Business Context and Reporting Period
Company: Kewaunee Scientific Corporation
Filing Type: Form 10-K (Annual Report)
Period Ended: April 30, 1995
Business Overview: The Registrant manufactures and sells scientific laboratory and technical workstations, including fume hoods, benches, and sinks, primarily for industrial, educational, and governmental clients. Sales are 100% derived from these products. The business is not considered cyclical or seasonal but relies on long lead times for building construction projects.
Key Financial Metrics
Note: Specific revenue, profit, cash flow, and margin figures are incorporated by reference from the Annual Report to Stockholders and are not explicitly detailed in the provided text.
- Sales Backlog: $24.1 million as of April 30, 1995.
- Research & Development: $527,647 for the fiscal year ended April 30, 1995.
- Allowance for Doubtful Accounts: $624,000 (ending balance); $125,000 charged to costs/expenses during the period.
- Employees: 575 as of April 30, 1995.
- Stockholders: Approximately 1,400 as of July 7, 1995.
- Outstanding Shares: 2,366,717 shares of Common Stock as of July 7, 1995.
- Debt/Liquidity: Land and buildings are pledged as collateral for borrowings and letters of credit under a revolving credit facility. Specific debt amounts are not provided in the text.
Material Changes vs. Prior Period
- Backlog Decline: Sales backlog decreased to $24.1 million in 1995, down from $25.3 million in 1994 and $27.9 million in 1993.
- R&D Increase: Spending on research and development increased to $527,647 in 1995, compared to $490,481 in 1994 and $440,580 in 1993.
- Customer Concentration: Sales to VWR Corporation represented 17% of total sales in 1995, up from 13% in 1994 and 15% in 1993.
- Management Change: Robert M. Cecchini, Vice President-Finance and CFO, elected to retire effective July 31, 1995.
Outlook, Risks, and Contingencies
- Operational Outlook: Management expects the beginning backlog plus current orders to be sufficient for satisfactory operations in the coming year. Over 90% of the backlog scheduled for shipment is expected to be shipped within the fiscal year.
- Key Risks:
- Construction Delays: Orders often require delivery at extended future dates tied to building construction; delays in construction can delay shipments and revenue recognition.
- Cost Volatility: Prices are quoted on a firm basis; the company bears the risk of labor and material cost increases between order receipt and delivery.
- Working Capital: The business requires significant working capital due to extended payment terms and retention amounts on building projects.
- Customer Concentration: Reliance on VWR Corporation for a significant portion of sales (17%).
- Environmental: No material effect on earnings or competitive position from environmental compliance in the last three years; no material capital expenditures anticipated.
Investor Verification Checklist
- Verify the specific revenue, net income, and cash flow figures in the incorporated Annual Report to Stockholders (pages 9-20), as they are not listed in the 10-K text.
- Confirm the details of the revolving credit facility and total outstanding debt secured by the company's land and buildings.
- Review the "Range of Market Prices" and "Quarterly Financial Data" in the Annual Report (page 20) for stock performance trends.
- Assess the impact of the upcoming retirement of the CFO (Robert M. Cecchini) on financial reporting continuity.
- Monitor the status of the $24.1 million backlog, specifically the portion at risk due to customer construction delays.