UNITED STATESSTATESSECURITIES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT ~~PURSUANT~~ PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended ~~October~~January 21, ~~2004~~2005

[ ] 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 000-01859

KNAPE & VOGT ~~MANUFACTURING~~ MANUFACTURING COMPANY (Exact name of registrant as specified in its charter)

Michigan (State of Incorporation) 2700 Oak Industrial Drive, ~~NEGrand~~NE Grand Rapids, Michigan (Address of principal executive offices) 38-0722920 (IRS Employer Identification No.) 49505 (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 ~~______~~____

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

YES ~~______~~____ NO __X__

As of ~~October~~January 151, ~~2004~~2005, Knape & Vogt Manufacturing Company had 2,~~345~~395,~~131~~ 237 shares of ~~Common~~ Common Stock outstanding and 2,~~171~~121,~~974~~868 shares of Class B Common Stock outstanding.

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

INDEX

PART I. FINANCIAL INFORMATION	Page	No.
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
--October 2, 2004 and July 3, 2004	2
--January 1, 2005 and July 3, 2004	2
Condensed Consolidated Statements of Income
--Three Months Ended Oct. 2, 2004 and Sept. 27, 2003	3
--Six Months and Three Months Ended Jan. 1, 2005 and Dec. 27, 2003	3
Condensed Consolidated Statement of Stockholders' Equity
--Three Months Ended Oct. 2, 2004	4
--Six Months Ended Jan. 1, 2005	4
Condensed Consolidated Statements of Cash Flows
--Three Months Ended Oct. 2, 2004 and Sept. 27, 2003	5
--Six Months Ended Jan. 1, 2005 and Dec. 27, 2003	5
Notes to Condensed Consolidated Financial Statements	6-	1012
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	11	-13
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	13	-17
Item 3. Quantitative and Qualitative Disclosures About Market Risk	1418
Item 4. Controls and Procedures	1519
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K	16	-17
Item 1. Legal Proceedings	20
SIGNATURES	18
Item 4. Submission of Matters to a Vote of Security Holders	20
EXHIBIT INDEX	19
Item 6. Exhibits and Reports on Form 8-K	20	-21
SIGNATURES	22
EXHIBIT INDEX	23	-25

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES PART I. FINANCIAL INFORMATIONINFORMATIONCONDENSED CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)Oct. 2, 2004		July 3, 2004
		(Unaudited)Jan. 1, 2005			July 3, 2004
AssetsCurrent assets
Assets
Cash	$ 4,978,553		$ 5,278,869
Current assets
Accounts receivable - net	18,985,824		19,959,442
Cash		$	6,456,845		$	5,278,869
Inventories	24,085,155		23,955,271
Accounts receivable - net			19,282,799			19,959,442
Prepaid expenses and other current assets	714,110		950,911
Inventories			24,151,737			23,955,271
Total current assets	48,763,642		50,144,493
Prepaid expenses and other current assets			831,556			950,911
Property, plant and equipment	84,802,592		84,215,531
Total current assets			50,722,937			50,144,493
Less accumulated depreciation	57,028,767		55,531,817
Property, plant and equipment			83,965,158			84,215,531
Net property, plant and equipment	27,773,825		28,683,714
Less accumulated depreciation			58,850,406			55,531,817
Goodwill	4,772,837		4,772,837
Net property, plant and equipment			25,114,752			28,683,714
Prepaid pension cost	11,975,187		12,088,937
Goodwill			4,772,837			4,772,837
Other assets	555,004		561,345
Prepaid pension cost			11,891,937			12,088,937
	$ 93,840,495		$ 96,251,326
Other assets			550,346			561,345
Liabilities and Stockholders' Equity
		$	93,052,809		$	96,251,326
Current liabilities
Liabilities and Stockholders' Equity
Accounts payable	$ 10,084,412		$ 11,299,675
Current liabilities
Other accrued liabilities	9,564,099		11,506,033
Accounts payable		$	11,274,723		$	11,299,675
Total current liabilities	19,648,511		22,805,708
Other accrued liabilities			10,647,706			11,506,033
Long-term debt and capital leases	25,508,289		24,538,864
Total current liabilities			21,922,429			22,805,708
Deferred income taxes and other long-term liabilities	11,852,976		12,082,536
Long-term debt and capital leases			24,532,113			24,538,864
Total liabilities	57,009,776		59,427,108
Deferred income taxes and other long-term liabilities			10,526,020			12,082,536
Stockholders' Equity
Total liabilities			56,980,562			59,427,108
Common stock (Common - 2,345,131 and 2,331,860 shares
Stockholders' Equity
issued and outstanding, Class B common - 2,171,974 and
Common stock (Common - 2,395,237 and 2,331,860 shares issued and
2,184,489 shares issued and outstanding)	9,034,210		9,032,698
outstanding, Class B common - 2,121,868 and 2,184,489 shares
Preferred stock -unissued	-		-
issued and outstanding)			9,034,210			9,032,698
Additional paid-in capital	7,552,997		7,544,749
Preferred stock -unissued			-			-
Unearned stock grant	(94,500	)	(94,500	)
Additional paid-in capital			7,552,997			7,544,749
Accumulated other comprehensive loss	(1,486,975	)	(1,805,866	)
Unearned stock grant			(94,500	)		(94,500	)
Retained earnings	21,824,987		22,147,137
Accumulated other comprehensive loss			(1,009,137	)		(1,805,866	)
Total stockholders' equity	36,830,719		36,824,218
Retained earnings			20,588,677			22,147,137
	$ 93,840,495		$ 96,251,326
Total stockholders' equity			36,072,247			36,824,218
		$	93,052,809		$	96,251,326

See accompanying notes.

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	For the Three Months Ended
	Oct. 2,2004	Sept. 27,2003
Net sales	$ 38,385,770	$ 36,013,012
Cost of sales	31,580,994	28,960,702
Gross profit	6,804,776	7,052,310
Selling and administrative expenses	5,835,251	5,788,224
Operating income	969,525	1,264,086
Interest and other expenses, net	307,158	392,929
Income before income taxes	662,367	871,157
Income taxes	271,856	201,282
Net income	$ 390,511	$ 669,875
Basic and diluted earnings per share	$ 0.09	$ 0.15
Weighted average shares outstanding	4,516,681	4,515,925
Cash dividend - common stock	$ 0.165	$ 0.165
Cash dividend - Class B common stock	$ 0.15	$ 0.15

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

See accompanying notes.

	For the Six Months Ended					For the Three Months Ended

	Jan. 1, 2005			Dec. 27, 2003		Jan. 1, 2005			Dec. 27, 2003

Net sales	$	75,894,375		$	70,355,998	$	37,508,605		$	34,342,986

Cost of sales		62,130,518			56,143,077		30,549,524			27,182,375

Gross profit		13,763,857			14,212,921		6,959,081			7,160,611

Selling and administrative expenses		11,367,449			11,695,019		5,532,198			5,906,795

Impairment expenses		1,778,447			-		1,778,447			-

Operating income (loss)		617,961			2,517,902		(351,564	)		1,253,816

Interest and other expenses, net		718,345			839,627		411,187			446,698

Income (loss) before income taxes		(100,384	)		1,678,275		(762,751	)		807,118

Income taxes		31,920			566,497		(239,936	)		365,214

Net income (loss)	$	(132,304	)	$	1,111,778	$	(522,815	)	$	441,904

Basic and diluted earnings per share	$	(0.03	)	$	0.25	$	(0.12	)	$	0.10

Weighted average shares outstanding		4,516,893			4,516,137		4,517,105			4,516,349

Cash dividend - common stock	$	.33		$	.33	$	.165		$	.165

Cash dividend - Class B common stock	$	.30		$	.30	$	.15		$	.15

3See accompanying notes.

~~KNAPE~~3 ~~& VOGT MANUFACTURING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)~~

	Common stock	Additionalpaid-incapital	Unearnedstockgrant		Accumulatedothercomprehensiveloss		Retainedearnings		Total
Balance, July 3, 2004	$9,032,698	$7,544,749	$(94,500	)	$(1,805,866	)	$ 22,147,137		$ 36,824,218
Comprehensive income
Net income	-	-	-		-		390,511		390,511
Foreign currency translation adjustment	-	-	-		225,510		-
Gain on derivative instrument	-	-	-		93,381		-
Other comprehensive income	-	-	-		318,891		-		318,891
Comprehensive income									709,402
Cash dividends	-	-	-		-		(712,661	)	(712,661	)
Restricted stock issued	1,512	8,248	-		-		-		9,760
Balance, October 2, 2004	$9,034,210	$7,552,997	$(94,500	)	$(1,486,975	)	$ 21,824,987		$ 36,830,719

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

~~See~~CONDENSED ~~accompanying~~CONSOLIDATED STATEMENT ~~notes.~~OF STOCKHOLDERS’ EQUITY(Unaudited)

	Common stock		Additional paid-in capital		Unearned stock grant			Accumulated other comprehensive loss			Retained earnings			Total


Balance, July 3, 2004	$	9,032,698	$	7,544,749	$	(94,500	)	$	(1,805,866	)	$	22,147,137		$	36,824,218

Comprehensive income
Net income (loss)		-		-		-			-			(132,304	)		(132,304	)
Foreign currency translation
adjustment		-		-		-			492,294			-
Gain on derivative instrument		-		-		-			304,435			-

Other comprehensive income		-		-		-			796,729			-			796,729

Comprehensive income															664,425


Cash dividends		-		-		-			-			(1,426,156	)		(1,426,156	)
Restricted stock issued		1,512		8,248		-			-			-			9,760


Balance, January 1, 2005	$	9,034,210	$	7,552,997	$	(94,500	)	$	(1,009,137	)	$	20,588,677		$	36,072,247

~~KNAPE~~See &accompanying ~~VOGT~~notes. ~~MANUFACTURING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)~~

	Three Months Ended
	Oct. 2,2004		Sept. 27,2003
Operating Activities Net income	$ 390,511		$ 669,875
Non-cash items:
Depreciation and amortization	1,515,294		1,630,766
Deferred income taxes	(141,894	)	354,373
Change in retirement plan cost	107,341		64,800
Loss (gain) on disposal of fixed assets	(1,103	)	26,661
Other	5,981		-
Changes in operating assets and liabilities:
Accounts receivable	1,070,829		(3,580,931	)
Inventories	(129,884	)	649,495
Other current assets	238,291		147,235
Accounts payable and accrued expenses	(3,099,913	)	(8,235	)
Net cash used for operating activities	(44,547	)	(45,961	)
Investing Activities:
Additions to property, plant and equipment	(716,514	)	(440,487	)
Proceeds from sales of property, plant and equipment	-		800
Other	(1,789	)	(17,765	)
Net cash used for investing activities	(718,303	)	(457,452	)
Financing Activities:
Dividends paid	(712,661	)	(712,174	)
Borrowings on long-term debt	10,926,159		11,339,040
Payments on long-term debt and capital leases	(9,956,734	)	(10,153,120	)
Net cash provided by financing activities	256,764		473,746
Effect of Exchange Rate Changes on Cash	205,770		(3,473	)
Net Decrease in Cash and Equivalents	(300,316	)	(33,140	)
Cash and equivalents, beginning of year	5,278,869		3,846,611
Cash and equivalents, end of period	$ 4,978,553		$ 3,813,471
Cash Paid During the Period - interest	$ 441,839		$ 388,394
- income taxes	1,827,800		-

SeeKNAPE accompanying& notes.VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

5CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	Six Months Ended

	Jan. 1, 2005			Dec. 27, 2003

Operating Activities:
Net income (loss)	$	(132,304	)	$	1,111,778
Non-cash items:
Depreciation and amortization		3,327,143			3,278,015
Deferred income taxes		(1,204,142	)		205,319
Change in retirement plan cost		132,373			172,784
Impairment expenses		1,778,447			-
Gain on disposal of fixed assets		(1,103	)		(4,349	)
Other		13,496			-
Changes in operating assets and liabilities:
Accounts receivable		886,090			69,089
Inventories		(196,466	)		(2,239,790	)
Other current assets		162,411			(774,469	)
Accounts payable and accrued expenses		(992,114	)		1,013,613

Net cash provided by operating activities		3,773,831			2,831,990


Investing Activities:
Additions to property, plant and equipment		(1,578,918	)		(764,415	)
Proceeds from sales of property, plant and equipment		1,750			800
Other		(13,367	)		(21,962	)

Net cash used for investing activities		(1,590,535	)		(785,577	)


Financing Activities:
Dividends paid		(1,426,156	)		(1,424,363	)
Payments on long-term debt and capital leases		(6,751	)		(6,295	)

Net cash used for financing activities		(1,432,907	)		(1,430,658	)


Effect of Exchange Rate Changes on Cash		427,587			120,805


Net Increase in Cash and Equivalents		1,177,976			736,560

Cash and equivalents, beginning of year		5,278,869			3,846,611


Cash and equivalents, end of period	$	6,456,845		$	4,583,171


Cash Paid During the Period - interest	$	553,871		$	768,199
- income taxes		2,056,700			160,936

See accompanying notes.

