KNAP Knape & Vogt Manufacturing (MM)

GRAND RAPIDS, Mich., Jan. 19 /PRNewswire-FirstCall/ -- Knape & Vogt Manufacturing Co. (NASDAQ:KNAP) today announced the results for its second quarter and the six-month period ended December 31, 2005. The Grand Rapids, Mich.-based manufacturer and distributor of drawer slides, shelving, storage and ergonomic office products reported that net sales grew 9.0 percent to $40.9 million for the second quarter of fiscal 2006, compared with net sales of $37.5 million during the same period a year ago. Sales of new products and product enhancements were $8.1 million for the second quarter of fiscal 2006 compared with $7.3 million in the second quarter of the prior year. Net sales for the six months ended December 31, 2005, grew to $81.7 million from $75.9 million for the same period in the prior year, representing a 7.7 percent increase. KV reported second quarter net income of $2.5 million, or $0.56 per basic and diluted share, which included a one-time settlement gain on one of the Company's defined benefit plans of approximately $952,000 after-tax. This compared to a second quarter fiscal 2005 net loss of $522,815, or $0.12 per basic and diluted share, which included an impairment/restructuring charge of approximately $1.3 million after-tax related to the relocation of the Company's wire production to Grand Rapids. Excluding these unusual items, the improvement in net income reflected savings from the consolidation of the Company's wire production, leveraged operating costs due to higher sales volumes and lower steel costs. Net income for the six months ended December 31, 2005, was $3.7 million, or $0.81 per basic and diluted share, compared with a net loss of $132,304, or $0.03 per basic and diluted share for the same period in the prior 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/ . Knape & Vogt Manufacturing Company and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) Six Months Ended Three Months Ended Dec. 31, 2005 Jan. 1, 2005 Dec. 31, 2005 Jan. 1, 2005 Net sales $81,676,019 $75,868,426 $40,869,336 $37,496,247 Cost of sales 64,587,725 62,104,569 31,551,166 30,537,166 Gross margin 17,088,294 13,763,857 9,318,170 6,959,081 Selling and administrative expenses 10,768,001 11,367,449 5,242,857 5,532,198 Restructuring and impairment expenses 44,477 1,778,447 - 1,778,447 Operating income (loss) 6,275,816 617,961 4,075,313 (351,564) Interest and other expenses, net 687,458 718,345 364,241 411,187 Income (loss) before income taxes 5,588,358 (100,384) 3,711,072 (762,751) Income taxes 1,925,934 31,920 1,205,777 (239,936) Net income (loss) $3,662,424 $(132,304) $2,505,295 $(522,815) Earnings per common share - basic: Weighted average shares outstanding 4,510,505 4,516,893 4,510,505 4,517,105 Earnings per common share - dilutive: Weighted average shares outstanding 4,510,701 4,516,893 4,510,897 4,517,105 Net income (loss) per share $0.81 $(0.03) $0.56 $(0.12) Cash dividend - Common stock $0.33 $0.33 $0.165 $0.165 Cash dividend - Class B common stock $0.30 $0.30 $0.15 $0.15 Knape & Vogt Manufacturing Company and Subsidiaries Condensed Consolidated Balance Sheets Dec. 31, 2005 July 2, 2005 (Unaudited) Assets Current Assets: Cash and equivalents $9,607,229 $6,349,702 Accounts receivable, net 19,564,979 19,944,781 Inventories 25,848,744 24,362,073 Assets held for sale 833,975 1,281,213 Prepaid expenses and other 1,286,062 934,711 Total current assets 57,140,989 52,872,480 Property, plant and equipment, net 21,225,441 22,120,924 Other assets 17,169,978 17,395,234 $95,536,408 $92,388,638 Liabilities and Equity Current liabilities $21,790,324 $21,633,059 Long-term debt and capital leases 24,516,890 22,524,129 Deferred income taxes & other long-term liabilities 8,281,201 10,123,573 Stockholders' equity 40,947,993 38,107,877 $95,536,408 $92,388,638 Knape & Vogt Manufacturing Company and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended Dec. 31, 2005 Jan. 1, 2005 From Operating Activities: Net income (loss) $3,662,424 $(132,304) Depreciation and amortization 2,496,385 3,327,143 Change in retirement plan cost (1,447,627) 132,373 Deferred income taxes 30,000 (1,204,142) Impairment expenses - 1,778,447 Changes in operating assets & liabilities (1,146,196) (140,079) Other, net 37,233 12,393 Net cash provided by operating activities 3,632,219 3,773,831 From Investing Activities: Additions to property, plant & equipment net (1,493,139) (1,578,918) Other, net 183,575 (11,617) Net cash used for investing activities (1,309,564) (1,590,535) From Financing Activities: Cash dividends paid (1,429,473) (1,426,156) Net change in long-term debt/capital leases 1,992,761 (6,751) Net cash used for financing activities 563,288 (1,432,907) Effect of Exchange Rates on Cash 371,584 427,587 Net increase in cash and equivalents $3,257,527 $1,177,976 First Call Analyst: FCMN Contact: 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 Ryan McGrath of Lambert, Edwards & Associates, Inc., +1-616-233-0500, Web site: http://www.knapeandvogt.com/

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