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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-Q



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|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended January 31, 2005



| ̈ | 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



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KEWAUNEE SCIENTIFIC CORPORATION

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 38-0715562                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|2700 West Front Street Statesville, North Carolina             |  | 28677                               
|(Address of principal executive offices)                       |  | (Zip Code)                          



(704) 873-7202

(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 ̈



As of
March 1, 2005, the Registrant had outstanding 2,491,770 shares of Common Stock.



Pages: This report, excluding exhibits, contains 21 pages numbered sequentially from this cover page.



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##### Table of Contents

KEWAUNEE SCIENTIFIC CORPORATION



INDEX TO
FORM 10-Q



FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2005



|                                                                                                              |  |            
|------------------------------------------------------------------------------------------------------------- |  | -----------
|                                                                                                              |  | Page Number
|PART I. FINANCIAL INFORMATION                                                                                 |  |            
|                                                                                                              | 
|Item 1.
Financial Statements                                                                                  |  |            
|                                                                                                              | 
|Condensed Consolidated Statements of Operations -Three months and nine months ended January 31, 2005 and 2004 |  | 3          
|                                                                                                              | 
|Condensed Consolidated Balance SheetsJanuary 31, 2005 and April 30, 2004                                      |  | 4          
|                                                                                                              | 
|Condensed Consolidated Statements of Cash Flows -Nine months ended January 31, 2005 and 2004                  |  | 5          
|                                                                                                              | 
|Notes to Condensed Consolidated Financial Statements                                                          |  | 6          
|                                                                                                              | 
|Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations                 |  | 12         
|                                                                                                              | 
|Review by Independent Registered Public Accounting Firm                                                       |  | 17         
|                                                                                                              | 
|Report of Independent Registered Public Accounting Firm                                                       |  | 18         
|                                                                                                              | 
|Item 3.
Quantitative and Qualitative Disclosures About Market Risk                                            |  | 19         
|                                                                                                              | 
|Item 4.
Controls and Procedures                                                                               |  | 19         
|                                                                                                              | 
|PART II. OTHER INFORMATION                                                                                    |  |            
|                                                                                                              | 
|Item 6.
Exhibits and Reports on Form 8-K                                                                      |  | 20         
|                                                                                                              | 
|SIGNATURE                                                                                                     |  | 21         



2



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##### Table of Contents

Part 1. Financial Information



Item 1. Financial Statements



Kewaunee Scientific Corporation

Condensed Consolidated Statements of Operations

(Unaudited)

|                                                                     |  |                                         |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|-------------------------------------------------------------------- |  | --------------------------------------- | ------ | - | ---------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                     |  | Three months ended January 31           |        |   | Nine months ended January 31 |  
|                                                                     |  | 2005                                    |        |   | 2004                         |   |        | 2005 |  |   | 2004   |  
|                                                                     |  | ($ in thousands, except per share data) |       
|Net sales                                                            |  | $                                       | 15,623 |   |                              | $ | 21,454 |      |  | $ | 54,276 |   |  | $ | 70,051 |  
|Cost of products sold                                                |  |                                         | 13,586 |   |                              |   | 17,736 |      |  |   | 45,310 |   |  |   | 58,626 |  
|                                                                     |  |                                         |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Gross profit                                                         |  |                                         | 2,037  |   |                              |   | 3,718  |      |  |   | 8,966  |   |  |   | 11,425 |  
|Operating expenses                                                   |  |                                         | 3,030  |   |                              |   | 3,206  |      |  |   | 9,336  |   |  |   | 9,528  |  
|                                                                     |  |                                         |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Operating earnings (loss)                                            |  |                                         | (993   | ) |                              |   | 512    |      |  |   | (370   | ) |  |   | 1,897  |  
|Interest expense                                                     |  |                                         | (84    | ) |                              |   | (71    | )    |  |   | (254   | ) |  |   | (232   | )
|Other (expense) income                                               |  |                                         | (47    | ) |                              |   | 14     |      |  |   | (44    | ) |  |   | 163    |  
|                                                                     |  |                                         |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Earnings (loss) before income taxes                                  |  |                                         | (1,124 | ) |                              |   | 455    |      |  |   | (668   | ) |  |   | 1,828  |  
|Income tax expense (benefit)                                         |  |                                         | (382   | ) |                              |   | 164    |      |  |   | (227   | ) |  |   | 658    |  
|                                                                     |  |                                         |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Net earnings (loss)                                                  |  | $                                       | (742   | ) |                              | $ | 291    |      |  | $ | (441   | ) |  | $ | 1,170  |  
|                                                                     |  |                                         |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Net earnings (loss) per share-                                       |  |                                         |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Basic                                                                |  | $                                       | (0.30  | ) |                              | $ | 0.12   |      |  | $ | (0.18  | ) |  | $ | 0.47   |  
|Diluted                                                              |  | $                                       | (0.30  | ) |                              | $ | 0.12   |      |  | $ | (0.18  | ) |  | $ | 0.47   |  
|                                                                     |  |                                         |        |  
|Weighted average number of common shares outstanding (in thousands)- |  |                                         |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Basic                                                                |  |                                         | 2,492  |   |                              |   | 2,486  |      |  |   | 2,491  |   |  |   | 2,485  |  
|Diluted                                                              |  |                                         | 2,493  |   |                              |   | 2,499  |      |  |   | 2,495  |   |  |   | 2,493  |  



