What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-07-15 compared with 2020-07-27 · 303 added, 217 removed, 623 unchanged (45% of the section changed)

1 unchanged sentence

Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Report s of Independent Registered Public Accounting Firm s

Consolidated Statements of Operations—Years ended April 30, 2021 and 2020

4 unchanged sentences

Notes to Consolidated Financial Statements

Consent of Independent Registered Public Accounting Firm

Consent s of Independent Registered Public Accounting Firm s

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

1 unchanged sentence

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Kewaunee Scientific Corporation and subsidiaries (the Company) as of April 30, 2020 and 2019, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the two years in the period ended April 30, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 30, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended April 30, 2020, in conformity with U.S.

We have audited the accompanying consolidated balance sheet of Kewaunee Scientific Corporation and subsidiaries (the “Company”) as of April 30, 2021, the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2021, and the results of its operations and its cash flows for the year then ended, in conformity with U.S.

generally accepted accounting principles.

Adoption of ASC 842, Leases

As discussed in Note 8 to the consolidated financial statements, the Company changed its method of accounting for leases in 2020 due to the adoption of ASC 842, Leases.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion .

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ Dixon Hughes Goodman LLP

We have served as the Company's auditor since 2020.

Charlotte, NC

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Kewaunee Scientific Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Kewaunee Scientific Corporation and subsidiaries

(the Company) as of April 30, 2020, the related consolidated statements of income, comprehensive income,

stockholders' equity and cash flows for the year ended April 30, 2020, and the related notes (collectively referred to

as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all

material respects, the financial position of the Company at April 30, 2020, and the results of its operations and its cash

flows for the year ended April 30, 2020, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an

opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with

the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with

respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of

the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and

perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform,

an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the

Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements,

whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included

examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also

included evaluating the accounting principles used and significant estimates made by management, as well as

evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis

for our opinion.

/s/ Ernst & Young LLP

We served as the Company's auditor from 2016 to 2020.

Charlotte, North Carolina

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CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended April 30

Kewaunee Scientific Corporation

Years Ended April 30 Kewaunee Scientific Corporation

$ and shares in thousands, except per share amounts 2021 2020

Net sales $ 147,469 $ 147,540

Cost of products sold 123,476 124,113

Gross profit 23,993 23,427

Operating expenses 25,309 25,772

Operating earnings (loss)

Operating loss ( 1,316 ) ( 2,345 )

Pension expense ( 1,153 ) ( 454 )

Other income (expense), net

Other income, net 241 426

Interest expense ( 389 ) ( 493 )

Earnings (loss) before income taxes

Loss before income taxes ( 2,617 ) ( 2,866 )

Income tax expense 990 1,758

Net earnings (loss)

net earnings attributable to the noncontrolling interest

Net earnings (loss) attributable to Kewaunee Scientific Corporation

Net earnings (loss) per share attributable to Kewaunee Scientific Corporation stockholders

Net loss ( 3,607 ) ( 4,624 )

net earnings attributable to the non-controlling interest 65 63

Net loss attributable to Kewaunee Scientific Corporation $ ( 3,672 ) $ ( 4,687 )

Net loss per share attributable to Kewaunee Scientific Corporation stockholders

Basic $ ( 1.33 ) $ ( 1.70 )

Diluted $ ( 1.33 ) $ ( 1.70 )

Weighted average number of common shares outstanding

Basic 2,760 2,750

Diluted 2,760 2,750

The accompanying Notes are an integral part of these Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended April 30

Kewaunee Scientific Corporation

Years Ended April 30 Kewaunee Scientific Corporation

$ in thousands 2021 2020

Net earnings (loss)

Net loss $ ( 3,607 ) $ ( 4,624 )

Other comprehensive income (loss), net of tax

Foreign currency translation adjustments ( 23 ) ( 444 )

Change in unrecognized actuarial loss on pension obligations

Change in unrecognized actuarial gain (loss) on pension obligations 6,044 ( 2,748 )

Change in fair value of cash flow hedges — 1

Comprehensive income (loss), net of tax $ 2,414 $ ( 7,815 )

Less comprehensive income (loss) attributable to the noncontrolling interest

Less comprehensive income attributable to the non-controlling interest 65 63

Total comprehensive income (loss) attributable to Kewaunee Scientific Corporation $ 2,349 $ ( 7,878 )

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Kewaunee Scientific Corporation

$ in thousands, except shares and per share amounts

Earnings As Adjusted

$ in thousands, except shares and per share amounts Common

Stock Additional

Capital Treasury

Stock Retained

As Adjusted Accumulated

Comprehensive

Income (Loss)

Income (Loss) Total

Stockholders'

Balance at April 30, 2019 $ 6,875 $ 3,133 $ ( 53 ) $ 43,552 $ ( 6,407 ) $ 47,100

Net earnings attributable to Kewaunee Scientific Corporation

Other comprehensive income

Net loss attributable to Kewaunee Scientific Corporation — — — ( 4,687 ) — ( 4,687 )

Other comprehensive expense — — — — ( 3,191 ) ( 3,191 )

Cash dividends paid, $ 0.38 per share

— — — ( 1,044 ) — ( 1,044 )

Stock options exercised, 2300 shares

1 ( 1 ) — — — —

Stock based compensation 9 228 — — — 237

Cumulative adjustment for adoption of ASC 606, net of tax

Balance at April 30, 2020 6,885 3,360 ( 53 ) 37,821 ( 9,598 ) 38,415

Net earnings attributable to Kewaunee Scientific Corporation

Other comprehensive income (expense)

