SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K

(Mark One)
[X]  Annual  report  pursuant  to section 13 or 15(d) of the  Securities
     Exchange  Act of 1934 for the fiscal  year  ended June 30,  1998 
     or 
[ ]  Transition  report  pursuant  to section 13 or 15(d) of the  Securities
     Exchange Act of 1934 for the transition period from ________ to _________

Commission file number 2-18868

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

        Michigan                                        38-0722920
(State or other jurisdiction of 
incorporation or organization)             (I.R.S. Employer Identification No.)

             2700 Oak Industrial Drive, N.E., Grand Rapids, MI 49505
               (Address of principal executive offices) (Zip Code)

                                 (616) 459-3311
              (Registrant's telephone number, including area code)

               Securities registered pursuant to 12(b) of the Act:

        Title of each class          Name of each exchange on which registered

               None                                   None

           Securities Registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $2.00 per share
                                (Title of class)

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 if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The  aggregate  market  value  of  voting  stock  held by  nonaffiliates  of the
registrant was $104,763,139 as of August 28, 1998.

Number of shares  outstanding  of each  class of common  stock as of August  28,
1998: 3,523,375 shares of Common Stock, par value $2.00 per share, and 2,427,727
shares of Class B Common Stock, par value $2.00 per share.

Documents incorporated by reference.  Certain portions of the Registrant's Proxy
Statement for the Annual Meeting of Shareholders to be held on October 16, 1998,
are incorporated by reference into Part III of this Report.
<PAGE>
                                     PART I
                                ITEM 1--BUSINESS

Item 1(a)--General Development of Business

     The Company is engaged primarily in the design, manufacture,  and marketing
of storage products, which serve the consumer,  contract builder,  hardware, and
original  equipment  manufacturer  markets.  The  Company  was  incorporated  in
Michigan in 1906,  reorganized in Delaware in 1961, and  reorganized in Michigan
in 1985. The Company's main plant and corporate  offices are located at 2700 Oak
Industrial Drive,  N.E., Grand Rapids,  Michigan 49505, and its telephone number
is (616) 459-3311.  Unless otherwise noted or indicated by the context, the term
"Company" includes Knape & Vogt Manufacturing  Company, its predecessors and its
subsidiaries.

    The following significant events occurred in fiscal 1998:

     On March 27, 1998,  the Company  completed  the sale of Roll-it,  which was
     accounted for as a discontinued operation.

     In May of 1998 the  Company  sold  its  Knape & Vogt  Canada  manufacturing
     facility  and  equipment  in  the  Toronto  area  as  part  of  a  plan  of
     reorganization of its Canadian operation. The Company will continue to sell
     and  distribute  its  products in Canada and maintain a sales office in the
     Toronto area.


     The following significant events occurred subsequent to June 30, 1998:

     On August 31, 1998, the Company entered into a definitive agreement to sell
     The  Hirsh  Company,   a  wholly  owned  subsidiary,   which   manufactures
     free-standing shelving, wood storage products and workshop accessories.

     On  September 1, 1998,  the Company  announced  its Board of Directors  had
approved a new financial strategy which includes authorization to purchase up to
1.35 million shares of the Company's common stock,  including 1.2 million shares
pursuant  to a "Dutch  Auction"  self-tender  offer.  Also  included  in the new
financial  strategy  was  approval  by the Board of  Directors  of a post  Dutch
Auction purchase in the open market or in privately  negotiated  transactions of
common  stock in an amount  which  when  added to the number of shares of common
stock purchased in the Dutch Auction would equal 1,350,000.

Item 1(b)--Financial Information About Industry Segments

     The Company  believes that a dominant  portion of the Company's  operations
(more than 95%) is in a single industry segment -- the design, manufacture,  and
marketing  of  storage  products.  Accordingly,  no  separate  industry  segment
information is presented.

Item 1(c)--Narrative Description of Business

     Products,  Services,  Markets,  and Methods of Distribution.  The Company's
storage  products  include a  complete  line of  decorative  and  utility  wall-
attached  shelving  systems.  Drawer slides  manufactured by the Company include
precision,  Euro-style  and utility  slides.  Precision  drawer  slides use ball
bearings,  and  Euro-style  and utility  drawer slides use rollers.  The Company
manufactures  many  different  hardware  products  such as closet rods,  kitchen
storage products and various fixtures.

     Approximately  44% of the Company's  sales were to the consumer  market and
56%  of the  Company's  sales  were  to  original  equipment  manufacturers  and
specialty distributors.

                                       2
<PAGE>
     While the  Company  does not  maintain  precise  sales  records  by product
category,  management believes that the approximate sales of the Company's major
product groups during the last three fiscal years were as follows:

<TABLE>
                                                                  Year Ended June 30
    Class of Products                                      1998          1997            1996
                                                                (dollars in millions)
                                                         Sales         Sales            Sales
          <S>                                          <C>             <C>             <C>
          Shelving Systems                             $ 83.0          $ 82.0          $ 79.5
          Drawer Slides                                  69.8            62.3            52.4
          Hardware                                       28.8            29.3            28.1
          Furniture Components                            0.0             3.0             3.0
                                                       ------          ------          ------
          Total                                        $181.6          $176.6          $163.0
                                                        =====           =====           =====
</TABLE>
     New Product and Capital  Spending  Information.  Capital spending in fiscal
1999  should  remain at  approximately  the same level as in fiscal  1998,  when
capital spending was $4.2 million.

     Sources and  Availability of Raw Materials.  Most of the Company's  storage
products are produced primarily from steel or wood. During the past fiscal year,
the Company experienced no difficulty in obtaining these raw materials.

     Patents,  Licenses,  Etc. Patents,  trademarks,  licenses,  franchises,  or
concessions do not play an important part in the Company's business.

     Seasonal Nature of Business. The business of the Company is not seasonal.

     Working  Capital  Practices.  The Company  does not believe that it, or the
industry in general,  has any special practices or special conditions  affecting
working capital items that are significant for an understanding of the Company's
business.

     Importance of Limited  Number of Customers.  The Company  estimates that at
present it has over 1,400 active customers with approximately 35,000 outlets, of
which the five largest  customers  account for less than 15% of sales and no one
of which  accounts for more than 6% of sales.  The Company does not believe that
its business is dependent upon any single or small number of customers, the loss
of which would have a materially adverse effect upon the Company.

     Backlog of Orders. The Company does not believe that information concerning
backlog is material to an understanding of its business.

     Government Contracts.  The Company does not believe that any portion of its
business is subject to  renegotiation  of profits or termination of contracts or
subcontracts at the election of the government. 

     Competition.  All  aspects of the  business in which the Company is engaged
are highly competitive. Competition is based upon price, service and quality. In
the  various  markets  served  by the  Company,  it  competes  with a number  of
manufacturers  that have  significantly  greater resources and sales,  including
several conglomerate  corporations,  and with numerous smaller companies.  While
the Company is not aware of any reliable statistics that are available to enable
the Company to  accurately  determine  its  relative  position in the  industry,
either overall or with respect to any particular  product or market, the Company
believes  that  it is one of the  three  leading  manufacturers  of its  type of
shelving  systems  in  North  America  and that it is one of the  three  leading
manufacturers of drawer slides in North America.

     Research,  Design and  Development.  Approximately  $1,225,000 was spent in
fiscal  1998  in the  development  of new  products  and in the  improvement  of
existing  products;  approximately  $1,373,000  was  spent  in  fiscal  1997 and
$1,223,000  in fiscal 1996 for the same  purposes.  The amount of  research  and
development expenditures are determined by specific identification of the costs,
which are expensed as incurred.

     Environmental   Matters.   The  Company  does  not  believe  that  existing
environmental  regulations  will  have any  material  effect  upon  the  capital
expenditures, earnings, and competitive position of the Company.

                                       3
<PAGE>
     Employees.  At June  30,  1998,  the  Company  employed  approximately  950
persons.   None  of  the  Company's  employees  are  represented  by  collective
bargaining  agents except the hourly  employees at The Hirsch  Company,  who are
represented  by  the  International   Association  of  Bridge,   Structural  and
Ornamental Iron Workers.

Item 1(d)--Information About Foreign Operations

     The  Company's  Canadian  operation   accounted  for  approximately  8%  of
consolidated sales. Approximately 5% of consolidated net sales were derived from
export  shipments  from the Company's  United States  operations to customers in
other  foreign  countries.  The Company  does not know of any  particular  risks
attendant  thereto,  except that  fluctuating  exchange rates between the United
States and  Canadian  currencies  and other  factors  beyond the  control of the
Company, such as tariff and foreign economic policies, may affect future results
of  such  business.  Reference  is made to  Notes  2 and 3 of the  Notes  to the
Company's Consolidated Financial Statements contained herein for the fiscal year
ended June 30, 1998, for a presentation of additional information concerning the
Company's foreign operations.

                               ITEM 2--PROPERTIES

     The  Company  owned or  leased  the  following  offices  and  manufacturing
facilities as of June 30, 1998:
<TABLE>
        Location                   Description                                       Interest
<S>                          <C>                                                     <C>
Grand Rapids, Michigan       Executive offices and manufacturing facilities;         Owned
                             444,000 sq. ft. on 41 acres.

Sparks, Nevada               Warehouse; 76,000 sq. ft.                               Leased

Skokie, Illinois             Manufacturing facility and offices;                     Leased
                             298,000 sq. ft. on 12 acres.

Muncie, Indiana              Manufacturing facilities and office;                    Owned
                             98,000 sq. ft. on 12 acres.

Muncie, Indiana              Warehouse; 5,000 sq. ft.                                Leased


Mississauga, Ontario         Office; 1,900 sq. ft.                                   Leased
</TABLE>

The  facilities  indicated are owned in fee by the Company and are subject to no
material  encumbrances.  The Company  believes that its facilities are generally
adequate for its operations  and are  maintained in a state of good repair.  The
Company  believes it is in compliance with all applicable  state and federal air
and water pollution control laws. During the five years ended June 30, 1998, the
Company  spent  approximately  $28,000,000  for  expansion,   modernization  and
improvements of its facilities and equipment.

                            ITEM 3--LEGAL PROCEEDINGS

     As  of  the  date  hereof,  the  Company  has  no  material  pending  legal
proceedings other than ordinary routine  litigation  incidental to the Company's
business.

                                       4
<PAGE>
           ITEM 4--SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were  submitted to a vote of security  holders during the fourth
quarter of the fiscal year ended June 30, 1998.

              ADDITIONAL ITEM--EXECUTIVE OFFICERS OF THE REGISTRANT

     The executive officers of the Company were, at June 30, 1998, as follows:
<TABLE>
                                                                                       Year First Elected
    Name                        Age           Positions and Offices Held               an Executive Officer
<S>                             <C>           <C>                                             <C>
William R. Dutmers              41            Chairman of the Board of Directors              1998

Allan E. Perry                  58            Director, President and Chief                   1978
                                              Executive Officer

Richard C. Simkins              55            Director, Executive V.P., C.F.O.,               1985
                                              Secretary and Treasurer

Michael G. Van Rooy             45            Vice President - Manufacturing                  1994

John W. Vogus                   36            Vice President - Sales & Marketing              1997

Carman D. Hepburn               50            Vice President - Sales and Marketing            1985
                                              of Knape & Vogt Canada
</TABLE>
     Mr.  Dutmers was named  Chairman of the Board of Directors in January 1998.
Mr. Dutmers has been a member of the Board of Directors since April 1996.

     Mr. Perry was named  President and Chief  Executive  Officer in April 1996.
Mr. Perry joined the Company in 1978 as General  Manager of Modar,  Inc. and has
held a variety of senior level management positions.

     Mr. Simkins was named  Executive  Vice President and C.F.O.  in April 1996.
Mr.  Simkins has been  Secretary  of the Company  since July 1992 and  Treasurer
since  October  1987.  Mr.  Simkins  joined the  Company in 1970 in the  finance
department and has held a variety of management positions.

     Mr. Van Rooy has been the Vice  President -  Manufacturing  since  December
1993. Mr. Van Rooy joined the Company in 1985 in the engineering  department and
has held a variety of management positions.

     Mr. Vogus was named Vice  President - Sales and  Marketing in June of 1997.
Mr. Vogus joined the Company in March 1993 as Director of Marketing.

     Mr.  Hepburn has been Vice  President - Sales and Marketing at Knape & Vogt
Canada since  November  1985.  Mr. Hepburn joined the Company in May 1969 in the
sales department and has held a variety of management positions.

     All terms of office are on an annual  basis and will  expire on October 16,
1998.

                                       5
<PAGE>
                                     PART II

            ITEM 5--MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
                COMMON STOCK AND RELATED SECURITY HOLDER MATTERS

     Market Price.  The Company's  Common Stock is traded on the NASDAQ National
Market under the ticker  symbol  KNAP.  Stock price  quotations  can be found in
major daily  newspapers  (listed  KnapeV) and in the Wall Street Journal (listed
KnapeVogt).  As of August 28, 1998, there were approximately  3,300 shareholders
of the Company's Common Stock and Class B Common Stock. 

<TABLE>
                              1998 Bid Price                           1997 Bid Price
                  ---------------------------------------- ----------------------------------------
Quarter                  High                 Low                 High                  Low
----------------  ------------------- -------------------- -------------------  -------------------
<S>                     <C>                  <C>                 <C>                  <C>
First                   $18.50               $15.88              $16.88               $12.25
Second                  $22.75               $18.50              $17.63               $14.25
Third                   $23.00               $20.00              $18.50               $15.50
Fourth                  $24.75               $21.25              $17.00               $14.75
</TABLE>

     Dividends.  The Company  paid cash  dividends on its shares of Common Stock
and Class B Common  Stock in the  following  amounts  during the last two fiscal
years.
<TABLE>
                                                                          Per Share Cash Dividends
Year Ended June 30, 1998                                        Common Stock                Class B Common Stock
------------------------                                        ------------                --------------------
<S>                                                                <C>                              <C>
First Quarter                                                      $.165                            $.15
Second Quarter                                                     $.165                            $.15
Third Quarter                                                      $.165                            $.15
Fourth Quarter                                                     $.165                            $.15
</TABLE>

<TABLE>
                                                                          Per Share Cash Dividends
Year Ended June 30, 1997                                        Common Stock                Class B Common Stock
------------------------                                        ------------                --------------------
<S>                                                                 <C>                             <C>
First Quarter                                                       $.165                           $.15
Second Quarter                                                      $.165                           $.15
Third Quarter                                                       $.165                           $.15
Fourth Quarter                                                      $.165                           $.15
</TABLE>


     On August 14, 1998, the Board of Directors  declared a $.165 per share cash
dividend  on  shares of the  Company's  Common  Stock  and $.15 per  share  cash
dividend on shares of its Class B Common  Stock,  payable  September 4, 1998, to
shareholders  of record on August 25, 1998.  On  September 1, 1998,  the Company
announced its Board of Directors had approved a new financial strategy.  Part of
the  new  financial  strategy  included  the  substitution  of  quarterly  stock
dividends for cash dividends beginning with the fiscal 1999 second quarter.

                                       6
<PAGE>
                         ITEM 6--SELECTED FINANCIAL DATA
<TABLE>
For the Year Ended                                              1998           1997            1996          1995           1994
                                                                (a)             (b)             (c)
<S>                                                         <C>            <C>            <C>            <C>            <C>
Net sales...................................................$181,632,570   $176,630,294   $163,012,030   $168,190,969   $145,504,536
Cost of sales............................................... 139,332,670    133,081,765    124,408,648    127,296,470    107,701,337
Operating expenses (excluding interest expense).............  45,513,688     28,972,779     31,211,332     26,983,142     25,043,151
Interest expense............................................   1,224,394      1,986,522      2,253,992      2,471,652      1,426,328
Income (loss) from continuing operations before taxes.......  (4,438,182)    12,589,228      5,138,058     11,439,705     11,333,720
Income taxes................................................   3,931,000      4,264,000      2,035,000      3,849,000      4,020,000
Income (loss) from continuing operations....................  (8,369,182)     8,325,228      3,103,058      7,590,705      7,313,720
Income (loss) from discontinued operation...................  (1,368,278)      (471,624)    (3,037,926)       654,433        842,556
Net income (loss) ..........................................  (9,737,460)     7,853,604         65,132      8,245,138      8,156,276
Basic earnings per share from continuing operations.........       (1.41)          1.41           0.53           1.29           1.24
Basic earnings per share from discontinued operation........       (0.23)         (0.08)         (0.52)          0.11           0.15
Basic earnings per share....................................       (1.64)          1.33           0.01           1.40           1.39
Diluted earnings per share from continuing operations.......       (1.41)          1.41           0.53           1.29           1.24
Diluted earnings per share from discontinued operation......       (0.23)         (0.08)         (0.52)          0.11           0.14
Diluted earnings per share..................................       (1.64)          1.33           0.01           1.40           1.38
Dividends paid..............................................   3,760,383      3,738,138      3,727,321      3,722,814      3,373,493
Dividend payout, percent of income from continuing operations       (45%)           45%           120%            49%            46%
Dividends per share--common.................................        0.66           0.66           0.66           0.66           0.60
Dividends per share--Class B common ........................        0.60           0.60           0.60           0.60          0.545
Percentage of pre-tax income from continuing operations 
  to sales                                                         (2.4%)          7.1%           3.2%           6.8%           7.8%
Capital expenditures........................................   4,228,552      7,763,482      8,032,779      4,181,472      3,837,249
Depreciation................................................  $6,604,799     $6,542,750     $6,190,031     $5,876,391     $5,250,453



At Year-End

Working capital............................................. $38,276,167    $39,266,034    $39,535,991    $45,796,753    $39,572,003
Ratio of current assets to current liabilities..............         2.5            4.2            4.0            5.8            3.4
Net property and equipment..................................  36,654,720     48,586,802     50,381,608     48,698,785     50,395,355
Total assets................................................ 104,033,087    125,741,698    129,225,159    131,433,714    133,655,919
Total debt..................................................   9,700,000     29,000,000     35,000,000     35,800,000     40,000,000
Debt to equity, percent.....................................         16%            39%            51%            49%            59%
Stockholders' equity........................................  61,756,674     73,460,498     69,173,750     72,713,836     67,973,890
Weighted average shares outstanding - basic.................   5,920,380      5,889,420      5,881,069      5,879,914      5,872,160
Weighted average shares outstanding - diluted...............   5,954,713      5,903,237      5,897,141      5,893,651      5,896,164
Stockholders' equity per share - basic......................      $10.43         $12.47         $11.76         $12.37         $11.58
Stockholders' equity per share - diluted....................      $10.37         $12.44          11.73          12.34          11.53
Number of employees.........................................         944          1,061          1,084          1,136          1,137
</TABLE>

(a)  1998 figures include 1) an adjustment to the inventory obsolescence reserve
     of $910,000  recorded in cost of sales; 2) a  restructuring  charge for the
     reorganization of KV Canada of $3,992,276  recorded in operating  expenses,
     and an  income  tax  benefit  of  $600,000,  for  an  after-tax  effect  of
     $3,392,276,  or $0.57 per basic and diluted share; 3) an impairment  charge
     for the sale of Hirsh of $11,800,000 recorded in operating expenses, and an
     income tax expense of $1,000,000,  for an after-tax  effect of $12,800,000,
     or $2.16 per basic and  diluted  share;  4) a  $448,284  write-off  of idle
     equipment;  and 4) an  after-tax  charge of $937,268 or $0.16 per basic and
     diluted share to record the sale of Roll-it, a discontinued operation.

