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KEWAUNEE SCIENTIFIC CORP /DE/ - Quarter Report: 2013 January (Form 10-Q)

Form 10-Q
Table of Contents

 

 

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, 2013

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 7, 2013, the registrant had outstanding 2,591,462 shares of Common Stock.

 

 

 


Table of Contents

KEWAUNEE SCIENTIFIC CORPORATION

INDEX TO FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2013

 

         Page Number  

PART I. FINANCIAL INFORMATION

  
Item 1.  

Financial Statements

  
 

Consolidated Statements of Operations (unaudited) – Three and nine months ended January 31, 2013 and 2012

     1   
 

Consolidated Statements of Comprehensive Income (Loss) (unaudited) – Three and nine months ended January 31, 2013 and 2012

     2   
 

Consolidated Balance Sheets – January 31, 2013 (unaudited) and April 30, 2012

     3   
 

Consolidated Statements of Cash Flows (unaudited) – Nine months ended January 31, 2013 and 2012

     4   
 

Notes to Consolidated Financial Statements

     5   
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   

 

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Table of Contents

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
 
     2013     2012     2013     2012  

Net sales

   $ 27,450      $ 21,574      $ 85,318      $ 73,857   

Costs of products sold

     22,441        17,803        69,839        62,053   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     5,009        3,771        15,479        11,804   

Operating expenses

     4,054        3,990        12,205        11,950   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating earnings (loss)

     955        (219     3,274        (146

Other income

     84        193        260        228   

Interest expense

     (80     (110     (295     (333
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) before income taxes

     959        (136     3,239        (251

Income tax expense (benefit)

     177        (170     962        (237
  

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings (loss)

     782        34        2,277        (14

Less: net earnings attributable to the noncontrolling interest

     238        156        450        211   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings (loss) attributable to Kewaunee Scientific Corporation

   $ 544      $ (122   $ 1,827      $ (225
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic

   $ 0.21      $ (0.05   $ 0.71      $ (0.09

Diluted

   $ 0.21      $ (0.05   $ 0.71      $ (0.09

Weighted average number of common shares outstanding (in thousands)

        

Basic

     2,590        2,579        2,586        2,579   

Diluted

     2,604        2,579        2,596        2,579   

See accompanying notes to consolidated financial statements.

 

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Table of Contents

Kewaunee Scientific Corporation

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(in thousands)

 

     Three months ended
January 31
    Nine months ended
January 31
 
     2013      2012     2013      2012  

Net earnings (loss)

   $ 782       $ 34      $ 2,277       $ (14
  

 

 

    

 

 

   

 

 

    

 

 

 

Other comprehensive income (loss), net of tax:

          

Foreign currency translation adjustments

     71         (84     46         (319

Change in fair value of cash flow hedge

     24         (27     25         (121
  

 

 

    

 

 

   

 

 

    

 

 

 

Other comprehensive income (loss)

     95         (111     71         (440
  

 

 

    

 

 

   

 

 

    

 

 

 

Comprehensive income (loss)

     877         (77     2,348         (454

Less comprehensive income (loss) attributable to the noncontrolling interest

     238         156        450         211   
  

 

 

    

 

 

   

 

 

    

 

 

 

Comprehensive income (loss) attributable to Kewaunee Scientific Corporation

   $ 639       $ (233   $ 1,898       $ (665
  

 

 

    

 

 

   

 

 

    

 

 

 

See accompanying notes to consolidated financial statements.

 

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Kewaunee Scientific Corporation

Consolidated Balance Sheets

(in thousands)

 

     January 31,
2013
    April 30,
2012
 
     (Unaudited)        

Assets

    

Current Assets:

    

Cash and cash equivalents

   $ 4,202      $ 6,188   

Restricted cash

     692        704   

Receivables, less allowance

     20,064        23,244   

Inventories

     12,888        11,760   

Deferred income taxes

     742        713   

Prepaid expenses and other current assets

     1,527        989   
  

 

 

   

 

 

 

Total Current Assets

     40,115        43,598   

Property, plant and equipment, at cost

     44,861        43,556   

Accumulated depreciation

     (29,971     (28,210
  

 

 

   

 

 

 

Net Property, Plant and Equipment

     14,890        15,346   

Deferred income taxes

     1,732        1,656   

Other

     3,886        3,536   
  

 

 

   

 

 

 

Total Other Assets

     5,618        5,192   
  

 

 

   

 

 

 

