##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



---

FORM 10-Q



---



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

For the quarterly period ended October 31, 2006



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

For the transition period from  to

Commission file number 0-5286



---

KEWAUNEE SCIENTIFIC CORPORATION

(Exact name of registrant as specified in its charter)



---



|                                                               |  |                                    
|-------------------------------------------------------------- |  | -----------------------------------
|Delaware                                                       |  | 38-0715562                         
|(State or other jurisdiction of incorporation or organization) |  | (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 ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and larger accelerated filer in Rule 12b-2 of the
Exchange Act.

Large accelerated filer ̈Accelerated filer ̈Non-accelerated
filer  x.

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

As of December 8, 2006, the Registrant had outstanding 2,492,270 shares of Common Stock.

Pages: This report, excluding exhibits, contains 20 pages numbered sequentially from this cover page.



---



---

##### Table of Contents

KEWAUNEE SCIENTIFIC CORPORATION

INDEX TO FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 2006



|                                                                                             |  |                                                                                       |  |    |  |            
|-------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------- |  | -- |  | -----------
|                                                                                             |  |                                                                                       |  |    |  | Page Number
|PART I.                                                                                      |  | FINANCIAL INFORMATION                                                                 |  |   
|                                                                                             |  |                                                                                      
|Item 1.                                                                                      |  | Financial Statements                                                                  |  |   
|                                                                                             | 
|Consolidated Statements of Operations - Three and six months ended October 31, 2006 and 2005 |  | 3                                                                                    
|                                                                                             | 
|Consolidated Balance Sheets October 31, 2006 and April 30, 2006                              |  | 4                                                                                    
|                                                                                             | 
|Consolidated Statements of Cash Flows - Six months ended October 31, 2006 and 2005           |  | 5                                                                                    
|                                                                                             | 
|Notes to Consolidated Financial Statements                                                   |  | 6                                                                                    
|                                                                                             |  |                                                                                      
|Item 2.                                                                                      |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 11
|                                                                                             |  |                                                                                      
|                                                                                             |  | Review by Independent Registered Public Accounting Firm                               |  | 16
|                                                                                             |  |                                                                                      
|                                                                                             |  | Report of Independent Registered Public Accounting Firm                               |  | 17
|                                                                                             |  |                                                                                      
|Item 3.                                                                                      |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 18
|                                                                                             |  |                                                                                      
|Item 4.                                                                                      |  | Controls and Procedures                                                               |  | 18
|                                                                                             |  |                                                                                      
|PART II.                                                                                     |  | OTHER INFORMATION                                                                     |  |   
|                                                                                             |  |                                                                                      
|Item 4.                                                                                      |  | Submission of Matters to a Vote of Security Holders                                   |  | 19
|                                                                                             |  |                                                                                      
|Item 6.                                                                                      |  | Exhibits                                                                              |  | 19
|                                                                                             | 
|SIGNATURE                                                                                    |  | 20                                                                                   



2



---

##### Table of Contents

Part 1. Financial Information

Item 1. Financial Statements

Kewaunee Scientific Corporation

Consolidated Statements of Operations

(Unaudited)

(in thousands, except
per share data)



