UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

 

 

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended JulyOctober 31, 2009

or

 

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to                

Commission file number 0-5286

 

 

KEWAUNEE SCIENTIFIC CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware 38-0715562

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

2700 West Front Street

Statesville, North Carolina

 28677-2927
(Address of principal executive offices) (Zip Code)

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

 

 

Indicate by check mark whether the registrantregistrant: (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 has submitted electronically and posted on its corporate webWeb site, if any, every Interactive Dates File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ¨    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 definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ¨ Accelerated filer ¨ 

Non-accelerated filer ¨

Smaller reporting company  x

(Do not check if a smaller

reporting company)

 Smaller reporting company x

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

As of September 5,December 7, 2009, the registrant had outstanding 2,564,5922,569,310 shares of Common Stock.

 

 

 


KEWAUNEE SCIENTIFIC CORPORATION

INDEX TO FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JULYOCTOBER 31, 2009

 

     Page Number
PART I. FINANCIAL INFORMATION  FINANCIAL INFORMATION1
Item 1. 

Financial Statements

  1

Consolidated Statements of Operations - Three and Six months ended JulyOctober 31, 2009 and 2008

1

Consolidated Balance Sheets October 31, 2009 and April 30, 2009

2

Consolidated Statements of Cash Flows – Six months ended October 31, 2009 and 2008

  3

Consolidated Balance Sheets - July 31, 2009 and April 30, 2009

4

Consolidated Statements of Cash Flows - Three months ended July 31, 2009 and 2008

5

Notes to Consolidated Financial Statements

  64
Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  96

Review by Independent Registered Public Accounting Firm

  138

Report of Independent Registered Public Accounting Firm

  149
Item 3. 

Quantitative and Qualitative Disclosures About Market Risk

  1510
Item 4. 

Controls and Procedures

  1510

PART II. OTHER INFORMATION

  OTHER INFORMATION11
Item 4. 

Submission of Matters to a Vote of Security Holders

  1611
Item 6. 

Exhibits

  1611

SIGNATURE

  1712

i


Part 1. Financial Information

 

Item 1.Financial Statements

Kewaunee Scientific Corporation

Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share data)

 

  Three months ended
July 31
   Three months ended
October 31
 Six months ended
October 31
 
  2009 2008   2009 2008 2009 2008 

Net sales

  $26,249   $25,395  

Net Sales

  $27,088   $27,732   $53,337   $53,127  

Costs of products sold

   20,485    20,044     20,878    21,713    41,363    41,757  
                    

Gross profit

   5,764    5,351     6,210    6,019    11,974    11,370  

Operating expenses

   3,966    3,586     3,976    3,858    7,942    7,444  
                    

Operating earnings

   1,798    1,765     2,234    2,161    4,032    3,926  

Other income (expense)

   —      (38

Other expense

   —      (1  —      (39

Interest expense

   (41  (89   (39  (93  (80  (182
                    

Earnings before income taxes

   1,757    1,638     2,195    2,067    3,952    3,705  

Income tax expense

   589    541     751    566    1,340    1,107  
                    

Net earnings

   1,168    1,097     1,444    1,501    2,612    2,598  

Less: net earnings attributable to the noncontrolling interest

   (97  (116   92    37    189    153  
                    

Net earnings attributable to Kewaunee Scientific Corporation

  $1,071   $981    $1,352   $1,464   $2,423   $2,445  
                    

Net earnings per share attributable to Kewaunee Scientific Corporation stockholders

        

Basic

  $0.42   $0.38    $0.53   $0.57   $0.95   $0.96  

Diluted

  $0.42   $0.38    $0.53   $0.57   $0.95   $0.95  

Weighted average number of common shares outstanding (in thousands)

        

Basic

   2,556    2,551     2,560    2,555    2,558    2,553  

Diluted

   2,558    2,570     2,571    2,562    2,564    2,566  

See accompanying notes to consolidated financial statements.

