UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended October 31, 2005
¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission file number 0-5286
KEWAUNEE SCIENTIFIC CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | 38-0715562 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S.Employer Identification No.) |
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2700 West Front Street Statesville, North Carolina |
28677 | |
(Address of principal executive offices) | (Zip Code) |
(704) 873-7202
(Registrants telephone number, including area code)
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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x .
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x .
As of October 5, 2005, the Registrant had outstanding 2,492,270 shares of Common Stock.
Pages: This report, excluding exhibits, contains 18 pages numbered sequentially from this cover page.
KEWAUNEE SCIENTIFIC CORPORATION
INDEX TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 2005
2
Kewaunee Scientific Corporation
Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
Three months ended October 31 |
Six months ended October 31 |
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2005
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2004
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2005
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2004
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Net sales |
$ | 22,319 | $ | 18,365 | $ | 42,627 | $ | 38,653 | ||||||||
Costs of products sold |
18,834 | 14,812 | 35,756 | 31,724 | ||||||||||||
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Gross profit |
3,485 | 3,553 | 6,871 | 6,929 | ||||||||||||
Operating expenses |
2,953 | 3,260 | 5,873 | 6,306 | ||||||||||||
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Operating earnings |
532 | 293 | 998 | 623 | ||||||||||||
Other income (expense) |
1 | (6 | ) | 880 | 40 | |||||||||||
Interest expense |
(118 | ) | (84 | ) | (205 | ) | (170 | ) | ||||||||
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Earnings before income taxes |
415 | 203 | 1,673 | 493 | ||||||||||||
Income tax expense |
137 | 55 | 594 | 155 | ||||||||||||
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Earnings before minority interests |
278 | 148 | 1,079 | 338 | ||||||||||||
Minority interests |
39 | 40 | 77 | 37 | ||||||||||||
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Net earnings |
$ | 239 | $ | 108 | $ | 1,002 | $ | 301 | ||||||||
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Net earnings per share |
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Basic |
$ | 0.10 | $ | 0.04 | $ | 0.40 | $ | 0.12 | ||||||||
Diluted |
$ | 0.10 | $ | 0.04 | $ | 0.40 | $ | 0.12 | ||||||||
Weighted average number of common shares outstanding (in thousands) |
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Basic |
2,492 | 2,492 | 2,492 | 2,491 | ||||||||||||
Diluted |
2,493 | 2,494 | 2,493 | 2,497 |
See accompanying notes to consolidated financial statements.
3
Kewaunee Scientific Corporation
Consolidated Balance Sheets
(in thousands)
October 31 2005 |
April 30 2005 |
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(Unaudited) | ||||||||
Assets |
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Current assets: |
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Cash and cash equivalents |
$ | 588 | $ | 225 | ||||
Restricted cash |
367 | 379 | ||||||
Receivables, less allowance |
21,058 | 21,683 | ||||||
Inventories |
4,342 | 3,542 | ||||||
Deferred income taxes |
467 | 456 | ||||||
Prepaid income taxes |
| 94 | ||||||
Prepaid expenses and other current assets |
949 | 401 | ||||||
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Total current assets |
27,771 | 26,780 | ||||||
Property, plant and equipment, at cost |
36,426 | 34,467 | ||||||
Accumulated depreciation |
(24,815 | ) | (23,737 | ) | ||||
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Net property, plant and equipment |
11,611 | 10,730 | ||||||
Prepaid pension cost |
4,824 | 4,731 | ||||||
Property held for sale |
| 1,450 | ||||||
Other |
2,739 | 2,521 | ||||||
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Total other assets |
7,563 | 8,702 | ||||||
Total Assets |
$ | 46,945 | $ | 46,212 | ||||
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Liabilities and Stockholders Equity |
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Current liabilities: |
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Short-term borrowings |
$ | 5,567 | $ | 3,778 | ||||
Current portion of long-term debt |
372 | 931 | ||||||
Current obligations under capital leases |
137 | 111 | ||||||
Accounts payable |
7,001 | 8,558 | ||||||
Employee compensation and amounts withheld |
1,096 | 1,113 | ||||||
Deferred Revenue |
542 | 1,261 | ||||||
Other accrued expenses |
1,565 | 647 | ||||||
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Total current liabilities |
16,280 | 16,399 | ||||||
Obligations under capital leases |
314 | 307 | ||||||
Deferred income taxes |
384 | 391 | ||||||
Accrued employee benefit plan costs |
2,717 | 2,524 | ||||||
Other long-term liabilities |
| 2 | ||||||
Minority interests |
662 | 600 | ||||||
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Total Liabilities |
20,357 | 20,223 | ||||||
Stockholders equity: |
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Common stock |
6,550 | 6,550 | ||||||
Additional paid-in-capital |
143 | 144 | ||||||
Retained earnings |
20,684 | 20,031 | ||||||
Accumulated other comprehensive income |
(2 | ) | 54 | |||||
Common stock in treasury, at cost |
(787 | ) | (790 | ) | ||||
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Total stockholders equity |
26,588 | 25,989 | ||||||
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Total Liabilities and Stockholders Equity |
$ | 46,945 | $ | 46,212 | ||||
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See accompanying notes to consolidated financial statements.
4
Kewaunee Scientific Corporation
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Six months ended October 31 |
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2005
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2004
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Cash flows from operating activities: |
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Net earnings |
$ | 1,002 | $ | 301 | ||||
Adjustments to reconcile net earnings to net cash used in operating activities: |
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Depreciation |
1,080 | 1,037 | ||||||
Provision for bad debts |
31 | 321 | ||||||
Increase in deferred income tax expense |
(18 | ) | | |||||
Gain on sale of property held for sale |
(884 | ) | | |||||
Decrease in prepaid income taxes |
94 | 165 | ||||||
Decrease in receivables |
594 | 1,127 | ||||||
(Increase) decrease in inventories |
(800 | ) | 281 | |||||
Increase in prepaid pension cost |
(93 | ) | | |||||
Increase (decrease) in accounts payable and other current liabilities |
1,645 | (2,226 | ) | |||||
Decrease in deferred revenue |
(719 | ) | (166 | ) | ||||
Other, net |
(735 | ) | 1,039 | |||||
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Net cash provided by operating activities |
1,197 | 1,879 | ||||||
Cash flows from investing activities: |
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Capital expenditures |
(1,869 | ) | (417 | ) | ||||
Proceeds from sale of property held for sale |
2,500 | | ||||||
Decrease (increase) in restricted cash |
12 | (8 | ) | |||||
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Net cash provided by (used in) investing activities |
643 | (425 | ) | |||||
Cash flows from financing activities: |
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Decrease in bank overdraft |
(2,301 | ) | | |||||
Increase (decrease) in short-term borrowings |
1,789 | (917 | ) | |||||
Payments on long-term debt |
(559 | ) | (559 | ) | ||||
Payments on capital leases |
(59 | ) | | |||||
Dividends paid |
(349 | ) | (349 | ) | ||||
Proceeds from exercise of stock options (including tax benefit) |
2 | 13 | ||||||
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Net cash used in financing activities |
(1,477 | ) | (1,812 | ) | ||||
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Increase (decrease) in cash and cash equivalents |
363 | (358 | ) | |||||
Cash and cash equivalents, beginning of period |
225 | 805 | ||||||
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Cash and cash equivalents, end of period |
$ | 588 | $ | 447 | ||||
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See accompanying notes to consolidated financial statements.
