The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes to the condensed consolidated financial statements, both of which are included in Part I, Item 1 of this report. The Company's critical accounting policies are included in the Company's 2009 Annual Report, which was filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended April 30, 2009.

Forward-Looking Statements

This report contains statements concerning the Company's expectations, plans, objectives, future financial performance, and other statements that are not historical facts. These statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In most cases, the reader can identify these forward-looking statements by words such as "anticipate," "estimate," "forecast," "expect," "believe," "should," "could," "plan," "may" or other similar words. Forward-looking statements contained in this Management's Discussion and Analysis are based on current expectations and our actual results may differ materially from those projected in any forward-looking statements. In addition, the Company participates in an industry that is subject to rapidly changing conditions and there are numerous factors that could cause the Company to experience a decline in sales and/or earnings. These include (1) overall industry demand at reduced levels, (2) economic weakness in a specific channel of distribution, (3) the loss of sales from specific customers due to their loss of market share, bankruptcy or switching to a competitor, (4) a sudden and significant rise in basic raw material costs, (5) a dramatic increase to the cost of diesel fuel and/or transportation related services, (6) the need to respond to price or product initiatives launched by a competitor, (7) the Company's ability to successfully implement initiatives related to increasing market share, new products, maintaining and increasing its sales force and new product displays, and (8) sales growth at a rate that outpaces the Company's ability to install new capacity. Additional information concerning the factors that could cause actual results to differ materially from those in forward-looking statements is contained in this report and also in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2009, including Item 1A, "Risk Factors" and Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," as well as the Company's 2009 Annual Report, including under the headings "Forward-Looking Statements," "Market Risks," and "Outlook for Fiscal 2010" in Management's Discussion and Analysis. While the Company believes that these risks are manageable and will not adversely impact the long-term performance of the Company, these risks could, under certain circumstances, have a materially adverse impact on its operating results and financial condition.

Overview

American Woodmark Corporation manufactures and distributes kitchen cabinets and vanities for the remodeling and new home construction markets. Its products are sold on a national basis directly to home centers, major builders and home manufacturers, and through a network of independent dealers and distributors. At July 31, 2009, the Company operated 11 manufacturing facilities and 9 service centers across the country.

The three-month period ended July 31, 2009 was the Company's first quarter of its fiscal year that ends on April 30, 2010 (fiscal 2010). During the first quarter of fiscal 2010, the Company experienced a continuation of difficult housing market conditions that began during the Company's 2007 fiscal year. In new construction, total housing starts were down 48% through July 2009 on a calendar year-to-date basis. In remodeling, calendar year-to-date sales of existing homes were down only 4%, but the gross private domestic investment in residential property as supplied by the Bureau of Economic Analysis declined by over 30% during the first half of calendar 2009. The Company believes that its remodeling sales decline was roughly in line with that of the market during the first quarter of fiscal 2010, while its decline in new construction sales was less than the market's decline.

The Company believes the current housing environment continues to be adversely impacted by the combined impacts of inventory overhang, falling home prices, and the continued credit crunch. The Company believes these factors, and their associated media coverage, have contributed to a reduced ability and desire for buyers to obtain mortgage financing. The Company expects the short-term outlook for the housing economy will remain uncertain until the credit crunch is resolved and housing prices have stabilized.

Despite the present housing market downturn, the Company believes that the long-term fundamentals for the American housing industry continue to remain positive, based upon continued population growth, relatively low interest rates, and other favorable demographic trends. Based upon this belief, the Company has continued to invest in improving its operations and its capabilities to best service its customers. The Company remains focused on continuing to gain market share and has continued to invest in developing and launching new products while maintaining its product displays and related marketing collateral deployed with new customers in its new construction channel.

During fiscal 2009, the Company announced its intention to realign its manufacturing network by closing two of its oldest manufacturing plants and suspending operations in a third. These initiatives were achieved during the first quarter of fiscal 2010.

The Company's 11.7% gross margin rate for the first quarter of fiscal 2010 was well below the 15.9% gross margin generated in the first quarter of fiscal 2009. The reduction in the Company's gross margin rate was driven by inefficiencies in overhead and labor costs that were driven by lower sales volumes, offset in part by lower fuel costs.