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 – Summary of Significant Accounting Policies

The condensed consolidated financial statements have been prepared by Knape & Vogt Manufacturing Company (the “Company”), without audit, in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the ~~instructions~~ instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. Management believes that the disclosures made in this document are adequate so as not to make the information presented misleading. Operating results for the six and three- month ~~period~~ periods ended ~~October~~January 21, ~~2004~~2005, are not necessarily indicative of the results that may be expected for the fiscal year ending July 2, 2005. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Form 10-K for the year ended July 3, 2004.

The Company utilizes a 52- or 53-week fiscal year, which ends on the Saturday nearest the end of June. The fiscal year ended July 3, 2004 contained 53 weeks, while the fiscal year ending July 2, 2005 will contain 52 weeks. Both ~~three~~six-month periods ended on ~~October~~January 21, ~~2004~~2005 and ~~September~~December 27, 2003 contained 13 26 weeks.

Revenue Recognition

The Company records revenue when title to the product and risk of ownership passes to the buyer. Sales are shown net of returns, discounts and any other form of sales incentive, including cooperative advertising and rebates. In certain circumstances, the Company does provide buyback programs and markdown allowances to its customers. These amounts are fixed at the start of the contract period with the customer and accounted for in accordance with Statement of Position No. 93-7, “Reporting on Advertising Costs” and Emerging Issues Task Force Issue No. 01-9, “Accounting for Consideration Given by a Vendor to a Customer”. The cost of these programs are either expensed at the time of the initial shipment of the goods or are expensed on a prorated basis over the sales of the contract, if the Company has a written commitment from the customer.

Stock Based Compensation

The Company accounts for its stock option plans in accordance with APB Opinion No.25, Accounting for Stock Issued to Employees. Since the exercise price of the Company’s employee stock options equals or exceeds the market price of the underlying stock on the date of the grant, no compensation cost is recognized under APB Opinion No. 25. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation, the Company is required to provide pro forma information regarding net income and earnings per share as if compensation costs for the Company’s stock option plan had been determined using a fair value based estimate. Had SFAS No. 123 been adopted, there would be no change in either net income or earnings per share as no options have been granted to employees during the past three fiscal years.

Reclassifications

Certain prior year information has been reclassified to conform to the current year presentation.

Note 2 – New Accounting Standards

In ~~May~~December 2004, the Financial ~~Accounting~~ Accounting Standards Board (“FASB”) issued ~~FASB~~a ~~Staff~~revision ~~Position~~of SFAS No. 123(~~“FSP”~~R), Share-Based ~~FAS~~Payment, ~~106~~which supersedes APB Opinion No. 25. This statement focuses primarily on transactions in which an entity obtains employee services in exchange for share-2based payments. Under SFAS No. 123(R), ~~“Accounting~~ ~~and~~a ~~Disclosure~~public ~~Requirements~~company ~~Related~~generally is required to measure the ~~Medicare~~cost ~~Prescription~~of ~~Drug, Improvement~~employee ~~and~~services ~~Modernization~~received ~~Act~~in exchange for an award of ~~2003.”~~equity instruments ~~FSP~~based ~~FAS~~on ~~106~~the grant-2date ~~supercedes~~fair ~~FSP~~value ~~FAS~~of ~~106-1~~the award, ~~“Accounting~~ ~~and~~with ~~Disclosure~~such ~~Requirements~~cost ~~Related~~recognized over to the ~~Medicare~~applicable ~~Prescription~~vesting ~~Drug~~period. In addition, SFAS No. 123(R) requires an entity to ~~Improvement~~provide ~~and~~certain ~~Modernization~~disclosures ~~Act~~in order to assist in understanding the nature of ~~2003,”~~share-based payments transactions and ~~provides~~the ~~guidance~~effects of those transactions on the ~~accounting,~~financial statements. ~~disclosure,~~The ~~effective~~provisions ~~date~~of ~~and~~SFAS ~~transition~~No. ~~rules~~123(R) ~~related~~are required to be applied as of the ~~Medicare~~beginning ~~Prescription~~of ~~Drug~~the first interim or annual reporting period that begins after June 15, 2005. As such, the ~~Improvement~~Company ~~and~~is ~~Modernization~~required ~~Act~~to adopt the provisions of ~~2003~~SFAS No. ~~FSP~~123(R) ~~FAS~~at ~~106-2~~the ~~was~~beginning ~~adopted~~of ~~during~~the first quarter of fiscal 2006. The Company has not granted such awards over the ~~first~~past three ~~quarter~~years. ~~and~~If ~~had~~in nothe future, it should grant any such awards it will evaluate the impact of SFAS No. 123(R) on ~~the~~its consolidated financial statements.

In December 2004, the FASB issued Staff Position (“FSP”) No. 109-1, Application of FASB Statement No. 109, Accounting for Income Taxes, for the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act (“the Act”) of 2004. The FASB also issued FSP 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004. The Company is currently evaluating the impact that the Act will have on its consolidated financial statements and expects to determine such impact prior to issuing its fiscal 2005 annual report.

In November 2004, the FASB issued SFAS No. 151, Inventory Cost. This Statement amends the guidance in Accounting Research Bulletin No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (scrap). SFAS No. 151 requires that those items be recognized as current-period charges. In addition, this Statement requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of SFAS No. 151 are effective for inventory costs incurred in fiscal years beginning after June 15, 2005. As such, the Company is required to adopt these provisions at the beginning of fiscal year 2006. The Company is currently evaluating the impact of SFAS No. 151 on its consolidated financial statements.

Note 3 – Derivative Instrument

The Company uses an interest rate swap agreement to modify a portion of the variable rate revolving line of credit to a fixed rate obligation, thereby reducing the exposure to market rate fluctuations. The interest rate swap agreement is designated as a hedge, and effectiveness is determined by matching the principal balance and terms with that specific obligation. Amounts currently due to or from interest-rate-swap-counter parties are recorded in interest expense in the period in which they accrue. The derivative, which has a notional amount $20,000,000, was recognized as a liability on the balance sheet at its fair value of $1922,~~247,752~~698 at ~~October 2~~January 1, 2005 ~~2004~~ and $1,391,133 at July 3, 2004.

The Company has 6,000,000 shares of common stock and 4,000,000 shares of Class B common stock authorized. All of the stock is $2 par/share.

The following are the numerators and denominators used in the calculations of basic and diluted earnings per share (EPS) for each of the periods presented:

	For the Three Months Ended
		For the six months ended					For the three months ended
	Oct. 2, 2004		Sept. 27, 2003
		Jan. 1,2005			Dec. 27,2003		Jan. 1,2005			Dec. 27,2003
Numerators:
Numerator for both basic and
Numerator for both basic and
diluted EPS, net income (loss)		$	(132,304	)	$	1,111,778	$	(522,815	)	$	441,904
diluted EPS, net income	$ 390,511		$ 669,875
Denominator for both basic and
Denominators:
diluted EPS,weighted-average
Denominator for both basic and
common shares outstanding			4,516,893			4,516,137		4,517,105			4,516,349
diluted EPS,weighted-average
common shares outstanding	4,516,681		4,515,925

The following exercisable stock options were not included in the computation of diluted EPS because the option prices were greater than average quarterly market prices.

Exercise Price		Oct. 2, 2004	Sept. 27, 2003
$ 13	.64	6,050	6,875
$ 14	.09	7,700	8,525
$ 16	.74	-	6,962
$ 18	.18	5,500	6,325
$ 18	.41	-	130,240
$ 18	.48	206,183	206,183

	For the three and six months ended:

	Jan. 1, 2005		Dec. 27, 2003

Exercise Price
$13.64		6,050		6,050
$14.09		7,700		7,700
$16.74		-		6,054
$18.18		5,500		5,500
$18.41		-		130,240
$18.48		206,183		206,183

Note 5 — Inventories

Inventories are valued at the lower of FIFO (first-in, first-out) cost or market. Inventories are summarized as follows:

	Oct. 2, 2004		July 3, 2004
		Jan. 1, 2005		July 3, 2004
Finished products	~~$15,367,827~~	$	$15,~~256~~509,~~160~~584	$	15,256,160
Consignment inventory	~~3,119,332~~		3,~~292~~062,~~297~~931		3,292,297
Work in process	~~2,081,573~~		2,~~062~~027,~~060~~622		2,062,060
Raw materials	~~3,516,423~~	$	3,~~344~~551,~~754~~600		3,344,754
Total	~~$24,085,155~~	$	~~$23~~24,~~955~~151,~~271~~737	$	23,955,271

7Note 6 – Impairment Expenses

~~Note~~During 6the –quarter ~~Warranty~~ended ~~Disclosure~~January 1, 2005, the Company recognized asset impairment charges and accelerated depreciation of $419,204 pre-tax on certain manufacturing equipment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The equipment has been utilized for backup production of certain precision drawer slide products. Now those products are being partially sourced from a third party rather than manufactured in house, so the extra capacity is no longer required. Some of the equipment will be abandoned and its useful life was adjusted accordingly for depreciation purposes. The equipment that will be held and used or sold was written-down to its estimated fair vales as determined by the Company’s management based on estimated prices of similar assets or proceeds from sale, respectively. The equipment that will be sold has been classified as assets held for sale on the balance sheet and is included in the Other Assets on the condensed balance sheet in this document.

~~The~~In ~~Company~~January ~~provides~~2005, athe ~~limited~~Board of ~~lifetime~~Directors ~~warranty~~approved ona ~~most~~restructuring ~~products~~plan ~~sold.~~to ~~Depending~~close onits ~~the product~~Muncie, ~~the~~Indiana ~~lifetime~~facility ~~warranty~~and relocate isits ~~generally~~operations ~~defined~~into existing available space in athe ~~range~~Grand ofRapids, ~~three~~Michigan tofacility. ~~fifteen~~In accordance ~~years~~with SFAS No. ~~The~~144, the Company ~~does~~recorded ~~not~~pre-tax ~~sell~~impairment orcharges of ~~otherwise~~$1,663,359, ~~issue~~in ~~warranties~~the orsecond ~~warranty~~quarter ~~extensions~~of asfiscal ~~stand~~2005, ~~alone~~consisting ~~products.~~of ~~The~~the ~~warranty issues~~write ~~replacement~~down of the long-lived ~~product~~assets; asincluding ~~the~~real ~~resolution~~estate, ~~for~~fixed ~~any~~assets ~~warranty~~and ~~claims.~~manufacturing ~~Reserves~~equipment ~~have~~located ~~been~~in ~~established~~Muncie ~~for~~facility to the ~~various~~lower ~~costs~~of ~~associated~~their ~~with~~carrying ~~the~~value ~~Company’s~~or ~~warranty~~their estimated fair values, ~~program.~~less ~~General~~the ~~warranty~~disposition ~~reserves~~costs. ~~are~~Fair ~~based~~value onestimates ~~historical~~were ~~claims~~determined ~~experience~~by ~~and~~the ~~other~~Company’s ~~currently~~management, ~~available~~with ~~information~~the ~~and~~assistance ~~are~~of ~~periodically~~independent ~~adjusted~~appraisers, ~~for~~and ~~business~~were ~~levels~~based ~~and~~on estimated ~~other~~proceeds ~~factors~~from sale. ~~Specific~~The ~~reserves~~fair ~~are~~value ~~established~~of ifthe anreal ~~issue~~estate iswas ~~identified~~determined ~~with~~to ~~the amounts~~be ~~for~~$1.0 ~~such~~million and ~~reserves~~the ~~based~~equipment onwas ~~the~~adjusted ~~estimated~~to ~~cost~~a tofair ~~correct~~value ~~the~~of ~~problem~~$220,000. ~~The~~Management ~~actual~~anticipates that ~~warranty~~the ~~expense~~closure ~~could~~of ~~differ from~~ the ~~estimates~~facility ~~made~~and by the ~~Company~~relocation ~~based~~of onthe ~~product performance.~~operations ~~The~~will ~~following~~be ~~table~~completed ~~presents~~prior to the ~~changes~~end inof ~~the~~its ~~Company’s~~fiscal ~~product warranty~~year. ~~liability:~~