5
Kewaunee Scientific Corporation
Notes to Consolidated Financial Statements
(unaudited)
A. Financial Information
The unaudited interim consolidated financial statements of Kewaunee Scientific Corporation (the Company or Kewaunee) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the Commission). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, although the Company believes that the disclosures are adequate to make the information presented not misleading.
These interim consolidated financial statements should be read in conjunction with the financial statements and notes included in the Companys 2005 Annual Report to Stockholders. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.
The preparation of the financial statements requires management to make certain estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates.
Certain prior period amounts have been reclassified to conform to current classifications. These reclassifications had no impact on the results of operations of the Company.
B. Inventories
Inventories consisted of the following (in thousands):
October 31, 2005
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April 30, 2005
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Finished products |
$ | 1,327 | $ | 1,054 | ||
Work in process |
994 | 929 | ||||
Raw materials |
2,021 | 1,559 | ||||
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$ | 4,342 | $ | 3,542 | |||
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For interim reporting, LIFO inventories are computed based on year-to-date quantities and interim changes in price levels. Changes in quantities and price levels are reflected in the interim financial statements in the period in which they occur.
6
C. Balance Sheet
The Companys April 30, 2005 consolidated balance sheet as presented herein is derived from audited financial statements, but does not include all disclosures
D. Comprehensive Income
A reconciliation of net earnings and total comprehensive income for the three months and six months ended October 31, 2005 and 2004 is as follows (in thousands):
Three months ended October 31, 2005 |
Three months ended October 31, 2004 |
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Net earnings |
$ | 239 | $ | 108 | |||
Change in fair value of cash flow hedge, net of income tax |
1 | 3 | |||||
Change in cumulative foreign currency translation adjustments |
(53 | ) | 42 | ||||
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Total comprehensive income |
$ | 187 | $ | 153 | |||
Six months ended October 31, 2005 |
Six months ended October 31, 2004 |
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Net earnings |
$ | 1,002 | $ | 301 | |||
Change in fair value of cash flow hedge, net of income tax |
2 | 7 | |||||
Change in cumulative foreign currency translation adjustments |
(58 | ) | 24 | ||||
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Total comprehensive income |
$ | 946 | $ | 332 |
Statement and Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, requires that the Company record derivatives on the balance sheet at fair value and establishes criteria for designation and effectiveness of hedging relationships. The nature of the Companys business activities involves the management of various financial and market risks, including those related to changes in interest rates. The Company may from time-to-time employ derivative financial instruments, such as interest rate swap contracts, to mitigate or eliminate certain of those risks. The Company does not enter into derivative instruments for speculative purposes. The Company had one interest rate swap agreement outstanding at October 31, 2005 that expires February 28, 2006.
7
For the Companys foreign subsidiaries, assets and liabilities are translated at exchange rates prevailing on the balance sheet date. Revenues and expenses are translated at weighted average exchange rates prevailing during the period and any resulting translation adjustments are reported separately in shareholders equity.
E. Stock Options
The Company accounts for stock options using the intrinsic value method. Under this method no compensation expense is recorded since the exercise price of the stock options is equal to the market price of the underlying stock on the grant date. Had compensation expense for the stock options issued been determined consistent with Financial Accounting Standards Board (FASB) Statement No. 123R, Accounting for Stock-Based Compensation, net earnings and net earnings per share would have been reduced (increased) to the following pro forma amounts (in thousands, except per share data):
Three months ended October 31, 2005 |
Three months ended October 31, 2004 |
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Net earnings as reported |
$ | 239 | $ | 108 | ||||
Pro forma compensation cost |
(3 | ) | (9 | ) | ||||
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Net earnings pro forma |
236 | 99 | ||||||
Net earnings per share Basic |
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As reported |
$ | 0.10 | $ | 0.04 | ||||
Pro forma |
0.09 | 0.04 | ||||||
Net earnings per share Diluted |
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As reported |
$ | 0.10 | $ | 0.04 | ||||
Pro forma |
0.09 | 0.04 | ||||||
Six months ended October 31, 2005 |
Six months ended October 31, 2004 |
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Net earnings as reported |
$ | 1,002 | $ | 301 | ||||
Pro forma compensation cost |
(6 | ) | (17 | ) | ||||
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Net earnings pro forma |
996 | 284 | ||||||
Net earnings per share Basic |
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As reported |
$ | 0.40 | $ | 0.12 | ||||
Pro forma |
0.40 | 0.11 | ||||||
Net earnings per share Diluted |
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As reported |
$ | 0.40 | $ | 0.12 | ||||
Pro forma |
0.40 | 0.11 |
8
F. Defined Pension Plans
The Company has non-contributory defined benefit pension plans covering substantially all salaried and hourly employees. Effective April 30, 2005, no further benefits will be earned under the plans and no additional participants will be added to the plans. No contributions were paid to the plans during the six months ended October 31, 2005, and the Company does not expect any contributions to be paid to the plans during the remainder of the current year.
