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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