UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DCWASHINGTON, D.C. 20549

 

FORM 10-Q

 

 

xQuarterly Report Pursuant to SectionQUARTERLY REPORT PURSUANT TO SECTION 13 orOR 15(d) of the Securities Exchange Act ofOF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended JanuaryJuly 31, 2008

OR or

 

¨Transition Report Pursuant to SectionTRANSITION REPORT PURSUANT TO SECTION 13 orOR 15(d) of the Securities Exchange Act ofOF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            

Commission file number 0-5286

 

KEWAUNEE SCIENTIFIC CORPORATION

(Exact name of registrant as specified in its charter)

 

 

Delaware 38-0715562

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S.IRS Employer

Identification No.)

2700 West Front Street

Statesville, North Carolina

 2867728677-2927
(Address of principal executive offices) (Zip Code)

(704) 873-7202

(Registrant’s telephone number, including area code)code: (704) 873-7202

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitionsdefinition of “large accelerated filer,” “accelerated filer”filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer    ¨    Accelerated filer     ¨    Non-accelerated filer    ¨    Smaller reporting company    x

(Do not check if a

smaller reporting company)

Large accelerated filer¨Accelerated filer¨Non-accelerated filerxSmaller reporting company¨

Indicate by check mark whether the registrant is a shell company (as defined inby Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of March 3,September 5, 2008, the Registrantregistrant had outstanding 2,552,4202,556,202 shares of Common Stock.

 

 


KEWAUNEE SCIENTIFIC CORPORATION

INDEX TO FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JANUARYJULY 31, 2008

 

      

Page Number

PART I.  FINANCIAL INFORMATION  
Item 1.  Financial Statements  

Consolidated Statements of Operations - Three and nine months ended JanuaryJuly 31, 2008 and 2007

  3

Consolidated Balance Sheets JanuaryJuly 31, 2008 and April 30, 20072008

  4

Consolidated Statements of Cash Flows - NineThree months ended JanuaryJuly 31, 2008 and 2007

  5

Notes to Consolidated Financial Statements

  6
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations  9
  Review by Independent Registered Public Accounting Firm  13
  Report of Independent Registered Public Accounting Firm  14
Item 3.  Quantitative and Qualitative Disclosures About Market Risk  15
Item 4.  Controls and Procedures  15
PART II.  OTHER INFORMATION  
Item 4.Submission of Matters to a Vote of Security Holders16
Item 6.  Exhibits  16
SIGNATURE  17

Part 1. Financial Information

Item 1. Financial Statements

Item 1.Financial Statements

Kewaunee Scientific Corporation

Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share data)

 

  Three months ended
January 31
 Nine months ended
January 31
   Three months ended
July 31
 
  2008 2007 2008 2007   2008 2007 

Net sales

  $21,883  $18,041  $67,394  $58,720   $25,395  $20,784 

Costs of products sold

   17,064   14,417   52,759   47,888    20,044   16,521 
                    

Gross profit

   4,819   3,624   14,635   10,832    5,351   4,263 

Operating expenses

   3,293   2,829   9,811   8,365    3,586   3,148 
                    

Operating earnings

   1,526   795   4,824   2,467    1,765   1,115 

Other income (expense)

   (6)  (11)  (2)  33    (38)  3 

Interest expense

   (86)  (142)  (302)  (524)   (89)  (110)
                    

Earnings before income taxes

   1,434   642   4,520   1,976    1,638   1,008 

Income tax expense

   421   207   1,391   613    541   312 
                    

Earnings before minority interests

   1,013   435   3,129   1,363    1,097   696 

Minority interests

   211   114   441   340 

Minority interests in subsidiaries

   116   22 
                    

Net earnings

  $802  $321  $2,688  $1,023   $981  $674 
                    

Net earnings per share

        

Basic

  $0.32  $0.13  $1.07  $0.41   $0.38  $0.27 

Diluted

  $0.31  $0.13  $1.05  $0.41   $0.38  $0.27 

Weighted average number of common shares outstanding (in thousands)

        

Basic

   2,543   2,492   2,523   2,492    2,551   2,502 

Diluted

   2,576   2,493   2,551   2,493    2,570   2,521 

See accompanying notes to consolidated financial statements.