Total Assets

   $ 60,623      $ 64,136   
  

 

 

   

 

 

 

Liabilities and Equity

    

Current Liabilities:

    

Short-term borrowings

   $ 2,707      $ 6,816   

Current obligations under capital leases

     —         36   

Current portion of long-term debt

     200        200   

Accounts payable

     8,562        8,848   

Employee compensation and amounts withheld

     1,339        1,304   

Deferred revenue

     939        1,362   

Other accrued expenses

     2,082        1,674   
  

 

 

   

 

 

 

Total Current Liabilities

     15,829        20,240   

Long-term debt

     3,317        3,467   

Accrued employee benefit plan costs

     8,778        8,771   
  

 

 

   

 

 

 

Total Liabilities

     27,924        32,478   

Commitments and Contingencies

    

Equity:

    

Common Stock

     6,550        6,550   

Additional paid-in-capital

     1,501        1,341   

Retained earnings

     30,225        29,218   

Accumulated other comprehensive loss

     (7,105     (7,176

Common stock in treasury, at cost

     (317     (422
  

 

 

   

 

 

 

Total Kewaunee Scientific Corporation Stockholders’ Equity

     30,854        29,511   

Noncontrolling interest

     1,845        2,147   
  

 

 

   

 

 

 

Total Equity

     32,699        31,658   
  

 

 

   

 

 

 

Total Liabilities and Equity

   $ 60,623      $ 64,136   
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

 

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Kewaunee Scientific Corporation

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

     Nine months ended
January 31
 
     2013     2012  

Cash flows from operating activities:

    

Net earnings (loss)

   $ 2,277      $ (14

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

    

Depreciation

     1,994        1,994   

Bad debt provision

     (8     45   

Provision for deferred income tax expense

     (105     (167

Increase in prepaid income taxes

     —          (391

Decrease in receivables

     3,188        7,255   

Increase in inventories

     (1,128     (1,296

Increase (decrease) in accounts payable and other accrued expenses

     157        (2,561

Decrease in deferred revenue

     (423     (258

Other, net

     (624     (298
  

 

 

   

 

 

 

Net cash provided by operating activities

     5,328        4,309   

Cash flows from investing activities:

    

Capital expenditures

     (1,538     (1,230

Decrease (increase) in restricted cash

     12        (96
  

 

 

   

 

 

 

Net cash used in investing activities

     (1,526     (1,326

Cash flows from financing activities:

    

Dividends paid

     (784     (773

Dividends paid to minority interest

     (744     —     

Decrease in short-term borrowings

     (4,109     (187

Payments on long-term debt

     (150     (150

Payments on capital leases

     (36     (61

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

     94        —     
  

 

 

   

 

 

 

Net cash used in financing activities

     (5,729     (1,171

Effect of exchange rate changes on cash

     (59     (285
  

 

 

   

 

 

 

(Decrease) increase in cash and cash equivalents

     (1,986     1,527   

Cash and cash equivalents, beginning of period

     6,188        2,402   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 4,202      $ 3,929   
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

 

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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 2012 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, 2012 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, 2013      April 30, 2012  

Finished products

   $ 3,692       $ 3,570   

Work in process

     1,737         1,831   

Raw materials

     7,459         6,359   
  

 

 

    

 

 

 
   $ 12,888       $ 11,760   
  

 

 

    

 

 

 

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. Segment Information

The following table provides financial information by business segments for the three and nine months ended January 31, 2013 and 2012 (in thousands):

 

     Domestic
Operations
     International
Operations
     Corporate     Total  

Three months ended January 31, 2013

          

Revenues from external customers

   $ 20,445       $ 7,005       $ —        $ 27,450   

Intersegment revenues

     2,415         454         (2,869     —     

Operating earnings (loss) before income taxes

     1,009         992         (1,042     959   

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

 

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     Domestic
Operations
     International
Operations
     Corporate     Total  

Nine months ended January 31, 2013

          

Revenues from external customers

   $ 68,757       $ 16,561       $ —        $ 85,318   

Intersegment revenues

     3,833         1,876         (5,709     —     

Operating earnings (loss) before income taxes

     4,331         2,022         (3,114     3,239   

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

D. 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 $1,000,000 were paid to the plans during the nine months ended January 31, 2013, and the Company does not expect any contributions to be paid to the plans during the remainder of the fiscal year. Contributions of $402,000 were made during the nine months ended January 31, 2012.