Kewaunee Scientific Corporation

Consolidated Balance Sheets

(in thousands)

 

  July 31,
2009
 April 30,
2009
   October 31,
2009
 April 30,
2009
 
  (Unaudited)     (Unaudited)   

Assets

      

Current assets:

      

Cash and cash equivalents

  $3,044   $3,559    $2,596   $3,559  

Restricted cash

   467    456     461    456  

Receivables, less allowance

   23,874    24,526     26,660    24,526  

Inventories

   9,348    7,839     8,117    7,839  

Deferred income taxes

   293    309     311    309  

Prepaid expenses and other current assets

   1,204    856     1,389    856  
              

Total current assets

   38,230    37,545     39,534    37,545  

Property, plant and equipment, at cost

   41,318    39,298     40,952    39,298  

Accumulated depreciation

   (28,553  (27,929   (28,560  (27,929
              

Net property, plant and equipment

   12,765    11,369     12,392    11,369  

Deferred income taxes

   350    351     339    351  

Other

   3,619    3,264     3,759    3,264  
              

Total other assets

   3,969    3,615     4,098    3,615  
       

Total Assets

  $54,964   $52,529    $56,024   $52,529  
              

Liabilities and Stockholders’ Equity

      

Current liabilities:

      

Short-term borrowings

  $6,229   $5,720    $5,370   $5,720  

Current obligations under capital leases

   163    220     100    220  

Accounts payable

   9,041    8,812     7,410    8,812  

Employee compensation and amounts withheld

   1,573    1,709     1,476    1,709  

Deferred revenue

   959    1,298     1,327    1,298  

Other accrued expenses

   1,462    904     2,971    904  
              

Total current liabilities

   19,427    18,663     18,654    18,663  

Obligations under capital leases

   177    201     177    201  

Accrued employee benefit plan costs

   5,974    5,406     6,371    5,406  
              

Total Liabilities

   25,578    24,270     25,202    24,270  

Equity:

      

Common stock

   6,550    6,550  

Common Stock

   6,550    6,550  

Additional paid-in-capital

   635    614     711    614  

Retained earnings

   26,668    25,802     27,764    25,802  

Accumulated other comprehensive loss

   (5,417  (5,521   (5,308  (5,521

Common stock in treasury, at cost

   (492  (492   (471  (492
              

Total Kewaunee Scientific Corporation stockholders’ equity

   27,944    26,953     29,246    26,953  

Noncontrolling interest

   1,442    1,306     1,576    1,306  
              

Total equity

   29,386    28,259  

Total Equity

   30,822    28,259  
              

Total Liabilities and Equity

  $54,964   $52,529    $56,024   $52,529  
              

See accompanying notes to consolidated financial statements.

Kewaunee Scientific Corporation

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

  Three months ended
July 31
   Six months ended
October 31
 
  2009 2008   2009 2008 

Cash flows from operating activities:

      

Net earnings

  $1,071   $981    $2,423   $2,445  

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

      

Depreciation

   615    568     1,255    1,135  

Bad debt provision

   36    33     71    116  

Provision for deferred income tax expense

   17    2     10    (2

Decrease in prepaid income taxes

   9    812     9    812 

(Decrease) increase in receivables

   616    (2,915

Increase in inventories

   (1,509  (326

Increase in receivables

   (2,205  (5,537

(Increase) decrease in inventories

   (278  118  

Increase in prepaid pension cost

   —      (148

Increase in accounts payable and other accrued expenses

   651    357     432    698  

(Decrease) increase in deferred revenue

   (339  28  

Increase in deferred revenue

   29    707  

Other, net

   79    (266   327    (847
              

Net cash provided by (used in) operating activities

   1,246    (726   2,073    (503

Cash flows from investing activities:

      

Capital expenditures

   2,011    (785   (2,278  (679

Increase (decrease) in restricted cash

   (11  41     (5  72  
              

Net cash used in investing activities

   (2,022  (744   (2,283  (607

Cash flows from financing activities:

      

Dividends paid

   (205  (205   (461  (408

Increase in short-term borrowings

   509    1,156  

Decrease (increase) in short-term borrowings

   (350  415  

Payments on capital leases

   (81  (95   (144  (192

Purchase of treasury stock

   (114  (198

Proceeds from exercise of stock options (including tax benefit)

   —      6     135    276  
              

Net cash provided by financing activities

   223    862  

Net cash used in financing activities

   (934  (107

Effect of exchange rate changes on cash

   38    (45   181    (285
              

Decrease in cash and cash equivalents

   (515  (653   (963  (1,502

Cash and cash equivalents, beginning of period

   3,559    3,784     3,559    3,784  
              

Cash and cash equivalents, end of period

  $3,044   $3,131    $2,596   $2,282  
              

See accompanying notes to consolidated financial statements.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 2009 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. In preparing these interim consolidated financial statements, we have reviewed and considered for disclosure all significant events occurring through December 11, 2009, the date of financial statement issuance.

B.Inventories

B.Inventories

Inventories consisted of the following (in thousands):

 

  July 31, 2009  April 30, 2009  October 31, 2009  April 30, 2009

Finished products

  $2,316  $1,756  $1,772  $1,756

Work in process

   1,447   1,461   1,534   1,461

Raw materials

   5,585   4,622   4,811   4,622
            
  $9,348  $7,839  $8,117  $7,839
            

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 six months ended JulyOctober 31, 2009 and 2008 is as follows (in thousands):

 

  Three months ended
July 31, 2009
  Three months ended
July 31, 2008
   Three months ended
October 31, 2009
  Three months ended
October 31, 2008
 

Net earnings

  $1,071  $981    $1,352  $1,464  

Change in cumulative foreign currency translation adjustments

   104   (136   109   (588
              

Total comprehensive income

  $1,175  $845    $1,461  $876  
              
  Six months ended
October 31, 2009
  Six months ended
October 31, 2008
 

Net earnings

  $2,423  $2,445  

Change in cumulative foreign currency translation adjustments

   213   (724
       

Total comprehensive income

  $2,636  $1,721  
       

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’stockholders’ equity.

D.Segment Information

D.Segment Information

The following table provides financial information by business segments for the three and six months ended JulyOctober 31, 2009 and 2008 (in thousands):

 

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

Three months ended July 31, 2009

       

Three months ended October 31, 2009

       

Revenues from external customers

  $23,358  $2,891  $—     $26,249  $24,713  $2,375  $—     $27,088

Intersegment revenues

   420   107   (527  —     271   310   (581  —  

Operating earnings (loss) before income taxes

   2,545   303   (1,091  1,757   2,900   206   (911  2,195

Three months ended July 31, 2008

       

Three months ended October 31, 2008

       

Revenues from external customers

  $21,013  $4,382  $—     $25,395  $23,785  $3,947  $—     $27,732

Intersegment revenues

   786   4   (790  —     851   21   (872  —  

Operating earnings (loss) before income taxes

   2,040   414   (816  1,638

Operating earnings (loss) before incomes taxes

   2,693   309   (935  2,067

Six months ended October 31, 2009

       

Revenues from external customers

  $48,071  $5,266  $—     $53,337

Intersegment revenues

   691   417   (1,108  —  

Operating earnings (loss) before incomes taxes

   5,445   509   (2,002  3,952

Six months ended October 31, 2008

       

Revenues from external customers

  $44,798  $8,329  $—     $53,127

Intersegment revenues

   1,637   25   (1,662  —  

Operating earnings (loss) before incomes taxes

   4,732   723   (1,750  3,705

E.Defined Pension Plans

E.Defined Pension Plans

The Company has non-contributory defined benefit pension plans covering substantially all salaried and hourly employees. These plans were amended as of April 30, 2005, no further benefits have been, or will be, earned under the plans, subsequent to the amendment date, and no additional participants will be added to the plans. No contributions were paid to the plans during the threesix months ended JulyOctober 31, 2009, 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
July 31, 2009
  Three months ended
July 31, 2008
 

