LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity have historically been funds generated from operating activities, supplemented as needed by borrowings under our revolving credit facility. Additionally, certain machinery and equipment are financed by non-cancelable operating leases. We believe that these sources of funds will be sufficient to support ongoing business requirements, including capital expenditures, through fiscal year 2020.
At April 30, 2019, we had advances of $9.5 million and standby letters of credit aggregating $5.2 million outstanding under our unsecured $20 million revolving credit facility. On June 19, 2019 we entered into a Security Agreement pursuant to which we granted a security interest in substantially all of our assets to secure our obligations under the credit facility. See Note 4 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report for additional information concerning our credit facility. We did not have any off balance sheet arrangements at April 30, 2019.
The following table summarizes the cash payment obligations for our lease arrangements and long-term debt as of April 30, 2019:
PAYMENTS DUE BY PERIOD
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual Cash Obligations
|
Total
|
|
1 Year
|
|
2-3 Years
|
|
4-5 Years
|
|
After 5 years
|
Operating Leases
|
$
|
5,565
|
|
|
$
|
1,246
|
|
|
$
|
1,602
|
|
|
$
|
981
|
|
|
$
|
1,736
|
|
Long-term Debt and Capital Lease Obligations
|
1,413
|
|
|
1,185
|
|
|
138
|
|
|
50
|
|
|
40
|
|
Total Contractual Cash Obligations
|
$
|
6,978
|
|
|
$
|
2,431
|
|
|
$
|
1,740
|
|
|
$
|
1,031
|
|
|
$
|
1,776
|
|
Operating activities provided cash of $2,490,000 in fiscal year 2019, primarily from operating earnings, and a decrease in inventories, partially offset by increases in receivables, and decreases in deferred revenue. Operating activities provided cash of $3,183,000 in fiscal year 2018, primarily from operating earnings, and an increase in accounts payable and other accrued expenses, partially offset by increases in receivables, inventories, and deferred revenue.
The Company’s financing activities provided cash of $2,334,000 during fiscal year 2019 as a result of an increase in short-term borrowings of $5,628,000, which was partially utilized for cash dividends of $2,030,000 paid to stockholders, cash dividends of $51,000 paid to minority interest holders and repayment of long-term debt of $1,177,000. The Company’s financing activities used cash of $2,484,000 during fiscal year 2018 for cash dividends of $1,794,000 paid to stockholders, cash dividends of $74,000 paid to minority interest holders, and repayment of long-term debt of $918,000, partially offset by an increase in short-term borrowings of $294,000. See Note 4 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report for additional information concerning our credit facility.
The majority of the April 30, 2019 accounts receivable balances are expected to be collected during the first quarter of fiscal year 2020, with the exception of retention amounts on fixed-price contracts which are collected when the entire construction project is completed and all retention funds are paid by the owner.
As discussed above, no further benefits have been, or will be, earned under our pension plans after April 30, 2005, and no additional participants have been, or will be, added to the plans. We do not expect to make any contributions to the plans in fiscal year 2020. We made contributions of $1,000,000 and $600,000 to the plans in fiscal years 2019 and 2018, respectively.
Capital expenditures were $4.2 million and $3.4 million in fiscal years 2019 and 2018, respectively. Capital expenditures in fiscal year 2019 were funded primarily from operations. Fiscal year 2020 capital expenditures are anticipated to be approximately $2.5 million, with the majority of these expenditures for manufacturing equipment and facilities improvements. The fiscal year 2020 expenditures are expected to be funded primarily by operating activities, supplemented as needed by borrowings under our revolving credit facility.
Working capital was $32.6 million at April 30, 2019, down from $36.8 million at April 30, 2018, and the ratio of current assets to current liabilities was 2.0-to-1.0 at April 30, 2019 and 2.3-to-1.0 at April 30, 2018. The decrease in working capital for fiscal year 2019 was primarily due to the increase in current liabilities related to the outstanding line of credit at year end along with the decrease in inventories, partially offset by an increase in cash and receivables.
We paid cash dividends of $0.74 per share in fiscal year 2019. We paid cash dividends of $0.66 per share in fiscal year 2018. We expect to pay a dividend in the future in line with our actual and anticipated future operating results. The declaration and payment of future dividends under the quarterly dividend policy will be at the discretion of the Board of Directors and will depend upon many factors, including the Company’s earnings, capital requirements, financial conditions, the terms of the Company’s indebtedness and other factors that the Board of Directors may deem to be relevant.
RECENT ACCOUNTING STANDARDS
New Accounting Standards
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). This update outlined a new comprehensive revenue recognition model that
supersedes most prior revenue recognition guidance and required companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflected the consideration to which the entity expected to be entitled in exchange for those goods or services. The Company adopted this standard effective May 1, 2019. See Note 2 of the Notes to Consolidated Financial Statements included in Item 8 for a discussion of the impact of the adoption of this standard.
In July 2015, the FASB issued ASU 2015-11, “Inventory—Simplifying the Measurement of Inventory.” This guidance changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. Net realizable value is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company adopted this standard effective May 1, 2017. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.
In February 2016, the FASB issued ASU 2016-02, “Leases.” This guidance establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company will adopt this standard in fiscal year 2020. Based on the Company's assessment to date, the Company expects that the adoption of ASU 2016-02 will result in the recognition of right-to-use assets and corresponding lease liabilities with a material impact on the Company's consolidated financial position and an immaterial impact on the Company's consolidated results of operations and cash flows.
In March 2016, the FASB issued ASU 2016-09, “Stock Compensation—Improvements to Employee Share-Based Payment Accounting.” This guidance simplifies various aspects related to how share-based payments are accounted for and presented in the financial statements. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company adopted this standard effective May 1, 2017. Prior periods were not retrospectively adjusted. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.
In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” which replaces the current incurred loss method used for determining credit losses on financial assets, including trade receivables, with an expected credit loss method. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company will adopt this standard in fiscal year 2021. The Company does not expect the adoption of this standard to have a significant impact on the Company’s consolidated financial position or results of operations.
In August 2016, the FASB issued ASU 2016-15, “Cash Flow Classification of Certain Cash Receipts and Cash Payments,” which clarifies guidance on classification of certain transactions in the statement of cash flows, including classification of debt prepayments, debt extinguishment costs and contingent consideration payments after a business combination. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company adopted this standard effective May 1, 2018. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.
In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows—Restricted Cash,” which requires that the statement of cash flows reconcile the change during the period in total cash, cash equivalents and restricted cash. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company adopted this standard effective May 1, 2018. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.
In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company will adopt this standard in fiscal year 2021. The Company does not expect the adoption of this standard to have any impact on the Company’s consolidated financial position or results of operations.
In March 2017, the FASB issued ASU 2017-07, “Compensation—Retirement Benefits—Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires that the service cost component of net periodic pension cost is presented in the same line as other compensation costs arising from services rendered by the respective employees during the year. The other components of net periodic pension cost are required to be presented in the income statement separately from the service cost component and outside of earnings from operations. This guidance allows for the service cost component to be eligible for capitalization when applicable. This guidance is effective for fiscal years, and interim
periods within those years, beginning after December 15, 2017. The Company adopted this standard effective May 1, 2018 using the full retrospective approach. The Company reclassified $694,000 of non-service components of net benefits cost to other (income)/expense, net from operating expenses on the Consolidated Statements of Operations. During 2019, the Company recorded $295,000 of non-service components of net benefits cost to other (income)/expense, net.
In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation—Scope of Modification Accounting.” This guidance was issued in an effort to reduce diversity in practice as it relates to applying modification accounting for changes to the terms and conditions of share-based payment awards. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The Company adopted this standard effective May 1, 2018. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.
In February 2018, the FASB issued ASU 2018-2, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This guidance provides the Company with an option to reclassify stranded tax effects resulting from the 2017 Tax Act from accumulated other comprehensive income to retained earnings. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company will adopt this standard in fiscal year 2020. The Company does not expect the adoption of this standard to have a significant impact on the Company’s consolidated financial position or results of operations.
OUTLOOK
Financial Outlook
The Company’s ability to predict future demand for its products continues to be limited given its role as subcontractor or supplier to dealers for subcontractors. Demand for the Company’s products is also dependent upon the number of laboratory construction projects planned and/or current progress in projects already under construction. The Company’s earnings are also impacted by fluctuations in prevailing pricing for projects in the laboratory construction marketplace and increased costs of raw materials, including stainless steel, wood, and epoxy resin, and whether the Company is able to increase product prices to customers in amounts that correspond to such increases without materially and adversely affecting sales. Additionally, since prices are normally quoted on a firm basis in the industry, the Company bears the burden of possible increases in labor and material costs between the quotation of an order and delivery of a product. Looking forward, the Company is optimistic in its ability to secure the volumes necessary to return to profitability, and that fiscal year 2020 will result in sales and earnings growth.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rates
We are exposed to market risk in the area of interest rates. This exposure is associated with advances outstanding under our bank line of credit and certain lease obligations for production machinery, all of which are priced on a floating rate basis. Advances outstanding under the bank line of credit were $9.5 million at April 30, 2019. In May 2013, the Company entered into an interest rate swap agreement whereby the interest rate payable by the Company on $3,450,000 of outstanding long-term debt was effectively converted to a fixed interest rate of 4.875% for the period beginning May 1, 2013 and ending August 1, 2017. In May 2013, the Company entered into an interest rate swap agreement whereby the interest rate payable by the Company on $2,600,000 of outstanding long-term debt was effectively converted to a fixed interest rate of 4.37% for the period beginning August 1, 2017 and ending May 1, 2020. In May 2013, the Company entered into an interest rate swap agreement whereby the interest rate payable by the Company on $1,218,000 of outstanding long-term debt was effectively converted to a fixed interest rate of 3.07% for the period beginning November 3, 2014 and ending May 1, 2020. We believe that our current exposure to interest rate market risk is not material. As a result of the swaps described above, at April 30, 2019 we had a total of $9.5 million of outstanding debt bearing interest at floating rates.
Foreign Currency Exchange Rates
Our results of operations could be affected by factors such as changes in foreign currency rates or weak economic conditions in foreign markets. We derive net sales in U.S. dollars and other currencies including Indian rupees, Chinese renminbi, Singapore dollars, or other currencies. For fiscal 2019, 20% of net sales were derived in currencies other than U.S. dollars. We incur expenses in currencies other than U.S. dollars relating to specific contracts with customers and for our operations outside the U.S.
Over the long term, net sales to international markets are expected to increase as a percentage of total net sales and, consequently, a greater portion of our business could be denominated in foreign currencies. As a result, operating results may become more subject to fluctuations based upon changes in the exchange rates of certain currencies in relation to the U.S. dollar. To the extent we engage in international sales denominated in U.S. dollars, an increase in the value of the U.S. dollar relative to foreign currencies could make
our products less competitive in international markets. This effect is also impacted by sources of raw materials from international sources and costs of our sales, service, and manufacturing locations outside the U.S.
We have foreign currency cash accounts to operate our global business. These accounts are impacted by changes in foreign currency rates. Cash balances at April 30, 2019 of $11.1 million were held by our foreign subsidiaries and denominated in currencies other than U.S. dollars.