Pension expense (income) consisted of the following (in thousands):
Three months ended October 31, 2005 |
Three months ended October 31, 2004 |
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Service Cost |
$ | -0- | $ | 129 | ||||
Interest Cost |
201 | 213 | ||||||
Expected return on plan assets |
(309 | ) | (251 | ) | ||||
Amortization of prior service costs |
-0- | 3 | ||||||
Recognition of net loss |
71 | 59 | ||||||
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Net periodic pension cost (income) |
$ | (37 | ) | $ | 153 | |||
Six months ended October 31, 2005 |
Six months ended October 31, 2004 |
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Service Cost |
$ | -0- | $ | 258 | ||||
Interest Cost |
396 | 426 | ||||||
Expected return on plan assets |
(620 | ) | (502 | ) | ||||
Amortization of prior service costs |
-0- | 6 | ||||||
Recognition of net loss |
131 | 118 | ||||||
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Net periodic pension cost (income) |
$ | (93 | ) | $ | 306 |
9
Item 2. Managements Discussion and Analysis
of Financial Condition and Results of Operations
The Companys 2005 Annual Report to Stockholders contains managements discussion and analysis of financial condition and results of operations at and for the year ended April 30, 2005. The following discussion and analysis describes material changes in the Companys financial condition since April 30, 2005. The analysis of results of operations compares the three months and six months ended October 31, 2005 with the comparable periods of the prior fiscal year.
Results of Operations
Sales for the three months ended October 31, 2005 were $22,319,000, an increase of 21.5% from sales of $18,365,000 for the comparable period of the prior year. Sales for the six months ended October 31, 2005 were $42,627,000, an increase of 10.3% from sales of $38,653,000 in the comparable period of the prior year. The total order backlog was $35.2 million at October 31, 2005. This compares to $40.7 million at July 31, 2005 and $38.6 million at October 31, 2004.
The gross profit margin for the three months ended October 31, 2005 was 15.6% of sales, as compared to 19.3% of sales in the comparable quarter of the prior year. The gross profit margin for the six months ended October 31, 2005 was 16.1%, as compared to 17.9% in the comparable period of the prior year. Gross profit margins for the three and six months of the current year were unfavorably impacted by aggressive pricing in the marketplace and higher raw material, energy and transportation costs.
Operating expenses for the three months ended October 31, 2005 were $3.0 million, or 13.2% of sales, as compared to $3.3 million, or 17.8% of sales, in the comparable period of the prior year. Operating expenses for the six months ended October 31, 2005 were $5.9 million, or 13.8% of sales, as compared to $6.3 million, or 16.3% of sales, in the comparable period of the prior year. The decrease in operating expenses as a percent of sales for each of the current year periods resulted from reduced bad debt expense in the current year periods and higher sales volumes in the current year periods without a proportionate increase in other operating expenses. As compared to the prior year periods, bad debt expense declined $245,000 and $290,000 for the three months and six months ended October 31, 2005, respectively.
Operating earnings of $532,000 and $998,000 were recorded for the three months and six months ended October 31, 2005, respectively, compared to $293,000 and $623,000 recorded for the comparable periods of the prior year.
10
Interest expense was $118,000 and $205,000 for the three months and six months ended October 31, 2005, respectively, compared to $84,000 and $170,000 for the same periods of the prior year. The increase in interest expense for the current year periods resulted from higher interest rates, which was partially offset by lower borrowing levels in the current year.
Other income was $1,000 and $880,000 in the three months and six months ended October 31, 2005, respectively, compared to other expense of $6,000 and other income of $40,000 for the comparable periods of the prior year. Other income for the six months ended October 31, 2005, included $884,000 from the sale of the Companys Lockhart, Texas property in the first quarter.
Income tax expenses of $137,000 and $594,000 were recorded for the three months and six months ended October 31, 2005, respectively, as compared to an income tax expense of $55,000 and $155,000 recorded for the comparable periods of the prior year. The effective tax rate was 33.0% and 35.5% for the three and six months ended October 31, 2005 and was 27.1% and 31.4% for the three months and six months ended October 31, 2004, respectively. The effective tax rate for each of these periods differs from the statutory rate due to the impact of state and federal tax credits on the different levels of taxable earnings for the periods.
Minority interest related to the Companys two subsidiaries that are not 100% owned by the Company reduced net earnings by $39,000 and $77,000 for the three and six months ended October 31, 2005, respectively, as compared to minority interest expense of $40,000 and $37,000 during the comparable periods of the prior year.
Net earnings of $239,000, or $.10 per diluted share, and $1,002,000, or $.40 per diluted share, were recorded for the three and six months ended October 31, 2005, respectively. This compares to net earnings of $108,000, or $.04 per diluted share, and $301,000, or $.12 per diluted share, for the three and six month periods of the prior year. Net earnings for the six months ended October 31, 2005 included an after-tax gain of $540,000, or $.22 per diluted share, resulting from the sale of the Companys former plant site in Lockhart, Texas.
Liquidity and Capital Resources
Historically, the Companys principal sources of liquidity have been funds generated from operations, supplemented as needed by short-term
11
borrowings under the Companys revolving credit facility. Additionally, certain machinery and equipment are financed by non-cancelable operating leases or capital leases. The Company believes that these sources will be sufficient to support ongoing business requirements, including capital expenditures through the current fiscal year.
The Company had working capital of $11.5 million at October 31, 2005, as compared to $10.4 million at April 30, 2005. The ratio of current assets to current liabilities was 1.7-to-1 at October 31, 2005, as compared to 1.6-to-1 at April 30, 2005. At October 31, 2005, advances of $5,567,000 were outstanding under the Companys revolving credit loan, leaving available credit under this line in the amount of $3,433,000.
The Companys operations provided cash of $1,197,000 during the six months ended October 31, 2005. Cash was provided primarily from operations, a decrease in accounts receivable, and increases in accounts payable and other current liabilities. The favorable impact of these items was partially offset by cash requirements resulting from an increase in inventories and a decrease in deferred revenue. The Companys operations provided cash of $1,879,000 during the six months ended October 31, 2004, primarily from operations and decreases in accounts receivable. Cash of $890,000 was also received during the comparable period of the prior year from the cancellation of life insurance policies covering all salaried employees when these policies were replaced with a group term insurance plan. Cash of $2,226,000 was used for the reduction of accounts payable and other current liabilities during the six months ended October 31, 2004.
During the six months ended October 31, 2005, net cash of $643,000 was provided by investing activities, primarily from the proceeds of the sale of the Companys former plant site in Lockhart, Texas, reduced by $1,869,000 of capital expenditures. This compares to the use of $425,000 for investing activities in the same period of the prior year, primarily for capital expenditures.
The Companys financing activities used cash of $1,477,000 during the six months ended October 31, 2005. Cash used included $2,301,000 to reduce bank overdrafts, reported as a component of accounts payable, $559,000 for scheduled repayments of long-term debt, and $349,000 for cash dividends. The impact of these items was partially offset by cash of $1,789,000 provided from advances under the revolving credit loan. Financing activities used cash of $1,812,000 in the same period of the prior year. This included $917,000 for repayment of advances under the revolving credit loan, scheduled long-term debt repayments of $559,000, and cash dividends paid of $349,000.