Service Cost

  $-0-   $-0-  

Interest Cost

   230    228  

Expected return on plan assets

   (235  (337

Recognition of net loss

   160    49  
         

Net periodic pension cost (income)

  $155   $(60
   Three months ended
October 31, 2009
  Three months ended
October 31, 2008
 

Service cost

  $-0-   $-0-  

Interest cost

   245    220  

Expected return on plan assets

   (234  (339

Recognition of net loss

   187    31  
         

Net periodic pension expense (income)

  $198   $(88
         
   Six months ended
October 31, 2009
  Six months ended
October 31, 2008
 

Service cost

  $-0-   $-0-  

Interest cost

   475    448  

Expected return on plan assets

   (469  (676

Recognition of net loss

   347    80  
         

Net periodic pension expense (income)

  $353   $(148
         

F.Credit Arrangement

F.Credit Arrangements

In July 2009, the Company amended its unsecured revolving credit facility to extend the facility’s expiration date to July 31, 2012, and modify the variable rate component of the interest calculation. Monthly interest payments under the facility, as amended, are payable calculated at the 30-day LIBOR Market Interest Rate plus a variable rate ranging from 1.575% to 2.175%.

In July 2009, the Company entered into an interest rate SWAP agreement whereby the interest rate payable by the Company on $2 million of outstanding advances under the revolving credit facility will effectively convert to a fixed interest rate of 3.9% for the period beginning August 3, 2009, and ending August 1, 2012. The Company entered into this interest rate swap to mitigate future interest rate risk associated with advances under the credit facility.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Company’s 2009 Annual Report to Stockholders contains management’s discussion and analysis of financial condition and results of operations at and for the year ended April 30, 2009. The following discussion and analysis describes material changes in the Company’s financial condition since April 30, 2009. The analysis of results of operations compares the three and six months ended JulyOctober 31, 2009 with the comparable period of the prior fiscal year.

Results of Operations

Sales for the three months ended JulyOctober 31, 2009 were $26,249,000, an increase$27,088,000, a decrease of 3%2% from sales of $25,395,000$27,732,000 in the same period last year. Sales from Domestic Operations were $23,358,000,$24,713,000, an increase of 11%4% from the prior year period. Sales from International Operations were $2,891,000,$2,375,000, a decrease of 34%40% from the prior year period.

Sales for the six months ended October 31, 2009 were $53,337,000, a slight increase from sales of $53,127,000 in the same period last year. Sales from Domestic Operations were $48,071,000, an increase of 7% from the prior year period. Sales from International Operations were $5,266,000, a decrease of 37% from the prior year period. The decline in international operations sales for both the three and six month periods resulted from customer changes in their product delivery dates. The order backlog at JulyOctober 31, 2009 was $60.7$65.2 million, as compared to a backlog of $62.7 million at April 30, 2009 and $60.4$61.6 million at JulyOctober 31, 2008.

The gross profit margin for the three months ended JulyOctober 31, 2009 was 22%22.9% of sales, as compared to 21.1%21.7% of sales in the comparable quarter of the prior year. The increasegross profit margin for the six months ended October 31, 2009 was 22.4% of sales, as compared to 21.4% of sales in the comparable quarter of the prior year. The increases in gross profit margin percentage waspercentages were primarily due to increased manufacturing efficiencies, savings from alternative sources of raw materials and components, and other cost improvement initiatives.improvements.

