UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549





FORM
10-Q


(Mark
One)


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





For
the quarterly period ended March 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 001-32865





KSW,
INC.


(Exact
name of registrant as specified in its charter)





Delaware
                
                11-3191686(State
      or other jurisdiction of
                  incorporation
      or organization)
                
                (I.R.S.
      Employer
                  Identification
      Number)






37-16 23rd Street, Long Island City, New
      York
                  
                  11101(Address
      of principal executive offices)
                  
                  (Zip
      Code)


718-361-6500


(Registrant’s
telephone number, including area code)





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
o





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).    Yeso      No
o





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 definitions of “large accelerated filer”, “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):


Large
      Accelerated Filer  o
            Accelerated
      Filer  o
            Non-Accelerated
      Filer  o
            Smaller
      Reporting Company  x





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





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date:


Class
                      
                      Outstanding
      at
                        May 7, 2009Common
      stock, $.01 par value
                      
                      6,235,125








KSW,
INC.


QUARTERLY
REPORT ON FORM 10-Q


QUARTER ENDED MARCH 31,
2009





TABLE
OF CONTENTS





Page No.PART
      I
                                        FINANCIAL
      INFORMATIONItem
      1.
                                        Financial
      StatementsConsolidated
      Balance Sheets – March 31, 2009 (unaudited) and December 31,
      2008
                                        
                                        
                                        3Consolidated
      Statements of Income – Three months ended March 31, 2009 and 2008
      (unaudited)
                                        
                                        
                                        4Consolidated
      Statements of Comprehensive Income – Three months ended March 31, 2009
      and 2008 (unaudited)
                                        
                                        
                                        5Consolidated
      Statement of Stockholders’ Equity – Three months ended March 31, 2009
      (unaudited)
                                        
                                        
                                        6Consolidated
      Statements of Cash Flows– Three months ended March 31, 2009 and 2008
      (unaudited)
                                        
                                        
                                        7Notes
      to Consolidated Financial Statements–
                                        
                                        
                                        8Item
      2.
                                        Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                        
                                        
                                        12Item
      3.
                                        Quantitative
      and Qualitative Disclosures about Market Risk
                                        
                                        
                                        17Item
      4.
                                        Controls
      and Procedures
                                        
                                        
                                        17PART
      II
                                        OTHER
      INFORMATIONItem
      1.
                                        Legal
      Proceedings
                                        
                                        
                                        17Item
      1A.
                                        Risk
      Factors
                                        
                                        
                                        18Item
      2.
                                        Unregistered
      Sales of Equity Securities and Use of Proceeds
                                        
                                        
                                        18Item
      3.
                                        Defaults
      Upon Senior Securities
                                        
                                        
                                        18Item
      4.
                                        Submission
      of Matters to a Vote of Security Holders
                                        
                                        
                                        18Item
      5.
                                        Other
      Information
                                        
                                        
                                        19Item
      6.
                                        Exhibits
                                        
                                        
                                        19SIGNATURE
                                        
                                        
                                        
                                        20INDEX
      TO EXHIBITS
                                        
                                        
                                        
                                        21





PART
I – FINANCIAL INFORMATION





ITEM
1 – FINANCIAL
STATEMENTS





KSW,
INC. AND SUBSIDIARY


CONSOLIDATED
BALANCE SHEETS


(in
thousands, except share data)





March 31, 2009
                    
                    
                    December 31, 2008ASSETS
                    
                    (unaudited)Current
      assets:Cash
      and cash equivalents
                    
                    $
                    16,329
                    
                    
                    $
                    16,611Marketable
      securities
                    
                    
                    1,216
                    
                    
                    
                    1,223Accounts
      receivable
                    
                    
                    20,048
                    
                    
                    
                    19,448Retainage
      receivable
                    
                    
                    8,824
                    
                    
                    
                    9,097Costs
      and estimated earnings in excess of billings on uncompleted
      contracts
                    
                    
                    378
                    
                    
                    
                    229Prepaid
      income taxes
                    
                    
                    358
                    
                    
                    
                    326Prepaid
      expenses and other receivables
                    
                    
                    649
                    
                    
                    
                    349Deferred
      income taxes
                    
                    
                    290
                    
                    
                    
                    299Total
      current assets
                    
                    
                    48,092
                    
                    
                    
                    47,582Property
      and equipment, net of accumulated depreciation and amortization of
      $2,213 and $2,173 at 3/31/09 and 12/31/08,
    respectively
                    
                    
                    2,744
                    
                    
                    
                    2,778Deferred
      income taxes and other
                    
                    
                    138
                    
                    
                    
                    139Total
      assets
                    
                    $
                    50,974
                    
                    
                    $
                    50,499LIABILITIES AND STOCKHOLDERS’
      EQUITYCurrent
      liabilities:Current
      portion of mortgage payable
                    
                    $
                    58
                    
                    
                    $
                    58Accounts
      payable
                    
                    
                    15,442
                    
                    
                    
                    14,442Retainage
      payable
                    
                    
                    4,502
                    
                    
                    
                    4,982Accrued
      payroll and benefits
                    
                    
                    1,099
                    
                    
                    
                    1,654Accrued
      expenses
                    
                    
                    13
                    
                    
                    