Item 8. Financial Statements and Supplementary Data
|
|
|
|
Page
|
Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1—Summary of Significant Accounting Policies
Kewaunee Scientific Corporation and subsidiaries (collectively the “Company”) design, manufacture, and install laboratory, healthcare, and technical furniture products. The Company’s products include steel, wood, and laminate furniture, fume hoods, biological safety cabinets, laminare flow and ductless fume hoods, adaptable modular and column systems, movable workstations and carts, epoxy resin worksurfaces, sinks and accessories and related design services. The Company’s sales are made through purchase orders and contracts submitted by customers, dealers and agents, a national stocking distributor, and competitive bids submitted by the Company and its subsidiaries located in Singapore, India, and China. The majority of the Company’s products are sold to customers located in North America, primarily within the United States. The Company’s laboratory products are used in chemistry, physics, biology and other general science laboratories in the pharmaceutical, biotechnology, industrial, chemical, commercial, educational, government and health care markets. Technical products are used in facilities manufacturing computers and light electronics and by users of computer and networking furniture. Laminate casework is used in educational, healthcare and industrial applications.
Principles of Consolidation
The Company’s consolidated financial statements include the accounts of Kewaunee Scientific Corporation and its international subsidiaries. A brief description of each subsidiary, along with the amount of the Company’s controlling financial interests, as of April 30, 2019 is as follows: (1) Kewaunee Labway Asia Pte. Ltd., a commercial sales organization for the Company’s products in Singapore, is
100%
owned by the Company; (2) Kewaunee Scientific Corporation Singapore Pte. Ltd., a holding company in Singapore, is
100%
owned by the Company; (3) Kewaunee Labway India Pvt. Ltd., a manufacturing, assembly and commercial sales operation for the Company’s products in Bangalore, India, is
95%
owned by the Company; (4) Koncepo Scientech International Pvt. Ltd., a laboratory design and strategic advisory and construction management services firm, located in Bangalore, India, is
80%
owned by the Company; and (5) Kewaunee Scientific (Suzhou) Co., Ltd., a commercial sales organization for the Company’s products in China, is
100%
owned by the Company. In fiscal year 2019, Kewaunee Scientific Corporation India Pvt. Ltd. merged into Kewaunee Labway India, Pvt. Ltd. resulting in a single subsidiary. There was no impact to the Company's weighted ownership of both subsidiaries. All intercompany balances, transactions, and profits have been eliminated. Included in the consolidated financial statements are net assets of $
17,887,000
and
$15,762,000
at
April 30, 2019
and
2018
, respectively, of the Company’s subsidiaries. Net sales by the Company’s subsidiaries in the amounts of
$29,964,000
and
$43,456,000
were included in the consolidated statements of operations for fiscal years
2019
and
2018
, respectively.
Change in Accounting Principle
During the second quarter of 2019, the Company changed its method of accounting for its Domestic segment’s inventory from the last-in, first-out (LIFO) method to the first-in, first out (FIFO) method. All prior periods presented have been retrospectively adjusted to apply the new method of accounting. See Note 3 for more information on the change in inventory accounting method.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less. During the years ended
April 30, 2019
and
2018
, the Company had cash deposits in excess of FDIC insured limits. The Company has not experienced any losses from such deposits.
Restricted Cash
Restricted cash includes bank deposits of subsidiaries used for performance guarantees against customer orders.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are stated at the amount owed by the customer, net of allowances for estimated doubtful accounts. The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where management is aware of a customer’s inability to meet its financial obligations to the Company, or a project dispute makes it unlikely that all of the receivable owed by a customer will be collected, a specific reserve for bad debts is estimated and recorded to reduce the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, a general reserve for bad debts is estimated and recorded based on past loss history and an overall assessment of past due trade accounts receivable amounts outstanding. Accounts are written off when it is clearly established that the receivable is a bad debt. Recoveries of receivables previously written off are recorded when received. The activity in the allowance for doubtful accounts for each of the years ended
April 30
was:
|
|
|
|
|
|
|
|
|
|
$ in thousands
|
|
2019
|
|
2018
|
Balance at beginning of year
|
|
$
|
384
|
|
|
$
|
191
|
|
Bad debt provision
|
|
65
|
|
|
344
|
|
Doubtful accounts written off (net)
|
|
(88
|
)
|
|
(151
|
)
|
Balance at end of year
|
|
$
|
361
|
|
|
$
|
384
|
|
Unbilled Receivables
Accounts receivable included unbilled receivables that represent amounts earned which have not yet been billed in accordance with contractually stated billing terms. The amount of unbilled receivables at
April 30, 2019
and
2018
was
$4,589,000
and
$1,007,000
, respectively.
Inventories
The Company elected to change the method of accounting for the inventory of its Domestic segment from the last-in, first-out ("LIFO") method to the first-in, first out ("FIFO") method. Inventories at the Company's international subsidiaries had previously been and continue to be measured on the FIFO method. See Note 3 for additional information.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation. 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. Property, plant and equipment consisted of the following at
April 30
:
|
|
|
|
|
|
|
|
|
|
|
|
$ in thousands
|
|
2019
|
|
2018
|
|
Useful Life
|
Land
|
|
$
|
41
|
|
|
$
|
41
|
|
|
N/A
|
Building and improvements
|
|
16,594
|
|
|
16,489
|
|
|
10-40 years
|
Machinery and equipment
|
|
40,041
|
|
|
38,118
|
|
|
5-10 years
|
Total
|
|
56,676
|
|
|
54,648
|
|
|
|
Less accumulated depreciation
|
|
(40,214
|
)
|
|
(39,987
|
)
|
|
|
Net property, plant and equipment
|
|
$
|
16,462
|
|
|
$
|
14,661
|
|
|
|
Management reviews the carrying value of property, plant and equipment for impairment whenever changes in circumstances or events indicate that such carrying value may not be recoverable. If projected undiscounted cash flows are not sufficient to recover the carrying value of the potentially impaired asset, the carrying value is reduced to estimated fair value. There were
no
impairments in fiscal years
2019
or
2018
.
Other Assets
Other assets at
April 30, 2019
and
2018
included
$3,057,000
and
$4,050,000
, respectively, of assets held in a trust account for non-qualified benefit plans and
$76,000
and
$65,000
, respectively, of cash surrender values of life insurance policies. Life insurance policies are recorded at the amount that could be realized under the insurance contract as of the date of the Company’s consolidated balance sheets with the change in cash surrender or contract value being recorded as income or expense during each period.
Use of Estimates
The presentation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates. Significant estimates impacting the accompanying consolidated financial statements include the allowance for uncollectible accounts receivable, inventory valuation, self-insurance reserves, and pension liabilities.
Fair Value of Financial Instruments
A financial instrument is defined as cash equivalents, evidence of an ownership interest in an entity, or a contract that creates a contractual obligation or right to deliver or receive cash or another financial instrument from another party. The Company’s financial instruments consist primarily of cash and equivalents, mutual funds, cash surrender value of life insurance policies, term loans and short-term borrowings. The carrying value of these assets and liabilities approximate their fair value.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Expanded disclosures about instruments measured at fair value require the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy is based on
three
levels of inputs, of which the first
two
are considered observable and the last unobservable, that may be used to measure fair value as follows:
|
|
Level 1
|
Quoted prices in active markets for identical assets or liabilities as of the reporting date.
|
|
|
Level 2
|
Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities as of the reporting date.
|
|
|
Level 3
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
The following tables summarize the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring and nonrecurring basis as of
April 30, 2019
and
2018
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Financial Assets
|
|
|
|
|
|
|
|
Trading securities held in non-qualified compensation plans
(1)
|
$
|
3,057
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,057
|
|
Cash surrender value of life insurance policies
(1)
|
—
|
|
|
76
|
|
|
—
|
|
|
76
|
|
Total
|
$
|
3,057
|
|
|
$
|
76
|
|
|
$
|
—
|
|
|
$
|
3,133
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
Non-qualified compensation plans
(2)
|
$
|
—
|
|
|
$
|
3,519
|
|
|
$
|
—
|
|
|
$
|
3,519
|
|
Interest rate swap derivatives
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Total
|
$
|
—
|
|
|
$
|
3,520
|
|
|
$
|
—
|
|
|
$
|
3,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Financial Assets
|
|
|
|
|
|
|
|
Trading securities held in non-qualified compensation plans
(1)
|
$
|
4,050
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,050
|
|
Cash surrender value of life insurance policies
(1)
|
—
|
|
|
65
|
|
|
—
|
|
|
65
|
|
Total
|
$
|
4,050
|
|
|
$
|
65
|
|
|
$
|
—
|
|
|
$
|
4,115
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
Non-qualified compensation plans
(2)
|
$
|
—
|
|
|
$
|
4,462
|
|
|
$
|
—
|
|
|
$
|
4,462
|
|
Interest rate swap derivatives
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
Total
|
$
|
—
|
|
|
$
|
4,467
|
|
|
$
|
—
|
|
|
$
|
4,467
|
|
|
|
(1)
|
The Company maintains
two
non-qualified compensation plans which include investment assets in a rabbi trust. These assets consist of marketable securities, which are valued using quoted market prices multiplied by the number of shares owned, and life insurance policies, which are valued at their cash surrender value.
|
|
|
(2)
|
Plan liabilities are equal to the individual participants’ account balances and other earned retirement benefits.
|
Revenue Recognition
Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products. The Company recognizes revenue when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. The majority of the Company’s revenues are recognized over time as the customer receives control as the Company performs work under a contract. However, a portion of the Company’s revenues are recognized at a point-in-time as control is transferred at a distinct point in time per the terms of a contract. Sales taxes that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. Certain customers' cash discounts and volume rebates are offered as sales incentives. The discounts and volume rebates are recorded as a reduction in sales at the time revenue is recognized in an amount estimated based on historical experience and contractual obligations.
Deferred revenue consists of customer deposits and advance billings of the Company’s products where sales have not yet been recognized. Accounts receivable includes retainage in the amounts of
$1,810,000
and
$2,724,000
at
April 30, 2019
and
2018
, respectively. Shipping and handling costs are included in cost of product sales. Because of the nature and quality of the Company’s products, any warranty issues are determined in a relatively short period after the sale and are infrequent in nature, and as such, warranty costs are immaterial to the Company’s consolidated financial position and results of operations and are expensed as incurred.
Credit Concentration
The Company performs credit evaluations of its customers. Revenues from
three
of the Company’s domestic dealers represented in the aggregate approximately
34%
and
33%
of the Company’s sales in fiscal years
2019
and
2018
, respectively. Accounts receivable for
two
domestic customers represented approximately
30%
and
31%
of the Company’s total accounts receivable as of
April 30, 2019
and
2018
, respectively.
Insurance
The Company maintains a self-insured health-care program. The Company accrues estimated losses for claims incurred but not reported (“IBNR”) using actuarial models and assumptions based on historical loss experience. The Company has also purchased specific stop-loss insurance to limit claims above a certain amount. The Company adjusts insurance reserves, as needed, in the event that future loss experience differs from historical loss patterns.