See accompanying notes to condensed
consolidated financial statements.



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##### Table of Contents

Kewaunee Scientific Corporation

Condensed Consolidated Balance Sheets

(in thousands)



|                                           |  |                 |         |   |               |   |         |  
|------------------------------------------ |  | --------------- | ------- | - | ------------- | - | ------- | -
|                                           |  | January 31 2005 |         |   | April 30 2004 |  
|                                           |  | (Unaudited)     |        
|Assets                                     |  |                 |         |   |               |   |         |  
|Current assets:                            |  |                 |         |   |               |   |         |  
|Cash and cash equivalents                  |  | $               | 1,128   |   |               | $ | 1,167   |  
|Receivables, less allowance                |  |                 | 18,756  |   |               |   | 24,987  |  
|Inventories                                |  |                 | 3,953   |   |               |   | 4,285   |  
|Deferred income taxes                      |  |                 | 517     |   |               |   | 517     |  
|Prepaid income taxes                       |  |                 | 251     |   |               |   | 165     |  
|Prepaid expenses and other current assets  |  |                 | 523     |   |               |   | 415     |  
|                                           |  |                 |         |   |               |   |         |  
|Total current assets                       |  |                 | 25,128  |   |               |   | 31,536  |  
|                                           |  |                
|Property, plant and equipment, at cost     |  |                 | 34,144  |   |               |   | 33,246  |  
|Accumulated depreciation                   |  |                 | (23,415 | ) |               |   | (21,884 | )
|                                           |  |                 |         |   |               |   |         |  
|Net property, plant and equipment          |  |                 | 10,729  |   |               |   | 11,362  |  
|                                           |  |                 |         |   |               |   |         |  
|Other assets                               |  |                 | 6,513   |   |               |   | 7,563   |  
|                                           |  |                 |         |   |               |   |         |  
|Total Assets                               |  | $               | 42,370  |   |               | $ | 50,461  |  
|                                           |  |                 |         |   |               |   |         |  
|Liabilities and Stockholders Equity       |  |                 |         |   |               |   |         |  
|Current liabilities:                       |  |                 |         |   |               |   |         |  
|Short-term borrowings                      |  | $               | 3,263   |   |               | $ | 6,996   |  
|Current portion of long-term debt          |  |                 | 1,118   |   |               |   | 1,118   |  
|Current obligations under capital leases   |  |                 | 51      |   |               |   | 0       |  
|Accounts payable                           |  |                 | 5,189   |   |               |   | 6,924   |  
|Employee compensation and amounts withheld |  |                 | 623     |   |               |   | 1,507   |  
|Deferred Revenue                           |  |                 | 1,230   |   |               |   | 1,152   |  
|Other accrued expenses                     |  |                 | 682     |   |               |   | 1,222   |  
|                                           |  |                 |         |   |               |   |         |  
|Total current liabilities                  |  |                 | 12,156  |   |               |   | 18,919  |  
|                                           |  |                
|Long-term debt                             |  |                 | 93      |   |               |   | 931     |  
|Obligations under capital leases           |  |                 | 164     |   |               |   | 0       |  
|Deferred income taxes                      |  |                 | 1,013   |   |               |   | 1,013   |  
|Accrued employee benefit plan costs        |  |                 | 2,603   |   |               |   | 2,325   |  
|Other long-term liabilities                |  |                 | 537     |   |               |   | 482     |  
|                                           |  |                 |         |   |               |   |         |  
|Total Liabilities                          |  |                 | 16,566  |   |               |   | 23,670  |  
|                                           |  |                
|Stockholders equity:                      |  |                 |         |   |               |   |         |  
|Common stock                               |  |                 | 6,550   |   |               |   | 6,550   |  
|Additional paid-in-capital                 |  |                 | 132     |   |               |   | 141     |  
|Retained earnings                          |  |                 | 19,912  |   |               |   | 20,876  |  
|Accumulated other comprehensive income     |  |                 | 0       |   |               |   | 36      |  
|Common stock in treasury, at cost          |  |                 | (790    | ) |               |   | (812    | )
|                                           |  |                 |         |   |               |   |         |  
|Total stockholders equity                 |  |                 | 25,804  |   |               |   | 26,791  |  
|                                           |  |                 |         |   |               |   |         |  
|Total Liabilities and Stockholders Equity |  | $               | 42,370  |   |               | $ | 50,461  |  
|                                           |  |                 |         |   |               |   |         |  