                    165Billings
      in excess of costs and estimated earnings on uncompleted
      contracts
                    
                    
                    8,470
                    
                    
                    
                    7,950Total
      current liabilities
                    
                    
                    29,584
                    
                    
                    
                    29,251Mortgage
      payable, net of current portion
                    
                    
                    1,098
                    
                    
                    
                    1,118Total
      liabilities
                    
                    
                    30,682
                    
                    
                    
                    30,369Commitments
      and contingencies (Note 6)Stockholders’
      equity:Preferred
      stock, $.01 par value, 1,000,000 shares  authorized, no shares issued
      and outstanding
                    
                    
                    —
                    
                    
                    
                    —Common
      stock, $.01 par value, 25,000,000 shares  authorized 6,287,825 shares
      issued,  6,235,125 and 6,281,225 shared outstanding at 3/31/09 and
      12/31/08, respectively
                    
                    
                    63
                    
                    
                    
                    63Additional
      paid-in capital
                    
                    
                    13,297
                    
                    
                    
                    13,293Retained
      earnings
                    
                    
                    7,429
                    
                    
                    
                    7,142Accumulated
      other comprehensive loss:Net
      unrealized holding losses on available -  for-sale
      securities
                    
                    
                    (357
                    )
                    
                    
                    (352
                    )Less
      treasury stock at cost, 52,700 and 6,600 shares at 3/31/09 and 12/31/08,
      respectively
                    
                    
                    (140
                    )
                    
                    
                    (16
                    )Total
      stockholders’ equity
                    
                    
                    20,292
                    
                    
                    
                    20,130Total
      liabilities and stockholders’ equity
                    
                    $
                    50,974
                    
                    
                    $
                    50,499





See
accompanying notes to consolidated financial statements.


3








KSW,
INC. AND SUBSIDIARY





CONSOLIDATED
STATEMENTS OF INCOME (in
thousands, except share and per share data)


(unaudited)





Three
      Months
                Ended March 31, 2009
              
              
              Three
      Months
                Ended March 31, 2008Revenues
              
              $
              19,706
              
              
              $
              20,491Cost
      of revenues
              
              
              17,884
              
              
              
              18,174Gross
      profit
              
              
              1,822
              
              
              
              2,317Selling,
      general and administrative expenses
              
              
              1,402
              
              
              
              1,308Operating
      income
              
              
              420
              
              
              
              1,009Other
      income:Interest
      income, net
              
              
              16
              
              
              
              124Income
      before provision for income taxes
              
              
              436
              
              
              
              1,133Provision
      for income taxes
              
              
              149
              
              
              
              293Net
      income
              
              $
              287
              
              
              $
              840Earnings
      per common share:Basic
              
              $
              .05
              
              
              $
              .13Diluted
              
              $
              .05
              
              
              $
              .13Weighted
      average common shares outstanding:Basic
              
              
              6,251,800
              
              
              
              6,261,098Diluted
              
              
              6,282,560
              
              
              
              6,324,415





See
accompanying notes to consolidated financial statements.


4





KSW,
INC. AND SUBSIDIARY





CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (in
thousands)


(unaudited)








Three
      Months
                Ended March 31, 2009
              
              
              Three
      Months
                Ended March 31, 2008Net
      income
              
              $
              287
              
              
              $
              840Other
      comprehensive loss before income tax benefit:Unrealized
      holding losses arising during the period
              
              
              (9
              )
              
              
              (119
              )Less:
      reclassification adjustment for gains included in net
    income
              
              
              -
              
              
              
              -Other
      comprehensive loss before income tax benefit
              
              
              (9
              )
              
              
              (119
              )Income
      tax benefit related to items of other comprehensive
    loss
              
              
              (4
              )
              
              
              (54
              )Other
      comprehensive loss, net of income tax benefit
              
              
              (5
              )
              
              
              (65
              )Total
      comprehensive income
              
              $
              282
              
              
              $
              775








See
accompanying notes to consolidated financial statements.





5


KSW,
INC. AND SUBSIDIARY




CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY




THREE
MONTHS ENDED MARCH 31, 2009


(in thousands, except
share data)


(unaudited)







Common
      Stock
                  
                  
                  Additional
                    Paid-In
                  
                  
                  Retained
                  
                  
                  Accumulated
                    Other
                    Comprehensive
                  
                  
                  TreasuryShares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Earnings
                  
                  
                  Loss
                  
                  
                  Stock
                  
                  
                  TotalBalances,
      January 1, 2009
                  
                  
                  6,287,825
                  
                  
                  $
                  63
                  
                  
                  $
                  13,293
                  
                  
                  $
                  7,142
                  
                  
                  $
                  (352
                  )
                  
                  $
                  (16
                  )
                  
                  $
                  20,130Net
      income
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  
                  
                  
                  
                  287
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  287Amortization
      of share-basedcompensation
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  4
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  4Purchase
      of treasury stock
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (124
                  )
                  
                  
                  (124
                  )Net
      unrealized losses on available-for-sale securities
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (5
                  )
                  
                  
                  —
                  
                  
                  
                  (5
                  )Balances,
      March 31, 2009
                  
                  
                  6,287,825
                  
                  
                  $
                  63
                  
                  
                  $
                  13,297
                  
                  
                  $
                  7,429
                  
                  
                  $
                  (357
                  )
                  
                  $
                  (140
                  )
                  
                  $
                  20,292











See
accompanying notes to consolidated financial statements.