Cash dividends paid, $0.38 per share

Stock options exercised, 2,300 shares

Net loss attributable to Kewaunee Scientific Corporation — — — ( 3,672 ) — ( 3,672 )

Other comprehensive income — — — — 6,021 6,021

Stock based compensation 30 447 — — — 477

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CONSOLIDATED BALANCE SHEETS

Kewaunee Scientific Corporation

April 30 Kewaunee Scientific Corporation

$ and shares in thousands, except per share amounts 2021 2020

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Receivables, less allowance:

$ 636 (2021);

34,095 28,062

Inventories 16,517 15,330

Income tax receivable 955 2,717

Prepaid expenses and other current assets 3,159 2,907

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Deferred income taxes — 336

Other assets 3,666 3,778

Total Assets $ 89,384 $ 83,929

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Short-term borrowings and interest rate swaps

Current portion of long-term debt

Current portion of capital lease liability

Short-term borrowings $ 6,828 $ 4,719

Current portion of financing lease liability 21 19

Current portion of operating lease liabilities 1,348 1,282

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Total Current Liabilities 34,181 27,060

Long-term debt

Long-term portion of capital lease liability

Long-term portion of financing lease liability 91 113

Long-term portion of operating lease liabilities 7,860 7,780

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Common stock in treasury, at cost:

( 53 ) ( 53 )

Total Kewaunee Scientific Corporation Stockholders' Equity 41,241 38,415

Noncontrolling Interest

Non-controlling interest 246 288

Total Stockholders' Equity 41,487 38,703

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended April 30

Kewaunee Scientific Corporation

Years Ended April 30 Kewaunee Scientific Corporation

$ in thousands 2021 2020

Cash Flows from Operating Activities

Net earnings (loss)

Adjustments to reconcile net earnings to net cash provided by operating activities:

Net loss $ ( 3,607 ) $ ( 4,624 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation 2,687 2,654

Bad debt provision 53 364

Stock based compensation expense 634 251

Provision for deferred income tax expense

Provision for deferred income taxes 1,662 1,895

Change in assets and liabilities:

Receivables ( 6,087 ) 4,833

Inventories ( 1,188 ) 1,876

Income tax receivable 1,762 ( 2,717 )

Accounts payable and other accrued expenses 4,567 ( 2,016 )

Deferred revenue 615 909

Other, net ( 186 ) 736

Net cash provided by operating activities 912 4,161

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Dividends paid — ( 1,044 )

Dividends paid to noncontrolling interest in subsidiaries

Dividends paid to non-controlling interest in subsidiaries ( 108 ) ( 324 )

Proceeds from short-term borrowings 62,205 58,721

Repayments on short-term borrowings ( 60,096 ) ( 63,515 )

Payments on long-term debt and lease obligations

Payments on long-term debt ( 19 ) ( 1,282 )

Net proceeds from exercise of stock options (including tax benefit) — ( 14 )

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities 1,982 ( 7,458 )

Effect of exchange rate changes on cash, net 19 ( 179 )

(Decrease) Increase in Cash, Cash Equivalents and Restricted Cash

Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash 516 ( 5,941 )

Cash, Cash Equivalents and Restricted Cash at Beginning of Year 5,215 11,156

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Interest paid $ 65 $ 513

Income taxes paid

Income taxes (refunded) paid $ ( 1,800 ) $ 188

The accompanying Notes are an integral part of these Consolidated Financial Statements.

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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.

See Note 11 for details on the closure of the Company's China operations in fiscal year 2020.

See Note 11 , Restructuring Costs for details on the closure of the Company's China operations in fiscal year 2020.

The majority of the Company's products are sold to customers located in North America, primarily within the United States.

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Net sales by the Company's subsidiaries in the amounts of $ 36,434,000 and $ 32,437,000 were included in the consolidated statements of operations for fiscal years 2021 and 2020, respectively.

Change in Accounting Principle During the second quarter of fiscal year 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.

Reclassifications The Company reclassified certain amounts in the consolidated balance sheet for the period ended April 30, 2020 and the consolidated statements of cash flows for the year ended April 30, 2020 to conform to the current period presentation.

There was no impact to the consolidated statements of operations or statements of stockholders' equity for fiscal year 2020.

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.

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In accordance with ASU 2016-18, Statement of Cash Flows:

Restricted Cash, the Company includes restricted cash along with the cash balance for presentation in the condensed consolidated statements of cash flows.

The reconciliation between the condensed consolidated balance sheet and the condensed consolidated statement of cash flows at April 30 is as follows:

Restricted Cash, the Company includes restricted cash along with the cash balance for presentation in the consolidated statements of cash flows.

The reconciliation between the consolidated balance sheet and the consolidated statement of cash flows at April 30 is as follows:

$ in thousands 2021 2020

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Property, plant and equipment consisted of the following at April 30:

$ in thousands

Building and improvements

Machinery and equipment

$ in thousands 2021 2020 Useful Life

Land $ 41 $ 41 N/A

Building and improvements 17,017 16,920 10 - 40 years

Machinery and equipment 41,746 40,898 5 - 10 years

Total 58,804 57,859

Less accumulated depreciation ( 42,822 ) ( 41,587 )

Net property, plant and equipment $ 15,982 $ 16,272

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.

The Company 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.

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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:

Quoted prices in active markets for identical assets or liabilities as of the reporting date.

Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities;

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.

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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, 2021 and 2020 (in thousands):

Level 1 Level 2 Level 3 Total

Financial Assets

Trading securities held in non-qualified compensation plans (1)

$ 1,299 $ — $ — $ 1,299

Cash surrender value of life insurance policies (1)

— 1,458 — 1,458

Total $ 1,299 $ 1,458 $ — $ 2,757

Financial Liabilities

Non-qualified compensation plans (2)

Interest rate swap derivatives

$ — $ 3,169 $ — $ 3,169

Total $ — $ 3,169 $ — $ 3,169

Level 1 Level 2 Level 3 Total

Financial Assets

Trading securities held in non-qualified compensation plans (1)

$ 2,485 $ — $ — $ 2,485

Cash surrender value of life insurance policies (1)

Total $ 2,485 $ 87 $ — $ 2,572

Financial Liabilities

Non-qualified compensation plans (2)

Interest rate swap derivatives

$ — $ 2,899 $ — $ 2,899

Total $ — $ 2,899 $ — $ 2,899

(1) The Company maintains two non-qualified compensation plans which include investment assets in a rabbi trust.

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The Company terminated the interest rate swap arrangements in conjunction with the payoff of the outstanding long-term debt in September 2019.

(See Note 4 , Long-term Debt and Other Credit Arrangements .)

Foreign Currency Translation The financial statements of subsidiaries located in India and China, and of Kewaunee Scientific Corporation Singapore Pte.

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Weighted average common shares outstanding

Basic 2,760 2,750

Dilutive effect of stock options and RSUs — —

Weighted average common shares outstanding—diluted 2,760 2,750

The Company granted 39,781 RSUs under the 2017 Omnibus Incentive Plan in fiscal year 2020 and 19,738 RSUs in fiscal 2019 .

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 95,861 RSUs under the 2017 Omnibus Incentive Plan in fiscal year 2021 and 39,781 RSUs in fiscal year 2020.

There were no stock options granted during fiscal years 2021 and 2020.

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.

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 an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.

(See Note 6 , Stock Options and Share-Based Compensation )

New Accounting Standards 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 an 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.

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The adoption of ASU 2016-02 resulted in the recognition of ROU assets and corresponding lease liabilities on the Company's consolidated financial position.

See Note 8 for additional information on the adoption of this standard.

See Note 8 , Leases, Commitments and Contingencies , for additional information on the adoption of this standard.

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.

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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 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 became 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 adopted this standard effective May 1, 2020.

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 2018-02, "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 Tax Cuts and Jobs Act ("2017 Tax Act") from accumulated other comprehensive income to retained earnings.

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The adoption of this standard did not have a significant impact on the Company's consolidated financial position or results of operations.

In August 2018, the FASB issued ASU 2018-13, "Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement," which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC Topic 820.

The Company adopted this standard effective May 1, 2020.

The adoption of this standard did not have a significant impact on the Company's consolidated financial position or results of operations.

In August 2018, the FASB issued ASU 2018-14, "Compensation -Retirement Benefits -Defined Benefit Plans -General (Subtopic 715-20) - Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans" ("ASU 2018-14").

The amendments in this update remove defined benefit plan disclosures that are no longer considered cost-beneficial, clarify the

specific requirements of disclosures, and add disclosure requirements identified as relevant.

The amendments in this update remove defined benefit plan disclosures that are no longer considered cost-beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant.

ASU 2018-14 is effective for fiscal years ending after December 15, 2020.

Early adoption is permitted.

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.

The Company adopted this standard effective May 1, 2020.

The adoption of this standard did not have a significant impact on the Company's consolidated financial position or results of operations.

In December 2019, the FASB issued ASU No.

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The amendments in this update are effective for fiscal years and interim periods beginning after December 15, 2020.

The Company expects to adopt this guidance when effective and is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.

The Company adopted this standard effective May 1, 2021.

The adoption of this standard did not have a significant impact on the Company's consolidated financial position or results of operations.

Note 2 - Revenue Recognition

The Company adopted Accounting Standards Codification 606 - Revenue from Contracts with Customers ("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.

The Company recognizes revenue when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer.

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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.

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.

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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.

As such, from time to time Kewaunee's 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.

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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.

The Company's contracts with customers contain terms typical for Kewaunee's industry, including withholding a portion of the transaction price until after the goods or services have been transferred to the customer (i.e.

"retainage").

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Practical Expedients Used

Accounting Standards Codification 606 - Revenue from Contracts with Customers ("ASC 606") permits the use of practical expedients under certain conditions.

ASC 606 permits the use of practical expedients under certain conditions.

The Company has elected the following practical expedients allowed under ASC 606:

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A summary of net sales transferred to customers at a point in time and over time for the twelve months ended April 30 is as follows (in thousands):

Twelve Months Ended April 30, 2020

International

Domestic International Total

Over Time $ 107,575 $ 36,434 $ 144,009

Point in Time 3,460 — 3,460

Total Revenue $ 111,035 $ 36,434 $ 147,469

Twelve months ended April 30, 2019

International

Domestic International Total

Over Time $ 109,982 $ 32,437 $ 142,419

Point in Time 5,121 — 5,121

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Contract Balances

The closing and opening balances of contract assets arising from contracts with customers were $ 6,131,000 at April 30, 2020 and $ 4,589,000 at April 30, 2019 .

The closing and opening balances of contract liabilities arising from contracts with customers were $ 2,508,000 at April 30, 2020 and $ 1,599,000 at April 30, 2019 .