See accompanying notes to condensed
consolidated financial statements.



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Kewaunee Scientific Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)



|                                                                                                     |  |                              |        |   |      |   |        |  
|---------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                                     |  | Nine months ended January 31 |       
|                                                                                                     |  | 2005                         |        |   | 2004 |  
|Cash flows from operating activities:                                                                |  |                              |        |   |      |   |        |  
|Net earnings (loss)                                                                                  |  | $                            | (441   | ) |      | $ | 1,170  |  
|Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: |  |                              |        |   |      |   |        |  
|Depreciation                                                                                         |  |                              | 1,531  |   |      |   | 1,543  |  
|Provision for bad debts                                                                              |  |                              | 516    |   |      |   | 62     |  
|(Increase) decrease in prepaid income taxes                                                          |  |                              | (86    | ) |      |   | 1,133  |  
|Decrease (increase) in receivables                                                                   |  |                              | 5,715  |   |      |   | (6,581 | )
|Decrease in inventories                                                                              |  |                              | 332    |   |      |   | 1,373  |  
|Decrease in accounts payable and other current liabilities                                           |  |                              | (3,159 | ) |      |   | (3,150 | )
|Increase in deferred revenue                                                                         |  |                              | 78     |   |      |   | 882    |  
|Other, net                                                                                           |  |                              | 1,239  |   |      |   | 853    |  
|                                                                                                     |  |                              |        |   |      |   |        |  
|Net cash provided by (used in) operating activities                                                  |  |                              | 5,725  |   |      |   | (2,715 | )
|                                                                                                     |  |                              |        |   |      |   |        |  
|Cash flows from investing activities:                                                                |  |                              |        |   |      |   |        |  
|Capital expenditures                                                                                 |  |                              | (674   | ) |      |   | (1,310 | )
|                                                                                                     |  |                              |        |   |      |   |        |  
|Net cash used in investing activities                                                                |  |                              | (674   | ) |      |   | (1,310 | )
|                                                                                                     |  |                              |        |   |      |   |        |  
|Cash flows from financing activities:                                                                |  |                              |        |   |      |   |        |  
|(Decrease) increase in short-term borrowings                                                         |  |                              | (3,733 | ) |      |   | 4,668  |  
|Proceeds from long-term debt                                                                         |  |                              | 0      |   |      |   | 1,200  |  
|Payments of long-term debt                                                                           |  |                              | (838   | ) |      |   | (801   | )
|Payments of capital leases                                                                           |  |                              | (9     | ) |      |   | 0      |  
|Dividends paid                                                                                       |  |                              | (523   | ) |      |   | (522   | )
|Proceeds from exercise of stock option                                                               |  |                              | 13     |   |      |   | 23     |  
|                                                                                                     |  |                              |        |   |      |   |        |  
|Net cash (used in) provided by financing activities                                                  |  |                              | (5,090 | ) |      |   | 4,568  |  
|                                                                                                     |  |                              |        |   |      |   |        |  
|(Decrease) increase in cash and cash equivalents                                                     |  |                              | (39    | ) |      |   | 543    |  
|                                                                                                     |  |                             
|Cash and cash equivalents, beginning of period                                                       |  |                              | 1,167  |   |      |   | 520    |  
|                                                                                                     |  |                              |        |   |      |   |        |  
|Cash and cash equivalents, end of period                                                             |  | $                            | 1,128  |   |      | $ | 1,063  |  
|                                                                                                     |  |                              |        |   |      |   |        |  



See accompanying notes to condensed
consolidated financial statements.



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Kewaunee Scientific Corporation

Notes to Condensed Financial Statements

(unaudited)



A. Financial Information



The unaudited interim condensed 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. These interim condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in the
Companys 2004 Annual Report to Stockholders.



The preparation of the
financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect reported amounts and disclosures. Actual results could differ
from those estimates.