6


KSW,
INC. AND SUBSIDIARY


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(in
thousands)


(unaudited)


Three MonthsEndedMarch 31,
      2009
                
                
                Three MonthsEnded March 31,
      2008Cash
      flows from operating activities:
                
                $
                287
                
                
                $
                840Net
      incomeAdjustments
      to reconcile net income to cash used in operating
    activities:
                
                
                41
                
                
                
                20Depreciation
      and amortizationDeferred
      income taxes
                
                
                13
                
                
                
                173Tax
      benefits from exercise of stock options
                
                
                —
                
                
                
                (62
                )Stock-based
      compensation expense related to stock option plan
                
                
                4
                
                
                
                2Changes
      in operating assets and liabilities:
                
                
                (600
                )
                
                
                (2,115
                )Accounts
      receivableRetainage
      receivable
                
                
                273
                
                
                
                (1,766
                )Costs
      and estimated earnings in excess of billings on uncompleted
      contracts
                
                
                (149
                )
                
                
                449Prepaid
      expenses and other receivables
                
                
                (300
                )
                
                
                19Prepaid
      income taxes
                
                
                (32
                )
                
                
                (15
                )Accounts
      payable
                
                
                1,000
                
                
                
                2,453Retainage
      payable
                
                
                (480
                )
                
                
                436Accrued
      payroll and benefits
                
                
                (555
                )
                
                
                (692
                )Accrued
      expenses
                
                
                (152
                )
                
                
                (175
                )Billings
      in excess of costs and estimated earnings on uncompleted
      contracts
                
                
                520
                
                
                
                88Income
      taxes payable
                
                
                —
                
                
                
                (5
                )Net cash used in operating
      activities
                
                
                (130
                )
                
                
                (350
                )Cash
      flows from investing activities:Purchases
      of property and equipment
                
                
                (6
                )
                
                
                (25
                )Purchases
      of marketable securities
                
                
                (2
                )
                
                
                (15
                )Net
      cash used in investing activities
                
                
                (8
                )
                
                
                (40
                )Cash
      flows from financing activities:Proceeds
      from exercise of employee stock option plan
                
                
                —
                
                
                
                57Tax
      benefits from exercise of stock options
                
                
                —
                
                
                
                62Repayment
      of mortgage payable
                
                
                (20
                )
                
                
                —Purchase
      of treasury stock
                
                
                (124
                )
                
                
                —Net
      cash (used in) provided by financing activities
                
                
                (144
                )
                
                
                119Net
      decrease in cash and cash equivalents
                
                
                (282
                )
                
                
                (271
                )Cash
      and cash equivalents, beginning of period
                
                
                16,611
                
                
                
                16,232Cash
      and cash equivalents, end of period
                
                $
                16,329
                
                
                $
                15,961Supplemental
      disclosure of cash flow information:Cash
      paid during the period for:Interest
                
                $
                18
                
                
                $
                2Income
      taxes
                
                $
                167
                
                
                $
                136











See
accompanying notes to consolidated financial statements.





7


KSW,
INC. AND SUBSIDIARY





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(unaudited)





1.
            Nature of Operations
      and Basis of Presentation





KSW, Inc.
and its Subsidiary, collectively the “Company”, furnishes and installs heating,
ventilating and air conditioning systems and process piping systems for
institutional, industrial, commercial, high-rise residential and public works
projects, primarily in the State of New York.  The Company also serves
as a mechanical trade manager, performing project management services relating
to the mechanical trades.  The Company considers itself to operate as
one operating segment.





The
unaudited consolidated financial statements presented herein have been prepared
in accordance with the instructions to Form 10-Q and do not include all of the
information and disclosures required by accounting principles generally accepted
in the United States of America.  These consolidated statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2008.





In the
opinion of management, the accompanying unaudited consolidated financial
statements include all adjustments of normal recurring nature necessary for a
fair presentation of the consolidated financial position of the Company as of
March 31, 2009, and its results of operations, comprehensive income and cash
flows for the three month periods ended March 31, 2009 and
2008.  Because of the possible fluctuations in the marketplace in the
construction industry, operating results of the Company on a quarterly basis may
not be indicative of operating results for the full year ending December 31,
2009.





2.
            Significant Accounting
      Policies





The
significant accounting policies followed by the Company and its subsidiary in
preparing its consolidated financial statements are set forth in Note (2) to the
consolidated financial statements included in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2008.  The Company
has made no significant changes to these policies during 2009.





In
December 2007, the Financial Accounting Standards Board (“FASB”)issued Statement of
Financial Accounting Standards (“SFAS”) No. 141 (revised 2007), “Business
Combinations” (“SFAS 141-R”).  SFAS 141-R changes the accounting for
acquisitions specifically eliminating the step acquisition model, changing the
recognition of contingent consideration from being recognized when it is
probable to being recognized at the time of acquisition, disallowing the
capitalization of transaction costs and changes when restructurings related to
acquisition can be recognized.  The standard is effective for fiscal
years beginning on or after December 15, 2008 and only impacts the accounting
for acquisitions that are made after adoption.  The adoption of SFAS
141-R did not have an effect on the Company’s consolidated financial position or
results of operations.




