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, 1996
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 [ ]
3,409,454 common shares were outstanding as of January 31, 1997.
2,480,473 Class B common shares were outstanding as of January 31, 1997.
KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain matters discussed in this section include forward looking statements
which include risks and uncertainties including but not limited to economic,
competitive, governmental and technological factors affecting Knape & Vogt
Manufacturing Companies operations, markets, products, services and prices.
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, 1996 and 1995:
Six months ended December 31, Three months ended December 31,
---------------------------------------- ----------------------------------------
1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------
Shelving systems $ 40.6 46.9% $39.7 50.9% $ 18.3 43.7% $ 18.3 48.0%
Drawer slides 30.1 34.8% 23.2 29.8% 15.1 36.1% 11.9 31.3%
Hardware 14.1 16.3% 13.5 17.3% 7.5 18.1% 7.2 18.9%
Furniture components 1.8 2.0% 1.5 2.0% 0.9 2.1% 0.7 1.8%
- -------------------------------------------------------------------------------------------------------------------
Total $ 86.6 100.0% $77.9 100.0% $ 41.8 100.0% $ 38.1 100.0%
===================================================================================================================
Net sales for the six months and second quarter of fiscal year 1997 increased
$8.7 million, or 11.1%, and $3.7 million, or 9.5%, respectively, over the
comparable periods of fiscal year 1996. Shelving sales were flat for the
quarter. Drawer slide sales increased by $3.2 million for the quarter. The
increased sales is due to the Company's expanding share of the precision,
Euro-style and utility drawer slide markets. Hardware product line sales
increased during the quarter by $.3 million from last year, due to more sales of
kitchen and bath products manufactured by Feeny. Furniture component sales
increased during the quarter by $.2 million compared to last year.
Costs and Expenses
Cost of sales was 74.8% of sales for the first six months and 75.3% of sales for
the second quarter of fiscal year 1997 compared to 76.2% and 76.1% of sales for
the first six months and second quarter of fiscal year 1996, respectively.
Decreases in raw material prices and larger sales volumes absorbing fixed
overhead costs accounted for the majority of the improvement.
Selling and administrative expenses for the six months was 16.4% of sales
compared to 16.8% for the same period last year and for the second quarter
increased to 16.6% of sales from 16.2% for
the same quarter last year. The increase as a percentage of sales for the
quarter was mainly due to increases in administrative expenses such as the
Michigan Single Business Tax.
Other Expenses
Interest expense was $517,881 for the quarter ended December 31, 1996 compared
to $594,740 for the quarter ended December 31, 1995. The decrease was due to
lower borrowing levels and lower interest rates. Interest expense for the six
months ended December 31, 1996 was $1,021,188 compared to $1,182,296 last year.
Income Taxes
The effective tax rate for the six months and quarter ended December 31, 1996,
was 36.1% and 36.4% compared to 37.8% and 36.7% for the six months and quarter
ended December 31, 1995. The effective tax rates are slightly lower in fiscal
year 1997 due to foreign and state tax rates.
Income from Continuing Operations
Income from continuing operations were at record levels of $4,161,320 for the
first six months and $1,814,728 for the second quarter of 1997. Earnings per
share from continuing operations for the six months increased 61.4% to $.71
compared to $.44 last year and income per share for the quarter rose 29.2% to
$.31 compared to $.24 in the second quarter of last year. The Company is
continuing to pursue the sale of this operation.
The Company announced on December 18, 1996 that the intended buyer for Modar
withdrew its offer. Modar will continue to operate at low levels until the end
of the third quarter or a new buyer is secured. The Company is not anticipating
a material impact due to the intended buyer of Modar withdrawing its offer, but
there may be additional costs incurred in concluding an eventual sale or phasing
out of the operation.
Income from Discontinued Operation
The estimated loss on discontinued operation recorded at June 30, 1996 includes
an estimate of the operating loss until the Roll-it facility is disposed of.
There was no income, or loss, recorded on discontinued operation for the quarter
ended December 31, 1996 as current estimates of the loss from disposal
approximate prior estimates. For the second quarter of last year the
discontinued operation lost $366,867, or $.06 per share. It is the Company's
intent to sell the Roll-it division during fiscal year 1997 through an
independent broker.
Net Income
Net income of $4,161,320 for the six months was 4.8% of sales compared to
$2,567,458, for the first six months last year which was 3.3% of sales. For the
quarter ended December 31, 1996 net income was $1,814,728 which was 4.3% of
sales compared to $1,059,747 which was 2.8% of sales for the second quarter of
last year.
Liquidity and Capital Resources
The Company's net cash position increased during the first six months to
$743,329 from $499,058 at June 30, 1996. Net cash from operating activities of
$4,836,237 was positively affected by the increased net income and depreciation
expense but negatively affected by the impact on accounts receivable of sales
terms offered to customers and higher sales. The decrease in accrued
restructuring costs is due mainly to the payment of severance.
Capital expenditures were $2,739,039 for the six months ended December 31, 1996.
The Company is currently forecasting capital expenditures to be approximately $8
million for the fiscal year. The Company had total debt of $35,400,000 at
December 31, 1996, an increase of $400,000 from total debt of $35,000,000 at
June 30, 1996. It is estimated that debt levels will decrease in the second half
of the fiscal year. Anticipated cash flow from operations will substantially
fund working capital, capital expenditures and dividend payments.
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