SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 25, 1996
KNAPE & VOGT MANUFACTURING COMPANY
(Exact Name of Registrant as Specified in its Charter)
MICHIGAN
(State or Other Jurisdiction of Incorporation)
2-18868 38-0722920
(Commission File Number) (I.R.S. Employer Identification No.)
2700 Oak Industrial Drive, N.E., Grand Rapids, Michigan 49505
(Address of Principal Executive Offices) (Zip Code)
(616) 459-3311
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 2. Other Events
Attached as Exhibit 99 is Registrant's Press Release, dated June 25,
1996, announcing Registrant's Proposed Reorganization Plan.
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
Date: June 25, 1996 /s/ Richard C. Simkins
Richard C. Simkins, Vice President-Finance,
Secretary and Treasurer
<PAGE>
NEWS KNAPE & VOGT MFG. CO.
BULLETIN 2700 Oak Industrial Drive, NE
FROM Grand Rapids, MI 49505
FRB 616-459-3311
Traded: OTC-NMS (KNAP)
The Financial Relations Board, Inc.
FOR FURTHER INFORMATION:
AT THE COMPANY: FRB CHICAGO: FRB NEW YORK:
Richard C. Simkins Jack Queeney (general) Regina Lenihan (analysts)
Exec. VP, CFO, Secretary 312-640-6726 212-661-8030
& Treasurer Kathy Brunson (analyst)
616-459-3311 312-640-6696
FOR IMMEDIATE RELEASE
TUESDAY, JUNE 25, 1996
KNAPE & VOGT ANNOUNCES MAJOR REORGANIZATION;
CONSOLIDATION OF FACILITIES TO DECREASE EXCESS CAPACITY AND
INCREASE SHAREHOLDER VALUE
GRAND RAPIDS, MI, JUNE 25, 1996--Knape & Vogt Manufacturing Company today
announced that its Board of Directors has approved a major reorganization
plan that focuses on growth of the company's core operations, and increasing
shareholder value.
President and Chief Executive Officer, Al Perry, said the restructuring
involves:
the shift of wood production from its Modar unit in Benton Harbor,
Michigan to the Hirsh facility in Skokie, Illinois and the subsequent
closure of the Modar facility;
the relocation of manufacturing operations from KV Canada near Toronto,
Ontario, Canada to Grand Rapids, Michigan;
the liquidation of slow moving inventories at Hirsh, KV Canada and
the Parent Company, in order to create additional manufacturing and
warehousing space, and;
an early retirement offer to salaried employees at the company's
headquarters in Grand Rapids.
<PAGE>
"We looked long and hard at all aspects of our operations in an effort
to determine what courses of action were necessary to improve our bottom
line and the overall return to our shareholders," said Perry. "The effect
of this reorganization will be to reduce our fiscal 1996 after-tax earnings
by approximately $2.8 million, or $0.48 per share. By focusing on core
operations and maximizing the use of our facilities, we expect that higher
margins and earnings will result. Assuming the maintenance of current sales
and pricing levels, we believe these changes, when fully implemented, will
result in an estimated annual after-tax savings of approximately $2.3 million,
or $0.40 per share which would be spread over the next two fiscal years."
The costs associated with the restructuring plan primarily relate to
severance and employee benefit costs ($1,635,000), the write-down of assets
to be disposed of to their fair market value ($1,509,000), the elimination
of slow moving inventories ($863,000), other costs ($352,000), and an income
tax benefit of ($1,534,000). In total, approximately 150 positions will be
eliminated at certain facilities and 60 positions will be created at other
facilities, for a net elimination of approximately 90 positions related to
the restructuring charge. An additional 15 positions were eliminated at Hirsh
with the completion in June 1996 of the previously announced consolidation of
administrative functions into the Grand Rapids location. Assets at the Benton
Harbor and Toronto facilities will be disposed of to eliminate the duplication
of operations at various facilities. In order to create warehousing space,
standardize packaging and generate cash, some inventory items will be
liquidated. Although these changes will not be completed by the end of the
fiscal year ending June 30, we decided to commit to make these changes in
fiscal 1996 so we could start fiscal 1997 focusing on our new objectives and
goals. Our future cash flow from operations should improve because of these
changes, and our quarterly cash dividend will not be affected.
"An examination of our entire structure determined that we had excess
capacity," Perry said. "Many of the operations at KV Canada were redundant
to those at Grand Rapids where we had made significant investments in
modernization of plant and equipment. Shifting the manufacturing operations
to Michigan would better utilize the equipment and personnel there and permit
us to utilize the Canadian facility for its contract work and a sales office
and distribution center for KV, Hirsh and Feeny products manufactured in the
U.S."
"A similar situation exists with our Hirsh and Modar subsidiaries," Perry
said. "Hirsh has been operating below capacity, and by relocating wood
production from Benton Harbor to Skokie, the utilization rate at that facility
will be greatly enhanced. The savings brought about from this reallocation of
resources should reduce Hirsh's unit costs and improve profitability. The
Benton Harbor plant will be closed by calendar year-end unless a buyer is
found for the plant," Perry stated. "We have engaged a business broker in
an attempt to sell the Modar plant as a going concern."
Perry said, "We will eliminate slow moving inventory at Hirsh, KV Canada
and the Parent Company to generate cash and provide additional warehouse
space that will be required in order to consolidate operations. In following
generally accepted accounting principles, this pre-tax <PAGE> expense of
approximately $863,000 will be reported as part of cost of sales and will
cause a decline in gross margins for the three months and year ended June 30,
1996."
"We are also implementing an early retirement plan for our salaried
employees 55 years of age and older at the Grand Rapids headquarters," Perry
said. "We expect the savings from the reductions in salaried personnel will
offset this portion of the restructuring expense within a year."
Knape & Vogt manufactures wall-attached and freestanding shelving and a
wide variety of home furnishing items and also derives nearly one-third of
its sales from drawer slides for OEM office furniture, kitchen and utility
cabinet manufacturers. Knape & Vogt is listed on the NASDAQ National Market
under the symbol KNAP.
This news release contains forward-looking statements which reflect
management's current view of future events and financial performance. These
forward-looking statements are based on many assumptions and factors including
costs of raw materials, competitive pricing for products, success of new
product introductions and acquisitions, and economic conditions and government
regulations in countries where our subsidiaries do business. Many of these
factors are discussed in the annual report, on Form 10-K, and other documents
filed from time-to-time with the Securities and Exchange Commission. Any
changes in such assumptions or factors could product significantly different
results.
For more information on Knape & Vogt Manufacturing Company,
simply dial 1-800-PRO-INFO and enter the company code KNAP.