8







In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51” (“SFAS
160”).  SFAS 160 is effective for fiscal years beginning on or after
December 15, 2008, with earlier adoption prohibited.  SFAS 160
requires the recognition of a noncontrolling interest (minority interest) as
equity in the consolidated financial statements and separate from the Company’s
equity.  The amount of netincomeattributable to the
noncontrolling interest will be included in consolidated net income on the face
of the consolidated income statement.  It also amends certain of ARB
No. 51’s consolidation procedures for consistency with the requirements of SFAS
141-R.  SFAS 160 also includes expanded disclosure requirements
regarding the interests of the parent and its noncontrolling
interest.  The adoption of SFAS 160 did not have an effect on the
Company’s consolidated financial position or results of operations.







3.           Marketable
Securities





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
157”).





SFAS 157
established a broad three level fair value hierarchy that prioritizes observable
and unobservable inputs which are used to measure fair value.





The
Company values mutual funds and marketable equity securities using market prices
on active markets, which is Level 1 of the SFAS 157 fair value
hierarchy.  Level 1 instrument valuations are obtained from real-time
quotes for transactions in active exchange markets involving identical
assets.





Financial
assets carried at fair value at March 31, 2009 are classified in the table below
in one of the SFAS 157’s three broad categories.





Level 1
                
                
                Level 2
                
                
                Level 3
                
                
                TotalMutual
      funds and marketable equity securities
                
                $
                1,216,000
                
                
                $
                —
                
                
                $
                —
                
                
                $
                1,216,000








4.
            Stockholders’
      Equity





(A) Stock Option
Plans:





The
Company has outstanding stock options issued under two plans, the KSW, Inc. 1995
Stock Option Plan (“1995 plan”) and the KSW, Inc. 2007 Stock Option Plan (“2007
plan”).





The 1995
plan expired December 2005.  Therefore, no new options can be granted
under that plan.  There are 145,501 outstanding options, which were
previously issued under the 1995 plan, expiring on various dates through
2015.


9


The 2007
plan was adopted and approved by the Company’s Board of Directors on May 8, 2007
and was approved by the shareholders at the May 2008 Annual Meeting of
Stockholders.  Pursuant to the 2007 plan, 300,000 shares of common
stock of the Company are reserved for issuance to employees, consultants and
directors of the Company.  The primary purpose of the 2007 plan is to
reward and retain key employees.  No options have been issued to
officers or employees under the 2007 plan.  Under this plan, the
Company has issued to a Company director options to purchase 20,000 shares of
the Company’s common stock at an exercise price of $6.95 per share. At March 31,
2009, there were 20,000 options outstanding of which 6,666 were vested under the
2007 plan.





During
the three months ended March 31, 2009, the Company incurred compensation expense
related to the vesting of stock options totaling approximately
$4,000.  There were no stock options issued or exercised during the
quarter ended March 31, 2009.





During the three months
ended March 31, 2008, the Company incurred compensation expense related to the
vesting of stock options totaling approximately $2,000.  During the
quarter ended March 31, 2008, a director, an executive and an employee exercised
an aggregate of 36,500 options.





As of
March 31, 2009, there is approximately $19,000 of unrecognized compensation
expense related to unvested stock-based compensation awards.  That
cost is expected to be recognized over the next 1.4 years.





Under
both plans, options were granted to certain employees, executives and directors
at prices equal to the market value of the stock on the dates the options were
issued.  The options granted generally have a term of 10 years from
the grant date and granted options vest ratably over a three year
period.  The fair value of each option is amortized into compensation
expense on a straight-line basis between the grant date for the option and each
vesting date.  The Company estimates the fair value of all stock
option awards as of the date of the grant by applying the Black-Scholes pricing
valuation model.  The application of this valuation model involves
assumptions that are judgmental and sensitive in the determination of
compensation expense which would include the expected stock price volatility,
risk-free interest rate, weighted-average expected life of the options and the
dividend yield.





Historical
information is the primary basis for the selection of the expected volatility,
expected dividend yield and the expected lives of options.  The risk
free interest rate was selected based upon yields of U.S. Treasury issues with a
term equal to the expected life of the option being valued.  Stock
option activity for the quarter ended March 31, 2009 was as
follows:





10





Number
                    of Shares
                  
                  
                  Weighted
      Average
                    Exercise Price
                  
                  
                  Weighted
      Average Remaining Contractual
                    Term in Years
                  
                  
                  Aggregate
                    IntrinsicValueOutstanding
      at January 1, 2009
                  
                  
                  165,501
                  
                  
                  $
                  2.23Expired/canceled
                  
                  
                  —
                  
                  
                  
                  —Granted
                  
                  
                  —
                  
                  
                  
                  —Exercised
                  
                  
                  —
                  
                  
                  
                  —Outstanding
      at March 31, 2009
                  
                  
                  165,501
                  
                  
                  $
                  2.23
                  
                  
                  