The closing and opening balances of contract assets included in accounts receivable arising from contracts with customers were $ 6,929,000 at April 30, 2021 and $ 6,131,000 at April 30, 2020.

The closing and opening balances of contract liabilities included in deferred revenue arising from contracts with customers were $ 3,123,000 at April 30, 2021 and $ 2,508,000 at April 30, 2020.

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.

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Approximately 100 % of the contract liability balance at April 30, 2021 is expected to be recognized as revenue during fiscal year 2022.

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 .

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.

Note 3— Inventories

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Total inventories $ 16,517 $ 15,330

At April 30, 2020 and 2019 , the Company’s international subsidiaries’ inventories were $2,136,000 and $1,863,000 , respectively, measured using the FIFO method at the lower of cost and net realizable value and are included in the above tables.

At April 30, 2021 and 2020, the Company's international subsidiaries' inventories were $ 2,560,000 and $ 2,136,000 , respectively, measured using the FIFO method at the lower of cost or net realizable value and are included in the above tables.

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") consisting of 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, a term loan in the amount of $ 3,450,000 which matured on May 1, 2020 ("Term Loan A") and a term loan in the amount of $ 1,550,000 which matured on May 1, 2020 (Term Loan B and together with Term Loan A, the "Term Loans").

At April 30, 2019, the Company was not in compliance with all of the financial covenants under the revolving credit facility.

The Company received a waiver from its lender with respect to 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 amendment to the Loan Agreement and the Line of Credit to effect a change in the financial covenants set forth in the Loan Agreement.

This amendment did not change the amount of availability provided by the Company’s Line of Credit.

On June 19, 2019, 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.

In September 2019, the Company paid off Term Loan A and Term Loan B and terminated the related interest rate swap agreements.

On December 13, 2019, the Company entered into an amendment to the Loan Agreement and the Line of Credit to effect a change to an asset based lending arrangement based on eligible accounts receivable and inventory, with the available amount not to exceed $ 20 million through January 31, 2020, and with such maximum amount reduced to $ 15 million thereafter.

with such maximum amount reduced to $ 15 million thereafter.

This amendment replaced the prior financial covenants with new financial covenants, including minimum monthly liquidity and EBITDA requirements.

Additionally, a requirement for the repatriation of foreign cash and restrictions on the payment of dividends were added.

At April 30, 2020, the Company was not in compliance with all of the financial covenants under the revolving credit facility.

On July 20, 2020, the Company entered into an amendment to the Loan Agreement and Line of Credit which effected changes in certain financial covenants set forth in the Loan Agreement and included a waiver of the non-compliance.

On January 28, 2021, the Company entered into another amendment which effected changes (i) extending the maturity date under the Credit Agreement and Revolving Note from February 1, 2021 to May 3, 2021;

(ii) establishing a minimum EBITDA covenant for the fiscal quarter ending April 30, 2021 of $ 1,000,000 , determined for the four-quarter period then ending;

and (iii) revising the covenant regarding delivery of financial projections to the Bank to, among other things, provide projections for the next succeeding fiscal year.

On April 27, 2021, the Company entered into another amendment which effected changes (i) extending the maturity date under the Credit Agreement and Revolving Note from May 3, 2021 to July 30, 2021;

and (ii) revising the minimum EBITDA covenant to permit EBITDA to be increased by (a) scheduled one-time non-recurring addbacks in an amount not to exceed $ 250,000 , and (b) solely for the four-quarter period ending April 30, 2021, a one-time addback in an amount not to exceed $ 600,000 for non-cash, stock-based compensation paid by the Company.

These amendments did not change the amount of availability under the revolving credit facility.

At April 30, 2021, the Company was in compliance with all the financial covenants under its revolving credit facility.

At April 30, 2021, there were advances of $ 6.8 million and $ 704,000 in letters of credit outstanding, leaving $ 7.5 million available under the Line of Credit.

The borrowing rate under the Line of Credit at that date was 4.750 %.

Monthly interest payments under the Line of Credit were payable at the Daily One Month LIBOR interest rate plus 1.5% to 3.75% based upon the ratio of senior funded debt to EBITDA calculated quarterly.

At April 30, 2020 , the interest rate margin was 3.75% .

At April 30, 2020, the Company was not in compliance with all of the financial covenants under the revolving credit facility.

This amendment did not change the amount of availability provided by the Company's Line of Credit.

Monthly interest payments under the Line of Credit were payable at the greater of the Daily One Month LIBOR interest rate or 0.75 % plus 4.0 %.

At April 30, 2021, there were bank guarantees issued by foreign banks outstanding to customers in the amount of $ 3.2 million, $ 61,000 , $ 18,000 , $ 9,000 and $ 257,000 , and with expiration dates in fiscal years 2022, 2023, 2024, 2025 and 2027, respectively, collateralized by a $ 6.0 million corporate guarantee and certain assets of the Company's subsidiaries in India.

At April 30, 2019 , there were advances of $9.5 million and $5.2 million in letters of credit outstanding under the Line of Credit.

At April 30, 2020, there were advances of $ 4.7 million and $ 512,000 in letters of credit outstanding under the Line of Credit.

The borrowing rate at that date was 4.13 %.

At April 30, 2020, there were foreign bank guarantees outstanding to customers in the amount of $ 1.6 million, $ 297,000 and $ 74,000 with expiration dates in fiscal years 2021, 2022, and 2023, respectively, collateralized by a $ 6.0 million corporate guarantee and certain assets of the Company's subsidiaries in India.