In the opinion of management, the interim condensed
consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the interim periods. The results of operations for the interim periods are not necessarily indicative of
the results of operations to be expected for the full year.



B. Revenue Recognition



Product sales
are generally recognized at the date of shipment, or when customers have purchased and accepted title to the goods, but because of construction delays, have requested the Company to temporarily store the finished goods on the customers behalf.
Deferred revenue consists of customer deposits and advance billings of the Companys products where sales have not yet been recognized. Service revenue for installation of product sold is recognized as the installation services are
performed.



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##### Table of Contents

Product Sales for Fixed-Price Construction Contracts. Product sales for fixed-price construction contracts involve
a signed contract for a fixed price to provide the Companys laboratory furniture and fume hoods for a construction project. The Company usually is in the role as a subcontractor, but in some cases may enter into a contract directly with the
end-user of the products. Product sales for fixed-price construction contracts are generated from multiple-element arrangements that require separate units of accounting and estimates regarding the fair value of individual elements.



The Company determined that its multiple-element arrangements are generally comprised of the
following elements that would qualify as separate units of accounting: product sales and installation services. Each of these elements represent individual units of accounting as the delivered item has value to a customer on a stand-alone basis,
objective and reliable evidence of fair value exists for undelivered items, and arrangements normally do not contain a general right of return relative to the delivered item. The Company determines fair value based on the price of the deliverable
when it is sold separately or based on third-party evidence. In accordance with the guidance in EITF 00-21, the Company uses the residual method to allocate the arrangement consideration when it does not have fair value of the product sale. Under
the residual method, the amount of consideration allocated to the delivered item equals the total arrangement consideration less the aggregate fair value of the undelivered items. Assuming all other criteria for revenue recognition have been met,
the Company recognizes revenue for product sales at the date of shipment.



Product Sales for Purchase Orders. Product sales for purchase orders involve a purchase order received by the Company from its dealers and its stocking distributor. This category includes product sales for standard products, as well
as products which require some customization. These sales are recognized under the terms of the purchase order which generally are freight on board (FOB) shipping point and do not include rights of return. Accordingly, sales are
recognized at the time of shipment.



C.
Principles of Consolidation



The Companys consolidated financial
statements include the accounts of Kewaunee Scientific Corporation and its three subsidiaries. A brief description of each subsidiary, along with the amount of the Companys controlling financial interests, is as follows:



(1) Kewaunee Labway Asia Pte. Ltd., a dealer for the Companys products
in Singapore, is 51% owned by the Company; (2) Labway Scientific India Pvt. Ltd., a dealer for the Companys products in Bangalore, India, is 95% owned by Kewaunee Labway Asia; and (3) Kewaunee Scientific Corporation India Pvt. Ltd. in
Bangalore, India, an assembly operation, is 100% owned by the Company. All intercompany balances, transactions, and profits have been eliminated.



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D. Inventories



Inventories consisted of the following (in thousands):



|                  |  |                  |       |                |   |      
|----------------- |  | ---------------- | ----- | -------------- | - | -----
|                  |  | January 31, 2005 |       | April 30, 2004
|Finished products |  | $                | 1,062 |                | $ | 1,364
|Work in process   |  |                  | 1,046 |                |   | 1,373
|Raw materials     |  |                  | 1,845 |                |   | 1,548
|                  |  |                  |       |                |   |      
|                  |  | $                | 3,953 |                | $ | 4,285
|                  |  |                  |       |                |   |      



E.
Balance Sheet



The Companys April 30, 2004 condensed consolidated
balance sheet as presented herein is derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles.



F. Long-Term Debt



At January 31, 2005, long-term debt of the Company included $1,211,000 of obligations under a bank note, of which $1,118,000 was due within
one year and classified as a current liability in the balance sheet. The note includes certain covenants as to tangible net worth, funds flow coverage, current ratio and ratio of liabilities to tangible net worth. At January 31, 2005, the
Companys funds flow coverage ratio fell below the minimum required under the financial covenant at the beginning of the quarter because of the net loss reported by the Company in the third quarter. The bank has waived the funds flow coverage
ratio requirement for the period ended January 31, 2005 and amended the ratio calculation for the period ending April 30, 2005 to lower the required ratio for that period. The Company expects to be in compliance with all covenants, as amended, under
the note in future periods.



