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 January 31, 2004
| ¨ | 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.) | |
| 2700 West Front Street Statesville, North Carolina |
28677 | |
| (Address of principal executive offices) | (Zip Code) | |
(704) 873-7202
(Registrant’s 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 ¨
As of March 12, 2004, the Registrant had outstanding 2,488,270 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 JANUARY 31, 2004
| Page Number | ||||||
| PART I. | ||||||
| Item 1. | ||||||
|
Condensed Consolidated Statements of Operations – Three months and nine months ended January 31, 2004 and 2003 |
3 | |||||
| Condensed Consolidated Balance Sheets January 31, 2004 and April 30, 2003 | 4 | |||||
|
Condensed Consolidated Statements of Cash Flows – Nine months ended January 31, 2004 and 2003 |
5 | |||||
| Notes to Condensed Consolidated Financial Statements | 6 | |||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
10 | ||||
| 14 | ||||||
| 15 | ||||||
| Item 3. | 16 | |||||
| Item 4. | 16 | |||||
| PART II. | ||||||
| Item 1. | 17 | |||||
| Item 6. | 17 | |||||
| SIGNATURE | 18 | |||||
2
Kewaunee Scientific Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
| Three months ended January 31 |
Nine months ended January 31 |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| ($ in thousands, except per share data) | ||||||||||||||||
| Net sales |
$ | 21,454 | $ | 16,381 | $ | 70,051 | $ | 55,691 | ||||||||
| Cost of products sold |
17,736 | 12,919 | 58,626 | 45,645 | ||||||||||||
| Gross profit |
3,718 | 3,462 | 11,425 | 10,046 | ||||||||||||
| Operating expenses |
3,206 | 3,361 | 9,528 | 9,621 | ||||||||||||
| Operating earnings |
512 | 101 | 1,897 | 425 | ||||||||||||
| Interest expense |
(71 | ) | (35 | ) | (232 | ) | (117 | ) | ||||||||
| Other income (expense) |
14 | (24 | ) | 163 | 44 | |||||||||||
| Earnings before income taxes |
455 | 42 | 1,828 | 352 | ||||||||||||
| Income tax expense |
164 | — | 658 | 110 | ||||||||||||
| Net earnings |
$ | 291 | $ | 42 | $ | 1,170 | $ | 242 | ||||||||
| Net earnings per share- |
||||||||||||||||
| Basic |
$ | 0.12 | $ | 0.02 | $ | 0.47 | $ | 0.10 | ||||||||
| Diluted |
$ | 0.12 | $ | 0.02 | $ | 0.47 | $ | 0.10 | ||||||||
| Weighted average number of common shares outstanding (in thousands)- |
||||||||||||||||
| Basic |
2,486 | 2,480 | 2,485 | 2,477 | ||||||||||||
| Diluted |
2,499 | 2,487 | 2,493 | 2,486 | ||||||||||||
See accompanying notes to condensed consolidated financial statements.
3
Kewaunee Scientific Corporation
Condensed Consolidated Balance Sheets
(in thousands)
| January 31 2004 |
April 30 2003 |
|||||||
| (Unaudited) | ||||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 1,063 | $ | 520 | ||||
| Receivables, less allowance |
22,657 | 16,138 | ||||||
| Inventories |
4,585 | 5,958 | ||||||
| Deferred income taxes |
103 | 89 | ||||||
| Prepaid income taxes |
366 | 1,499 | ||||||
| Prepaid expenses and other current assets |
749 | 782 | ||||||
| Total current assets |
29,523 | 24,986 | ||||||
| Property, plant and equipment, at cost |
33,236 | 31,926 | ||||||
| Accumulated depreciation |
(21,678 | ) | (20,135 | ) | ||||
| Net property, plant and equipment |
11,558 | 11,791 | ||||||
| Other assets |
6,285 | 6,877 | ||||||
| Total Assets |
$ | 47,366 | $ | 43,654 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Short-term borrowings |
$ | 6,084 | $ | 1,416 | ||||
| Current portion of long-term debt |
1,118 | 681 | ||||||
| Accounts payable |
5,477 | 8,338 | ||||||
| Employee compensation and amounts withheld |
1,007 | 1,203 | ||||||
| Deferred Revenue |
1,738 | 856 | ||||||
| Other accrued expenses |
741 | 834 | ||||||
| Total current liabilities |
16,165 | 13,328 | ||||||
| Long-term debt |
1,211 | 1,249 | ||||||
| Deferred income taxes |
1,151 | 1,150 | ||||||
| Accrued employee benefit plan costs |
1,650 | 1,634 | ||||||
| Other long-term liabilities |
538 | 355 | ||||||
| Total Liabilities |
20,715 | 17,716 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock |
6,550 | 6,550 | ||||||
| Additional paid-in-capital |
134 | 145 | ||||||
| Retained earnings |
20,758 | 20,110 | ||||||
| Accumulated other comprehensive income (loss) |
33 | (9 | ) | |||||
| Common stock in treasury, at cost |
(824 | ) | (858 | ) | ||||
| Total stockholders’ equity |
26,651 | 25,938 | ||||||
| Total Liabilities and Stockholders’ Equity |
$ | 47,366 | $ | 43,654 | ||||
See accompanying notes to condensed consolidated financial statements.