Income Taxes
In accordance with ASC 740, “Income Taxes,” the Company uses the liability method in measuring the provision for income taxes and recognizing deferred tax assets and liabilities on the consolidated balance sheets. Provision has not been made for income taxes on unremitted earnings of foreign subsidiaries as these earnings are deemed to be permanently reinvested. ASC 740 clarifies the financial statement recognition threshold and measurement attribute of a tax position taken or expected to be taken in a tax return. Under ASC 740, the Company applies a more-likely-than-not recognition threshold for all tax uncertainties. ASC 740 only allows the recognition of those tax benefits that have a greater than 50% likelihood of being sustained upon examination by the taxing authorities. The Company did not have any significant uncertain tax positions at
April 30, 2019
and
2018
.
Research and Development Costs
Research and development costs are charged to cost of products sold in the periods incurred. Expenditures for research and development costs were
$1,550,000
and
$1,537,000
for the fiscal years ended
April 30, 2019
and
2018
, respectively.
Advertising Costs
Advertising costs are expensed as incurred, and include trade shows, training materials, sales, samples, and other related expenses. Advertising costs for the years ended
April 30, 2019
and
2018
were
$268,000
and
$395,000
, respectively.
Derivative Financial Instruments
The Company records derivatives on the consolidated balance sheets at fair value and establishes criteria for designation and effectiveness of hedging relationships. The nature of the Company’s business activities involves the management of various financial and market risks, including those related to changes in interest rates. The Company does not enter into derivative instruments for speculative purposes. In May 2013, the Company entered into an interest rate swap agreement whereby the interest rate payable by the Company on
$3,450,000
of outstanding long-term debt was effectively converted to a fixed interest rate of
4.875%
for the period beginning
May 1, 2013
and ending
August 1, 2017
. In May 2013, the Company entered into an interest rate swap agreement whereby the interest rate payable by the Company on
$2,600,000
of outstanding long-term debt was effectively converted to a fixed interest rate of
4.37%
for the period beginning
August 1, 2017
and ending
May 1, 2020
. In May 2013, the Company entered into an interest rate swap agreement whereby the interest rate payable by the Company on
$1,218,000
of outstanding long-term debt was effectively converted to a fixed interest rate of
3.07%
for the period beginning
November 3, 2014
and ending
May 1, 2020
. The Company entered into these interest rate swap arrangements to mitigate future interest rate risk associated with its long-term debt and has designated these as cash flow hedges. (See Note 4)
Foreign Currency Translation
The financial statements of subsidiaries located in India and China, and of Kewaunee Scientific Corporation Singapore Pte. Ltd., are measured using the local currency as the functional currency. Kewaunee Labway Asia Pte. Ltd. is measured using the U.S. dollar as its functional currency. Assets and liabilities of the Company’s foreign subsidiaries using local currencies are translated into United States dollars at fiscal year-end exchange rates. Sales, expenses, and cash flows are translated at weighted average exchange rates for each period. Net translation gains or losses are included in other comprehensive income, a separate component of stockholders’ equity. The Company does not provide for U.S. income taxes on foreign currency translation adjustments, since it does not provide for taxes on undistributed earnings of foreign subsidiaries. Gains and losses from foreign currency transactions of these subsidiaries are included in operating expenses.
Earnings Per Share
Basic earnings per share is based on the weighted average number of common shares outstanding during the year. Diluted earnings per share reflects the assumed exercise of outstanding options and the conversion of restricted stock units (“RSUs”) under the Company’s various stock compensation plans, except when RSUs and options have an antidilutive effect. There were
31,015
antidilutive RSUs and options outstanding at
April 30, 2019
. There were
no
antidilutive RSUs or options outstanding at April 30, 2018.
The following is a reconciliation of basic to diluted weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
Shares in thousands
|
|
2019
|
|
2018
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
Basic
|
|
2,742
|
|
|
2,720
|
|
|
Dilutive effect of stock options and RSUs
|
|
52
|
|
|
57
|
|
|
Weighted average common shares outstanding—diluted
|
|
2,794
|
|
|
2,777
|
|
|
Accounting for Stock Options and Other Equity Awards
Compensation costs related to stock options and other stock awards granted by the Company are charged against operating expenses during their vesting period, under ASC 718, “Compensation—Stock Compensation”. The Company granted
19,738
RSUs under the 2017 Omnibus Incentive Plan in fiscal year
2019
and
23,907
RSUs in fiscal 2018. There were
no
stock options granted during fiscal years 2019 and 2018. (See Note 6)
Reclassifications
In connection with the Company's adoption of ASU 2016-18, “Statement of Cash Flows-Restricted Cash,” the Company reclassified certain 2018 amounts in the consolidated statements of cash flows to include restricted cash when
reconciling the beginning-of-period and end-of-period cash amounts shown on the statement of cash flows to conform to the current period presentation. Such reclassifications had no impact on net earnings.
New Accounting Standards
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-9, “Revenue from Contracts with Customers” (“ASU 2014-09”). This update outlined a new comprehensive revenue recognition model that supersedes prior revenue recognition guidance and required companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflected the consideration to which the entity expected to be entitled in exchange for those goods or services. The Company adopted this standard effective May 1, 2018. See Note 2 for a discussion of the impact of the adoption of this standard.
In July 2015, the FASB issued ASU 2015-11, “Inventory—Simplifying the Measurement of Inventory.” This guidance changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. Net realizable value is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company adopted this standard effective May 1, 2017. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.
In February 2016, the FASB issued ASU 2016-2, “Leases.” This guidance establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company will adopt this standard in fiscal year 2020. Based on the Company's assessment to date, the Company expects that the adoption of ASU 2016-02 will result in the recognition of right-to-use assets and corresponding lease liabilities with a material impact on the Company's consolidated financial position and an immaterial impact on the Company's consolidated results of operations and cash flows.
In March 2016, the FASB issued ASU 2016-9, “Stock Compensation—Improvements to Employee Share-Based Payment Accounting.” This guidance simplifies various aspects related to how share-based payments are accounted for and presented in the financial statements. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company adopted this standard effective May 1, 2017. Prior periods were not retrospectively adjusted. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.
In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” which replaces the current incurred loss method used for determining credit losses on financial assets, including trade receivables, with an expected credit loss method. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company will adopt this standard in fiscal year 2021. The Company does not expect the adoption of this standard to have a significant impact on the Company’s consolidated financial position or results of operations.
In August 2016, the FASB issued ASU 2016-15, “Cash Flow Classification of Certain Cash Receipts and Cash Payments,” which clarifies guidance on classification of certain transactions in the statement of cash flows, including classification of debt prepayments, debt extinguishment costs and contingent consideration payments after a business combination. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company adopted this standard effective May 1, 2018. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.
In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows—Restricted Cash,” which requires that the statement of cash flows reconcile the change during the period in total cash, cash equivalents and restricted cash. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company adopted this standard effective May 1, 2018. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.
In January 2017, the FASB issued ASU 2017-4, “Simplifying the Test for Goodwill Impairment,” which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company will adopt this standard in fiscal year 2021. The Company does not expect the adoption of this standard to have any impact on the Company’s consolidated financial position or results of operations.
In March 2017, the FASB issued ASU 2017-7, “Compensation—Retirement Benefits—Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires that the service cost component of net periodic pension cost is presented in the same line as other compensation costs arising from services rendered by the respective employees during the year. The other components of net periodic pension cost are required to be presented in the income statement separately from the service cost component and outside of earnings from operations. This guidance allows for the service cost component to be eligible for capitalization when applicable. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company adopted this standard effective May 1, 2018 using the full retrospective approach. The Company reclassified
$694,000
of non-service components of net benefits cost to Other (Income)/expense, net from operating expenses on the Consolidated Statements of Operations. During 2019, the Company recorded
$295,000
of non-service components of net benefits cost to other (income)/expense, net.
In May 2017, the FASB issued ASU 2017-9, “Compensation—Stock Compensation—Scope of Modification Accounting.” This guidance was issued in an effort to reduce diversity in practice as it relates to applying modification accounting for changes to the terms and conditions of share-based payment awards. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The Company adopted this standard effective May 1, 2018. The adoption of this standard did not have a significant impact on the Company’s financial position or results of operations.
In February 2018, the FASB issued ASU 2018-2, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This guidance provides the Company with an option to reclassify stranded tax effects resulting from the 2017 Tax Act from accumulated other comprehensive income to retained earnings. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company will adopt this standard in fiscal year 2020. The Company does not expect the adoption of this standard to have a significant impact on the Company’s consolidated financial position or results of operations.
Note 2 - Revenue Recognition
The Company recognizes revenue when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. The majority of the Company’s revenues are recognized over time as the customer receives control as the Company performs work under a contract. However, a portion of the Company’s revenues are recognized at a point-in-time as control is transferred at a distinct point in time per the terms of a contract.
Performance Obligations
A performance obligation is a distinct good or service or bundle of goods and services that is distinct or a series of distinct goods or services that are substantially the same and have the same pattern of transfer. The Company identifies performance obligations at the inception of a contract and allocates the transaction price to individual performance obligations to reasonably reflect the Company’s performance in transferring control of the promised goods or services to the customer. The Company has elected to treat shipping and handling as a fulfillment activity instead of a separate performance obligation.
The following are the primary performance obligations identified by the Company:
Laboratory Furniture
The Company principally generates revenue from the manufacture of custom laboratory, healthcare, and technical furniture and infrastructure products (herein referred to as “laboratory furniture”). The Company’s products include steel, wood, and laminate furniture, fume hoods, biological safety cabinets, laminar flow and ductless hoods, adaptable modular and column systems, moveable workstations and carts, epoxy resin worksurfaces, sinks, and accessories and related design services. Customers can benefit from each piece of laboratory furniture on its own or with resources readily available in the market place such as separately purchased installation services. Each piece of laboratory furniture does not significantly modify or customize other laboratory furniture, and the pieces of laboratory furniture are not highly interdependent or interrelated with each other. The Company can, and frequently does, break portions of contracts into separate “runs” to meet manufacturing and construction schedules. As such, each piece of laboratory furniture is considered a separate and distinct performance obligation. The majority of the Company’s products are customized to meet the specific architectural design and performance requirements of laboratory planners and end users. The finished laboratory furniture has no alternative use to the Company and the Company has an enforceable right to payment for performance completed to date. As such, revenue from the sales of customized laboratory furniture is recognized over time once the customization process has begun, using the units-of-production output method to measure progress towards completion. There is not a material amount of work-in-process for which the customization process
has begun at the end of a reporting period. The Company believes this output method most reasonably reflects the Company’s performance because it directly measures the value of the goods transferred to the customer. For standardized products sold by the Company, revenue is recognized when control transfers, which is typically freight on board (“FOB”) shipping point.
