-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OeHHploilD1fcrzsgtdbSy9Ceo+H4Gw4tIj4Z4hrwejdD636oigeRCRRwimmt8Uz NNZEJrWB1uk//xkFPDtXMg== 0000926044-97-000069.txt : 19970520 0000926044-97-000069.hdr.sgml : 19970520 ACCESSION NUMBER: 0000926044-97-000069 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: KNAPE & VOGT MANUFACTURING CO CENTRAL INDEX KEY: 0000056362 STANDARD INDUSTRIAL CLASSIFICATION: PARTITIONS, SHELVING, LOCKERS & OFFICE AND STORE FIXTURES [2540] IRS NUMBER: 380722920 STATE OF INCORPORATION: MI FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-01859 FILM NUMBER: 97607059 BUSINESS ADDRESS: STREET 1: 2700 OAK INDUSTRIAL DR NE CITY: GRAND RAPIDS STATE: MI ZIP: 49505 BUSINESS PHONE: 6164593311 MAIL ADDRESS: STREET 1: 2700 OAK INDUSTRIAL DRIVE, NE CITY: GRAND RAPIDS STATE: MI ZIP: 49505 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1997 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 ______ 3,447,515 common shares were outstanding as of April 30, 1997. 2,446,937 Class B common shares were outstanding as of April 30, 1997. KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES INDEX Page No. PART I FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets (Unaudited) --March 31, 1997 and June 30, 1996...................................2 Condensed Consolidated Statements of Income (Unaudited) --Nine Months and Three Months Ended March 31, 1997 and 1996.........3 Condensed Consolidated Statements of Cash Flows (Unaudited) --Nine Months Ended March 31, 1997 and 1996..........................4 Notes to Condensed Consolidated Financial Statements (Unaudited).....5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................6-8 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K.....................................9 SIGNATURES...................................................................10 1
KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES PART I. FINANCIAL INFORMATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, 1997 June 30, 1996 --------------- ------------- Assets Cash and equivalents ...................................... $ 304,060 $ 244,271 Accounts receivable - net ................................. 28,060,396 22,763,645 Refundable income taxes ................................... 1,379,812 1,860,191 Inventories ............................................... 23,040,347 23,016,541 Other current assets ...................................... 2,864,037 3,058,021 Net current assets of discontinued operation .............. 1,044,167 1,790,740 ------------- ------------- Total current assets ............................. 56,692,819 52,733,409 ------------- ------------- Property, plant and equipment ............................. 79,553,870 82,129,435 Less accumulated depreciation ............................. 32,395,262 31,747,827 ------------- ------------- Net property, plant and equipment ................ 47,158,608 50,381,608 ------------- ------------- Net property, plant and equipment of discontinued operation 1,534,540 1,775,225 Other assets .............................................. 24,058,659 24,334,917 ------------- ------------- $ 129,444,626 $ 129,225,159 ============= ============= Liabilities and Stockholders' Equity Accounts payable .......................................... $ 5,592,162 $ 4,825,372 Other accrued liabilities ................................. 6,431,677 8,372,046 ------------- ------------- Total current liabilities ........................ 12,023,839 13,197,418 Long-term debt ............................................ 33,800,000 35,000,000 Deferred income taxes and other long-term liabilities ..... 11,559,341 11,853,991 ------------- ------------- Total liabilities ................................ 57,383,180 60,051,409 ------------- ------------- Stockholders' equity Common stock .............................................. 11,780,904 11,762,138 Additional paid-in capital ................................ 33,181,131 33,080,087 Foreign currency translation adjustment ................... (1,392,791) (1,211,286) Retained earnings ......................................... 28,492,202 25,542,811 ------------- ------------- Total stockholders' equity ....................... 72,061,446 69,173,750 ------------- ------------- $ 129,444,626 $ 129,225,159 ============= =============
See accompanying notes. 2
KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Nine Months Ended Three Months Ended Mar. 31, 1997 Mar. 31, 1996 Mar. 31, 1997 Mar. 31, 1996 ------------- ------------- ------------- ------------- Net sales .......................... $ 132,675,931 $ 122,739,813 $ 46,072,548 $ 44,813,408 Cost of sales ...................... 99,406,928 93,175,541 34,615,069 33,817,731 ------------- ------------- ------------- ------------- Gross profit ....................... 33,269,003 29,564,272 11,457,479 10,995,677 Selling and administrative expenses 21,493,160 20,287,204 7,284,146 7,175,191 Restructuring charges .............. 373,235 0 373,235 0 -------------- ------------- ------------- ------------- Operating income ................... 11,402,608 9,277,068 3,800,098 3,820,486 Other expenses ..................... 1,631,869 1,942,067 542,679 624,526 ------------- ------------- ------------- ------------- Income from continuing operations before income taxes ............. 9,770,739 7,335,001 3,257,419 3,195,960 Income taxes - continuing operations 3,548,000 2,721,000 1,196,000 1,155,000 ------------- ------------- ------------- ------------- Income from continuing operations .. 6,222,739 4,614,001 2,061,419 2,040,960 Income (loss) from discontinued operation, net of taxes ......... (471,624) 52,294 (471,624) 57,877 ------------- ------------- ------------- ------------- Net income ......................... $ 5,751,115 $ 4,666,295 $ 1,589,795 $ 2,098,837 ============= ============= ============= ============= Per common share: Income from continuing operations $ 1.06 $ .78 $ .35 $ .34 Income from discontinued operation (.08) .01 (.08) .01 -------------- ------------- ------------- ------------- Net Income $ .98 $ .79 $ .27 $ .35 ============== ============= ============= ============= Cash Dividend - Common stock $ .495 $ .495 $ .165 $ .165 Cash Dividend - Class B common stock $ .45 $ .45 $ .15 $ .15 Weighted average shares outstanding 5,891,202 5,883,594 5,901,382 5,883,099
See accompanying notes. 3
KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended Mar. 31, 1997 Mar. 31, 1996 ------------- ------------- Operating Activities: Net income ................................... $ 5,751,115 $ 4,666,295 Non-cash items: Depreciation and amortization ............ 5,800,839 5,374,372 Deferred income taxes .................... 10,000 264,000 Other long-term liabilities .............. (303,220) (327,445) Changes in operating assets & liabilities: Accounts receivable ................. (5,331,826) (1,578,591) Inventories ......................... (45,218) (94,749) Net assets of discontinued operation 903,026 244,551 Other current assets ................ 668,977 (359,452) Accounts payable & accrued expenses . (1,156,226) 406,081 ----------- ----------- Net cash from operating activities ................ 6,297,467 8,595,062 ----------- ----------- Investing Activities: Additions to property and equipment .......... (5,044,891) (5,584,989) Sale of property and equipment ............... 3,345,678 109,771 Payments for other assets .................... (645,988) (1,125,822) ----------- ----------- Net cash for investing activities ................. (2,345,201) (6,601,040) ----------- ----------- Financing Activities: Proceeds from issuance of common stock ....... 119,810 16,624 Additions to long-term debt .................. 0 900,000 Payments on long-term debt ................... (1,200,000) 0 Cash dividends paid .......................... (2,801,274) (2,795,366) ----------- ----------- Net cash for financing activities ................. (3,881,914) (1,878,742) ----------- ----------- Effect of Exchange Rate Changes on Cash ........... (10,563) 11,777 ----------- ----------- Net Decrease in Cash & Equivalents ................ 59,789 127,057 Cash and Equivalents: Beginning of year ........................ 244,271 534,280 ----------- ----------- End of period ............................ $ 304,060 $ 661,337 =========== =========== Cash Paid During the Period - interest $ 1,529,813 $ 1,183,989 - income taxes $ 2,775,148 $ 1,310,585