Kewaunee Scientific Corporation

Consolidated Balance Sheets

(in thousands)

 

  January 31,
2008
 April 30,
2007
   July 31,
2008
 April 30,
2008
 
  (Unaudited)     (Unaudited)   

Assets

      

Current assets:

      

Cash and cash equivalents

  $2,427  $2,231   $3,131  $3,784 

Restricted cash

   455   372    439   480 

Receivables, less allowance

   19,791   19,061    22,969   20,087 

Inventories

   6,130   5,869    7,310   6,984 

Deferred income taxes

   298   297    405   407 

Prepaid expenses and other current assets

   924   684    841   1,440 
              

Total current assets

   30,025   28,514    35,095   33,182 

Property, plant and equipment, at cost

   38,364   37,096    39,957   39,186 

Accumulated depreciation

   (26,796)  (25,841)   (27,915)  (27,361)
              

Net property, plant and equipment

   11,568   11,255    12,042   11,825 

Prepaid pension cost

   2,256   1,911    1,996   1,936 

Deferred income taxes

   134   129 

Other

   3,575   3,431    3,577   3,663 
              

Total other assets

   5,965   5,471    5,573   5,599 

Total Assets

  $47,558  $45,240   $52,710  $50,606 
       
       

Liabilities and Stockholders’ Equity

      

Current liabilities:

      

Short-term borrowings

  $3,673  $3,489   $5,707  $4,551 

Current obligations under capital leases

   351   360    291   323 

Accounts payable

   7,669   8,437    8,928   8,929 

Employee compensation and amounts withheld

   1,500   1,416    1,444   2,026 

Deferred revenue

   710   1,672    695   667 

Other accrued expenses

   1,451   809    1,706   766 
              

Total current liabilities

   15,354   16,183    18,771   17,262 

Obligations under capital leases

   219   476    90   153 

Deferred income tax

   921   921 

Accrued employee benefit plan costs

   3,445   3,351    3,488   3,555 

Minority interests in subsidiaries

   1,685   1,182    1,847   1,768 
              

Total Liabilities

   20,703   21,192    25,117   23,659 

Stockholders’ equity:

      

Common stock

   6,550   6,550    6,550   6,550 

Additional paid-in-capital

   360   155    492   489 

Retained earnings

   22,105   19,947    23,149   22,373 

Accumulated other comprehensive loss

   (1,732)  (1,833)   (2,177)  (2,041)

Common stock in treasury, at cost

   (428)  (771)   (421)  (424)
              

Total stockholders’ equity

   26,855   24,048    27,593   26,947 
              

Total Liabilities and Stockholders’ Equity

  $47,558  $45,240   $52,710  $50,606 
              

See accompanying notes to consolidated financial statements.

Kewaunee Scientific Corporation

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)thousands )

 

  Nine months ended
January 31
   Three months ended
July 31
 
  2008 2007   2008 2007 

Cash flows from operating activities:

      

Net earnings

  $2,688  $1,023   $981  $674 

Adjustments to reconcile net earnings to net cash used in operating activities:

      

Depreciation

   1,429   1,428    568   494 

Provision for bad debts

   184   112 

Deferred income tax expense

   (5)  —   

Decrease (increase) in receivables

   (914)  4,613 

Increase in inventories

   (261)  (137)

Bad debt provision

   33   88 

Provision for deferred income tax expense

   2   —   

Decrease in prepaid income taxes

   812   —   

(Increase) decrease in receivables

   (2,915)  105 

(Increase) decrease in inventories

   (326)  175 

Increase in prepaid pension cost

   (345)  (286)   (60)  (114)

Decrease in accounts payable and other current liabilities

   (42)  (2,412)

