KNAP Knape & Vogt Manufacturing (MM)

Knape & Vogt Reports Seventh Consecutive Quarter of Revenue Growth GRAND RAPIDS, Mich., April 21 /PRNewswire-FirstCall/ -- Knape & Vogt Manufacturing Co. (NASDAQ:KNAP) today announced results for the third quarter ended April 2, 2005. The Grand Rapids, Mich.-based manufacturer and distributor of drawer slides, shelving, storage and ergonomic office products reported that net sales increased 9.0 percent to $40.2 million for the third quarter of fiscal 2005, compared with net sales of $36.9 million during the same period a year ago. The increase was driven by new products, which included the expanded line of precision drawer slides, height adjustable tables and the various new kitchen and bath storage accessories, including the Virtu(TM) collection. "This was our seventh consecutive quarter of revenue growth," said Bill Dutmers, chairman and CEO. "Our growth directly reflects our efforts to develop and bring innovative products to market. This quarter, we focused our attention on getting these products in front of both our existing customers as well as potential customers. "The upcoming quarter brings our two largest trade shows of the year, the Kitchen and Bath Show in Las Vegas and the NeoCon office furniture show in Chicago. These shows provide us with the opportunity to showcase some of our newer product lines along with the ability to introduce extensions of these lines and additional new products and prototypes not yet on the market." KV reported net income of $1.7 million, or $0.37 per diluted share, for the current quarter, compared with $1.1 million, or $0.25 per diluted share, during the same period in fiscal 2004. The 2005 results included restructuring charges of approximately $204,000 pre-tax related to the relocation of the Muncie wire operations, partially offset by $594,000 in tax benefits primarily related to the expiration of certain statutory tax periods and prior year research and development credit claims. The net effect of these items was an increase in earnings of $0.10 per diluted share. "Our operating income has increased progressively each quarter of fiscal 2005, demonstrating the steps taken to improve our efficiency and better offset the significantly higher costs of raw materials, especially steel and resin," stated Dutmers. "We are also well underway in relocating our wire processing operation to Grand Rapids, as previously announced, and expect to have this complete prior to the end of the fiscal year." For the first nine months of fiscal 2005, KV reported an 8.3 percent increase in net sales to $116.1 million, compared with net sales of $107.2 million in the prior year period. New products and product extensions accounted for $23.1 million in sales for the first nine months of fiscal 2005, compared with $18.1 million in the prior year, allowing KV to post solid growth in its Office Products Original Equipment Manufacturer and Distribution and Other markets. KV recorded net income of $1.6 million, or $0.35 per diluted share, compared to $2.3 million, or $0.50 per diluted share, for the first nine months of fiscal 2004. The first nine months of fiscal 2005 included a pre-tax impairment/restructuring charge of $2.3 million, or $0.33 per diluted share, which was partially offset by the tax benefit recorded in the third quarter. Excluding these unusual items, KV would have posted improved net income results for the first nine months of fiscal 2005. "We believe that we have addressed the various challenges in the market and have made the right operating decisions and new product investments to position KV for continued growth," concluded Dutmers. About Knape & Vogt Knape & Vogt Manufacturing Co. brings more than a century of experience to the design, manufacture and distribution of kitchen and bath storage solutions and office products for original equipment manufacturers, specialty distributors, office furniture dealers, hardware chains and major home centers throughout the country. Additional information on KV's product lines is available on http://www.knapeandvogt.com/ . Cautionary Statement: This press release contains certain forward-looking statements that involve risks and uncertainties. When used in this release, the words "believe," "anticipates," "think," "intend," "optimistic," "forecast," "looking forward," "expect," "potential" and similar expressions identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements concerning future improvements in net sales, margins and profitability. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and prices. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date of this press release. Knape & Vogt Manufacturing Company and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) Nine Months Ended Three Months Ended April 2, 2005 March 27, 2004 April 2, 2005 March 27, 2004 Net sales $116,073,826 $107,215,636 $40,179,451 $36,859,638 Cost of sales 94,572,964 85,055,331 32,442,446 28,912,254 Gross margin 21,500,862 22,160,305 7,737,005 7,947,384 Selling and administrative expenses 16,804,638 17,438,069 5,437,189 5,743,051 Impairment/ restructuring expenses 1,982,474 - 204,027 - Operating income 2,713,750 4,722,236 2,095,789 2,204,333 Interest and other expenses, net 1,091,077 1,216,043 372,732 376,416 Income before income taxes 1,622,673 3,506,193 1,723,057 1,827,917 Income taxes 63,364 1,256,073 31,444 689,576 Net income $1,559,309 $2,250,120 $1,691,613 $1,138,341 Earnings per common share - basic and diluted: Weighted average shares outstanding 4,516,964 4,516,208 4,517,105 4,516,349 Net income per share $0.35 $0.50 $0.37 $0.25 Cash dividend - Common stock $0.495 $0.495 $0.165 $0.165 Cash dividend - Class B common stock $0.45 $0.45 $0.15 $0.15 Knape & Vogt Manufacturing Company and Subsidiaries Condensed Consolidated Balance Sheets April 2, 2005 (Unaudited) July 3, 2004 Assets Current Assets: Cash and equivalents $6,380,232 $5,278,869 Accounts receivable, net 20,714,954 19,959,442 Inventories 23,320,415 23,955,271 Assets held for sale 1,259,967 - Prepaid expenses and other 991,803 950,911 Total current assets 52,667,371 50,144,493 Property, plant and equipment, net 22,923,512 28,683,714 Other assets 17,135,156 17,423,119 $92,726,039 $96,251,326 Liabilities and Equity Current liabilities $20,565,975 $22,805,708 Long-term debt and capital leases 24,528,648 24,538,864 Deferred income taxes & other long-term liabilities 10,481,811 12,082,536 Stockholders' equity 37,149,605 36,824,218 $92,726,039 $96,251,326 Knape & Vogt Manufacturing Company and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended April 2, 2005 March 27, 2004 From Operating Activities: Net income $1,559,309 $2,250,120 Depreciation and amortization 4,695,858 4,857,429 Change in retirement plan cost 203,409 258,765 Deferred income taxes (1,066,209) 210,268 Impairment expenses 1,778,447 - Gain on disposal of fixed assets (4,205) (3,758) Changes in operating assets & liabilities (2,219,599) (4,963,973) Other, net 13,011 - Net cash provided by operating activities 4,960,021 2,608,851 From Investing Activities: Additions to property, plant & equipment net (2,069,050) (959,030) Proceeds from sales of property, plant & equipment 10,250 53,975 Other, net (28,257) (24,676) Net cash used for investing activities (2,087,057) (929,731) From Financing Activities: Cash dividends paid (2,141,039) (2,136,760) Net change in long-term debt/ capital leases (10,216) 990,473 Net cash used for financing activities (2,151,255) (1,146,287) Effect of Exchange Rates on Cash 379,654 78,519 Net increase in cash and equivalents $1,101,363 $611,352 DATASOURCE: Knape & Vogt Manufacturing Co. CONTACT: Leslie Cummings, Vice President of Finance and Treasurer of Knape & Vogt Manufacturing Company, +1-616-459-3311, Ext. 225; or Jeff Lambert of Lambert, Edwards & Associates, Inc., +1-616-233-0500, or Web site: http://www.knapeandvogt.com/

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