4 KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 - Basis of Financial Statement Preparation The accompanying unaudited condensed consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Security and Exchange Commission. The information furnished reflects all adjustments which are, in the opinion of management, necessary for a fair statement of results of operations. Interim results are not necessarily indicative of the results for the year end and are subject to year end adjustments, and audit by independent public accountants. The balance sheet at June 30, 1996, has been taken from the audited financial statements at that date. The condensed consolidated financial statements and notes should be read in conjunction with the Company's 1996 annual report. Note 2 - Common Stock and Per Share Information Income per share is determined based on weighted average number of shares outstanding during each period. Common stock is $2 par - shares authorized 6,000,000 of common stock and 4,000,000 of Class B common stock. Shares issued: 3,443,515 of common stock; 2,446,937 of Class B stock at March 31, 1997; and 3,327,918 of common stock and 2,553,151 of Class B common stock at June 30, 1996. Note 3 - Inventories Inventories are valued at the lower of FIFO (first-in, first-out) cost or market. Inventories are summarized as follows: Mar. 31, 1997 June 30, 1996 ------------- ------------- Finished products $ 13,885,693 $ 13,189,032 Work in process 1,738,736 2,665,754 Raw materials 7,415,918 7,161,755 -------------- -------------- Total $ 23,040,347 $ 23,016,541 ============== ==============
5 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 Company's 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 nine month and three month periods ended March 31, 1997 and 1996: Nine Months ended March 31, Three Months ended March 31, 1997 1996 1997 1996 ---- ---- ---- ---- Shelving systems $ 61.8 46.6% $ 60.7 49.5% $ 21.1 45.8% $ 21.0 46.9% Drawer slides 46.3 34.9% 38.9 31.7% 16.2 35.1% 15.7 35.0% Hardware 21.6 16.3% 20.8 17.0% 7.5 16.3% 7.3 16.3% Furniture components 3.0 2.2% 2.3 1.8% 1.3 2.8% 0.8 1.8% ------ ------ ------- ------ ------- ------ ------- ------ Total $ 132.7 100.0% $122.7 100.0% $ 46.1 100.0% $ 44.8 100.0% ====== ====== ====== ====== ======= ====== ======= ======
Net sales for the nine months and third quarter of fiscal year 1997 increased $10.0 million, or 8.1%, and $1.3 million, or 2.8%, respectively, over the comparable periods of fiscal year 1996. The product category of shelving sales was flat for the quarter. Sales of wall mounted shelving increased during the quarter due to the addition of two new customers. Free standing metal shelving sales were flat and Space Solutions (wood storage products) sales declined due to a slow down in orders from a major customer. Both free standing metal shelving and Space Solutions are manufactured by Hirsh. Drawer slide sales increased $.5 million for the quarter due to increases in the sale of precision drawer slides. Hardware product line sales increased during the quarter by $.2 million from last year, due to increased sales of kitchen and bath products for the consumer market by Feeny. Furniture component sales from the company's Modar subsidiary increased during the quarter. Modar was sold on March 28, 1997. For the remainder of fiscal year 1997 management believes the positive sales trends of the past three quarters will continue and anticipates approximately an 8 percent growth in sales for the twelve months ended June 30, 1997 compared with last year. Costs and Expenses Cost of sales was 74.9% of sales for the first nine months and 75.1% of sales for the third quarter of fiscal year 1997 compared to 75.9% and 75.5% of sales for the first nine months and third quarter of fiscal year 1996, respectively. The cost of sales for the third quarter was higher than the year-to-date cost of sales due to a decline in production efficiencies caused by the parent company in Grand Rapids adding over forty direct labor employees in January and February. In March the new employees were fully trained and the cost of sales returned to normal levels. Selling and administrative expenses for the nine months were 16.2% of sales compared to 16.5% for the same period last year and for the third quarter decreased to 15.8% of sales from 16.0% for the same quarter last year. The decrease as a percentage of sales for the quarter was mainly due to decreases in administrative expenses, primarily reduced bad debt expense. 6 KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) The restructuring charge of $373,235 represents the difference between the original estimate and the actual loss from the decision to sell Modar, Inc. Modar was sold on March 28, 1997 to Preferred Fixture, Inc. located in Glastonbury, Connecticut. The after-tax effect of the sale was a loss of $246,235 or $.04 per share. Other Expenses Interest expense was $497,603 for the quarter ended March 31, 1997 compared to $541,685 for the quarter ended March 31, 1996. The decrease was due to lower borrowing levels and lower interest rates. Interest expense for the nine months ended March 31, 1997 was $1,518,791 compared to $1,723,981 last