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

|(Mark One)
|----------
|[X]       
|[   ]     

## Commission
file number 000-01859

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

|Michigan  
(State or other jurisdiction of incorporation or organization) | 38-0722920
(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 
None | Name of each exchange on which registered
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 $51,053,005 as of August
23, 2002.

Number of shares
outstanding of each class of common stock as of August 23, 2002: 2,276,720
shares of Common Stock, par value $2.00 per share, and 2,241,245 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 11, 2002, are
incorporated by reference into Part III of this Report.

1

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# PART IITEM 1--BUSINESS

## Item 1(a)--General Development of Business

The Company is engaged primarily in the design, manufacture, and marketing of functional hardware,
storage-related components and ergonomic products, which serve the consumer, contract builder, hardware, and
original equipment manufacturer ("OEM") markets.  The Company was incorporated in Michigan in 1906, reorganized
in Delaware in 1961, and reorganized in Michigan in 1985.  Unless otherwise noted or indicated by the context,
the term "Company" includes Knape & Vogt Manufacturing Company, its predecessors and its subsidiaries.

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

The Company was realigned in March 2002 into two reportable segments: Home and Commercial Products, and
Office Products.  The Office Products segment develops, markets and distributes its hardware and idea@WORK(TM)brand
of ergonomic products primarily to office furniture OEMs and office furniture dealers.  The Home and Commercial
Products segment develops, markets and distributes hardware, kitchen and storage solutions primarily to
retailers, specialty distributors and kitchen OEMs.  These products include the Real Solutions for Real Life(TM)
brand of storage products.  KV substantially completed this realignment of its structure during the fourth
quarter of fiscal 2002.  Due to the realignment, presentation of operating segment results is impracticable;
however certain revenue information is reflected in the Management's Discussion and Analysis Section of this report.

Home and Commercial Products Segment

The Company's Home and Commercial Products segment consists of development, marketing and distribution in the
United States and Canada.   The segment's storage products include a complete line of decorative and utility
wall-attached shelving systems and drawer slides.  Drawer slides manufactured by the Company include precision,
Euro-style and utility slides.  Precision drawer slides use ball bearings, while Euro-style and utility drawer
slides use rollers.  In addition, the segment's many different hardware products include closet rods, kitchen
storage products and various fixtures.  In fiscal 2002, approximately 31% of the segment sales were to the
consumer market, 12% to original equipment manufacturers, and 57% to specialty distributors.  The markets are
highly competitive.  The Company competes primarily on the basis of product design, product quality, price,
on-time delivery, and customer service.  The precision slide market consists of two large manufacturers, a number
of smaller domestic manufacturers, and an increasing number of foreign manufacturers that compete primarily on
the basis of price and quality.

Office Products Segment

The Company's Office Products segment consists of development, marketing, and distribution primarily in the
United States.  The segment's ergonomic products include adjustable keyboard trays, gel wrist rests, floating
mousepads, office lights, and recently introduced height adjustable tables.  In fiscal 2002, approximately 23% of
the segment sales were to office furniture dealers, and 77% were to OEMs.  The Company competes in this segment
with several large producers of ergonomic support systems, and many smaller domestic and foreign manufacturers
that compete primarily on the basis of product quality, features, and price.

## 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 and drawer slides.  Drawer slides
manufactured by the Company include precision, Euro-style and utility slides.  Precision drawer slides use ball
bearings, while Euro-style and utility drawer slides use rollers.  In addition, the Company's many different
hardware products include closet rods, kitchen storage products and various fixtures.   The Company's ergonomic
products include adjustable keyboard trays, gel wrist rests, floating mousepads and office lights.

The Company's sales force calls directly on some of the large customers, while most other sales are
made through independent sales representatives.

New Product and Capital Spending Information. Management believes that capital spending in fiscal 2003
will increase to approximately the level of depreciation or $7.0 million.  The fiscal 2003 spending will reflect
investments made primarily to bring new products and product enhancements to the Company's customers.

Sources and Availability of Raw Materials.  Most of the Company's storage products are produced
primarily from steel or wood.  Historically, the Company has not experienced difficulty in obtaining these raw
materials and does not anticipate any difficulty in the future, as the raw materials used are not unique.  The
Company, however, does anticipate an increase in its steel prices over the coming months as the impact of steel
tariffs begins to impact the cost of steel.

2

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Patents, Licenses, Etc.  Patents, trademarks and licenses play a part in the Company's business, but the
Company as a whole is not dependent to any material extent upon any single patent.

Seasonal Nature of Business.  The Company's business 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 sells to both the consumer market and to the
OEM/specialty distributor market, as well as direct sales to the dealer network.  The consumer market is
comprised of a broad base of retail outlets.  The OEM/specialty distributor market is more concentrated with a
fewer number of customers and is more closely tied to the office furniture industry.  The dealer network is also
closely tied to the office furniture industry.  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 material adverse effect upon the
Company.  The Company estimates that at present it has over 1,400 active customers with approximately 30,000
outlets, of which the five largest customers account for approximately 22% of sales and no one of which accounts
for more than 8% of sales.