|                                                                    |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------- |  | ----------------------------- | ------ | - | --------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                    |  | Three months ended October 31 |        |   | Six months ended October 31 |  
|                                                                    |  | 2006                          |        |   | 2005                        |   |        | 2006 |  |   | 2005   |  
|Net sales                                                           |  | $                             | 21,385 |   |                             | $ | 22,319 |      |  | $ | 40,679 |   |  | $ | 42,627 |  
|Costs of products sold                                              |  |                               | 17,305 |   |                             |   | 18,834 |      |  |   | 33,471 |   |  |   | 35,756 |  
|                                                                    |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Gross profit                                                        |  |                               | 4,080  |   |                             |   | 3,485  |      |  |   | 7,208  |   |  |   | 6,871  |  
|Other operating income                                              |  |                               |       |   |                             |   |       |      |  |   |       |   |  |   | 884    |  
|Operating expenses                                                  |  |                               | 2,899  |   |                             |   | 2,953  |      |  |   | 5,536  |   |  |   | 5,873  |  
|                                                                    |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Operating earnings                                                  |  |                               | 1,181  |   |                             |   | 532    |      |  |   | 1,672  |   |  |   | 1,882  |  
|Other income (expense)                                              |  |                               | 26     |   |                             |   | 1      |      |  |   | 44     |   |  |   | (4     | )
|Interest expense                                                    |  |                               | (195   | ) |                             |   | (118   | )    |  |   | (382   | ) |  |   | (205   | )
|                                                                    |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Earnings before income taxes                                        |  |                               | 1,012  |   |                             |   | 415    |      |  |   | 1,334  |   |  |   | 1,673  |  
|Income tax expense                                                  |  |                               | 328    |   |                             |   | 137    |      |  |   | 406    |   |  |   | 594    |  
|                                                                    |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Earnings before minority interests                                  |  |                               | 684    |   |                             |   | 278    |      |  |   | 928    |   |  |   | 1,079  |  
|Minority interests in subsidiaries                                  |  |                               | 115    |   |                             |   | 39     |      |  |   | 226    |   |  |   | 77     |  
|                                                                    |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Net earnings                                                        |  | $                             | 569    |   |                             | $ | 239    |      |  | $ | 702    |   |  | $ | 1,002  |  
|                                                                    |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Net earnings per share                                              |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Basic                                                               |  | $                             | 0.23   |   |                             | $ | 0.10   |      |  | $ | 0.28   |   |  | $ | 0.40   |  
|Diluted                                                             |  | $                             | 0.23   |   |                             | $ | 0.10   |      |  | $ | 0.28   |   |  | $ | 0.40   |  
|Weighted average number of common shares outstanding (in thousands) |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Basic                                                               |  |                               | 2,492  |   |                             |   | 2,492  |      |  |   | 2,492  |   |  |   | 2,492  |  
|Diluted                                                             |  |                               | 2,492  |   |                             |   | 2,493  |      |  |   | 2,493  |   |  |   | 2,493  |  

See accompanying notes to consolidated financial statements.



3



---

##### Table of Contents

Kewaunee Scientific Corporation

Consolidated Balance Sheets

(in thousands)



|                                           |  |                |         |   |              |   |         |  
|------------------------------------------ |  | -------------- | ------- | - | ------------ | - | ------- | -
|                                           |  | October 312006 |         |   | April 302006 |  
|                                           |  | (Unaudited)    |         |   |              |  
|Assets                                     |  |                |         |   |              |   |         |  
|Current assets:                            |  |                |         |   |              |   |         |  
|Cash and cash equivalents                  |  | $              | 738     |   |              | $ | 929     |  
|Restricted cash                            |  |                | 404     |   |              |   | 399     |  
|Receivables, less allowance                |  |                | 22,358  |   |              |   | 23,199  |  
|Inventories                                |  |                | 5,346   |   |              |   | 5,860   |  
|Deferred income taxes                      |  |                | 378     |   |              |   | 378     |  
|Prepaid expenses and other current assets  |  |                | 758     |   |              |   | 633     |  
|                                           |  |                |         |   |              |   |         |  
|Total current assets                       |  |                | 29,982  |   |              |   | 31,398  |  
|                                           |  |               
|Property, plant and equipment, at cost     |  |                | 36,300  |   |              |   | 35,421  |  
|Accumulated depreciation                   |  |                | (25,232 | ) |              |   | (24,258 | )
|                                           |  |                |         |   |              |   |         |  
|Net property, plant and equipment          |  |                | 11,068  |   |              |   | 11,163  |  
|                                           |  |               
|Prepaid pension cost                       |  |                | 5,089   |   |              |   | 4,898   |  
|Other                                      |  |                | 3,093   |   |              |   | 3,013   |  
|                                           |  |                |         |   |              |   |         |  
|Total other assets                         |  |                | 8,182   |   |              |   | 7,911   |  
|                                           |  |               
|Total Assets                               |  | $              | 49,232  |   |              | $ | 50,472  |  
|                                           |  |                |         |   |              |   |         |  
|Liabilities and Stockholders Equity       |  |                |         |   |              |   |         |  
|Current liabilities:                       |  |                |         |   |              |   |         |  
|Short-term borrowings                      |  | $              | 8,137   |   |              | $ | 8,216   |  
|Current obligations under capital leases   |  |                | 343     |   |              |   | 260     |  
|Accounts payable                           |  |                | 6,377   |   |              |   | 9,074   |  
|Employee compensation and amounts withheld |  |                | 1,236   |   |              |   | 1,297   |  
|Deferred Revenue                           |  |                | 461     |   |              |   | 535     |  
|Other accrued expenses                     |  |                | 1,809   |   |              |   | 991     |  
|                                           |  |                |         |   |              |   |         |  
|Total current liabilities                  |  |                | 18,363  |   |              |   | 20,373  |  
|                                           |  |               
|Obligations under capital leases           |  |                | 661     |   |              |   | 583     |  
|Deferred income taxes                      |  |                | 247     |   |              |   | 247     |  
|Accrued employee benefit plan costs        |  |                | 2,997   |   |              |   | 2,905   |  
|Minority interests                         |  |                | 1,050   |   |              |   | 818     |  
|                                           |  |                |         |   |              |   |         |  
|Total Liabilities                          |  |                | 23,318  |   |              |   | 24,926  |  
|                                           |  |               
|Stockholders equity:                      |  |                |         |   |              |   |         |  
|Common stock                               |  |                | 6,550   |   |              |   | 6,550   |  
|Additional paid-in-capital                 |  |                | 144     |   |              |   | 144     |  
|Retained earnings                          |  |                | 19,879  |   |              |   | 19,526  |  
|Accumulated other comprehensive income     |  |                | 128     |   |              |   | 113     |  
|Common stock in treasury, at cost          |  |                | (787    | ) |              |   | (787    | )
|                                           |  |                |         |   |              |   |         |  
|Total stockholders equity                 |  |                | 25,914  |   |              |   | 25,546  |  
|                                           |  |                |         |   |              |   |         |  
|Total Liabilities and Stockholders Equity |  | $              | 49,232  |   |              | $ | 50,472  |  
|                                           |  |                |         |   |              |   |         |  

