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KEWAUNEE SCIENTIFIC CORP /DE/ - Quarter Report: 2012 January (Form 10-Q)

Form 10-Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

 

 

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

For the quarterly period ended January 31, 2012

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 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data 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   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 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   ¨  (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 March 5, 2012, the registrant had outstanding 2,579,464 shares of Common Stock.

 

 

 


KEWAUNEE SCIENTIFIC CORPORATION

INDEX TO FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2012

 

         Page Number  
PART I. FINANCIAL INFORMATION   
Item 1.  

Financial Statements

  
 

Consolidated Statements of Operations (unaudited) – Three and nine months ended January 31, 2012 and 2011

     1   
 

Consolidated Balance Sheets – January 31, 2012 (unaudited) and April 30, 2011

     2   
 

Consolidated Statements of Cash Flows (unaudited) – Nine months ended January 31, 2012 and 2011

     3   
 

Notes to Consolidated Financial Statements

     4   
Item 2.  

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

     7   
 

Review by Independent Registered Public Accounting Firm

     9   
 

Report of Independent Registered Public Accounting Firm

     10   
Item 3.  

Quantitative and Qualitative Disclosures About Market Risk

     11   
Item 4.  

Controls and Procedures

     11   
PART II. OTHER INFORMATION   
Item 6.  

Exhibits

     12   
SIGNATURE      13   

 

 

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
January 31,
     Nine months ended
January 31,
 
     2012     2011      2012     2011  

Net Sales

   $ 21,574      $ 22,568       $ 73,857      $ 73,051   

Costs of products sold

     17,803        18,405         62,053        58,472   
  

 

 

   

 

 

    

 

 

   

 

 

 

Gross profit

     3,771        4,163         11,804        14,579   

Operating expenses

     3,990        4,007         11,950        11,953   
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating earnings (loss)

     (219     156         (146     2,626   

Other income

     193        1         228        —     

Interest (expense) income

     (110     17         (333     (105
  

 

 

   

 

 

    

 

 

   

 

 

 

Earnings (loss) before income taxes

     (136     174         (251     2,521   

Income tax expense (benefit)

     (170     49         (237     792   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net earnings (loss)

     34        125         (14     1,729   

Less: net earnings attributable to the noncontrolling interest

     156        39         211        131   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net earnings (loss) attributable to Kewaunee Scientific Corporation Stockholders

   $ (122   $ 86       $ (225   $ 1,598   
  

 

 

   

 

 

    

 

 

   

 

 

 

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

         

Basic

   $ (0.05   $ 0.03       $ (0.09   $ 0.62   

Diluted

   $ (0.05   $ 0.03       $ (0.09   $ 0.62   

Weighted average number of common shares outstanding

         

Basic

     2,579        2,576         2,579        2,574   

Diluted

     2,579        2,592         2,579        2,583   

See accompanying notes to consolidated financial statements.

 

1


Kewaunee Scientific Corporation

Consolidated Balance Sheets

(in thousands)

 

     January 31,
2012
    April 30,
2011
 
     (Unaudited)        

Assets

    

Current Assets:

    

Cash and cash equivalents

   $ 3,929      $ 2,402   

Restricted cash

     649        553   

Receivables, less allowance

     20,046        27,346   

Inventories

     11,762        10,466   

Deferred income taxes

     510        431   

Prepaid expenses and other current assets

     1,824        1,181   
  

 

 

   

 

 

 

Total Current Assets

     38,720        42,379   

Property, plant and equipment, at cost

     43,663        42,716   

Accumulated depreciation

     (27,852     (26,141
  

 

 

   

 

 

 

Net Property, Plant and Equipment

     15,811        16,575   

Deferred income taxes

     487        399   

Other

     3,403        3,705   
  

 

 

   

 

 

 

Total Other Assets

     3,890        4,104   
  

 

 

   

 

 

 

Total Assets

   $ 58,421      $ 63,058   
  

 

 

   

 

 

 

Liabilities and Equity

    

Current Liabilities:

    