Warranties
All orders contain a standard warranty that warrants that the product is free from defects in workmanship and materials under normal use and conditions for a limited period of time. Due to the nature and quality of the Company’s products, any warranty issues have historically been determined in a relatively short period after the sale, have been infrequent in nature, and have been immaterial to the Company’s financial position and results of operations. The Company’s standard warranties are not considered a separate and distinct performance obligation as the Company does not provide a service to customers beyond assurance that the covered product is free of initial defects. Costs of providing these short term assurance warranties are immaterial and, accordingly, are expensed as incurred. Extended separately priced warranties are available which can last up to five years. Extended warranties are considered separate performance obligations as they are individually priced options providing assurances that the products are free of defects.
Installation Services
The Company sometimes performs installation services for customers. The scope of installation services primarily relates to setting up and ensuring the proper functioning of the laboratory furniture. In certain markets, the Company may provide a broader range of installation services involving the design and installation of the laboratory’s mechanical services. Installation services can be, and often are, performed by third parties and thus may be distinct from the Company’s products. Installation services create or enhance assets that the customer controls as the installation services are provided. As such, revenue from installation services is recognized over time, as the installation services are performed using the cost input method, as there is a direct relationship between the Company’s inputs and the transfer of control by means of the performance of installation services to the customer.
Custodial Services
It is common in the laboratory and healthcare furniture industries for customers to request delivery at specific future dates, as products are often to be installed in buildings yet to be constructed. Frequently, customers will request the manufacture of these products prior to the customer’s ability or readiness to receive the product due to various reasons such as changes to or delays in the construction of the building. As such, from time to time our customers require us to provide custodial services for their laboratory furniture. Custodial services are frequently provided by third parties and do not significantly alter the other goods or services covered by the contract and as such are considered a separate and distinct performance obligation. Custodial services are simultaneously received and consumed by the customer and as such revenue from custodial services is recognized over time using a straight-line time-based measure of progress towards completion, because the Company’s services are provided evenly throughout the performance period.
Payment Terms and Transaction Prices
The Company's contracts with customers are fixed-price and do not contain variable consideration or a general right of return or refund. The Company's contracts with customers contain terms typical for our industry, including withholding a portion of the transaction price until after the goods or services have been transferred to the customer (i.e. “retainage”). The Company does not recognize this as a significant financing component because the primary purpose of retainage is to provide the customer with assurance that the Company will perform its obligations under the contract, rather than to provide financing to the customer.
Allocation of Transaction Price
The Company's contracts with customers may cover multiple goods and services, such as differing types of laboratory furniture and installation services. For these arrangements, each good or service is evaluated to determine whether it represents a distinct performance obligation. The total transaction price is then allocated to the distinct performance obligations based on their relative standalone selling price at the inception of the arrangement. If available, the Company utilizes observable prices for goods or services sold separately to similar customers in similar circumstances to determine its relative standalone selling price. Otherwise, list prices are used if they are determined to be representative of standalone selling prices. If neither of these methods are available at contract inception, such as when the Company does not sell the product or service separately, judgment may be required and the Company determines the standalone selling price using one, or a combination of, the adjusted market assessment or expected cost-plus margin approaches.
Practical Expedients Used
Accounting Standards Codification 606 - Revenue from Contracts with Customers ("ASC 606") permits the use of practical expedients under certain conditions. The Company has elected the following practical expedients allowed under ASC 606:
|
|
•
|
Under the modified retrospective approach, the Company elected to reassess revenue recognition under ASC 606 for only those contracts open as of the adoption date.
|
|
|
•
|
The portfolio approach was applied in evaluating the accounting for the cost of obtaining a contract.
|
|
|
•
|
Payment terms with the Company's customers which are one year or less are not considered a significant financing component.
|
|
|
•
|
The Company excludes from revenues taxes it collects from customers that are assessed by a government authority. This is primarily relevant to domestic sales but also includes taxes on some international sales which are also excluded from the transaction price.
|
|
|
•
|
The Company's incremental cost to obtain a contract is limited to sales commissions. The Company applies the practical expedient to expense commissions as incurred for contracts having a duration of one year or less. Sales commissions related to contracts with a duration of greater than one year are immaterial to the Company’s consolidated financial position and results of operations and are also expensed as incurred.
|
Disaggregated Revenue
A summary of net sales transferred to customers at a point in time and over time for the twelve months ended April 30, 2019 is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended April 30, 2019
|
|
Domestic
|
International
|
|
Total
|
Over Time
|
$
|
110,338
|
|
|
$
|
29,964
|
|
|
$
|
140,302
|
|
|
Point in Time
|
|
6,248
|
|
|
|
—
|
|
|
|
6,248
|
|
|
Total Revenue
|
$
|
116,586
|
|
|
$
|
29,964
|
|
|
$
|
146,550
|
|
|
Contract Balances
The closing and opening balances of contract assets arising from contracts with customers were
$4,589,000
at April 30, 2019 and
$1,007,000
at April 30, 2018. The closing and opening balances of contract liabilities arising from contracts with customers were
$1,599,000
at April 30, 2019 and
$1,884,000
at April 30, 2018. The timing of revenue recognition, billings and cash collections results in accounts receivable, unbilled receivables, and deferred revenue which is disclosed on the consolidated balance sheets and in the notes to the consolidated financial statements. In general, the Company receives payments from customers based on a billing schedule established in its contracts. Unbilled receivables represent amounts earned which have not yet been billed in accordance with contractually stated billing terms. Accounts receivable are recorded when the right to consideration becomes unconditional and the Company has a right to invoice the customer. Deferred revenue relates to payments received in advance of performance under the contract. Deferred revenue is recognized as revenue as (or when) the Company performs under the contract.
During the twelve months ended April 30, 2019, changes in contract assets and liabilities were not materially impacted by any other factors. Approximately
100%
of the contract liability balance at April 30, 2019 is expected to be recognized as revenue during fiscal year 2020.
ASC 606 adoption impact
Under ASC 606, sales consisting of customized products sold to customers for which revenue was previously recognized at a point in time now meet the criteria of a performance obligation satisfied over time. These contracts consist of customized laboratory furniture engineered or tailored to meet the customer’s requirements. In the event the customer cancels the contract, the Company will have no alternative use for and cannot economically repurpose the laboratory furniture, and the Company has the right to payment for performance completed to date. This change results in accelerated recognition of revenue and increases the balance of contract assets compared to the previous revenue recognition standard.
The Company adopted ASC 606 on May 1, 2018 using the modified retrospective approach and elected to reassess revenue recognition under ASC 606 for only those contracts open as of the adoption date, which resulted in a cumulative effect adjustment to increase retained earnings, net of tax, of
$217,000
. Comparative information for prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods presented. The Company elected to reflect the aggregate effect of all contract modifications that occurred before the beginning of the earliest period presented in determining the transaction price, identifying the satisfied and unsatisfied performance obligations and allocating the transaction
price to the satisfied and unsatisfied performance obligations for the modified contract at transition. The effects of these elections were immaterial.
The following table summarizes the impact of adopting ASC 606 on the Company's consolidated statement of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended April 30, 2019
|
|
($ in thousands, except per share amounts)
|
|
As Reported
|
|
Adjustments
|
|
Balance Without
Adoption of
ASC 606
|
Net sales
|
$
|
146,550
|
|
|
$
|
(1,226
|
)
|
|
$
|
145,324
|
|
Cost of products sold
|
121,231
|
|
|
|
(403
|
)
|
|
|
120,828
|
|
Gross profit
|
25,319
|
|
|
|
(823
|
)
|
|
|
24,496
|
|
Operating expenses
|
23,207
|
|
|
|
(35
|
)
|
|
|
23,172
|
|
Operating earnings
|
2,112
|
|
|
|
(788
|
)
|
|
|
1,324
|
|
Other income
|
389
|
|
|
|
—
|
|
|
|
389
|
|
Interest expense
|
(367
|
)
|
|
|
—
|
|
|
|
(367
|
)
|
Earnings before income taxes
|
2,134
|
|
|
|
(788
|
)
|
|
|
1,346
|
|
Income tax expense
|
446
|
|
|
|
(182
|
)
|
|
|
264
|
|
Net earnings
|
1,688
|
|
|
|
(606
|
)
|
|
|
1,082
|
|
Net earnings attributable to the noncontrolling interest
|
159
|
|
|
|
—
|
|
|
|
159
|
|
Net earnings attributable to Kewaunee Scientific Corporation
|
$
|
1,529
|
|
|
$
|
(606
|
)
|
|
$
|
923
|
|
Basic Earnings Per Share
|
$
|
0.56
|
|
|
$
|
(0.22
|
)
|
|
$
|
0.34
|
|
Diluted Earnings Per Share
|
$
|
0.55
|
|
|
$
|
(0.22
|
)
|
|
$
|
0.33
|
|
The following table summarizes the impact of adopting ASC 606 on the Company’s consolidated balance sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2019
|
|
($ in thousands)
|
|
As Reported
|
|
Adjustments
|
|
Balance Without
Adoption of
ASC 606
|
Assets
|
|
|
|
|
|
Receivables, less allowances
|
|
33,259
|
|
|
|
(3,354
|
)
|
|
|
29,905
|
|
Inventories
|
|
17,206
|
|
|
|
2,331
|
|
|
|
19,537
|
|
Total Current Assets
|
|
65,357
|
|
|
|
(1,023
|
)
|
|
|
64,334
|
|
Total Assets
|
$
|
87,223
|
|
|
$
|
(1,023
|
)
|
|
$
|
86,200
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
Accounts payable
|
|
15,190
|
|
|
|
(59
|
)
|
|
|
15,131
|
|
Deferred revenue
|
|
1,599
|
|
|
|
117
|
|
|
|
1,716
|
|
Other accrued expenses
|
|
1,510
|
|
|
|
(258
|
)
|
|
|
1,252
|
|
Total Current Liabilities
|
|
32,733
|
|
|
|
(200
|
)
|
|
|
32,533
|
|
Total Liabilities
|
|
39,520
|
|
|
|
(200
|
)
|
|
|
39,320
|
|
Total Kewaunee Scientific Corporation Stockholders’ Equity
|
|
47,100
|
|
|
|
(823
|
)
|
|
|
46,277
|
|
Total Stockholders’ Equity
|
|
47,703
|
|
|
|
(823
|
)
|
|
|
46,880
|
|
Total Liabilities and Stockholders’ Equity
|
$
|
87,223
|
|
|
$
|
(1,023
|
)
|
|
$
|
86,200
|
|
Note 3—Inventories
Inventories consisted of the following at
April 30
:
|
|
|
|
|
|
|
|
(in thousands)
|
2019
|
2018
|
Finished goods
|
$
|
4,139
|
|
$
|
4,987
|
|
Work-in-process
|
2,179
|
|
2,393
|
|
Materials and components
|
10,888
|
|
11,169
|
|
Total inventories
|
$
|
17,206
|
|
$
|
18,549
|
|
At
April 30, 2019
and
2018
, the Company’s international subsidiaries’ inventories were
$1,863,000
and
$1,908,000
, respectively, measured using the FIFO method at the lower of cost and net realizable value and are included in the above tables.