12
Outlook for Remainder of Fiscal Year 2006
In addition to general economic factors affecting the Company and its markets, demand for the Companys products is also dependent upon the number of laboratory construction projects planned and/or current progress in projects already under construction. The Companys ability to predict future demand is very limited given, among other general economic factors affecting the Company and its markets, the Companys role as subcontractor or supplier to dealers of subcontractors.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Certain statements in this report constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the Reform Act). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could significantly impact results or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, economic, competitive, governmental, and technological factors affecting the Companys operations, markets, products, services, and prices. The cautionary statements made pursuant to the Reform Act herein and elsewhere by the Company should not be construed as exhaustive or as any admission regarding the adequacy of disclosures made by the Company prior to the effective date of the Reform Act. The Company cannot always predict what factors would cause actual results to differ materially from those indicated by the forward-looking statements. In addition, readers are urged to consider statements that include the terms believes, belief, expects, plans, objectives, anticipates, intends or the like to be uncertain and forward-looking.
13
REVIEW BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
A review of the interim financial information included in this Quarterly Report on Form 10-Q for the three months and six months ended October 31, 2005 has been performed by Cherry, Bekaert & Holland LLP, the Companys independent auditors. Their report on the interim financial information follows.
14
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Kewaunee Scientific Corporation
Statesville, North Carolina
We have reviewed the accompanying consolidated balance sheet of Kewaunee Scientific Corporation and its subsidiaries (the Company) as of October 31, 2005, and the related consolidated statements of operations for the three-month and six-month periods ended October 31, 2005, and the consolidated statements of cash flows for the six-month period ended October 31, 2005. These interim financial statements are the responsibility of the companys management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the consolidated interim financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.
Cherry, Bekaert & Holland LLP
Charlotte, North Carolina
December 7, 2005
15
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There are no material changes to the disclosures made on this matter in the Companys Annual Report on Form 10-K for the fiscal year ended April 30, 2005.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures
An evaluation was performed under the supervision and the participation of the companys management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of October 31, 2005. Based on that evaluation, the Companys management, including the CEO and CFO, concluded that, as of October 31, 2005, the Companys disclosure controls and procedures were adequate and effective and designed to ensure that all material information required to be filed in this quarterly report is made known to them by others within the Company and its subsidiaries.
(b) Changes in internal controls
There were no significant changes in the Companys internal controls or in other factors that could significantly affect these controls subsequent to October 31, 2005. As no significant deficiencies or material weaknesses were found, no corrective actions were taken.
16
Item 4. Submission of Matters to a Vote of Security Holders
The Companys Annual Meeting of Stockholders was held on August 24, 2005. Information regarding the results of this meeting are incorporated by reference from the Companys Report on Form 10-Q for the three months ended July 31, 2005.
Item 6. Exhibits and Reports on Form 8-K
10.30 | Kewaunee Scientific Corporation Executive Severance Pay Policy | |
10.38B | First Amendment to the Change of Control Agreement between William A. Shumaker and the Company. | |
10.39B | First Amendment to the Change of Control Agreement between D. Michael Parker and the Company. | |
10.40B | First Amendment to the Change of Control Agreement between Dana L. Dahlgren and the Company. | |
10.41B | First Amendment to the Change of Control Agreement between Kurt P. Rindoks and the Company. | |
10.44B | First Amendment to the Change of Control Agreement between Keith D. Smith and the Company. | |
31.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
17
Pursuant to the requirements of the Securities and 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 (Registrant) |
||||
Date: December 14, 2005 | By |
/s/ D. Michael Parker |
||
D. Michael Parker | ||||
Senior Vice President, Finance and | ||||
Chief Financial Officer |
18
Exhibit 10.30
Kewaunee Scientific Corporation
Executive Severance Pay Policy
Effective Date: December 12, 2005
Revised: | N/A |
PURPOSE
Severance pay benefits are intended to provide support for Kewaunee Scientific Corporation (the Company) Executive Associates who become unemployed as a result of management action. The philosophy of this policy is to ensure that management does not take lightly the separation of any Company Associate, whether because of performance deficiencies or Company action. The policy is designed to be fair to all affected Associates and even beneficial to those Associates who choose to sign a release and waiver of claims agreement. Release and waiver agreements are strongly encouraged in this policy because the Company needs to protect its interests in exchange for the additional consideration provided to Associates.
SCOPE
The Executive Severance Pay Policy applies to active, regular, full-time, non-union, U.S. exempt salary Associates, in salary grade 19 or higher, reporting directly to the President and Chief Executive Officer of the Company.
A. | Director of Human Resources |
The Director of Human Resources is responsible for administering the Severance Pay Policy in a way that is consistent with both the philosophy and the mechanics of the policy, as well as entering the proper codes into the Companys HRIS and payroll systems.
B. | Compensation Committee of the Board of Directors |
The Compensation Committee is the Plan Administrator of the Executive Severance Pay Policy and is responsible for final interpretation of the Policy. Any changes to the Policy must be approved by the Compensation Committee and the Board of Directors. The Associates covered under this policy shall be notified within ten (10) days of any such changes.
PROVISIONS
Eligibility
All active, regular, full-time, non-union, U.S. exempt salary Associates, in salary grade 19 or higher, reporting directly to the President and Chief Executive Officer of the Company.
Severance Benefit Overview
Consistent with the Companys policy, severance benefits are intended to provide support for Executive Associates who become unemployed as a result of a qualifying event. Two levels of benefits, standard and enhanced, are available under the severance program to Executive Associates who meet the eligibility and participation requirements. For an Associate to receive the enhanced benefits, he or she must sign the Release and Waiver Agreement described below. Severance payment(s) are subject to applicable taxes and withholdings, and are not earned or deferred compensation. The Company will deduct and/or withhold from separation pay any applicable medical insurance contributions.
E-1
Qualifying Events
A qualifying event is a termination of employment under circumstances that are typically management-initiated and not related to the Associates own action(s). Examples of such events include, but are not limited to, reductions-in-force, plant closings, and major restructuring efforts. The following are examples of circumstances that would NOT constitute qualifying events. This list is not intended to be all-inclusive.
