Business Context and Reporting Period
Company: Kewaunee Scientific Corporation
Filing Type: Form 10-K (Annual Report)
Period Ended: April 30, 2002
Business Overview: The Company designs, manufactures, and installs scientific and technical furniture. Operations are divided into two segments: Laboratory Products (steel/wood furniture, fume hoods for research/healthcare/education) and Technical Products (network storage, workstations for manufacturing/computing).
Employees: 609 as of April 30, 2002.
Key Financial Metrics
Note: Specific revenue, profit, and cash flow figures are incorporated by reference to the Annual Report to Stockholders and are not explicitly detailed in the provided text.
- Backlog: $34.2 million at April 30, 2002 (down from $35.5 million in 2001).
- Research & Development: $618,273 for fiscal year 2002.
- Allowance for Doubtful Accounts: Ended at $597,000 (up from $389,000 in 2001).
- Market Value: Approximately $18.76 million for non-affiliate voting stock (as of July 2, 2002).
- Outstanding Shares: 2,469,996 shares of Common Stock (as of July 5, 2002).
- Debt/Liquidity: The Company has a bank note and lease obligations priced on a floating rate basis. An interest rate swap was entered into to fix the rate on $1.5 million of the bank note principal at 6.37% starting May 1, 2002.
Material Changes and Operational Highlights
- Backlog Trend: Sales order backlog decreased by $1.3 million compared to the prior year. Approximately $32.7 million is scheduled for shipment in fiscal year 2003.
- Customer Concentration: Sales to VWR International represented 12% of total sales in fiscal 2002 (13% in 2001, 11% in 2000).
- Facilities: The Company owns three plants in Statesville, NC, and one in Lockhart, TX. A new 100,000 sq. ft. warehouse in Statesville is expected to be completed in late 2002.
- Legal Contingency: A judgment of approximately $1.3 million was issued against the Company in fiscal 2002 regarding a dispute with Bernards Bros. Inc. The Company recorded a $391,000 charge in fiscal 2001 and intends to appeal the judgment.
Outlook, Risks, and Management Commentary
- Forward-Looking Statements: Management notes that actual results may differ due to economic, competitive, and technological factors. The Company expects over 90% of the current backlog to be shipped in fiscal 2003, though delays due to customer construction schedules are anticipated.
- Market Risk: Exposure to interest rate fluctuations exists due to floating-rate debt. Management believes this exposure is not material, particularly following the interest rate swap agreement.
- Legal Risk: The Company is actively appealing the $1.3 million judgment from the Bernards Bros. dispute. If unsuccessful, the Company could be liable for the full amount.
- Seasonality: Sales are sometimes lower in the third quarter due to slower construction activity in winter months.
Investor Verification Checklist
- Verify the final outcome of the appeal regarding the $1.3 million Bernards Bros. judgment.
- Review the full "Selected Financial Data" and "Management's Discussion and Analysis" in the Annual Report to Stockholders for specific revenue and net income figures not included in this text.
- Monitor the completion and impact of the new 100,000 sq. ft. warehouse facility in Statesville.
- Assess the impact of the 12% sales concentration with VWR International on future revenue stability.
- Confirm the execution of the interest rate swap and its effect on future interest expense.