UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ____________________ To ______________________
Commission File Number 2-18868
KNAPE & VOGT MANUFACTURING COMPANY
(Exact name of registrant as specified in its charter)
Michigan 38-0722920
(State of Incorporation) (IRS Employer Identification No.)
2700 Oak Industrial Drive, NE
Grand Rapids, Michigan 49505
(Address of principal executive offices) (Zip Code)
(616) 459-3311
(Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
3,311,146 common shares were outstanding as of January 19, 1996.
2,569,923 Class B common shares were outstanding as of January 19, 1996.
KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net Sales
The following table indicates the Company's sales (in millions) and percentage
of total sales by product category for the six month and three month periods
ended December 31, 1995 and 1994:
Six months ended December 31, Three months ended December 31,
---------------------------------------- ----------------------------------------
1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------------------------
Shelving systems $ 39.7 46.4% $39.4 43.9% $ 18.3 45.4% $ 18.5 44.5%
Drawer slides 23.2 27.1% 25.3 28.2% 11.9 29.5% 12.1 29.1%
Hardware 13.5 15.8% 14.6 16.3% 7.2 17.9% 7.6 18.3%
Store fixtures 7.5 8.8% 7.1 7.9% 2.2 5.5% 2.0 4.8%
Furniture components 1.6 1.9% 3.4 3.8% 0.8 1.7% 1.5 3.4%
- -------------------------------------------------------------------------------------------------------------------
Total $ 85.5 100.0% $89.8 100.0% $ 40.4 100.0% $ 41.7 100.0%
===================================================================================================================
Net sales for the second quarter and six months of fiscal year 1996 decreased
$1.3 million, or 3.3%, and $4.3 million, or 4.8%, respectively, over the
comparable periods of fiscal year 1995. Sales of shelving systems were flat for
the six months and the quarter as a result of little change in the market or the
Company's market share. Drawer slide sales decreased by $.2 million for the
quarter. Continued increases in the precision drawer slides did not offset the
decrease in sales of utility slides. This reflects continued strength and
gaining of market share in the wood office furniture market for precision slides
and a downturn of the kitchen/bath cabinet market for utility slides. The
decrease in sales of utility slides is not expected to continue. Hardware
product line sales decreased during the quarter by $.4 million from last year,
due to lower sales of hardware products by Knape & Vogt Canada in the Canadian
market. Store fixture sales are up slightly for the six months and the quarter
due to increased orders from Roll-it's major customer. Furniture component sales
decreased during the quarter by $.7 million compared to last year as Modar
concentrated on producing wood products for Hirsh and Knape & Vogt. Based on
internal forecasts, the Company anticipates that sales may match the results of
the third and fourth quarters of fiscal year 1995.
Costs and Expenses
Cost of sales was 77.0% of sales for the second quarter and 76.3% of sales for
the first six months of fiscal year 1996 compared to 75.5% and 74.7% of sales
for the second quarter and first six months of fiscal year 1995, respectively.
Discounting of prices to retail and store fixture
customers and increases in raw material prices accounted for the majority of the
increase in cost as a percentage of sales for the quarter. The impact of recent
decreases in steel prices should reduce costs as a percentage of sales during
the second half of fiscal year 1996.
Selling and administrative expenses for the quarter decreased $384,683, and
decreased as a percentage of sales to 17.2% from 17.5% last year, mainly due to
decreases in administrative expenses such as the Michigan Single Business Tax.
Selling and administrative expense for the six months decreased $378,388, but
increased to 17.3% of sales compared to 16.9% in fiscal year 1995.
Other Expenses
Interest expense was $594,740 for the quarter ended December 31, 1995 compared
to $601,835 for the quarter ended December 31, 1994. The decrease was due to
lower borrowing levels. Interest expense for the six months ended December 31,
1995 was $1,193,145 compared to $1,181,783 last year.
Income Taxes
The effective tax rate for the quarter and six months ended December 31, 1995,
was 37.6% and 38.4% compared to 34.4% and 36.2% for the quarter and six months
ended December 31, 1994. The effective tax rate in the second quarter of fiscal
year 1995 was lower than normal due to reductions in Illinois state taxes
relating to the Hirsh Company.
Net Income
Net income of $1,059,747 for the second quarter was 28.4% lower than the
$1,480,613 reported a year ago. For the six months ended December 31, 1995 net
income was $2,567,458 which is 35.7% lower than the $3,989,971 reported for the
same period last year. Earnings per share for the quarter and six months was
$.18 and $.44, respectively, compared to $.25 and $.68 for the same periods last
year. Net income was 2.6% and 3.0% of sales for the quarter and six months,
respectively. The decrease in net income was mainly due to higher cost of sales,
and discounting of prices to store fixture customers. Second quarter operations
of the Company's store fixture manufacturing division resulted in an operating
loss of $559,000 and a net loss of $332,000. On similar sales volume for the
second quarter of fiscal year 1995, the division experienced an operating loss
of $68,000 and a net loss of $23,000.
Liquidity and Capital Resources
The Company's net cash position decreased during the first six months to
$333,557 from $604,106 at June 30, 1995. Net cash from operating activities was
positively affected by decreases in accounts receivable, but partially offset by
an increase in accounts payable. Accounts receivable balances were lower at the
end of December than at the end of June because sales in December were lower
than in June. Payable balances increased because purchases related to January
1996 production and sales which were higher than the June purchases related to
July 1995 production and sales.
Capital expenditures were $2,952,611 for the six months ended December 31, 1995.
The Company is currently forecasting capital expenditures to be approximately $8
million for the fiscal year. The Company had total debt of $35,000,000 at
December 31, 1995, a decrease of $800,000 from total debt of $35,800,000 at June
30, 1995. It is estimated that debt levels will remain at approximately these
levels in the second half of the fiscal year due to the increase in capital
expenditures.
The Company's balance sheet remained strong with working capital of $45,805,444
and current ratio of 5.9 to 1 at December 31, 1995, compared to the $45,796,753
of working capital and a 4.4 to 1 current ratio at June 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amended report to be signed on its behalf by the
undersigned thereunto duly authorized.
Knape & Vogt Manufacturing Company
(Registrant)
Date: May 1, 1997 /s/ Richard C. Simkins
Richard C. Simkins
Executive Vice President -
CFO, Secretary and Treasurer