1. | Resignation; |
2. | Associate-elected retirement; |
3. | Termination of employment for cause; |
4. | Permanent disability with actual receipt of long-term disability benefits per disability plan; |
5. | Failure to return to work after temporary lay-off; |
6. | Resignation or loss of employment due to a personal leave of absence; |
7. | When an operation is restructured and the Associate is offered a reasonably comparable job, or an operation is divested and the Associate is employed by the new owner and/or management of the operation; |
8. | When an Associate is transferred to or offered a reasonably comparable job in any Company operation, subsidiary, or affiliated company (unless the offered position would have required the Associate to relocate to a new work location that is fifty (50) miles away from his or her current residence); or |
9. | Death. |
Release and Waiver of Claims Agreements
The Release and Waiver Agreement contains a release of all legal claims, including employment discrimination claims under the Age Discrimination in Employment Act, the Civil Rights Act of 1964 as amended, the Equal Pay Act, and the Americans with Disabilities Act, against the Company. Release and waiver of claims agreements are a critical element in the Severance Pay Policy and, thus, should be used in instances involving qualifying events to help limit litigation challenging such Company action. Thus, for an Associate to receive the enhanced severance pay and benefits outlined in this Policy, he or she must sign the release and waiver agreement.
All release agreements must be executed in accordance with the Older Workers Benefit Protection Act of 1990. Please be advised that the legal requirements for release agreements vary depending on the nature of the qualifying event and the population of Associates involved. Consequently, the Director of Human Resources must review and approve all release and waiver agreements prior to distributing any release agreements.
Associates who choose not to sign the release and waiver of claims agreement will be eligible for the standard severance payment as designated below, COBRA coverage for up to 18 months, and vested/unused vacation earned prior to the termination date. They will not be eligible for any other benefits provided for in this Policy.
If an Associate is terminated by action of the Company as described above, the Associate will be paid a severance payment(s) according to one of the schedules below, depending on whether he or she signs a release and waiver agreement. To receive enhanced benefits, the Associate must sign, submit, and not revoke the release agreement that provides additional consideration for signing a release of all potential claims and provides the Company certain protections authorized by law.
Associates must be advised to consult with an attorney prior to executing the release and waiver agreement described in this Policy.
Release and waiver agreements are legal documents and may NOT be altered for any reason without prior approval from the Director of Human Resources.
E-2
When a severance package is offered to an Associate, he or she will receive a release and waiver agreement that includes the following provisions:
| Review period of 45 days |
| Revocation period of 7 days |
| Attachment A to the release and waiver agreement (listing in accordance with the OWBPA) |
| Review Period |
The Associate may sign and return the agreement at any time within forty-five (45) days of receipt. Signed agreements should be returned to the Director of Human Resources.
| Revocation Right |
If the Associate signs the release and waiver agreement, he or she may revoke it in writing within seven (7) days after it is signed and returned. Revocations must also be returned to the Director of Human Resources and are not effective unless received within the seven-day period. Once the Associate has signed and returned the release and waiver agreement and the period for revocation has expired, he or she is entitled to begin receiving the enhanced benefits. This seven-day revocation period cannot be shortened.
Severance Pay
Severance payments are calculated at the Associates base compensation rate at the time of his or her termination of employment. Base compensation does not include bonuses, overtime pay, commissions, fees, incentives, or automobile allowances.
Severance pay is based on length of service from the most recent hire date to the date the Associate is terminated because of the qualifying event. Associates with less than two full years of service will receive the minimum payment as applicable.
The Company reserves the right to amend or completely terminate this Policy for any or all groups of Associates at any time, pursuant to the Employee Retirement Income Security Act of 1974 (ERISA).
Standard Severance Payment (Without a Signed Release and Waiver Agreement)
Eligible Associates who choose not to sign the release and waiver of claims agreement are eligible for the Companys standard severance plan as indicated below, COBRA for up to 18 months, and will be paid for any vested/unused vacation earned prior to the termination date. They will not be eligible for any other benefits provided for in this policy.
Standard Severance Payment Without a Signed Release and Waiver Agreement Number of Weeks4
Enhanced Severance Payment (With a Signed Release and Waiver Agreement)
Enhanced Benefits:
Eligible Associates who sign a release and waiver agreement are entitled to the following benefits:
| Enhanced severance payment as additional consideration for releasing all potential claims. Eligible Associates will be paid severance pay in accordance with the enhanced schedule listed below for each full or partial year of service, less applicable benefit contributions, taxes, and withholdings. |
E-3
Enhanced Payment Schedule
Years of Service | Number of Weeks | |||||
2 |
20 | |||||
3 |
24 | |||||
4 |
28 | |||||
5 |
32 | |||||
6 |
36 | |||||
7 |
40 | |||||
8 |
44 | |||||
9 |
48 | |||||
³ 10 |
52 |
Continuation of Current Benefits (only applicable with a signed release and waiver of claims agreement)
| Medical and Dental |
In consideration of the Associate executing the release and waiver agreement, and in addition to the severance pay benefits, if the Associate is participating in the Companys group medical and dental plan, he or she may continue to participate in the applicable group plans, pursuant to those plans terms until the end of the month in which he or she receives any separation pay.
The Companys and the Associates contributions for these benefits are the same as the contributions for active Associates.
The Company reserves the right to modify or terminate any group medical and dental insurance plan at any time. The Company also reserves the right to change the required participant contributions for any group medical and dental insurance plan at any time.
| Optional COBRA Continuation Coverage |
After the Associates insurance continuation has ceased, he or she will be eligible to elect optional COBRA coverage for 18 months. Associates will receive an application for COBRA coverage from the COBRA administrator shortly after his or her termination date.
Benefits That End
In all circumstances, regardless of whether a release and waiver agreement is signed, all other benefits will cease as of the last day of employment consistent with Plan documents.
Other Considerations
| Workers Compensation |
| If the Associate is terminated immediately due to a qualifying event, severance benefits shall be paid as outlined in this Policy. |
| If the Associate is terminated due to a qualifying event only after the Company has satisfied a workers compensation obligation, severance benefits will be paid at termination as outlined in this Policy, except that such benefits will include service only through the date at which the Associate would otherwise have been terminated. |
| If workers compensation has previously been denied by the Company and in legal dispute, and if the Associate is terminated due to a qualifying event, severance |
E-4
benefits should be paid at termination as outlined in this Policy. However, prior to paying severance, it is important to confer with legal counsel handling the matter to consider any ramifications to the Companys legal strategy.
| Educational Reimbursement |
The Company will provide education reimbursement per the policy guidelines.
| Medical Plan Option With signed release and waiver of claims agreement |
If an Associate is participating in the Companys group medical and dental plan, since the loss of job is a life event, the Associate may make an immediate change in their coverage level or medical plan option. The Associate should advise the Director of Human Resources of any change in coverage.