(b)  1997 figures include an after-tax charge of $246,235 or $0.04 per basic and
     diluted share to record the March 1997 sale of Modar.

(c)  1996 figures include an inventory  liquidation of $863,000 recorded in cost
     of sales,  a  restructuring  charge of  $3,496,000  recorded  in  operating
     expenses, and an income tax benefit of $1,534,000,  for an after-tax effect
     of $2,825,000,  or $0.48 per basic and diluted share. The 1996 figures also
     include an after-tax  charge of $2,700,000 to recognize the estimated  loss
     on the sale of Roll-it, the Company's discontinued store fixture operation.

                                       7
<PAGE>
       ITEM 7--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

     The following discussion and analysis provides information which management
believes  is  relevant  to an  assessment  and  understanding  of the  Company's
financial condition and results of operations.  The discussion should be read in
conjunction with the consolidated financial statements and footnotes.

Results of Operations

     The table below sets forth certain items in the Consolidated  Statements of
Operations from continuing operations as a percentage of net sales:
<TABLE>

Year ended June 30,                                  1998                 1997                1996
--------------------------------------------  ------------------  ------------------- -------------------
<S>                                                 <C>                  <C>                 <C>
Net sales...................................        100.0%               100.0%              100.0%
Cost of sales...............................         76.7                 75.3                76.3
                                              ------------------  ------------------- -------------------
  Gross profit..............................         23.3                 24.7                23.7
Selling and administrative expenses.........         16.1                 16.1                16.8
Restructuring and impairment of assets......          8.7                   .3                 2.1
                                              ------------------  ------------------- -------------------
  Operating income (loss)...................         (1.5)                 8.3                 4.8
Interest expense............................           .6                  1.1                 1.4
Other expense...............................           .3                   .1                  .2
                                              ------------------  ------------------- -------------------
  Income (loss) from continuing operations
   before income taxes......................         (2.4)                 7.1                 3.2
Income taxes - continuing operations........          2.2                  2.4                 1.3
                                              ------------------  ------------------- -------------------
  Income (Loss)from continuing operations...        (4.6)%                 4.7%                1.9%
--------------------------------------------  ------------------  ------------------- -------------------
</TABLE>
Fiscal 1998 compared with fiscal 1997

     Net sales in fiscal 1998 increased $5.0 million to a record $181.6 million,
or 2.8%, over fiscal 1997 sales of $176.6 million. The increase in sales was due
primarily to an increase in unit  volumes.  Drawer slide sales led this increase
with a $7.5 million improvement.  The increase was due to precision drawer slide
sales  continuing  their rapid growth and the  expansion  of shipments  into the
metal office furniture market. Euro-style drawer slide sales increases in fiscal
1998 were offset by a decline in sales of utility slides. Drawer slide sales are
expected to continue to increase in fiscal 1999 due to  increases  in demand for
precision drawer slides and further  penetration into the metal office furniture
market.  Shelving  system  sales  increased  by $1.0 million due to increases in
sales of  wall-attached  shelving.  The Company  anticipates that sales from the
wall-attached shelving portion of the shelving system product line will continue
to grow in fiscal  1999.  The  free-standing  shelving  portion of the  shelving
system product line will be  discontinued  in fiscal 1999 with the sale of Hirsh
(discussed below).  Hardware sales declined $0.5 million in fiscal 1998 compared
to fiscal 1997.  Feeny's continued increase in the sales of its kitchen and bath
storage products were offset by a decrease in the Hirsh Iron Horse product line.
The  decrease in sales of the Iron Horse  product line was caused by a reduction
in  promotions of the product line at major home  centers.  Hardware  sales will
decline in fiscal 1999 with the discontinuance of the Iron Horse line due to the
sale of  Hirsh.  The  Company  anticipates  that  sales of Feeny  products  will
increase in fiscal 1999.  Furniture  component  sales declined $3.0 million.  No
sales were recorded in fiscal 1998 due to the elimination of the product line in
fiscal  1997  with the sale of Modar  Inc.  Hirsh  sales  in  fiscal  1998  were
approximately  $38 million with about 90% of these sales in the shelving  system
product group and 10% in the hardware product group.

     Gross  profit as a  percentage  of net  sales  was  23.3% in  fiscal  1998,
compared  to 24.7% in  fiscal  1997.  Gross  profit in fiscal  1998  included  a
$910,000 unfavorable adjustment to the inventory  obsolescence reserve.  Without
this charge, gross profit as a percentage of net sales would have been 23.8 % in
fiscal  1998.  The  decrease  in  margin  is  attributable  to 1) the  Company's
continued investments in manufacturing and sales to aggressively enter the metal
office  furniture  market;  2)  transition  costs that cannot be  classified  as
restructuring  related to the reorganization of the Company's Canadian operation
near Toronto, and 3) continued softness in the Canadian dollar.

     Selling  and  administrative  expenses  as a percent of sales were 16.1% in
both fiscal 1998 and fiscal 1997.

     A pre-tax  restructuring  charge of  $3,992,276  was  recorded in the third
quarter of fiscal  1998 for Knape & Vogt  Canada.  In March  1998,  Knape & Vogt
announced its plans to reorganize its Canadian operation,  including the sale of
the Company's manufacturing facility and equipment in the Toronto area. The sale
was completed in May of 1998.  The Company will continue to sell and

                                       8
<PAGE>
distribute  its  products in Canada and  maintain a sales  office in the Toronto
area. The Company  signed a definitive  agreement to sell substantially  all the
assets of The Hirsh  Company,  a wholly  owned  subsidiary  of Knape & Vogt,  on
August 31, 1998. At June 30, 1998,  the carrying value of the net assets subject
to the sale were reduced to fair value based on the estimated selling price less
costs to sell.  This  resulted  in a  pre-tax  impairment  of  assets  charge of
$11,800,000.  The sale of Hirsh  reflects  the  Company's  desire to enhance its
corporate margins and profitability and remain focused on its core drawer slide,
kitchen and bath storage and  wall-attached  shelving  products.  During  fiscal
1997,  the sale of Modar was  completed  and resulted in an  additional  pre-tax
restructuring  and impairment of assets charge of $373,235 which  represents the
difference between the original estimate and the actual loss from the sale.

     Total  other  expenses  in fiscal 1998  decreased  by $356,318  compared to
fiscal 1997. Interest expense declined 38% or $762,000, reflecting the Company's
continued   dedication  to  improving  cash  flow  using  Economic  Value  Added
principles.  The decrease in interest expense was offset by a $448,284 write-off
of idle equipment.

     See Note 9 to the consolidated  financial  statements for an explanation of
the effective income tax rate.

     Income (loss) from continuing operations in fiscal 1998 was ($8.4) million,
or ($1.41) per diluted  share,  compared to $8.3  million,  or $1.41 per diluted
share in fiscal 1997.  Without the $12.8 million after-tax charge for impairment
of assets of  Hirsh,  the $3.4  million  restructuring  charge  for Knape & Vogt
Canada,  the $0.6 million after-tax  adjustment to the inventory reserve and the
$0.2 adjustment due to the write-off of idle  equipment,  income from continuing
operations  would have been $8.6  million or $1.45 per  diluted  share in fiscal
1998. This is compared with $8.6 million,  or $1.45 per diluted share, in fiscal
1997 without the restructuring charge pertaining to the sale of Modar.

     Net of the 1998  restructuring,  impairment  of assets  and other  one-time
charges,  the  Company  expects  fiscal 1999 to  generate  improved  income from
continuing  operations over fiscal 1998.  However,  the Company anticipates that
the  operating  profit for the first  quarter  of fiscal  1999 will be less than
operating profit for the first quarter of fiscal 1998, with other income causing
net earnings for the first  quarter of fiscal 1999 to be only slightly less than
the net earnings for the first quarter of fiscal 1998. The Company  expects that
most of its profit  improvement  will be  generated in the second half of fiscal
1999 as the Company further  increases its sales of precision  drawer slides and
receives  the  benefit  from  the  implementation  of the  Company's  new  KVOPS
"Operation  Improvement Program." At the cornerstone of KVOPS is Continuous Flow
Manufacturing,  which is designed to make the Company the low-cost producer, the
best service provider and the quality leader.

     The results of operations of Roll-it, net of income taxes, are presented as
a discontinued  operation.  In fiscal 1998, the after-tax loss from discontinued
operation was $1.4 million compared to $0.5 million in fiscal 1997. On March 27,
1998,  the Company  signed an  agreement to sell  Roll-it  which  resulted in an
additional  loss of $1.0 million,  which  represents the difference  between the
original estimate and the actual loss from the sale of Roll-it.

Fiscal 1997 compared with fiscal 1996

     Net  sales in  fiscal  1997  increased  $13.6  million  to a record  $176.6
million,  or 8.4%,  over fiscal 1996 sales of $163.0  million.  The  increase in
sales was due primarily to an increase in unit  volumes.  Drawer slide sales led
this increase with a $9.9 million improvement. The majority of this increase was
due to precision drawer slide sales  continuing  their rapid growth.  Euro-style
and utility  slide sales were also improved  over fiscal 1996.  Shelving  system
sales  increased by $2.5 million  primarily due to an increase in  wall-attached
shelving.   The  increase  in   wall-attached   shelving   sales  was  primarily
attributable  to the  addition  of two  significant  customers  in the middle of
fiscal 1997. Hardware sales increased in fiscal 1997 by $1.2 million over fiscal
1996 levels led by the Feeny kitchen and bath product line.  There was no change
in furniture  component  sales in fiscal 1997, and with the sale of Modar,  this
product line has been eliminated.

     Gross  profit as a  percentage  of net  sales  was  24.7% in  fiscal  1997,
compared  to 23.7% in fiscal  1996.  Gross  profit in fiscal  1996  included  an
$863,000   charge  for   liquidation  of   inventories   to  create   additional
manufacturing  and  warehousing  space.  Without this charge,  gross profit as a
percentage of net sales would have been 24.2 % in fiscal 1996.  The  improvement
in gross  profit  during  fiscal  1997 was due to  successful  cost  containment
efforts and higher sales levels which absorbed fixed overhead costs.

     Selling and  administrative  expenses in fiscal 1997  decreased to 16.1% of
net sales from 16.8% in fiscal 1996.  The  decrease was due to expense  controls
put into place during the fiscal year and the increase in sales.

     During  fiscal  1997,  the sale of Modar was  completed  and resulted in an
additional  restructuring  and  impairment  of assets  charge of $373,235  which
represents the difference between the original estimate and the actual loss from
the sale.

                                       9
<PAGE>
     Other expenses in fiscal 1997 decreased by $381,571 compared to fiscal 1996
mainly due to a reduction in interest expense caused by lower debt levels.

     The effective income tax rate was 33.9% in fiscal 1997 compared to 39.6% in
fiscal  1996.  See  note  9 to  the  consolidated  financial  statements  for an
explanation of the effective income tax rate.

     Income from continuing operations in fiscal 1997 was $8.3 million, or $1.41
per share,  compared to $3.1 million, or $0.53 per share in fiscal 1996. Without
the $2.8 million  charge for  restructuring,  impairment of assets and inventory
liquidations,  the  income  from  continuing  operations  would  have  been $5.9
million, or $1.01 per share in fiscal 1996.

     The results of operations of Roll-it, net of income taxes, are presented as
a discontinued  operation.  In fiscal 1997, the after-tax loss from discontinued
operation  was $0.5 million  compared to $3.0  million in fiscal 1996.  The 1996
loss  includes  an  estimated  after-tax  loss on the  sale of  Roll-it  of $2.7
million.

Liquidity And Capital Resources

     The Company's focus on aggressively generating cash using the newly adopted
Economic Value Added,  or EVA,  philosophy  resulted in a reduction of long-term
debt by $19.3  million  to $9.7  million  at the end of fiscal  1998 from  $29.0
million at the end of fiscal 1997. The debt to equity ratio at the end of fiscal
1998 was 16% compared to 39% at the end of fiscal 1997.  Net cash  provided from
operating  activities  in  fiscal  1998 was a record  $23.4  million.  Financial
resources,  including  borrowing capacity and anticipated funds from operations,
are  expected  to be  adequate to satisfy  all  short-term  obligations  and the
internal growth objectives of the Company.

     Cash flows from operating activities generated $23.2 million in fiscal 1998
compared to $16.2  million in fiscal 1997.  Cash flows in fiscal 1998  increased
over fiscal 1997 levels  primarily  due to an increase in accounts  payable.  As
part of the Company's focus on EVA and cash flow,  payment terms for most of the
Company's  payables  were  extended  by 30  days  resulting  in a  $7.6  million
increase.

     Investing  activities provided $1.2 million in fiscal 1998 compared to $5.9
million  of  cash  used  for  investing   activities  in  fiscal  1997.  Capital
expenditures  decreased  to $4.2  million  in fiscal  1998 from $7.8  million in
fiscal  1997.  In fiscal  1997,  approximately  $3.3  million was  expended  for
additional  equipment  to  manufacture  precision  drawer  slides  for the  wood
furniture and metal office  furniture  markets.  The  disposition of Roll-it,  a
discontinued  operation,  generated $2.0 million in cash in fiscal 1998. Capital
expenditures  in fiscal 1999 are  expected to remain at  approximately  the same
levels as in fiscal  1998.  It is  anticipated  that the sale of Hirsh in fiscal
1999 will result in $15.9 million of cash, after expenses.  The sale of Modar in
fiscal 1997 was the primary  reason for the $3.0 million of cash  generated from
the sales of property, plant and equipment.

     Financing  activities  used $22.6 million in fiscal 1998,  compared to $9.4
million in fiscal 1997. The Company reduced debt by $19.3 million in fiscal 1998
and declared  cash  dividends of $3.8  million.  The Company  believes that cash
flows from  operations and funds available under an existing credit facility are
sufficient to fund working  capital  requirements  and capital  expenditures  in
fiscal 1999. The Company  announced on September 1, 1998, that it was initiating
a stock dividend sale plan and  eliminating  cash  dividends.  Shareholders  can
elect to have their quarterly stock dividends automatically sold by a broker. On
September 1, 1998,  the Company  announced  the purchase by the Company of up to
1.2 million  shares of the  Company's  common stock  pursuant to a Dutch Auction
self-tender  offer.  The Company also  announced on September 1, 1998,  that the
Board of Directors  approved,  following  the Dutch  Auction,  a purchase in the
market or in  negotiated  transactions  of common  stock in an amount which when
added to the number of shares of common  stock  purchased  in the Dutch  Auction
would equal  1,350,000.  The Company will use long-term  debt to the point where
financial flexibility is preserved and undue financial risk is not incurred.

Year 2000 Compliance

     The Year 2000 issue is the result of computer  systems  that use two digits
rather than four to define the applicable  year,  which may prevent such systems
from accurately  processing dates ending in the year 2000 and after.  This could
result  in  system  failures  or  in   miscalculations   causing  disruption  of
operations, including, but not limited to, an inability to process transactions,
to send and receive electronic data, or to engage in routine business activities
and operations.

     In 1995 the  Company  established  a Year 2000 task  force for  Information
Technology  ("IT") to develop and implement a Year 2000 readiness  program.  The
Company has developed a Year 2000  readiness  plan, and has completed the audit,
assessment and

                                       10
<PAGE>
scope phases of its plan. The Company has completed an inventory of the software
applications  that it  uses.  The  Company  has  also  installed  its  Corporate
Information  System  software  at its  subsidiaries  to improve  efficiency  and
facilitate Year 2000 compliance.  The Company estimates that the  implementation
phase is 50% complete  for the  Company's IT systems.  The  Company's  readiness
program includes  installing software releases designed to cause the software to
be Year 2000 compliant.  The Company is in the process of testing its IT systems
for Year 2000 compliance,  and expects testing activities to continue into 1999.
The Company's goal is to be substantially  Year 2000 compliant by December 1998,
to allow for testing all systems during 1999.