See accompanying notes to consolidated financial statements.



4



---

##### Table of Contents

Kewaunee Scientific Corporation

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)



|                                                                                |  |                             |        |   |      |   |        |  
|------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                |  | Six months ended October 31 |       
|                                                                                |  | 2006                        |        |   | 2005 |  
|Cash flows from operating activities:                                           |  |                             |        |   |      |   |        |  
|Net earnings                                                                    |  | $                           | 702    |   |      | $ | 1,002  |  
|Adjustments to reconcile net earnings to net cash used in operating activities: |  |                             |        |   |      |   |        |  
|Depreciation                                                                    |  |                             | 973    |   |      |   | 1,080  |  
|Provision for bad debts                                                         |  |                             | 50     |   |      |   | 31     |  
|Deferred income tax expense                                                     |  |                             |       |   |      |   | (18    | )
|Gain on sale of property held for sale                                          |  |                             |       |   |      |   | (884   | )
|Decrease in prepaid income taxes                                                |  |                             |       |   |      |   | 94     |  
|Decrease in receivables                                                         |  |                             | 791    |   |      |   | 594    |  
|Decrease (increase) in inventories                                              |  |                             | 514    |   |      |   | (800   | )
|Increase in prepaid pension cost                                                |  |                             | (191   | ) |      |   | (93    | )
|(Decrease) increase in accounts payable and other current liabilities           |  |                             | (1,940 | ) |      |   | 1,645  |  
|Decrease in deferred revenue                                                    |  |                             | (74    | ) |      |   | (719   | )
|Other, net                                                                      |  |                             | 134    |   |      |   | (735   | )
|                                                                                |  |                             |        |   |      |   |        |  
|Net cash provided by operating activities                                       |  |                             | 959    |   |      |   | 1,197  |  
|                                                                                |  |                            
|Cash flows from investing activities:                                           |  |                             |        |   |      |   |        |  
|Capital expenditures                                                            |  |                             | (577   | ) |      |   | (1,869 | )
|Proceeds from sale of property held for sale                                    |  |                             |       |   |      |   | 2,500  |  
|(Increase) decrease in restricted cash                                          |  |                             | (5     | ) |      |   | 12     |  
|                                                                                |  |                             |        |   |      |   |        |  
|Net cash (used in) provided by investing activities                             |  |                             | (582   | ) |      |   | 643    |  
|                                                                                |  |                            
|Cash flows from financing activities:                                           |  |                             |        |   |      |   |        |  
|Decrease in bank overdraft                                                      |  |                             |       |   |      |   | (2,301 | )
|(Decrease) increase in short-term borrowings                                    |  |                             | (79    | ) |      |   | 1,789  |  
|Payments on long-term debt                                                      |  |                             |       |   |      |   | (559   | )
|Payments on capital leases                                                      |  |                             | (140   | ) |      |   | (59    | )
|Dividends paid                                                                  |  |                             | (349   | ) |      |   | (349   | )
|Proceeds from exercise of stock options (including tax benefit)                 |  |                             |       |   |      |   | 2      |  
|                                                                                |  |                             |        |   |      |   |        |  
|Net cash used in financing activities                                           |  |                             | (568   | ) |      |   | (1,477 | )
|                                                                                |  |                             |        |   |      |   |        |  
|(Decrease) increase in cash and cash equivalents                                |  |                             | (191   | ) |      |   | 363    |  
|                                                                                |  |                            
|Cash and cash equivalents, beginning of period                                  |  |                             | 929    |   |      |   | 225    |  
|                                                                                |  |                             |        |   |      |   |        |  
|Cash and cash equivalents, end of period                                        |  | $                           | 738    |   |      | $ | 588    |  
|                                                                                |  |                             |        |   |      |   |        |  