Increase (decrease) in accounts payable and other accrued expenses

   357   (1,133)

Increase (decrease) in deferred revenue

   (962)  152    28   (960)

Other, net

   313   388    (206)  (342)
              

Net cash provided by operating activities

   2,085   4,881 

Net cash used in operating activities

   (726)  (1,013)

Cash flows from investing activities:

      

Capital expenditures

   (1,742)  (1,415)   (785)  (435)

Increase in restricted cash

   (83)  (14)

Decrease (increase) in restricted cash

   41   (24)
              

Net cash used in investing activities

   (1,825)  (1,429)   (744)  (459)

Cash flows from financing activities:

      

(Decrease) increase in short-term borrowings

   184   (2,169)

Dividends paid

   (205)  (175)

Increase in short-term borrowings

   1,156   1,067 

Payments on capital leases

   (266)  (222)   (95)  (86)

Dividends paid

   (530)  (524)

Proceeds from exercise of stock options (including tax benefit)

   548   —      6   190 
              

Net cash used in financing activities

   (64)  (2,915)

Net cash provided by financing activities

   862   996 

Effect of exchange rate changes on cash

   (45)  36 
              

Increase in cash and cash equivalents

   196   537 

Decrease in cash and cash equivalents

   (653)  (440)

Cash and cash equivalents, beginning of period

   2,231   929    3,784   2,231 
              

Cash and cash equivalents, end of period

  $2,427  $1,466   $3,131  $1,791 
              

See accompanying notes to consolidated financial statements.

Kewaunee Scientific Corporation

Notes to Consolidated Financial Statements

(unaudited)

A.Financial Information

A.Financial Information

The unaudited interim consolidated financial statements of Kewaunee Scientific Corporation (the “Company” or “Kewaunee”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's 2007Company’s 2008 Annual Report to Stockholders. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

The preparation of the consolidated financial statements requires management to make certain estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates.

B.Inventories

B.Inventories

Inventories consisted of the following (in thousands):

 

  January 31, 2008  April 30, 2007  July 31, 2008  April 30, 2008

Finished products

  $1,087  $1,243  $2,410  $1,920

Work in process

   1,400   1,257   1,261   1,099

Raw materials

   3,644   3,369   3,639   3,965
            
  $6,130  $5,869  $7,310  $6,984
            

For interim reporting, LIFO inventories are computed based on year-to-date quantities and interim changes in price levels. Changes in quantities and price levels are reflected in the interim consolidated financial statements in the period in which they occur.

C.Comprehensive Income

C.Comprehensive Income

A reconciliation of net earnings and total comprehensive income for the three and nine months ended JanuaryJuly 31, 2008 and 2007 is as follows (in thousands):

 

  Three months ended
January 31, 2008
 Three months ended
January 31, 2007
  Three months ended
July 31, 2008
 Three months ended
July 31, 2007

Net earnings

  $802  $321  $981  $674

Change in cumulative foreign currency translation adjustments

   (69)  20   (136)  53
            

Total comprehensive income

  $(733) $341  $845  $727
  Nine months ended
January 31, 2008
 Nine months ended
January 31, 2007

Net earnings

  $2,688  $1,023

Change in cumulative foreign currency translation adjustments

   (101)  35
      

Total comprehensive income

  $2,587  $1,058

Assets and liabilities for the Company’s foreign subsidiaries are translated at exchange rates prevailing on the balance sheet date. Revenues and expenses are translated at weighted average exchange rates prevailing during the period and any resulting translation adjustments are reported separately in shareholders’ equity.