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G. Comprehensive Income (Loss)



A reconciliation of net earnings (loss) and total comprehensive income (loss) for the three
months and nine months ended January 31, 2005 and 2004 is as follows (in thousands):



|                                                              |  |                                    |      |   |                                    |   |       |  
|------------------------------------------------------------- |  | ---------------------------------- | ---- | - | ---------------------------------- | - | ----- | -
|                                                              |  | Three months endedJanuary 31, 2005 |      |   | Three months endedJanuary 31, 2004 |  
|Net earnings (loss)                                           |  | $                                  | (742 | ) |                                    | $ | 291   |  
|Change in fair value of cash flow hedge, net of income tax    |  |                                    | 3    |   |                                    |   | (12   | )
|Change in cumulative foreign currency translation adjustments |  |                                    | (70  | ) |                                    |   | 12    |  
|                                                              |  |                                    |      |   |                                    |   |       |  
|Total comprehensive income (loss)                             |  | $                                  | (809 | ) |                                    | $ | 291   |  
|                                                              |  |                                   
|                                                              |  | Nine months ended January 31, 2005 |      |   | Nine months ended January 31, 2004 |  
|Net earnings (loss)                                           |  | $                                  | (441 | ) |                                    | $ | 1,170 |  
|Change in fair value of cash flow hedge, net of income tax    |  |                                    | 10   |   |                                    |   | (3    | )
|Change in cumulative foreign currency translation adjustments |  |                                    | (46  | ) |                                    |   | 45    |  
|                                                              |  |                                    |      |   |                                    |   |       |  
|Total comprehensive income (loss)                             |  | $                                  | (477 | ) |                                    | $ | 1,212 |  



Statement and Financial Accounting
Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, requires that the Company record derivatives on the balance sheet at fair value and establishes criteria for designation and
effectiveness of hedging relationships. The nature of the Companys business activities involves the management of various financial and market risks, including those related to changes in interest rates. The Company may from time-to-time
employ derivative financial instruments, such as interest rate swap contracts, to mitigate or eliminate certain of those risks. The Company does not enter into derivative instruments for speculative purposes. The Company had one interest rate swap
agreement outstanding at January 31, 2005.



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



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H. Stock Options



The Company has not granted stock options to employees or directors since fiscal year 2004. The Company accounts for stock options using the
intrinsic value method. Under this method no compensation expense is recorded since the exercise price of the stock options is equal to the market price of the underlying stock on the grant date. Had compensation expense for the stock options issued
been determined consistent with Financial Accounting Standards Board (FASB) Statement No. 123, Accounting for Stock-Based Compensation, net earnings (loss) and net earnings (loss) per share would have been reduced (increased)
to the following pro forma amounts (in thousands, except per share data):



|                                        |  |                                     |       |   |                                     |   |       |  
|--------------------------------------- |  | ----------------------------------- | ----- | - | ----------------------------------- | - | ----- | -
|                                        |  | Three months ended January 31, 2005 |       |   | Three months ended January 31, 2004 |  
|Net earnings (loss)as reported          |  | $                                   | (742  | ) |                                     | $ | 291   |  
|Pro forma compensation cost             |  |                                     | (9    | ) |                                     |   | (20   | )
|                                        |  |                                     |       |   |                                     |   |       |  
|Net earnings (loss) pro forma           |  |                                     | (751  | ) |                                     |   | 271   |  
|                                        |  |                                    
|Net earnings (loss) per share  Basic   |  |                                     |       |   |                                     |   |       |  
|As reported                             |  | $                                   | (0.30 | ) |                                     | $ | 0.12  |  
|Pro forma                               |  |                                     | (0.30 | ) |                                     |   | 0.11  |  
|                                        |  |                                    
|Net earnings (loss) per share  Diluted |  |                                     |       |   |                                     |   |       |  
|As reported                             |  | $                                   | (0.30 | ) |                                     | $ | 0.12  |  
|Pro forma                               |  |                                     | (0.30 | ) |                                     |   | 0.11  |  
|                                        |  |                                    
|                                        |  | Nine months ended January 31, 2005  |       |   | Nine months ended January 31, 2004  |  
|Net earnings (loss) as reported         |  | $                                   | (441  | ) |                                     | $ | 1,170 |  
|Pro forma compensation cost             |  |                                     | (26   | ) |                                     |   | (60   | )
|                                        |  |                                     |       |   |                                     |   |       |  
|Net earnings (loss) pro forma           |  |                                     | (467  | ) |                                     |   | 1,110 |  
|                                        |  |                                    
|Net earnings (loss) per share  Basic   |  |                                     |       |   |                                     |   |       |  
|As reported                             |  | $                                   | (0.18 | ) |                                     | $ | 0.47  |  
|Pro forma                               |  |                                     | (0.19 | ) |                                     |   | 0.45  |  
|                                        |  |                                    
|Net earnings (loss) per share  Diluted |  |                                     |       |   |                                     |   |       |  
|As reported                             |  | $                                   | (0.18 | ) |                                     | $ | 0.47  |  
|Pro forma                               |  |                                     | (0.19 | ) |                                     |   | 0.45  |  