Backlog of Orders.  The Company typically has a short lead-time on its orders and therefore does not
believe that information concerning backlog is material to an understanding of its business.

Government Contracts.  While the Company does have two contracts with the General Services
Administration ("GSA") for certain of it's ergonomic products, the sales volume under these contracts does not
result in a significant risk if the government were to terminate these contracts.

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 drawer slides in North America.

Research, Design and Development.  Approximately $1,977,000 was spent in fiscal 2002 in the development
of new products and in the improvement of existing products; approximately $2,281,000 was spent in fiscal 2001
and $1,612,000 in fiscal 2000 for the same purposes.  The amount of research and development expenditures was
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 impact upon the capital expenditures, earnings and competitive position of the Company.

Employees.  At June 29, 2002, the Company employed 777 persons.  Collective bargaining agents represent
none of the Company's employees.

## Item 1(d)--Information About Foreign Operations

The Company's Canadian operations accounted for approximately 7% 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 Note 13 of the Notes to the Company's Consolidated Financial Statements contained
herein for the fiscal year ended June 29, 2002, for a presentation of additional information concerning the
Company's foreign operations.

3

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# ITEM 2--PROPERTIES

The Company owned or leased the following offices and manufacturing facilities as of June 29, 2002:

|Location
Grand Rapids, Michigan
Sparks, Nevada        
Muncie, Indiana       
Mississauga, Ontario | Description
Executive offices and manufacturing facilities;
444,000 sq. ft. on 41 acres.
Warehouse; 76,000 sq. ft.
Manufacturing facilities and office;
98,000 sq. ft. on 12 acres.
Office; 1,900 sq. ft. | Interest
 Owned
 Leased
 Owned
 Leased
|-------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------

The facilities indicated as
owned 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 29, 2002, the Company
spent approximately $31,000,000 for expansion, modernization and improvements of
its facilities and equipment.

# ITEM 3--LEGAL PROCEEDINGS

In September 1998 when the
Company sold The Hirsh Company, the purchaser assumed the lease for the facility
located in Skokie, Illinois. The Company guaranteed all of the lease obligations
to the landlord through the expiration of the lease in August 2000. During
fiscal 2000, the purchaser defaulted on the lease agreement. In May 2000, the
landlord filed suit in the Cook County, Illinois Circuit Court against the
purchaser and the Company as the guarantor. The claim is for unpaid rent, unpaid
property taxes, building repairs and legal costs.

The Company was sued in the
Kent County, Michigan Circuit Court in 1997 by a former employee seeking
additional benefits under an executive retirement plan. The Circuit Court ruled
in favor of the plaintiff, but in June 2002, the Circuit Court was reversed on
the Companys appeal to the Michigan Court of Appeals. The plaintiff has
filed a delayed request for leave to appeal to the Michigan Supreme Court. In
August 2002, the plaintiff filed a lawsuit seeking these retirement benefits in
the Federal District Court for the Western District of Michigan.

Canada Customs and Revenue
Agency (CCRA) has performed an audit of the Companys sales to
its wholly owned subsidiary, Knape & Vogt Canada. Results from a joint
review by the Company and its customs broker indicate that the Company may be
liable for the underpayment of duties in a range estimated from $150,000 to
$350,000 on certain customs transactions. The Company has made an accrual within
the range of the estimated liability. The Company has also received a
determination from CCRA that Knape & Vogt Canada is not the importer of
record. The Company is appealing the determination letter and believes that
based on the information available at this time, any additional liability
pertaining to this issue will not have a material adverse effect on the
Companys earnings.

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

In the opinion of
management, based on the information presently known and taking into account
established accruals of approximately $1,285,000 at June 29, 2002, the ultimate
liability for these matters would not have a material adverse effect on the
Companys financial position or the results of its operations.

# 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 29, 2002.

4

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# ADDITIONAL ITEM--EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers of the Company, at June 29, 2002, were as follows:

|Name                                                                                                   | Age            | Positions and Offices Held                                                                                                                                                                                                                                | Year First Elected 
an Executive Officer                                 | 
|------------------------------------------------------------------------------------------------------ | -------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | 
|William R. Dutmers 
James S. Dahlke *    
Michael G. Van Rooy *
Raymond N. Watson  
Leslie J. Cummings | 46
52
50
49
37 | Chairman of the Board of Directors and   
Chief Executive Officer                  
President of Office Products             
President of Home and Commercial Products
President of Operations                  
Vice President of Finance and Treasurer | 1998
            1999
            1993
            2002
            2000 | 

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.  He was named Chief Executive Officer in May 1999.  Mr. Dutmers was the
President of
G & L, Inc., a business consulting firm, from 1991 to 1997.