	For the Three Months Ended
	Oct. 2, 2004		Sept. 27, 2003
Accrued warranty costs at beginning of period	$ 287,000		$ 275,195
Payments made for warranty costs	(47,179	)	(58,864	)
Accrual for product warranty	48,950		58,670
Accrued warranty costs at end of period	$ 288,771		$ 275,001

The Company will also incur certain qualifying exit costs in connection with the closure of the Muncie facility, including severance and the relocation of certain equipment and inventory. In accordance with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, the severance costs, estimated to be approximately $270,000 pre-tax, will be expensed in the third quarter, as the commitment to the restructuring plan and the communication of it to the employees occurred in the third quarter of fiscal 2005. Further, in accordance with SFAS No. 146, the Company will expense the facility exit and other costs, estimated to be approximately $380,000, as they are incurred. All of the charges will be recorded in the Manufacturing division of the Company.

~~Note~~8 ~~7 — Comprehensive Income~~

ComprehensiveNote income7 represents– netWarranty income and other revenues, expenses, gains and losses that are excluded from net income and recognized directly as a component of stockholders’ equity. Disclosure

~~Comprehensive~~The ~~income~~Company ~~and~~provides ~~its~~a limited ~~components~~lifetime ~~consist~~warranty on most products sold. Depending on the product, the lifetime warranty is generally defined in a range of three to fifteen years. The Company does not sell or otherwise issue warranties or warranty extensions as stand alone products. The warranty issues replacement of the product as the resolution for any warranty claims. Reserves have been established for the various costs associated with the Company’s warranty program. General warranty reserves are based on historical claims experience and other currently available information and are periodically adjusted for business levels and other factors. Specific reserves are established if an issue is identified with the amounts for such reserves based on the estimated cost to correct the problem. The actual warranty expense could differ from the estimates made by the Company based on product performance. The following table presents the changes in the Company’s product warranty liability:

	For the Three Months Ended
		For the Six Months Ended						For the Three Months Ended
	Oct. 2, 2004		Sept. 27, 2003
		Jan. 1, 2005			Dec. 27, 2003			Jan. 1, 2005			Dec. 27, 2003
Net income	$390,511		$ 669,875
Accrued warranty costs at beginning of period		$	287,250		$	275,195		$	289,021		$	275,001
Other comprehensive income:
Payments made for warranty costs			(135,915	)		(103,181	)		(88,684	)		(44,317	)
Foreign currency translation adjustment	225,510		(3,536	)
Accrual for product warranty			144,683			104,391			95,681			45,721
Gain on derivative instrument	93,381		229,693
Accrued warranty costs at end of period		$	296,018		$	276,405		$	296,018		$	276,405
Comprehensive income	$709,402		$ 896,032

OtherNote comprehensive8 income— (loss) relatedComprehensive to the interest rate swap agreement consisted of the following components: Income

	For the Three Months Ended
	Oct. 2, 2004				Sept. 27, 2003
	Pre-Tax		After-Tax		Pre-Tax		After-Tax
Change in fair value of interest rate swap	$ 382,381		$ 248,731		$ 603,527		$ 392,293
Settlement to interest expense	(239,000	)	(155,350	)	(250,834	)	(162,600	)
Other comprehensive income	$ 143,381		$ 93,381		$ 352,693		$ 229,693

Comprehensive income represents net income and other revenues, expenses, gains and losses that are excluded from net income and recognized directly as a component of stockholders’ equity.

~~Note~~Comprehensive 8income —and ~~Retirement~~its components ~~Plans~~consist of the following:

The Company has several noncontributory defined benefit pension plans that provide benefits based on the participants’ years of service. The Company also has a nonqualified supplemental retirement program for designated officers of the Company, which includes death and disability benefits. The postretirement health-care plan covers substantially all employees. The plan is unfunded and contributory.

	For the Six Months Ended					For the Three Months Ended

	Jan. 1, 2005			Dec. 27, 2003		Jan. 1, 2005			Dec. 27, 2003


Net income (loss)	$	(132,304	)	$	1,111,778	$	(522,815	)	$	441,904
Other comprehensive income:
Foreign currency translation adjustment		492,294			135,248		266,787			138,785
Gain on derivative instrument		304,435			395,527		211,054			165,834

Comprehensive income (loss)	$	664,425		$	1,642,553	$	(44,974	)	$	746,523

8Other comprehensive income related to the interest rate swap agreement consisted of the following components:

Components of Net Periodic Benefit Costs:

	For the Six Months Ended												For the Three Months Ended

	Jan. 1, 2005						Dec 27, 2003						Jan. 1, 2005						Dec 27, 2003

	Pre-Tax			After-Tax			Pre-Tax			After-Tax			Pre-Tax			After-Tax			Pre-Tax			After-Tax

Change in fair value of
interest rate swap	$	920,269		$	598,128		$	1,113,311		$	724,287		$	537,888		$	349,396		$	509,784		$	331,551
Settlement to interest expense		(451,834	)		(293,693	)		(505,784	)		(328,760	)		(212,834	)		(138,342	)		(254,950	)		(165,717	)

Other comprehensive income (loss)	$	468,435		$	304,435		$	607,527		$	395,527		$	325,054		$	211,054		$	254,834		$	165,834

ForNote the9 three— months ended:Retirement Plans

	Benefits				SERPBenefits			PostretirementHealth-Care Benefits
	Oct. 2,2004		Sept. 27,2003		Oct. 2,2004	Sept. 27,2003		Oct. 2,2004	Sept. 27, 2003
Service cost	$ 123,303		$ 123,005		$ 1,805	$(1,756	)	$22,137	$22,137
Interest cost	276,056		275,383		44,849	48,840		31,702	31,499
Expected return on plan
assets	(433,480	)	(442,846	)	-	-		-	-
Net amortization	170,851		170,470		35,807	36,048		2,411	2,411
Net periodic pension cost	$ 136,730		$ 126,012		$82,461	$ 83,132		$56,250	$56,047

~~Employer~~9 ~~Contributions~~

~~The~~Components Company has contributed $167,932 for the quarter ended October 2, 2004 to fund its retirement plans compared to $172,028 for the same period in the prior year. The Company anticipates additional contributions of ~~approximately~~ ~~$500,000 to fund its retirement plans in fiscal 2005 for an estimated total~~Net ofPeriodic ~~$670,000.~~Benefit Costs:

Note 9 – Segment Information

For the three months ended:	Pension Benefits						SERP Benefits					Postretirement Health-Care Benefits

	Jan. 1, 2005			Dec. 27, 2003			Jan. 1, 2005		Dec. 27, 2003			Jan. 1, 2005			Dec. 27, 2003

Service cost	$	107,419		$	123,005		$	1,984	$	(1,756	)	$	20,500		$	22,137
Interest cost		276,951			275,383			45,085		48,840			32,500			31,499
Expected return on plan assets		(433,439	)		(442,846	)		-		-			-			-
Net amortization		162,447			170,470			33,008		36,048			(3,000	)		2,411

Net periodic pension cost	$	113,378		$	126,012		$	80,077	$	83,132		$	50,000		$	56,047

During the fourth quarter of fiscal 2004, management began managing the business and reviewing financial information by market channel rather than by the previous Home & Commercial Products and Office Products divisions.

For the six months ended:	Pension Benefits						SERP Benefits					Postretirement Health-Care Benefits

	Jan. 1, 2005			Dec. 27, 2003			Jan. 1, 2005		Dec. 27, 2003			Jan. 1, 2005			Dec. 27, 2003

Service cost	$	214,838		$	246,010		$	3,968	$	(3,512	)	$	41,000		$	44,274
Interest cost		553,902			550,766			90,170		97,680			65,000			62,999
Expected return on plan assets		(866,878	)		(885,693	)		-		-			-			-
Net amortization		324,894			340,940			66,016		72,096			(6,000	)		4,822

Net periodic pension cost	$	226,756		$	252,023		$	160,154	$	166,264		$	100,000		$	112,095

~~The~~Employer ~~Office Products division was~~Contributions ~~segregated~~ into two market channels: OEM and dealer. The OEM market channel sells precision drawer slides, hardware and ergonomic products to original equipment office furniture manufacturers. The dealer market channel sells ergonomic products to independent office furniture dealers. These dealers purchase product from office furniture manufacturers and resell the furniture along with design and installation services to the end customer.

The ~~Home~~Company &has ~~Commercial~~contributed ~~Products~~$171,379 ~~division~~for ~~was~~the ~~segregated~~quarter ~~into~~and ~~two~~$339,657 ~~market~~for ~~channels:~~the ~~consumer~~six ~~and~~months ~~distribution/other.~~ended ~~The~~January 1, 2005 to fund its ~~consumer~~retirement ~~market~~plans ~~channel~~compared ~~sells~~to a$171,249 ~~majority~~and of$343,277, respectively for the ~~Company’s~~same ~~product~~periods ~~lines~~in the toprior ~~retailers~~year. The ~~distribution/other~~Company ~~market~~anticipates ~~channel~~contributing ~~sells~~approximately ~~many~~an ofadditional ~~the~~$340,000 to ~~Company’s~~fund ~~product~~its ~~lines~~retirement ~~to kitchen~~plans ~~and~~in ~~bath~~fiscal ~~OEM~~2005 ~~manufacturers~~for ~~and~~an ~~full~~estimated ~~line~~total ~~woodworking~~of ~~distributors~~$680,000.

ManagementNote has10 limited– itsSegment review of the channels to net sales to external customers and operating profit before administrative costs as shown below. In accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”, only those measures prepared on an ongoing basis and reviewed by the chief operating decision maker are disclosed.

~~The~~During ~~accounting~~the ~~policies~~fourth quarter of ~~the~~fiscal ~~business~~2004, ~~segments~~management ~~are~~began managing the ~~same~~business asand ~~those~~reviewing ~~described~~financial ininformation ~~the~~by ~~summary~~market channel ofrather ~~significant~~than ~~accounting policies~~by in the ~~2004~~previous ~~Annual~~Home ~~Report~~& onCommercial ~~Form~~Products ~~10-K~~and Office Products divisions.

9The Office Products division was segregated into two market channels: OEM and dealer. The OEM market channel sells precision drawer slides, hardware and ergonomic products to original equipment office furniture manufacturers. The dealer market channel sells ergonomic products to independent office furniture dealers. These dealers purchase product from office furniture manufacturers and resell the furniture along with design and installation services to the end customer.