year. Income Taxes The effective tax rate for the nine months and quarter ended March 31, 1997, was 36.3% and 36.7% compared to 37.1% and 36.1% for the nine months and quarter ended March 31, 1996. The effective tax rates are slightly lower for the nine months ended March 31, 1997 due to foreign and state tax rates. Income from Continuing Operations Income from continuing operations was $6,222,739 for the first nine months and $2,061,419 for the third quarter of 1997. Earnings per share from continuing operations for the nine months increased 35.9% to $1.06 compared to $.78 last year and income per share for the quarter rose 2.9% to $.35 compared to $.34 in the third quarter of last year. Fiscal year 1997 income from continuing operations for the third quarter and nine months includes a non-recurring after-tax charge of $246,235 or $.04 per share for restructuring charges pertaining to the sale of Modar. Loss from Discontinued Operation The company recorded a loss of $471,624 or $.08 per share from discontinued operation, which is an adjustment to the estimated provision for operating losses of Roll-it through fiscal year 1997. The adjustment was necessary as it became evident in the third quarter that Roll-it's sales for the year would be less than the level forecasted in recording the original estimated provision for operating losses through fiscal year 1997. The lower than expected sales is primarily attributable to less than forecasted orders from Roll-it's major customer. Income or loss attributable to Roll-it's operations beyond fiscal year 1997 through the date of the sale will be reflected as incurred in each reporting period. For the third quarter of last year the discontinued operation had income of $57,877 or $.01 per share. Knape & Vogt has been seeking a buyer for Roll-it and has engaged the firm of J.J.B. Hilliard, W.L. Lyons, Inc. to assist in the sale. Although it is difficult to predict, the company expects to sell Roll-it during fiscal year 1998. Net Income Net income of $5,751,115 for the nine months was 4.3% of sales compared to $4,666,295 for the first nine months last year which was 3.8% of sales. For the quarter ended March 31, 1997 net income was $1,589,795 compared to $2,098,837 for the third quarter of last year. Net income for the third quarter and nine months includes the after-tax charge of $246,235 or $.04 per share to record the sale of Modar and the charge of $471,624 or $.08 per share for an adjustment to the estimated provision for operating losses of Roll-it through fiscal year 1997. 7 KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Liquidity and Capital Resources Cash provided by operating activities totaled $6,297,467 in the first nine months. Increases in accounts receivable were due to higher sales and an increase in days sales outstanding. The decrease in accounts payable and accrued expenses is due mainly to the sale of Modar. Proceeds from the sale of Modar were recorded in investing activities under sale of property and equipment. Capital expenditures were $5,044,891 for the nine months ended March 31, 1997. The Company is currently forecasting capital expenditures to be approximately $7 million for the fiscal year. The Company had total debt of $33,800,000 at March 31, 1997, a decrease of $1,200,000 from total debt of $35,000,000 at June 30, 1996. It is estimated that debt levels will continue to decrease during the fourth quarter of the fiscal year. Anticipated cash flow from operations will adequately fund working capital, capital expenditures and dividend payments. 8 KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES PART II. OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K (a) Exhibits - None (b) Reports on Form 8-K There were no reports on Form 8-K filed for the three months ended March 31, 1997. 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Knape & Vogt Manufacturing Company (Registrant) Date: May 14, 1997 /s/ Allan E. Perry Allan E. Perry President and Chief Executive Officer Date: May 14, 1997 /s/ Richard C. Simkins Richard C. Simkins Executive Vice President, CFO, Secretary and Treasurer 10 EX-27 2 ARTICLE 5 FDS FOR KNAPE & VOGT 3RD QUARTER 10-Q
5 3-MOS JUN-30-1997 JAN-01-1997 MAR-31-1997 304,060 0 28,903,396 843,000 23,040,347 56,692,819 79,553,870 32,395,262 129,444,626 12,023,839 33,800,000 0 0 11,780,904 60,280,542 129,444,626 46,072,548 46,072,548 34,615,069 34,615,069 7,284,146 0 497,603 3,257,419 1,196,000 2,061,419 (471,624) 0 0 1,589,795 .27 .27
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