See accompanying notes to consolidated financial statements.



5



---

##### Table of Contents

Kewaunee Scientific Corporation

Notes to Consolidated Financial Statements

(unaudited)

A. Financial Information

The unaudited interim consolidated financial statements of Kewaunee Scientific Corporation (the "Company" or "Kewaunee") have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (the "Commission"). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These interim consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company's 2006 Annual Report to Stockholders. The results of operations for the
interim periods are not necessarily indicative of the results of operations to be expected for the full year.

The preparation of the financial statements
requires management to make certain estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates.

Certain prior period amounts have been reclassified to conform to current classifications. These reclassifications had no impact on the results of operations of the Company.

B. Inventories

Inventories consisted of the following (in thousands):



|                  |  |                  |       |               |   |      
|----------------- |  | ---------------- | ----- | ------------- | - | -----
|                  |  | October 31, 2006 |       | April 30,2006
|Finished products |  | $                | 2,140 |               | $ | 1,653
|Work in process   |  |                  | 588   |               |   | 745  
|Raw materials     |  |                  | 2,618 |               |   | 3,462
|                  |  |                  |       |               |   |      
|                  |  | $                | 5,346 |               | $ | 5,860
|                  |  |                  |       |               |   |      

For interim reporting, LIFO inventories are computed based on year-to-date quantities and interim changes in price
levels. Changes in quantities and price levels are reflected in the interim financial statements in the period in which they occur.



6



---

##### Table of Contents

C. Comprehensive Income

A reconciliation of net earnings and total comprehensive income for the three and six months ended October 31, 2006 and 2005 is as follows (in thousands):



|                                                              |  |                                    |     |                                    |   |       |  
|------------------------------------------------------------- |  | ---------------------------------- | --- | ---------------------------------- | - | ----- | -
|                                                              |  | Three months endedOctober 31, 2006 |     | Three months endedOctober 31, 2005 |  
|Net earnings                                                  |  | $                                  | 569 |                                    | $ | 239   |  
|Change in fair value of cash flow hedge, net of income tax    |  |                                    | -0- |                                    |   | 1     |  
|Change in cumulative foreign currency translation adjustments |  |                                    | 49  |                                    |   | (53   | )
|                                                              |  |                                    |     |                                    |   |       |  
|Total comprehensive income (loss)                             |  | $                                  | 618 |                                    | $ | 187   |  
|                                                              |  |                                   
|                                                              |  | Six months endedOctober 31, 2006   |     | Six months endedOctober 31, 2005   |  
|Net earnings                                                  |  | $                                  | 702 |                                    | $ | 1,002 |  
|Change in fair value of cash flow hedge, net of income tax    |  |                                    | -0- |                                    |   | 2     |  
|Change in cumulative foreign currency translation adjustments |  |                                    | 15  |                                    |   | (58   | )
|                                                              |  |                                    |     |                                    |   |       |  
|Total comprehensive income (loss)                             |  | $                                  | 717 |                                    | $ | 946   |  

The Company records 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. There were no derivative instruments
outstanding at October 31, 2006.

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.