Short-term borrowings

   $ 6,401      $ 6,588   

Current obligations under capital leases

     58        83   

Current portion of long-term debt

     200        200   

Accounts payable

     6,608        9,770   

Employee compensation and amounts withheld

     1,581        1,435   

Deferred revenue

     850        1,108   

Other accrued expenses

     1,535        1,080   
  

 

 

   

 

 

 

Total Current Liabilities

     17,233        20,264   

Obligations under capital leases

     —          36   

Long-term debt

     3,517        3,667   

Accrued employee benefit plan costs

     5,799        6,075   
  

 

 

   

 

 

 

Total Liabilities

     26,549        30,042   

Commitments and Contingencies

    

Equity:

    

Common Stock

     6,550        6,550   

Additional paid-in-capital

     1,272        1,091   

Retained earnings

     28,220        29,218   

Accumulated other comprehensive loss

     (5,370     (4,930

Common stock in treasury, at cost

     (422     (438
  

 

 

   

 

 

 

Total Kewaunee Scientific Corporation Stockholders’ Equity

     30,250        31,491   

Noncontrolling interest

     1,622        1,525   
  

 

 

   

 

 

 

Total Equity

     31,872        33,016   
  

 

 

   

 

 

 

Total Liabilities and Equity

   $ 58,421      $ 63,058   
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

 

2


Kewaunee Scientific Corporation

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

     Nine months ended
January 31,
 
     2012     2011  

Cash flows from operating activities:

    

Net earnings (loss)

   $ (14   $ 1,729   

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

    

Depreciation

     1,994        1,816   

Bad debt provision

     45        19   

Provision for deferred income tax expense

     (167     (129

Increase in prepaid income taxes

     (391     —     

Decrease in receivables

     7,255        5,094   

Increase in inventories

     (1,296     (2,171

Decrease in accounts payable and other accrued expenses

     (2,561     (166

(Decrease) increase in deferred revenue

     (258     417   

Other, net

     (298     (474
  

 

 

   

 

 

 

Net cash provided by operating activities

     4,309        6,135   

Cash flows from investing activities:

    

Capital expenditures

     (1,230     (4,698

Increase in restricted cash

     (96     —     
  

 

 

   

 

 

 

Net cash used in investing activities

     (1,326     (4,698

Cash flows from financing activities:

    

Proceeds from long-term debt

     —          4,000   

Payments on long-term debt

     (150     (83

Dividends paid

     (773     (772

Decrease in short-term borrowings

     (187     (4,176

Payments on capital leases

     (61     (62

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

     —          31   
  

 

 

   

 

 

 

Net cash used in financing activities

     (1,171     (1,062

Effect of exchange rate changes on cash

     (285     63   
  

 

 

   

 

 

 

Increase in cash and cash equivalents

     1,527        438   

Cash and cash equivalents, beginning of period

     2,402        1,722   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 3,929      $ 2,160   
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

 

3


Kewaunee Scientific Corporation

Notes to Consolidated Financial Statements

(unaudited)

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 include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of these financial statements and should be read in conjunction with the consolidated financial statements and notes included in the Company’s 2011 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 condensed consolidated balance sheet as of April 30, 2011 included in this interim period filing has been derived from the audited financial statements at that date, but does not include all of the information and related notes required by generally accepted accounting principles (GAAP) for complete financial statements.

The preparation of the interim 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

Inventories consisted of the following (in thousands):

 

     January 31, 2012      April 30, 2011  

Finished products

   $ 3,957       $ 2,887   

Work in process

     1,479         1,697   

Raw materials

     6,326         5,882   
  

 

 

    

 

 

 
   $ 11,762       $ 10,466   
  

 

 

    

 

 

 

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 (Loss)

A reconciliation of net earnings and total comprehensive income for the three and nine months ended January 31, 2012 and 2011 is as follows (in thousands):

 

     Three months ended
January 31, 2012
    Three months ended
January 31, 2011
 

Net earnings (loss)

   $ (122   $ 86   

Change in cumulative foreign currency translation adjustments

     (84     (133

Change in fair value of cash flow hedge, net of tax

     (27     107   
  

 

 

   

 

 

 

Total comprehensive income (loss)

   $ (233   $ 60   
  

 

 

   

 

 

 
     Nine months ended
January 31, 2012
    Nine months ended
January 31, 2011
 

Net earnings (loss)

   $ (225   $ 1,598   

Change in cumulative foreign currency translation adjustments

     (319     (151

Change in fair value of cash flow hedge, net of tax

     (121     (101
  

 

 

   

 

 

 

Total comprehensive income (loss)

   $ (665   $ 1,346   
  

 

 

   

 

 

 

 

4


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 stockholders’ equity.