Amounts outstanding under the term loans were as follows as of April 30 :

$ in thousands

Term Loan A payable

Term Loan B payable

current portion

Long-term debt

Note 5— Income Taxes

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The CARES Act includes a broad range of tax reform provisions affecting businesses, including permissible net operating losses ("NOLs") carrybacks up to five years , changes in business deductions limitations, and deferral of Social Security withholdings.

The Company expects that it will apply the NOL carryback provision of the CARES Act with respect to its estimated NOL for fiscal year 2020 to years that had higher enacted tax rates, resulting in a tax benefit.

This resulted in a reclassification of a $ 2,456,000 NOL deferred income tax asset to refundable income taxes for fiscal year 2020.

The Company expects that it will apply the NOL carryback provision of the CARES Act with respect to its estimated NOL for fiscal year 2021 to years that had higher enacted tax rates, and applied this provision to the NOL for fiscal year 2020, resulting in a tax benefit.

The Company also applied the deferral of Social Security withholdings in accordance with the CARES Act;

these deferred withholdings are due in future periods.

Effective August 1, 2019, as previously stated, the Company elected to revoke the indefinite reinvestment of foreign unremitted earnings position set forth by ASC 740-30-25-17 for multiple foreign subsidiaries.

The Company recorded a tax withholding expense imposed by the India Income Tax Department of $ 1,964,000 for the year ended April 30, 2020.

As of April 30, 2019, the Company considers the accounting defined in SEC Staff Accounting Bulletin No.

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 concluded there was no material impact related to this change and did no t record a deferred income tax expense for the year ended April 30, 2020.

The Company recorded a tax withholding expense imposed by the India Income Tax Department of $ 226,000 and $ 1,964,000 for the years ended April 30, 2021 and 2020, respectively.

The Company's accounting policy with respect to the Global Intangible Low-Taxed Income ("GILTI") tax rules is that GILTI will be treated as a periodic charge in the year in which it arises.

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Current tax expense (benefit):

Federal $ ( 396 ) $ ( 2,289 )

State and local 8 49

Total current tax expense

Foreign 1,136 1,567

Total current tax expense (benefit) 748 ( 673 )

Deferred tax expense (benefit):

Federal 449 1,233

State and local ( 135 ) 438

Total deferred tax expense (benefit)

Foreign ( 72 ) 760

Total deferred tax expense 242 2,431

Net income tax expense $ 990 $ 1,758

1 unchanged sentence

$ in thousands 2021 2020

Income tax expense (benefit) at statutory rate

Income tax benefit at statutory rate $ ( 470 ) $ ( 567 )

State and local taxes, net of federal income tax benefit ( 129 ) ( 115 )

4 unchanged sentences

Net operating loss carryback 118 ( 939 )

Effects of stock options exercised

Effect of prior year true ups ( 42 ) 38

Impact of foreign subsidiary income to parent

Increase (decrease) in valuation allowance

Impact of foreign subsidiary income (loss) to parent 67 ( 5 )

Increase in valuation allowance 1,538 1,707

Other items, net 80 196

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Net operating loss carryforwards 572 457

Revenue recognition change (See Note 2)

LIFO change (See Note 3)

Other 568 506

Total deferred tax assets 5,754 6,293

2 unchanged sentences

Prepaid pension ( 847 ) ( 1,111 )

APB 23 Assertion ( 765 ) ( 786 )

Other ( 122 ) ( 304 )

Total deferred tax liabilities ( 3,330 ) ( 3,746 )

Valuation allowance ( 2,731 ) ( 2,612 )

Net deferred tax assets (liabilities)

Deferred tax assets classified in the balance sheet:

Net deferred tax assets (liabilities)

At April 30, 2020 , the Company had deferred tax assets related to various federal, state and foreign deferred tax items, net operating loss carryforwards, and tax credit carryforwards in the amount of $ 6,293,000 The Company is required to evaluate the realization of the deferred tax asset and any requirement for a valuation allowance in accordance with ASC 740-10-30-2(b).

Net deferred tax liabilities $ ( 307 ) $ ( 65 )

Deferred tax assets (liabilities) classified in the balance sheet:

Current $ — $ 336

Non-current ( 307 ) ( 401 )

Net deferred tax liabilities $ ( 307 ) $ ( 65 )

At April 30, 2021, the Company had deferred tax assets related to various federal, state and foreign deferred tax items, net operating loss carryforwards, and tax credit carryforwards in the amount of $ 5,754,000 .

The Company is required to evaluate the realization of the deferred tax asset and any requirement for a valuation allowance in accordance with ASC 740-10-30-2(b).

The Company evaluates all available evidence, both positive and negative, to determine the amount of any required valuation allowance.

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At April 30, 2021, the Company had federal research and development tax credit carryforwards in the amount of $ 808,000 expiring beginning in 2041.

The Company expects to carryback $ 332,000 of research and development tax credit to prior periods reducing the Company’s carryforward amount to $ 362,000 .

At April 30, 2020 , the Company had foreign tax credit carryforwards in the amount of $ 638,000 that are subject to a full valuation allowance.

At April 30, 2021, the Company had foreign tax credit carryforwards in the amount of $ 638,000 , which are subject to a full valuation allowance, beginning to expire in 2028.

At April 30, 2021, the Company had $ 1,136,000 gross net operating losses in jurisdictions outside of the United States, of which $ 482,000 is set to expire in years 2022 to 2025.