                  3.1
                  
                  
                  $
                  102,000Exercisable
      at March 31, 2009
                  
                  
                  152,167
                  
                  
                  $
                  1.81
                  
                  
                  
                  2.6
                  
                  
                  $
                  72,000




Cash
proceeds, tax benefits and intrinsic value related to total stock options
exercised during the quarters ended March 31, 2009 and 2008 are as
follows:




Three MonthsEnded
                  March 31, 2009
                
                
                Three MonthsEnded
                  March 31, 2008Proceeds
      from stock options exercised
                
                $
                —
                
                
                $
                57,000Tax
      benefits related to stock options exercised
                
                $
                —
                
                
                $
                62,000Intrinsic
      value of stock options exercised
                
                $
                —
                
                
                $
                143,000





(B)
            Treasury
      Stock





During
December 2008, the Company’s Board of Directors authorized the purchase, through
June 2009 of up to $1,000,000 of the Company’s common stock on the open
market.  As of March 31, 2009, the Company purchased 52,700 shares of
common stock at a cost of $140,000.





5.
            Earnings per
      Share





Three
      Months Ended
                                                    March 31, 2009
                                                  
                                                  
                                                  Three
      Months Ended
                                                    March 31, 2008Net
      income
                                                  
                                                  $
                                                  287,000
                                                  
                                                  
                                                  $
                                                  840,000Earnings per share – basic:Weighted average
      shares outstanding during the period
                                                  
                                                  
                                                  6,251,800
                                                  
                                                  
                                                  
                                                  6,261,098Earnings
      per share - basic
                                                  
                                                  $
                                                  .05
                                                  
                                                  
                                                  $
                                                  .13Earnings per share – diluted:Weighted
      average shares outstanding during the period
                                                  
                                                  
                                                  6,251,800
                                                  
                                                  
                                                  
                                                  6,261,098Effect
      of stock option dilution
                                                  
                                                  
                                                  30,760
                                                  
                                                  
                                                  
                                                  63,317Total
      shares outstanding for purposes of calculating diluted earnings per
      share
                                                  
                                                  
                                                  6,282,560
                                                  
                                                  
                                                  
                                                  6,324,415Earnings
      per share – diluted
                                                  
                                                  $
                                                  .05
                                                  
                                                  
                                                  $
                                                  .13





11


6.
            Commitment and
      Contingencies





Proposals and
Claims.  During the course of its work on construction
projects, the Company may incur expenses for work outside the scope of its
contractual obligations, for which no acknowledgment of liability exists from
the owner or general contractor for such additional work.  These
claims may include change proposals for extra work or requests for an equitable
adjustment to the Company’s contract price due to unforeseen disruptions to its
work. In accordance with accounting principles generally accepted in the United
States of America for the construction industry, until written acknowledgments
of the validity of the claims are received, the claims are not recognized in the
accompanying consolidated financial statements.  No accruals have been
made in the accompanying consolidated financial statements related to these
proposals for which no acknowledgment of liability exists.  While the
Company has been generally successful in obtaining a favorable resolution of
such claims, there is no assurance that the Company will be successful in the
future.





7.
            Recently Issued
      Accounting Pronouncements





There are
no recently issued accounting pronouncements which will affect the
Company.




ITEM
      2.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





Results of
Operations





Revenues





Total
revenues for the quarter ended March 31, 2009 decreased by $785,000, or (3.8)%
to $19,706,000, as compared to $20,491,000 for the quarter ended March 31,
2008.  This decrease in revenues was a result of the cancellation in
March 2009 of three Upper West Side contracts which had been included in the
Company’s backlog at December 31, 2008, as well as the suspension of work on two
large projects during the fourth quarter of 2008.  All five contracts
were cancelled or delayed by the owners due to the economic recession and credit
crisis.  After the three Upper West Side contracts were terminated,
the Company and its principal union worked with the owner to reduce costs
through value engineering and work rule modifications.  As a result,
the Company has been awarded new contracts for two of these cancelled Upper West
Side projects.  The Company is hopeful that in the coming months, the
third project can also be restored to the Company’s backlog.





As of
March 31, 2009, the Company had backlog of approximately
$38,300,000.  The contract values for the two cancelled Upper West
Side projects, for which work will soon restart, are not included in the backlog
at March 31, 2009. The owner of the Mount Sinai project has approved retaining
the Company as trade manager for the construction phase of its
project.  Although the Company has received a letter of intent, no
contract has been issued for this project, currently valued at between $58 and
$61 million, and the value for this project has not been included in the
Company’s backlog.  Preliminary work is scheduled to commence in the
later half of 2009 with construction scheduled to begin in 2010 and to last for
approximately two years. Backlog also does not include two
trade


12


management
projects for which preconstruction services are complete and the construction
phases should start shortly. While final contract amounts have not yet been
determined, the Company estimates that the aggregate contract value for these
two trade management projects is approximately $10,000,000.





Approximately
$3,000,000 of the March 31, 2009 backlog is not reasonably expected to be
completed within the year ended December 31, 2009.  The projects
discussed above and new contracts secured during 2009 will also increase 2009
revenues.  The amount of backlog not reasonably expected to be
completed in the next fiscal year is subject to various uncertainties and risks.
The Company is actively seeking new projects to add to its
backlog.  The economic recession has impacted the number of private
projects which the Company may pursue.  Therefore, the Company has
begun aggressively pursuing opportunities in the public sector, where the
Company has been successful in the past.