Operating expenses for the three months ended JulyOctober 31, 2009 were $3,966,000,$3,976,000, or 15.1%14.7% of sales, as compared to $3,586,000,$3,858,000, or 14.1%13.9% of sales, in the comparable period of the prior year. IncreasedOperating expenses for the six months ended October 31, 2009 were $7,942,000, or 14.9% of sales, as compared to $7,444,000, or 14.0% of sales, in the comparable period of the prior year. The increase in operating expenses for the current quarter was primarily due to an increase of $286,000 in pension expense, partially offset by a decrease in compensation expense of $215,000 accounted$127,000. The increase in operating expenses for the majoritycurrent year six-month period was primarily due to an increase of the increase$501,000 in the percentagepension expense, partially offset by a decrease in compensation expense of sales.$76,000.

Operating earnings were $1,798,000$2,234,000 and $4,032,000 for the three and six months ended JulyOctober 31, 2009. This compares to operating earnings of $1,765,000$2,161,000 and $3,926,000 for the comparable periodperiods of the prior year.

Interest expense was $41,000$39,000 and $80,000 for the three and six months ended JulyOctober 31, 2009, respectively, as compared to $89,000$93,000 and $182,000 for the same periodcomparable periods of the prior year. The decrease in interest expense for the current year periodperiods resulted from lower interest rates paid.on advances.

There was no other income and other expense in the three and six months ended JulyOctober 31, 2009, respectively, as compared to other income of $38,000$1,000 and $39,000 for the comparable periodperiods of the prior year.

Income tax expense of $589,000$751,000 and $1,340,000 was recorded for the three and six months ended JulyOctober 31, 2009, respectively, as compared to income tax expense of $541,000$566,000 and $1,107,000 recorded for the comparable periodperiods of the prior year. The effective tax rate was 35.0%rates were 34.2% and 33.9% for the three and six months ended JulyOctober 31, 2009, respectively, and was 33.0%were 27.4% and 29.9% for the three and six months ended JulyOctober 31, 2008. The effective tax raterates for each of the three months ended July 31, 2009and six month periods differs from the statutory rate primarily due to the impact of varying income tax rates on income earned by the Company’s foreign subsidiaries. In addition to this factor, the effective tax rate inrates for all the prior year period wasperiods were favorably impacted by earned state and federal tax credits. The increase in the effective tax raterates in the current year periodperiods as compared to the prior year periodperiods resulted primarily from a lower portion of earnings in the current year periodperiods from subsidiaries located in geographic locations with lower income tax rates.

Minority interests relate to minority shareholders’ interest in the Company’s two subsidiaries that are not 100% owned by the Company. Minority interests reduced net earnings by $97,000$92,000 and $189,000 for the three and six months ended JulyOctober 31, 2009, as compared to a reductionreductions of $116,000$37,000 and $153,000 for the comparable periodperiods of the prior year. The decrease in minority interests in the current period was directly related to decreasedlower earnings of the two subsidiaries.

Net earnings were $1,071,000,$1,352,000, or $0.42$0.53 per diluted share, and $2,423,000, or $0.95 per diluted share, for the three and six months ended JulyOctober 31, 2009. This compares to netNet earnings of $981,000,were $1,464,000, or $0.38$0.57 per diluted share, and $2,445,000, or $0.95 per diluted share, for the comparable period of the prior year.three and six-months ended October 31, 2008.

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-cancelablenon-cancellable 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 $18.8$20.9 million at JulyOctober 31, 2009, compared to $18.9 million at April 30, 2009. The ratio of current assets to current liabilities was 2-to-12.1-to-1.0 at JulyOctober 31, 2009, unchanged fromcompared to 2.0-to-1.0 at April 30, 2009. At JulyOctober 31, 2009, advances of $6,229,000$5,370,000 were outstanding under the unsecuredCompany’s bank revolving credit facility, as compared to advances of $5,720,000 outstanding as of April 30, 2009.

The Company’s operations provided cash of $1,246,000$2,073,000 during the threesix months ended JulyOctober 31, 2009. Cash was primarily provided from earnings, and a decrease of $616,000 in accounts receivable, which werewas partially offset by cash used to fund an increase in inventory on hand.increased accounts receivable of $2,205,000. The Company’s operations used cash of $726,000$503,000 during the threesix months ended JulyOctober 31, 2008. Cash was primarily used to fund an increase of $5,537,000 in accounts receivable, of $2,915,000, which was partially offset by cash provided from operating earnings.