The Company regularly assesses its long-lived assets to determine if any impairment has occurred. Although the direction of the housing market and its resultant impact upon the Company's performance is not presently positive, the Company continues to believe that the long-term fundamentals for the American housing industry, as discussed above, will support a growing and vibrant housing economy in the future. The Company does not believe that its long-lived assets pertaining to its 11 manufacturing plants or any of its other long-lived assets were impaired as of July 31, 2009.

In connection with its aforementioned manufacturing realignment, the Company expects that certain of the three manufacturing plants that have ceased production may be held for sale if management commits to a plan of disposal. At July 31, 2009, the aggregate net book value of the three plants which are scheduled to be permanently closed or suspended was $6.4 million. If these assets become held for sale, it is possible that an asset impairment charge could be recorded at that time if their estimated fair value is determined to be less than net book value.

The Company recorded restructuring charges during the first quarter of fiscal 2010 in connection with its plant closure activity. The net of tax impact of these charges was a loss of $1.6 million. Exclusive of these charges, the Company's net loss from operations totaled $4.8 million for the first quarter of fiscal 2010, compared with net income earned during the prior fiscal year's first quarter of $0.2 million.

Results of Operations

                                                 Three Months Ended July 31
                                                                         Percent
       (in thousands)                            2009          2008       Change
       Net Sales                             $    100,835    $ 139,153     (28 %)
       Gross Profit                                11,834       22,060     (46 %)
       Selling and Marketing Expenses              13,349       15,568     (14 %)
       General and Administrative Expenses          6,227        6,542      (5 %)

Net Sales. Net sales were $100.8 million for the first quarter of fiscal 2010, a decrease of 28% as compared with the first quarter of fiscal 2009. Overall unit volume for the three-month period ended July 31, 2009 decreased by 25%, while average revenue per unit also declined by 4%.

Gross Profit. Gross profit margin for the first quarter of fiscal 2010 was 11.7%, as compared with 15.9% for the same period of fiscal 2009. Overhead and labor costs increased by a combined 6.0% of net sales in the first quarter of fiscal 2010 as compared with the comparable prior year period, driven by the impact of lower sales volumes. These increased costs were partially offset by reduced freight costs of 1.2% of net sales and lower material costs of 0.5% of net sales, both of which were driven primarily by a reduction in fuel costs.

Selling and Marketing Expenses. Selling and Marketing expenses were 13.2% of sales in the first quarter of fiscal 2010, up from 11.2% in the first quarter of the prior year. Sales and marketing costs were reduced by $2.2 million or 14% from prior year levels, due primarily to lower compensation and headcount-related costs. Sales and marketing costs increased in relation to sales because the magnitude of the sales decline exceeded that of the expense reduction.

General and Administrative Expenses. General and Administrative expenses were 6.2% of sales in the first quarter of fiscal 2010, compared with 4.7% of sales in the first quarter of the prior year. As with sales and marketing expenses, the Company reduced its general and administrative costs by 5%, but this cost reduction was lower in magnitude than the decline in sales. As of July 31, 2009, the Company had receivables from customers with a higher perceived level of risk aggregating $1.5 million, of which $0.7 million had been reserved for potential uncollectibility.

Outlook. The Company expects the continuing impact of tighter credit conditions and falling real estate prices will cause the remodeling and new construction markets to remain subdued until these conditions are resolved. The Company expects that it will continue to gain market share during fiscal 2010, causing its sales to decline at a lower rate than that of the overall market.

LIQUIDITY AND CAPITAL RESOURCES

On July 31, 2009, the Company's cash and cash equivalents totaled $72.8 million, down from $82.8 million at April 30, 2009. At July 31, 2009, total short-term and long-term debt was $27.2 million, nearly unchanged from its balance at April 30, 2009. The Company's ratio of long-term debt to total capital was 11.7% at July 31, 2009 compared to 11.5% at April 30, 2009.

The Company's main source of liquidity is its existing cash balance, coupled with cash generated from operating activities consisting of net earnings adjusted for non-cash operating items, primarily depreciation, amortization and non-cash stock-based compensation expense, and changes in operating assets and liabilities such as receivables, inventories, and payables.