The following table summarizes the effect of the change in method of accounting on the Company's prior consolidated statement of operations:
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended April 30, 2018
|
|
Effect of Accounting Change
|
|
Twelve Months Ended April 30, 2018
|
(in thousands, except per share data)
|
As Previously Reported
|
|
LIFO/FIFO
|
|
As Adjusted
|
Cost of products sold
|
|
126,030
|
|
|
(139
|
)
|
|
125,891
|
|
Gross profit
|
|
32,020
|
|
|
139
|
|
|
32,159
|
|
Earnings from continuing operations before income taxes
|
|
9,480
|
|
|
139
|
|
|
9,619
|
|
Income tax expense
|
|
4,115
|
|
|
46
|
|
|
4,161
|
|
Net earnings
|
|
5,365
|
|
|
93
|
|
|
5,458
|
|
Net earnings attributable to Kewaunee Scientific Corporation
|
$
|
5,188
|
|
$
|
93
|
|
$
|
5,281
|
|
Net earnings per share attributable to Kewaunee Scientific Corporation stockholders
|
|
|
|
|
Basic
|
$
|
1.91
|
|
$
|
0.03
|
|
$
|
1.94
|
|
Diluted
|
$
|
1.87
|
|
$
|
0.03
|
|
$
|
1.90
|
|
The following table summarizes the effect of the change in method of accounting on the Company's prior consolidated balance sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2018
|
|
|
Effect of Accounting Change
|
|
|
April 30, 2018
|
(in thousands)
|
As Previously Reported
|
|
|
LIFO/FIFO
|
|
|
As Adjusted
|
|
|
|
|
|
|
|
|
|
Inventory
|
$
|
17,662
|
|
|
$
|
887
|
|
|
$
|
18,549
|
|
Total Current Assets
|
|
63,504
|
|
|
|
887
|
|
|
|
64,391
|
|
Deferred income taxes
|
|
2,031
|
|
|
|
(162
|
)
|
|
|
1,869
|
|
Total Other Assets
|
|
6,193
|
|
|
|
(162
|
)
|
|
|
6,031
|
|
Total Assets
|
$
|
84,358
|
|
|
$
|
725
|
|
|
$
|
85,083
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
Other accrued expenses
|
$
|
2,062
|
|
|
$
|
54
|
|
|
$
|
2,116
|
|
Total Current Liabilities
|
|
27,562
|
|
|
|
54
|
|
|
|
27,616
|
|
Total Liabilities
|
|
36,837
|
|
|
|
54
|
|
|
|
36,891
|
|
Retained earnings
|
|
43,165
|
|
|
|
671
|
|
|
|
43,836
|
|
Total Kewaunee Scientific Corporation Stockholders' Equity
|
|
47,059
|
|
|
|
671
|
|
|
|
47,730
|
|
Total Equity
|
|
47,521
|
|
|
|
671
|
|
|
|
48,192
|
|
Total Liabilities and Stockholders' Equity
|
$
|
84,358
|
|
|
$
|
725
|
|
|
$
|
85,083
|
|
The following table summarizes the effect of the change in method of accounting on the Company's prior consolidated cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended April 30,
|
|
Effect of Accounting Change
|
|
Twelve Months Ended April 30,
|
|
|
2018
|
|
|
2018
|
|
(in thousands)
|
As Previously Reported
|
|
LIFO/FIFO
|
|
As Adjusted
|
|
|
Net earnings
|
$
|
5,365
|
|
|
$
|
93
|
|
|
$
|
5,458
|
|
|
Change in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
(2,727
|
)
|
|
|
(139
|
)
|
|
|
(2,866
|
)
|
|
Accounts payable and other accrued expenses
|
|
4,560
|
|
|
|
46
|
|
|
|
4,606
|
|
|
Net cash provided by operating activities
|
$
|
3,183
|
|
|
$
|
—
|
|
|
$
|
3,183
|
|
Certain amounts in the Company’s consolidated statement of operations for the
twelve months ended April 30, 2019
under the former LIFO method would have been as follows :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended April 30, 2019
|
(in thousands, except per share amounts)
|
As Reported
Under FIFO
|
|
Adjustments
|
|
As Computed
Under LIFO
|
Cost of products sold
|
$
|
121,231
|
|
|
$
|
444
|
|
|
$
|
121,675
|
|
Income tax expense
|
446
|
|
|
(104
|
)
|
|
342
|
|
Net earnings
|
1,688
|
|
|
(340
|
)
|
|
1,348
|
|
Net earnings attributable to Kewaunee Scientific Corporation
|
$
|
1,529
|
|
|
$
|
(340
|
)
|
|
$
|
1,189
|
|
Net earnings per share attributable to Kewaunee Scientific Corporation stockholders
|
|
|
|
|
|
Basic
|
$
|
0.56
|
|
|
$
|
(0.12
|
)
|
|
$
|
0.44
|
|
Diluted
|
$
|
0.55
|
|
|
$
|
(0.12
|
)
|
|
$
|
0.43
|
|
Certain amounts in the Company’s consolidated statement of cash flows for the twelve months ended
April 30, 2019
would h
ave been as follows under the former LIFO method:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended April 30, 2019
|
(in thousands)
|
As Reported
Under FIFO
|
|
Adjustments
|
|
As Computed
Under LIFO
|
Net earnings
|
$
|
1,688
|
|
|
$
|
(340
|
)
|
|
$
|
1,348
|
|
Change in assets and liabilities:
|
|
|
|
|
|
Inventories
|
456
|
|
|
444
|
|
|
900
|
|
Other, net
|
(1,685
|
)
|
|
(104
|
)
|
|
(1,789
|
)
|
Net cash provided by operating activities
|
$
|
2,490
|
|
|
$
|
—
|
|
|
$
|
2,490
|
|
Certain amounts in the Company’s consolidated balance sheet as of
April 30, 2019
would have been as follows under the former LIFO method:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2019
|
(in thousands)
|
As Reported
Under FIFO
|
|
Adjustments
|
|
As Computed
Under LIFO
|
Inventories
|
$
|
17,206
|
|
|
$
|
(1,331
|
)
|
|
$
|
15,875
|
|
Total Current Assets
|
65,357
|
|
|
(1,331
|
)
|
|
64,026
|
|
Deferred Income Taxes
|
1,829
|
|
|
156
|
|
|
1,985
|
|
Prepaid Expenses and Other Assets
|
3,736
|
|
|
164
|
|
|
3,900
|
|
Total Assets
|
87,223
|
|
|
(1,011
|
)
|
|
86,212
|
|
Retained Earnings
|
43,552
|
|
|
(1,011
|
)
|
|
42,541
|
|
Total Kewaunee Scientific Corporation Stockholders’ Equity
|
47,100
|
|
|
(1,011
|
)
|
|
46,089
|
|
Total Stockholders’ Equity
|
47,703
|
|
|
(1,011
|
)
|
|
46,692
|
|
Total Liabilities and Stockholders’ Equity
|
$
|
87,223
|
|
|
$
|
(1,011
|
)
|
|
$
|
86,212
|
|
Note 4—Long-term Debt and Other Credit Arrangements
On May 6, 2013, the Company entered into a credit and security agreement (the “Loan Agreement”) with a new lender consisting of (1) a
$20 million
revolving credit facility (“Line of Credit”) which matured on May 1, 2018 and was extended to March 1, 2021 on March 12, 2018, (2) a term loan in the amount of
$3,450,000
which matures on May 1, 2020 (“Term Loan A”) and (3) a term loan in the amount of
$1,550,000
which matures on May 1, 2020 (Term Loan B and together with Term Loan A, the “Term Loans”). The Loan Agreement provided funds to refinance all existing indebtedness to the Company’s previous lender and for working capital and other general corporate purposes. In addition, the credit facility provided a sub-line for the issuance of up to
$6.5 million
of letters of credit at
April 30, 2019
and
April 30, 2018
.
At
April 30, 2019
, there were advances of
$9.5 million
and
$5.2 million
in letters of credit outstanding, leaving
$5.3 million
available under the Line of Credit. The borrowing rate under the Line of Credit at that date was
4.00%
. Monthly interest payments under the Line of Credit were payable at the Daily One Month LIBOR interest rate plus
1.50%
per annum. Payments are due under Term Loan A in consecutive equal monthly principal payments in the amount of
$79,000
until May 1, 2020, and at that time, all principal, accrued unpaid interest and other charges outstanding under Term Loan A shall be due and payable in full. The interest rate on Term Loan A, after consideration of related interest rate swap agreements, is a fixed rate per annum equal to
4.37%
. Payments are due under Term Loan B in consecutive equal monthly principal payments in the amount of
$18,000
until May 1, 2020, and at that time, all principal, accrued unpaid interest and other charges outstanding under Term Loan B shall be due and payable in full. The interest rate on Term Loan B, after consideration of the related interest rate swap agreement, effective November 3, 2014, converted to a fixed rate per annum of
3.07%
. The fair value of the interest rate swap derivatives were
$1,000
and
$5,000
at
April 30, 2019
and
2018
, respectively. Scheduled annual principal payments for the term loans are
$1,167,000
and
$97,000
for fiscal years 2020 and 2021, respectively. Term Loan A and Term Loan B are secured by liens against certain machinery and equipment.
At
April 30, 2019
, there were bank guarantees issued by foreign banks outstanding to customers in the amount of
$2,337,000
,
$49,000
,
$75,000
, and
$60,000
with expiration dates in fiscal years
2020
,
2021
,
2022
and
2023
, respectively, collateralized by a
$5.0 million
letter of credit under the Line of Credit and certain assets of the Company’s subsidiaries in India. The Loan Agreement includes financial covenants with respect to certain ratios, including (a) senior funded debt to EBITDA, (b) fixed charge coverage, and (c) asset coverage. At
April 30, 2019
, the Company was not in compliance with all of the financial covenants. The Company received a waiver from its lender for this noncompliance pursuant to a waiver letter executed on June 19, 2019 ("the Waiver Letter"). In connection with the Waiver Letter, the Company entered into a Security Agreement pursuant to which the Company granted a security interest in substantially all of its assets to secure its obligations under the Loan Agreement. On July 9, 2019, the Company entered into an agreement to amend the Loan Agreement and the Line of Credit to effect a change in the financial covenants set forth in the Loan Agreement. The amendment does not change the amount of availability provided by Company’s Line of Credit.
At
April 30, 2018
, there were advances of
$3.8 million
and
$5.2 million
in letters of credit outstanding under the Line of Credit. The borrowing rate at that date was
3.50%
. At
April 30, 2018
, there were foreign bank guarantees outstanding to customers in the
amount of
$1,625,000
,
$21,000
,
$1,000
and
$63,000
with expiration dates in fiscal years 2019, 2020, 2021 and 2023, respectively. At
April 30, 2018
, the Company was in compliance with all of the financial covenants in the Loan Agreement.