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##### Table of Contents

I. Pension Plans



The Company has non-contributory defined benefit pension plans covering substantially all salaried and hourly employees. Pension expense
consisted of the following (in thousands):



|                                    |  |                                     |      |   |                                     |   |      |  
|----------------------------------- |  | ----------------------------------- | ---- | - | ----------------------------------- | - | ---- | -
|                                    |  | Three months ended January 31, 2005 |      |   | Three months ended January 31, 2004 |  
|Service Cost                        |  | $                                   | 129  |   |                                     | $ | 121  |  
|Interest Cost                       |  |                                     | 213  |   |                                     |   | 200  |  
|Expected return on plan assets      |  |                                     | (251 | ) |                                     |   | (207 | )
|Amortization of prior service costs |  |                                     | 3    |   |                                     |   | 3    |  
|Recognition of net loss             |  |                                     | 59   |   |                                     |   | 80   |  
|                                    |  |                                     |      |   |                                     |   |      |  
|Net periodic cost                   |  | $                                   | 153  |   |                                     | $ | 197  |  
|                                    |  |                                    
|                                    |  | Nine months ended January 31, 2005  |      |   | Nine months ended January 31, 2004  |  
|Service Cost                        |  | $                                   | 386  |   |                                     | $ | 362  |  
|Interest Cost                       |  |                                     | 639  |   |                                     |   | 599  |  
|Expected return on plan assets      |  |                                     | (753 | ) |                                     |   | (621 | )
|Amortization of prior service costs |  |                                     | 8    |   |                                     |   | 8    |  
|Recognition of net loss             |  |                                     | 178  |   |                                     |   | 241  |  
|                                    |  |                                     |      |   |                                     |   |      |  
|Net periodic cost                   |  | $                                   | 458  |   |                                     | $ | 589  |  



No contributions were paid to the plan
during the nine months ended January 31, 2005. Contributions of approximately $1 million are expected to be paid to the plans in the fourth quarter of the current year.



At the Companys Board of Directors meeting of February 22, 2005, the Board approved amendments to the Companys two defined
benefit pension plans to suspend (freeze) benefits earned under each of the plans, effective April 30, 2005. The amendments to suspend benefits under the plans will result in an expense of approximately $28,000, all of which will be
recorded in the fourth quarter of the current year.



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Item 2. Managements Discussion and Analysis

of Financial Condition and Results of Operations



The Companys 2004 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, 2004. The following discussion and analysis describes material changes in the Companys financial condition since April 30, 2004. The analysis of
results of operations compares the three months and nine months ended January 31, 2005 with the comparable period of the prior fiscal year.



Results of Operations



Sales for the quarter were $15,623,000, a decrease of 27% from sales of $21,454,000 in the same period last year. Sales for the nine months ended January 31, 2005 were
$54,276,000, a decrease of 23% from sales of $70,051,000 in the comparable period last year.



Sales for the quarter were adversely affected by a continuing soft marketplace for laboratory furniture. Spending for new research projects by pharmaceutical companies continued to be below levels of recent years.
Additionally, the number of projects generally available in the marketplace was reduced, or construction was delayed, by the significant increases in the cost of construction materials over the past year. Funding available for education construction
projects also continued to be affected by reduced state spending budgets. However, order activity for the quarter increased over the two previous quarters, as activity in the marketplace showed some improvement after the Presidential election in
November 2004. The order backlog at January 31, 2005 was $41.7 million, up from $38.6 million at October 31, 2004.



The gross profit margin for the three months ended January 31, 2005 was 13.0% of sales, as compared to 17.3% of sales in the comparable quarter of the prior year. The
gross profit margin for the nine months ended January 31, 2005 was 16.5%, as compared to 16.3% in the comparable period of the prior year. The gross profit margin for the current quarter was adversely affected by manufacturing inefficiencies
resulting from the low sales and cost overruns on several completed projects. Additionally, gross profit margins for each of the current year periods were adversely affected by higher costs in the current year for raw materials, particularly steel
and epoxy resin. The impact of the above items was partially offset by continuing cost reduction activities.



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Operating expenses for the three months ended January 31, 2005 were $3.0 million, or 19.4% of sales, as compared to $3.2
million, or 14.9% of sales, in the comparable period of the prior year. Operating expenses for the nine months ended January 31, 2005 were $9.3 million, or 17.2% of sales, as compared to $9.5 million, or 13.6% of sales, in the comparable period of
the prior year.