     In addition,  in 1997 the Company began  evaluating  non-IT systems such as
imbedded  chips in  production  equipment  and  personal  computer  hardware and
software.  With respect to these non-IT  systems,  the Company has completed the
audit phase, and the assessment and scope phases are approximately 50% complete.
The Company is  presently in the process of testing and  implementation,  and is
upgrading its non-IT systems to become Year 2000  compliant.  The Company's goal
is to complete the remediation of non-IT systems by June 30, 1999.

     In addition to reviewing its internal  systems,  the Company has had formal
communications  with its significant  customers,  vendors and freight  companies
concerning Year 2000 compliance,  including electronic commerce. There can be no
assurance  that the systems of other  companies  that  interact with the Company
will be sufficiently Year 2000 compliant so as to avoid an adverse impact on the
Company's operations, financial condition and results of operations. The Company
does not believe that its products and services involve any Year 2000 risks.

     The Company  does not  presently  anticipate  that the costs to address the
Year 2000 issue will have a material  adverse effect on the Company's  financial
condition,  results of  operations  or  liquidity.  Present  estimated  cost for
remediation are as follows:
<TABLE>

                                                 Previous Fiscal Years          Fiscal 1999
               <S>                                   <C>                         <C>
               Labor                                 $ 313,000                   $276,000
               Software                                  4,000                     44,000
               Hardware                                 34,000                          0
               Year 2000 solution providers            101,000                     76,000
                                                    ----------                  ---------
                                                     $ 452,000                   $396,000
                                                    ==========                  =========
</TABLE>
     The  Company  presently  anticipates  that it will  complete  its Year 2000
assessment  and  remediation  by December  31,  1999.  However,  there can be no
assurance  that the Company will be  successful  in  implementing  its Year 2000
remediation plan according to the anticipated schedule. In addition, the Company
may be adversely  affected by the  inability of other  companies  whose  systems
interact  with the  Company  to become  Year  2000  compliant  and by  potential
interruptions of utility, communication or transportation systems as a result of
Year 2000 issues.

     Although the Company expects its internal systems to be Year 2000 compliant
as described  above, the Company intends to prepare a contingency plan that will
specify what it plans to do if it or important  external  companies are not Year
2000  compliant  in  a  timely  manner.  The  Company  expects  to  prepare  its
contingency plan during 1999.


     This report contains certain forward-looking statements which involve risks
and uncertainties.  When used in this report, the words "believe," "anticipate,"
"think," "intend," "goal," "forecast," "expect" and similar expressions identify
forward-looking  statements.  Forward-looking  statements  include,  but are not
limited to,  statements  concerning  anticipated  income from operations and net
income  for fiscal  1999.  Such  statements  are  subject  to certain  risks and
uncertainties  which would 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 those forward-looking statements which speak only
as of the date of this report.

                ITEM 7A--QUANTITATIVE AND QUALITATIVE DISCLOSURES
                                ABOUT MARKET RISK

     The  Company is  exposed to market  risks,  which  include  changes in U.S.
interest rates and changes in foreign currency exchange rate as measured against
the U.S. dollar.

     Interest  Rate Risk -- The  interest  payable for the  Company's  revolving
credit agreement is principally between 40 and 50 basis points above the federal
funds rate and therefore affected by changes in market interest rates.  However,
the  Company  has the  option  to pay the  balance  in full at any time  without
penalty. As a result, the Company believes that the market risk is minimal.

                                       11
<PAGE>
     Foreign  Currency Risk -- 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  risk  through
working capital management. There can be no assurance that such an approach will
be  successful,  especially in the event of a significant  and sudden decline in
the value of the Canadian  dollar.  The Company does not hedge  against  foreign
currency risk.


               ITEM 8--FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Immediately  following are the  consolidated  balance sheets of the Company
and  its  subsidiaries  as of  June  30,  1998,  and  the  related  consolidated
statements of  operations,  stockholders'  equity and cash flows for each of the
three years in the period ended June 30,  1998,  the notes  thereto,  summary of
accounting policies, and the independent auditors' report.





                                       12
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                      Consolidated Statements of Operations
<TABLE>

Year ended June 30,                                              1998                 1997              1996
-----------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                  <C>               <C>
Net Sales                                                     $181,632,570         $176,630,294      $163,012,030

Cost of Sales                                                  139,332,670          133,081,765       124,408,648
-----------------------------------------------------------------------------------------------------------------
Gross Profit                                                    42,299,900           43,548,529        38,603,382
------------------------------------------------------------------------------------------------------------------
Expenses
     Selling and shipping                                       22,594,546           21,545,425        21,044,004
     Administrative and general                                  6,557,842            6,890,905         6,394,013
             Restructuring and impairment of assets             15,792,276              373,235         3,496,000
-------------------------------------------------------------------------------------------------- ------------------
Total Expenses                                                  44,944,664           28,809,565        30,934,017
-------------------------------------------------------------------------------------------------- ------------------
Operating Income (Loss)                                         (2,644,764)          14,738,964         7,669,365
-------------------------------------------------------------------------------------------------- ------------------
Other Expenses
     Interest                                                    1,224,394            1,986,522         2,253,992
     Other, net                                                    569,024              163,214           277,315
-------------------------------------------------------------------------------------------------- ------------------
Total Other Expenses                                             1,793,418            2,149,736         2,531,307
-------------------------------------------------------------------------------------------------- ------------------
     Income (Loss) From Continuing Operations Before Income Taxes
                                                                (4,438,182)          12,589,228         5,138,058
Income Taxes - Continuing Operations                             3,931,000            4,264,000         2,035,000
-------------------------------------------------------------------------------------------------- ------------------
Income (Loss) From Continuing Operations                        (8,369,182)           8,325,228         3,103,058
-------------------------------------------------------------------------------------------------- ------------------
     Discontinued Operation, Net of Income Taxes
     Loss from operations                                         (431,010)            (471,624)         (337,926)
     Estimated loss on sale                                       (937,268)                   -        (2,700,000)
--------------------------------------------------------------------------------------------------------------------
     Total Discontinued Operation, Net of
         Income Taxes                                           (1,368,278)            (471,624)       (3,037,926)
--------------------------------------------------------------------------------------------------------------------
Net Income (Loss)                                        $      (9,737,460)    $      7,853,604  $         65,132
================================================================================================== ==================
Basic Earnings Per Share
     Income (loss) from continuing operations            $           (1.41)    $           1.41  $            .53
        Loss from discontinued operation                 $           (0.23)    $         (0.08)  $           (.52)
-------------------------------------------------------------------------------------------------- ------------------
Net Income (Loss) Per Share                              $           (1.64)    $           1.33  $            .01
================================================================================================== ==================
Weighted Average Shares Outstanding                              5,920,380            5,889,420         5,881,069
-------------------------------------------------------------------------------------------------- ------------------
Diluted Earnings Per Share
            Income (loss) from continuing operations     $           (1.41)    $           1.41  $             53
            Loss from discontinued operation             $           (0.23)    $          (0.08) $           (.52)
-------------------------------------------------------------------------------------------------- ------------------
     Net Income (Loss) Per Share                         $           (1.64)    $           1.33  $            .01
=====================================================================================================================
     Weighted Average Shares Outstanding                         5,954,713            5,903,237         5,897,141
Dividends Per Share
     Common stock                                       $              .66    $             .66  $            .66
     Class B common stock                               $              .60    $             .60  $            .60
=====================================================================================================================
                    See accompanying notes to consolidated financial statements.
</TABLE>

                                       13
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                           Consolidated Balance Sheets
<TABLE>


June 30,                                                                                 1998                1997
-------------------------------------------------------------------------------------------------------------------
Assets
<S>                                                                               <C>                 <C>
Current Assets
     Cash                                                                       $   3,057,158       $   1,146,546
     Accounts receivable, less allowances of $352,000
       and $525,000, respectively                                                  25,677,043          24,991,341
     Refundable income taxes                                                          176,204           1,578,681
     Inventories                                                                   12,808,532          18,629,454
     Prepaid expenses                                                               2,706,490           3,686,042
     Net current assets of discontinued operation                                           -           1,462,089
        Net assets held for sale                                                   18,648,000                   -
-------------------------------------------------------------------------------------------------------------------
Total Current Assets                                                               63,073,427          51,494,153
-------------------------------------------------------------------------------------------------------------------
Property and Equipment
     Land and improvements                                                          1,804,948           1,874,420
     Buildings                                                                     14,353,886          16,573,882
     Machinery and equipment                                                       44,743,067          62,322,944
-------------------------------------------------------------------------------------------------------------------
                                                                                   60,901,901          80,771,246
     Less accumulated depreciation                                                 24,247,181          32,184,444
-------------------------------------------------------------------------------------------------------------------
Net Property and Equipment                                                         36,654,720          48,586,802
-------------------------------------------------------------------------------------------------------------------
     Net Property and Equipment of Discontinued Operation                                   -           1,440,740
-------------------------------------------------------------------------------------------------------------------
Goodwill, net                                                                         593,277          18,409,767
-------------------------------------------------------------------------------------------------------------------
Other Assets                                                                        3,711,663           5,810,236
-------------------------------------------------------------------------------------------------------------------
                                                                             $    104,033,087    $    125,741,698
===================================================================================================================
                    See accompanying notes to consolidated financial statements.
</TABLE>



                                       14
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                           Consolidated Balance Sheets

<TABLE>

June 30,                                                                                 1998                1997
-------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
<S>                                                                               <C>                 <C>
Current Liabilities
     Accounts payable                                                        $     17,765,610    $      5,976,683
     Accruals:
         Income taxes                                                                 847,306             382,273
         Taxes other than income                                                      860,928           1,551,686
         Compensation                                                               3,067,186           2,460,426
         Retirement plan contributions                                                769,978             740,666
         Restructuring costs                                                          828,932                   -
         Miscellaneous                                                                657,320           1,116,385
-------------------------------------------------------------------------------------------------------------------
Total Current Liabilities                                                          24,797,260          12,228,119

Supplemental Retirement Benefits                                                    1,837,153           1,579,653

Long-Term Debt                                                                      9,700,000          29,000,000

Deferred Lease Costs                                                                        -           1,818,428

Deferred Income Taxes                                                               5,942,000           7,655,000
-------------------------------------------------------------------------------------------------------------------
Total Liabilities                                                                  42,276,413          52,281,200
-------------------------------------------------------------------------------------------------------------------
Commitments

Stockholders' Equity
     Stock:
        Common, $2 par - 6,000,000 shares authorized; 3,530,042 and
            3,465,664 issued                                                        7,060,084           6,931,328
        Class B common, $2 par - 4,000,000 shares authorized; 
            2,405,583 and 2,438,165 issued                                          4,811,166           4,876,330
        Preferred - 2,000,000 shares authorized and unissued                                -                   -
     Additional paid-in capital                                                    33,724,990          33,340,541
     Retained earnings                                                             16,160,434          29,658,277

     Cumulative foreign currency translation adjustment                                     -          (1,345,978)
-------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity                                                         61,756,674          73,460,498
-------------------------------------------------------------------------------------------------------------------
                                                                             $    104,033,087    $    125,741,698
===================================================================================================================
                    See accompanying notes to consolidated financial statements.
</TABLE>


                                       15
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                 Consolidated Statements of Stockholders' Equity

<TABLE>

                                                                                                         Cumulative
                                                                                                            foreign
                                                                Additional                                 currency
                                                 Common            paid-in           Retained           translation
                                                  stock            capital           earnings            adjustment
-------------------------------------------------------------------------------------------------------------------
<S>                                           <C>               <C>                 <C>                 <C>
Balance, July 1, 1995                     $   11,759,828   $    33,065,773    $     29,205,000     $    (1,316,765)
Net income for 1996                                    -                 -              65,132                   -
Cash dividends                                         -                 -          (3,727,321)                  -
     Stock issued under stock option plan          2,310            14,314                   -                   -
     Foreign currency translation adjustment           -                 -                   -             105,479
---------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1996                        11,762,138        33,080,087          25,542,811          (1,211,286)
Net income for 1997                                    -                 -           7,853,604                   -
Cash dividends                                         -                 -          (3,738,138)                  -
     Stock issued under stock option plan         45,520           260,454                   -                   -
     Foreign currency translation adjustment           -                 -                   -            (134,692)
---------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1997                        11,807,658        33,340,541          29,658,277          (1,345,978)
Net loss for 1998                                      -                 -          (9,737,460)                  -
Cash dividends                                         -                 -          (3,760,383)                  -

     Stock issued under stock option plan         63,592           384,449                   -                   -
     Foreign currency translation adjustment           -                 -                   -            (259,327)
     Sale of Knape & Vogt Canada assets                -                 -                   -           1,605,305
---------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1998                    $   11,871,250   $    33,724,990    $     16,160,434     $             -
=====================================================================================================================
                    See accompanying notes to consolidated financial statements.
</TABLE>


                                       16
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                      Consolidated Statements of Cash Flows

<TABLE>

Year ended June 30,                                                         1998              1997               1996
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>               <C>                 <C>
Operating Activities
     Net income (loss)                                                  $ (9,737,460)     $ 7,853,604          $ 65,132  
     Adjustments to reconcile net income (loss) to net cash
         provided by operating activities:
         Depreciation of fixed assets                                      6,604,799        6,542,750         6,190,031
         Amortization of other assets                                      1,361,584        1,185,853         1,155,322
                   Decrease in deferred income taxes                        (752,000)        (334,800)       (1,060,000)
                   Increase in supplemental retirement benefits              264,957           76,740            64,612
                   Decrease in deferred lease costs                         (556,992)        (541,696)         (524,966)
                   Loss on sale of the discontinued operation                937,268                -         3,866,000
                   Write-off of foreign currency translation adjustment    1,605,305                -                 -
                   Impairment loss - Hirsh                                12,800,000                -                 -
                   Changes in operating assets and liabilities:
            Decrease (increase) in:
               Accounts receivable                                          (809,180)      (2,248,856)          515,079
               Refundable income taxes                                     1,157,735          272,579        (1,627,737)
               Inventories                                                 1,903,218        4,372,415           720,025
                              Net assets of discontinued operation          (995,000)         592,226           636,106
               Prepaid expenses                                              384,903         (629,600)         (160,535)
             Increase (decrease) in:
               Accounts payable                                            8,776,835        1,158,861           289,679
               Accrued restructuring costs                                   672,004       (3,440,184)        3,440,184
               Accruals                                                     (383,204)       1,326,505           (83,555)
-----------------------------------------------------------------------------------------------------------------------
     Net cash provided by operating activities                            23,234,772       16,186,397        13,485,377
-----------------------------------------------------------------------------------------------------------------------
Investing Activities
     Additions to property, plant and equipment                           (4,228,552)      (7,763,482)       (8,032,779)
     Sales of property, plant and equipment                                2,564,744        2,985,833           175,651
     Disposition of discontinued operation                                 2,045,364                -                 -
     Payments for other assets                                               803,530       (1,079,168)       (1,471,438)
-----------------------------------------------------------------------------------------------------------------------
     Net cash provided by (used for) investing activities                  1,185,086       (5,856,817)       (9,328,566)
-----------------------------------------------------------------------------------------------------------------------
Financing Activities
     Cash dividends declared                                              (3,760,383)      (3,738,138)       (3,727,321)
     Proceeds from issuance of common stock                                  448,041          305,974            16,624
             Payments on long-term debt                                  (19,300,000)      (6,000,000)         (800,000)
-----------------------------------------------------------------------------------------------------------------------
         Net cash used for financing activities                          (22,612,342)      (9,432,164)       (4,510,697)
-----------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes on Cash                                      103,096            4,859            63,877
-----------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash                                            1,910,612          902,275          (290,009)
Cash, beginning of year                                                    1,146,546          244,271           534,280
-----------------------------------------------------------------------------------------------------------------------
Cash, end of year                                                     $    3,057,158    $   1,146,546    $      244,271
=======================================================================================================================
                    See accompanying notes to consolidated financial statements.

</TABLE>

                                       17
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements




1.      Summary of Significant 
        Accounting
        Policies               


     Principles of Consolidation

     The consolidated  financial statements include the accounts of Knape & Vogt
     Manufacturing  Company and its  wholly-owned  subsidiaries  (Company).  All
     material  intercompany  balances,  transactions and stockholdings have been
     eliminated in consolidation.

     Description of Business,  Revenue  Recognition and  Concentration of Credit
     Risk

     The  Company  designs,   manufactures  and  distributes   storage  products
     including  decorative and utility  shelving  systems,  drawer slides,  home
     workshop items,  kitchen and closet storage products and cabinet  hardware.
     On August 20, 1996,  the Company  announced  its decision to sell its store
     fixture  operation  and  this  portion  of  the  business  is  shown  as  a
     discontinued  operation.  The  Company  primarily  sells  its  products  to
     hardware  chains,  home  centers,   specialty   distributors  and  original
     equipment manufacturers and recognizes revenue upon shipment of products to
     customers.  No single  customer  accounts for more than 10% of consolidated
     sales.  The Company  performs  ongoing  credit  evaluations  and  maintains
     reserves for potential credit losses.

     Foreign Currency Translation

     The accounts of the foreign  subsidiary are translated into U.S. dollars in
     accordance with Statement of Financial  Accounting Standards (SFAS) No. 52.
     Assets and  liabilities are translated at year-end  exchange rates.  Income
     and expense  accounts are  translated at average  exchange  rates in effect
     during  the year.  Adjustments  relating  to the  translation  process  are
     accumulated  and  reported  in  the  stockholders'   equity  section  as  a
     cumulative foreign currency translation adjustment.