Reemployment
It is understood that the separated Associate will make reasonable efforts to secure employment during the separation pay period. Should an Associate become reemployed by the Company or any other employer before receiving the full separation pay allowance to which he or she is entitled, no payments will be made beyond his or her date of reemployment. Medical insurance, which was in effect, will be in effect until the end of the month during which he or she received any separation pay.
Method of Payment
| Separation payments will be made based on an Associates normal payroll schedule. |
| Concurrent with the first separation check, and all subsequent checks, the separated Associate will be mailed a form stating, I am currently unemployed. This form must be signed, dated, and returned to the Company prior to the distribution of the next scheduled check. This process will be followed until the separated Associate states he or she has employment, or the separation pay per the schedule has been exhausted. |
Claims Procedure
If an Associate is separated from employment and believes that he or she is entitled to additional benefits, then the Associate should send a written notice of claim to the Director of Human Resources. The Human Resources Director must receive this notice within 90 days from the separation from employment. Claims received more than 90 days after separation will automatically be denied.
If the claim is properly submitted, the Director of Human Resources needs to promptly send this claim to the Plan Administrator for review. The Company will send a written decision to a claimant within 30 days of receipt of the claim. The decision of the Plan Administrator will be final. The Plan Administrator shall exercise his or her powers in a uniform and nondiscriminatory manner.
The Plan Administrator retains the discretion to reduce the Severance Allowance, or any other settlements or relocation subsidies, to recover any amounts the Associate owes to the Company. By participating in this program, the Associate waives all notices and demands in connection with such offsets and consents thereto.
E-5
Exhibit 10.38B
FIRST AMENDMENT TO
CHANGE OF CONTROL EMPLOYMENT AGREEMENT
Section 6. (a) of the Change of Control Employment Agreement by and between Kewaunee Scientific Corporation (the Company), and William A. Shumaker (the Executive), dated as of the 12 th day of November, 1999, is hereby amended as follows:
| Section 6. (a) (i) is hereby replaced in its entirety by the following: |
(i) | The Company shall pay to the Executive an amount equal to either: |
A. if the Date of Termination occurs on or before the first anniversary of the Change of Control Date, two times the sum of the Executives Annual Base Salary plus his Average Annual Bonus and the compensation for any earned but unused vacation days; or
B. if the Date of Termination occurs after the first anniversary of the Change of Control Date, the sum of the Executives Annual Base Salary plus his Average Annual Bonus and the compensation for any earned but unused vacation days.
| Section 6. (a) (iii) is hereby replaced in its entirety by the following: |
(iii) If the Executive is a participant in the Kewaunee Scientific Corporation Executive Deferred Compensation Plan (the Deferred Compensation Plan), his benefit under the Deferred Compensation Plan shall be paid in a single lump sum pursuant to Section 5.2 of the Deferred Compensation Plan regardless of whether he had elected a different form of benefit, and shall be increased by an amount equal to the additional employer matching contributions the Executive would have received under both the Deferred Compensation Plan and the 401K Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee Scientific Corporation as if the Executives employment had continued until the end of the Protection Period, based on the assumption that the Executives compensation throughout the Protection Period would have been that required by Section 4(b)(i) and Section 4(b)(ii), that the Executives would have elected to defer his compensation under both such plans at the same rate that he had elected immediately prior to the Termination Date, and that all such employer matching contributions were fully vested at the end of the Protection Period. The provisions of this Section 6(a)(iii) shall be considered an amendment to the Deferred Compensation Plan consented to by the Executive.
1
| Section 6. (a) (iv) is hereby replaced in its entirety by the following: |
(iv) If the Executive is a participant in the Kewaunee Scientific Corporation Group Life Insurance Benefit Plan (the Life Insurance Plan), he shall also receive a payment equal to the present value of the vested death benefit, if any, to which the Executives beneficiaries would have been entitled under the Life Insurance Plan if the Executives employment had continued until the end of the Protection Period, based on the assumption that the Executives compensation throughout the Protection Period would have been that required by Section 4(b)(i) and Section 4(b)(ii). Such present value shall be determined as if the death benefit were payable at the end of the Executives life expectancy, determined as of the date of payment, and discounted to the date of payment, using the same mortality and interest rate assumptions used to calculate lump sum benefits under the Retirement Plan. The provisions of this Section 6(a)(iv) shall be considered an amendment to the Life Insurance Plan consented to by the Executive, and the amount of such payment shall be in full satisfaction of all amounts owed to the Executives beneficiaries under the Life Insurance Plan.
In all other respects, this Agreement is reaffirmed and remains unchanged.
IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the authorization from its Board of Directors, the Company has caused this First Amendment to be executed in its name on its behalf as of this 12 th day of December, 2005.
/s/ William A. Shumaker |
Executive |
By: |
/s/ Eli Manchester, Jr. |
|
Eli Manchester, Jr. | ||
Chairman of the Board |
2
Exhibit 10.39B
FIRST AMENDMENT TO
CHANGE OF CONTROL EMPLOYMENT AGREEMENT
Section 6. (a) of the Change of Control Employment Agreement by and between Kewaunee Scientific Corporation (the Company), and D. Michael Parker (the Executive), dated as of the 12 th day of November, 1999, is hereby amended as follows:
| Section 6. (a) (i) is hereby replaced in its entirety by the following: |
(i) | The Company shall pay to the Executive an amount equal to either: |
A. if the Date of Termination occurs on or before the first anniversary of the Change of Control Date, two times the sum of the Executives Annual Base Salary plus his Average Annual Bonus and the compensation for any earned but unused vacation days; or
B. if the Date of Termination occurs after the first anniversary of the Change of Control Date, the sum of the Executives Annual Base Salary plus his Average Annual Bonus and the compensation for any earned but unused vacation days.
| Section 6. (a) (iii) is hereby replaced in its entirety by the following: |
(iii) If the Executive is a participant in the Kewaunee Scientific Corporation Executive Deferred Compensation Plan (the Deferred Compensation Plan), his benefit under the Deferred Compensation Plan shall be paid in a single lump sum pursuant to Section 5.2 of the Deferred Compensation Plan regardless of whether he had elected a different form of benefit, and shall be increased by an amount equal to the additional employer matching contributions the Executive would have received under both the Deferred Compensation Plan and the 401K Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee Scientific Corporation as if the Executives employment had continued until the end of the Protection Period, based on the assumption that the Executives compensation throughout the Protection Period would have been that required by Section 4(b)(i) and Section 4(b)(ii), that the Executives would have elected to defer his compensation under both such plans at the same rate that he had elected immediately prior to the Termination Date, and that all such employer matching contributions were fully vested at the end of the Protection Period. The provisions of this Section 6(a)(iii) shall be considered an amendment to the Deferred Compensation Plan consented to by the Executive.
