KNAP Knape & Vogt Manufacturing (MM)

Knape & Vogt Reports First Quarter Results GRAND RAPIDS, Mich., Oct. 14 /PRNewswire-FirstCall/ -- Knape & Vogt Manufacturing Co. (NASDAQ:KNAP) today announced growth in sales for the first quarter ended October 2, 2004. The Grand Rapids, Mich.-based manufacturer and distributor of drawer slides, shelving, storage and ergonomic office products reported that net sales increased 6.6 percent to $38.4 million for the first quarter of fiscal 2005, compared with net sales of $36.0 million during the same period a year ago. KV reported that new products such as its expanded precision drawer slide line, Shelf Made(TM) instant shelf line and enhanced line of kitchen and bath storage products continued to fuel growth in most of its market channels. New product sales were $6.1 million for the first quarter of fiscal 2005 compared with $5.5 million in the first quarter of the prior year, KV's ninth consecutive quarter of higher new product contribution. "Our focus on new product development continues to deliver the opportunity for growth in the markets that we serve," said Bill Dutmers, KV chairman and CEO. "In late August, we participated in the International Woodworking Fair held in Atlanta. At this show, we introduced Virtu(TM), our new line of Italian-designed upscale kitchen and closet storage accessories. Between this line and our other new products, we introduced over 300 items at this show and were pleased with the excitement generated by all of the new offerings." KV reported net income of $390,511, or $0.09 per diluted share, for the fiscal 2005 first quarter, compared with net income of $669,875, or $0.15 per diluted share, during the same period in fiscal 2004. The first quarter of fiscal 2005 included higher steel costs of approximately $700,000 pre-tax, which equates to $420,000, or $0.09 per diluted share. Steel is the most significant raw material purchased by KV. Average steel costs have risen by over 70 percent since the start of the calendar year resulting in higher material costs for KV during the first quarter of approximately $2.5 million. The Company reported that it was only able to pass through approximately $1.8 million of the increased costs to its customers. Going forward, KV's profitability will benefit from price increases that were agreed to by its customers late in the first quarter. In addition, KV has been working closely with its steel vendors to identify lower-cost solutions, and the Company is utilizing alternative sourcing options when available. "Unfortunately, our higher sales were offset by the rapid increase in steel costs, which lowered our earnings," said Dutmers. "We have been successful in working with our customers to pass along a portion of this increase. While we do not foresee any significant relief in steel costs in the coming quarter, we continue to evaluate opportunities to reduce the impact that higher steel costs will have on our bottom line moving forward. "Looking ahead, we are optimistic about the new products that will be introduced in the second quarter," concluded Dutmers. "We are working on an undermount slide that we believe will be well received by most of our furniture and cabinet makers, and we anticipate further traction in our new product lines introduced over the past 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," "looking ahead," "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 as to optimism about or future success of new products. 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) Three Months Ended Oct. 2, 2004 Sept. 27, 2003 Net sales $38,385,770 $36,013,012 Cost of sales 31,580,994 28,960,702 Gross margin 6,804,776 7,052,310 Selling and administrative expenses 5,835,251 5,788,224 Operating income 969,525 1,264,086 Interest and other expenses, net 307,158 392,929 Income before income taxes 662,367 871,157 Income taxes 271,856 201,282 Net income $390,511 $669,875 Earnings per common share - basic and diluted: Weighted average shares outstanding 4,516,681 4,515,925 Net income per share $0.09 $0.15 Cash dividend - Common stock $0.165 $0.165 Cash dividend - Class B common stock $0.15 $0.15 Knape & Vogt Manufacturing Company and Subsidiaries Condensed Consolidated Balance Sheets Oct. 2, 2004 July 3, 2004 (Unaudited) (Audited) Assets Current Assets: Cash and equivalents $4,978,553 $5,278,869 Accounts receivable, net 18,985,824 19,959,442 Inventories 24,085,155 23,955,271 Prepaid expenses and other 714,110 950,911 Total current assets 48,763,642 50,144,493 Property, plant and equipment, net 27,773,825 28,683,714 Other assets 17,303,028 17,423,119 $93,840,495 $96,251,326 Liabilities and Equity Current liabilities $19,648,511 $22,805,708 Long-term debt and capital leases 25,508,289 24,538,864 Deferred income taxes & other long-term liabilities 11,852,976 12,082,536 Stockholders' equity 36,830,719 36,824,218 $93,840,495 $96,251,326 Knape & Vogt Manufacturing Company and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended Oct. 2, 2004 Sept. 27, 2003 From Operating Activities: Net income $390,511 $669,875 Depreciation and amortization 1,515,294 1,630,766 Change in retirement plan cost 107,341 64,800 Deferred income taxes (141,894) 354,373 Loss (gain) on disposal of fixed assets (1,103) 26,661 Changes in operating assets & liabilities (1,920,677) (2,792,436) Other, net 5,981 - Net cash used for operating activities (44,547) (45,961) From Investing Activities: Additions to property, plant & equipment net (716,514) (440,487) Proceeds from sales of property, plant & Equipment - 800 Other, net (1,789) (17,765) Net cash used for investing activities (718,303) (457,452) From Financing Activities: Cash dividends paid (712,661) (712,174) Net change in long-term debt/ capital leases 969,425 1,185,920 Net cash provided by financing activities 256,764 473,476 Effect of Exchange Rates on Cash 205,770 (3,473) Net decrease in cash and equivalents $(300,316) $(33,140) 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 or Eric Lubbers of Lambert, Edwards & Associates, Inc., +1-616- 233-0500, , for Knape & Vogt Manufacturing Co. Web site: http://www.knapeandvogt.com/

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