D. Segment Information

The following table provides financial information by business segments for the three and nine months ended January 31, 2012 and 2011 (in thousands):

 

     Domestic
Operations
     International
Operations
     Corporate     Total  

Three months ended January 31, 2012

          

Revenues from external customers

   $ 17,142       $ 4,432       $ —        $ 21,574   

Intersegment revenues

     1,369         511         (1,880     —     

Operating earnings (loss) before income taxes

     233         504         (873     (136

Three months ended January 31, 2011

          

Revenues from external customers

   $ 19,108       $ 3,460       $ —        $ 22,568   

Intersegment revenues

     1,054         96         (1,150     —     

Operating earnings (loss) before incomes taxes

     774         148         (748     174   

 

     Domestic
Operations
     International
Operations
     Corporate     Total  

Nine months ended January 31, 2012

          

Revenues from external customers

   $ 64,364       $ 9,493       $ —        $ 73,857   

Intersegment revenues

     1,770         777         (2,547     —     

Operating earnings (loss) before income taxes

     1,600         704         (2,555     (251

Nine months ended January 31, 2011

          

Revenues from external customers

   $ 62,324       $ 10,727       $ —        $ 73,051   

Intersegment revenues

     2,222         743         (2,965     —     

Operating earnings (loss) before incomes taxes

     4,470         481         (2,430     2,521   

E. Defined Benefit 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. Contributions of $402,000 were paid to the plans during the nine months ended January 31, 2012, and the Company does not expect any contributions to be paid to the plans during the remainder of the fiscal year. Contributions of $719,000 were made during the nine months ended January 31, 2011.

Pension expense consisted of the following (in thousands):

 

     Three months ended
January 31, 2012
    Three months ended
January 31, 2011
 

Service cost

   $ -0-      $ -0-   

Interest cost

     235        240   

Expected return on plan assets

     (326     (289

Recognition of net loss

     179        172   
  

 

 

   

 

 

 

Net periodic pension expense

   $ 88      $ 123   
  

 

 

   

 

 

 

 

     Nine months ended
January 31, 2012
    Nine months ended
January 31, 2011
 

Service cost

   $ -0-      $ -0-   

Interest cost

     705        720   

Expected return on plan assets

     (978     (867

Recognition of net loss

     537        516   
  

 

 

   

 

 

 

Net periodic pension expense

   $ 264      $ 369   
  

 

 

   

 

 

 

 

5


F. Earnings Per Share

Basic earnings per share is based on the weighted average number of common shares outstanding during the three and nine month periods. Diluted earnings per share reflects the assumed exercise and conversion of outstanding options under the Company’s stock option plans, except when options have an anti-dilutive effect. Options to purchase shares of 308,800 were not included in the computation of diluted earnings per share for the three and nine month periods ended January 31, 2012, because the effect would be anti-dilutive as a result of the reported net losses. Options to purchase shares of 119,600 were not included in the computation of diluted earnings per share for the three and nine month periods ended January 31, 2011, because the option exercise prices were greater than the average market price of the common shares at that date, and accordingly, such options would have an antidilutive effect.

 

6


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

The Company’s 2011 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, 2011. The following discussion and analysis describes material changes in the Company’s financial condition since April 30, 2011. The analysis of results of operations compares the three and nine months ended January 31, 2012 with the comparable period of the prior year.