D.Segment Information

D.Segment Information

The following table provides financial information by business segments for the three and nine months ended JanuaryJuly 31, 2008 and 2007 (in thousands):

 

  Domestic
Operations
  International
Operations
  Corporate Total  Domestic
Operations
  International
Operations
 Corporate Total

Three months ended January 31, 2008

       

Three months ended July 31, 2008

      

Revenues from external customers

  $17,659  $4,224  $—    $21,883  $21,013  $4,382  $—    $25,395

Intersegment revenues

   303   66   (369)  —     786   4   (790)  —  

Operating earnings (loss) before income taxes

   1,565   601   (732)  1,434   2,040   414   (816)  1,638

Nine months ended January 31, 2008

       

Three months ended July 31, 2007

      

Revenues from external customers

   55,753   11,641   —     67,394  $18,014  $2,770  $—    $20,784

Intersegment revenues

   1,566   376   (1,942)  —     776   89   (865)  —  

Operating earnings (loss) before income taxes

   5,506   1,234   (2,220)  4,520   1,672   (2)  (662)  1,008

   Domestic
Operations
  International
Operations
  Corporate  Total

Three months ended January 31, 2007

       

Revenues from external customers

  $14,714  $3,327  $—    $18,041

Intersegment revenues

   971   594   (1,565)  —  

Operating earnings (loss) before income taxes

   749   440   (547)  642

Nine months ended January 31, 2007

       

Revenues from external customers

   48,424   10,296   —     58,720

Intersegment revenues

   2,834   1,051   (3,885)  —  

Operating earnings (loss) before income taxes

   2,573   1,193   (1,790)  1,976

E.Defined Pension Plans

E.Defined Pension Plans

The Company has non-contributory defined benefit pension plans covering substantially all salaried and hourly employees. EffectiveThese 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. At April 30, 2007, the plans’ assets at fair value exceeded benefit obligations by $1.9 million. No contributions were paid to the plans during the ninethree months ended JanuaryJuly 31, 2008, and the Company does not expect any contributions to be paid to the plans during the remainder of the current fiscal year.

Pension expense (income) consisted of the following (in thousands):

 

  Three months ended
January 31, 2008
 Three months ended
January 31, 2007
   Three months ended
July 31, 2008
 Three months ended
July 31, 2007
 

Service Cost

  $-0-  $-0-   $-0-  $-0- 

Interest Cost

   215   210    228   215 

Expected return on plan assets

   (365)  (346)   (337)  (365)

Amortization of prior service costs

   -0-   -0- 

Recognition of net loss

   35   41    49   35 
              

Net periodic pension cost (income)

  $(115) $(95)  $(60) $(115)
  Nine months ended
January 31, 2008
 Nine months ended
January 31, 2007
 

Service Cost

  $-0-  $-0- 

Interest Cost

   645   631 

Expected return on plan assets

   (1,095)  (1,039)

Amortization of prior service costs

   -0-   -0- 

Recognition of net loss

   105   122 
       

Net periodic pension cost (income)

  $(345) $(286)

Item 2. Management’s Discussion and Analysis

of Financial Condition and Results of Operations

The Company’s 20072008 Annual Report to Stockholders contains management'smanagement’s discussion and analysis of financial condition and results of operations at and for the year ended April 30, 2007.2008. The following discussion and analysis describes material changes in the Company’s financial condition since April 30, 2007.2008. The analysis of results of operations compares the three and nine months ended JanuaryJuly 31, 2008 with the comparable periodsperiod of the prior fiscal year.

Results of Operations

Sales for the three months ended JanuaryJuly 31, 2008 were $21,883,000,$25,395,000, an increase of 21.3%22% from sales of $18,041,000$20,784,000 in the same period last year. Sales from domestic operations increased 20.0% from the same period last year to $17.7 million. Sales from international operations increased 26.9% from the same period last year to $4.2 million.

Sales for the nine months ended January 31, 2008Domestic Operations were $67,394,000,$21,013,000, an increase of 14.8%17% from sales of $58,720,000 in the same period last year.prior year period. Sales from domestic operations increased 15.1%International Operations were $4,382,000, an increase of 58% from the same period lastprior year to $55.8 million. Sales from international operations increased 13.1% from the same period last year to $11.6 million.period. The total order backlog at July 31, 2008 was $58.8$60.4 million, as compared to a backlog of $58.7 million at January 31, 2008. This compares to $54.9April 30, 2008 and $54.7 million at October 31, 2007 and $48.6 million at JanuaryJuly 31, 2007.