Cash provided/(used) by operating activities in the first three months of fiscal 2010 was ($6.7) million, compared with $10.6 million in the comparable period of fiscal 2009. The reduction in cash provided from operations was primarily attributable to the $6.6 million decline in net income, combined with increased payments made for severance, income taxes, and performance-based bonuses accrued in the prior fiscal year totaling $7.8 million.

The Company's primary investing activities are capital expenditures and investments in promotional displays. Net cash used by investing activities in the first three months of fiscal 2010 was $2.4 million, $0.9 million lower than in the comparable period of fiscal year 2009, as the Company's investments in both capital expenditures and promotional displays were reduced. Capital expenditures made in both three-month periods of fiscal 2009 and 2010 did not reflect any new plant construction activities. The Company expects its investments in capital expenditures and promotional displays for fiscal 2010 will approximate the total invested in fiscal 2009.

During the first three months of fiscal 2010, net cash used by financing activities was $1.0 million, compared with net cash used in the comparable period of fiscal 2009 of $3.9 million. The primary use of cash during the first quarter of fiscal 2010 was to return cash to the Company's shareholders in the form of dividends in the amount of $1.3 million as well as debt repayments of $0.1 million, offset in part by proceeds received from stock option transactions of $0.4 million. The use of cash during the comparable period of fiscal 2009 related primarily to stock repurchases of $2.4 million and dividend payments of $1.3 million.

The Company made no repurchases of its common stock during the first three months of fiscal 2010 and had $93.2 million of remaining stock repurchases authorized by its Board of Directors as of July 31, 2009.

The Company's cash position, coupled with expected cash flow and available borrowing capacity on the Company's $25 million line of credit is expected to be more than sufficient to meet forecasted working capital requirements, service existing debt obligations, and fund capital expenditures for the remainder of fiscal 2010.

The timing of the Company's contractual obligations as of April 30, 2009 is summarized in the table below.

                                                   FISCAL YEARS ENDED APRIL 30
                                  Total                                             2015 and
 (in thousands)                  Amounts     2010      2011-2012     2013-2014     Thereafter
 Term credit facility            $ 10,000   $    -    $        -    $    10,000   $         -
 Economic development loans         3,524        -             -             -           3,524
 Term loans                         5,114       366           805           761          3,182
 Capital lease obligations          8,696       493         1,015         1,057          6,131
 Interest on long-term debt(a)      3,708       586         1,108           751          1,263
 Operating lease obligations       18,177     4,495         5,820         3,512          4,350
 Pension contributions (b)         25,117        -          7,346        17,771             -

 Total                           $ 74,336   $ 5,940   $    16,094   $    33,852   $     18,450

(a) Interest commitments under interest bearing debt consists of interest under the Company's primary loan agreement and other term loans and capitalized lease agreements. The Company's term credit facility includes a $10 million term note that bears a variable interest rate determined by the London Interbank Offered Rate (LIBOR) plus a spread. At April 30, 2009, that spread was between .50% and .675%. Effective June 10, 2009, the spread may range from 1.25% to 2.50%, based on the Company's consolidated leverage ratio. Interest under other term loans and capitalized lease agreements is fixed at rates between 2% and 6%. Interest commitments under interest bearing debt for the Company's term credit facility is at LIBOR plus the spread as of April 30, 2009, throughout the remaining term of the agreement.

(b) The estimated cost of the Company's two defined benefit pension plans are determined annually based upon the discount rate and other assumptions at fiscal year end. Future pension funding contributions beyond 2014 have not been determined at this time.

Dividends Declared

On August 27, 2009, the Board of Directors approved a $.09 per share cash dividend on its common stock. The cash dividend will be paid on September 28, 2009 to shareholders of record on September 14, 2009.

Seasonal and Inflationary Factors

The Company's business has historically been subject to seasonal influences, with higher sales typically realized in the second and fourth fiscal quarters.

The costs of the Company's products are subject to inflationary pressures and commodity price fluctuations. The Company has generally been able over time to recover the effects of inflation and commodity price fluctuations through sales price increases.

Critical Accounting Policies

The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no significant changes to the Company's critical accounting policies as disclosed in the Company's 2009 Annual Report, which was filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2009.