Results of Operations

Sales for the three months ended January 31, 2012 were $21,574,000, a decrease of 4.4% from sales of $22,568,000 in the comparable period of the prior year. Sales from Domestic Operations were $17,142,000, down from $19,108,000 in the comparable period of the prior year. The decrease was primarily due to a continuing decline in orders for publicly-funded K-12 education projects, primarily wood furniture, and lower sales of technical furniture products. Sales from International Operations were $4,432,000, up from sales of $3,460,000 in the third quarter last year. Sales benefited from the beginning of shipments for a large international project in the order backlog. Additional international sales of $720,000 for products manufactured late in the quarter were not recorded as a sale because the customer failed to secure shipping containers and take delivery of the products. The Company continues to have a strong backlog of international orders, including a large project that has experienced a lengthy construction delay due to extraordinary building construction complications.

The order backlog was $77.1 million at January 31, 2012, as compared to $65.7 million at April 30, 2011 and $68.2 million at January 31, 2011.

Sales for the nine months ended January 31, 2012 were $73,857,000, up 1.1% from sales of $73,051,000 in the same period last year. Domestic Operations sales were $64,364,000, up from sales of $62,324,000 in the same period last year. International Operation sales were $9,493,000, down from sales of $10,727,000 in the same period last year.

The gross profit margin for the three months ended January 31, 2012 was 17.5% of sales, as compared to 18.4% of sales in the comparable quarter of the prior year. The gross profit margin for the nine months ended January 31, 2012 was 16.0% of sales, as compared to 20.0% of sales in the comparable period of the prior year. The decreases in gross profit margin for the current year periods were due to the combination of lower selling prices and higher costs paid for raw materials, particularly steel and epoxy resin.

Operating expenses for the three months ended January 31, 2012 were $3,990,000, or 18.5% of sales, as compared to $4,007,000, or 17.8% of sales, in the comparable period of the prior year. Operating expenses for the nine months ended January 31, 2012 were $11,950,000, or 16.2% of sales, as compared to $11,953,000, or 16.4% of sales in the comparable period of the prior year. Expenses for both periods of the current year were relatively flat with the comparable periods of the prior year, as higher operating expenses at International Operations were offset by lower operating expenses at Domestic Operations.

Interest expense was $110,000 and $333,000 for the three and nine months ended January 31, 2012, respectively, as compared to interest income of $17,000 and interest expense of $105,000 for the comparable periods of the prior year. The increases in interest expense for the current year periods resulted primarily from higher levels of borrowings.

Other income was $193,000 and $228,000 for the three months and nine months ended January 31, 2012, respectively, as compared to $1,000 and none for the comparable periods of the prior year. Both periods of the current year include income of $156,000 related to a property insurance settlement.

An income tax benefit of $170,000 and $237,000 was recorded for the three months and nine months ended January 31, 2012, respectively, as compared to income tax expense of $49,000 and $792,000 recorded for the comparable periods of the prior year. The effective tax rates for the three and nine months of the current year were 125% and 94%, respectively. The unusually high effective tax rates for the current year periods resulted from the combination of federal and state income tax credits and reported net losses. The effective tax rates for the three and nine months comparable periods of the prior year were 28% and 31%, respectively. The effective rates for the prior year periods were lower than the statutory rate due to the favorable impact of lower tax rates for the Company’s international subsidiaries and the impact of state and federal tax credits.

Net earnings attributable to the noncontrolling interests reduced net earnings by $156,000 for the three months ended January 31, 2012, as compared to a reduction of net earnings of $39,000 for the comparable period of the prior year. Net earnings were reduced by $211,000 and $131,000 for the nine months ended January 31, 2012 and 2011, respectively. Noncontrolling interests relate to the Company’s two subsidiaries that are not 100% owned by the Company. The increases in the current year periods resulted from increased net earnings of the two subsidiaries over the comparable periods of the prior year.

A net loss of $122,000, or $0.05 per diluted share, was reported for the three months ended January 31, 2012, compared to net earnings of $86,000, or $0.03 per diluted share, in the prior year period. A net loss of $225,000, or $0.09 per diluted share, was reported for the nine months ended January 31, 2012, compared to net earnings of $1,598,000, or $0.62 per diluted share, for the same period last year.