The gross profit margin for the three months ended JanuaryJuly 31, 2008 was 22.0%21.1% of sales, as compared to 20.1%20.5% of sales in the comparable quarter of the prior year. The increase in gross profit margin for the nine months ended January 31, 2008 was 21.7%, as compareddue to 18.4% in the comparable period of the prior year. The gross profit margin improvements in the current year periods resulted primarily from increased manufacturing efficiencies, savings from alternatealternative sources forof raw materials and components, and other cost improvement activities.initiatives, which more than offset higher prices paid during the quarter for certain raw materials, particularly steel and resin, and for energy and transportation.

Operating expenses for the three months ended JanuaryJuly 31, 2008 were $3.3$3.6 million, or 15.0%14.1% of sales, as compared to $2.8$3.1 million, or 15.7% of sales, in the comparable period of the prior year. Operating expenses for the nine months ended January 31, 2008 were $9.8 million, or 14.6% of sales, as compared to $8.4 million, or 14.2%15.1% of sales, in the comparable period of the prior year. The absolute dollar increase in operating expenses for the three and

nine months ended January 31, 2008, and the increasedecrease in operating expenses as a percentpercentage of sales was due to most operating expenses staying relatively constant while sales increased. The increase in operating expenses in dollars was primarily due to increased expense recorded for the nine months ended January 31, 2008, resulted primarily from increased costs associated withperformance incentive plans of $182,000, increased administrative salaries expense of $90,000, and increased sales and marketing expenses and Sarbanes-Oxley and otherof $76,000, partially offset by a decrease of $59,000 in consulting expenses.

Operating earnings of $1,526,000 and $4,824,000 were recorded$1,765,000 for the three and nine months ended JanuaryJuly 31, 2008, respectively, compared2008. This compares to $795,000 and $2,467,000 recordedoperating earnings of $1,115,000 for the comparable periodsperiod of the prior year.

Interest expense was $86,000 and $302,000$89,000 for the three and nine months ended JanuaryJuly 31, 2008, respectively,as compared to $142,000 and $524,000$110,000 for the same periodsperiod of the prior year. The decrease in interest expense for the current year periodsperiod resulted primarily from lower borrowing levels.interest rates paid, partially offset by higher levels of borrowings, as compared to the prior year period.

Other income/The net of other income and other expense was an expense of $6,000 and $2,000 in the three and nine months ended January 31, 2008, respectively, compared to expense of $11,000$38,000 in the three months ended JanuaryJuly 31, 2007 and2008, as compared to income of $33,000 in$3,000 for the nine months ended January 31,2007.comparable period of the prior year.

Income tax expensesexpense of $421,000 and $1,391,000 were$541,000 was recorded for the three and nine months ended JanuaryJuly 31, 2008, respectively, as compared to income tax expense of $207,000 and $613,000$312,000 recorded for the comparable periodsperiod of the prior year. The effective tax rate was 29.4% and 30.8%33.0% for the three and nine months ended JanuaryJuly 31, 2008 respectively, and was 32.2% and 31.0% for the three and nine months ended JanuaryJuly 31, 2007, respectively.2007. The effective tax ratesrate for each of these periodsthe three months ended July 31, 2008 differs from the statutory rate primarily due to the impact of varying income tax rates associated withon income earned by the earnings ofCompany’s foreign subsidiaries, andsubsidiaries. In addition to a lesser extent,this factor, the impact ofeffective tax rate in the prior year period was favorably impacted by earned state and federal income tax credits. The increase in the effective tax rate in the current year period as compared to the prior year period resulted primarily from the absence of tax credits no longer available because of the expiration of tax credits allowable to corporations under the United States Federal Research and Environmental Tax Credit Law.