7



---

##### Table of Contents

D. Share-based Compensation

In recent fiscal years, through fiscal year 2003, the Company used stock options as its primary long-term incentive plan for officers. The Company has not granted any stock options since fiscal year 2003. Prior to May 1, 2006, the
Company accounted for its share-based employee compensation under the measurement and recognition provisions of Accounting Principles Board (APB) Option No. 25, Accounting for Stock Issues to Employees and related
Interpretations, as permitted by SFAS No. 123, Accounting for Stock-Based Compensation. In accordance with these guidelines, the Company did not record any share-based employee compensation expense for options granted under
its option plans prior to May 1, 2006, as all options granted under these plans had exercise prices equal to the fair market value of the Companys common shares on the date of grant.

Effective May 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123(R) Share-Based Payment, using the modified
prospective transition method. Under that transition method, compensation expense that the Company recognizes beginning on May 1, 2006 includes compensation expense for all share options granted prior to, but not yet vested as of May 1,
2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123. Expected fiscal year 2007 share-based compensation expense determined in accordance with SFAS No. 123(R) is $2,298. Results for
prior periods are not required, nor have they been restated, for the adoption of SFAS 123(R).

Share-based compensation expense for the three months ended
October 31, 2006 was $574, as compared to proforma compensation expense of $3,000 for the prior year. Share based compensation expense for the six months ended October 31, 2006 was $1,148 as compared to proforma compensation expense of
$6,000 in the prior year.



8



---

##### Table of Contents

E. Defined Pension Plans

The Company has non-contributory defined benefit pension plans covering substantially all salaried and hourly employees. Effective April 30, 2005, no further benefits will be earned under the plans and no additional participants will
be added to the plans. At April 30, 2006, the plans assets at fair value exceeded benefit obligations by $1.6 million. No contributions were paid to the plans during the six months ended October 31, 2006, and the Company does not
expect any contributions to be paid to the plans during the remainder of the current year.

Pension expense (income) consisted of the following (in
thousands):



|                                    |  |                                    |      |   |                                    |   |      |  
|----------------------------------- |  | ---------------------------------- | ---- | - | ---------------------------------- | - | ---- | -
|                                    |  | Three months endedOctober 31, 2006 |      |   | Three months endedOctober 31, 2005 |  
|Service Cost                        |  | $                                  | -0-  |   |                                    | $ | -0-  |  
|Interest Cost                       |  |                                    | 213  |   |                                    |   | 201  |  
|Expected return on plan assets      |  |                                    | (346 | ) |                                    |   | (309 | )
|Amortization of prior service costs |  |                                    | -0-  |   |                                    |   | -0-  |  
|Recognition of net loss             |  |                                    | 43   |   |                                    |   | 71   |  
|                                    |  |                                    |      |   |                                    |   |      |  
|Net periodic pension cost (income)  |  | $                                  | (90  | ) |                                    | $ | (37  | )
|                                    |  |                                   
|                                    |  | Six months endedOctober 31, 2006   |      |   | Six months endedOctober 31, 2005   |  
|Service Cost                        |  | $                                  | -0-  |   |                                    | $ | -0-  |  
|Interest Cost                       |  |                                    | 421  |   |                                    |   | 396  |  
|Expected return on plan assets      |  |                                    | (693 | ) |                                    |   | (620 | )
|Amortization of prior service costs |  |                                    | -0-  |   |                                    |   | -0-  |  
|Recognition of net loss             |  |                                    | 81   |   |                                    |   | 131  |  
|                                    |  |                                    |      |   |                                    |   |      |  
|Net periodic pension cost (income)  |  | $                                  | (191 | ) |                                    | $ | (93  | )

F. Credit Arrangements

In May 2006, the Company increased its bank revolving credit facility from $9 million to $10 million. Total outstanding advances under the credit facility were $8.1 million at October 31, 2006. The revolving credit facility will expire
on December 31, 2006, unless extended. The Company expects to extend the facility prior to its expiration.