Mr. Watson was named President of Operations in March 2002.  Before joining the Company, he had been employed at
the Marmon Group from 1993 to 2002, most recently as the Vice President of Finance of Marmon Retail Services.

Ms. Cummings was named Vice President of Finance and Treasurer in July 2000.  Ms. Cummings joined the
Company in 1998 as the Assistant Treasurer.  Prior to that she was employed at Herman Miller, Inc. from 1992 to
1998.

Mr. Dahlke was named President of Office Products in March 2002.  He previously held the role of Vice President
of Business Development since October 1999.  Mr. Dahlke joined the Company in August 1999.  Mr. Dahlke served as
the President and Chief Operating Officer of Harrow Industries from 1996 to 1999.   Prior to that he served as
President and CEO of Medalist Industries.

Mr. Van Rooy was named President of Home and Commercial Products in March 2002.  Previously, he had served as
the Senior Vice President of Manufacturing since December 1993.   Mr. Van Rooy joined the Company in 1985 in the
engineering department and has held a variety of management positions.

All
terms of office are on an annual basis and will expire on October 11, 2002.

*  In August
2002, Mr. Dahlke and Mr. Van Rooy resigned from their positions with the Company.

5

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# PART II

## ITEM 5--MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER 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 23, 2002, there were approximately 3,000 shareholders of the
Company's Common Stock and Class B Common Stock.

`Fiscal 2002                            Fiscal 2001
                           -------------------------------------- --------------------------------------
Quarter                           High                Low               High                Low
-------------------------- ------------------- ------------------ ------------------ -------------------
First                            $12.99             $10.48             $15.438             $14.00
Second                           $13.45              $9.83             $15.00             $11.875
Third                            $14.02             $10.75             $14.25             $12.375
Fourth                           $13.49             $11.71             $13.875             $12.14`

Dividends.
The Company paid per share cash dividends on its shares of Common Stock and
Class B Common Stock in the following amounts during the last two fiscal years.

`Per Share Cash Dividends
                                                                 ------------------------
Year Ended June 29, 2002                               Common Stock               Class B Common Stock
------------------------                               ------------               --------------------
First Quarter                                              $.165                          $.15
Second Quarter                                             $.165                          $.15
Third Quarter                                              $.165                          $.15
Fourth Quarter                                             $.165                          $.15


                                                                 Per Share Cash Dividends
                                                                 ------------------------
Year Ended June 30, 2001                               Common Stock               Class B Common Stock
------------------------                               ------------               --------------------
First Quarter                                              $.165                          $.15
Second Quarter                                             $.165                          $.15
Third Quarter                                              $.165                          $.15
Fourth Quarter                                             $.165                          $.15`

On
August 9, 2002, 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 6, 2002, to shareholders
of record on August 23, 2002.

6

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# ITEM 6--SELECTED FINANCIAL DATA

`For the Year Ended                                                   2002            2001           2000              1999          1998
----------------------------------------------------------------------------------------------------------------------------------------


                                                                                                                 (a)           (b)
Summary of Operations
Net sales...............................................     $131,868,842    $143,912,863   $152,905,868       153,266,180   184,332,710
Gross profit............................................       30,069,337      33,562,856     36,760,813        30,533,538    33,805,900
  Gross profit %........................................            22.8%           23.3%          24.0%             19.9%         18.3%
Selling, general and administrative.....................       21,771,990      23,135,501     22,228,025        20,448,833    21,111,858
  Selling, general and administrative %.................            16.5%           16.1%          14.5%             13.3%         11.5%
Operating income (loss).................................        7,362,347      10,127,355     14,427,788         9,484,705   (3,098,234)
  Operating income (loss) %.............................             5.6%            7.0%           9.4%              6.2%        (1.7)%
Income (loss) from continuing operations................        3,789,046       5,615,065      8,423,730         6,161,769   (8,369,182)
Loss from discontinued operation........................                -               -              -                 -   (1,368,278)
Net income (loss).......................................        3,789,046       5,615,065      8,423,730         6,161,769   (9,737,460)

Common Stock Data
Diluted earnings per share from continuing operations...             0.83            1.22           1.80              1.13        (1.28)
Diluted earnings per share from discontinued operation..                -               -              -                 -        (.021)
Diluted earnings per share..............................             0.83            1.22           1.80              1.13        (1.49)
Weighted-average shares outstanding-diluted.............        4,569,942       4,618,250      4,684,125         5,445,009     6,550,184
Dividends per share--common.............................             0.66            0.66          0.615             0.600         0.600
Dividends per share--Class B common.....................             0.60            0.60          0.559             0.545         0.545
Year-end stock price....................................            12.40           12.66          15.25             16.02         20.45