Cost
of Revenues





Cost of
revenues for the quarter ended March 31, 2009, decreased by $290,000, or (1.6)%
to $17,884,000, as compared to $18,174,000 for the quarter ended March 31,
2008.  The decrease in cost of revenues for the quarter ended March
31, 2009 as compared to March 31, 2008, is primarily associated with the
decreased revenues.





During
the quarter ended March 31, 2009, the Company reclassified to inventory
approximately $400,000 of piping materials which were originally purchased for
contracts which were later terminated.  This amount is included in the
accompanying consolidated balance sheet under the caption “Prepaid expenses and
other receivables”.





Gross
Profit





Gross
profit for the quarter ended March 31, 2009 was $1,822,000, or 9.2% of revenues,
as compared to a gross profit of $2,317,000, or 11.3% of revenues, for the
quarter ended March 31, 2008.  The decrease in gross profit for the
quarter ended March 31, 2009, as compared to the quarter ended March
31, 2008, was primarily a result of lower revenues, as well as higher than
anticipated costs incurred on several projects.  The Company has
submitted claims on some of these projects to recoup some of these unanticipated
costs.  In accordance with accounting principles generally accepted in
the United States of America for the construction industry, the Company does not
record any income from claims until the claims have been received or
awarded.  While there is no assurance that these costs will be
reimbursed, the Company believes its claims are meritorious.





Selling,
General and Administrative Expenses





Selling,
general and administrative expenses (“SG&A”) for the quarter ended
March 31, 2009 increased by $94,000, or 7.2% to $1,402,000, as
compared to $1,308,000 for the quarter ended March 31, 2008.  This
increase in SG&A for the quarter ended March 31, 2009, as compared to the
quarter ended March 31, 2008, was primarily a result of increased employment
costs.





13


Other
Income





Other
income for the quarter ended March 31, 2009 was $16,000, as compared to $124,000
for the quarter ended March 31, 2008.  This decrease was primarily a
result of declines in the interest rates that investments were able to
earn.





Provision
for Income Taxes





The
provision for income taxes for the quarter ended March 31, 2009 was $149,000, as
compared to the provision for income taxes of $293,000 for the quarter ended
March 31, 2008.  The tax expense during the quarter ended March 31,
2008 was lower than the Company’s statutory tax rate as a result of the
Company’s ability to utilize the Domestic Production Activities Deduction, a
credit available to qualifying entities in the construction and other
industries.





Net
Income





As a
result of the above mentioned items, the Company reported net income of
$287,000, or $.05 per share-basic and diluted, for the quarter ended March 31,
2009, as compared to reported net income of $840,000, or $.13 per share-basic
and diluted, for the quarter ended March 31, 2008.





Liquidity and Capital
Resources





General





The
Company’s principal capital requirement is to fund its work on construction
projects.  Projects are billed monthly based on the work performed to
date.  These project billings, less a withholding of retention, which
is received as the project nears completion, are collectible based on their
respective contract terms.  The Company has historically relied
primarily on internally generated funds and bank borrowings to finance its
operations.  The Company has a line of credit which is subject to
certain conditions.  The Company has not relied on bank borrowings to
finance its operations since July 2003.





As of
March 31, 2009, total cash and cash equivalents was $16,329,000, a $368,000
increase from the $15,961,000 reported as of March 31, 2008.





Cash
used in operations





Net cash
used in operations was $130,000 for the quarter ended March 31, 2009, as
compared to $350,000 for the quarter ended March 31, 2008.  Both
periods were affected by the funding of projects, the payment of corporate
income taxes and executive bonuses.





Cash
used in investing activities





Net cash
used in investing activities was $8,000 and $40,000 for the quarters ended
March 31, 2009 and 2008, respectively.  The Company
purchased property and equipment totaling $6,000 and $25,000 and marketable
securities totaling $2,000 and $15,000 during the quarters ended March 31,
2009 and 2008, respectively.


14





Cash
used in / provided by financing activities





Net cash
used by financing activities during the quarter ended March 31, 2009 was
$144,000.





Net cash
provided by financing activities during the quarter ended March 31, 2008 was
$119,000.





During
the quarter ended March 31, 2008, an executive, an employee and a director
exercised options to purchasean aggregate of 36,500
shares contributing cash proceeds of $57,000 to the Company.





Prior to
adopting SFAS 123-R, the Company presented all tax benefits resulting from the
exercise of stock options as operating cash flows in the statement of cash
flows. SFAS 123-R requires cash flows resulting from excess tax benefits to be
classified as a part of cash flows from financing activities.  Excess
tax benefits represent tax benefits related to exercised options in excess of
the associated deferred tax assets for such options.  As a result of
adopting SFAS 123-R, $62,000 of excess tax benefits for the quarter ended March
31, 2008 have been classified as an operating cash outflow and a financing cash
inflow.





During
the quarter ended March 31, 2009, the Company purchased 46,100 shares of
treasury stock at a cost of $124,000.