     Fair Value of Financial Instruments

     The carrying amounts of the Company's financial instruments,  which consist
     of cash, receivables, bank revolving credit agreement and accounts payable,
     approximate their fair values.

     Inventories

     Inventories are stated at the lower of FIFO  (first-in,  first-out) cost or
     market at June 30, 1998 and 1997.

     Property, Equipment and Depreciation

     Property  and  equipment  are  stated at cost  after  elimination  of fully
     depreciated  items.  For  financial  reporting  purposes,  depreciation  is
     computed over the estimated useful lives of the assets by the straight-line
     method.  For income tax  purposes,  accelerated  depreciation  methods  and
     shorter useful lives are used.

     Goodwill

     Goodwill  represents  the amount by which the cost of businesses  purchased
     exceeds the fair value of the net assets  acquired.  Goodwill is  amortized
     over a period  of 40 years  using  the  straight-line  method.  Accumulated
     amortization  of goodwill was $120,441 and  $1,853,951 at June 30, 1998 and
     1997,   respectively.   The  Company   periodically  reviews  goodwill  for
     impairment based upon undiscounted operating income over the remaining life
     of the goodwill.  While the estimates are based on management's  historical
     experience and assumptions regarding future operations, the amounts the


                                       18
<PAGE>
              Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements

     Company will  ultimately  realize  could differ from those used in the 1998
     SFAS No. 121 analysis.

     Employee Retirement Plans

     The Company has pension and profit-sharing plans covering substantially all
     employees.  The  Company's  policy is to fund pension costs for the plan in
     amounts which equal or exceed the ERISA minimum requirements.

     The Company has a supplemental retirement program for officers. The cost of
     the supplemental  program is actuarially  determined and is accrued but not
     funded.

     Income Taxes

     The Company  accounts for certain income and expenses in different  periods
     for financial  reporting and income tax purposes.  The Company utilizes the
     liability method to account for deferred income taxes by applying statutory
     tax rates in effect at the balance  sheet date to  differences  between the
     financial reporting and tax bases of assets and liabilities.  The resulting
     deferred tax  liabilities or assets are adjusted to reflect  changes in tax
     laws or rates by means of charges or credits to income tax expense.

     Use of Estimates in Preparation of Financial Statements

     The  preparation  of financial  statements  in  accordance  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported amounts of assets and liabilities and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  and the  reported  amounts of revenues  and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

     Accounting for the Impairment of Long-Lived Assets

     In  accordance  with  SFAS  No.  121,  Accounting  for  the  Impairment  of
     Long-Lived  Assets,  the Company reviews  long-lived  assets for impairment
     whenever  events or changes in  circumstances  indicate  that the  carrying
     amount of an asset may not be recoverable.

     Advertising

     The Company  expenses the costs of  advertising  as  incurred.  Advertising
     expense was $299,000 in 1998, $422,000 in 1997 and $553,000 in 1996.

     Earnings Per Share

     During fiscal 1998, the Company  adopted SFAS No. 128,  Earnings Per Share.
     SFAS No. 128 replaces the calculation of primary and fully diluted earnings
     per share  with  basic and  diluted  earnings  per  share.  Unlike  primary
     earnings per share,  basic earnings per share excludes the dilutive effects
     of options, warrants and convertible securities. Diluted earnings per share
     is very  similar to the  previously  reported  fully  diluted  earnings per
     share.  SFAS No. 128 requires that earnings per share amounts for all prior
     periods  presented  be  restated to give  effect to the  provisions  of the
     statement.  SFAS No.  128 did not  materially  impact  earnings  per  share
     information previously reported. For the periods presented,  the numerators
     remained  the  same in both  the  basic  and  diluted  earnings  per  share
     calculations.  The denominator was increased in the diluted computation due
     to the recognition of stock options as common stock equivalents.

                                       19
<PAGE>
              Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements


     New Accounting Standards Not Yet Adopted

     SFAS No. 130, Reporting Comprehensive Income, establishes standards for the
     reporting  and  display  of  comprehensive   income,   its  components  and
     accumulated  balances.  Comprehensive  income is  defined  to  include  all
     changes in equity except those  resulting  from  investments  by owners and
     distributions  to owners.  Among other  disclosures,  SFAS No. 130 requires
     that all items that are required to be recognized under current  accounting
     standards as components of comprehensive  income be reported in a financial
     statement  that is displayed  with the same  prominence as other  financial
     statements.  This  statement  is  effective  for the  Company  for 1999 and
     requires comparative information for earlier years to be restated.

     SFAS No.  131,  Disclosures  About  Segments of an  Enterprise  and Related
     Information, which supersedes SFAS No. 14, Financial Reporting for Segments
     of a Business  Enterprise,  establishes  standards  for the way that public
     enterprises report information about operating segments in annual financial
     statements and requires  reporting of selected  information about operating
     segments in interim  financial  statements  issued to the  public.  It also
     establishes  standards  for  disclosures  regarding  products and services,
     geographic  areas and  major  customers.  SFAS No.  131  defines  operating
     segments as  components  of an enterprise  about which  separate  financial
     information is available that is evaluated regularly by the chief operating
     decision  maker in deciding  how to  allocate  resources  and in  assessing
     performance. This statement is effective for the Company in 1999.

     SFAS  No.   132,   Employers'   Disclosures   About   Pensions   and  Other
     Postretirement  Benefits,  revises  existing  disclosure  requirements  for
     pension and other postretirement benefit plans thereby intending to improve
     the   understandability   of   benefit   disclosures,   eliminate   certain
     requirements that the Financial  Accounting Standards Board believes are no
     longer necessary,  and standardize footnote disclosures.  This statement is
     effective for the Company for 1999 and requires comparative information for
     earlier years to be restated.

     Management is currently  evaluating the impact,  if any, SFAS No. 130, SFAS
     No.  131  and  SFAS  No.  132  may  have  on  future  financial   statement
     disclosures.

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
     Accounting for Derivative Instruments and Hedging Activities.  SFAS No. 133
     requires companies to recognize all derivatives  contracts as either assets
     or liabilities  in the balance sheet and to measure them at fair value.  If
     certain conditions are met, a derivative may be specifically  designated as
     a hedge,  the  objective  of which is to match  the  timing of gain or loss
     recognition  on the  hedging  derivative  with the  recognition  of (i) the
     changes  in the  fair  value of the  hedged  asset  or  liability  that are
     attributable  to the hedged risk or (ii) the earnings  effect of the hedged
     forecasted  transaction.  For a  derivative  not  designated  as a  hedging
     instrument,  the gain or loss is  recognized  in  income  in the  period of
     change. SFAS No. 133 is effective for fiscal years beginning after June 15,
     1999.

     Historically, the Company has not entered into derivatives contracts either
     to hedge  existing  risks or for  speculative  purposes.  Accordingly,  the
     Company  does not expect  adoption of the new standard for fiscal year 2000
     to affect its financial statements.

2.      Restructuring and
        Impairment of
        Assets

     In  fiscal  1996  the  Board  of  Directors  of  the  Company   approved  a
     restructuring  plan. The  restructuring and impairment charge of $3,496,000
     primarily related to severance and employee benefit costs ($1,635,000), the
     write-down of assets to be disposed of to their

                                       20
<PAGE>
              Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements


     fair market value  ($1,509,000)  and other costs  ($352,000).  The Board of
     Directors  also  authorized  as part of the  plan the  liquidation  of slow
     moving inventories of $863,000.  After an income tax benefit of $1,534,000,
     these actions  reduced  fiscal year 1996 earnings by $2,825,000 or $.48 per
     diluted share.

     During 1997,  the sale of Modar was completed and resulted in an additional
     impairment  charge of $373,235 which represents the difference  between the
     original estimate and the actual loss from the sale. After a related income
     tax benefit of $127,000, fiscal year 1997 earnings were reduced by $246,235
     or $.04 per diluted share.

     A one-time  restructuring  charge of  $3,992,276  was recorded in the third
     quarter  of  fiscal  1998  for  Knape  &  Vogt  Canada.   Included  in  the
     restructuring  charge is a reduction  of the foreign  currency  translation
     adjustment account of $1,605,305. In March 1998, Knape & Vogt announced its
     plans to  reorganize  its  Canadian  operation,  including  the sale of the
     Company's  manufacturing  facility and equipment in the Toronto  area.  The
     sale was  completed in May of 1998.  The Company will  continue to sell and
     distribute  its  products  in Canada  and  maintain  a sales  office in the
     Toronto area. The after-tax effect of the sale was a loss of $3,392,276, or
     $.57 per diluted share.

     The Company is in the process of completing the negotiation of a definitive
     agreement to sell The Hirsh Company,  a wholly owned  subsidiary  (see Note
     13). Hirsh manufactures  free-standing  shelving, wood storage products and
     workshop  accessories.  At June 30,  1998,  the  carrying  value of the net
     assets subject to the sale was reduced to fair value based on the estimated
     selling price less costs to sell.  This resulted in a loss of  $12,800,000,
     which is included in the restructuring and impairment of assets line of the
     consolidated  statement of  operations.  The loss includes the write-off of
     the  unamortized  balance  of  goodwill  recorded  in  connection  with the
     purchase of Hirsh. Management expects to complete the sale during the first
     quarter of fiscal year ending June 30, 1999.

     The components of the net assets held for sale are as follows:
<TABLE>
<S>                                                             <C>
Current assets                                                  $   4,483,000
Property and equipment                                              6,923,000
Other assets                                                        8,985,000
Liabilities                                                        (1,743,000)
-----------------------------------------------------------------------------
Net assets held for sale                                        $  18,648,000
=============================================================================
</TABLE>

Summary operating results for Hirsh (in thousands) are as follows:
<TABLE>

June 30,                                       1998         1997         1996
-------------------------------------------------------------------------------
<S>                                          <C>          <C>          <C>
Revenues                                  $  35,634    $  36,589    $  37,312
Costs and expenses                           47,880       37,344       37,880
-------------------------------------------------------------------------------
Income (loss) before taxes                  (12,246)        (755)        (568)
Income tax expense (benefit)                    998          (79)         (57)

Net income (loss)                         $(13,244)     $  (676)     $   (511)
===============================================================================
</TABLE>

3.      Discontinued Operation      

     On August 20, 1996, the Company  announced its decision to sell the Roll-it
     division of Knape & Vogt Canada Inc. (Roll-it), the Company's store fixture
     operation.  Accordingly,  Roll-it is reported as a discontinued  operation,
     and the consolidated

                                       21
<PAGE>
              Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements


     financial statements have been reclassified to segregate the net assets and
     operating results of the business.

     The estimated  loss recorded  during fiscal 1996 on the sale of Roll-it was
     $3.9  million,  which  included a reduction in asset values of $3.6 million
     and a provision for  anticipated  closing costs and operating  losses until
     disposal of $.3 million. The loss was reported net of an income tax benefit
     of $1.2 million, for an after-tax loss of $2.7 million.

     During the third  quarter of fiscal  year 1997,  the  Company  recorded  an
     additional  after-tax  loss of  $471,624  which  was an  adjustment  to the
     estimated provision for operating loss of Roll-it through fiscal year 1997.
     Income or loss attributable to Roll-it's operations beyond fiscal year 1997
     through  the  date  of the  sale  will be  reflected  as  incurred  in each
     reporting period.

     On March 27, 1998,  the Company  signed an agreement to sell Roll-it  which
     resulted in an additional loss of $937,268, which represents the difference
     between the original estimate and the actual loss from the sale of Roll-it.

     Summary operating results of the discontinued  operation (in thousands) are
     as follows:
<TABLE>

June 30,                                       1998         1997         1996
-------------------------------------------------------------------------------
<S>                                       <C>          <C>          <C>
Revenues                                  $  11,865    $  10,531    $  13,540

Costs and expenses                           12,519       11,237       13,990
-------------------------------------------------------------------------------
Income (loss) before taxes                     (654)        (706)        (450)

Income tax expense (benefit)                   (223)        (234)        (112)
-------------------------------------------------------------------------------
Net Income (Loss)                         $    (431)    $   (472)  $     (338)
===============================================================================
</TABLE>


4. Inventories 

     Inventories are summarized as follows:
<TABLE>

June 30,                                               1998              1997
-------------------------------------------------------------------------------
<S>                                         <C>                <C>
Finished products                           $     7,369,923    $   11,219,379
Work in process                                   1,719,891         1,950,391
Raw materials and supplies                        3,718,718         5,459,684
-------------------------------------------------------------------------------
                                            $    12,808,532    $   18,629,454
===============================================================================
</TABLE>


5.      Long-Term Debt             

     At June 30, 1998 and 1997,  long-term debt consisted of borrowings under an
     unsecured  revolving  credit  agreement  which  provides  for  loans  up to
     $47,500,000  with interest between 40 and 50 basis points above the federal
     funds rate depending on the Company's interest coverage ratio (averaging 6%
     for the  month  ended  June  30,  1998).  There  was a  $9,700,000  balance
     outstanding  under the  revolving  credit  agreement at June 30, 1998.  The
     agreement  contains  certain  covenants  which the Company is in compliance
     with at June 30, 1998.  The  revolving  credit  agreement is required to be
     repaid by November  1, 1999.  Annually,  the  Company may request  that the
     maturity of the revolving credit agreement be extended by another year.

                                       22
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements



6.      Retirement Plans  

     The Company has several  noncontributory  defined benefit pension plans and
     defined contribution plans covering substantially all of its employees. The
     defined benefit plans provide benefits based on the participants'  years of
     service.  The Company's funding policy for defined benefit plans is to make
     annual  contributions  which equal or exceed regulatory  requirements.  The
     Company's Board of Directors  annually  approves  contributions  to defined
     contribution  plans. The pension and  profit-sharing  plans hold a combined
     total of 304,425 shares of the Company's Class B common stock with a market
     value of $6,849,563 and $4,870,800 at June 30, 1998 and 1997, respectively.
     Dividends  paid to the plans totaled  $182,655 for the years ended June 30,
     1998 and 1997.

     The Company  also has a  supplemental  retirement  program  for  designated
     officers of the Company which also includes death and disability benefits.

     The costs of retirement benefits are as follows:
<TABLE>
Year ended June 30,                        1998           1997           1996
-------------------------------------------------------------------------------
    <S>                             <C>            <C>            <C>
    Discretionary profit-sharing    $   758,055    $   685,564    $   585,965
    Pension                             535,192        309,415        261,781
    Supplemental retirement             320,534        199,700        193,960
-------------------------------------------------------------------------------
                                    $ 1,613,781    $ 1,194,679    $ 1,041,706
===============================================================================
</TABLE>


     Net periodic cost for the pension plans include the following components:
<TABLE>

Year ended June 30,                      1998            1997            1996
-------------------------------------------------------------------------------
<S>                               <C>             <C>             <C>
Service cost - benefits earned
 during the period                $    267,092    $    276,718    $    280,075
Interest cost on projected 
 benefit obligation                    885,949         847,333         737,433
Actual return on plan assets        (2,102,398)     (1,504,890)     (1,208,193)
Net deferral and amortization of
 unrecognized amounts                1,282,412         715,578         452,466
-------------------------------------------------------------------------------
Net periodic pension cost         $    333,055    $    334,739    $    261,781
===============================================================================
</TABLE>

     The  weighted  average  discount  rate used in  determining  the  actuarial
     present value of the projected benefit  obligation of the pension plans was
     7.5%  and  8.5% at June  30,  1998 and  1997,  respectively.  The  expected
     long-term rate of return on plan assets was 8.5%.

                                       23
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements


     The funded status of the pension plans is as follows:

<TABLE>
June 30,                                                 1998            1997
-------------------------------------------------------------------------------
<S>                                              <C>             <C>
Actuarial present value of benefit obligations:
     Accumulated and projected benefit 
         obligation, vested benefits of 
         $11,799,750 and $10,280,087             $ 12,292,838    $ 10,681,208
     Plan assets at fair value, primarily
     equity securities and fixed income funds      13,389,253      11,794,363
-------------------------------------------------------------------------------
Plan assets in excess of projected
     benefit obligations                            1,096,415       1,113,155
-------------------------------------------------------------------------------
Unrecognized net obligations:
    Unrecognized net loss (gain)                       47,659        (248,149)
    Unrecognized prior service cost                 1,287,172       1,421,142
    Unrecognized transition net assets, 
        being recognized over 12.4 years             (293,700)       (348,100)
-------------------------------------------------------------------------------
Unrecognized net obligations                        1,041,131         824,893

Prepaid pension cost included in other assets    $  2,137,546    $  1,938,048
===============================================================================
</TABLE>

7.      Postretirement Health
        Care Benefits

     The  Company   maintains  a  defined   benefit   postretirement   plan  for
     substantially  all employees  which provides  certain health care benefits.
     Eligibility and benefits are based on age and years of service.  On July 1,
     1992,  the  Company  adopted  SFAS  No.  106,  Employers'   Accounting  for
     Postretirement  Benefits Other Than Pensions,  on a prospective  basis. The
     transition  obligation represents the difference between the Company's July
     1, 1992, accrued postretirement benefit costs prior to the adoption of SFAS
     No. 106 and the Plan's unfunded liability as of that date reduced by a 1994
     revision in the  eligibility  definition  for  benefits.  During 1998,  the
     unrecognized  prior  service costs were combined with the above noted items
     and are all being amortized over 15 years.

