KNAP Knape & Vogt Manufacturing (MM)

Knape & Vogt Reports Fourth Quarter and Fiscal Year Sales and Income Growth Sales Increase 19%, Net Income Increases 67% for the Year GRAND RAPIDS, Mich., Aug. 12 /PRNewswire-FirstCall/ -- Knape & Vogt Manufacturing Co. (NASDAQ:KNAP) today announced double-digit growth in sales and net income for the fourth quarter and fiscal year ending July 3, 2004. The Grand Rapids, Mich.-based manufacturer and distributor of drawer slides, shelving, storage and ergonomic office products reported that net sales increased 30.9 percent to $41.8 million for the fourth quarter of fiscal 2004, compared with net sales of $31.9 million during the same period a year ago. KV reported net income of $1.5 million, or $0.33 per diluted share, for the current quarter, compared with $788,819, or $0.17 per diluted share, during the same period in fiscal 2003. The fourth quarter of fiscal 2004 included 14 weeks versus 13 weeks in the prior year fourth quarter. The additional week added approximately $3.0 million in sales to the 2004 fourth quarter and fiscal year. A focused sales effort led by KV's expanded direct sales force, along with new product sales totaling $6.4 million in the fourth quarter of fiscal 2004, were the primary sales growth drivers. Sales volume growth combined with KV's ability to leverage its selling and administrative costs helped to offset the negative impact of higher steel prices and improve net income. KV reported selling and administrative expenses as a percent of sales declined from 18.8 percent in the prior year quarter to 14.7 percent in the current fourth quarter. "Our focus on new products and better penetrating our key markets resulted in solid growth for both the fourth quarter and the fiscal year," said Bill Dutmers, chairman and CEO. "Our focus on innovation continues to spark interest in the marketplace. In June, we participated in NeoCon and introduced several new products, including our Proxi(TM) office organization system; the KV Bug, a solution that allows the users to attach USB connections under any of our keyboard platforms; and the SRS(TM)/Polaris(TM) keyboard arm, which brings a rigid and stable surface to the user that is easily adjusted without any buttons or dials. "We have also proven the value of our vendor managed inventory system with one of our largest customers," continued Dutmers. "This system has allowed KV to serve as a purchasing resource for our customers and improve their inventory levels, while ensuring that they have the right product on hand when they need it." For the 2004 fiscal year, KV reported a 67.4 percent increase in net income on a 19.3 percent increase in net sales compared to the prior year period. KV posted net income of $3.7 million, or $0.83 per diluted share, on net sales of $149.0 million in fiscal 2004, compared with net income of $2.2 million, or $0.49 per diluted share, on net sales of $124.9 million in fiscal 2003. New products accounted for $21.7 million in sales for fiscal 2004, compared with $11.7 million in the prior year. "Our focus on innovative new products will be demonstrated again at the International Woodworking Fair scheduled to be held later this month in Atlanta," said Dutmers. "We will introduce over 300 new items at the show, including a new line of European-designed upscale chrome kitchen and closet organization products. We will also show a wood and wire program of kitchen accessories, including pullout pan storage and a waste/recycle unit that has wood features and an undermount slide system. "We continue to differentiate ourselves in the markets that we serve as a partner with strong manufacturing and engineering expertise, coupled with a focus on innovation. We believe this model will allow us to continue to grow as we enter the new fiscal year." 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," "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 Fiscal Year Ended Three Months Ended (Audited) (Unaudited) July 3, June 28, July 3, June 28, 2004 2003 2004 2003 Net sales $148,977,742 $124,920,476 $41,762,106 $31,914,923 Cost of sales 118,249,399 97,638,310 33,194,068 24,710,028 Gross margin 30,728,343 27,282,166 8,568,038 7,204,895 Selling and administrative expenses 23,568,741 23,190,715 6,130,672 5,998,717 Other - 271,325 - - Operating income 7,159,602 3,820,126 2,437,366 1,206,178 Interest and other expenses, net 1,634,403 1,202,726 418,361 247,402 Income before income taxes 5,525,199 2,617,400 2,019,005 958,776 Income taxes 1,790,267 386,501 534,193 169,957 Net income $3,734,932 $2,230,899 $1,484,812 $788,819 Earnings per common share - basic and diluted: Weighted average shares outstanding 4,516,245 4,516,706 4,516,349 4,515,635 Net income per share $0.83 $0.49 $0.33 $0.17 Cash dividend - Common stock $0.66 $0.66 $0.165 $0.165 Cash dividend - Class B common stock $0.60 $0.60 $0.15 $0.15 Knape & Vogt Manufacturing Company and Subsidiaries Condensed Consolidated Balance Sheets (Audited) July 3, 2004 June 28, 2003 Assets Current Assets: Cash and equivalents $5,278,869 $3,846,613 Accounts receivable, net 19,959,442 16,820,600 Inventories 23,955,271 18,979,056 Prepaid expenses and other 950,911 731,749 Total current assets 50,144,493 40,378,018 Property, plant and equipment, net 28,683,714 33,989,109 Other assets 17,423,119 17,981,702 $96,251,326 $92,348,829 Liabilities and Equity Current liabilities $22,805,708 $19,920,749 Long-term debt and capital leases 24,538,864 24,052,605 Deferred income taxes & other long-term liabilities 12,082,536 13,613,613 Stockholders' equity 36,824,218 34,761,862 $96,251,326 $92,348,829 Knape & Vogt Manufacturing Company and Subsidiaries Condensed Consolidated Statements of Cash Flows (Audited) Fiscal Year Ended July 3, 2004 June 28, 2003 From Operating Activities: Net income $3,734,932 $2,230,899 Depreciation and amortization 6,400,358 6,642,091 Change in retirement plan cost 390,845 (4,263,407) Deferred income taxes (370,106) 480,000 Loss (gain) on disposal of fixed assets 1,450 136,746 Changes in operating assets & liabilities (5,290,913) (4,765,011) Other, net 42,098 50,000 Net cash provided by operating activities 4,908,664 511,318 From Investing Activities: Additions to property, plant & equipment net (1,199,398) (3,707,536) Proceeds from sales of property, plant & equipment 53,975 243,527 Other, net (28,114) (62,282) Net cash used for investing activities (1,173,537) (3,526,291) From Financing Activities: Cash dividends paid (2,849,192) (2,847,316) Net change in long-term debt/capital leases 486,259 3,993,920 Repurchase and retirement of common stock - (23,949) Net cash provided by (used for) financing activities (2,362,933) 1,122,655 Effect of Exchange Rates on Cash 60,062 308,388 Net increase (decrease) in cash and equivalents $1,432,256 $(1,583,930) 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; Jeff Lambert or Eric Lubbers of Lambert, Edwards & Associates, Inc., +1-616-233-0500, , for Knape & Vogt Manufacturing Company Web site: http://www.knapeandvogt.com/

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