For the Three Months Ended:	OfficeProductsOEM		OfficeProductsDealer	Consumer		Distributionand Other	Manufacturing		Corporateand Other		ConsolidatedTotal
Oct. 2, 2004:
Net sales to external
customers	$10,202,142		$2,429,815	$7,495,984		$18,257,829	$ -		$ -		$38,385,770
Operating profit (loss)
before administrative
costs, other expenses and
income taxes	$ 562,466		$390,239	$(347,318	)	$2,395,381	$(1,060,466	)	-		$1,940,302
Administrative costs,
other expenses	-		-	-		-	-		$1,277,935		$1,277,935
Income tax expense	-		-	-		-	-		$271,856		$271,856
Net income (loss)	$ 562,466		$390,239	$(347,318	)	$2,395,381	$(1,060,466	)	$(1,549,791	)	$390,511
Sept. 27, 2003:
Net sales to external
customers	$9,395,753		$2,482,675	$8,225,567		$15,909,017	$ -		$ -		$36,013,012
Operating profit (loss)
before administrative
costs, other expenses and
income taxes	$(886,867	)	$252,418	$ 36,611		$3,187,669	$(301,558	)	-		$2,288,273
Administrative costs,
other expenses	-		-	-		-	-		$1,417,116		$1,417,116
Income tax expense	-		-	-		-	-		$201,282		$201,282
Net income (loss)	$(886,867	)	$252,418	$ 36,611		$3,187,669	$(301,558	)	$(1,618,398	)	$669,875

The Home & Commercial Products division was segregated into two market channels: consumer and distribution/other. The consumer market channel sells a majority of the Company’s product lines to retailers. The distribution/other market channel sells many of the Company’s product lines to kitchen and bath OEM manufacturers and full line woodworking distributors.

~~Note~~Management 10has –limited ~~Legal~~its ~~Contingencies~~review of the channels to net sales to external customers and operating profit before administrative costs as shown below. In accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”, only those measures prepared on an ongoing basis and reviewed by the chief operating decision maker are disclosed.

~~Two pending legal matters are described in Note~~ 10 ~~– Legal Contingencies in the 2004 Annual Report on Form 10-K. There have been no recent material developments in these matters.~~

The ~~Company~~accounting ispolicies ~~also~~of ~~subject~~the business tosegments ~~other legal~~are ~~proceedings~~the ~~and~~same ~~claims,~~as ~~which~~those ~~arise~~described in the ~~ordinary~~summary ~~course~~ of ~~business~~significant accounting policies in the 2004 Annual Report on Form 10-K.

For the Three Months Ended:	Office Products OEM			Office Products Dealer		Consumer		Distribution and Other		Manu- facturing			Corporate and Other			Consolidated Total

January 1, 2005:
Net sales to external
customers	$	10,223,620		$	2,351,052	$	7,944,172	$	16,989,761	$	-		$	-		$	37,508,605
Operating profit (loss)
before administrative
costs, other expenses and
income taxes		630,730			293,514		338,228		2,716,680		(1,382,135	)		-			2,597,017
Administrative costs,
impairment charges and
other expenses		-			-		-		-		1,778,447			1,581,321			3,359,768
Income tax expense		-			-		-		-		-			(239,936	)		(239,936	)
Net income (loss)		630,730			293,514		338,228		2,716,680		(3,160,582	)		(1,341,385	)		(522,815	)

December 27, 2003:
Net sales to external
customers	$	8,573,442		$	2,255,003	$	8,382,118	$	15,132,423	$	-		$	-		$	34,342,986
Operating profit (loss)
before administrative
costs, other expenses and
income taxes		(631,686	)		289,232		396,596		2,321,292		(45,512	)		-			2,329,922
Administrative costs,
other expenses		-			-		-		-		-			1,522,803			1,522,803
Income tax expense		-			-		-		-		-			365,214			365,214
Net income (loss)		(631,686	)		289,232		396,596		2,321,292		(45,512	)		(1,888,017	)		441,905

For the Six Months Ended:	Office Products OEM			Office Products Dealer		Consumer			Distribution and Other		Manu- facturing			Corporate and Other			Consolidated Total

January 1, 2005:
Net sales to external
customers	$	20,425,762		$	4,780,867	$	15,440,156		$	35,247,590	$	-		$	-		$	75,894,375
Operating profit (loss)
before administrative
costs, other expenses and
income taxes		1,193,196			683,753		(9,090	)		5,112,062		(2,442,602	)		-			4,537,319
Administrative costs,
impairment charges and
other expenses		-			-		-			-		1,778,447			2,859,256			4,637,703
Income tax expense		-			-		-			-		-			31,920			31,920
Net income (loss)		1,193,196			683,753		(9,090	)		5,112,062		(4,221,049	)		(2,891,176	)		(132,304	)

December 27, 2003:
Net sales to external
customers	$	17,969,195		$	4,737,678	$	16,607,685		$	31,041,440	$	-		$	-		$	70,355,998
Operating profit (loss)
before administrative
costs, other expenses and
income taxes		(1,518,553	)		541,650		433,207			5,508,960		(347,069	)		-			4,618,195
Administrative costs,
other expenses		-			-		-			-		-			2,939,919			2,939,919
Income tax expense		-			-		-			-		-			566,497			566,497
Net income (loss)		(1,518,553	)		541,650		433,207			5,508,960		(347,069	)		(3,506,416	)		1,111,779

Note 11 – Legal Contingencies

Two pending legal matters are described in Note 10 – Legal Contingencies in the 2004 Annual Report on Form 10-K. There has been no change in the Canada Customs and Revenue Agency matter. In the case involving the former employee’s claim for additional benefits under an executive retirement plan, the Sixth Circuit Court of Appeals, in January 2005, denied the plaintiff’s appeal of the dismissal.

During the second quarter of fiscal 2005, a competitor filed a suit in the U.S. District Court of the Central District of California alleging that the Company infringes two of the competitor’s U.S. patents. The competitor is seeking monetary damages and injunctive relief. The Company has received an opinion from its outside patent counsel that the Company’s products do not infringe the competitor’s patents. The Company has not yet answered, but intends to deny any liability and vigorously defend the suit.

The Company is also subject to other legal proceedings and claims, which arise in the ordinary course of business.

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 involving risks and uncertainties. When used in this document, the words “believes,” “expects,” “anticipates,” “goal,” “think,” “forecast,” “project,” “may,” and similar expressions identify forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning future revenue, net income growth, cash flows and capital expenditures. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this report.

RESULTS OF OPERATIONS

Net Sales

Net sales for the ~~first~~second quarter of fiscal 2005 were $3837.45 million compared to $3634.03 million for the same period in the prior year. Net sales for the first six months of fiscal 2005 were $75.9 million compared to $70.4 million for the same period in the prior year. In total, the Company had new product sales of $64.19 million inand ~~the~~$11.0 ~~first~~million for the quarter ~~of fiscal~~and six months ended January 1, 2005. This compared to new product sales of $54.54 million inand $9.8 million for the ~~first~~same periods ~~quarter~~respectively ofin fiscal 2004. The Company consistently defines new product sales as those products sold within a three-year period from the date of introduction.

The Distribution and Other segment net sales of $1817.30 million ~~grew~~for bythe 14second quarter and $35.8%2 ~~during~~million for the first ~~quarter~~six months of fiscal 2005 ~~resulting~~represented growth of 12.3% and 13.6%, respectively, over the same periods in the prior year. The growth resulted primarily from the addition of several new products. These include athe Virtu™ line of ~~wood~~upscale ~~storage products,~~kitchen and bath accessories, several ~~upscale~~new wood and wire ~~kitchen~~ storage ~~accessories,~~accessory products and the expanded line of precision ball bearing drawer slides, including the Precision Built™ family of slides. The Company continues to ~~invest~~identify ~~in both~~ new ~~products~~product solutions for this key ~~channel~~market ~~as well as value added services, such as its vendor managed inventory capabilities~~channel.

The Consumer segment net sales of ~~declined~~$7.9 bymillion ~~8.8%~~for tothe second quarter and $715.54 million ~~when~~for ~~compared~~the tofirst six months of fiscal 2005 represented a decline of 5.2% and 7.0%, respectively, over the same ~~period~~periods in the prior year. Last year, the Company launched a number of new products to several key customers during the first ~~quarter~~six months and filled the initial stocking orders during this same period resulting in higher than normal sales. This segment continues to introduce new products to its customers including an upscale line of glass shelving, a line of garage ~~organization~~ organization products and an expanded offering of the Shelf Made™ instant shelves such as display mantels and shadow boxes.

The Office Products Original Equipment Manufacturer (“OEM”) segment ~~recorded increased~~ net sales of $10.2 million for the second quarter and $20.4 million for the first ~~quarter~~six months of fiscal 2005 ofrepresented ~~$10~~growth of 19.2% ~~million,~~and ~~an increase of 8~~13.67%, ~~when~~respectively, ~~compared~~over tothe same periods in the prior year. The Business and Institutional Furniture Manufacturers’ Association (BIFMA) results for the five months ofended ~~July~~November ~~and August~~ 2004, reported increased shipments of 4.34% compared to the same period in the prior year. The Company’s ability to provide customer specific versions of KV’s precision ball bearing drawer slides at competitive prices has been ~~the~~ the primary reason for its ability to outperform the overall market in this channel.

The Office Products Dealer segment net sales ~~remained~~increased ~~relatively~~slightly ~~stable~~to at $2.4 million ~~compared~~for tothe second quarter and $4.8 million for the first ~~quarter~~six months of ~~the prior~~fiscal ~~year~~2005. The Company expects new products to ~~see~~help ~~growth~~it continue into ~~this~~record ~~market~~sales growth as ~~the~~it ~~new~~enters ~~products~~into ~~are~~the ~~fully introduced~~last ~~into~~six months of the ~~marketplace.~~fiscal year. These products include the ProLiftix™ line of height adjustable tables, the Polaris™ lever free adjustable keyboard system and the Proxi™ line of office organization tools.

Gross Profit

Gross profit, as a percentage of net sales, was 1718.76% for the ~~first~~second quarter and 18.1% for the first six months of fiscal 2005 compared to 1920.69% and 20.2%, respectively, for the same ~~period~~ periods in the prior year. The gross profit was negatively impacted by the increased cost of steel. Since the beginning of the calendar year, the average price of steel has increased over 70%. The increased steel costs resulted in the Company paying approximately $2.51 million ~~more for raw steel~~ during the quarter than it would have if steel prices had remained as they were at the beginning of the calendar year. During the first quarter of fiscal 2005, the Company was able to pass through approximately 70% of the increase to its customers. While it is difficult to predict whether the cost of steel will continue to escalate, it does appear that the cost of steel may stabilize for the last three months of calendar 2004.

1113

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

~~During~~ the ~~first~~second quarter ofand ~~fiscal~~$4.6 million ~~2005,~~for the ~~Office~~six ~~Products~~months ~~OEM~~ended ~~segment~~January ~~showed~~1, ~~their~~2005 ~~cost~~more for ~~Asian~~steel ~~slides~~if atcompared ~~the~~to ~~Asian~~steel ~~cost~~pricing at ~~regardless~~the beginning of ~~whether or not~~ the ~~slides~~calendar ~~were produced domestically~~year. ~~This~~During ~~resulted~~the ~~in improved~~second ~~profitability~~quarter ~~for~~of ~~this~~fiscal ~~segment~~2005, of the ~~business~~Company was ~~and~~able ~~correspondingly~~to ~~reduced~~charge ~~the profitability~~approximately 80% of the ~~Manufacturing~~increase ~~segment~~to its customers.

While it is difficult to predict whether the cost of steel will continue to escalate, market pricing appears to have stabilized during the second quarter of fiscal 2005.

During the second quarter of fiscal 2005, the Company recorded additional depreciation expense of $304,115 in cost of goods sold related to certain equipment that it had been utilizing for backup production of precision drawer slide products. Those products are now being partially sourced from overseas rather than manufactured in house, so the extra capacity is no longer required. The useful life of the equipment identified for disposal was adjusted accordingly for depreciation purposes.

During the first six months of fiscal 2005, the Office Products OEM segment has shown their cost for certain precision slides partially sourced from Asia and partially produced domestically at the Asian cost regardless of where the slides were produced. This resulted in improved profitability for this segment of the business and correspondingly reduced the profitability of the Manufacturing segment.

Operating Expenses

Selling and administrative expenses, as a percentage of net sales, were 14.7% for the second quarter and 15.20% for the first six ~~quarter~~months of fiscal 2005 compared to 17.2% and 16.16%, respectively, for the same ~~period~~ periods in the prior year. The decrease in selling and administrative expense, as a percentage of sales, reflects the fact that the Company has been successful in its ability to leverage the fixed portion of its selling and administrative expenses while sales have grown. Ongoing investments are being made in those products and markets where it believes that such investments will generate future growth.