Year-end Financial Position
Total assets............................................       87,891,418      89,803,393     88,287,652        75,059,989   104,033,087
Working capital.........................................       17,185,811      18,465,603     16,378,393        18,135,700    38,276,167
Current ratio...........................................              1.9             2.0            1.7               2.0           2.5
Long-term debt..........................................       20,000,000      23,750,000     20,050,000        17,700,000     9,700,000
Long-term debt as a % of total capital..................            35.6%           39.0%          36.6%             35.8%         13.6%
Stockholders' equity....................................       36,213,219      37,132,697     34,706,630        31,758,785    61,756,674

Other Data/Key Ratios
Cash flow from operating activities.....................       13,354,293       8,788,239     17,269,946        13,471,459    23,234,772
Cash flow provided by/(used in) investing activities....      (2,263,077)     (9,791,911)   (14,089,822)        13,079,541     1,185,086
Cash flow provided by/ (used in) financing activities...      (7,790,769)         788,811    (2,443,585)      (27,986,435)  (22,612,342)
Capital expenditures....................................        3,935,470       9,282,239      9,112,810         4,786,263     4,228,552
Depreciation and amortization...........................        6,693,293       6,340,647      5,862,588         5,914,739     7,966,383
Return on average assets................................             4.3%            6.3%          10.3%              6.9%        (8.5)%
Return on average equity................................            10.3%           15.6%          25.3%             13.2%       (14.4)%

-----------------------------------------------------------------------------------------------------------------------------------------------`

|(a) | 1999 figures include an impairment charge of $600,000 pre-tax and an inventory write-off of $400,000
pre-tax recorded for the discontinuance of certain utility slides. This resulted in an after-tax reduction of $650,000, or $0.12 per diluted
share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | 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
           $0.52 per 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 $1.96 per diluted share; 4)  a $448,284 write-off of idle equipment; and 5) an after-tax charge of
           $937,268, or $0.15 per diluted share, to record the sale of Roll-it, a discontinued operation.

7

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

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

Overview

The Company  reported net income of $3.8 million,  or $0.83 per diluted  share,  on net sales of $131.9 million
for fiscal  2002.  This  compared to net income of $5.6  million,  or $1.22 per diluted  share,  on sales of $143.9
million in fiscal 2001.  Clearly,  this was a challenging  year for Knape & Vogt ("KV").  KV felt the impact of the
overall  economic  downturn in the U.S.  across all of the markets that it serves.  This was especially true in the
office furniture market, which posted its most significant  shipment decline in recent history,  with a decrease of
approximately 25% for the 12-month period ended June 2002.

KV addressed  the  challenges  presented  by  reorganizing  its sales,  marketing  and new product  development
efforts to better focus on its two key business  segments:  Office  Products and Home and Commercial  Products.  It
also  emphasized  its  commitment to bringing  fresh,  innovative  product and service  solutions to these markets,
while  still  using lean  manufacturing  techniques  in its own  operations  to help  maintain a  competitive  cost
structure.

Critical Accounting Policies

Management's  Discussion  and  Analysis of Results of  Operations  and  Financial  Condition is based upon KV's
Consolidated  Financial  Statements.  These  financial  statements have been prepared in accordance with accounting
principles  generally  accepted in the United States of America.  These principles require the use of estimates and
assumptions  that affect  amounts  reported and  disclosed  in the  financial  statements  and related  notes.  The
accounting  policies that may involve a higher degree of judgments,  estimates and complexity include the allowance
for uncollectible  accounts  receivable,  inventory  reserves,  net book value of long-lived assets and pension and
other  post-retirement  benefits.  See Note 2 to the  Consolidated  Financial  Statements for a description of KV's
revenue recognition policy.  KV uses the following methods and assumptions in its estimates.

| |  Allowance  for  uncollectible  accounts  receivable - KV records  allowances  for losses that it may incur
        from the  inability of certain of its  customers  to pay for  products or services  that they have
        purchased.  In determining these allowances,  KV takes into consideration the financial  condition
        of its customers,  previous payment history and the age of the outstanding  balances.  KV monitors
        its customers' balances on a monthly basis and assesses the adequacy of the allowances recorded.                                                                                                                                                                     
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  Inventory  reserves - KV provides  reserves  for  inventory  that it deems to be  obsolete or  slow-moving
        utilizing  assumptions  about future demand for its  products.  KV monitors its inventory by type,
        age and usage on a monthly basis to determine the reserves recorded.                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  Net book value of  long-lived  assets - KV  periodically  reviews  the  carrying  value of its  long-lived
        assets held and used,  including  goodwill and other intangible  assets.  This review is performed
        using estimated  future cash flows.  If the carrying value of a long-lived  asset is considered to
        be  impaired,  an  impairment  charge is recorded  for the amount that the  carrying  value of the
        long-lived asset exceeds its fair value.                                                                                                                                                                                                                             
| |  Pension and Other  Postretirement  Benefits - The  determination of the obligation and expense for pension
        and other postretirement  benefits is dependent on the selection of certain actuarial  assumptions
        used in  computing  such  amounts.  These  assumptions  include the  discount  rate,  the expected
        long-term  rate of return on plan  assets  and  rates of  increase  in  health-care  costs.  These
        assumptions  are reviewed and updated  annually based on relevant  external and internal  factors.
        See Note 9 to the  Consolidated  Financial  Statements for more  information  regarding  costs and
        assumptions for KV's employee retirement plans.