Operating expenses for the current year reflect a decline in
sales commissions of $196,000 and $458,000 for the three and nine months ended January 31, 2005, respectively, as compared to the same periods last year. The decline in sales commissions was primarily attributable to the lower sales volumes.
Operating expenses also benefited from continuing cost reduction activities, including reduced salaries and benefits of $269,000 and $361,000 for the three and nine months ended January 31, 2005, respectively, resulting from the workforce reduction
made during the second quarter of the current year. These expense reductions were partially offset by increases in bad debt expense over the prior year comparable periods of $139,000 and $454,000 for the three and nine months ended January 31, 2005,
respectively. The increase in operating expenses as a percent of sales for each of the current year periods resulted as operating expenses were not reduced in proportion to the decline in sales.



Operating losses of $993,000 and $370,000 were recorded for the three months and nine months
ended January 31, 2005, respectively, compared to operating earnings of $512,000 and $1,897,000 recorded for the comparable periods of the prior year.



Interest expense was $84,000, and $254,000 for the three months and nine months ended January 31, 2005, respectively, compared to $71,000 and $232,000 for the same
periods of the prior year. The impacts of increased borrowing rates for each of the periods of the current year were substantially offset by lower levels of borrowings.



Other expense was $47,000 and $44,000 in the three months and nine months ended January 31, 2005, respectively, compared to other income of
$14,000 and other income of $163,000 for the comparable periods of the prior year. Other income for the nine months of the prior year was increased by $295,000 from a payment received from the resolution of a disputed claim for laboratory furniture
sold by the Company several years earlier.



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Income tax benefits of $382,000 and $227,000 were recorded for the three months and nine months ended January 31, 2005,
respectively, as compared to an income tax expense of $164,000 and $658,000 recorded for the comparable periods of the prior year. The effective tax rate was approximately 34.0% for the three and nine months ended January 31, 2005, and 36.0% for the
three and nine months ended January 31, 2004.



A net loss of $742,000, or $0.30
per diluted share, was reported for the three months ended January 31, 2005. A net loss of $441,000, or $0.18 per diluted share, was reported for the nine months ended January 31, 2005. This compares to net earnings of $291,000, or $0.12 per diluted
share, and net earnings of $1,170,000, or $.47 per diluted share, recorded for the comparable periods of the prior year.



Liquidity and Capital Resources



Historically, the Companys principal sources of liquidity have been funds generated from operations, supplemented as needed by short-term borrowings. The Company
believes that these sources, will be sufficient to support ongoing business levels, including capital expenditures, through the current fiscal year and fiscal year 2006.



The Company had working capital of $13.0 million at January 31, 2005, as compared to $12.6 million at April 30, 2004. The ratio of current
assets to current liabilities was 2.1-to-1.0 at January 31, 2005, as compared to 1.7-to-1.0 at April 30, 2004. At January 31, 2005, advances of $3,263,000 were outstanding under the Companys revolving credit bank loan, leaving available
advances under this line in the amount of $5,737,000. The term of this loan is through December 31, 2006.



At January 31, 2005, long-term debt of the Company included $1,211,000 of obligations under a bank note, of which $1,118,000 was due within one year and classified as a current liability in the balance sheet. The note
includes certain covenants as to tangible net worth, funds flow coverage, current ratio and ratio of liabilities to tangible net worth. At January 31, 2005, the Companys funds flow coverage ratio fell below the minimum required under the
financial covenant at the beginning of the quarter because of the net loss reported by the Company in the third quarter. The bank has waived the funds flow coverage ratio requirement for the period ended January 31, 2005 and amended the ratio
calculation for the period ending April 30, 2005 to lower the required ratio for that period. The Company expects to be in compliance with all covenants, as amended, under the note in future periods.



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The Companys operations provided cash of $5.7 million during the nine months ended January 31, 2005. The cash
provided was primarily attributable to a $5.7 million decrease in receivables, which benefited from the lower sales volumes, and depreciation expense of $1.5 million. Cash was used by a $3.2 million reduction in accounts payable and other current
liabilities, and the $441,000 net loss after taxes.



The Companys
operations used cash of $2.7 million during the nine months ended January 31, 2005, primarily due to a $6.6 million increase in accounts receivable and a $3.2 million decrease in accounts payable and other current liabilities. The impact of these
items was partially offset by cash provided from net earnings after taxes of $1.2 million, depreciation expense of $1.5 million, a decrease in inventories of $1.4 million, and a decrease in prepaid income taxes of $1.1 million.