Impairment Expenses

During the second quarter of fiscal 2005, the Company also recorded a pre-tax impairment charge of $115,089 related to the precision drawer slide equipment discussed above that will be held and used or held for sale.

In January 2005, the Board of Directors approved a restructuring plan to close its Muncie, Indiana facility and relocate its operations into existing available space in the Grand Rapids, Michigan facility. KV recorded pre-tax impairment charges of $1,663,359, in the second quarter of fiscal 2005, consisting of the write down of the long-lived assets; including real estate, fixed assets and manufacturing equipment located in the Muncie facility to the lower of their carrying value or their estimated fair values, less the disposition costs. Fair value estimates were determined by the Company’s management, with the assistance of independent appraisers, and were based on estimated proceeds from sale. The fair value of the real estate was determined to be $1.0 million and the equipment was adjusted to a fair value of $220,000. Management anticipates that the closure of the facility and the relocation of the operations will be completed prior to the end of its fiscal year.

The Company will also incur certain qualifying exit costs in connection with the closure of the Muncie facility, including severance and the relocation of certain equipment and inventory. The severance costs, estimated to be approximately $270,000 pre-tax, will be expensed in the third quarter, as the commitment to the restructuring plan and the communication of it to the employees will occur in the third quarter of fiscal 2005. The Company will expense the facility exit and other costs, estimated to be approximately $380,000, as they are incurred. All of the charges will be recorded in the Manufacturing division of the Company.

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)

Management believes that the decision to relocate the Muncie operations will lower the Company’s overall manufacturing costs. The Company will be able to utilize the pool of stable skilled employees at its Grand Rapids manufacturing facility, including the existing manufacturing expertise of its in-house kaizen staff and industrial engineers. In addition, management believes that the consolidation of operations will improve the Company’s speed to market on its kitchen and bath accessories, as the new product engineers and the test lab are located in Grand Rapids.

Finally, management has estimated the payback period for the closing of the Muncie facility will be approximately a year and a half from the closure date.

Interest and Other Expenses, net

Interest expense was $~~394~~401,~~586~~538 and $796,124 for the quarter and six months ended ~~October~~January 21, ~~2004~~2005, compared to $~~389~~400,~~931~~007 and $789,938 for the same ~~period~~periods in the prior year, respectively. The slight change reflects the increased cost of borrowings at the prime rate.

Other ~~income~~expense was $879,~~428~~649 for the ~~first~~second quarter of fiscal 2005 compared to other expense of $246,~~998~~691 for the same quarter in the prior year. ~~The~~For the first six months of fiscal 2005, other income was $77,779 compared to other expenses of $49,689 for the same period in the prior year. The other income for the first ~~quarter~~six months of fiscal 2005 reflects a settlement payment received in connection with one of the Company’s patents. The other expense shown in the prior year resulted from exchange rate losses recorded on certain Canadian sales.

Income Taxes

The effective tax rate was 4131.05% for the ~~first~~second quarter of fiscal 2005, compared to an45.2% ~~effective~~for ~~rate~~the ofsame ~~23.1%~~period in the prior year. The ~~current~~effective ~~year~~ rate isfor ~~slightly~~the ~~higher~~second quarter of fiscal 2005 was lower than normal due to the ~~normal~~fact ~~effective~~that ~~tax~~the ~~rate~~Feeny ~~due~~subsidiary has a net operating loss at the state level and was unable to record a deferred tax benefit on the impairment charge. Those charges also ~~valuation~~caused ~~allowances~~the ~~recorded~~Company ~~for~~to ~~state~~pay $31,920 in taxes atfor the ~~domestic~~first ~~subsidiary~~six months of fiscal 2005 on a pre-tax loss. The effective tax rate ~~was~~for ~~lower~~the infirst ~~the~~six ~~prior~~months ~~year~~of ~~due~~fiscal to2004 was 33.8%. The effective rate for the ~~reversal~~second quarter of ~~certain~~fiscal ~~valuation~~2004 ~~allowances~~was unfavorably impacted by atcertain foreign tax obligations. This was partially offset for the ~~Canadian~~six-month ~~subsidiary~~period by the review and subsequent adjustment of certain deferred tax valuation reserves that were deemed no longer ~~deemed~~ necessary.

Net Income (Loss)

Net ~~income~~loss for the ~~first~~second quarter of fiscal 2005 was $~~390~~522,~~511~~815 or $0.0912 per diluted share compared to net income of $~~669~~441,~~875~~904, or $0.1510 per diluted share for the same quarter of last year. ~~The~~A ~~decline~~net inloss of $132,304, or $0.03 per diluted share was recorded for the first six months of fiscal 2005, compared to net income ~~reflects~~of $1.1 million, or $0.25 per diluted share in the prior year. Fiscal ~~negative~~2005‘s ~~impact~~loss ofincluded the ~~higher~~pre-tax ~~steel~~impairment ~~costs~~charges ~~along~~and ~~with~~additional adepreciation of $2.1 million. In addition, higher ~~effective~~steel ~~tax~~costs ~~rate~~have reduced gross margin.

Liquidity and Capital Resources

Net cash ~~used~~provided ~~for~~by operating activities for the first ~~three~~six months of fiscal 2005 was $~~44,547~~3.8 million compared to $~~45,961~~2.8 million for the first ~~three~~six months of fiscal 2004. ~~The~~In ~~Company paid a number of significant accruals in the first quarter of~~ fiscal 2005 ~~including federal income taxes~~, the ~~profit~~Company ~~sharing~~has been ~~contribution~~successful ~~and~~in ~~the~~reducing ~~various~~its ~~incentive~~days ~~plan~~outstanding ~~bonuses. This cash outflow was partially offset by a reduction~~ in accounts receivable ~~due~~and toimproving ~~the Company more closely managing~~ its ~~credit~~inventory ~~terms~~turns.

~~Cash~~15 used for investing activities was $718,303 for the first three months of fiscal 2005, compared to $457,452 used in the same period in the prior year. Capital expenditures totaled $716,514 for the three months ended October 2, 2004, compared to $440,487 for the first three months of the prior year. The capital expenditures for the first three months of fiscal 2005 represented investments in tooling for new products, a new showroom in Chicago and equipment for Asian production.

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)

~~There~~Cash ~~were~~used ~~capital~~for ~~expenditure~~investing activities ~~commitments~~was ~~of approximately~~ $1.16 million for ~~tooling~~the first six months of fiscal 2005, compared to $785,577 used in the same ~~Chicago~~period ~~showroom~~in ~~and~~the prior year. Capital expenditures totaled $1.6 for the ~~Asian~~six months ended ~~production~~January ~~equipment~~1, at2005, ~~October~~compared 2to $764,415 ~~2004~~for the first six months of the prior year. ~~Capital~~The capital expenditures for the first six months of fiscal ~~year~~2005 ~~are~~represented investments in ~~anticipated~~tooling tofor benew ~~approximately~~products, ~~$4.0~~a ~~million~~new showroom in Chicago and equipment for Asian production.

~~Cash~~There ~~provided~~were bycapital ~~financing activities~~expenditure ~~was~~commitments of approximately $~~256~~868,~~764~~000 for ~~the~~new ~~first~~product ~~three~~tooling ~~months~~and ofAsian ~~fiscal~~production equipment ~~2005~~at ~~compared~~January ~~to $473~~1,~~746~~ ~~for~~2005. ~~the~~Capital ~~same period~~expenditures infor the ~~prior~~fiscal year. ~~The~~are ~~Company~~anticipated ~~borrowed less on the revolving line of credit during~~to ~~the~~be ~~first~~approximately ~~quarter~~$4.0 ~~of fiscal 2005~~million.

~~Anticipated~~Cash ~~cash~~used ~~flows~~for ~~from~~financing activities ~~operations~~was ~~and~~$1.4 ~~available~~million ~~balances~~for on the ~~revolving~~first ~~credit line~~six ~~are~~months ~~expected~~of tofiscal be2005 ~~adequate~~and tofiscal ~~fund~~2004. ~~working~~The ~~capital, capital~~ expenditures represent ~~and~~the Company’s dividend payments to its shareholders.

Anticipated cash flows from operations and available balances on the revolving credit line are expected to be adequate to fund working capital, capital expenditures, stock repurchases and dividend payments.

Legal Proceedings

Two pending legal matters are described in Note 10 – Legal Contingencies in the 2004 Annual Report on Form 10-K. There ~~have~~has been no ~~recent~~change ~~material~~in ~~developments~~the Canada Customs and Revenue Agency matter. In the case involving the former employee’s claim for additional benefits under an executive retirement plan, the Sixth Circuit Court of Appeals, in ~~these~~January ~~matters~~2005, denied the plaintiff’s appeal of the dismissal.

~~The~~During the second quarter of fiscal 2005, a competitor filed a suit in the U.S. District Court of the Central District of California alleging that the Company isinfringes ~~also~~two ~~subject~~of tothe ~~other~~competitor’s U.S. patents. ~~legal~~The ~~proceedings~~competitor is seeking monetary damages and ~~claims,~~injunctive ~~which~~relief. ~~arise~~The inCompany has received an opinion from its outside patent counsel that the ~~ordinary~~Company’s ~~course~~products ofdo ~~business~~not infringe the competitor’s patents. The Company has not yet answered, but intends to deny any liability and vigorously defend the suit.

The Company is also subject to other legal proceedings and claims, which arise in the ordinary course of business.

New Accounting Standards

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)

In December 2004, the FASB issued Staff Position (“FSP”) No. 109-1, Application of FASB Statement No. 109, Accounting for Income Taxes, for the Tax Deduction Provided to U.S. Based Manufacturers by the American Jobs Creation Act of 2004 (“the Act”). The FASB also issued FSP 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004. The Company is currently evaluating the impact that the Act will have on its consolidated financial statements and expects to determine such impact prior to issuing its fiscal 2005 annual report.

In November 2004, the FASB issued SFAS No. 151, Inventory Cost. This Statement amends the guidance in Accounting Research Bulletin No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (scrap). SFAS No. 151 requires that those items be recognized as current-period charges. In addition, this Statement requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of SFAS No. 151 are effective for inventory costs incurred in fiscal years beginning after June 15, 2005. As such, the Company is required to adopt these provisions at the beginning of fiscal year 2007. The Company is currently evaluating the impact of SFAS No. 151 on its consolidated statements.

Critical Accounting Policies

This discussion and analysis of the Company’s financial condition and results of its operations is based upon its consolidated financial statements. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts. On an ongoing basis, management evaluates the estimates, including those related to bad debts, inventories, long-lived assets, income taxes, self-insurance reserves, retirement benefits and contingencies and litigation. Management bases the estimates on historical experience and on various other assumptions and factors that they believe to be reasonable under the circumstances. Based on management’s ongoing review, adjustments are made that are considered appropriate under the facts and circumstances. The accompanying condensed consolidated financial statements are prepared using the same critical accounting policies discussed in the 2004 Annual Report on Form 10-K.

1317

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risks, which include changes in the Canadian dollar foreign currency exchange rate as measured against the U.S. dollar and changes in U.S. interest rates. The Company holds a derivative instrument in the form of an interest rate swap, which is viewed as a risk management tool and is not used for trading or speculative purposes. The intent of the interest rate swap is to effectively fix the interest rate on part of the borrowings under the Company’s variable rate revolving credit agreement. The derivative was recognized as a liability on the balance sheet at its fair value of $1922,~~247,752~~698 at ~~October~~January 21, ~~2004~~2005 and $1,391,133 at July 3, 2004.

The following table provides information on the Company’s fixed maturity investments as of ~~October~~January 21, ~~2004~~2005 that are sensitive to changes in interest rates. The table also presents the corresponding interest rate swap on this debt. Since the interest rate swap effectively fixes the interest rate on the notional amount of debt, changes in interest rates have no current effect on the interest expense recorded by the Company on the portion of the debt covered by the interest rate swap.