8

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Results of Operations

The table below shows certain items in the Consolidated Statements of Operations as a percentage of net sales:

`June 29,        June 30,         July 1,
Year Ended                                                      2002            2001            2000
------------------------------------------------------- --------------- --------------- ---------------
Net sales.....................................                 100.0%          100.0%          100.0%
Cost of sales.................................                  77.2            76.7            76.0
                                                        --------------- --------------- ---------------
  Gross profit................................                  22.8            23.3            24.0
Selling, general and administrative expenses..                  16.5            16.1            14.5
Restructuring and impairment of assets........                    .7              .2              .1
                                                        --------------- --------------- ---------------
  Operating income............................                   5.6             7.0             9.4
Interest expense..............................                   1.1             1.1              .9
                                                        --------------- --------------- ---------------
Income before income taxes....................                   4.5             5.9             8.5
Income taxes..................................                   1.6             2.1             3.0
                                                        --------------- --------------- ---------------
Net income....................................                   2.9%            3.8%            5.5%
------------------------------------------------------- --------------- --------------- ---------------`

## Sales

In
March 2002, the Company announced the creation of two business segments: office
products and home and commercial products. The office products segment develops,
markets and distributes its hardware and idea@WORK brand of ergonomic
products primarily to office furniture OEMs and office furniture dealers. The
home and commercial products segment develops, markets and distributes hardware,
kitchen and storage solutions primarily to retailers, specialty distributors and
kitchen OEMs. These products include the Real Solutions for Real Life
brand of storage products. KV substantially completed this realignment of its
structure during the fourth quarter of fiscal 2002. Due to the reorganization,
restatement of prior years operating segment results is impracticable;
however, segment revenue is shown below.

`June 29,                June 30,                 July 1,
Year Ended (In million's)               2002          %         2001          %         2000          %
-------------------------------- ------------ ---------- ------------ ---------- ------------ ----------
Office Products                        $39.9      29.3%        $48.1      32.3%        $40.6      25.7%
Home and Commercial
   Products                             96.4      70.7%        100.6      67.7%        117.1      74.3%
-------------------------------- ------------ ---------- ------------ ---------- ------------ ----------

Total Gross Sales                   $  136.3       100%     $  148.7       100%     $  157.7       100%
================================ ============ ========== ============ ========== ============ ==========`

Consolidated
net sales for fiscal 2002 declined 8.4% compared to fiscal 2001. The Office
Products segment experienced the most significant decline in sales. This segment
sells ergonomic products along with hardware components including precision
drawer slides to several of the large office furniture OEMs. As a result of the
downturn in that industry during fiscal 2002, there was a significant decline in
orders from these customers. The increase in fiscal 2001 sales for this segment
represented the growth of the ergonomic product line, which was acquired in the
previous fiscal year. The Home and Commercial segment has seen the impact of the
overall economic downturn in its sales volumes.

New
product sales (those products introduced within the last 18 months) served to
partially offset the impact of the downturn in the U.S. economy. New product
sales in fiscal 2002 were approximately $8.0 million, which was more than double
the amount in fiscal 2001. New products introductions allowed KV to continue to
grow its idea@WORK line of ergonomic products and increase its market
share, despite the significant decline in the overall office furniture industry.
In addition, KV introduced more than two-dozen new products during its two major
trade shows held in the fourth quarter of fiscal 2002. These introductions
included the new height adjustable table line that KV acquired the rights to
manufacture during the third quarter of fiscal 2002.

Net
sales in fiscal 2001 were $143.9 million. This represented a 5.9% decline from
fiscal 2000. The overall weakness in the U.S. economy, especially during the
second half of fiscal 2001, was the primary reason for the decline. Despite the
softness in the overall office furniture and storage-related markets, the
Companys ergonomic product line grew substantially, more than doubling the
sales volume from fiscal 2000. The Company successfully launched several new
products, including an ergonomic lighting line and several next-generation
products in both drawer slides and kitchen and bath accessories. Most of these
products were introduced to the market during the fourth quarter of fiscal 2001,
so the impact on net sales was modest.