     The components of net periodic postretirement benefit cost are as follows:
<TABLE>

Year ended June 30,                             1998        1997         1996
--------------------------------------------------------------------------------
<S>                                           <C>         <C>          <C>
Service cost - benefits earned
  during the year                             $  85,042   $  86,588    $  82,461
Interest cost on projected benefit
  obligation                                    156,507     138,498      126,329
Amortization of transition liability
  over 15 years                                  48,037      93,861       93,861
Amortization of prior service costs                   -     (57,279)     (57,279)
Amortization of unrecognized net loss            27,614      24,412       18,415
--------------------------------------------------------------------------------
Net postretirement health care cost           $ 317,200   $ 286,080    $ 263,787
================================================================================
</TABLE>

                                       24
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements



     A reconciliation of the accumulated  postretirement  benefit  obligation to
the liability recognized in the consolidated balance sheets is as follows:
<TABLE>

June 30,                                               1998              1997
-------------------------------------------------------------------------------
<S>                                               <C>              <C>
Accumulated postretirement benefit obligation:
    Active participants                     $     1,000,409    $      931,487
    Retirees                                      1,093,330           769,823
-------------------------------------------------------------------------------
                                                  2,093,739         1,701,310
Unrecognized transition obligation                 (672,524)       (1,407,902)
-------------------------------------------------------------------------------
                                                  1,421,215           293,408
Unrecognized net loss                              (679,380)         (467,660)
Unrecognized prior service cost                           -           687,341
-------------------------------------------------------------------------------
Postretirement health care liability        $       741,835    $      513,089
===============================================================================
</TABLE>

     The actuarial  calculation assumes a health care inflation rate of 7.45% in
     1998  and  grades  down  uniformly  to  5.0%  in  2002  and  remains  level
     thereafter.  The health  care cost trend rate has an effect on the  amounts
     reported.  Increasing  the health care  inflation rate by 1% would increase
     the  June  30,  1998,  accumulated  postretirement  benefit  obligation  by
     $248,527,  and the 1998 net postretirement health care cost by $33,551. The
     discount rate used in determining  the accumulated  postretirement  benefit
     obligation was 7.5%. The Company's postretirement health care plans are not
     funded.  Prior to 1993, the cost of providing  postretirement  benefits was
     expensed as incurred.

8.      Lease Commitments 

     The  Company  is  leasing   certain  real  property  and  equipment   under
     noncancelable  agreements  which expire at various dates through 2000.  The
     definitive  agreement  being  negotiated for the sale of Hirsh (see Notes 2
     and 13) includes the  assumption of the lease for the Hirsh building by the
     buyer of Hirsh.

     Annual  minimum  rental  payments   required  under  operating  leases  are
     (excluding Hirsh) as follows:

<TABLE>
Year ending June 30,
-----------------------------------------------------------------------------
<S>                                                             <C>
1999                                                            $     230,351
2000                                                                  141,956
                                                                -------------
                                                                $     372,307
===============================================================================
</TABLE>

     Rent  expense  under all  operating  leases was  approximately  $1,848,000,
     $1,991,000 and $2,076,000 in 1998, 1997 and 1996, respectively.


                                       25
<PAGE>
9.      Income Taxes  

     The  components of income (loss) from  continuing  operations  before taxes
     consists of:
<TABLE>

Year ended June 30,                     1998             1997            1996
-------------------------------------------------------------------------------
<S>                              <C>               <C>             <C>
United States                  $   (919,274)    $  12,028,340    $  5,603,192
Foreign                          (3,518,908)          560,888        (465,134)
-------------------------------------------------------------------------------
Income (loss) from
 continuing operations
 before income taxes           $ (4,438,182)    $  12,589,228    $  5,138,058
===============================================================================
</TABLE>

     Income tax expense (benefit) from continuing operations consists of:

<TABLE>
Year ended June 30,                   1998             1997              1996
-------------------------------------------------------------------------------
<S>                              <C>              <C>               <C>
Current:
    United States            $   3,740,000    $   4,558,800    $    3,189,000
    Foreign                        541,000         (115,000)         (152,000)
    State and local                368,000          155,000            58,000
-------------------------------------------------------------------------------
Total current                    4,649,000        4,598,800         3,095,000
-------------------------------------------------------------------------------
Deferred:
    United States                  377,000         (546,800)        (1,159,000)
    Foreign                       (955,000)         287,000             14,000
    State and local               (140,000)         (75,000)            85,000
-------------------------------------------------------------------------------
Total deferred                    (718,000)        (334,800)        (1,060,000)
-------------------------------------------------------------------------------
Income tax expense           $   3,931,000    $   4,264,000    $     2,035,000
===============================================================================
</TABLE>

     The difference between the federal statutory tax rate and the effective tax
     rate on continuing operations is as follows:
<TABLE>

Year ended June 30,                     1998            1997              1996
------------------------------------------------------------------------------
<S>                             <C>              <C>               <C>
Income (loss) from
       continuing operations    $ (1,509,000)    $ 4,280,000   $   1,747,000
Foreign earnings taxed at
    different rates                  237,000         109,000        (137,000)
Nondeductible losses-Hirsh Sale    5,012,000               -               -
Write-off of foreign currency
    translation adjustment           546,000               -               -
State and local income
       taxes                         530,000         159,000         141,000
Tax credits and other               (885,000)       (284,000)        (73,000)
Tax bracket change                         -               -         357,000
-------------------------------------------------------------------------------
Income tax expense              $  3,931,000    $  4,264,000    $  2,035,000
===============================================================================
</TABLE>


                                       26
<PAGE>
              Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements


     The sources of the net deferred income tax liability are as follows:

<TABLE>
June 30,                                               1998              1997
-------------------------------------------------------------------------------
    <S>                                          <C>              <C>
    Property and equipment                  $     7,716,000    $    9,475,000
    Pension accrual                                 705,000           756,000
    Net operating loss carryforward                (995,000)       (1,308,000)
    Stock basis of Canadian subsidiary           (1,419,000)       (1,105,000)
    Other                                           (65,000)         (163,000)
-------------------------------------------------------------------------------
                                            $     5,942,000    $    7,655,000
===============================================================================
</TABLE>

     For Canadian tax purposes,  the Company has net operating  losses  expiring
     through 2005 totaling approximately  $5,000,000.  The tax benefit reflected
     above for these  loss  carryforwards  is net of a  valuation  allowance  of
     $1,255,000.

10.     Stock Option Plan   

     The 1987 Stock Option Plan granted key employees of the Company  options to
     purchase  shares of common  stock.  Options  were  granted  at or above the
     market price of the Company's  common stock on the date of the grant,  were
     exercisable  from that date and  terminated  ten years from the grant date.
     The plan,  as amended in October  1994 and in October  1991,  authorized  a
     total of 300,000 shares to be available for issuance under the plan. Grants
     can no longer be made under the 1987 Stock Option Plan.

     Transactions under the 1987 Stock Option Plan are as follows:

<TABLE>
                                                  Weighted             Weighted
                                                   average              average
                                                  exercise             exercise
June 30,                                 1998        price       1997     price
--------------------------------------------------------------------------------
<S>                                   <C>           <C>       <C>        <C>
Options outstanding,
   beginning of year                  170,337       $15.55    172,740    $15.57
Granted                                     -         0.00     50,000     15.50
Exercised                             (31,796)       16.40    (22,760)    15.50
Forfeited                              (4,500)       17.00    (29,643)    15.50
---------------------------------------------------------------------------------
Options outstanding and
 exercisable, end of year             134,041       $15.30    170,337    $15.55
=================================================================================
Options available for grant,
 end of year                                -                  26,610
=================================================================================
Weighted average fair value of
 options granted during the year          N/A                   $4.92
=================================================================================
</TABLE>

                                       27
<PAGE>
              Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements

     The Company  accounts  for its stock option  plans in  accordance  with APB
     Opinion 25,  Accounting  for Stock Issued to Employees.  Since the exercise
     price of the Company's  employee  stock options  equals the market price of
     the  underlying  stock on the date of the grant,  no  compensation  cost is
     recognized  under  APB  Opinion  25.  In  accordance  with  SFAS  No.  123,
     Accounting for Stock-Based Compensation, the Company is required to provide
     pro forma  information  regarding  net  income  compensation  costs for the
     Company's  stock option plan had been  determined  using a fair value based
     estimate.  The  Company  uses  the  Black-Scholes  option-pricing  model to
     determine  the  fair  value  of each  option  at the  grant  date  with the
     following weighted average assumptions:
<TABLE>
                                                            1998         1997
-------------------------------------------------------------------------------
<S>                                                    <C>          <C>
Dividends per share                                    $    0.66    $    0.66
Expected volatility                                       0.3134       0.3592
Risk-free interest rate                                     5.4%         6.5%
Expected lives                                              10.0          9.3
===============================================================================
</TABLE>

     Under the  accounting  provisions of SFAS No. 123, the Company's net income
     (loss), earnings per share and pro forma amounts are indicated below:
<TABLE>

                                                         1998            1997
-------------------------------------------------------------------------------
<S>                                             <C>               <C>
Net income (loss):
    As reported                                 $  (9,737,460)    $ 7,853,604
    Pro forma                                      (9,737,460)      7,680,684
Earnings per share:
    As reported                                         (1.64)           1.33
    Pro forma                                           (1.64)           1.30
===============================================================================
</TABLE>

     Shareholders  at the 1997 annual meeting  approved the Company's 1997 Stock
     Incentive  Plan.  Under this plan,  up to 600,000  shares of the  Company's
     common stock are  available  for  issuance.  Issuance can be in the form of
     stock options  or restricted stock; however, no more than 50,000 shares can
     be issued as  restricted  stock.  Stock options can be granted as incentive
     stock options or nonqualified stock options. The number of shares of common
     stock subject to an option granted to a participant under this plan will be
     determined based on the amount of the participant's  election under the EVA
     bonus plan.  Each  participant  may elect to receive options by electing to
     forego a portion  of the cash  bonus  that may be earned by them,  with the
     option price determined in accordance with the plan. The exercise price per
     share of common stock  purchasable  under an option shall be a single fixed
     exercise  price equal to 100% of the fair market  value of the common stock
     at the award date increase (based on U.S. Treasury  Securities plus 2% less
     a  projected  dividend  yield)  compounded  annually  over  the term of the
     option.  In general,  the options vest three years after the date of option
     was  granted  and expire  five years  after the grant  date.  No options or
     restricted stock shares were granted during fiscal 1998.

     Of the 600,000 shares available for issuance under the 1997 Stock Incentive
     Plan,  no more than 50,000 shares may be issued as  restricted  stock.  The
     Executive

                                       28
<PAGE>
              Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements



     Compensation  Committee  shall,  subject  to the  approval  of the Board of
     Directors,  determine the eligible  persons to whom, and the price (if any)
     to be paid by the  participant.  The participant  shall not be permitted to
     sell,  transfer,  pledge,  or assign  the  shares of the  restricted  stock
     awarded under this Plan.  Subject to these  limits,  the Committee has sole
     discretion  to set,  accelerate  or waive the  restrictions  of the  stock.
     Except as provided  above,  upon  issuance  of the  restricted  stock,  the
     participant  will have all the rights of a shareholder  with respect to the
     shares,  including  the right to vote them and to receive all dividends and
     other related distributions. If termination of employment occurs within the
     restricted  period,  all shares of stock still subject to restriction  will
     vest  or  be  forfeited  in  accordance   with  the  terms  and  conditions
     established by the Committee.

     In July 1, 1998,  William  Dutmers,  Chairman of the Board of Knape & Vogt,
     was  granted  10,500  shares  of common  stock.  The  stock is  subject  to
     restrictions   on  transfer  for  one  year.   The  stock  is  the  primary
     compensation  for one  year's  service  by Mr.  Dutmers  to the  Company as
     Chairman of the Board of Directors. In addition,  under the EVA bonus plan,
     Mr. Dutmers is eligible to receive a target bonus of 65% times the value of
     the above  awarded  shares which is  determined  by using the average stock
     price in the 30 day period  preceding  the date of grant.  Mr.  Dutmers has
     elected to utilize up to 50% of his fiscal  1999  target  bonus to purchase
     leveraged stock options.


11.     Stockholders' Equity

     The Company has three classes of stock,  common stock, Class B common stock
     and  unissued  preferred  stock.  Each share of common  stock  entitles the
     holder  thereof to one vote on all matters  submitted to the  shareholders.
     Each share of Class B common stock  entitles the holder to ten votes on all
     such  matters,  except  that the  holders of common  stock are  entitled to
     elect,  voting separately as a class, at least one quarter of the Company's
     directors to be elected at each meeting held for the election of directors.
     In all other  instances,  holders of common  stock and Class B common stock
     vote  together,  except for matters  affecting the powers,  preferences  or
     rights  of the  respective  classes  or as  otherwise  required  under  the
     Michigan  Corporation Act. With respect to dividend  rights,  each share of
     common  stock is entitled  to cash  dividends  at least ten  percent  (10%)
     higher than those  payable on each share of Class B common  stock.  Class B
     common  stock is  subject  to  certain  restrictions  on  transfer,  but is
     convertible into common stock on a share-for-share basis at anytime.


12.     Supplemental Cash Flow
        Information

     Total  interest  paid during the years ended June 30, 1998,  1997 and 1996,
     was $1,310,066, $2,025,599 and $2,245,136, respectively.

     Total  income  taxes paid  during the years ended June 30,  1998,  1997 and
     1996, were $3,686,753, $4,324,000 and $2,540,139, respectively.

     In  1998  the  Company  recorded  an  accrued  liability  of  approximately
     $3,000,000 in  connection  with the sale of Hirsh.  The accrual  represents
     closing and other costs associated with the planned sale of Hirsh.

13.     Subsequent Events 

     The Board of Directors gave final approval on August 31, 1998,  authorizing
     the  purchase by the  Company of up to  1,200,000  shares of the  Company's
     common stock pursuant to a Dutch Auction self-tender offer at a price range
     to be determined.  The  self-tender  offer will commence in September 1998.
     The Company  plans to use a portion of the proceeds  from the sale of Hirsh
     and its existing credit facility to fund the repurchase of shares of stock

     The Board  also  approved  a purchase  in the open  market or in  privately
     negotiated transactions,  following the completion of the Dutch Auction, of
     shares of common stock

                                       29
<PAGE>
              Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements


     in an amount  which  when  added to the  number  of shares of common  stock
     purchased in the Dutch Auction would equal 1,350,000.

     Also, on August 31, 1998, the Company  signed the  definitive  agreement to
     sell The Hirsh Co. (see Notes 2 and 8).



                                       30
<PAGE>
Independent Auditors' Report


Board of Directors
Knape & Vogt Manufacturing Company
Grand Rapids, Michigan

We have audited the  accompanying  consolidated  balance  sheets of Knape & Vogt
Manufacturing  Company and  subsidiaries  as of June 30, 1998 and 1997,  and the
related  consolidated  statements of operations,  stockholders'  equity and cash
flows for each of the three  years in the  period  ended  June 30,  1998.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
consolidated  financial  statement  presentation.  We  believe  that our  audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of  Knape & Vogt
Manufacturing  Company  and  subsidiaries  at June 30,  1998 and  1997,  and the
results of their  operations and their cash flows for each of the three years in
the period ended June 30, 1998, in conformity with generally accepted accounting
principles.



/s/ BDO Seidman, LLP
Grand Rapids, Michigan
August 7, 1998
except for Note 13, as to which the date is August 31, 1998




                                       31
<PAGE>
          ITEM 9--DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     No changes in, or disagreements with, the Company's  accountants  occurred,
requiring disclosure under Item 304 of Regulation S-K.

                                    PART III

           ITEM 10--DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Directors of  Registrant.  Information  relating to directors  and director
nominees of the Company,  contained in the Company's  definitive Proxy Statement
for its Annual  Meeting of  Shareholders  to be held October 16, 1998, and filed
pursuant to Regulation 14A, is incorporated herein by reference.


     Executive  Officers of  Registrant.  Information  relating to the executive
officers of the Company is included in Part I of this Form 10-K.

                         ITEM 11--EXECUTIVE COMPENSATION

     The information  under the captions "Summary  Compensation  Table," "Option
Grants in Last Fiscal Year," and  "Aggregated  Stock Option  Exercises in Fiscal
1998 and Year End Option Values," is  incorporated  herein by reference from the
Company's  definitive  Proxy  Statement  for the  Company's  Annual  Meeting  of
Shareholders to be held October 16, 1998, filed pursuant to Regulation 14A.

     ITEM 12--SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  information  under  the  captions  "Voting  Securities  and  Principal
Shareholders"  and "Directors and Nominees" is incorporated  herein by reference
from the Company's  definitive  Proxy Statement for the Company's Annual Meeting
of Shareholders to be held October 16, 1998, filed pursuant to Regulation 14A.

             ITEM 13--CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information under the caption  "Directors and Nominees" is incorporated
herein by  reference  from the  Company's  definitive  Proxy  Statement  for the
Company's  Annual  Meeting of  Shareholders  to be held October 16, 1998,  filed
pursuant to Regulation 14A.



                                       32
<PAGE>
                                     PART IV

    ITEM 14--EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  (1) Financial Statements

     The following  financial  statements  and  schedules,  all of which are set
forth in Item 8, are filed as part of this report. 

                                                                  Page Number in
                                                                     10-K Report

    Consolidated Statements of Operations                                     13
    Consolidated Balance Sheets                                               14
    Consolidated Statements of Stockholders' Equity                           16
    Consolidated Statements of Cash Flows                                     17
    Notes to Consolidated Financial Statements                                18
    Independent Auditors' Report                                              31


     (2) Financial Statement Schedule

     The  following   financial   statement  schedule  and  related  Independent
Auditors'  Report on such  schedule  are included in this Form 10-K on the pages
noted.