Liability	Amount	Maturity Date
Variable rate revolving credit
agreement	$25,472,771	November 1, 2006
First $20,000,000 at an interest rate
of 1.80% (3 month LIBOR)
plus weighted average
credit spread of .75%;
Next $5,000,000 at an interest rate of
1.84% (1 month LIBOR)
plus weighted average
credit spread of .75%;
Amounts in excess of $25,000,000
at the prime rate, currently 4.75%
Interest Rate Swap
Notional amount	$20,000,000	June 1, 2006
Pay/Receive variable
at 3 month LIBOR - 1.79%
Pay fixed interest rate - 6.25%

Liability
Variable rate revolving credit
agreement
First $20,000,000 at an interest rate
of 2.41% (3 month LIBOR)
plus weighted average
credit spread of .85%;
Next $4,500,000 at an interest rate of
2.29% (1 month LIBOR)
plus weighted average
credit spread of .85%;

Interest Rate Swap
Notional amount
Pay/Receive variable
at 3 month LIBOR - 2.40%
Pay fixed interest rate - 6.25%

Amount

$24,500,000

$20,000,000

Maturity Date

November 1, 2006

June 1, 2006

The Company has a sales office located in Canada. Sales are typically denominated in Canadian dollars, thereby creating exposures to changes in exchange rates. The changes in the Canadian/U.S. exchange rate may positively or negatively affect the Company’s sales, gross margins and retained earnings. The Company attempts to minimize currency exposure through working capital management. The Company does not hedge its exposure to translation gains and losses relating to foreign currency net asset exposures.

1418

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES
CONTROLS AND PROCEDURES

Item 4.

Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures The Company’s Chief Executive Officer and the Vice President of Finance, after evaluating the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) as of the end of the period covered by this Form 10-Q Quarterly Report have concluded that the Company’s disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company would be made known to them by others within the Company, particularly during the period in which this Form 10-Q Quarterly Report was being prepared.

~~The Company’s Chief Executive Officer and the Vice President of Finance, after evaluating the effectiveness of the Company’s disclosure controls and procedures~~ (asb) ~~defined~~Changes in ~~Exchange~~Internal ~~Act~~Controls ~~Rules~~During ~~13a-15(e) and 15(d)-15(e)) as of~~ the ~~end of the~~ period covered by this ~~Form~~report, ~~10-Q~~there ~~Quarterly~~have ~~Report~~been ~~have~~no ~~concluded~~changes ~~that~~in the Company’s ~~disclosure~~internal ~~controls~~control ~~and~~over ~~procedures~~financial ~~were~~reporting ~~adequate and effective to ensure~~ that ~~material~~have ~~information~~materially ~~relating~~affected toor ~~the~~are ~~Company~~reasonably ~~would~~likely ~~be made known~~ to ~~them~~materially byaffect ~~others within~~ the Company,’s ~~particularly~~internal ~~during~~control ~~the~~over ~~period~~financial ~~in which this Form 10-Q Quarterly Report was being prepared~~reporting.

~~(b)~~19 ~~Changes in Internal Controls~~

During the period covered by this report, there have been no changes in the Company's internal control over financial reporting that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

The Company is also subject to other legal proceedings and claims, which arise in the ordinary course of business.

Item 4.

Submission of Matters to a Vote of Security Holders

(a)

Knape & Vogt Manufacturing Company’s Annual Meeting of Shareholders was held on October 15, 2004.

(b)

Proxies were distributed by Knape & Vogt Manufacturing Company pursuant to Regulation 14A under the Securities Exchange Act of 1934. There was no opposition to management’s nominees as listed in the proxy statement and all nominees were elected.

The vote on the nominees was:

Thomas A. Hilborn
Robert J. Knape
Christopher Norman

(1) (2)
(1) (2)
(1) (3)

For
17,696,002
18,895,597
1,849,924

Withheld
1,410,802
211,206
228,809

(1)

Term expires in 2007.

(2)

Elected by vote of holders of Common stock and Class B Common stock voting as a class.

(3)

Elected by vote of holders of Common stock voting as a class.

Members of the Board of Directors whose terms have not yet expired are:

William R. Dutmers, Richard S. Knape and Michael J. Kregor, terms expiring in 2005 and John E. Fallon and Gregory Lambert, terms expiring in 2006.

Item 6.

Exhibits and Reports on Form 8-K

(a)

Exhibits

3.1 Bylaws of Knape & Vogt Manufacturing Company as amended and restated October 15, 2004

31.1

Certificate of the Chairman and Chief Executive Officer of Knape & Vogt Manufacturing Company pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certificate of the Vice President of Finance of Knape & Vogt Manufacturing Company pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~32.1~~20 ~~Certificate of the Chief Executive Officer of Knape & Vogt Manufacturing Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.~~

32.21 Certificate of the ~~Vice~~Chief ~~President~~Executive ofOfficer ~~Finance~~ of Knape & Vogt Manufacturing Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

1632.2 Certificate of the Vice President of Finance of Knape & Vogt Manufacturing Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)	Reports on Form 8-K

Knape & Vogt furnished the following ~~Form~~Forms 8-K during the quarter ended ~~October~~January 21, ~~2004~~2005.

Date of ~~ReportAugust~~Report 12October 14, 2004 October 15, 2004 Filing ~~DateAugust~~Date 12October 14, 2004 ~~August~~October 1218, 2004 Items Reported Under Item 9, this Form 8-K included a press release that reported Knape & Vogt’'s financial results for the fiscal quarter ~~and fiscal year~~ that ended on ~~July~~October 32, 2004. ~~Items~~The ~~ReportedThe~~ press release included summary consolidated financial data for the fiscal quarters ~~and years~~ ended ~~July~~October 32, 2004 and ~~June~~September 2827, 2003. The press release also contained balance sheet information as of ~~July~~October 32, 2004 and ~~June~~September ~~28,~~27 2003. Under Item 5.03 reporting a bylaw amendment changing the annual meeting date to Friday of the third week in October.

1721

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: October 18, 2004		/s/ William R. Dutmers
		William R. Dutmers
		Chairman of the Board and Chief Executive Officer
Date: October 18, 2004		/s/ Leslie J. Cummings
		Leslie J. Cummings
		Vice President of Finance and Treasurer

Date: January 31, 2005
———————————

Date: January 31, 2005
———————————

Knape & Vogt Manufacturing Company
(Registrant)

/s/ William R. Dutmers
——————————————
William R. Dutmers
Chairman of the Board and
Chief Executive Officer

/s/ Leslie J. Cummings
——————————————
Leslie J. Cummings
Vice President of Finance and
Treasurer

1822

EXHIBIT INDEX

Exhibit

Description

3.1 Bylaws of Knape & Vogt Manufacturing Company as amended and restated October 15, 2004

31.1	Certificate of the Chairman and Chief Executive Officer of Knape & Vogt Manufacturing Company pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certificate of the Vice President of Finance of Knape & Vogt Manufacturing Company pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certificate of the Chief Executive Officer of Knape & Vogt Manufacturing Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

32.2 Certificate of the Vice President of Finance of Knape & Vogt Manufacturing Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

1923

EXHIBIT 3.1

ADOPTED: OCTOBER 15, 2004

AMENDED AND RESTATED B Y L A W S

KNAPE & VOGT MANUFACTURING COMPANY

A Michigan corporation

ARTICLE I OFFICES

1.1 Registered Office. The registered office of the corporation shall be located at the address specified in the Articles of Incorporation or at such other place as may be determined by the Board of Directors if notice thereof is filed with the State of Michigan.

1.2 Other Offices. The business of the corporation may be transacted at such locations other than the registered office, within or outside the State of Michigan, as the Board of Directors may from time to time determine or as the business of the corporation may require.

ARTICLE II CAPITAL SHARES

2.1 Share Certificates. Certificates representing shares of the corporation shall be in such form as is approved by the Board of Directors. Certificates shall be signed in the name of the corporation by the Chairman of the Board of Directors, the President or a Vice President, and by the Treasurer or Secretary of the corporation, and shall be sealed with the seal of the corporation if one is adopted. If an officer who has signed a certificate ceases to be such officer before the certificate is issued, it may be issued by the corporation with the same effect as if he or she were such officer at the date of issue. The Board of Directors may authorize the issuance of some or all of the shares of any or all classes or series without certificates. Any such authorization shall not affect shares already represented by certificates until the certificates are surrendered. Within a reasonable time after the issuance or transfer of shares without certificates, the corporation shall send or cause to be sent to the shareholder a written statement including the following information: (a) the corporation is formed under the laws of the State of Michigan, (b) the name of the person to whom the shares have been issued, (c) the number and class of shares, and the designation of the series, if any, issued, and (d) a statement that the corporation will furnish to the shareholder upon request and without charge a full statement of the designation, relative rights, preferences, and limitations of the shares of each class authorized to be issued, and if the corporation is authorized to issue any class of shares in series, the designation, relative rights, preferences, and limitations of each series so far as the same have been prescribed and the authority of the Board to designate and prescribe the relative rights, preferences, and limitations of other series. If applicable, the statement shall also set forth any restriction on transfer or registration of transfer of the shares issued.

2.2 Replacement of Lost or Destroyed Certificates. If a share certificate is lost or destroyed, no new certificate shall be issued in place thereof until the corporation has received such assurances, representations, warranties, or guarantees from the registered holder as the Board of Directors, in its sole discretion, deems advisable and until the corporation receives such indemnification against any claim that may be made on account of the lost or destroyed certificate, or the issuance of any new certificate in place thereof, including an indemnity bond in such amount and with such sureties, if any, as the Board of Directors, in its sole discretion, deems advisable. Any new certificate issued in place of any lost or destroyed certificate shall be plainly marked “duplicate” upon its face.

2.3 Transfer of Shares; Shareholder Records. The Board of Directors may appoint a transfer agent or a registrar of transfer and, upon such appointment, capital shares of the corporation shall be transferable only upon the books of the transfer agent or registrar of transfer. The old certificates shall be surrendered by delivery to the transfer agent or registrar, properly endorsed for transfer, and the old certificates shall be canceled before a new certificate is issued. The signatures of the officers required by Section 2.1 hereof and the corporate seal, if any, may be facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the corporation itself or its employees. If an officer whose facsimile signature has been placed upon a certificate ceases to be such officer before the certificate is issued, it may be issued by the corporation with the same effect as if he or she were such officer at the date of issue. The transfer agent or the registrar of transfer shall keep records containing the names and addresses of all shareholders, the number, class, and series of shares held by each, and the dates when they respectively became holders of record thereof. The corporation shall be entitled to treat the person in whose name any share, right, or option is registered as the owner thereof for all purposes and shall not be bound to recognize any equitable or other claim, regardless of any notice thereof, except as may be specifically required by the laws of the State of Michigan.

2.4 Rules Governing Share Certificates. Subject to Article III of the Articles of Incorporation, the Board of Directors shall have the power and authority to make such rules and regulations as they may deem expedient concerning the issue, transfer, and registration of share certificates.

2.5 Record Date for Share Rights. The Board of Directors may fix in advance a date not exceeding sixty (60) days preceding the date of payment of any dividend or other distribution, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital shares shall go into effect, as a record date for the determination of the shareholders entitled to receive payment of any such dividend or other distribution, or any such allotment of rights, or to exercise rights with respect to any such change, conversion, or exchange of capital shares and, in such case, only shareholders of record on the date so fixed shall be entitled to receive payment of such dividend or other distribution, or allotment of rights, or exercise such rights, as the case may be, notwithstanding the transfer of any shares on the books of the corporation after such record date. If the Board of Directors shall fail to fix a record date, the record date for the purposes specified herein shall be the close of business on the date on which the resolution of the Board of Directors relating thereto is adopted.

-2-

2.6 Dividends. The Board of Directors, in its discretion, may from time to time declare and direct payment of dividends or other distributions upon the corporation’s outstanding shares out of funds legally available for such purposes, which dividends may be paid in cash, the corporation’s bonds, or the corporation’s property, including the shares or bonds of other corporations. In the event a dividend is paid or any other distribution made, in any part, from sources other than earned surplus, payment, or distribution thereof shall be accompanied by written notice to the shareholders: (a) disclosing the amounts by which the dividend or distribution affects stated capital, capital surplus, and earned surplus; or (b) if such amounts are not determinable at the time of the notice, disclosing the approximate effect of the dividend or distribution upon stated capital, capital surplus, and earned surplus and stating that the amounts are not yet determinable.