G. Recent Accounting Pronouncements

In October 2006, the FASB issued SFAS No. 157, Statement of Financial Accounting Standards (SFAS 157). The purpose of SFAS 157
is to provide users of financial statements with better information about the extent to which fair value is used to measure recognized assets and liabilities, the inputs used to develop the measurements, and the effect of certain of the measurements
on earnings for the period. SFAS No. 157 also provides guidance on the definition of fair value, the methods used to measure fair value,



9



---

##### Table of Contents

and the expanded disclosures about fair value measurements. This changes the definition of fair value to be the price
that would be received to sell an asset or paid to transfer a liability, an exit price, as opposed to the price that would be paid to acquire the asset or received to assume the liability, an entry price. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company does not expect the adoption of SFAS No. 157 to have a material impact on its consolidated financial position,
results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 158, Statement of Financial Accounting Standards
(SFAS 158) which amends SFAS No. 87, 88, 106, and 132(R). Post application of SFAS 158, an employer will continue to apply the provision in Statements 87, 88, and 106 when measuring plan assets and benefit obligations as of the date
of its statement of financial position and in determining the amount of net periodic benefit cost. SFAS 158 requires amounts to be recognized as of the funded status of a benefit plan, that is, the difference between plan assets at fair value and
the benefit obligation. SFAS 158 further requires recognition of gains/losses and prior service costs or credits not recognized pursuant to SFAS No. 87 or SFAS No. 106. Additionally, the measurement date is to be the date of the
employers fiscal year-end. Lastly, SFAS 158 requires disclosure in the financial statements of the effects from delayed recognition of gains/losses, prior service costs or credits, and transition assets or obligations. SFAS No. 158 is
effective for years ending after December 15, 2006 for employers with publicly traded equity securities and as of the end of the fiscal year ended after June 15, 2007 for employers without publicly traded equity securities. The Company
estimates the impact of adopting SFAS 158 will result in a charge to comprehensive income of $2.1 million at April 30, 2007, and a corresponding reduction in prepaid pension cost, related to net unrecognized losses under the plans.



10



---

##### Table of Contents

Item 2. Management's Discussion and Analysis

of Financial Condition and Results of Operations

The Company's 2006 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, 2006. The following discussion and analysis describes material changes in the Company's financial condition since April 30, 2006. The analysis of results of operations compares the three and six months ended October 31, 2006
with the comparable periods of the prior fiscal year.

Results of Operations

Sales for the three months ended October 31, 2006 were $21,385,000, a decrease of 4.2% from sales of $22,319,000 in the same period last year. The volume of domestic sales continued to be adversely affected as
larger portions of the construction budget dollars of pharmaceutical companies are being allocated to overseas projects to take advantage of lower research costs. Sales from domestic operations, which declined 16% from the same period last year,
were also unfavorably impacted by delays in the awarding of construction projects, as many project budgets were reexamined because of higher than expected project costs. The Companys international business continued to experience strong growth
in sales and earnings, as sales of the Companys Asian subsidiaries during the quarter doubled from the same period last year to $4.3 million.

Sales
for the six months ended October 31, 2006 were $40,679,000, a decrease of 4.6% from sales of $42,627,000 in the same period last year. Sales from domestic operations declined 12.3% from the prior year period. Sales of the Companys Asian
subsidiaries increased 66.5% from the prior year period. The total order backlog was $34.3 million at October 31, 2006. This compares to $36.5 million at July 31, 2006 and $35.2 million at October 31, 2005.

The gross profit margin for the three months ended October 31, 2006 was 19.1% of sales, as compared to 15.6% of sales in the comparable quarter of the prior year.
The gross profit margin for the six months ended October 31, 2006 was 17.7%, as compared to 16.1% in the comparable period of the prior year. The increases in gross profit margins for the three and six months of the current year were primarily
due to lower manufacturing costs which are attributed to realization of manufacturing efficiencies related to previous capital expenditures.

Other
operating income of $884,000 for the six months ended October 31, 2005 represented a gain from the sale of the Companys Lockhart, Texas property.



11



---

##### Table of Contents

Operating expenses for the three months ended October 31, 2006 were $2.9 million, or 13.6% of sales, as compared to
$3.0 million, or 13.2% of sales, in the comparable period of the prior year. The increase in operating expenses as a percent of sales for the current year period resulted from the lower level of sales. Operating expenses for the six months ended
October 31, 2006 were $5.5 million, or 13.6% of sales, as compared to $5.9 million, or 13.8% of sales, in the comparable period of the prior year. The decline in operating expenses as a percent of sales for the current six month period resulted
as the impact of cost reduction activities more than offset the impact of the lower level of sales.

Operating earnings of $1,181,000 and $1,672,000 were
recorded for the three and six months ended October 31, 2006, respectively, compared to $532,000 and $1,882,000 recorded for the comparable periods of the prior year. Operating earnings for the six months ended October 31, 2005 were
favorably impacted by a gain of $884,000 from the sale of the Companys Lockhart, Texas property.