During the nine months ended January 31, 2005, the Company used cash of $674,000 in investing
activities, primarily for purchases of production equipment. This compares to the use of $1,310,000 for similar investing activities in the same period of the prior year.



The Companys financing activities used cash of $5.1 million during the nine months ended January 31, 2005, with $3.7 million of this
amount for the repayment of short-term borrowings. Additionally, $838,000 was used for long-term debt repayments and $523,000 was used for the payment of cash dividends. Financing activities provided cash of $4.6 million in the same period of the
prior year. This included cash of $4.7 million provided from short-term borrowings and $1.2 million provided from an increase in long-term debt. In the prior year period, $801,000 was used for long-term debt repayments and $522,000 was used for the
payment of cash dividends.



In the third quarter of the current year, the
Company began a project to upgrade its enterprise resource planning (ERP) software at an estimated project cost of $1.8 million. The Company has entered into a lease arrangement to fund the majority of the expected costs of the project, as such
costs are incurred. Costs of $375,000 were incurred and funded under the lease arrangement during the third quarter ended January 31, 2005. The project is expected to be completed during the second quarter of fiscal year 2006.



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Outlook for Remainder of Fiscal Year 2005



In addition to general economic factors affecting the Company and its markets, 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 ability to predict future demand is very limited given,
among other general economic factors affecting the Company and its markets, the Companys role as subcontractor or supplier to dealers of subcontractors.



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



Certain statements in this report constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 (the Reform Act). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could significantly impact results or
achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, economic, competitive, governmental, and technological factors affecting the Companys operations, markets, products, services,
and prices. The cautionary statements made pursuant to the Reform Act herein and elsewhere by the Company should not be construed as exhaustive or as any admission regarding the adequacy of disclosures made by the Company prior to the effective date
of the Reform Act. 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.



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##### Table of Contents

REVIEW BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



A review of the interim financial information included in this Quarterly Report on Form 10-Q for the three months and nine months ended January 31, 2005 has been performed by PricewaterhouseCoopers LLP, the Companys independent
auditors. Their report on the interim financial information follows.



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Stockholders of

Kewaunee Scientific Corporation

Statesville, North Carolina



We have reviewed
the accompanying condensed consolidated balance sheet of Kewaunee Scientific Corporation as of January 31, 2005 and April 30, 2004, and the related condensed consolidated statements of operations for each of the three and nine-month periods ended
January 31, 2005 and January 31, 2004 and the condensed consolidated statement of cash flows for the nine-month periods ended January 31, 2005 and January 31, 2004. These interim financial statements are the responsibility of the
Companys management.



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



Based on our review,
we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements information 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, 2004, and the related consolidated statements of operations, of stockholders equity, and of cash flows for the year then ended (not presented
herein), and in our report dated June 4, 2004 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of April 30, 2004, is
fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.



PricewaterhouseCoopers LLP

Charlotte, North Carolina

February 22, 2005



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##### Table of Contents

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, 2004.



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, 2005. Based on that evaluation, the Companys management,
including the CEO and CFO, concluded that, as of January 31, 2005, 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 were no significant changes in the Companys internal controls or in other factors that could significantly affect these controls subsequent to January 31, 2005. As no significant deficiencies or material weaknesses were found,
no corrective actions were taken.



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##### Table of Contents

PART II. OTHER INFORMATION



Item 6. Exhibits and Reports on Form 8-K



| | (a) | Exhibits
| | --- | --------

|      |  |                                                                                                                                                   
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.1A |  | First Amendment to the Re-Established Retirement Plan for Salaried Employees of Kewaunee Scientific Corporation.                                  
|      | 
|10.2B |  | Second Amendment to the Re-Established Retirement Plan for Hourly Employees of Kewaunee Scientific Corporation.                                   
|      | 
|10.21 |  | Kewaunee Scientific Corporation 401Plus Executive Deferred Compensation Plan (Restated effective January 1, 2005)                                 
|      | 
|31.1  |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|      | 
|31.2  |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, 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.



| | (b) | Reports on Form 8-K
| | --- | -------------------



A Form 8-K was filed on November 24, 2004 with the Commission which included as an exhibit the Companys Press Release announcing the financial
results for the second quarter ended October 31, 2004.



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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 15, 2005 |  | By                              |  | /s/ D. Michael Parker             
|                     |  |                                 |  | D. Michael Parker                 
|                     |  |                                 |  | Senior Vice President, Finance and
|                     |  |                                 |  | Chief Financial Officer           



21