In addition to the declaration of dividends or other distributions provided in the preceding paragraph of this Section 2.6, the Board of Directors, in its discretion, may from time to time declare and direct payment of a dividend in shares of this corporation, upon its outstanding shares, in accordance with and subject to the provisions of the Articles of Incorporation and the Business Corporation Act of Michigan. A share dividend or other distribution of shares of the corporation shall be accompanied by a written notice to shareholders: (a) disclosing the amounts by which the distribution affects stated capital, capital surplus, and earned surplus; or (b) if such amounts are not determinable at the time of the notice, disclosing the approximate effect of the distribution upon stated capital, capital surplus, and earned surplus and stating that the amounts are not yet determinable.

ARTICLE IIISHAREHOLDERS

3.1 Place of Meetings. Meetings of shareholders shall be held at the registered office of the corporation or at such other place, within or outside the State of Michigan, as may be determined from time to time by the Board of Directors; provided, however, that if a shareholders meeting is to be held at a place other than the registered office, the notice of the meeting shall designate such place.

3.2 Annual Meeting. Annual meetings of shareholders for election of directors and for such other business as may come before the meeting shall be held on Friday of the third full week of October of each year, but if such day is a legal holiday, then the meeting shall be held on the first business day following, at such time as may be fixed by the Board of Directors, or at such other date and time within the four (4) months next succeeding the end of the corporation's fiscal year as may be designated by the Board of Directors and stated in the notice of the meeting. If the annual meeting is not held on the date specified, the Board of Directors shall cause the meeting to be held as soon thereafter as convenient.

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3.3 Special Meetings. Special meetings of shareholders may be called by the Chairman of the Board, the President, or the Secretary and shall be called by one of them pursuant to resolution therefor by the Board of Directors.

3.4 Record Date for Notice and Vote. The Board of Directors may fix in advance a date not more than sixty (60) nor less than ten (10) days before the date of a shareholders meeting as the record date for the purpose of determining shareholders entitled to notice of and to vote at the meeting or adjournments thereof or to express consent or to dissent from a proposal without a meeting. If the Board of Directors fails to fix a record date as provided in this Section 3.4, the record date for determination of shareholders entitled to notice of or to vote at a shareholders meeting shall be the close of business on the day on which notice is given or, if no notice is given, the day next preceding the day on which the meeting is held, and the record date for determining shareholders entitled to express consent or to dissent from a proposal without a meeting shall be the close of business on the day on which the resolution of the Board of Directors relating to the proposal is adopted.

3.5 Notice of Meetings. Written notice of the time, place, and purpose of any shareholders meeting shall be given to shareholders entitled to vote thereat not less than ten (10) nor more than sixty (60) days before the date of the meeting; provided, however, that not less than twenty (20) days notice shall be given if a plan of merger or consolidation or a sale, lease, exchange, or other disposition of all, or substantially all, the property and assets, with or without the goodwill, of the corporation, if not in the usual and regular course of its business as conducted by the corporation, is to be submitted for approval at a shareholders meeting. Such notice may be given either by delivery in person to shareholders or by mailing such notice to shareholders at their addresses as the same appear in the records of the corporation; provided, however, that attendance of a person at a shareholders meeting, in person or by proxy, constitutes a waiver of notice of the meeting, except when the shareholder attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

3.6 Voting Lists. The corporation’s officer or the agent having charge of its share transfer books shall prepare and certify a complete list of the shareholders entitled to vote at a shareholders meeting or any adjournment thereof, which list shall be arranged alphabetically within each class and series and shall show the address of, and number of shares held by, each shareholder. The list shall be produced at the time and place of the shareholders meeting and be subject to inspection, but not copying, by any shareholder at any time during the meeting for the purpose of determining who is entitled to vote at the meeting. If for any reason the requirements with respect to the shareholder list specified in this Section 3.6 have not been complied with, any shareholder, either in person or by proxy, who in good faith challenges the existence of sufficient votes to carry any action at the meeting, may demand that the meeting be adjourned and the same shall be adjourned until the

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requirements are complied with; provided, however, that failure to comply with such requirements does not affect the validity of any action taken at the meeting before such demand is made.

3.7 Voting. Except as may be otherwise provided in the Articles of Incorporation, each shareholder entitled to vote at a shareholders meeting, or to express consent or dissent without a meeting, shall be entitled to one vote, in person or by written proxy, for each share entitled to vote held by such shareholder; provided, however, that no proxy shall be voted after three (3) years from its date unless the proxy provides for a longer period. A vote may be cast either orally or in writing as announced or directed by the person presiding at the meeting prior to the taking of the vote. When an action other than the election of directors is to be taken by vote of the shareholders, it shall be authorized by a majority of the votes cast by the holders of shares entitled to vote thereon, unless a greater plurality is required by the express provisions of the Michigan Business Corporation Act or the Articles of Incorporation. Except as otherwise expressly required by the Articles of Incorporation, directors shall be elected by a plurality of the votes cast at an election.

3.8 Quorum. Except as may be otherwise provided in the Articles of Incorporation, issued and outstanding shares entitled to cast a majority of the votes at a meeting, excluding treasury shares, represented in person or by proxy, shall constitute a quorum at a meeting. Where holders of a class or series of shares are entitled to vote separately on an item of business, a quorum shall be present for that item if issued and outstanding shares of that class or series entitled to cast a majority of votes on the item are represented in person or by proxy, excluding treasury shares. Meetings at which less than a quorum is represented may be adjourned by a vote of a majority of the shares present to a future date without further notice other than the announcement at such meeting and, when a quorum shall be present upon such adjourned date, any business may be transacted which might have been transacted at the meeting as originally called. Shareholders present in person or by proxy at any shareholders meeting may continue to do business until adjournment, notwithstanding the withdrawal of shareholders to leave less than a quorum.

3.9 Conduct of Meetings. The officer who is to preside at meetings of shareholders pursuant to Article V of these Bylaws, or his or her designee, shall determine the agenda and the order in which business shall be conducted unless the agenda and the order of business have been fixed by the Board of Directors. Such officer or designee shall call meetings of shareholders to order and shall preside unless otherwise determined by the affirmative note of a majority of all the noting shares of the corporation issued and outstanding, other than treasury shares. The secretary to the Board of Directors, if one is appointed, shall act as secretary of all meetings of shareholders. In the absence of the secretary to the Board of Directors or his or her inability to act as secretary, or if a secretary to the Board of Directors has not been appointed, the secretary of the corporation shall act as secretary of all meetings of shareholders, but in the absence of the secretary at any shareholders meeting, or his or her inability or refusal to act as secretary, the presiding officer may appoint any person to act as secretary of the meeting.

3.10 Inspector of Elections. The Board of Directors may, in advance of a shareholders meeting, appoint one or more inspectors to act at the meeting or any adjournment thereof. In the event inspectors are not so appointed, or an appointed inspector fails to appear or act, the person

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presiding at the shareholders meeting may, and on request of a shareholder entitled to vote thereat, shall, appoint one or more persons to fill such vacancy or vacancies or to act as inspector. The inspectors shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots, or consents, hear and determine challenges and questions arising in connection with the right to vote, count, and tabulate votes, ballots, or consents, determine the results, and do such acts as are proper to conduct the election or vote with fairness to all shareholders.

3.11 Action by Shareholders Without a Meeting. Any action which is required to be taken or which may be taken at any annual or special shareholders meeting may be taken without a meeting, without prior notice, and without a vote if all of the shareholders entitled to vote thereon consent thereto in writing.

ARTICLE IV DIRECTORS

4.1 Board of Directors. Except as may otherwise be provided in the Articles of Incorporation or these Bylaws, the business and affairs of the corporation shall be managed by a Board of Directors. The Board of Directors shall consist of nine (9) members or such other number as may be specified in compliance with Article VII of the Articles of Incorporation. Commencing with the annual meeting of shareholders to be held in 1985, the Board of Directors shall be divided into three (3) classes as provided in Article VII of the Articles of Incorporation to be elected in accordance with that Article and Article III of the Articles of Incorporation. Directors shall serve until their respective terms expire and their successors are elected and qualified or until their earlier resignation or removal. Directors of the corporation need not be shareholders.

4.2 Resignation and Removal. A director may resign by written notice to the corporation, which resignation is effective upon its receipt by the corporation or at a subsequent time as set forth in the notice. Any director or the entire Board of Directors may be removed in the manner specified in Article VII of the Articles of Incorporation.

4.3 Vacancies and Increase in Number. Vacancies on the Board of Directors occurring for any reason, including an increase in the number of directors, may be filled in the manner specified in Article VII of the Articles of Incorporation. A director chosen to fill a vacancy occurring for any reason, including an increase in the number of directors, shall hold office until the next election of directors by the shareholder or until his or her earlier resignation or removal.

4.4 Place of Meetings and Records. The directors shall hold their meetings and maintain the minutes of the proceedings of meetings of shareholders, the Board of Directors, and committees of the Board of Directors, if any, and keep the books and records of account for the corporation in such place or places, within or outside the State of Michigan, as the Board of Directors may from time to time determine.

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4.5 Annual Meetings. The annual meeting of the Board of Directors shall be held, without notice other than this Section 4.5, at the same place and immediately after the annual shareholders meeting. If such meeting is not so held, whether because a quorum is not present or for any other reason, or if the directors were elected by written consent without a meeting, the annual meeting of the Board of Directors shall be called in the same manner as hereinafter provided for special meetings of the Board of Directors.

4.6 Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board. Any notice given of a regular meeting need not specify the business to be transacted or the purpose of the meeting.

4.7 Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the president or the secretary and shall be called by one of them on the written request of any five (5) directors, upon at least two (2) days written notice to each director, or twenty-four (24) hours notice, given personally or by telephone or telegram or facsimile or electronic mail. The notice does not need to specify the business to be transacted or the purpose of the special meeting. Attendance of a director at a special meeting constitutes a waiver of notice of the meeting, except where a director attends the meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.

4.8 Quorum and Vote. A majority of the members of the Board then in office constitutes a quorum for the transaction of business and the vote of a majority of the members present at any meeting at which a quorum is present constitutes the action of the Board of Directors, unless the vote of a larger number is specifically required by the Articles of Incorporation or these Bylaws. If a quorum is not present, the members present may adjourn the meeting from time to time and to another place, without notice other than announcement at the meeting, until a quorum is present.

4.9 Action Without a Meeting. Any action required or permitted to be taken pursuant to authorization voted at a meeting of the Board of Directors, or any committee thereof, may be taken without a meeting if, before or after the action, all members of the Board of Directors, or such committee, consent thereto in writing. The written consent shall be filed with the minutes of the proceedings of the Board of Directors or committee and the consent shall have the same effect as a vote of the Board of Directors or committee for all purposes.

4.10 Report to Shareholders. The Board of Directors shall cause a financial report of the corporation for the preceding fiscal year to be made and distributed to each shareholder within four months after the end of each fiscal year. The report shall include the corporation’s statement of income, its year-end balance sheet, and, if prepared by the corporation, its statement of source and application of funds.

4.11 Corporate Seal. The Board of Directors may authorize a suitable corporate seal, which seal shall be kept in the custody of the Secretary and used by the Secretary.

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4.12 Compensation of Directors. By resolution of the Board of Directors, the directors may be paid their expenses, if any, of attendance at meetings of the Board or of any committee of which they are a member. In addition thereto or in lieu thereof, as determined by resolution of the Board of Directors, a director may be paid a fixed sum for attendance at each meeting of the Board, or of a committee thereof, or may be paid a stated salary for serving as a director as well as an additional stated salary for serving on any committee of the Board.