 

7


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-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 $21,487,000 at January 31, 2012, compared to $22,115,000 at April 30, 2011. The ratio of current assets to current liabilities was 2.2-to-1.0 at January 31, 2012, compared to 2.1-to-1.0 at April 30, 2011. At January 31, 2012, advances of $6,401,000 were outstanding under the Company’s bank revolving credit facility, as compared to advances of $6,588,000 outstanding as of April 30, 2011. Total bank borrowings and capital lease obligations were $10,176,000 at January 31, 2012, as compared to $10,574,000 at April 30, 2011.

The Company’s operations provided cash of $4,309,000 during the nine months ended January 31, 2012. Cash was primarily provided from a decrease in accounts receivable of $7,255,000 which was partially offset by an increase in inventory of $1,296,000 and a decrease in accounts payable and other accrued expenses of $2,561,000. The Company’s operations provided cash of $6,135,000 during the nine months ended January 31, 2011, with cash primarily provided from a decrease in accounts receivable of $5,094,000 and earnings, which were partially offset by an increase in inventory of $2,171,000.

During the nine months ended January 31, 2012, net cash of $1,326,000 was used in investing activities, primarily for capital expenditures. This compares to the use of $4,698,000 for investing activities in the comparable period of the prior year, primarily for capital expenditures related to the expansion of the Company’s Statesville, North Carolina manufacturing facilities.

The Company’s financing activities used cash of $1,171,000 during the nine months ended January 31, 2012, primarily for cash dividends of $773,000 paid to stockholders, repayment of short-term borrowings of $187,000, and payments on long-term debt of $150,000. Financing activities used cash of $1,062,000 in the same period of the prior year, primarily for cash dividends of $772,000 paid to stockholders and repayment of short-term borrowings of $4,176,000, offset by $4,000,000 of proceeds from new long-term debt. The proceeds of the term loan were used primarily to fund the expansion of the Company’s Statesville, North Carolina manufacturing facilities.

Outlook

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, and the fact that demand for its products is dependent upon the number of laboratory construction projects planned and/or current progress in projects already under construction. Customer changes to product designs and delivery dates for orders may also delay the start of manufacturing and shipment of orders, which in return may impact the timing of sales revenue and increase manufacturing costs.

Regarding the short-term, the Company’s expectations are that the on-going economic slowdown in the United States will continue to adversely impact the domestic demand for the Company’s products, particularly wood furniture. However, opportunities in the international laboratory marketplace are expected to continue to improve. The Company expects to benefit from lower operating costs related to recent headcount reductions and on-going cost savings initiatives at its Statesville location. It is uncertain whether the recent significant rise in the price of oil will result in higher transportation costs and prices paid for petroleum-based raw materials.

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, customer changes to product designs, customer changes to delivery dates, 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 2011 Annual Report on Form 10-K.

 

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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 nine month periods ended January 31, 2012 and January 31, 2011 has been performed by Cherry, Bekaert & Holland, L.L.P., the Company’s independent registered public accounting firm. Their report on the interim consolidated financial information follows.

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have reviewed the accompanying consolidated balance sheet of Kewaunee Scientific Corporation and its subsidiaries (the “Company”) as of January 31, 2012, and the related consolidated statements of operations for the three month and nine month periods ended January 31, 2012 and 2011 and the related consolidated statements of cash flows for the nine-month periods ended January 31, 2012 and 2011. These interim consolidated financial statements are the responsibility of the Company’s management.

We conducted our reviews 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 reviews, 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, 2011, and the related consolidated statements of operations, comprehensive income and stockholders’ equity and cash flows for the year then ended (not presented herein) and in our report dated July 15, 2011, 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, 2011 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 8, 2012

 

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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, 2011.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures

An evaluation was performed under the supervision of, and with 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 January 31, 2012. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that, as of January 31, 2012, 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.

 

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PART II. OTHER INFORMATION

 

Item 6. Exhibits

 

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.
101.INS    XBRL Instance Document
101.SCH    XBRL Taxonomy Extension Schema Document
101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB    XBRL Taxonomy Extension Label Linkbase Document
101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document

 

 

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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 9, 2012     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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