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The following table summarizes the RSU activity and weighted averages.

Number of RSUs

Weighted Average Grant Date Fair Value

Number of RSUs

Weighted Average Grant Date Fair Value

Number of RSUs Weighted Average Grant Date Fair Value Number of RSUs Weighted Average Grant Date Fair Value

Outstanding at beginning of year 52,850 $ 20.08 23,308 $ 28.66

Granted 95,861 $ 9.43 39,781 $ 15.93

Vested ( 11,477 ) $ 13.55 ( 2,397 ) $ 18.94

Forfeited ( 12,017 ) $ 16.69 ( 7,842 ) $ 21.94

Outstanding at end of year 125,217 $ 12.71 52,850 $ 20.08

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 stock options were 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, 2020 , there were no shares available for future grants under the 2010 Plan.

At April 30, 2020 there were no stock options outstanding 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 shares.

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 shares.

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 determined at the time of the grant.

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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 $58,000 and $115,000 of compensation expense and $14,000 and $27,000 of deferred income tax benefit in fiscal years 2020 and 2019 , respectively.

The remaining compensation expense of $12,000 and deferred income tax benefit of $3,000 will be recorded over the remaining vesting periods.

Under the 2008 Plan, the Company recorded $ 15,000 and $ 58,000 of compensation expense and $ 3,000 and $ 14,000 of deferred income tax benefit in fiscal years 2021 and 2020, respectively.

The Company issued new shares of common stock to satisfy options exercised during fiscal years 2021 and 2020.

Stock option activity and weighted average exercise price are summarized as follows:

Weighted Average Exercise Price

of Shares Weighted Average Exercise Price Number

of Shares Weighted Average Exercise Price

Outstanding at beginning of year 88,000 $ 18.45 104,350 $ 18.28

Canceled ( 3,700 ) $ 15.97 ( 14,050 ) $ 17.78

Exercised — $ — ( 2,300 ) $ 14.98

Outstanding at end of year 84,300 $ 18.56 88,000 $ 18.45

3 unchanged sentences

$ 8.59 -$ 11.78

$ 15.85 -$ 23.62

Options outstanding 5,150 79,150

Weighted average exercise price $ 10.85 $ 19.06

Weighted average remaining contractual life

Weighted average remaining contractual life 1.04 years 4.17 years

Aggregate intrinsic value $ 5,918 $ —

5 unchanged sentences

The before tax income (loss), related income tax effect, and accumulated balances are as follows:

$ in thousands

$ in thousands Cash Flow

Hedges Foreign

Adjustment Minimum

Adjustment Total

Comprehensive

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Balance at April 30, 2019 $ — $ ( 1,891 ) $ ( 4,516 ) $ ( 6,407 )

Effect of changes in tax rates

Foreign currency translation adjustment — ( 444 ) — ( 444 )

3 unchanged sentences

Balance at April 30, 2020 — ( 2,334 ) ( 7,264 ) ( 9,598 )

Effect of changes in tax rates

Foreign currency translation adjustment — ( 23 ) — ( 23 )

Change in fair value of cash flow hedges

Change in unrecognized actuarial loss on pension obligations — — 6,044 6,044

Income tax effect

Balance at April 30, 2021 $ — $ ( 2,357 ) $ ( 1,220 ) $ ( 3,577 )

2 unchanged sentences

2016-02, Leases, and all subsequently issued clarifying guidance.

Under the new guidance, lessees are required to recognize lease assets and lease liabilities with respect to the rights and obligations created by leased assets previously classified as operating leases.

In July 2018, the Financial Accounting Standards Board ("FASB") issued ASU No.

2018-11, which permitted entities to record the impact of adoption using a modified retrospective method with any cumulative effect as an adjustment to retained earnings (accumulated deficit) as opposed to restating comparative periods to reflect the effects of applying the new standard.

The Company elected this transition approach;

therefore, the Company’s prior period reported results are not restated to include the impact of this adoption.

In addition, the Company elected the package of three transition practical expedients which alleviate the requirements to reassess embedded leases, lease classification and initial direct costs for leases that commenced prior to the adoption date.

The Company has elected to use the short-term lease recognition exemption for all asset classes.

ASU 2016-02 required the Company to recognize lease assets and lease liabilities with respect to the rights and obligations created by leased assets previously classified as operating leases.

Upon adoption, the Company elected to:

• Record the impact of adoption using a modified retrospective method with any cumulative effect as an adjustment to retained earnings (accumulated deficit) as opposed to restating comparative periods to reflect the effects of applying the new standard.

• Elect the package of three transition practical expedients which alleviate the requirements to reassess embedded leases, lease classification and initial direct costs for leases that commenced prior to the adoption date.

• Elected to use the short-term lease recognition exemption for all asset classes.

This means, for those leases that qualify, the Company will not recognize right-of-use ("ROU") assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets.

The adoption of this standard did not affect the Condensed Consolidated Statements of Operations and therefore, no cumulative effect adjustment was recorded.

The adoption of this standard also did not materially affect the Condensed Consolidated Statements of Cash Flows.

The Company has operating type leases for real estate and equipment in both the U.S.

and internationally and a financing lease for a truck in the U.S.

At April 30, 2020 , ROU assets totaled $ 9,312,000 .

Included in the ROU assets was a finance lease with a net value of $ 123,000 with accumulated amortization totaling $ 36,000 .