Amounts outstanding under the term loans were as follows as of
April 30
:
|
|
|
|
|
|
|
|
|
|
$ in thousands
|
|
2019
|
|
2018
|
Term Loan A payable
|
|
$
|
1,024
|
|
|
$
|
1,970
|
|
Term Loan B payable
|
|
240
|
|
|
461
|
|
Less: current portion
|
|
(1,167
|
)
|
|
(1,167
|
)
|
Long-term debt
|
|
$
|
97
|
|
|
$
|
1,264
|
|
Note 5—Income Taxes
On December 22, 2017, the 2017 Tax Act was signed into law. The 2017 Tax Act includes a broad range of tax reform provisions affecting businesses, including lower corporate tax rates, changes in business deductions, and international tax provisions. In response to the 2017 Tax Act, the U.S. Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations where a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act. SAB 118 provides that the measurement period is complete when a company’s accounting is complete and that the measurement period shall not extend beyond one year from the enactment date. SAB 118 provides guidance for registrants under three scenarios: (i) measurement of certain income tax effects is complete, (ii) measurement of certain income tax effects can be reasonably estimated, and (iii) measurement of certain income tax effects cannot be reasonably estimated.
As of April 30, 2019, the Company considers the accounting under SAB 118 for the impacts of the 2017 Tax Act to be complete. We have recorded adjustments to income tax expense to account for the one-time transition tax on deferred foreign income, change in valuation of deferred tax assets associated with tax law changes, and foreign tax credits related to the transition tax.
In accordance with ASC 740, ”Income Taxes”, which requires deferred taxes to be re-measured in the year of an income tax rate change, the Company recorded a deferred income tax expense of
$75,000
for the year ended
April 30, 2019
as a result of applying a lower weighted average state income tax rate to the Company’s net deferred tax assets.
The Company finalized the accounting policy decision with respect to the new Global Intangible Low-Taxed Income (“GILTI”) tax rules and has concluded that GILTI will be treated as a periodic charge in the year in which it arises. Therefore, the Company will not record deferred taxes for the basis differential attributable to GILTI inclusions in U.S. taxable income. The Company has included
$265,000
of tax expense related to GILTI for the year ended April 30, 2019.
Income tax expense consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
$ in thousands
|
|
2019
|
|
2018
|
|
Current tax expense (benefit):
|
|
|
|
|
|
Federal
|
|
$
|
(571
|
)
|
|
$
|
1,719
|
|
|
State and local
|
|
(75
|
)
|
|
311
|
|
|
Foreign
|
|
1,065
|
|
|
1,414
|
|
|
Total current tax expense
|
|
419
|
|
|
3,444
|
|
|
Deferred tax expense (benefit):
|
|
|
|
|
|
Federal
|
|
30
|
|
|
442
|
|
|
State and local
|
|
59
|
|
|
33
|
|
|
Foreign
|
|
(62
|
)
|
|
242
|
|
|
Total deferred tax expense (benefit)
|
|
27
|
|
|
717
|
|
|
Net income tax expense
|
|
$
|
446
|
|
|
$
|
4,161
|
|
|
The reasons for the differences between the above net income tax expense and the amounts computed by applying the statutory federal income tax rate to earnings before income taxes are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
$ in thousands
|
|
2019
|
|
2018
|
|
|
Income tax expense at statutory rate
|
|
$
|
547
|
|
|
$
|
2,864
|
|
|
|
State and local taxes, net of federal income tax benefit (expense)
|
|
(29
|
)
|
|
162
|
|
|
|
Tax credits (state, net of federal benefit)
|
|
(546
|
)
|
|
(370
|
)
|
|
|
Effects of differing US and foreign tax rates
|
|
190
|
|
|
(97
|
)
|
|
|
Rate reduction impact on deferred tax assets
|
|
75
|
|
|
680
|
|
|
|
Federal and state transition tax on unrepatriated foreign earnings
|
|
—
|
|
|
649
|
|
|
|
Effects of stock options exercised
|
|
(49
|
)
|
|
—
|
|
|
|
Effect of prior year true ups
|
|
(105
|
)
|
|
—
|
|
|
|
Impact of foreign subsidiary income to parent
|
|
317
|
|
|
—
|
|
|
|
Increase (decrease) in valuation allowance
|
|
7
|
|
|
175
|
|
|
|
Other items, net
|
|
39
|
|
|
98
|
|
|
|
Net income tax expense
|
|
$
|
446
|
|
|
$
|
4,161
|
|
|
|
Significant items comprising deferred tax assets and liabilities as of
April 30
were as follows:
|
|
|
|
|
|
|
|
|
|
$ in thousands
|
|
2019
|
|
2018
|
Deferred tax assets:
|
|
|
|
|
Accrued employee benefit expenses
|
|
$
|
466
|
|
|
$
|
418
|
|
Allowance for doubtful accounts
|
|
28
|
|
|
41
|
|
Deferred compensation
|
|
922
|
|
|
1,205
|
|
Tax credits (state, net of federal benefits)
|
|
434
|
|
|
221
|
|
Foreign tax credit carryforwards
|
|
638
|
|
|
—
|
|
Unrecognized actuarial loss, defined benefit plans
|
|
1,772
|
|
|
1,825
|
|
Inventory reserves
|
|
290
|
|
|
378
|
|
Net operating loss carryforwards
|
|
257
|
|
|
261
|
|
Revenue recognition change (See Note 2)
|
|
(31
|
)
|
|
—
|
|
LIFO change (See Note 3)
|
|
(156
|
)
|
|
(162
|
)
|
Other
|
|
183
|
|
|
79
|
|
Total deferred tax assets
|
|
4,803
|
|
|
4,266
|
|
Deferred tax liabilities:
|
|
|
|
|
Book basis in excess of tax basis of property, plant and equipment
|
|
(850
|
)
|
|
(1,043
|
)
|
Prepaid pension
|
|
(1,218
|
)
|
|
(1,093
|
)
|
Total deferred tax liabilities
|
|
(2,068
|
)
|
|
(2,136
|
)
|
Less: valuation allowance
|
|
(906
|
)
|
|
(261
|
)
|
Net deferred tax assets
|
|
$
|
1,829
|
|
|
$
|
1,869
|
|
Deferred tax assets classified in the balance sheet:
|
|
|
|
|
Non-current
|
|
1,829
|
|
|
1,869
|
|
Net deferred tax assets
|
|
$
|
1,829
|
|
|
$
|
1,869
|
|
Unremitted earnings of subsidiaries outside the United States are considered to be reinvested indefinitely at
April 30, 2019
. It is not practicable to determine the deferred tax liability for temporary differences related to those unremitted earnings. At
April 30, 2019
, the Company had deferred tax assets related to the state net operating loss carryforwards in the amount of $
26,000
expiring at various times and state tax credit carryforwards in the amount of
$207,000
, net of federal benefit, expiring beginning in
2020
. Due to the current expiration schedule of the state credits, a valuation allowance in the amount of $
37,000
has been recorded to reflect the potential expiration of these credits in future years. At April 30, 2019, the Company had federal research and development tax credit carryforwards in the amount of $
228,000
expiring beginning in
2039
. At
April 30, 2019
, the Company had foreign tax credit carryforwards in the amount of
$638,321
that are subject to a full valuation allowance. At April 30, 2019, the Company had
$1,126,000
gross net operating losses in jurisdictions outside of the United States, of which
$501,000
is set to expire in years
2020
to
2023
. After a review of the expiration schedule of the net operating loss carryforwards and future taxable income required to utilize such carryforwards before their expiration, the Company recorded an additional valuation allowance of
$7,000
at
April 30, 2019
. The Company files federal, state and local tax returns with statutes of limitation generally ranging from
3
to
4 years
. The Company is generally no longer subject to federal tax examinations for years prior to fiscal year 2015 or state and local tax examinations for years prior to fiscal year 2014. Tax returns filed by the Company’s significant foreign subsidiaries are generally subject to statutes of limitations of
3
to
7 years
and are generally no longer subject to examination for years prior to fiscal year 2013. The Company has no unrecognized tax benefits.
Note 6—Stock Options and Share-Based Compensation
The Company adopted ASU 2016-9, “Stock Compensation – Improvements to Employee Share-Based Payment Accounting” prospectively effective May 1, 2017. Prior periods were not retrospectively adjusted. The Company elected prospectively to account for forfeitures as they occur rather than apply an estimated rate to share-based compensation expense.
The stockholders approved the 2017 Omnibus Incentive Plan (“2017 Plan”) on August 30, 2017, which enables the Company to grant a broad range of equity, equity-related, and non-equity types of awards, with potential recipients including directors, consultants and employees. This plan replaced the 2010 Stock Option Plan for Directors and the 2008 Key Employee Stock Option Plan.
No
new awards will be granted under the prior plans. All outstanding options granted under the prior plans will remain subject to the prior plans. At the date of approval of the 2017 Plan there were
280,100
shares available for issuance under the prior plans. These shares and any outstanding awards that subsequently cease to be subject to such awards are available under the 2017 Plan. The 2017 Plan did not increase the total number of shares available for issuance under the Company’s equity compensation plans. At
April 30, 2019
there were
272,178
shares available for future issuance.
Under the 2017 Plan, the Company recorded stock-based compensation expense in accordance with ASC 718 of
$34,000
and
$141,000
, and deferred income tax benefit of
$8,000
and
$34,000
, in fiscal years 2019 and 2018, respectively. The RSUs include both a service and performance component vesting over a
three
year period. The recognized expense is based upon the vesting period for service criteria and estimated attainment of the performance criteria at the end of the three year period based on the ratio of cumulative days incurred to total days over the three year period. The remaining estimated compensation expense of
$158,000
will be recorded over the remaining vesting periods.
The fair value of each RSU granted to employees was estimated on the day of grant based on the weighted average price of the Company's stock reduced by the present value of the expected dividend stream during the vesting period using the risk-free interest rate. The Company issued new shares of common stock to satisfy RSUs vested during fiscal year
2019
. The following table summarizes the RSUs activities and weighed averages.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
|
Number of RSUs
|
|
Weighted Average Grant Date Fair Value
|
|
Number of RSUs
|
|
Weighted Average Grant Date Fair Value
|
Outstanding at beginning of year
|
|
23,907
|
|
|
$
|
23.74
|
|
|
—
|
|
|
|
Granted
|
|
19,738
|
|
|
$
|
32.58
|
|
|
23,907
|
|
|
$
|
23.74
|
|
Vested
|
|
(2,390
|
)
|
|
$
|
34.16
|
|
|
—
|
|
|
—
|
|
Forfeited
|
|
(17,947
|
)
|
|
$
|
27.07
|
|
|
—
|
|
|
|
Outstanding at end of year
|
|
23,308
|
|
|
$
|
28.66
|
|
|
23,907
|
|
|
$
|
23.74
|
|
The stockholders approved the 2010 Stock Option Plan for Directors (“2010 Plan”) in fiscal year 2011 which allowed the Company to grant options on an aggregate of
100,000
shares of the Company’s common stock. Under this plan, each eligible director was granted options to purchase
10,000
shares at the fair market value at the date of grant for a term of
five years
. These options are exercisable in four equal installments, one-fourth becoming exercisable on the next August 1 following the date of grant, and one-fourth becoming exercisable on August 1 of each of the next three years. At
April 30, 2019
, there were
no
shares available for future grants under the 2010 Plan.