                                                                  Page Number in
                                                                     10-K Report

    Independent Auditors' Report on such schedule                             34
    Schedule II -- Valuation and Qualifying Accounts and Reserves             35


     All other  schedules are not submitted  because they are not  applicable or
not required,  or because the required  information is included in the financial
statements or notes thereto.

     (3) Exhibits

     Reference  is made to the  Exhibit  Index which is found on page 37 of this
Form 10-K Annual Report.

(b) Reports on Form 8-K

     No  reports on Form 8-K were  filed  during the fourth  quarter of the year
ended June 30, 1998.



                                       33
<PAGE>
                    Independent Auditors' Report on Schedule



Knape & Vogt Manufacturing Company
Grand Rapids, Michigan

The audits  referred to in our report dated August 7, 1998,  except for Note 13,
as to which the date is August 31, 1998, relating to the consolidated  financial
statements of Knape & Vogt Manufacturing Company which is contained in Item 8 of
this Form 10-K, included the audit of the financial statement schedule listed in
the accompanying  table of contents.  This financial  statement  schedule is the
responsibility of the Company's management.  Our responsibility is to express an
opinion on this financial statement schedule based upon our audits.

In our  opinion,  the  financial  statement  schedule  presents  fairly,  in all
material respects, the information set forth therein.



/s/ BDO Seidman, LLP
BDO Seidman, LLP
Grand Rapids, Michigan
August 7, 1998




                                       34
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
          Schedule II - Valuation and Qualifying Accounts and Reserves



<TABLE>
             Column A                      Column B         Column C          Column D          Column E
--------------------------------------------------------------------------------------------------------
                                           Balance         Charged to                           Balance
                                          beginning        costs and                            end of
Description                               of period       expenses(1)       Deductions(1)       period
--------------------------------------------------------------------------------------------------------
<S>                                        <C>              <C>                  <C>           <C>
Year ended June 30, 1998:
 Allowances deducted from assets:
    Accounts receivable for:
      Doubtful accounts                     $268,000         $390,000            $381,000       $277,000
      Cash discounts                         257,000                -              63,000        194,000
--------------------------------------------------------------------------------------------------------
                                            $525,000         $390,000            $444,000       $471,000

Year ended June 30, 1997
 Allowances deducted from
  assets:
    Accounts receivable for:
      Doubtful accounts              $       340,000        $ 318,000           $ 390,000      $ 268,000
      Cash discounts                         223,000           34,000                   -        257,000
--------------------------------------------------------------------------------------------------------
                                           $ 563,000        $ 352,000           $ 390,000      $ 525,000

Year ended June 30, 1996
 Allowances deducted from
  assets:
    Accounts receivable for:
      Doubtful accounts                    $ 338,000        $ 593,000        $ 591,000          $340,000
      Cash discounts                         216,000            7,000                -           223,000
----------------------------------  ----------------  --------------- ----------------  ----------------
                                            $554,000        $ 600,000        $ 591,000          $563,000

</TABLE>

(1)  Write-off  of doubtful  accounts  and  collections  on accounts  previously
     written off, including reduction in allowance balance.



                                       35
<PAGE>
                                   SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) 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


                                      By  /s/ Allan E. Perry
                                          Allan E. Perry, President and Chief
                                          Executive Officer

Date:  September 1, 1998


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report has been signed below on September 1, 1998, by the  following  persons on
behalf of the registrant in the capacities  indicated.  Each director or officer
of the registrant,  whose signature  appears below,  hereby appoints  Richard C.
Simkins as his  attorney-in-fact,  to sign in his name and on his  behalf,  as a
director or officer of the  registrant,  and to file with the Commission any and
all amendments to this Report on Form 10-K.


/s/ Allan E. Perry                           /s/ William R. Dutmers
Allan E. Perry, Chief Executive Officer      William R. Dutmers, 
and Director                                 Chairman of the Board

/s/ Richard C. Simkins                       /s/ Jack D. Poindexter
Richard C. Simkins, Executive Vice           Jack D. Poindexter, Principal
President and Director                       Financial and Accounting Officer

                                             /s/ John E. Fallon
Mary Rita Cuddohy, Director                  John E. Fallon, Director

                                             /s/ Herbert F. Knape
Michael J. Kregor, Director                  Herbert F. Knape, Director

/s/ Raymond E. Knape                         /s/ Richard S. Knape
Raymond E. Knape, Director                   Richard S. Knape, Director


                                       36
<PAGE>
                       KNAPE & VOGT MANUFACTURING COMPANY
                            ANNUAL REPORT - FORM 10-K

                                  EXHIBIT INDEX

3(a)      Certificate  of Amendment to the  Articles of  Incorporation,  and the
          Restated Articles of Incorporation of the Company,  which was filed as
          Exhibit  3(a) of the  Registrant's  Form 10-K  Annual  Report  for the
          fiscal year ended June 30, 1987, is incorporated by reference.

3(b)      Bylaws,  filed as Exhibit  3(b) of the  Registrant's  Form 10-K Annual
          Report  for  the  fiscal  year  June  30,  1987,  is  incorporated  by
          reference.

10(a)     Supplemental  Executive Retirement Plan, which was filed as Exhibit 10
          of the Registrant's  Form 10-K Annual Report for the fiscal year ended
          June 30, 1981, is incorporated by reference.

10(b)     Knape & Vogt Manufacturing  Company 1987 Stock Option Plan,  effective
          October  16,  1987,  which  was  filed as  Exhibit  I to  Registrant's
          definitive  Proxy  Statement dated September 23, 1987, is incorporated
          by reference.

10(c)     Knape & Vogt Manufacturing  Company Employees' Retirement Savings Plan
          (July 1, 1989 Restatement),  as amended, which was filed as Exhibit 99
          to  Registrant's   Registration   Statement  on  Form  S-8  (Reg.  No.
          33-88212), is incorporated by reference.

10(d)     Loan agreement with Old Kent Bank dated November 29, 1993, as amended,
          which was filed as Exhibit 10(d) to the Registrant's  Form 10-K Annual
          Report for the fiscal year ended June 30,  1996,  is  incorporated  by
          reference.

10(e)     Agreement  dated  November 1, 1997,  amending loan  agreement with Old
          Kent Bank - filed herewith.

10(f)     Knape & Vogt  Manufacturing  Company 1997 Stock Incentive Plan,  which
          was filed as  Appendix A to the  Registrant's  proxy  statement  dated
          September 17, 1997, is incorporated by reference.

10(g)     Letter Agreement dated July 1, 1998 between Knape & Vogt Manufacturing
          Company and William R. Dutmers - filed herewith.

10(h)     Restricted  Share Award  Agreement  dated July 1, 1998 between Knape &
          Vogt Manufacturing Company and William R Dutmers - filed herewith.

10(i)     Management  Continuity  Agreement dated July 1, 1997,  between Knape &
          Vogt  Manufacturing  Company  and  Allan  E.  Perry - filed  herewith.
          Registrant has entered into identical agreements with Messrs.  Richard
          C. Simkins, Michael G. Van Rooy and John Vogus.

21        Subsidiaries of Registrant.

23        Consent of BDO Seidman, LLP, independent public accountants.

24        Power of Attorney (Included on page 36).

27        Financial Data Schedule


                                       37
<PAGE>
                                 EXHIBIT 10(e)

                                 REVOLVING NOTE
$47,500,000                                               Grand Rapids, Michigan
                                                                November 1, 1997

     FOR VALUE RECEIVED, the undersigned,  KNAPE & VOGT MANUFACTURING COMPANY, a
Michigan corporation (the "Company"), hereby promises to pay to the order of OLD
KENT BANK, a Michigan banking  corporation  (the "Bank"),  in lawful currency of
the United States of America and in immediately  available funds, on November 1,
1999, the principal sum of  Forty-seven  Million Five Hundred  Thousand  Dollars
($47,500,000),  or, if less, the aggregate  unpaid principal amount of revolving
Loans made by the Bank to the Company  pursuant to the Loan Agreement  described
below and to pay interest on the unpaid  principal  balance  hereof from time to
time  outstanding,  in like money and funds, for the period from the date hereof
until those Revolving Loans shall be paid in full, at the rates per annum and on
the dates proviced in the Loan Agreement referred to below.

     The  Bank is  hereby  authorized  by the  Company  to note on the  schedule
attached to this  Revolving Note or on its books and records the date and amount
of each Revolving  Loan,  the applicable  interest rate and type and duration of
the  related  Interest  Period (if  applicable),  the amount of each  payment or
prepayment of principal thereon,  and the other information provided for on that
schedule,  which  schedule or such books and records,  as the case may be, shall
constitute  prima facie evidence of the information so noted,  provided that any
failure by the Bank to make any that  notation  shall not relieve the Company of
its obligation to repay the outstanding principal amount of this Revolving Note,
all  accrued  interest  hereon and any amount  payable  with  respect  hereto in
accordance with the terms of this Revolving Note and the Loan Agreement.

     The  Company  and  each  endorser  or  guarantor   hereof  waives   demand,
presentment,  protest,  diligence, notice of dishonor and any other formality in
connection with this Revolving Note.

     This Revolving Note evidences one or more Revolving Loans made under a Loan
Agreement,  dated as of November 29, 1993, and amended on February 16, 1995, and
June 28, 1996 (collectively,  the "Loan Agreement"), between the Company and the
Bank,  to which  reference is hereby made for a statement  of the  circumstances
under which this Revolving Note is subject to prepayment and under which its due
day may be accelerated. Capitalized terms used but not defined in this Revolving
Note shall have the respective meanings assigned to them in the Loan Agreement.


                                       KNAPE & VOGT MANUFACTURING COMPANY

                                       By /s/  Richard C. Simkins
                                               Richard C. Simkins
                                       Its        Executive Vice President


                                       Accepted by:

                                       OLD KENT BANK

                                       By
                                           Andrew P. Gavulic, Vice President
#196636
<PAGE>
                                 EXHIBIT 10(g)



                                  July 1, 1998



Mr. William R. Dutmers
1848 Antisdale Road
Muskegon, MI 49441

Dear Bill:

     This letter will serve as our agreement  concerning your  compensation  and
the  services to be provided by you to Knape & Vogt  Manufacturing  Company (the
"Company"). This agreement becomes effective as of July 1, 1998.

     Services  Rendered.  You are presently  serving as Chairman of the Board of
Directors  of the  Company.  You have been  providing  and  expect  to  continue
providing  consulting services to the Company concerning mergers,  acquisitions,
asset  dispositions  and other special projects that may be assigned to you from
time to time by the Board of Directors or  management  of the Company.  You will
also be expected to perform those duties  outlined in a written job  description
to be approved by the  Compensation  Committee  and the full Board of  Directors
prior to July 1, 1998.  It is expected that you will devote at least 80% of your
business time to the Company's  business.  You will report directly to the Board
of Directors.

     Restricted Shares.  Your base compensation for services rendered will be an
annual award at the beginning of each fiscal year of 10,500 restricted shares of
the Company's  common stock.  This restricted  share award will be granted as of
the beginning of each fiscal year for five years,  subject to prior  termination
of the  arrangement by the Board of Directors.  The  restricted  shares will not
vest and may not be transferred until one year after they are issued. During the
restricted  period,  the restricted  shares will be forfeited if you cease to be
Chairman of the Board of Directors for any reason or cease to be a member of the
Board of Directors for any reason,  other than your death or  disability.  After
the one year  restricted  period,  the  restricted  shares  will vest and become
freely  transferrable.  The restricted shares will be issued to you in a private
placement and will not have been registered  under state and federal  securities
law. During the one year restriction  period,  you will be permitted to vote the
restricted  shares and will be  entitled  to  dividends  paid on the  restricted
shares. The
<PAGE>
Mr. William R. Dutmers
July 1, 1998
Page 2


restricted  shares  will  vest  automatically  upon a change of  control  of the
Company.  The terms and conditions of the restricted shares will be described in
more detail in a  Restricted  Share Award  Agreement to be signed by you and the
Company, a copy of which is attached to this letter.

     EVA  Bonus.  During  the term of this  Agreement,  you will be paid a bonus
based on Economic  Value Added  determined in the same manner as provided in the
Company's  Management  Incentive  Compensation  Plan (the EVA Bonus  Plan).  For
purposes of  calculating  an equivalent to the bonus that would be payable under
the EVA Bonus Plan, your "base" for EVA bonus purposes for each fiscal year will
equal the fair market value of the 10,500 restricted  shares.  Fair market value
will be the average closing price per share during the month of June as reported
in the Wall Street Journal prior to the date the restricted shares were awarded.
July 1 will be the award  date for the  restricted  shares.  Your  Target  Bonus
Percentage  will be 65% for purposes of  calculating  your EVA bonus.  Any bonus
earned  by you  will  be  allocated  to  leveraged  stock  options  in the  same
percentage as the maximum  percentage of EVA bonus that the Company's  President
and Chief  Executive  Officer is eligible to  designate  as his EVA Bonus Option
Amount under the EVA Bonus Plan. In addition,  if the amount of leveraged  stock
options  that the  President  and Chief  Executive  Officer  of the  Company  is
eligible to receive is reduced because of the  limitations  contained in Section
6.4(a) of the 1997 Stock  Incentive  Plan,  then the number of  leveraged  stock
options that you may receive will also be reduced on a pro rata basis.  Although
you are not a participant in the Company's EVA Bonus Plan,  the leveraged  stock
options  will be  granted  to you on terms  equivalent  to the  leveraged  stock
options  that  would have been  granted  under the EVA Bonus Plan had you been a
participant  in the EVA Bonus Plan.  The  options and the shares  covered by the
options will be issued in a private  placement and will not be registered  under
state and federal securities laws.

     Additional  Compensation.  The Company will also provide you with  coverage
under the Company's  medical  insurance  plan. The Company will lease a suitable
automobile for your use and reimburse you for automobile expenses related to the
Company's business.

     Independent  Contractor.  We agree that you are  providing  services to the
Company as an independent contractor,  and not as an employee. As an independent
contractor,  you set your own hours and  determine the manner and method of your
performance.  This agreement is not an employment  agreement and does not create
an employment relationship.
<PAGE>
Mr. William R. Dutmers
July 1, 1998
Page 3

     This  agreement  supersedes  and replaces any and all other  agreements  or
arrangements  and  may be  canceled  by you or the  Company  at any  time.  This
agreement is not a commitment to nominate or elect you to the Company's Board of
Directors.

     If this  letter  accurately  reflects  the  agreement  between  you and the
Company concerning these matters,  please acknowledge below and return a copy to
the Company.

                                        Sincerely,

                                        KNAPE & VOGT MANUFACTURING COMPANY



                                        By: /s/ Allan E. Perry

                                          Its: President

Acknowledged and agreed:


/s/William R. Dutmers
William R. Dutmers




::ODMA\PCDOCS\GRR\140334\1
<PAGE>
                                  EXHIBIT 10(h)

                        RESTRICTED SHARE AWARD AGREEMENT


     AGREEMENT  made  as of  this  1st  day  of  July,  1998,  by  KNAPE  & VOGT
MANUFACTURING  COMPANY, a Michigan  corporation (the "Company"),  and WILLIAM R.
DUTMERS, an individual (the "Grantee").

RECITALS

     The  Company and the  Grantee  have  entered  into a  consulting  agreement
providing  for the grant by the Company to the Grantee of  restricted  shares of
common stock of the Company.

     The Board of Directors  of the Company has approved an award of  restricted
shares to the Grantee upon the terms and conditions set forth in this Agreement.

     The Company and the Employee desire to confirm in this Agreement the terms,
conditions and restrictions applicable to the award of restricted stock.

     NOW, THEREFORE, intending to be bound, the parties agree as follows:

1.       DEFINITIONS

     1.1 "Board" means the Board of Directors of the Company.

     1.2  "Change in Control"  shall have the  meaning  ascribed to such term in
Section 10.2 of the Company's 1997 Stock Incentive Plan.

     1.3 "Common  Stock" means the common stock of the Company,  par value $2.00
per share.

     1.4  "Company"  means  Knape  &  Vogt  Manufacturing  Company,  a  Michigan
corporation, its successors and assigns.

     1.5 "Effective Date of this Agreement" means July 1, 1998.

     1.6 "Fiscal  Year"  means the twelve  month  period  ending June 30 of each
year, or such other fiscal year as may be adopted for the Company by the Board.

     1.7 "Restricted Share" means a Share which is subject to the restriction on
sale,  pledge or other transfer imposed by Section 3.1. An "Unrestricted  Share"
is a Share which is no longer a Restricted Share.
<PAGE>
     1.8  "Reverted  Shares"  means  Shares  which have  reverted to the Company
pursuant to Section 5.2.

     1.9 "Shares" means the shares of Common Stock awarded, issued and delivered
to the Grantee  under this  Agreement.  If, as a result of a stock split,  stock
dividend,  combination of stock,  or any other change or exchange of securities,
by reclassification,  reorganization,  recapitalization or otherwise, the Shares
shall be increased or  decreased,  or changed into or exchanged  for a different
number or kind of shares of stock or other  securities of the Company or another
corporation,  the term  "Shares"  shall mean and  include the shares of stock or
other securities issued with respect to the Shares.

     1.10 "Vested Shares" shall have the meaning expressed in Section 5.1.

2.       AWARD AND ACCEPTANCE OF AWARD; TAX ELECTION

     2.1 Award.  The Company  confirms the award to the Grantee of 10,500 shares
of Common Stock (the "Shares") as restricted stock, upon the terms, restrictions
and conditions of this  Agreement.  The award of Shares shall be effective as of
the Effective Date of this Agreement. The Company agrees to issue and deliver to
the Grantee a certificate  representing  the Shares promptly after the Effective
Date of this Agreement.