Operating cash paid to settle lease liabilities was $ 1,526,000 for the twelve months ended April 30, 2020 .

and internationally and a financing lease for a truck in the United States.

ROU assets totaled $ 9,279,000 and $ 9,312,000 at April 30, 2021 and 2020, respectively.

Operating cash paid to settle lease liabilities was $ 1,799,000 and $ 1,526,000 for the twelve months ended April 30, 2021 and 2020, respectively.

The Company's leases have remaining lease terms of up to 8 years.

1 unchanged sentence

Operating lease expense was $ 2,854,000 for the twelve months ended April 30, 2021, inclusive of period cost for short-term leases, not included in lease liabilities, of $ 1,055,000 .

Rent expense for these operating leases was $2,225,000 in fiscal year 2019 .

Operating lease expense was $ 2,441,000 for the twelve months ended April 30, 2020, inclusive of period cost for short-term leases, not included in lease liabilities, of $ 915,000 .

At April 30, 2021, the weighted average remaining lease term for the capitalized operating leases was 5.9 years and the weighted average discount rate was 4.1 %.

For the finance lease, the remaining lease term was 5.4 years and the discount rate was 10.0% .

At April 30, 2020, the weighted average remaining lease term for the capitalized operating leases was 7.6 years and the weighted average discount rate was 4.1 %.

For the financing lease, the remaining lease term was 4.3 years and the discount rate was 10.0 % at April 30, 2021 as compared to 5.3 years and 10.0 % at April 30, 2020.

As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The Company uses the implicit rate when readily determinable.

Future minimum payments under the non-cancelable lease arrangements for the years ending April 30 are as follows:

Future minimum payments under the non-cancelable lease arrangements for the fiscal years ending April 30 are as follows:

($ in thousands) Operating Financing

2022 $ 2,018 $ 32

2023 1,833 32

2024 1,475 32

2025 1,431 32

2026 1,220 13

Thereafter 2,864 —

Total Minimum Lease Payments 10,841 141

Imputed Interest ( 1,633 ) ( 28 )

Total $ 9,208 $ 113

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.

12 unchanged sentences

Interest cost 723 832

Actuarial loss

Actuarial (loss) gain ( 97 ) 2,769

Actual benefits paid ( 1,404 ) ( 1,275 )

8 unchanged sentences

Amounts Recognized in the Consolidated Balance Sheets consist of:

Noncurrent liabilities

Non-current liabilities $ ( 1,483 ) $ ( 6,404 )

Amounts Recognized in Accumulated Other Comprehensive Income (Loss) Consist of:

4 unchanged sentences

Discount rate 3.20 % 3.10 %

Rate of compensation increase

Mortality table

Projection scale

$ in thousands

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Years Ended April 30

Rate of compensation increase N/A N/A

Mortality table Pri-2012 Pri-2012

Projection scale MP-2020 MP-2019

Year Ended April 30,

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost 2021 2020

Discount rate 3.20 % 3.10 %

Expected long-term return on plan assets 7.75 % 7.75 %

Rate of compensation increase

Rate of compensation increase N/A N/A

The components of the net periodic pension expense for each of the fiscal years ended April 30 are as follows:

6 unchanged sentences

The Company's funding policy is to contribute to the plans when pension laws and economics either require or encourage funding.

The Company expects to make contributions in the amount of $ 30,000 during fiscal year 2021 .

There were no contributions made to the plan in fiscal year 2020 .

The Company made contributions of $ 1,000,000 in fiscal year 2019.

The Company expects to make no contributions during fiscal year 2022.

There were $ 30,000 in contributions made to the plans in fiscal year 2021.

The Company made no contributions to the plans during fiscal year 2020.

The following benefit payments are expected to be paid from the benefit plans in the fiscal years ending April 30:

$ in thousands

$ in thousands Amount

2027 & Beyond 7,390

19 unchanged sentences

$ in thousands 2021 2020

Asset Category

Asset Category Amount % Amount %

Equity Securities $ 14,814 69 $ 10,797 62

1 unchanged sentence

Cash and Cash Equivalents 331 2 1,142 7

The following tables present the fair value of the assets in our defined benefit pension plans at April 30 :

Asset Category

Totals $ 21,459 100 $ 17,316 100

The following tables present the fair value of the assets in the Company's defined benefit pension plans at April 30:

Asset Category Level 1 Level 2 Level 3

Large Cap $ 7,726 $ — $ —

Small/Mid Cap 3,128 — —

1 unchanged sentence

Emerging Markets 862 — —

Fixed Income 6,314 — —

Liquid Alternatives 925 — —

Cash and Cash Equivalents 331 — —

Asset Category

Totals $ 21,459 $ — $ —

Asset Category Level 1 Level 2 Level 3

Large Cap $ 5,831 $ — $ —

Small/Mid Cap 2,121 — —

1 unchanged sentence

Emerging Markets 483 — —

Fixed Income 5,377 — —

Liquid Alternatives 512 — —

Cash and Cash Equivalents 1,142 — —

Totals $ 17,316 $ — $ —

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.

6 unchanged sentences

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 year 2019 of $338,000 .

The Company did not elect to make a non-matching contribution in fiscal year 2020.

The Company did not elect to make a non-matching contribution in fiscal years 2021 and 2020.

Note 10— Segment Information

2 unchanged sentences

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 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.

The International business segment, which consists of the foreign subsidiaries identified in Note 1 , Summary of Significant Accounting Policies , 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.