Interest expense was $195,000 and $382,000 for the
three and six months ended October 31, 2006, respectively, compared to $118,000 and $205,000 for the same periods of the prior year. The increase in interest expense for the current year periods resulted from a combination of higher interest
rates and higher borrowing levels.

Other income was $26,000 and $44,000 in the three and six months ended October 31, 2006, respectively, compared to
other income of $1,000 and other expense of $4,000 for the comparable periods of the prior year.

Income tax expenses of $328,000 and $406,000 were
recorded for the three and six months ended October 31, 2006, respectively, as compared to income tax expense of $137,000 and $594,000 recorded for the comparable periods of the prior year. The effective tax rate was 32.4% and 30.4% for the
three and six months ended October 31, 2006 and was 33.0% and 35.5% for the three and six months ended October 31, 2005, respectively. The effective tax rates for each of these periods differs from the statutory rate due to the impact of
state and federal tax credits on the different levels of taxable earnings for the periods.

Minority interest related to the Companys two foreign
subsidiaries that are not 100% owned by the Company reduced net earnings by $115,000 and $226,000 for the three and six months ended October 31, 2006, respectively, as compared to minority interest expense of $39,000 and $77,000 during the
comparable periods of the prior year. The increases in minority interest for the current year periods resulted from increased earnings of the related subsidiaries.



12



---

##### Table of Contents

Net earnings of $569,000, or $0.23 per diluted share, and $702,000, or $0.28 per diluted share, were recorded for the
three and six months ended October 31, 2006, respectively. This compares to net earnings of $239,000, or $.10 per diluted share, and $1,002,000, or $0.40 per diluted share, for the three and six month periods of the prior year. Net earnings for
the six months ended October 31, 2005 included an after tax gain from the sale of the Companys Lockhart, Texas property.

Liquidity and
Capital Resources

Historically, the Company's principal sources of liquidity have been funds generated from operations, supplemented as needed by
short-term borrowings under the Companys revolving credit facility. Additionally, certain machinery and equipment are financed by non-cancelable operating leases or capital leases. The Company believes that these sources will be sufficient to
support ongoing business requirements, including capital expenditures through the current fiscal year.

The Company had working capital of $11.6 million at
October 31, 2006, compared to $11.0 million at April 30, 2006. The ratio of current assets to current liabilities was 1.6-to-1 at October 31, 2006, as compared to 1.5-to-1 at April 30, 2006. At October 31, 2006, advances of
$8,137,000 were outstanding under the credit facility.

The Company's operations provided cash of $959,000 during the six months ended October 31,
2006. Cash was provided primarily from operations and a decrease in accounts receivable and inventories, which were partially offset by a decrease in accounts payable and other current liabilities. The Companys operations provided cash of
$1,197,000 during the six months ended October 31, 2005. Cash was provided primarily from a decrease in accounts receivable and an increase in accounts payable and other current liabilities, which were partially offset by an increase in
inventories.

During the six months ended October 31, 2006, net cash of $582,000 was used by investing activities, primarily for capital expenditures.
This compares to the net cash of $643,000 provided from investing activities in the same period of the prior year, which included $2,500,000 in proceeds from the sale of the Companys Lockhart, Texas property reduced by capital expenditure of
$1,869,000.

The Companys financing activities used cash of $568,000 during the six months ended October 31, 2006. Cash used included $79,000
for reductions of short-term borrowings, $349,000 for cash dividends paid and payments on obligations of capital leases of $140,000. Financing activities used cash of $1,477,000 in the same period of the prior year, which included $2,301,000 to
reduce



13



---

##### Table of Contents

bank overdrafts, $559,000 for scheduled repayments of long-term debt and $349,000 for cash dividends, which were
partially offset by advances of $1,789,000 under the revolving credit facility.