1
| Section 6. (a) (iv) is hereby replaced in its entirety by the following: |
(iv) If the Executive is a participant in the Kewaunee Scientific Corporation Group Life Insurance Benefit Plan (the Life Insurance Plan), he shall also receive a payment equal to the present value of the vested death benefit, if any, to which the Executives beneficiaries would have been entitled under the Life Insurance Plan if the Executives employment had continued until the end of the Protection Period, based on the assumption that the Executives compensation throughout the Protection Period would have been that required by Section 4(b)(i) and Section 4(b)(ii). Such present value shall be determined as if the death benefit were payable at the end of the Executives life expectancy, determined as of the date of payment, and discounted to the date of payment, using the same mortality and interest rate assumptions used to calculate lump sum benefits under the Retirement Plan. The provisions of this Section 6(a)(iv) shall be considered an amendment to the Life Insurance Plan consented to by the Executive, and the amount of such payment shall be in full satisfaction of all amounts owed to the Executives beneficiaries under the Life Insurance Plan.
In all other respects, this Agreement is reaffirmed and remains unchanged.
IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the authorization from its Board of Directors, the Company has caused this First Amendment to be executed in its name on its behalf as of this 12 th day of December, 2005.
/s/ D. Michael Parker |
Executive |
By: |
/s/ William A. Shumaker |
|
William A. Shumaker | ||
President, Chief Executive Officer |
2
Exhibit 10.40B
FIRST AMENDMENT TO
CHANGE OF CONTROL EMPLOYMENT AGREEMENT
Section 6. (a) of the Change of Control Employment Agreement by and between Kewaunee Scientific Corporation (the Company), and Dana L. Dahlgren (the Executive), dated as of the 25 th day of August, 2004, is hereby amended as follows:
| Section 6. (a) (i) is hereby replaced in its entirety by the following: |
(i) | The Company shall pay to the Executive an amount equal to either: |
A. if the Date of Termination occurs on or before the first anniversary of the Change of Control Date, the sum of the Executives Annual Base Salary plus his Average Annual Bonus and the compensation for any earned but unused vacation days; or
B. if the Date of Termination occurs after the first anniversary of the Change of Control Date, one-half the sum of the Executives Annual Base Salary plus his Average Annual Bonus and the compensation for any earned but unused vacation days.
| Section 6. (a) (iii) is hereby replaced in its entirety by the following: |
(iii) If the Executive is a participant in the Kewaunee Scientific Corporation Executive Deferred Compensation Plan (the Deferred Compensation Plan), his benefit under the Deferred Compensation Plan shall be paid in a single lump sum pursuant to Section 5.2 of the Deferred Compensation Plan regardless of whether he had elected a different form of benefit, and shall be increased by an amount equal to the additional employer matching contributions the Executive would have received under both the Deferred Compensation Plan and the 401K Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee Scientific Corporation as if the Executives employment had continued until the end of the Protection Period, based on the assumption that the Executives compensation throughout the Protection Period would have been that required by Section 4(b)(i) and Section 4(b)(ii), that the Executives would have elected to defer his compensation under both such plans at the same rate that he had elected immediately prior to the Termination Date, and that all such employer matching contributions were fully vested at the end of the Protection Period. The provisions of this Section 6(a)(iii) shall be considered an amendment to the Deferred Compensation Plan consented to by the Executive.
1
| Section 6. (a) (iv) is hereby replaced in its entirety by the following: |
(iv) If the Executive is a participant in the Kewaunee Scientific Corporation Group Life Insurance Benefit Plan (the Life Insurance Plan), he shall also receive a payment equal to the present value of the vested death benefit, if any, to which the Executives beneficiaries would have been entitled under the Life Insurance Plan if the Executives employment had continued until the end of the Protection Period, based on the assumption that the Executives compensation throughout the Protection Period would have been that required by Section 4(b)(i) and Section 4(b)(ii). Such present value shall be determined as if the death benefit were payable at the end of the Executives life expectancy, determined as of the date of payment, and discounted to the date of payment, using the same mortality and interest rate assumptions used to calculate lump sum benefits under the Retirement Plan. The provisions of this Section 6(a)(iv) shall be considered an amendment to the Life Insurance Plan consented to by the Executive, and the amount of such payment shall be in full satisfaction of all amounts owed to the Executives beneficiaries under the Life Insurance Plan.
In all other respects, this Agreement is reaffirmed and remains unchanged.
IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the authorization from its Board of Directors, the Company has caused this First Amendment to be executed in its name on its behalf as of this 12 th day of December, 2005.
/s/ Dana L. Dahlgren |
Executive |
By: |
/s/ William A. Shumaker |
|
William A. Shumaker | ||
President, Chief Executive Officer |
2
Exhibit 10.41B
FIRST AMENDMENT TO
CHANGE OF CONTROL EMPLOYMENT AGREEMENT
Section 6. (a) of the Change of Control Employment Agreement by and between Kewaunee Scientific Corporation (the Company), and Kurt P. Rindoks (the Executive), dated as of the 20 th day of January, 2000, is hereby amended as follows:
| Section 6. (a) (i) is hereby replaced in its entirety by the following: |
(i) | The Company shall pay to the Executive an amount equal to either: |
A. if the Date of Termination occurs on or before the first anniversary of the Change of Control Date, the sum of the Executives Annual Base Salary plus his Average Annual Bonus and the compensation for any earned but unused vacation days; or
B. if the Date of Termination occurs after the first anniversary of the Change of Control Date, one-half the sum of the Executives Annual Base Salary plus his Average Annual Bonus and the compensation for any earned but unused vacation days.
| Section 6. (a) (iii) is hereby replaced in its entirety by the following: |
(iii) If the Executive is a participant in the Kewaunee Scientific Corporation Executive Deferred Compensation Plan (the Deferred Compensation Plan), his benefit under the Deferred Compensation Plan shall be paid in a single lump sum pursuant to Section 5.2 of the Deferred Compensation Plan regardless of whether he had elected a different form of benefit, and shall be increased by an amount equal to the additional employer matching contributions the Executive would have received under both the Deferred Compensation Plan and the 401K Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee Scientific Corporation as if the Executives employment had continued until the end of the Protection Period, based on the assumption that the Executives compensation throughout the Protection Period would have been that required by Section 4(b)(i) and Section 4(b)(ii), that the Executives would have elected to defer his compensation under both such plans at the same rate that he had elected immediately prior to the Termination Date, and that all such employer matching contributions were fully vested at the end of the Protection Period. The provisions of this Section 6(a)(iii) shall be considered an amendment to the Deferred Compensation Plan consented to by the Executive.