Minority interests relate to minority shareholders’ interest related toin the Company’s two foreign subsidiaries that are not 100% owned by the CompanyCompany. Minority interests reduced net earnings by $211,000 and $441,000$116,000 for the three and nine months ended JanuaryJuly 31, 2008, respectively, as compared to minority interest expensea reduction of $114,000 and $340,000 during$22,000 for the comparable periodsperiod of the prior year. The increasesincrease in minority interest forinterests in the current year periods resulted fromperiod was directly related to increased earnings of the relatedtwo subsidiaries.

Net earnings of $802,000,were $981,000, or $0.31$0.38 per diluted share, and $2,688,000, or $1.05 per diluted share, were recorded for the three and nine months ended JanuaryJuly 31, 2008, respectively.2008. This compares to net earnings of $321,000,$674,000, or $0.13 per diluted share, and $1,023,000, or $0.41$0.27 per diluted share, for the three and nine month periodscomparable period of the prior year.

Liquidity and Capital Resources

Historically, the Company’s principal sources of liquidity have been funds generated from operations, supplemented as needed by short-term borrowings under the Company’s revolving credit facility. Additionally, certain machinery and equipment are financed by non-cancelable operating leases or capital leases. The Company believes that these sources will be sufficient to support ongoing business requirements, including capital expenditures through the current fiscal year.

The Company had working capital of $14.7$16.3 million at JanuaryJuly 31, 2008, compared to $12.3$15.9 million at April 30, 2007.2008. The ratio of current assets to current liabilities was 2.0-to-11.9-to-1 at JanuaryJuly 31, 2008, as compared to 1.8-to-1 atunchanged from April 30, 2007.2008. At JanuaryJuly 31, 2008, advances of $3,673,000$5,707,000 were outstanding under the bankunsecured credit facility, as compared to $3,489,000 atadvances of $4,551,000 outstanding as of April 30, 2007.2008.

The Company’s operations providedused cash of $2,085,000$726,000 during the ninethree months ended JanuaryJuly 31, 2008. Cash was provided primarily from earnings,used to fund an increase of $2,915,000 in accounts receivable, which was partially offset by a decrease in deferred revenue and an increase in receivables. cash provided from operating earnings.

The Company’s operations providedused cash of $4,881,000$1,013,000 during the ninethree months ended JanuaryJuly 31, 2007. During this period, cashCash was provided primarily from earnings and a decrease in accounts receivable, which were partially offset byused to fund a decrease in accounts payable and other current liabilities.accrued expenses as well as a decrease in deferred revenue. These items were partially offset by cash provided from operating earnings.

During the ninethree months ended JanuaryJuly 31, 2008, net cash of $1,825,000$744,000 was used inby investing activities, primarily for capital expenditures. This compares to the net cashuse of $1,429,000 used in$459,000 for investing activities in the same period of the prior year, primarily for capital expenditures.

The Company’s financing activities usedprovided cash of $64,000$862,000 during the ninethree months ended JanuaryJuly 31, 2008. Cash usedprovided included $530,000 for$1,156,000 received from short-term borrowings which was partially offset by cash dividends paid of $205,000 and $266,000 for payments on obligations underof capital leases. Cash uses were partially offset by $548,000 received from the exerciseleases of stock options and an increase in short-term borrowings of $184,000.$95,000. Financing activities usedprovided cash of $2,915,000$996,000 in the same period of the prior year, which included $524,000$1,067,000 received from short-term borrowings, partially offset by $175,000 for cash dividends paid, $222,000and $86,000 for payments on obligations underof capital leases, and $2,169,000 for reductions in short-term borrowings.leases.