4
Kewaunee Scientific Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands )
| Nine months ended January 31 |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net earnings |
$ | 1,170 | $ | 242 | ||||
| Adjustments to reconcile net earnings to net cash used in operating activities: |
||||||||
| Depreciation |
1,543 | 1,898 | ||||||
| Provision for bad debts |
62 | 223 | ||||||
| Decrease in prepaid income taxes |
1,133 | 180 | ||||||
| Increase in receivables |
(6,581 | ) | (275 | ) | ||||
| Decrease in inventories |
1,373 | 194 | ||||||
| Decrease in accounts payable and other current liabilities |
(3,150 | ) | (2,491 | ) | ||||
| Increase in deferred revenue |
882 | 211 | ||||||
| Other, net |
853 | 234 | ||||||
| Net cash (used in) provided by operating activities |
(2,715 | ) | 416 | |||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
(1,310 | ) | (3,212 | ) | ||||
| Proceeds from sale of fixed assets |
— | 366 | ||||||
| Net cash used in investing activities |
(1,310 | ) | (2,846 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Increase in short-term borrowings |
4,668 | 2,275 | ||||||
| Proceeds from long-term debt |
1,200 | — | ||||||
| Payments on long-term debt |
(801 | ) | (511 | ) | ||||
| Dividends paid |
(522 | ) | (520 | ) | ||||
| Proceeds from exercise of stock options (including tax benefit) |
23 | 50 | ||||||
| Purchase of treasury stock |
— | — | ||||||
| Net cash provided by financing activities |
4,568 | 1,294 | ||||||
| Increase (decrease) in cash and cash equivalents |
543 | (1,136 | ) | |||||
| Cash and cash equivalents, beginning of period |
520 | 1,747 | ||||||
| Cash and cash equivalents, end of period |
$ | 1,063 | $ | 611 | ||||
See accompanying notes to condensed consolidated financial statements.
5
Kewaunee Scientific Corporation
Notes to Condensed Financial Statements
(unaudited)
A. Financial Information
The unaudited interim condensed 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. These interim condensed financial statements should be read in conjunction with the financial statements and notes included in the Company’s 2003 Annual Report to Stockholders.
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates.
In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the interim periods. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.
B. Inventories
Inventories consisted of the following (in thousands):
| Jan. 31, 2004 |
April 30, 2003 | |||||
| Finished products |
$ | 1,906 | $ | 2,402 | ||
| Work in process |
1,178 | 1,812 | ||||
| Raw materials |
1,501 | 1,744 | ||||
| $ | 4,585 | $ | 5,958 | |||
C. Balance Sheet
The Company’s April 30, 2003 condensed consolidated balance sheet as presented herein is derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles.
6
D. Segment Information
The following table shows net sales and earnings (loss) before income taxes by business segment for three months and nine months ended January 31, 2004 and 2003 (in thousands):
| Laboratory Products |
Technical Products |
Corporate |
Total | |||||||||||
| Three months ended January 31, 2004 |
||||||||||||||
| Revenues from external customers |
$ | 20,508 | $ | 946 | ||||||||||