4.13 Committees. The Board of Directors may, by resolution passed by a majority of the whole Board, designate an executive committee consisting of one or more of the directors of the corporation. At all meetings of the executive committee, a majority of the members of the committee shall constitute a quorum and the act of a majority of the members present at any executive committee meeting at which there is a quorum present shall be the act of the executive committee. The executive committee, to the extent provided in said resolution or in these Bylaws, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers which may require it. The Board may designate one or more other committees which shall have such powers and duties as may be determined by the Board. All committees shall keep regular minutes of their proceedings and report to the Board when required. No committee shall have the power or authority to amend the Articles of Incorporation, adopt an agreement of merger or consolidation, recommend to the shareholders the sale, lease, or exchange of all or substantially all of the corporation’s property and assets, recommend to the shareholders a dissolution of the corporation or a revocation of a dissolution, fill vacancies in the Board of Directors, fix compensation of the directors for serving on the Board or on a committee, amend these Bylaws, or declare a dividend or authorize the issuance of shares, unless the power to declare a dividend or to authorize the issuance of shares is granted to such committee by specific resolution of the Board of Directors.

4.14 Meeting Participation by Use of Communication Equipment. Members of the Board of Directors, or of any committee designated by the Board, may participate in a meeting of the Board or committee, as the case may be, by using a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this Section 4.14 shall constitute presence at the meeting.

ARTICLE VOFFICERS

5.1 Officers. The officers of the corporation shall be a president, a treasurer, and a secretary, all of whom shall be elected by the Board of Directors. In addition, the Board of Directors may elect a chairman and one or more vice presidents who shall also be officers of the corporation if elected. Each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. None of the officers of the corporation, other than the chairman, need be directors. The officers shall be elected at the first meeting of the Board of Directors after each annual shareholders meeting. Any two (2) or more offices may be held by the same person, but an officer shall not execute, acknowledge, or verify any instrument in more than

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one capacity if the instrument is required by law to be executed, acknowledged, or verified by two (2) or more officers.

5.2 Other Officers and Agents. The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. The Board may, by specific resolution, empower the chairman, the president, or the executive committee, if such a committee has been designated by the Board, to appoint such subordinate officers or agents and to determine their powers and duties.

5.3 Removal. The chairman, president, any vice president, secretary, and treasurer may be removed at any time, with or without cause, but only by the affirmative vote of a majority of the whole Board of Directors. Any assistant secretary or assistant treasurer, or subordinate officer or agent appointed pursuant to Section 5.2, may be removed at any time, with or without cause, by action of the Board of Directors or by the committee or officer, if any, empowered to appoint such assistant secretary or assistant treasurer or subordinate officer or agent.

5.4 Compensation of Officers. Compensation of officers for services rendered to the corporation shall be established by the Board of Directors.

5.5 Chairman. The Chairman of the Board of Directors, if one be elected, shall be elected by the directors from among the directors then serving. The Chairman of the Board, or his or her designee, shall preside at all meetings of the shareholders and at all meetings of the Board of Directors and shall perform such other duties as may be determined by resolution of the Board of Directors including, if the Board shall so determine, acting as the chief executive officer of the corporation, in which case the Chairman shall have general supervision, direction, and control of the business of the corporation and shall have the general powers and duties of management usually vested in or incident to the office of the chief executive officer of a corporation.

5.6 President. Unless the Board shall determine otherwise, the President shall be the chief executive officer as well as the chief operating officer of the corporation and shall have general supervision, direction, and control of the business of the corporation as well as the duty and responsibility to implement and accomplish the objectives of the corporation. In the absence or nonelection of a chairman, the president shall preside at all meetings of shareholders and at all meetings of the Board of Directors. The president shall perform such other duties as may be assigned by the Board of Directors.

5.7 Vice Presidents. The vice presidents, in the order of their seniority, unless otherwise determined by the Board of Directors, shall, in the event of the absence or disability of the president, perform the duties and exercise the powers of the president. Each vice president shall have such other power and shall perform such other duties as may be assigned by the Board of Directors or the chief executive officer and may be designated by such special titles as the Board of Directors or the chief executive officer shall approve.

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5.8 Treasurer. The treasurer shall have custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the corporation. The treasurer shall deposit all money and other valuables in the name and to the credit of the corporation in such depositories as may be selected by the Board of Directors. The treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, or the chief executive officer, taking proper vouchers for such disbursements. In general, the treasurer shall perform all duties incident to the office of treasurer and such other duties as may be assigned by the Board of Directors.

5.9 Secretary. The Secretary shall give or cause to be given notice of all meetings of shareholders and directors and all other notices required by law or by these Bylaws; provided, however, that in the case of the Secretary’s absence, or refusal or neglect to do so, any such notice may be given by any person so directed by the Chief Executive Officer or by the directors, or by the shareholders upon whose requisition the meeting is called, as provided in these Bylaws. If the Board has not appointed a Secretary to the Board, the Secretary shall record all the proceedings of meetings of shareholders and of the directors in one or more books provided for the purpose. The Secretary shall perform all other duties incident to the office of Secretary and such other duties as may be assigned by the Board of Directors.

5.10 Assistant Treasurers and Assistant Secretaries. Assistant treasurers and assistant secretaries, if any shall be appointed, shall have such powers and shall perform such duties as shall be assigned to them by the Board of Directors or by the officer or committee who shall have appointed such assistant treasurer or assistant secretary.

5.11 Bonds. If the Board of Directors shall require, the treasurer, any assistant treasurer, or any other officer or agent of the corporation shall give bond to the corporation in such amount and with such surety as the Board of Directors may deem sufficient, conditioned upon the faithful performance of his or her respective duties and offices.

5.12 Secretary to the Board. The Board of Directors may also appoint a Secretary to the Board of Directors who shall not be an executive officer of the Corporation. The Secretary to the Board, if one is appointed, shall record all the proceedings of the meetings of the shareholders and of the directors in one or more books provided for that purpose. The Secretary to the Board shall also attend, and record the proceedings of, such meetings of Committees of the Board as may be requested, on a meeting by meeting basis, by the Chairman of the Board, the President or the Chair of the Committee.

ARTICLE VI CONTRACTS, LOANS, CHECKS, AND DEPOSITS

6.1 Contracts. The Board of Directors may authorize any officer, or officers, or agent, or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation and such authority may be general or confined to specific instances.

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6.2 Loans. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name, unless authorized by a resolution of the Board of Directors. Such authorization may be general or confined to specific instances.

6.3 Checks. All checks, drafts, or other orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer, or officers, or agent, or agents, of the corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors.

6.4 Deposits. All funds of the corporation, not otherwise employed, shall be deposited to the credit of the corporation in such banks, trust companies, or other depositories as the Board of Directors may select.

ARTICLE VII MISCELLANEOUS

7.1 Fiscal Year. The fiscal year of this corporation shall end on the Saturday nearest June 30 of each year.

7.2 Notices. Whenever any written notice is required to be given under the provisions of any law, the Articles of Incorporation, or by these Bylaws, it shall not be construed or interpreted to mean personal notice, unless expressly so stated, and any notice so required shall be deemed to be sufficient if given in writing by mail, by depositing the same in a Post Office box, postage prepaid, addressed to the person entitled thereto at his or her address as it appears in the records of the corporation. Such notice shall be deemed to have been given at the time and on the day of such mailing. Shareholders not entitled to vote shall not be entitled to receive notice of any meetings, except as otherwise provided by law or these Bylaws.

7.3 Waiver of Notice. Whenever any notice is required to be given under the provisions of any law, the Articles of Incorporation, or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

7.4 Voting of Securities. Securities of another corporation, foreign or domestic, standing in the name of this corporation, which are entitled to vote may be voted, in person or by proxy, by the chairman or the president of this corporation or by such other or additional persons as may be designated by the Board of Directors.

7.5 Compensation Repayment. If the compensation paid to any officer of the corporation for any fiscal year is challenged by the Internal Revenue Service as excessive so as to call into question the corporation’s deduction of such compensation for federal income tax purposes and, if such challenge is resolved, either by compromise or litigation, in a manner which disallows the deduction, or any part thereof, then such officer shall repay said compensation to the corporation to the extent the corporation’s deduction therefor has been disallowed.

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ARTICLE VIII AMENDMENTS

These Bylaws may be amended or repealed or new Bylaws adopted by a majority vote of the Board of Directors at any regular or special meeting, without prior notice of intent to do so, or by vote of the holders of a majority of the outstanding voting shares of the corporation at any annual or special meeting if notice of the proposed amendment, repeal, or adoption is contained in the notice of the meeting.

These are the Amended and Restated Bylaws of Knape & Vogt Manufacturing Company as in effect October 15, 2004.

/s/ Robert J. Knape ——————————————————— Robert J. Knape, Secretary

EXHIBIT 31.1

I, William R. Dutmers, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Knape & Vogt Manufacturing Company;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting;

~~Dated~~Date: ~~October~~January 1831, ~~2004~~2005 ~~/s/ William R. Dutmers William R. Dutmers Chairman of the Board and Chief Executive Officer~~

/s/ William R. Dutmers
William R. Dutmers
Chairman of the Board and Chief Executive Officer

EXHIBIT 31.2

I, Leslie J. Cummings, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Knape & Vogt Manufacturing Company;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

(a)

(b)

(c)

5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting;

~~Dated~~Date: ~~October~~January 1831, ~~2004~~2005 ~~/s/ Leslie J. CummingsLeslie J. CummingsVice President of Finance andTreasurer~~

/s/ Leslie J. Cummings
Leslie J. Cummings
Vice President of Finance and Treasurer

EXHIBIT 32.1

I, William R. Dutmers, Chairman of the Board and Chief Executive Officer of Knape & Vogt Manufacturing Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Quarterly Report on Form 10-Q for the three months ended ~~October~~January 21, ~~2004~~2005 which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Act of 1934, and

(2) the information contained in the Quarterly Report on Form 10-Q for the three months ended ~~October~~January 21, ~~2004~~2005 fairly presents, in all material respects, the financial condition and results of operations of Knape & Vogt Manufacturing Company.

Dated: ~~October~~January 1831, ~~2004~~2005 /s/ William R. Dutmers William R. Dutmers Chairman of the Board and Chief Executive Officer

EXHIBIT 32.2

I, Leslie J. Cummings, Vice President of Finance and Treasurer of Knape & Vogt Manufacturing Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(31) the Quarterly Report on Form 10-Q for the three months ended ~~October~~January 21, ~~2004~~2005 which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Act of 1934, and

(42) the information contained in the Quarterly Report on Form 10-Q for the three months ended ~~October~~January 21, ~~2004~~2005 fairly presents, in all material respects, the financial condition and results of operations of Knape & Vogt Manufacturing Company.

Dated: ~~October~~January 1831, ~~2004~~2005 /s/ Leslie J. ~~CummingsLeslie~~Cummings Leslie J. ~~CummingsVice~~Cummings Vice President of Finance ~~andTreasurer~~and Treasurer

UNITED STATESSTATESSECURITIES SECURITIES AND EXCHANGE COMMISSION

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

INDEX

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES PART I. FINANCIAL INFORMATIONINFORMATIONCONDENSED CONDENSED CONSOLIDATED BALANCE SHEETS

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

SeeKNAPE accompanying& notes.VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

Note 1 – Summary of Significant Accounting Policies

Revenue Recognition

Stock Based Compensation

Reclassifications

Note 2 – New Accounting Standards

Note 3 – Derivative Instrument

Note 4 — Common Stock and Per Share Information

Note 5 — Inventories

7Note 6 – Impairment Expenses

ComprehensiveNote income7 represents– netWarranty income and other revenues, expenses, gains and losses that are excluded from net income and recognized directly as a component of stockholders’ equity. Disclosure

OtherNote comprehensive8 income— (loss) relatedComprehensive to the interest rate swap agreement consisted of the following components: Income

ForNote the9 three— months ended:Retirement Plans

Note 9 – Segment Information

Note 11 – Legal Contingencies

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Net Sales

Gross Profit

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

Operating Expenses

Impairment Expenses

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

Interest and Other Expenses, net

Income Taxes

Net Income (Loss)

Liquidity and Capital Resources

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Legal Proceedings

New Accounting Standards

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Critical Accounting Policies

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES CONTROLS AND PROCEDURES

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

PART II. OTHER INFORMATION

SIGNATURES

EXHIBIT 31.1

EXHIBIT 31.2

EXHIBIT 32.1

EXHIBIT 32.2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK

KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES
CONTROLS AND PROCEDURES

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