The stockholders approved the 2008 Key Employee Stock Option Plan (“2008 Plan”) in fiscal year 2009 which allowed the Company to grant options on an aggregate of
300,000
shares of the Company’s common stock. On August 26, 2015, the stockholders approved an amendment to this plan to increase the number of shares available under the 2008 Plan by
300,000
. Under the plan, options were granted at not less than the fair market value at the date of grant and options are exercisable in such installments, for such terms (up to
10 years
), and at such times, as the Board of Directors may determine at the time of the grant. At
April 30, 2019
, there were
no
shares available for future grants under the 2008 Plan.
The Company recorded stock-based compensation expense in accordance with ASC 718. In order to determine the fair value of stock options on the date of grant, the Company applied the Black-Scholes option pricing model. Inherent in the model are assumptions related to expected stock-price volatility, option life, risk-free interest rate, and dividend yield. The Company did not
grant any stock options during fiscal years
2019
and 2018. The stock options outstanding have the “plain-vanilla” characteristics as defined in SEC Staff Accounting Bulletin No. 107 (SAB 107). The Company utilized the Safe Harbor option “Simplified Method” to determine the expected term of these options in accordance with the guidance of SAB 107 for options outstanding.
The stock-based compensation expense is recorded over the vesting period (
4 years
) for the options granted, net of tax. Under the 2010 and 2008 Plans, the Company recorded
$115,000
and
$172,000
of compensation expense and
$27,000
and
$42,000
of deferred income tax benefit in fiscal years
2019
and
2018
, respectively. The remaining compensation expense of
$76,000
and deferred income tax benefit of
$18,000
will be recorded over the remaining vesting periods.
The Company issued new shares of common stock to satisfy options exercised during fiscal years
2019
and
2018
. Stock option activity and weighted average exercise price are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
|
Number
of Shares
|
|
Weighted Average Exercise Price
|
|
Number
of Shares
|
|
Weighted Average Exercise Price
|
|
Outstanding at beginning of year
|
137,250
|
|
|
$
|
18.01
|
|
|
180,350
|
|
|
$
|
17.29
|
|
|
Canceled
|
(13,100
|
)
|
|
21.03
|
|
|
(6,300
|
)
|
|
19.09
|
|
|
Exercised
|
(19,800
|
)
|
|
14.54
|
|
|
(36,800
|
)
|
|
14.31
|
|
|
Outstanding at end of year
|
104,350
|
|
|
$
|
18.28
|
|
|
137,250
|
|
|
$
|
18.01
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of year
|
84,550
|
|
|
$
|
17.63
|
|
|
79,100
|
|
|
$
|
16.28
|
|
|
The number of options outstanding, exercisable, and their weighted average exercise prices were within the following ranges at
April 30, 2019
:
|
|
|
|
|
|
|
|
|
|
Exercise Price Range
|
|
$8.59-$11.78
|
|
$15.85-$23.62
|
Options outstanding
|
7,450
|
|
|
96,900
|
|
Weighted average exercise price
|
$
|
10.76
|
|
|
$
|
18.86
|
|
Weighted average remaining contractual life
|
2.63 years
|
|
|
5.68 years
|
|
Aggregate intrinsic value
|
$
|
88,000
|
|
|
$
|
392,000
|
|
Options exercisable
|
7,450
|
|
|
77,100
|
|
Weighted average exercise price
|
$
|
10.76
|
|
|
$
|
18.29
|
|
Aggregate intrinsic value
|
$
|
88,000
|
|
|
$
|
350,000
|
|
Note 7—Accumulated Other Comprehensive Income (Loss)
The Company’s other comprehensive income (loss) consists of unrealized gains and losses on the translation of the assets, liabilities, and equity of its foreign subsidiaries, changes in the fair value of its cash flow hedges, and additional minimum pension liability adjustments, net of income taxes. The before tax income (loss), related income tax effect, and accumulated balances are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in thousands
|
|
Cash Flow
Hedges
|
|
Foreign
Currency
Translation
Adjustment
|
|
Minimum
Pension
Liability
Adjustment
|
|
Total
Accumulated
Other
Comprehensive
Income (Loss)
|
Balance at April 30, 2017
|
|
(40
|
)
|
|
(997
|
)
|
|
(5,282
|
)
|
|
(6,319
|
)
|
Effect of changes in tax rates
|
|
3
|
|
|
—
|
|
|
996
|
|
|
999
|
|
Foreign currency translation adjustment
|
|
—
|
|
|
(430
|
)
|
|
—
|
|
|
(430
|
)
|
Change in fair value of cash flow hedges
|
|
57
|
|
|
—
|
|
|
—
|
|
|
57
|
|
Change in unrecognized actuarial loss on pension obligations
|
|
—
|
|
|
—
|
|
|
(586
|
)
|
|
(586
|
)
|
Income tax effect
|
|
(23
|
)
|
|
—
|
|
|
402
|
|
|
379
|
|
Balance at April 30, 2018
|
|
(3
|
)
|
|
(1,427
|
)
|
|
(4,470
|
)
|
|
(5,900
|
)
|
Effect of changes in tax rates
|
|
|
|
—
|
|
|
67
|
|
|
67
|
|
Foreign currency translation adjustment
|
|
—
|
|
|
(464
|
)
|
|
—
|
|
|
(464
|
)
|
Change in fair value of cash flow hedges
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
Change in unrecognized actuarial loss on pension obligations
|
|
—
|
|
|
—
|
|
|
(99
|
)
|
|
(99
|
)
|
Income tax effect
|
|
(1
|
)
|
|
—
|
|
|
(14
|
)
|
|
(15
|
)
|
Balance at April 30, 2019
|
|
$
|
—
|
|
|
$
|
(1,891
|
)
|
|
$
|
(4,516
|
)
|
|
$
|
(6,407
|
)
|
Note 8—Commitments and Contingencies
The Company leases both its primary distribution facility and warehouse facility under non-cancelable operating leases. The Company also leases some of its machinery and equipment under non-cancelable operating leases. Most of these leases provide the Company with renewal and purchase options, and most leases of machinery and equipment have certain early cancellation rights. Rent expense for these operating leases was
$2,225,000
and
$2,340,000
in fiscal years
2019
and
2018
, respectively. Future minimum payments under the above non-cancelable lease arrangements for the years ending
April 30
are as follows:
|
|
|
|
|
|
$ in thousands
|
|
Operating
|
2020
|
|
$
|
1,246
|
|
2021
|
|
855
|
|
2022
|
|
747
|
|
2023
|
|
618
|
|
2024
|
|
363
|
|
2025 and thereafter
|
|
1,736
|
|
Total minimum lease payments
|
|
$
|
5,565
|
|
The Company is involved in certain claims and legal proceedings in the normal course of business which management believes will not have a material adverse effect on the Company’s consolidated financial condition or results of operations.
Note 9—Retirement Benefits
Defined Benefit Plans
The Company has non-contributory defined benefit pension plans covering some of its domestic employees. These plans were amended as of April 30, 2005, no further benefits have been, or will be, earned under the plans subsequent to the amendment date, and no additional participants will be added to the plans. 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 ten consecutive calendar years of employment as of April 30, 2005. The benefit plan for hourly employees provides benefits at stated amounts based on years of service as of April 30, 2005. The Company uses an
April 30
measurement date for its defined benefit plans. The change in projected benefit obligations and the change in fair value of plan assets for the non-contributory defined benefit pension plans for each of the years ended
April 30
are summarized as follows:
|
|
|
|
|
|
|
|
|
|
$ in thousands
|
|
2019
|
|
2018
|
Accumulated Benefit Obligation, April 30
|
|
$
|
21,394
|
|
|
$
|
21,544
|
|
Change in Projected Benefit Obligations
|
|
|
|
|
Projected benefit obligations, beginning of year
|
|
$
|
21,544
|
|
|
$
|
21,313
|
|
Interest cost
|
|
859
|
|
|
875
|
|
Actuarial loss
|
|
412
|
|
|
480
|
|
Actual benefits paid
|
|
(1,421
|
)
|
|
(1,124
|
)
|
Projected benefit obligations, end of year
|
|
21,394
|
|
|
21,544
|
|
Change in Plan Assets
|
|
|
|
|
Fair value of plan assets, beginning of year
|
|
18,540
|
|
|
17,198
|
|
Actual return on plan assets
|
|
916
|
|
|
1,866
|
|
Employer contributions
|
|
1,000
|
|
|
600
|
|
Actual benefits paid
|
|
(1,421
|
)
|
|
(1,124
|
)
|
Fair value of plan assets, end of year
|
|
19,035
|
|
|
18,540
|
|
Funded status—under
|
|
$
|
(2,359
|
)
|
|
$
|
(3,004
|
)
|
Amounts Recognized in the Consolidated Balance Sheets consist of:
|
|
|
|
|
Noncurrent liabilities
|
|
$
|
(2,359
|
)
|
|
$
|
(3,004
|
)
|
Amounts Recognized in Accumulated Other Comprehensive Income (Loss) Consist of:
|
|
|
|
|
Net actual loss
|
|
$
|
7,541
|
|
|
$
|
7,481
|
|
Deferred tax benefit
|
|
(1,772
|
)
|
|
(1,825
|
)
|
After-tax actuarial loss
|
|
$
|
5,769
|
|
|
$
|
5,656
|
|
Weighted-Average Assumptions Used to Determine Benefit Obligations at April 30
|
|
|
|
|
Discount rate
|
|
3.90
|
%
|
|
4.10
|
%
|
Rate of compensation increase
|
|
N/A
|
|
|
N/A
|
|
Mortality table
|
|
RP-2014
|
|
|
RP-2014
|
|
Projection scale
|
|
MP-2018
|
|
|
MP-2017
|
|
|
|
|
|
|
|
|
|
$ in thousands
|
|
|
|
|
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Years Ended April 30
|
|
2019
|
|
2018
|
Discount rate
|
|
3.90
|
%
|
|
4.10
|
%
|
Expected long-term return on plan assets
|
|
7.75
|
%
|
|
7.75
|
%
|
Rate of compensation increase
|
|
N/A
|
|
|
N/A
|
|
The components of the net periodic pension cost for each of the fiscal years ended
April 30
are as follows:
|
|
|
|
|
|
|
|
|
|
|
$ in thousands
|
|
2019
|
|
2018
|
|
Interest cost
|
|
$
|
859
|
|
|
$
|
875
|
|
|
Expected return on plan assets
|
|
(1,448
|
)
|
|
(1,314
|
)
|
|
Recognition of net loss
|
|
884
|
|
|
1,133
|
|
|
Net periodic pension cost
|
|
$
|
295
|
|
|
$
|
694
|
|
|
The estimated net actuarial loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost during fiscal year 2020 is
$970,000
.
The Company’s funding policy is to contribute to the plans when pension laws and economics either require or encourage funding. The Company does
not
expect to make any contributions for fiscal year 2020. Contributions of
$1,000,000
and
$600,000
were made to the plan in fiscal years
2019
and
2018
, respectively.