9

---

## Gross Profit

Gross
profit, as a percentage of net sales, was 22.8% in fiscal 2002, compared to
23.3% in fiscal 2001 and 24.0% in fiscal 2000. Overall, the Company has a
significant investment in its manufacturing process, specifically machinery and
tooling. With the decrease in sales volumes during fiscal 2002 and 2001, it has
been more difficult to effectively leverage the fixed portion of these costs. KV
has been at least partially successful in offsetting this decline in gross
margin by the use of lean manufacturing initiatives to minimize manufacturing
costs and by increasing sales of higher margin products such as the line of
ergonomic products.

## Selling,
General and Administrative

Selling,
general and administrative expenses, as a percent of net sales, were 16.5% in
fiscal 2002, compared to 16.1% in fiscal 2001 and 14.5% in fiscal 2000. The
increase in both fiscal 2002 and 2001 was caused primarily by the higher level
of selling costs associated with the ergonomic product line than the
Companys other product lines. In addition, the Company has increased its
level of research and development efforts and the marketing costs associated
with the launch of the new products generated from these efforts.

## Restructuring/Impairment

In
the fourth quarter of fiscal 2002, the Company recorded a pre-tax impairment
charge of $690,000 in accordance with Financial Accounting Standard No. 144 for
certain precision drawer slide tooling. While KV will continue to produce the
drawer slides, the future cash flows associated with the sales of this
particular product line were less than the cost of the tooling recorded. In
addition, during the fourth quarter of fiscal 2002, KV adopted a plan to reduce
its salaried workforce in its Grand Rapids, Michigan facility. The Company
recorded $245,000 in severance costs for this workforce reduction.

In
the third quarter of fiscal 2001, the Company recorded a pre-tax impairment loss
on assets held for sale of $.3 million. The loss reflected new information,
which lowered the Companys estimate of the fair market value of the
properties listed for sale. In fiscal 2000, the Company had recorded a loss of
$.1 million, which was its best estimate at that time of the loss to be incurred
on the sale of the Companys former powder coat facility. The assets held
for sale were sold during fiscal 2002 at no additional loss to the Company.

## Interest
Expense and Income Taxes

Interest
expense was $1.5 million in fiscal 2002, compared to $1.6 million and $1.4
million, respectively, in fiscal years 2001 and 2000. Overall, interest expense
has remained relatively stable over the past three fiscal years. Slight
variations reflect the impact of higher or lower balances outstanding on the
revolving credit facility.

The
effective tax rate was 35.9% in fiscal 2002, compared to 34.6% in fiscal 2001
and 35.4% in fiscal 2000. Overall, rates have varied slightly due to the ratio
of foreign versus domestic income. See Note 10 to the Consolidated Financial
Statements for a reconciliation of the effective tax rate.

## Net Income

Net
income was $3.8 million, or $0.83 per diluted share, in fiscal 2002 compared to
$5.6 million, or $1.22 per diluted share, in fiscal 2001 and $8.4 million, or
$1.80 per diluted share in fiscal 2000. The declines in both fiscal 2002 and
fiscal 2001 were primarily due to the decrease in overall sales volume.

## Liquidity and
Capital Resources

Cash
flows from operating activities generated $13.4 million in fiscal 2002, compared
to $8.8 million in fiscal 2001 and $17.3 million in fiscal 2000. The increase in
fiscal 2002 represented an improvement in the change in accounts payable and
other accrued liabilities when compared to the prior year. The decline in fiscal
2001 resulted in part from a decrease in net income, lower accounts payable
levels due to a decrease in overall purchases and a decrease in payroll-related
accruals, which were variable with the Companys performance.

10

---

Cash
flows used in investing activities were $2.3 million in fiscal 2002, compared to
$9.8 million in fiscal 2001 and $14.1 million in fiscal 2000. KV spent $3.9
million on capital expenditures in fiscal 2002, compared to $9.3 million and
$9.1 million, respectively, in fiscal 2001 and 2000. The expenditures in fiscal
2001 and fiscal 2000 were primarily for improvements in the Companys
manufacturing processes and tooling for new products. While KV continued to
invest capital in connection with new product development, management concluded
that the investments in the manufacturing process were sufficient in the prior
two fiscal years to meet the anticipated capacity needs for at least the next
three to five years. Management believes that capital expenditures will
approximate the level of depreciation in fiscal 2003, as investments will be
focused on bringing new products and product enhancements to the Companys
customers. The cost to complete the items classified as construction in progress
at June 29, 2002 was estimated to be approximately $467,000, which will be
derived from cash flows from operations or from the revolving credit facility.
Investing activities in fiscals 2001 and 2000 also included the net cash paid
for the acquisition of Idea Industries, Inc. (Idea).

