KNAP Knape & Vogt Manufacturing (MM)

Knape & Vogt Reports Improved Second-Quarter and Six-Month Results GRAND RAPIDS, Mich., Jan. 12 /PRNewswire-FirstCall/ -- Knape & Vogt Manufacturing Co. today announced double-digit net sales growth for the six months and quarter ended December 27, 2003. The Grand Rapids, Mich.-based manufacturer and distributor of drawer slides, shelving, storage and ergonomic office products reported that net sales increased 14.2 percent to $34.5 million for the second quarter of fiscal 2004, compared with net sales of $30.2 million during the same period a year ago. KV reported net income of $441,904, or $0.10 per diluted share, for the just-completed quarter, compared with $851,728, or $0.19 per diluted share, during the same period in fiscal 2003. Excluding a one-time after-tax gain of $.5 million related to the settlement of certain legal matters, net income in the prior year second quarter would have been approximately $.3 million or $0.07 per diluted share. The Company attributed the strong sales growth to new products introduced during the past year, which accounted for $4.4 million of sales in the quarter. The new products not only generated sales with existing customers but also allowed the Company to develop new customers in key markets. "We have grown sales and gained market share with both existing and new customers," said Bill Dutmers, chairman and CEO. "Our ability to bring innovative, value-added products to the markets we serve, combined with our outstanding customer service have proven to be key reasons for our growth over the past six months." "We see potential to continue this growth trend in the coming months," Dutmers continued. "Our focus on key markets is critical. We listen to our customers' needs and respond quickly with products and services that address their issues, serving as a true partner in helping them achieve their business objectives. Many of our new products -- those already introduced along with those currently under development -- provide enhanced features and at the same time allow our customers to increase their productivity. This can be seen in products, such as our 4X4 Pocket Door(TM) slide and our Interlok(TM) lateral drawer anti-tip and locking system." KV also attributed the sales growth to its expanded sales force and sales rep network, which is beginning to generate new retail and wholesale customers. For the first six months of fiscal 2004, KV reported a 15.4 percent increase in sales and higher net income compared to the prior year period. KV posted net income of $1.1 million, or $0.25 per diluted share, on net sales of $70.6 million, compared with net income of $1.0 million, or $0.23 per diluted share, on net sales of $61.2 million for the first six months of fiscal 2003. New products accounted for $9.8 million in sales for the first six months of fiscal 2004, compared with $5.2 million in the year-ago period. "Our entire organization is committed to positioning KV for future growth," stated Dutmers. "We involve many cross functional teams in our new product development process, lean manufacturing activities and customer service initiatives. This helps foster a culture of continuous improvement and ensures that we remain focused on innovation that drives top and bottom line performance." 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 (Unaudited) Six Months Ended Three Months Ended Dec. 27, 2003 Dec. 28, 2002 Dec. 27, 2003 Dec. 28, 2002 Net sales $70,623,675 $61,218,080 $34,498,436 $30,219,890 Cost of sales 56,143,079 47,583,496 27,182,375 23,639,237 Gross margin 14,480,596 13,634,584 7,316,061 6,580,653 Selling and administrative expenses 11,962,694 11,071,891 6,062,245 4,921,448 Other - 271,325 - - Operating income 2,517,902 2,291,368 1,253,816 1,659,205 Interest and other expenses, net 839,627 636,815 446,698 317,769 Income before income taxes 1,678,275 1,654,553 807,118 1,341,436 Income taxes 566,497 607,862 365,214 489,708 Net income $1,111,778 $1,046,691 $441,904 $851,728 Earnings per common share - basic and diluted: Weighted average shares outstanding 4,516,137 4,517,472 4,516,349 4,517,480 Net income per share $.25 $.23 $.10 $.19 Cash dividend - Common stock $.33 $.33 $.165 $.165 Cash dividend - Class B common stock $.30 $.30 $.15 $.15 Knape & Vogt Manufacturing Company and Subsidiaries Condensed Consolidated Balance Sheets December 27, 2003 (Unaudited) June 28, 2003 Assets Current Assets: Cash $4,583,171 $3,846,611 Accounts receivable, net 16,862,223 16,820,600 Inventories 21,218,846 18,979,056 Prepaid expenses and other 1,507,187 731,751 Total current assets 44,171,427 40,378,018 Property, plant and equipment, net 31,206,900 33,989,109 Other assets 17,723,160 17,981,702 $93,101,487 $92,348,829 Liabilities and Equity Current liabilities $20,668,512 $19,920,749 Long-term debt and capital leases 24,046,310 24,052,605 Deferred income taxes & other long-term liabilities 13,399,120 13,613,613 Stockholders' equity 34,987,545 34,761,862 $93,101,487 $92,348,829 Knape & Vogt Manufacturing Company and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended December 27, 2003 December 28, 2002 From Operating Activities: Net income $1,111,778 $1,046,691 Depreciation and amortization 3,278,015 3,552,611 Decrease in prepaid pension cost 203,585 52,234 Deferred income taxes 205,319 265,000 Loss (gain) on disposal of fixed assets (4,349) 87,615 Changes in operating assets & liabilities (1,931,557) (855,273) Other, net (30,801) 15,448 Net cash provided by operating activities 2,831,990 4,164,326 From Investing Activities: Additions to property, plant & equipment net (764,415) (1,634,228) Proceeds from sales of property, plant & equipment 800 243,527 Other, net (21,962) (21,411) Net cash used for investing activities (785,577) (1,412,112) From Financing Activities: Cash dividends paid (1,424,363) (1,423,152) Net change in long-term debt/capital leases (6,295) - Repurchase and retirement of common stock - (5,934) Net cash used for financing activities (1,430,658) (1,429,086) Effect of Exchange Rates on Cash 120,805 (80,276) Net increase in cash $736,560 $1,242,852 DATASOURCE: Knape & Vogt Manufacturing Company CONTACT: Leslie Cummings, Vice President of Finance and Treasurer of Knape & Vogt Manufacturing Company, +1-616-459-3311, ext. 225; Jeff Lambert or Paula MacKenzie of Lambert, Edwards & Associates, Inc., +1-616-233-0500, , for Knape & Vogt Manufacturing Company Web site: http://www.knapeandvogt.com/

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