Pension expense consisted of the following (in thousands):

 

     Three months ended
January 31, 2013
    Three months ended
January 31, 2012
 

Service cost

   $ -0-      $ -0-   

Interest cost

     226        235   

Expected return on plan assets

     (303     (326

Recognition of net loss

     276        179   
  

 

 

   

 

 

 

Net periodic pension expense

   $ 199      $ 88   
  

 

 

   

 

 

 

 

     Nine months ended
January 31, 2013
    Nine months ended
January 31, 2012
 

Service cost

   $ -0-      $ -0-   

Interest cost

     679        705   

Expected return on plan assets

     (910     (978

Recognition of net loss

     827        537   
  

 

 

   

 

 

 

Net periodic pension expense

   $ 596      $ 264   
  

 

 

   

 

 

 

E. 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 118,400 shares were not included in the computation of diluted earnings per share for the three and nine month periods ended January 31, 2013, 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. Options to purchase 308,800 shares 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.

 

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

The Company’s 2012 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, 2012. The following discussion and analysis describes material changes in the Company’s financial condition since April 30, 2012. The analysis of results of operations compares the three and nine months ended January 31, 2013 with the comparable periods of the prior year.

Results of Operations

Sales for the three months ended January 31, 2013 were $27,450,000, an increase of 27% from sales of $21,574,000 in the comparable period of the prior year. Sales for the quarter benefited from the Company’s strengthened domestic dealer network, broadened international dealer network, and lower manufacturing costs. Sales from Domestic Operations were $20,445,000 for the three months ended January 31, 2013, up from $17,142,000 in the comparable period of the prior year. The domestic marketplace for privately-funded projects continued to hold up relatively well during the quarter, while opportunities for publicly-funded wood educational projects remained well below pre-recession levels, as state and local governments continued to receive significantly lower funding for capital projects. Sales from International Operations were $7,005,000 for the three months ended January 31, 2013, up from $4,432,000 in the comparable period of the prior year. The Company continues to see increased opportunities for sales and orders in its Asia and Middle East laboratory markets.

Sales for the nine months ended January 31, 2013 were $85,318,000, up 16% from sales of $73,857,000 in the same period last year. Domestic Operations sales were $68,757,000 for the nine months ended January 31, 2013, up from sales of $64,364,000 in the same period last year. International Operation sales were $16,561,000 for the nine months ended January 31, 2013, up from sales of $9,493,000 in the same period last year.

The order backlog was $84.5 million at January 31, 2013, as compared to $86.2 million at April 30, 2012 and $77.1 million at January 31, 2012.

The gross profit margin for the three months ended January 31, 2013 was 18.2% of sales, as compared to 17.5% of sales in the comparable quarter of the prior year. The gross profit margin for the nine months ended January 31, 2013 was 18.1% of sales, as compared to 16.0% of sales in the comparable period of the prior year. The increases in the gross profit margin percentages for the current year periods were primarily due to benefits associated with higher manufacturing volumes, a more favorable product mix, and reduced manufacturing and overhead costs.

Operating expenses for the three months ended January 31, 2013 were $4,054,000, or 14.8% of sales, as compared to $3,990,000, or 18.5% of sales, in the comparable period of the prior year. Operating expenses for the nine months ended January 31, 2013 were $12,205,000, or 14.3% of sales, as compared to $11,950,000, or 16.2% of sales in the comparable period of the prior year. The current year periods were favorably impacted by lower costs resulting from cost reduction actions initiated in the second half of the prior year. These lower costs substantially offset higher expenses associated with the increase in sales and higher pension expense. Pension expense increased by $111,000 and $332,000 for the three and nine month periods of the current year, respectively, as compared to the comparable periods of the prior year.

Interest expense was $80,000 and $295,000 for the three and nine months ended January 31, 2013, as compared to $110,000 and $333,000 for the comparable periods of the prior year. The decreases for the current year periods resulted from lower borrowing levels.

Income tax expense of $177,000 and $962,000 was recorded for the three and nine months ended January 31, 2013, as compared to income tax benefits of $170,000 and $237,000 recorded for the comparable periods of the prior year. The effective tax rates were 18.5% and 29.7% for the three and nine months ended January 31, 2013, respectively. These rates were favorably impacted by tax rates for the Company’s international subsidiaries and the impact of state and federal tax credits. Additionally, since the federal research and development (R&D) tax credit was reinstated in January 2013 retroactive to 2012, the cumulative impact of these tax credits for the first six months of the fiscal year was considered in the third quarter effective tax rate calculation. The effective tax rates were credits of 125% and 94.4% for the three and nine months ended January 31, 2012, respectively. The effective tax rates for these periods are reflective of favorable federal and state income tax credits combined with reported net losses.