On October 1, 1999, the Company acquired substantially all of the assets of Idea.  Idea designed,
manufactured and marketed ergonomic products, including adjustable keyboard mechanisms, keyboard and computer
mouse platforms, wrist rests and CPU holders.  The acquisition was recorded using the purchase method of
accounting.  Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed, based
on their estimated fair values at the date of the acquisition.  The cost of the acquisition in excess of net
identifiable assets acquired was recorded as goodwill and has been amortized using the straight-line method based
on a 15-year life.  The Company will discontinue the amortization of goodwill in fiscal 2003, as the Company has
adopted the provisions of SFAS No. 142 (see the discussion in Note 2).

The
terms of the Idea acquisition agreement provided for additional consideration to
be paid if Ideas sales exceeded certain targeted levels. The maximum
amount of contingent consideration was $550,000 payable through 2001. In
calendar year 1999, the additional consideration payment was $44,255, and in
calendar year 2000, the remaining contingent consideration was earned and paid.
All additional consideration paid was recorded as goodwill.

The
results of the Idea acquisition were not material to the Companys
consolidated operating results, therefore pro forma financial statements have
not been prepared.

Cash
flows used in financing activities were $7.8 million in fiscal 2002, compared to
$.8 million of cash flow generated in fiscal 2001 and $2.4 million used in
fiscal 2000. The use of funds in fiscal 2002 reflects the repayment of $3.8
million of debt under the revolving credit facility along with the repurchase of
$1.2 million of the Companys common stock. The cash flow generated in
fiscal 2001 reflected additional borrowings under the credit facility.

On April 14, 2000, the Board of Directors declared a 10% stock dividend of the Company's common stock and
Class B common stock.  On May 19, 2000, shareholders received one additional share of stock for each 10 shares
held.  All per share data and weighted-average shares outstanding have been restated to reflect the 10% stock
dividend.

The
Company has a stock repurchase program, under which it purchased 101,506 shares
during fiscal 2002 with the price per share ranging from approximately $10 to
$13. At June 29, 2002, the Company is authorized to repurchase an additional
274,482 shares.

The
Company has a revolving credit agreement that provides for borrowings up to $45
million and expires on November 1, 2004. In addition, the Company has an
interest rate swap agreement, which expires on June 1, 2006, in order to fix the
interest rate on $20 million of borrowings under the revolving credit facility.
The swap agreement fixed the rate at 6.25% plus the Companys credit spread
on the revolving credit agreement.

On
October 29, 1999, and on May 31, 2002, the revolving credit facility was amended
to modify certain covenants. At June 29, 2002, the Company was in compliance
with all of the covenants.

The
Companys outstanding debt at June 29, 2002 was $20.0 million, compared to
$23.8 million in fiscal 2001. The debt to total capital ratio decreased to 35.6%
at June 29, 2002, from 39.0% at June 30, 2001. The Company continues to manage
its debt levels in an effort to maintain its debt to total capital in a range of
35 to 45%. The Company believes that cash flows from operations and funds
available under the credit facility will be sufficient to fund working capital
requirements, stock repurchases and capital expenditures in fiscal 2003.

11

---

## Legal
Contingencies

In September 1998 when the Company sold The Hirsh Company, the purchaser assumed the lease for the facility
located in Skokie, Illinois.  The Company guaranteed all of the lease obligations to the landlord through the
expiration of the lease in August 2000.  During fiscal 2000, the purchaser defaulted on the lease agreement.  In
May 2000, the landlord filed suit in the Cook County, Illinois Circuit Court against the purchaser and the
Company as the guarantor.  The claim is for unpaid rent, unpaid property taxes, building repairs and legal costs.

The
Company was sued in the Kent County, Michigan Circuit Court in 1997 by a former
employee seeking additional benefits under an executive retirement plan. The
Circuit Court ruled in favor of the plaintiff, but in June 2002, the Circuit
Court was reversed on the Companys appeal to the Michigan Court of
Appeals. The plaintiff has filed a delayed request for leave to appeal to the
Michigan Supreme Court. In August 2002, the plaintiff filed a lawsuit seeking
these retirement benefits in the Federal District Court for the Western District
of Michigan.

Canada
Customs and Revenue Agency (CCRA) has performed an audit of the
Companys sales to its wholly owned subsidiary, Knape & Vogt Canada.
Results from a joint review by the Company and its customs broker indicate that
the Company may be liable for the underpayment of duties in a range estimated
from $150,000 to $350,000 on certain customs transactions. The Company has made
an accrual within the range of the estimated liability. The Company has also
received a determination from CCRA that Knape & Vogt Canada is not the
importer of record. The Company is appealing the determination letter and
believes that based on the information available at this time, any additional
liability pertaining to this issue will not have a material adverse effect on
the Companys earnings.