     2.2 Acceptance. The Grantee accepts this award of Shares and agrees to hold
them subject to the terms, restrictions and conditions of this Agreement.

     2.3 Tax  Election.  The  Grantee may elect to be taxed in 1998 [the year in
which this  award is made] on the fair  market  value of the  Shares  awarded by
signing an election to be so taxed under Section  83(b) of the Internal  Revenue
Code, and filing such election with the Internal  Revenue  Service within thirty
(30) days after the Effective Date of this Agreement. If the Grantee chooses not
to make such an election,  the Grantee will be taxed on the fair market value of
the Shares in the year in which the restrictions lapse.

     2.4 No  Withholding.  The  Grantee  recognizes  that  he is an  independent
contractor  with respect to the Company and not an employee of the Company.  The
Company will not withhold any amounts from the award of Shares for tax purposes.
Grantee is responsible for his own tax consequences with respect to the award of
Shares.


                                       -2-
<PAGE>
3.       RESTRICTIONS ON TRANSFER OF SHARES; LAPSE OF RESTRICTIONS

     3.1 Transfer  Prohibition.  The Grantee shall not sell, pledge or otherwise
assign or transfer  any Share or any interest in any Share while such Share is a
Restricted Share.

     3.2 Restricted  Shares.  Every Share shall be a Restricted  Share until the
restrictions lapse as provided in Section 3.6.

     3.3 Securities Law  Compliance.  The Grantee shall not sell or transfer any
Share or any interest in any Share, whether such Share is or is not a Restricted
Share,  unless either (a) the Company shall consent in writing to such transfer,
or (b) the Company shall have received an opinion of counsel satisfactory to the
Company to the effect  that such  transfer  will not  violate  the  registration
requirements imposed by the Securities Act of 1933 or any other provision of law
which the Company shall desire such opinion to cover.  The Grantee  acknowledges
that the Shares have not been  registered  under the federal  securities laws or
the securities laws of any state.

     3.4 Legend. Every certificate  representing a Share shall at all times bear
the following legend:

         "The  transferability  of this  certificate  and the  shares  of  stock
         represented  hereby are subject to the terms and conditions  (including
         forfeiture) of the Award Agreement  entered into between the registered
         owner  and the  Company,  dated  July  1,  1998.  A copy  of the  Award
         Agreement is on file in the offices of the Company, 2700 Oak Industrial
         Drive, N.E., Grand Rapids, MI 49505."

     3.5 Stop Transfer  Instructions.  The Company shall have the right to issue
instructions  to the transfer  agent for the shares of the Company,  prohibiting
transfer  of any  Shares  except in  accordance  with the  requirements  of this
Agreement.

     3.6  Unrestricted  Shares.  The  restrictions  imposed by Section 3.1 shall
lapse at the time a Share  becomes a Vested  Share  pursuant to Section  5.1. At
that time, the Share will be an Unrestricted Share.

     3.7  New  Certificate  for  Unrestricted  Shares.  If the  Grantee  holds a
certificate  representing  Shares  which are no longer  Restricted  Shares,  the
Grantee shall be entitled to receive from the Company,  in exchange therefor,  a
certificate  representing  such  Unrestricted  Shares,  bearing a legend, if the
Company shall deem such a legend to be appropriate,  only to the effect that the
transfer of such Shares is prohibited if it would violate the  Securities Act of
1933, or any state securities law. If the Grantee's certificate  represents both
Restricted and Unrestricted Shares, the Grantee shall be entitled to receive two
certificates in exchange

                                       -3-
<PAGE>
therefor,  one of which shall  represent the Restricted  Shares and one of which
shall represent Unrestricted Shares.

     3.8  Rights of  Shareholder.  Except for the  restrictions  imposed in this
Article 3 and unless the Shares have reverted to the Company pursuant to Section
5.2, the Grantee shall have all the rights of a shareholder  with respect to the
Restricted  Shares,  including  the right to vote and to receive  the  dividends
declared and paid thereon.

4.       ACQUISITION WARRANTIES

     In order to induce the Company to issue and deliver the Shares on the terms
of this  Agreement,  the  Grantee  warrants  to and agrees  with the  Company as
follows:

     4.1 No Participating  Interest. The Grantee is acquiring the Shares for the
Grantee's own account,  and has not made any  arrangement to convey any interest
in the Shares to any  person,  other  than to  transfer  Reverted  Shares to the
Company pursuant to Section 5.3.

     4.2 Ability to Evaluate.  Because of the Grantee's knowledge and experience
in financial  and business  matters,  the Grantee is capable of  evaluating  the
merits and risks of acquiring  the Shares under the  arrangements  prescribed by
this Agreement.

     4.3  Familiarity  with Company.  The Grantee is familiar with the business,
financial  condition,  earnings and prospects of the Company,  and confirms that
the Company has not made any  representation  regarding the foregoing matters or
the merits of this Agreement.

     4.4 All Questions  Answered.  The Grantee  understands  all of the terms of
this Agreement and the  consequences  to the Grantee of any actions which may be
taken under this Agreement. The Grantee confirms there are no questions relating
to any such  matters  which have not been  answered  to the  Grantee's  complete
satisfaction.

     4.5 Accredited Investors Status. The Grantee represents and warrants to the
Company  that  he is an  "accredited  investor"  as  such  term  is  defined  in
Regulation D under the Securities Act of 1933, as amended, because Grantee's net
worth exceeds $1,000,000.

     4.6 Separate Award. The Company and the Grantee  understand that Grantee is
not a participant in the Company's 1997 Stock Incentive Plan, and this Agreement
is not subject to the Company's 1997 Stock Incentive Plan.


                                       -4-
<PAGE>
5.       VESTING AND REVERSION

     5.1 Vesting.  All Shares shall become 100% Vested  Shares on the earlier of
(i) July 1, 1999 (one year from the date of this Agreement), (ii) the occurrence
of a Change of Control,  (iii) Grantee's  death,  or (iv) Grantee's  disability,
unless prior to such time such shares revert to the Company  pursuant to Section
5.2 of this  Agreement  because  Grantee ceases to be Chairman of the board or a
member  of  the  Board  of  Directors  for  any  reason  (other  than  death  or
disability), whether Grantee's departure was because of resignation or any other
reason (other than death or disability).

     5.2 Reversion.  Unless already  vested  pursuant to Section 5.1 above,  all
Shares which have not become  Vested  Shares shall  automatically  revert to the
Company  if prior to July 1, 1999  (one  year  from the date of this  Agreement)
Grantee ceases to be Chairman of the Board of Directors or a member of the Board
of Directors for any reason (other than death or disability),  whether Grantee's
departure was because of resignation or any other reason. No compensation  shall
be payable to the Grantee  for shares  which  revert to the Company  (other than
death or disability).

     5.3  Effect  of  Reversion.  Upon  reversion  of any  Shares  (a)  absolute
ownership  thereof shall  automatically  revert to the Company at that time, (b)
such  Shares  shall be deemed  to be  "Reverted  Shares"  for  purposes  of this
Agreement,  (c) all the Grantee's  rights and  interests in the Reverted  Shares
shall cease at that time, and (d) the Grantee shall be obligated  immediately to
surrender to the Company the certificates  representing the Reverted Shares, but
the failure to do so shall not impair the  immediate  effect of clauses (a), (b)
and (c) above.

6.       GENERAL PROVISIONS

     6.1 No Right to Employment.  This Agreement is not an employment  contract.
Grantee is an independent contractor with respect to the Company.

     6.2 Severability. Whenever possible, each provision of this Agreement shall
be  interpreted  in such  manner  as to be  valid  and  enforceable,  but if any
provision of this  Agreement  shall be held to be  prohibited  or  unenforceable
under  applicable law (a) such  provision  shall be deemed amended to accomplish
the  objectives  of the provision as  originally  written to the fullest  extent
permitted by law, and (b) all other provisions of this Agreement shall remain in
full force and effect.

     6.3 Captions. The captions used in this Agreement are for convenience only,
do not  constitute a part of this  Agreement  and all of the  provisions of this
Agreement shall be enforced and construed as if no captions had been used.


                                       -5-
<PAGE>
     6.4 Complete Agreement.  This Agreement and the Letter Agreement dated July
1, 1998,  between the Company and Grantee contain the complete agreement between
the  parties  relating in any way to the subject  matter of this  Agreement  and
supersede any prior  understandings,  agreements or representations,  written or
oral, which may have related to such subject matter in any way.

     6.5 Notices.

          (a) Procedures  Required.  Each communication given or delivered under
     this Agreement must be in writing and may be given by personal  delivery or
     by certified mail, return receipt requested.  A written communication shall
     be  deemed  to have  been  given on the date it shall be  delivered  to the
     address required by this Agreement.

          (b) Communications to the Company. Communications to the Company shall
     be addressed to it at the principal  corporate  headquarters  and marked to
     the attention of the Company's Executive Compensation Committee Chair.

          (c) Communications to the Grantee.  Every communication to the Grantee
     shall be addressed to the Grantee at the address  given  immediately  below
     the Grantee's signature to this Agreement,  or to such other address as the
     Grantee shall specify to the Company.

     6.6 Assignment.  This Agreement is not assignable by the Grantee during the
Grantee's  lifetime.  This  Agreement  shall be  binding  upon and  inure to the
benefit of (a) the successors and assigns of the Company,  and (b) any person to
whom the  Grantee's  rights  under  this  Agreement  may pass by  reason  of the
Grantee's death.

     6.7  Amendment.  This  Agreement may be amended,  modified or terminated by
written agreement between the Company and the Grantee.

     6.8 Waiver.  No delay or omission in exercising any right  hereunder  shall
operate as a waiver of such right or of any other right hereunder. A waiver upon
any one  occasion  shall  not be  construed  as a bar or  waiver of any right or
remedy on any other  occasion.  All of the rights and  remedies  of the  parties
hereto, whether evidenced hereby or granted by law, shall be cumulative.

     6.9 Choice of Law.  This  Agreement  shall be deemed to be a contract  made
under the laws of the State of Michigan and for all purposes  shall be construed
in accordance with and governed by the laws of the State of Michigan.


                                       -6-
<PAGE>
     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the day and year first above written.

Grantee:                                  KNAPE & VOGT MANUFACTURING
                                          COMPANY


/s/William R. Dutmers                     By /s/Allan E. Perry
William R. Dutmers                           Its   President

Address:

1848 Antisdale

Muskegon, MI 49441



::ODMA\PCDOCS\GRR\140209\3
                                       -7-
<PAGE>
                                 EXHIBIT 10(i)

                         MANAGEMENT CONTINUITY AGREEMENT


     THIS IS AN  AGREEMENT  between  KNAPE  & VOGT  MANUFACTURING  COMPANY  (the
"Corporation"),  whose  principal  offices are 2700 Oak Industrial  Drive,  N.E.
Grand Rapids,  MI 49505,  and ALLAN E. PERRY (the  "Executive"),  who resides at
10127 Augusta Valley Court, S.E., Ada, MI 49301, dated July 1, 1997.

                                    RECITALS

     The Executive is a key executive officer of the Corporation whose continued
dedication,  availability,  advice  and  counsel  to the  Corporation  is deemed
important  to  the  Board  of  Directors  of  the  Corporation  ("Board"),   the
Corporation and its shareholders.  The services of the Executive, his experience
and knowledge of the affairs of the  Corporation and his reputation and contacts
in the industry  are  extremely  valuable to the  Corporation.  The  Corporation
wishes to attract and retain such  well-qualified  executives,  and it is in the
best interests of the  Corporation  and of the Executive to secure the continued
services  of  the  Executive  notwithstanding  any  change  in  control  of  the
Corporation.  The Corporation  considers the  establishment and maintenance of a
sound and vital management to be part of its overall  corporate  strategy and to
be essential to protecting and enhancing the best interests of this  Corporation
and its  shareholders.  Accordingly,  the Board has approved this Agreement with
the  Executive  and  authorized  its  execution  and  delivery  on behalf of the
Corporation.

                                    AGREEMENT

     1. Term of Agreement.  This  Agreement will begin on the date entered above
(the  "Commencement  Date")  and will  continue  in  effect  through  the  third
anniversary of the Commencement  Date.  However,  as of the third anniversary of
the Commencement  Date, and as of each third  anniversary  date thereafter,  the
term of this  Agreement  may be extended for three (3)  additional  years if the
Board  specifically  approves  such an  extension.  If this  Agreement is not so
extended,  it will terminate unless the following sentence applies.  If a Change
of  Control  occurs  during  the term of this  Agreement,  this  Agreement  will
continue in effect for at least  thirty-six  (36)  months  beyond the end of the
month in which any Change of Control occurs.

     2.  Definitions.  The  following  defined terms shall have the meanings set
forth below, for purposes of this Agreement:

          (a) Change of Control.  A "Change of Control" of the Corporation shall
     be deemed to have occurred only if:
 <PAGE>
               (i) Any  "person"  (as such  term is used in  Sections  13(d) and
          14(d) of the Securities  Exchange Act of 1934 (the "Exchange Act")) is
          or becomes the "beneficial  owner" (as defined in Rule 13d-3 under the
          Exchange  Act),   directly  or   indirectly,   of  securities  of  the
          Corporation  representing  fifty-one  percent  (51%)  or  more  of the
          combined   voting  power  of  the   Corporation's   then   outstanding
          securities; or

               (ii) At any time a  majority  of the  Board of  Directors  of the
          Corporation  is  comprised  of other than  Continuing  Directors  (for
          purposes of this and the  following  paragraphs,  the term  Continuing
          Director  means a  director  who  was  either  (A)  first  elected  or
          appointed as a Director  prior to the date of this  Agreement;  or (B)
          subsequently  elected or appointed as a director if such  director was
          nominated or  appointed by at least a majority of the then  Continuing
          Directors); or

               (iii) Any of the following occur:

                    (A) Any merger or consolidation  of the  Corporation,  other
               than a merger or consolidation in which the voting  securities of
               the Corporation  immediately prior to the merger or consolidation
               continue to represent  (either by remaining  outstanding or being
               converted  into  securities  of the surviving  entity)  fifty-one
               percent  (51%)  or  more  of the  combined  voting  power  of the
               Corporation or surviving entity  immediately  after the merger or
               consolidation with another entity;

                    (B) Any sale, exchange,  lease, mortgage,  pledge, transfer,
               or other  disposition  (in a single  trans  action or a series of
               related  transactions) of all or substantially  all of the assets
               of the  Corporation,  which  shall not  include  any asset  sales
               approved by the Continuing  Directors for the specific purpose of
               downsizing of the Corporation's continuing business operations;

                    (C) Any liquidation or dissolution of the Corporation; or


                                       -2-
<PAGE>
                    (D) Any  transaction  or series  of  related  trans  actions
               having,  directly  or  indirectly,  the same effect as any of the
               foregoing;  or any  agreement,  contract,  or  other  arrangement
               providing for any of the foregoing.

          (b)  Disability.  "Disability"  means that, as a result of Executive's
     incapacity due to physical or mental illness, the Executive shall have been
     found to be eligible  for the receipt of benefits  under the  Corporation's
     long term disability plan.

          (c) Cause.  "Cause" means (i) the willful  commission by the Executive
     of a criminal or other act that causes or will probably  cause  substantial
     economic damage to the Corporation or a Subsidiary or substantial injury to
     the  business  reputation  of the  Corporation  or a  Subsidiary;  (ii) the
     commission by the Executive of an act of fraud in the  performance  of such
     Executive's  duties on behalf of the Corporation or a Subsidiary;  or (iii)
     the  continuing  willful  failure of the Executive to perform the duties of
     such  Executive to the  Corporation  or a  Subsidiary  (other than any such
     failure  resulting  from the  Executive's  Disability  or  occurring  after
     issuance by Executive  of a Notice of  Termination  for Good Reason)  after
     written notice thereof  (specifying the  particulars  thereof in reasonable
     detail) and a reasonable  opportunity to be heard and cure such failure are
     given to the  Executive  by the  Executive  Compensation  Committee  of the
     Board. For purposes of this subparagraph, no act, or failure to act, on the
     Executive's  part shall be deemed  "willful"  unless done, or omitted to be
     done, by the Executive not in good faith and without reasonable belief that
     the action or omission  was in the best  interest of the  Corporation  or a
     Subsidiary.