In
addition, the Company repaid principal payments on its mortgage payable totaling
$20,000 during the quarter ended March 31, 2009.





Credit
Facility





The
Company has a line of credit facility from Bank of America, N.A., which provides
borrowings for working capital purposes up to $2,000,000.  This
facility expires on April 1, 2010, is secured by the Company’s assets,
and is guaranteed by the Company’s subsidiary, KSW Mechanical Services,
Inc.  There have been no borrowings against this line of
credit.





Advances
bear interest, at the Company’s option, at either the bank’s prime lending rate
plus one percent per annum (4.25% at March 31, 2009) or the London Inter-Bank
Offered Rate (“LIBOR”) plus two and one-half percent per annum (2.98% at
March  31, 2009).





Payment
may be accelerated by certain events of default such as unfavorable credit
factors, the occurrence of a material adverse change in the Company’s business,
properties or financial condition, a default in payment on the line, impairment
of security, bankruptcy, or the Company ceasing operations or being unable to
pay its debts.  The line of credit must be paid in full at the end of
the term.





Commitments





The
Company currently has no significant capital expenditure
commitments.


15





Surety





On some
of its projects, the Company is required to provide a surety
bond.  The Company obtains its surety bonds from Federal Insurance
Company, a member of Chubb Group of Insurance Companies.  The
Company’s ability to obtain bonding, and the amount of bonding required, is
solely at the discretion of the surety and is primarily based upon the Company’s
net worth, working capital, the number and size of projects under construction
and the surety’s relationship with management.  The Company is
contingently liable to the surety under a general indemnity
agreement.  The Company agrees to indemnify the surety for any
payments made on contracts of suretyship, guaranty or indemnity that might
result from the Company not having the financial capacity to complete
projects.  Management believes the likelihood of the surety having to
complete projects is remote.  The contingent liability is the cost of
completing all bonded projects, which is an undeterminable amount because it is
subject to bidding by third parties.  Management believes that all
contingent liabilities will be satisfied by the Company’s performance on the
specific bonded contracts involved.  The surety provides bonding
solely at its discretion and the arrangement with the surety is an at-will
arrangement subject to termination.





The
Company’s bonding limits have been sufficient given the volume and size of the
Company’s contracts.  The Company’s surety may require that the
Company maintain certain tangible net worth levels, and may require additional
guarantees if the Company should desire increased bonding limits.  At
March 31, 2009, approximately $8,100,000 of the Company’s backlog of $38,300,000
is anticipated to be bonded.





Critical Accounting Policies
and Estimates





There
have been no material changes in the accounting policies and estimates that the
Company considers to be “critical” from those disclosed in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2008.





Recently Issued Accounting
Pronouncements





See Note
(7) to the consolidated financial statements for a summary of recently issued
accounting pronouncements and their impact on the Company.





Forward-Looking
Statements





Certain
statements contained in this report are not historical facts and constitute
“forward-looking statements” (as such term is defined in the Private Securities
Litigation Reform Act of 1995).  These forward looking statements
generally can be identified as statements that include words such as “believe”,
“expect”, “anticipate”, “intend”, “plan”, “foresee”, “likely”, “will” or other
similar words or phrases.  Such forward-looking statements concerning
management’s expectations, strategic objectives, business prospects, anticipated
economic performance and financial condition, and other similar matters involve
known and unknown risks, uncertainties and other important factors that could
cause the actual results, performance or achievements of results to differ
materially from any future results, performance or achievements discussed or
implied by such forward-


16


looking
statements.  This document describes factors that could cause actual
results to differ materially from expectations of the Company.  All
written and oral forward-looking statements attributable to the Company or
persons acting on behalf of the Company are qualified in their entirety by such
factors.  Such risks, uncertainties, and other important factors
include, among others:  inability to obtain bonding, inability to
retain senior management, low labor productivity and shortages of skilled labor,
a rise in the price of steel products, economic downturn, cancellation,
suspension or delay of projects by customers, reliance on certain customers,
competition, inflation, the adverse effect of terrorist concerns and activities
on public budgets and insurance costs, the unavailability of private funds for
construction, and other various matters, many of which are beyond the Company’s
control and other factors as are described in “ Part I, Item 1A.  Risk
Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2008.  Forward-looking statements speak only as of the
date of the document in which they are made.  Other than required by
applicable law, the Company disclaims any obligation or undertaking to provide
any updates or revisions to any forward-looking statements to reflect any
changes in the Company’s expectations or any changes in events, conditions or
circumstances on which the forward-looking statements are based.








ITEM
      3.
            QUANTITITATIVE AND
      QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





The
Company does not utilize futures, options or other derivative
instruments.  As of March 31, 2009, the Company has invested
$1,216,000 in marketable securities.








ITEM
4.                  CONTROLS AND
PROCEDURES





As of
March 31, 2009, our management, including our Chief Executive Officer and our
Chief Financial Officer, conducted an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act). Based on this assessment, management determined that,
as of March 31, 2009, the Company’s disclosure controls and procedures were
effective.