The following benefit payments are expected to be paid from the benefit plans in the fiscal years ending
April 30
:
|
|
|
|
|
|
$ in thousands
|
|
Amount
|
2020
|
|
$
|
1,380
|
|
2021
|
|
1,440
|
|
2022
|
|
1,460
|
|
2023
|
|
1,480
|
|
2024
|
|
1,520
|
|
2025 & Beyond
|
|
7,210
|
|
The expected long-term portfolio return is established via a building block approach with proper consideration of diversification and rebalancing. Historical markets are studied and long-term historical relationships between equities and fixed-income securities are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long term. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. Peer data and historical returns are also reviewed to check for reasonableness and appropriateness.
The Company uses a Yield Curve methodology to determine its GAAP discount rate. Under this approach, future benefit payment cash flows are projected from the pension plan on a projected benefit obligation basis. The payment stream is discounted to a present value using an interest rate applicable to the timing of each respective cash flow. The graph of these time-dependent interest rates is known as a yield curve. The interest rates comprising the Yield Curve are determined through a statistical analysis performed by the IRS and issued each month in the form of a pension discount curve. For this purpose, the universe of possible bonds consists of a set of bonds which are designated as corporate, have high quality ratings (AAA or AA) from nationally recognized statistical rating organizations, and have at least
$250 million
in par amount outstanding on at least one day during the reporting period. A
1%
increase/decrease in the discount rate for fiscal years
2019
and
2018
would decrease/increase pension expense by approximately
$234,000
and
$243,000
, respectively.
The Company uses a total return investment approach, whereby a mix of equities and fixed-income investments are used to attempt to maximize the long-term return on plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate financial condition. The investment portfolio contains a diversified blend of equity and fixed-income investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, as well as growth, value, and small and large capitalizations. The target allocations based on the Company’s investment policy were
75%
in equity securities and
25%
in fixed-income securities at
April 30, 2019
and
April 30, 2018
. A
1%
increase/decrease in the expected return on assets for fiscal years
2019
and
2018
would decrease/increase pension expense by approximately
$187,000
and
$170,000
, respectively.
Plan assets by asset categories as of
April 30
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in thousands
|
|
2019
|
|
2018
|
Asset Category
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
Equity Securities
|
|
$
|
14,085
|
|
|
74
|
|
$
|
9,643
|
|
|
52
|
Fixed Income Securities
|
|
4,754
|
|
|
25
|
|
4,599
|
|
|
25
|
Cash and Cash Equivalents
|
|
196
|
|
|
1
|
|
4,298
|
|
|
23
|
Totals
|
|
$
|
19,035
|
|
|
100
|
|
$
|
18,540
|
|
|
100
|
The following tables present the fair value of the assets in our defined benefit pension plans at
April 30
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
Asset Category
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Large Cap
|
|
$
|
7,783
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Small/Mid Cap
|
|
3,160
|
|
|
—
|
|
|
—
|
|
International
|
|
2,054
|
|
|
—
|
|
|
—
|
|
Emerging Markets
|
|
580
|
|
|
|
|
|
Fixed Income
|
|
4,754
|
|
|
—
|
|
|
—
|
|
Liquid Alternatives
|
|
508
|
|
|
—
|
|
|
—
|
|
Cash and Cash Equivalents
|
|
196
|
|
|
—
|
|
|
—
|
|
Totals
|
|
$
|
19,035
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
Asset Category
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Large Cap
|
|
$
|
4,929
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Small/Mid Cap
|
|
2,405
|
|
|
—
|
|
|
—
|
|
International
|
|
1,889
|
|
|
—
|
|
|
—
|
|
Fixed Income
|
|
4,599
|
|
|
—
|
|
|
—
|
|
Liquid Alternatives
|
|
420
|
|
|
—
|
|
|
—
|
|
Cash and Cash Equivalents
|
|
4,298
|
|
|
—
|
|
|
—
|
|
Totals
|
|
$
|
18,540
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Level 1 retirement plan assets include United States currency held by a designated trustee and equity funds of common and preferred securities issued by domestic and foreign corporations. These equity funds are traded actively on exchanges and price quotes for these shares are readily available.
Defined Contribution Plan
The Company has a defined contribution plan covering substantially all domestic salaried and hourly employees. The plan provides benefits to all employees who have attained age
21
, completed
three months
of service, and who elect to participate. The plan provides that the Company make matching contributions equal to
100%
of the employee’s qualifying contribution up to
3%
of the employee’s compensation, and make matching contributions equal to
50%
of the employee’s contributions between
3%
and
5%
of the employee’s compensation, resulting in a maximum employer contribution equal to
4%
of the employee’s compensation. Additionally, the plan provides that the Company may elect to make a non-matching contribution for participants employed by the Company on December 31 of each year. The Company included
1%
of the participant’s qualifying compensation in the annual contributions to the plan in fiscal years
2019
and
2018
of
$1,291,000
and
$1,159,000
, respectively.
Note 10—Segment Information
The Company’s operations are classified into
two
business segments: Domestic and International. The Domestic business segment principally designs, manufactures, and installs scientific and technical furniture, including steel and wood laboratory cabinetry, fume hoods, laminate casework, flexible systems, worksurfaces, workstations, workbenches, and computer enclosures. The International business segment, which consists of the foreign subsidiaries as identified in Note 1, provides the Company’s products and services, including facility design, detailed engineering, construction, and project management from the planning stage through testing and commissioning of laboratories.
Intersegment transactions are recorded at normal profit margins. All intercompany balances and transactions have been eliminated. Certain corporate expenses shown below have not been allocated to the business segments.
The following table shows revenues, earnings, and other financial information by business segment for each of the years ended
April 30
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in thousands
|
|
Domestic
|
|
International
|
|
Corporate
|
|
Total
|
Fiscal Year 2019
|
|
|
|
|
|
|
|
|
Revenues from external customers
|
|
$
|
116,586
|
|
|
$
|
29,964
|
|
|
$
|
—
|
|
|
$
|
146,550
|
|
Intersegment revenues
|
|
2,511
|
|
|
3,329
|
|
|
(5,840
|
)
|
|
—
|
|
Depreciation
|
|
2,299
|
|
|
272
|
|
|
—
|
|
|
2,571
|
|
Earnings (loss) before income taxes
|
|
4,971
|
|
|
3,374
|
|
|
(6,211
|
)
|
|
2,134
|
|
Income tax expense (benefit)
|
|
935
|
|
|
1,003
|
|
|
(1,492
|
)
|
|
446
|
|
Net earnings attributable to noncontrolling interest
|
|
—
|
|
|
159
|
|
|
—
|
|
|
159
|
|
Net earnings (loss) attributable to Kewaunee Scientific Corporation
|
|
4,036
|
|
|
2,212
|
|
|
(4,719
|
)
|
|
1,529
|
|
Segment assets
|
|
59,840
|
|
|
27,383
|
|
|
—
|
|
|
87,223
|
|
Expenditures for segment assets
|
|
4,015
|
|
|
198
|
|
|
—
|
|
|
4,213
|
|
Revenues (excluding intersegment) from customers in foreign countries
|
|
3,618
|
|
|
29,964
|
|
|
—
|
|
|
33,582
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2018 (as adjusted)
|
|
|
|
|
|
|
|
|
Revenues from external customers
|
|
$
|
114,594
|
|
|
$
|
43,456
|
|
|
$
|
—
|
|
|
$
|
158,050
|
|
Intersegment revenues
|
|
11,333
|
|
|
4,104
|
|
|
(15,437
|
)
|
|
—
|
|
Depreciation
|
|
2,532
|
|
|
229
|
|
|
—
|
|
|
2,761
|
|
Earnings (loss) before income taxes
|
|
10,871
|
|
|
4,986
|
|
|
(6,238
|
)
|
|
9,619
|
|
Income tax expense (benefit)
|
|
5,938
|
|
|
1,656
|
|
|
(3,433
|
)
|
|
4,161
|
|
Net earnings attributable to noncontrolling interest
|
|
—
|
|
|
177
|
|
|
—
|
|
|
177
|
|
Net earnings (loss) attributable to Kewaunee Scientific Corporation
|
|
4,933
|
|
|
3,153
|
|
|
(2,805
|
)
|
|
5,281
|
|
Segment assets
|
|
61,604
|
|
|
23,479
|
|
|
—
|
|
|
85,083
|
|
Expenditures for segment assets
|
|
2,826
|
|
|
569
|
|
|
—
|
|
|
3,395
|
|
Revenues (excluding intersegment) from customers in foreign countries
|
|
1,468
|
|
|
43,456
|
|
|
—
|
|
|
44,924
|
|
Note 11—Consolidated Quarterly Data (
Unaudited
)
Selected quarterly financial data for fiscal years
2019
and
2018
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in thousands, except per share amounts
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
Fiscal Year 2019
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
42,152
|
|
|
$
|
37,278
|
|
|
$
|
32,372
|
|
|
$
|
34,748
|
|
Gross profit
|
|
7,474
|
|
|
7,773
|
|
|
5,230
|
|
|
4,842
|
|
Net earnings (loss)
|
|
1,416
|
|
|
1,454
|
|
|
15
|
|
|
(1,197
|
)
|
Less: net earnings attributable to the noncontrolling interest
|
|
9
|
|
|
40
|
|
|
37
|
|
|
73
|
|
Net earnings (loss) attributable to Kewaunee Scientific Corporation
|
|
1,407
|
|
|
1,414
|
|
|
(22
|
)
|
|
(1,270
|
)
|
Net earnings (loss) per share attributable to Kewaunee Scientific Corporation
|
|
|
|
|
|
|
|
|
Basic
|
|
0.51
|
|
|
0.52
|
|
|
(0.01
|
)
|
|
(0.46
|
)
|
Diluted
|
|
0.50
|
|
|
0.51
|
|
|
(0.01
|
)
|
|
(0.46
|
)
|
Cash dividends paid per share
|
|
0.17
|
|
|
0.19
|
|
|
0.19
|
|
|
0.19
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2018 (as adjusted)
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
33,881
|
|
|
$
|
41,471
|
|
|
$
|
38,190
|
|
|
$
|
44,508
|
|
Gross profit
|
|
6,821
|
|
|
7,911
|
|
|
8,309
|
|
|
9,118
|
|
Net earnings
|
|
1,192
|
|
|
1,765
|
|
|
888
|
|
|
1,613
|
|
Less: net earnings attributable to the noncontrolling interest
|
|
44
|
|
|
41
|
|
|
35
|
|
|
57
|
|
Net earnings attributable to Kewaunee Scientific Corporation
|
|
1,148
|
|
|
1,724
|
|
|
853
|
|
|
1,556
|
|
Net earnings per share attributable to Kewaunee Scientific Corporation
|
|
|
|
|
|
|
|
|
Basic
|
|
0.42
|
|
|
0.64
|
|
|
0.31
|
|
|
0.58
|
|
Diluted
|
|
0.42
|
|
|
0.62
|
|
|
0.30
|
|
|
0.56
|
|
Cash dividends paid per share
|
|
0.15
|
|
|
0.17
|
|
|
0.17
|
|
|
0.17
|
|
The sum of the quarterly net earnings per share amounts does not necessarily equal net earnings per share for the year due to rounding.