2 unchanged sentences

The following table shows revenues, earnings, and other financial information by business segment for each of the years ended April 30:

$ in thousands

International

$ in thousands Domestic International Corporate Total

Fiscal Year 2021

1 unchanged sentence

Intersegment revenues 1,779 3,549 ( 5,328 ) —

Depreciation 2,423 264 — 2,687

Earnings (loss) before income taxes 1,166 3,178 ( 6,961 ) ( 2,617 )

Income tax expense (benefit) 245 1,063 ( 318 ) 990

Net earnings attributable to noncontrolling interest

Net earnings attributable to non-controlling interest — 65 — 65

Net earnings (loss) attributable to Kewaunee Scientific Corporation 921 2,049 ( 6,642 ) ( 3,672 )

5 unchanged sentences

Intersegment revenues 3,621 2,277 ( 5,898 ) —

Depreciation 2,371 283 — 2,654

Earnings (loss) before income taxes 1,176 1,924 ( 5,966 ) ( 2,866 )

Income tax expense (benefit) 585 2,463 ( 1,290 ) 1,758

Net earnings attributable to noncontrolling interest

Net earnings attributable to non-controlling interest — 63 — 63

Net earnings (loss) attributable to Kewaunee Scientific Corporation 591 ( 602 ) ( 4,676 ) ( 4,687 )

5 unchanged sentences

This restructuring plan, which included the closure of the Company's subsidiary in China, a commercial sales organization for the Company's products in China, was substantially completed as of April 30, 2020.

The Company expects the remaining administrative requirements for closure of the China subsidiary to be completed by the end of fiscal year 2021.

In fiscal year 2020 , the Company incurred expenses in its domestic operations of $ 380,000 , consisting primarily of severance costs for terminated positions and expenses related to hiring and relocation of the new Vice President of Information Technology.

In addition, the Company incurred expenses in its international operations related to the closure of the China subsidiary of $ 288,000 , consisting primarily of bad debt expenses of $ 240,000 .

The Company reflected all the expenses as operating expenses in the condensed statement of operations.

In fiscal year 2021, the Company incurred severance expenses in its international operations related to the closure of the China subsidiary of $ 25,000 .

The Company reflected all the expenses as operating expenses in the Consolidated Statement of Operations.

The Company now expects the remaining administrative requirements for closure of the China subsidiary to be completed by the end of fiscal year 2022.

Note 12— Consolidated Quarterly Data ( Unaudited )

Selected quarterly financial data for fiscal years 2021 and 2020 were as follows:

$ in thousands, except per share amounts

$ in thousands, except per share amounts First

Quarter Second

Quarter Third

Quarter Fourth

Fiscal Year 2021

Net earnings (loss)

net earnings attributable to the noncontrolling interest

Net earnings (loss) attributable to Kewaunee Scientific Corporation

Net earnings (loss) per share attributable to Kewaunee Scientific Corporation

Net sales $ 36,423 $ 39,000 $ 33,339 $ 38,707

Gross profit 5,881 6,395 5,654 6,063

Net (loss) earnings ( 608 ) ( 165 ) 95 ( 2,929 )

net (loss) earnings attributable to the non-controlling interest ( 10 ) 15 14 46

Net (loss) earnings attributable to Kewaunee Scientific Corporation ( 598 ) ( 180 ) 81 ( 2,975 )

Net (loss) earnings per share attributable to Kewaunee Scientific Corporation

Basic ( 0.22 ) ( 0.07 ) 0.03 ( 1.08 )

Diluted ( 0.22 ) ( 0.07 ) 0.03 ( 1.08 )

Cash dividends paid per share — — — —

Fiscal Year 2020

Net sales $ 39,336 $ 39,722 $ 34,225 $ 34,257

Gross profit 6,946 6,316 5,278 4,887

Net earnings (loss) 496 ( 2,161 ) ( 1,901 ) ( 1,058 )

net earnings attributable to the noncontrolling interest

net earnings attributable to the non-controlling interest 25 17 17 4

Net earnings (loss) attributable to Kewaunee Scientific Corporation 471 ( 2,178 ) ( 1,918 ) ( 1,062 )

Net earnings (loss) per share attributable to Kewaunee Scientific Corporation

Basic 0.17 ( 0.79 ) ( 0.70 ) ( 0.39 )

Diluted 0.17 ( 0.79 ) ( 0.70 ) ( 0.39 )

Cash dividends paid per share 0.19 0.19 — —

The sum of the quarterly net earnings per share amounts does not necessarily equal net earnings per share for the year due to rounding.

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Form S-8 No.

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - DIXON HUGHES GOODMAN LLP

We consent to the incorporation by reference in the Registration Statements on Forms S-8 (No.

333-160276, No.

1 unchanged sentence

333-213413, and No.

333-220389), of our report dated July 27, 2020 with respect to the consolidated financial statements of Kewaunee Scientific Corporation, included in this Annual Report (Form 10-K) for the year ended April 30, 2020.

333-220389), of Kewaunee Scientific Corporation of our reports dated July 15, 2021 with respect to the consolidated financial statements of Kewaunee Scientific Corporation, included in this Annual Report (Form 10-K) for the year ended April 30, 2021.

/s/ Dixon Hughes Goodman LLP

Charlotte, North Carolina

July 15, 2021

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - ERNST & YOUNG LLP

We consent to the incorporation by reference in the following Registration Statements on Form S-8 (No.

333-160276, No.

333-176447, No.

333-213413, and No.

/s/ Ernst & Young LLP

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data