There
have been no changes in the Company’s internal control over financial reporting
(as defined in Rules 13a-15(f) and 15d- 15(f) under the Exchange Act), during
the quarter ended March 31, 2009, that have materially affected or are
reasonably likely to materially affect the Company’s internal control over
financial reporting.








PART II - OTHER
INFORMATION











ITEM
      1.
            LEGAL
      PROCEEDINGS





None.


17





ITEM
1A.                RISK
FACTORS





There
have been no material changes related to risk factors from those items
previously disclosed in the Company’s December 31, 2008 Annual Report on Form
10-K.







ITEM
      2.
            UNREGISTERED SALES OF
      EQUITY SECURITIES AND USE OF
PROCEEDS





The
following table set forth information regarding the shares of Common Stock
purchased by the Company pursuant to its previously announced repurchase program
during the first quarter of 2009.








Period
              
              Total
      Number of Shares Purchased
              
              
              Average
      Price Paid per
    Share
              
              
              Total
      Number of Shares Purchased as Part of Publicly Announced Plans or
      Programs
              
              
              Maximum
      Number (or Approximate Dollar Value) of Shares that May Yet be
      Purchased Under the Plans or
      ProgramsJanuary
      2009
              
              
              25,500
              
              
              $
              2.70
              
              
              
              32,100
              
              
              $
              916,000February
      2009
              
              
              20,600
              
              
              $
              2.71
              
              
              
              52,700
              
              
              $
              860,000








ITEM
      3.
            DEFAULTS UPON SENIOR
      SECURITIES





None.





ITEM
      4.
            SUBMISSION OF MATTERS
      TO A VOTE OF SECURITY
HOLDERS





The
Company’s Annual Meeting of Stockholders was held at 2:00 PM on May 7, 2009 in
New York, New York, for the purpose of (i) electing one Class II Director to
serve until the annual meeting of stockholders in the year 2012; and (ii)
ratifying the appointment of J.H. Cohn LLP, as independent registered public
accounting firm for the fiscal year ending December 31, 2009.  Proxies
were solicited from holders of 6,235,125 outstanding shares of Common Stock as
of the close of business on March 10, 2009, as described in the Company’s Proxy
Statement dated April 3, 2009.  The Board of Directors had nominated
Innis O’Rourke, Jr. for re-election as a Class II Director.  Mr.
O’Rourke passed away on April 29, 2009.  Pursuant to the Company’s
Proxy Rules, if a nominated Director is unable to stand for re-election, the
Board of Directors is authorized to select a substitute nominee.  At
the regularly scheduled Board of Directors Meeting, at 11:00 AM on May 7, 2009,
the Board of Directors nominated Edward T. La Grassa to run in place of Mr.
O’Rourke.  At the Annual Meeting, Edward T. La Grassa was then elected
as a Class II Director, and the appointment of J.H. Cohn LLP was ratified by the
following votes:


18


(1)
            To
      elect one Class II Director to serve until the annual meeting of
      stockholders in the year 2012.








Votes For
                    
                    
                    Votes WitheldEdward
      T. La Grassa
                    
                    
                    4,156,330
                    
                    
                    
                    13,480





Floyd
Warkol, Stanley Kreitman, Warren O. Kogan, and John Cavanagh continue to serve
as directors of the Company after the Annual Meeting of
Stockholders.  Mr. La Grassa was appointed to the Company’s Audit
Committee by the Independent Directors.








(2)
            To
      ratify the appointment of J.H. Cohn LLP as the Company’s independent
      registered public accounting firm for the fiscal year ending December 31,
      2009.





Votes For
                        
                        Votes Against
                        
                        Votes Abstained4,165,052
                        
                        4,126
                        
                        632








ITEM
5.                      OTHER
INFORMATION





None.





ITEM
6.                      EXHIBITS





Exhibit
11 – Statement regarding Computation of Earnings per Share (see Note 5 to the
Consolidated Financial Statements included elsewhere in this
Report)





Exhibit
31.1 –  Certification of Chief Executive Officer required by Rule
13a-14(a)





Exhibit
31.2 – Certification of Chief Financial Officer required by Rule
13a-14(a)





Exhibit
32.1 – Certification of Chief Executive Officer required by Rule 13a-14(b) and
18 U.S.C. Section 1350





Exhibit
32.2 – Certification of Chief Financial Officer required by Rule 13a-14(b) and
18 U.S.C. Section 1350


19





SIGNATURE








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




KSW, INC.Date:  May
      12, 2009
                  By:
                  /s/ Richard
      W. LucasRichard
      W. LucasChief
      Financial Officer(Principal
      Financial and Accounting Officerand
      Duly Authorized Officer)








20





KSW,
INC.





INDEX
TO EXHIBITS




Exhibit Number
                  Description11
                  Statement
      Regarding Computation of Earnings per Share(see Note 5 to the Consolidated
      Financial Statements included elsewhere in this Report)31.1
                  Certification
      of Chief Executive Officer required by Rule 13a-14(a)31.2
                  Certification
      of Chief Financial Officer required by Rule 13a-14(a)32.1
                  Certification
      of Chief Executive Officer required by Rule 13a-14(b) and 18 U.S.C.
      §135032.2
                  Certification
      of Chief Financial Officer required by Rule 13a-14 (b) and 18 U.S.C.
      §1350







21