During the threesix months ended JulyOctober 31, 2009, net cash of $2,022,000$2,283,000 was used by investing activities, primarily for capital expenditures. This compares to the use of $744,000$607,000 for investing activities in the samecomparable period of the prior year, primarily for capital expenditures.

The Company’s financing activities providedused cash of $223,000$934,000 during the threesix months ended JulyOctober 31, 2009. Cash providedused included $509,000 received from short-term borrowings which was partially offset by cash dividends paid of $205,000 and$461,000, payments on obligations underof capital leases of $81,000.$144,000, and purchases of treasury stock of $114,000 and $350,000 for a reduction in short-term borrowing, partially offset by $135,000 in proceeds received from the exercise of stock options. Financing activities providedused cash of $862,000$107,000 in the same period offor the prior year, which included $1,156,000 received from short-term borrowings, partially offset by $205,000$408,000 for cash dividends, and $95,000$192,000 for payments on obligations of capital leases.leases, and $198,000 for the purchase of treasury stock, partially offset by increased short-term borrowings of $415,000 and $276,000 received from the exercise of stock options.

Outlook for SecondThird Quarter of Fiscal Year 2010

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 for subcontractors, the Company expects the secondthird quarter of fiscal year 2010 to be profitable. In addition to general economic factors affecting the Company and its markets, demand for its products is also dependent upon the number of laboratory construction projects planned and/or current progress in projects already under construction.

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 difference might be significant and harmful to stockholders’ interests. Many important factors that could cause such a difference are described under the caption “Risk Factors,” in Item 1A of the Company’s 2009 Annual Report on Form 10-K.

REVIEW BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

A review of the interim consolidated financial information included in this Quarterly Report on Form 10-Q for each of the three and six month periods ended JulyOctober 31, 2009 and JulyOctober 31, 2008 has been performed by Cherry, Bekaert & Holland, L.L.P., the Company’s registered public accounting firm. Their report on the interim consolidated financial information follows.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have reviewed the accompanying consolidated balance sheets of Kewaunee Scientific Corporation and its subsidiaries (the “Company”) as of JulyOctober 31, 2009, and the related consolidated statements of operations for the three month and six month periods ended October 31, 2009 and 2008 and the related consolidated statements of cash flows for the three-monthsix-month periods ended JulyOctober 31, 2009 and 2008. 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 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 standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of April 30, 2009, and the related statements of operations, of stockholder’sstockholders’ equity and of cash flows for the year then ended (not presented herein) and in our report dated July 10, 2009, 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, 2009 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

September 9,December 11, 2009

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, 2009.

 

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’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 JulyOctober 31, 2009. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that, as of JulyOctober 31, 2009, 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 26, 2009. EachInformation regarding the results of this meeting are incorporated by reference from Item 4 of Part II of the nomineesCompany’s Report on Form 10-Q 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:the three months ended July 31, 2009.

Director

  For  Withheld

John C. Campbell, Jr.

  2,262,340  81,488

James T. Rhind

  2,011,190  332,638

William A. Shumaker

  2,303,266  40,562

 

Item 6.Exhibits and Reports on Form 8-K

 

10.1Kewaunee Scientific Corporation Fiscal Year 2010 Incentive Bonus Plan.*(1)
10.2Amendment dated July 31, 2009 to Loan and Security Agreement dated as of December 10, 2007 between Bank of America, N.A. and the Company.
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.

*The referenced exhibit is a management contract or compensatory plan, or arrangement.

(1)Filed as an exhibit to the Kewaunee Scientific Corporation Current Report on Form 8-K (Commission on File No. 0–5286) filed on June 26, 2009, and incorporated herein by reference.

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: SeptemberDecember 11, 2009  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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