          (d) Good Reason.  For purposes of this Agreement,  "Good Reason" means
     the occurrence of any one or more of the following  without the Executive's
     express written consent:

               (i) The  assignment  to Executive of duties which are  materially
          different from or inconsistent with the duties, responsibilities,  and
          status of  Executive's  position  at any time during the six (6) month
          period  prior to the Change of Control  of the  Corporation,  or which
          result  in  a  significant  reduction  in  Executive's  authority  and
          responsibility as a senior executive of the Corporation;

               (ii) A reduction by the Corporation in Executive's base salary or
          salary grade as of the day prior to the Change of

                                       -3-
<PAGE>
          Control,  or the failure to grant salary  increases and bonus payments
          on a basis  comparable  to those  granted to other  executives  of the
          Corporation,  or reduction of Executive's  most recent incentive bonus
          potential  prior to the  Change of  Control  under  the  Corporation's
          Management Bonus Plan, or any successor plan;

               (iii)  The  Corporation  requiring  Executive  to be  based  at a
          location  in  excess  of forty  (40)  miles  from the  location  where
          Executive is currently based, or in the event of any relocation of the
          Executive with the Executive's express written consent, the failure of
          the  Corporation  or a Subsidiary  to pay (or  reimburse the Executive
          for) all  reasonable  moving  expenses by the Executive  relating to a
          change of principal  residence in connection  with such relocation and
          to indemnify  the  Executive  against any loss realized in the sale of
          the Executive's principal residence in connection with any such change
          of residence, all to the effect that the Executive shall incur no loss
          on an after tax basis;

               (iv) The  failure  of the  Corporation  to obtain a  satisfactory
          agreement from any successor to the Corporation to assume and agree to
          perform this Agreement, as contemplated in Paragraph 6 hereof;

               (v) Any termination by the Corporation of Executive's  employment
          that is not effected pursuant to a Notice of Termination;

               (vi) Any  termination  of  Executive's  employment,  reduction in
          Executive's compensation or benefits, or adverse change in Executive's
          location or duties, if such  termination,  reduction or adverse change
          (aa) occurs within six (6) months before a Change of Control,  (bb) is
          in contemplation of such Change in Control, and (cc) is taken to avoid
          the effect of this  Agreement  should  such  action  occur  after such
          Change in Control;

               (vii) The failure of the  Corporation  to provide  the  Executive
          with  substantially  the  same  fringe  benefits  (including,  without
          limitation, retirement plan, health care, insurance, stock options and
          paid vacations) that were provided to him

                                       -4-
<PAGE>
          immediately  prior to the  Change in  Control,  or with a  package  of
          fringe  benefits  that,  though one or more of such  benefits may vary
          from those in effect  immediately prior to such Change in Control,  is
          substantially  comparable  in all  material  respects  to such  fringe
          benefits taken as a whole.

          The  existence  of Good Reason  shall not be  affected by  Executive's
     Disability.  Executive's continued employment shall not constitute a waiver
     of Executive's  rights with respect to any circumstance  constituting  Good
     Reason under this Agreement.

          (e) Notice of  Termination.  "Notice of  Termination"  means a written
     notice  indicating  the specific  termination  provision in this  Agreement
     relied  upon  and  setting  forth  in  reasonable   detail  the  facts  and
     circumstances  claimed to provide a basis for termination of the employment
     under the  provision so indicated.  The Executive  shall not be entitled to
     give a Notice of Termination  that the Executive is terminating  employment
     for Good Reason more than six (6) months  following  the  occurrence of the
     event  alleged to constitute  Good Reason,  except with respect to an event
     which  occurred  before the Change of Control,  in which case the Notice of
     Termination  must be given  within six (6) months  following  the Change of
     Control.

          (f) Retirement.  "Retirement"  means having reached normal  retirement
     age as defined in the  Corporation's  profit  sharing  plan or taking early
     retirement in accordance with the terms of the Corporation's profit sharing
     plan.

          (g) Subsidiary.  "Subsidiary" means a corporation with at least eighty
     percent (80%) of its outstanding capital stock owned by the Corporation.

     3.  Eligibility  for  Severance  Benefits.  Subject  to  Paragraph  5,  the
Executive shall receive the Severance  Benefits  described in Paragraph 4 if the
Executive's employment is terminated during the term of this Agreement, and

          (a) The  termination  occurs  within  thirty-six  (36) months  after a
     Change of Control,  unless the  termination  is (i) because of  Executive's
     death or Disability,  (ii) by the  Corporation  for Cause,  or (iii) by the
     Executive other than for Good Reason; or

          (b) The  Corporation  terminates the employment  within six (6) months
     before a Change of Control, in contemplation of such Change of

                                       -5-
<PAGE>
     Control, and to avoid the effect of this Agreement should such action occur
     after such Change of Control.

     4. Severance Benefits.  Subject to Paragraph 5, the Executive shall receive
the following Severance Benefits (in addition to accrued compensation and vested
benefits) if eligible under Paragraph 3:

          (a) A lump sum cash amount equal to Executive's  annual base salary at
     the  highest  annual  rate in effect  during the twelve  (12) month  period
     immediately  prior to the Change of Control or, if greater,  at the rate in
     effect  at the time  Notice  of  Termination  is given  (or on the date the
     employment  is  terminated  if  no  Notice  of  Termination  is  required),
     multiplied by 2.5;

          (b) The average  incentive  bonus paid to Executive over the preceding
     three (3) full year period, multiplied by 2.5;

          (c) For a three  (3) year  period  after  the date the  employment  is
     terminated,  the  Corporation  will  arrange to provide to Executive at the
     Corporation's expense, with:

               (i) Health care  coverage  equal to that in effect for  Executive
          prior to the  termination  (or, if more  favorable to Executive,  that
          furnished   generally  to  salaried  employees  of  the  Corporation),
          including,  but not limited to, hospital,  surgical,  medical, dental,
          prescription  and  dependent  coverages.  Upon the  expiration  of the
          health  care  benefits  required  to  be  provided  pursuant  to  this
          subparagraph 4(c), the Executive shall be entitled to the continuation
          of such  benefits  under the  provisions of the  Consolidated  Omnibus
          Budget  Reconciliation Act. Health care benefits otherwise  receivable
          by Executive  pursuant to this  subparagraph  4(c) shall be reduced to
          the extent comparable benefits are actually received by Executive from
          a subsequent  employer during the three (3) year period  following the
          date the  employment  is  terminated  and any such  benefits  actually
          received by Executive shall be reported to the Corporation;

               (ii)  Life  and  accidental  death  and  dismemberment  insurance
          coverage  (including  supplemental  coverage purchase  opportunity and
          double indemnity for accidental  death) equal (including policy terms)
          to that in effect at the time  Notice of  Termination  is given (or on
          the date the  employment is terminated if no Notice of  Termination is
          required) or, if more

                                       -6-
<PAGE>
          favorable to Executive, equal to that in effect at the date the Change
          of Control occurs; and

               (iii)  Disability  insurance  coverage  (including  policy terms)
          equal to that in effect at the time Notice of Termination is given (or
          on the date  employment is terminated if no Notice of  Termination  is
          required) or, if more favorable to Executive,  equal to that in effect
          immediately prior to the Change of Control; provided, however, that no
          income  replacement  benefits  will be payable  under such  disability
          policy  with  regard  to  the  three  (3)  year  period   following  a
          termination  of employment  provided  that the payments  payable under
          subparagraphs 4(a) and (b) above have been made;

          (d) The Corporation  shall pay all fees for outplacement  services for
     the  Executive  up to a  maximum  equal  to  fifteen  percent  (15%) of the
     Executive's  base salary used to calculate his benefit  under  subparagraph
     4(a) plus provide a travel expense  account of up to $5000 to reimburse job
     search travel;

          (e)  In   computing   and   determining   Severance   Benefits   under
     subparagraphs  4(a),  (b),  (c), and (d) above,  a decrease in  Executive's
     salary, incentive bonus, or insurance benefits shall be disregarded if such
     decrease  occurs  within six (6) months  before a Change of Control,  is in
     contemplation  of such Change of Control,  and is taken to avoid the effect
     of this Agreement should such action be taken after such Change of Control;
     in such event, the salary,  incentive bonus, and/or insurance benefits used
     to determine  Severance Benefits shall be that in effect immediately before
     the decrease that is disregarded pursuant to this subparagraph 4(c);

          (f)  Executive  shall not be required  to  mitigate  the amount of any
     payment  provided for in this  Paragraph 4 by seeking  other  employment or
     otherwise,  nor  shall  the  amount  of any  payment  provided  for in this
     Paragraph  4 be  reduced by any  compensation  earned by  Executive  as the
     result of employment by another  employer  after the date the employment is
     terminated,  or  otherwise,  with the  exception  of a reduction  in health
     insurance coverage as provided in subparagraph 4(c)(i).

     The payments provided in subparagraphs 4(a) and (b) above shall be made not
later  than  thirty  (30)  business  days  following  the  date  the  employment
terminates.

                                       -7-
<PAGE>
     Any  termination  by the  Corporation  for  Cause  or  due  to  Executive's
Disability,  or by Executive for Good Reason shall be  communicated by Notice of
Termination to the other party.

     5. Maximum Payments. Notwithstanding any provision in this Agreement to the
contrary,  if  part  or  all  of any  amount  to be  paid  to  Executive  by the
Corporation under this Agreement or otherwise  constitute a "parachute  payment"
(or payments) under Section 280G or any other similar  provision of the Internal
Revenue Code of 1986, as amended (the "Code"),  the following  limitation  shall
apply:

                  If the aggregate present value of such parachute payments (the
         "Parachute  Amount")  exceeds 2.99 times  Executive's  "base amount" as
         defined in  Section  280G of the Code,  and if as a result the  amounts
         otherwise payable to or for the benefit of the Executive  subsequent to
         the  termination  of  his   employment,   and  taken  into  account  in
         calculating the Parachute Amount (the "termination payments"), shall be
         reduced  and/or  delayed,  as further  described  below,  to the extent
         necessary  so that the  Parachute  Amount  is equal to 2.99  times  the
         Executive's "base amount."

     Any  determination  or  calculation  described in this Paragraph 5 shall be
made by the Corporation's independent accountants.  Such determination,  and any
proposed  reduction  and/or delay in termination  payments shall be furnished in
writing  promptly by the  accountants to the  Executive.  The Executive may then
elect, in his sole discretion,  which and how much of any particular termination
payment  shall be reduced  and/or  delayed and shall advise the  Corporation  in
writing  of  his  election,   within  thirty  (30)  days  of  the   accountant's
determination,  of the reduction or delay in  termination  payments.  If no such
election is made by the Executive within such 30-day period, the Corporation may
elect  which and how much of any  termination  payment  shall be reduced  and/or
delayed and shall notify the Executive promptly of such election. As promptly as
practicable  following  such  determination  and the  elections  hereunder,  the
Corporation  shall pay to or  distribute  to or for the benefit of the Executive
such amounts as are then due to the Executive.

     Any  disagreement  regarding a reduction or delay in  termination  payments
will be subject to arbitration under Paragraph 15 of this Agreement. Neither the
Executive's  designation of specific payments to be reduced or delayed,  nor the
Executive's  acceptance  of  reduced  or  delayed  payments,   shall  waive  the
Executive's right to contest such reduction or delay.

     6.  Successors;  Binding  Agreements.  This  Agreement  shall  inure to the
benefit of and be enforceable by Executive's personal and legal representatives,
executors,   administrators,   successors,  heirs,  distributees,  devisees  and
legatees.  Executive's  rights  and  benefits  under this  Agreement  may not be
assigned, except that if Executive dies while any

                                       -8-
<PAGE>
amount would still be payable to Executive  hereunder if Executive had continued
to live, all such amounts,  unless otherwise  provided herein,  shall be paid in
accordance with the terms of this Agreement, to the beneficiaries  designated by
the Executive to receive benefits under this Agreement in a writing on file with
the  Corporation  at the time of the  Executive's  death or, if there is no such
beneficiary,  to Executive's  estate. The Corporation will require any successor
(whether direct or indirect, by purchase, merger,  consolidation,  or otherwise)
to all or substantially all of the business and/or assets of the Corporation (or
of any division or Subsidiary  thereof employing  Executive) to expressly assume
and agree to perform  this  Agreement  in the same manner and to the same extent
that the  Corporation  would be required to perform it if no such succession had
taken place.  Failure of the Corporation to obtain such assumption and agreement
prior to the  effectiveness  of any such  succession  shall be a breach  of this
Agreement and shall entitle  Executive to  compensation  from the Corporation in
the same  amount  and on the same  terms to which  Executive  would be  entitled
hereunder if Executive  terminated the  employment  for Good Reason  following a
Change of Control.

     7.  Withholding  of Taxes.  The  Corporation  may withhold from any amounts
payable  under this  Agreement  all  federal,  state,  city,  or other  taxes as
required by law.

     8.  Notice.  For the  purpose  of this  Agreement,  notices  and all  other
communications  provided for in this Agreement  shall be in writing and shall be
deemed  to have been  duly  given  when  delivered  or  mailed by United  States
registered mail,  return receipt  requested,  postage prepaid,  addressed to the
respective addressees set forth on the first page of this Agreement,  or at such
other addresses as the parties may designate in writing.

     9. Miscellaneous.  No provision of this Agreement may be modified,  waived,
or  discharged  unless such waiver,  modification,  or discharge is agreed to in
writing  and  signed  by  Executive  and  such  officer  as may be  specifically
designated  by  the  Board  of  Directors  of  the  Corporation.  The  validity,
interpretation,  construction,  and  performance  of  this  Agreement  shall  be
governed by the laws of the State of Michigan.

     10. Employment  Rights.  This Agreement shall not confer upon Executive any
right to continue in the employ of the Corporation or its subsidiaries and shall
not in any way  affect  the  right of the  Corporation  or its  subsidiaries  to
dismiss  or  otherwise  terminate  Executive's  employment  at any time  with or
without cause.

     11. No Vested Interest. Neither Executive nor Executive's beneficiary shall
have any right,  title, or interest in any benefit under this Agreement prior to
the  occurrence of the right to the payment  thereof,  or in any property of the
Corporation or its subsidiaries or affiliates.

     12. Prior Agreements. This Agreement contains the understanding between the
parties hereto with respect to Severance Benefits in connection with a Change of
Control of

                                       -9-
<PAGE>
the Corporation and supersedes any such prior agreement  between the Corporation
(or  any  predecessor  of  the  Corporation)  and  Executive.  If  there  is any
discrepancy or conflict between this Agreement and any plan,  policy, or program
of the  Corporation  regarding  any term or condition  of Severance  Benefits in
connection  with a Change of Control of the  Corporation,  the  language of this
Agreement shall govern.

     13. Validity.  The invalidity or  unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

     14. Counterparts.  This Agreement may be executed in several  counterparts,
each of which shall be deemed to be an original but all of which  together shall
constitute one and the same instrument.

     15.  Arbitration.  The sole and exclusive  method for resolving any dispute
arising out of this  Agreement  shall be  arbitration  in  accordance  with this
paragraph. Except as provided otherwise in this paragraph,  arbitration pursuant
to this paragraph shall be governed by the Commercial  Arbitration  Rules of the
American  Arbitration  Association.  A party wishing to obtain arbitration of an
issue shall deliver  written notice to the other party,  including a description
of the issue to be  arbitrated.  Within  fifteen  (15) days after  either  party
demands  arbitration,  the  Corporation  and the Executive shall each appoint an
arbitrator.  Within fifteen (15) additional  days,  these two arbitrators  shall
appoint the third arbitrator by mutual  agreement;  if they fail to agree within
said  fifteen  (15) day  period,  then the third  arbitrator  shall be  selected
promptly  pursuant  to the rules of the  American  Arbitration  Association  for
Commercial  Arbitration.  The  arbitration  panel  shall  hold a hearing in Kent
County,  Michigan,  within ninety (90) days after the  appointment  of the third
arbitrator.   The  fees  and  expenses  of  the  arbitrator,  and  any  American
Arbitration  Association  fees,  shall  be paid  by the  Corporation.  Both  the
Corporation  and the  Executive  may be  represented  by counsel and may present
testimony  and other  evidence  at the  hearing.  Within  ninety (90) days after
commencement  of the  hearing,  the  arbitration  panel  will  issue  a  written
decision;  the majority vote of two of the three arbitrators shall control.  The
majority  decision of the arbitrators shall be final and binding on the parties,
and shall be enforceable in accordance with law.  Judgment may be entered on the
arbitrators'  award in any court having  jurisdiction.  The  Executive  shall be
entitled to seek specific performances of his rights under this Agreement during
the pendency of any dispute or controversy  arising under or in connection  with
this  Agreement.  The  Corporation  will reimburse  Executive for all reasonable
attorney fees incurred by Executive as the result of any arbitration with regard
to any issue under this  Agreement  (or any judicial  proceeding to compel or to
enforce such arbitration); (i) which

                                      -10-
<PAGE>
is initiated by Executive if the Corporation is found in such proceeding to have
violated this Agreement  substantially as alleged by Executive; or (ii) which is
initiated by the  Corporation,  unless  Executive is found in such proceeding to
have violated this Agreement substantially as alleged by the Corporation.

     IN WITNESS  WHEREOF,  the parties have signed this  Agreement as of the day
and year written above.

                                    CORPORATION:

                                    KNAPE & VOGT MANUFACTURING
                                    COMPANY


                                    By /s/Herbert F. Knape

                                    Its:  Chairman of the Executive Compensation
                                          Committee


                                    EXECUTIVE:


                                    /s/Allan E. Perry
                                    Allan E. Perry





::ODMA\PCDOCS\GRR\46599\1
                                      -11-
<PAGE>
                                   EXHIBIT 21

         SCHEDULE OF SUBSIDIARIES OF KNAPE & VOGT MANUFACTURING COMPANY


Knape & Vogt Canada, Inc. (organized under the laws of Ontario, Canada)

Feeny Manufacturing Company (organized under the laws of Michigan)

The Hirsh Company (organized under the laws of Illinois)






                                       38
<PAGE>
                                   EXHIBIT 23


         Consent of Independent Certified Public Accountants



We hereby consent to the  incorporation by reference of our reports dated August
7, 1998,  except for Note 13, as to which the date is August 31, 1998,  relating
to  the  consolidated   financial  statements  and  schedule  of  Knape  &  Vogt
Manufacturing  Company,  appearing in that  Corporation's  annual report on Form
10-K for the year ended June 30, 1998, in that  corporation's  previously  filed
Form S-8 Registration  Statements (file numbers  33-20227,  33-43704,  33-88206,
33-88212 and 333-45411).





/s/ BDO Seidman, LLP
BDO Seidman, LLP
Grand Rapids, Michigan
September 1, 1998



                                       39