1
| Section 6. (a) (iv) is hereby replaced in its entirety by the following: |
(iv) If the Executive is a participant in the Kewaunee Scientific Corporation Group Life Insurance Benefit Plan (the Life Insurance Plan), he shall also receive a payment equal to the present value of the vested death benefit, if any, to which the Executives beneficiaries would have been entitled under the Life Insurance Plan if the Executives employment had continued until the end of the Protection Period, based on the assumption that the Executives compensation throughout the Protection Period would have been that required by Section 4(b)(i) and Section 4(b)(ii). Such present value shall be determined as if the death benefit were payable at the end of the Executives life expectancy, determined as of the date of payment, and discounted to the date of payment, using the same mortality and interest rate assumptions used to calculate lump sum benefits under the Retirement Plan. The provisions of this Section 6(a)(iv) shall be considered an amendment to the Life Insurance Plan consented to by the Executive, and the amount of such payment shall be in full satisfaction of all amounts owed to the Executives beneficiaries under the Life Insurance Plan.
In all other respects, this Agreement is reaffirmed and remains unchanged.
IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the authorization from its Board of Directors, the Company has caused this First Amendment to be executed in its name on its behalf as of this 12 th day of December, 2005.
/s/ Kurt P. Rindoks |
Executive |
By: |
/s/ William A. Shumaker |
|
William A. Shumaker | ||
President, Chief Executive Officer |
2
Exhibit 10.44B
FIRST AMENDMENT TO
CHANGE OF CONTROL EMPLOYMENT AGREEMENT
Section 6. (a) of the Change of Control Employment Agreement by and between Kewaunee Scientific Corporation (the Company), and Keith D. Smith (the Executive), dated as of the 22 nd day of March, 2005, is hereby amended as follows:
| Section 6. (a) (i) is hereby replaced in its entirety by the following: |
(i) | The Company shall pay to the Executive an amount equal to either: |
A. if the Date of Termination occurs on or before the first anniversary of the Change of Control Date, the sum of the Executives Annual Base Salary plus his Average Annual Bonus and the compensation for any earned but unused vacation days; or
B. if the Date of Termination occurs after the first anniversary of the Change of Control Date, one-half the sum of the Executives Annual Base Salary plus his Average Annual Bonus and the compensation for any earned but unused vacation days.
| Section 6. (a) (iii) is hereby replaced in its entirety by the following: |
(iii) If the Executive is a participant in the Kewaunee Scientific Corporation Executive Deferred Compensation Plan (the Deferred Compensation Plan), his benefit under the Deferred Compensation Plan shall be paid in a single lump sum pursuant to Section 5.2 of the Deferred Compensation Plan regardless of whether he had elected a different form of benefit, and shall be increased by an amount equal to the additional employer matching contributions the Executive would have received under both the Deferred Compensation Plan and the 401K Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee Scientific Corporation as if the Executives employment had continued until the end of the Protection Period, based on the assumption that the Executives compensation throughout the Protection Period would have been that required by Section 4(b)(i) and Section 4(b)(ii), that the Executives would have elected to defer his compensation under both such plans at the same rate that he had elected immediately prior to the Termination Date, and that all such employer matching contributions were fully vested at the end of the Protection Period. The provisions of this Section 6(a)(iii) shall be considered an amendment to the Deferred Compensation Plan consented to by the Executive.
1
| Section 6. (a) (iv) is hereby replaced in its entirety by the following: |
(iv) If the Executive is a participant in the Kewaunee Scientific Corporation Group Life Insurance Benefit Plan (the Life Insurance Plan), he shall also receive a payment equal to the present value of the vested death benefit, if any, to which the Executives beneficiaries would have been entitled under the Life Insurance Plan if the Executives employment had continued until the end of the Protection Period, based on the assumption that the Executives compensation throughout the Protection Period would have been that required by Section 4(b)(i) and Section 4(b)(ii). Such present value shall be determined as if the death benefit were payable at the end of the Executives life expectancy, determined as of the date of payment, and discounted to the date of payment, using the same mortality and interest rate assumptions used to calculate lump sum benefits under the Retirement Plan. The provisions of this Section 6(a)(iv) shall be considered an amendment to the Life Insurance Plan consented to by the Executive, and the amount of such payment shall be in full satisfaction of all amounts owed to the Executives beneficiaries under the Life Insurance Plan.
In all other respects, this Agreement is reaffirmed and remains unchanged.
IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the authorization from its Board of Directors, the Company has caused this First Amendment to be executed in its name on its behalf as of this 12 th day of December, 2005.
/s/ Keith D. Smith |
Executive |
By: |
/s/ William A. Shumaker |
|
William A. Shumaker | ||
President, Chief Executive Officer |
2
EXHIBIT 31.1
CERTIFICATIONS
I, William A. Shumaker, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Kewaunee Scientific Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of period covered by this report based on such evaluation; and
c) disclosed in this quarterly report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting;
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: December 14, 2005
/s/ William A. Shumaker |
William A. Shumaker |
President and Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATIONS
I, D. Michael Parker, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Kewaunee Scientific Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of period covered by this report based on such evaluation; and
c) disclosed in this quarterly report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting;
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: December 14, 2005
/s/ D. Michael Parker |
D. Michael Parker |
Senior Vice President, Finance and Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Kewaunee Scientific Corporation (the Company) for the period ending October 31, 2005, I, William A. Shumaker, President and Chief Executive Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) | such Form 10-Q of the Company for the period ended October 31, 2005, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in such Form 10-Q of the Company for the period ended October 31, 2005, fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: December 14, 2005
/s/ William A. Shumaker |
William A. Shumaker |
President and Chief Executive Officer |
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Kewaunee Scientific Corporation (the Company) for the period ending October 31, 2005, I, D. Michael Parker, Senior Vice President, Finance and Chief Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) | such Form 10-Q of the Company for the period ended October 31, 2005, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in such Form 10-Q of the Company for the period ended October 31, 2005, fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: December 14, 2005
/s/ D. Michael Parker |
D. Michael Parker |
Senior Vice President, Finance and Chief Financial Officer |