Recent Accounting Pronouncements

In October 2006, the FASB issued SFAS No. 157, Statement of Financial Accounting Standards (SFAS 157). The purpose of SFAS 157 is to provide
users of financial statements with better information about the extent to which fair value is used to measure recognized assets and liabilities, the inputs used to develop the measurements, and the effect of certain of the measurements on earnings
for the period. SFAS No. 157 also provides guidance on the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. This changes the definition of fair value to be the price
that would be received to sell an asset or paid to transfer a liability, an exit price, as opposed to the price that would be paid to acquire the asset or received to assume the liability, an entry price. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company does not expect the adoption of SFAS No. 157 to have a material impact on its consolidated financial position,
results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 158, Statement of Financial Accounting Standards
(SFAS 158) which amends SFAS No. 87, 88, 106, and 132(R). Post application of SFAS 158, an employer will continue to apply the provision in Statements 87, 88, and 106 when measuring plan assets and benefit obligations as of the date
of its statement of financial position and in determining the amount of net periodic benefit cost. SFAS 158 requires amounts to be recognized as of the funded status of a benefit plan, that is, the difference between plan assets at fair value and
the benefit obligation. SFAS 158 further requires recognition of gains/losses and prior service costs or credits not recognized pursuant to SFAS No. 87 or SFAS No. 106. Additionally, the measurement date is to be the date of the
employers fiscal year-end. Lastly, SFAS 158 requires disclosure in the financial statements of the effects from delayed recognition of gains/losses, prior service costs or credits, and transition assets or obligations. SFAS No. 158 is
effective for years ending after December 15, 2006 for employers with publicly traded equity securities and as of the end of the fiscal year ended after June 15, 2007 for employers without publicly traded equity securities. The Company
estimates the impact of adopting SFAS 158 will result in a charge to comprehensive income of $2.1 million at April 30, 2007, and a corresponding reduction in prepaid pension cost, related to net unrecognized losses under the plans.



14



---

##### Table of Contents

Outlook for Remainder of Fiscal Year 2007

While the Companys ability to predict future demand for its products continues to be limited given, among other general economic factors affecting the Company and its markets, the Companys role as
subcontractor or supplier to dealers of subcontractors, the Company expects the last six months of fiscal year 2007 to be profitable and much improved over the same period last year. 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 earnings are also impacted by
increased costs of raw materials, including stainless steel, wood, and epoxy resin, and whether the Company is able to increase product prices to customers in amounts that correspond to such increases without materially and adversely affecting
sales.

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. Over time, the Companys actual results, performance or achievements will likely differ from the
anticipated results, performance or achievements that are expressed or implied by the Companys forward-looking statements, and such difference might be significant and harmful to stockholders interest. Many important factors that could
cause such a difference are described under the caption Risk Factors, in Item 1A of the Companys 2006 Annual Report on Form 10-K.



15



---

##### 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 six months ended October 31, 2006 and October 31, 2005 has been performed by Cherry, Bekaert & Holland, L.L.P., the Company's independent auditors. Their report on the interim financial
information follows.



16



---

##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have reviewed the accompanying consolidated balance sheets of Kewaunee
Scientific Corporation and its subsidiaries (the Company) as of October 31, 2006, and the related consolidated statements of operations for the three-month and six-month periods ended October 31, 2006 and 2005 and the cash
flows for the six-month periods ended October 31, 2006 and 2005. 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 (United States), the objective of which is the
expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are
not aware of any material modifications that should be made to the consolidated interim financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited, in accordance with the Standards of the Public Accounting Oversight Board (United States), the consolidated balance sheet as of April 30,
2006, and the related 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 26, 2006, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of April 30, 2006 is fairly stated in all material respects in relation to the consolidated financial statement from which it has
been derived.

Cherry, Bekaert & Holland, L.L.P.

Charlotte, North Carolina

December 8, 2006



17



---

##### 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, 2006.



|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 October 31, 2006. Based on that evaluation, the Companys management, including the CEO and CFO, concluded that, as of October 31, 2006, 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 October 31, 2006. As no significant deficiencies or material weaknesses were found, no corrective
actions were taken.



18



---

##### Table of Contents

PART II. OTHER INFORMATION



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

The
Companys Annual Meeting of Stockholders was held on August 23, 2006. Information regarding the results of this meeting are incorporated by reference from the Companys Report on Form 10-Q for the three months ended July 31,
2006.



|Item 6. | Exhibits and Reports on Form 8-K
|------- | --------------------------------



| | 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.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------



19



---

##### Table of Contents

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: December 14, 2006 |  | By                              |  | /s/ D. Michael Parker             
|                        |  |                                 |  | D. Michael Parker                 
|                        |  |                                 |  | Senior Vice President, Finance and
|                        |  |                                 |  | Chief Financial Officer           



20