Outlook for Remainder of Fiscal Year 20082009

While the Company’s ability to predict future demand for its products continues to be limited given, among other general economic factors affecting the Company and its markets, the Company’s role as subcontractor or supplier to dealers offor subcontractors, the Company expects the last quarterremainder of fiscal year 20082009 to be profitable and improved over the same period last year.profitable. In addition to general economic factors affecting the Company and its markets, demand for the Company’sits 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 may beare also impacted by 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, we bear the burden of possible increases in labor and material costs between the quotation of an order and delivery of a product.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Certain statements in this report constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could significantly impact results or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, economic, competitive, governmental, and technological factors affecting the Company’s operations, markets, products, services, and prices, as well as prices for certain raw materials and energy. The cautionary statements made pursuant to the Reform Act herein and elsewhere by the Company should not be construed as exhaustive. The Company cannot always predict what factors would cause actual results to differ materially from those indicated by the forward-looking statements. In addition, readers are urged to consider statements that include the terms “believes”, “belief”, “expects”, “plans”, “objectives”, “anticipates”, “intends” or the like to be uncertain and forward-looking. Over time, the Company’s actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by the Company’s forward-looking statements, and such differencesdifference might be significant and adverse. Factorsharmful to stockholders’ interests. Many important factors that could cause such differencesa difference are described under the caption “Risk Factors,” in Item 1A of the Company’s 20072008 Annual Report on Form 10-K.

REVIEW BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

A review of the interim consolidated interim financial information included in this Quarterly Report on Form 10-Q for each of the three months and nine monthsmonth periods ended JanuaryJuly 31, 2008 and JanuaryJuly 31, 2007 has been performed by Cherry, Bekaert & Holland, L.L.P., the Company's independent auditors.Company’s registered public accounting firm. Their report on the interim consolidated interim financial information follows.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Kewaunee Scientific Corporation

We have reviewed the accompanying consolidated balance sheets of Kewaunee Scientific Corporation and its subsidiaries (the “Company”) as of JanuaryJuly 31, 2008, and the related consolidated statements of operations for the three-month and nine-month periods ended January 31, 2008 and 2007 and the related consolidated statements of cash flows for the nine-monththree-month periods ended JanuaryJuly 31, 2008 and 2007. These interim consolidated financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the interim consolidated interim financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited, in accordance with the Standardsstandards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of April 30, 2007,2008, and the related statements of operations, of stockholder’s equity and of cash flows for the year then ended (not presented herein) and in our report dated July 12, 2007,2008, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of April 30, 20072008 is fairly stated in all material respects in relation to the consolidated financial statement from which it has been derived.

/s/ Cherry, Bekaert & Holland, L.L.P.

Charlotte, North Carolina

March 12,September 9, 2008

Item 3.Quantitative and Qualitative Disclosures About Market Risk

There are no material changes to the disclosures made on this matter in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2007.2008.

 

Item 4.Controls and Procedures

(a) Evaluation of disclosure controls and procedures

An evaluation was performed under the supervision and the participation of the company’sCompany’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of JanuaryJuly 31, 2008. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that, as of JanuaryJuly 31, 2008, the Company’s disclosure controls and procedures were adequate and effective and designed to ensure that all material information required to be filed in this quarterly report is made known to them by others within the Company and its subsidiaries.

(b) Changes in internal controls

There was no significant change in the Company’s internal control over financial reporting that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

 

Item 4.Submission of Matters to a Vote of Security Holders

The Company’s Annual Meeting of Stockholders was held on August 27, 2008. Each of the nominees for Class I directors was re-elected for a three-year term. The votes cast for and withheld from each such director were as follows:

Director

  For  Withheld

Wiley N. Caldwell

  1,985,744  373,236

Silas Keehn

  1,962,872  396,108

David S. Rhind

  2,046,523  312,457

The proposal to adopt the 2008 Key Employee Stock Option Plan was also approved. The votes cast for the Plan were as follows:

For  Against  Abstain
1,261,344  431,555  2,519

Item 6.Exhibits and Reports on Form 8-K

 

31.1  Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2  Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1  Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2  Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 KEWAUNEE SCIENTIFIC CORPORATION
 

(Registrant)

Date: March 13,September 12, 2008 By 

/s/ D. Michael Parker

  D. Michael Parker
  (As duly authorized officer and
Senior Vice President, Finance and
Chief Financial Officer)

 

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