Noncontrolling interests related to the Company’s two subsidiaries that are not 100% owned by the Company reduced net earnings by $238,000 and $450,000 for the three and nine months ended January 31, 2013, respectively. Net earnings were reduced by $156,000 and $211,000 for the three and nine months ended January 31, 2012, respectively. The changes in the net earnings attributable to the noncontrolling interest in the current periods were due to the change in earnings of the two subsidiaries in the related periods.

Net earnings of $544,000, or $0.21 per diluted share, was reported for the three months ended January 31, 2013, compared to a net loss of $122,000, or $0.05 per diluted share, in the prior year period. Net earnings of $1,827,000, or $0.71 per diluted share, was reported for the nine months ended January 31, 2013, compared to a net loss of $225,000, or $0.09 per diluted share, for the same period last year.

 

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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 in the current year, including capital expenditures.

The Company had working capital of $24,286,000 at January 31, 2013, as compared to $23,358,000 at April 30, 2012. The ratio of current assets to current liabilities was 2.5-to-1.0 at January 31, 2013, as compared to 2.2-to-1.0 at April 30, 2012. At January 31, 2013, advances of $2,707,000 were outstanding under the Company’s bank revolving credit facility, as compared to advances of $6,816,000 outstanding as of April 30, 2012. Total bank borrowings and capital lease obligations were $6,224,000 at January 31, 2013, as compared to $10,519,000 at April 30, 2012.

The Company’s operations provided cash of $5,328,000 during the nine months ended January 31, 2013. Cash was primarily provided from earnings and a decrease in accounts receivable of $3,188,000, partially offset by an increase in inventories of $1,128,000. The Company’s operations provided cash of $4,309,000 during the nine months ended January 31, 2012, with cash primarily provided from a decrease in accounts receivable of $7,255,000, partially offset by an increase in inventory of $1,296,000 and a decrease in accounts payable and accrued expenses of $2,561,000.

During the nine months ended January 31, 2013, net cash of $1,526,000 was used in investing activities, primarily for capital expenditures. This compares to the use of $1,326,000 for investing activities in the comparable period of the prior year, primarily for capital expenditures.

The Company’s financing activities used cash of $5,729,000 during the nine months ended January 31, 2013, which included repayment of short-term borrowings of $4,109,000, cash dividends of $784,000 paid to stockholders, and cash dividends of $744,000 paid to minority interest holders. Financing activities used cash of $1,171,000 in the same period of the prior year, which included repayment of short-term borrowings of $187,000 and cash dividends paid of $773,000.

Outlook

The Company’s ability to predict future demand for its products continues to be limited given its role as subcontractor or supplier to dealers for subcontractors. Demand for the Company’s products is also dependent upon the number of laboratory construction projects planned and/or current progress in projects already under construction. The Company’s earnings are also impacted by increased costs of raw materials, including stainless steel, wood, and epoxy resin, and whether the Company is able to increase product prices to customers in amounts that correspond to such increases without materially and adversely affecting sales. Additionally, since prices are normally quoted on a firm basis in the industry, the Company bears the burden of possible increases in labor and material costs between the quotation of an order and delivery of a product. The Company is also unable to predict the timing and strength of the global economic recovery and its short-term and long-term impact on its operations and the markets in which it competes.

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 2012 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, 2013 and January 31, 2012 has been performed by Cherry Bekaert LLP, 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, 2013, the related consolidated statements of operations, and comprehensive income (loss) for the three-month and nine-month periods ended January 31, 2013 and 2012 and the related consolidated statements of cash flows for the nine-month periods ended January 31, 2013 and 2012. 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, 2012, and the related consolidated statements of operations, comprehensive income (loss) and stockholders’ equity, and cash flows for the year then ended (not presented herein) and in our report dated July 13, 2012, 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, 2012 is fairly stated in all material respects in relation to the consolidated financial statement from which it has been derived.

 

/s/ Cherry Bekaert LLP
Charlotte, North Carolina

March 8, 2013

 

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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, 2012.

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 January 31, 2013. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that, as of January 31, 2013, 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.DEF    XBRL Taxonomy Extension Definition 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 11, 2013     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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