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

In
the opinion of management, based on the information presently known and taking
into account established accruals of approximately $1,285,000 at June 29, 2002,
the ultimate liability for these matters would not have a material adverse
effect on the Companys financial position or the results of its
operations.

## Contractual
Obligations

As
more fully described in Notes to the Consolidated Financial Statements, the
Company is obligated to make future payments under certain debt and lease
agreements, and is a party to other commitments. The following table summarizes
these obligations as of June 29, 2002.

`Payments due by period
                                       ---------------- ---------------- ---------------- --------------
                                                          Less than 1
                                            Total             year           1-3 years       4-5 years
                                       ---------------- ---------------- ---------------- --------------

Long-term debt                            $ 20,000,000     $          -     $ 20,000,000     $        -
Operating leases                               801,000          441,000          357,000          3,000
                                       ---------------- ---------------- ---------------- --------------

Total contractual cash obligations        $ 20,801,000     $    441,000     $ 20,357,000     $    3,000
                                       ================ ================ ================ ==============`

In
addition, the Company is party to certain other agreements that contractually
and unconditionally commit the Company to pay certain amounts in the future.
While the Company believes it is probable that amounts will be spent in the
future under such contracts, the amount and/or the timing of such future
payments will vary depending on certain provisions of the applicable contract.
The agreements to which the Company is a party that fall into this category
include certain royalty agreements under which the Company pays a royalty based
on the sales volume of certain products that it manufactures and sells.

## Inflation

Inflation
has not had a significant effect on the Company over the past three years, nor
is it expected to have a significant effect in the foreseeable future. The
Company continuously attempts to minimize the effect of inflation through cost
reductions and improved productivity.

12

---

## Recently
Issued Accounting Standards

In June 2001, the Financial  Accounting  Standards Board ("FASB") finalized Statement of Financial  Accounting
Standard  No.  141,  Business  Combinations  (SFAS  141).  SFAS 141  requires  the use of the  purchase  method  of
accounting  and  prohibits  the use of the  pooling-of-interest  method of  accounting  for  business  combinations
initiated  after June 30, 2001.  SFAS 141 also  requires  that the Company  recognize  acquired  intangible  assets
apart from  goodwill if the  acquired  intangible  assets meet certain  criteria.  SFAS 141 applies to all business
combinations  initiated after June 30, 2001 and for purchase  business  combinations  completed on or after July 1,
2001.  It also  requires,  upon  adoption  of SFAS  142,  that the  Company  reclassify  the  carrying  amounts  of
intangible assets and goodwill based on the criteria in SFAS 141.

The
Companys previous business combinations were accounted for using the
purchase method.

In
June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets, effective for the Company in fiscal 2003. Under the new rules,
goodwill and intangible assets deemed to have indefinite lives will no longer be
amortized but will be subject to impairment tests at least annually. Other
intangible assets will continue to be amortized over their contractual lives.

The
Company will apply the new rules on accounting for goodwill and other intangible
assets beginning in the first quarter of fiscal 2003. Application of the
nonamortization provisions of SFAS No. 142 is expected to result in an increase
in net earnings of approximately $365,000 ($0.08 per diluted share) per year.
The Company has performed the first of the required impairment tests of goodwill
as of the first day of fiscal 2003 and has determined that the effect of these
tests on the earnings and financial position of the Company will not be
significant in 2003.

## Forward-Looking
Statements

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 new product introductions, future revenue
growth and gross margin improvement. Such statements are subject to certain
risks and uncertainties, which could cause actual results to differ materially
from those expressed or implied by such forward-looking statements. Readers are
cautioned not to place undue reliance on those forward-looking statements, which
speak only as of the date of this report.

Risk
Factors include, but are not limited to, uncertainties relating to changes in
demand for the Companys products; the cost and availability of
inventories; changes in trading policies or import and export regulations;
changes in duties, tariffs, quotas or applicable assessments; the ability to
secure and protect patents and other intellectual property; foreign competition;
loss of significant customers; and a continued slowdown in the U.S. economy.
These matters are representative of the Risk Factors that could cause a
difference between an ultimate actual outcome and a forward-looking statement.

13

---

# ITEM 7A--QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

The
Company is exposed to market risks, which include changes in foreign currency
exchange rates as measured against the U.S. dollar and changes in U.S. interest
rates. The Company holds a derivative instrument in the form of an interest rate
swap, which is viewed as a risk management tool and is not used for trading or
speculative purposes. The intent of the interest rate swap is to effectively fix
the interest rate on part of the borrowings on the Companys variable rate
revolving credit agreement.

A
discussion of the Companys accounting policies for derivative financial
instruments is included in the Summary of Significant Accounting Policies in the
Notes to Consolidated Financial Statements. Additional information relating to
financial instruments and debt is included in Note 6 - Long-Term Debt and Note 7
Derivative Financial Instruments. Quantitative disclosures relating to financial
instruments and debt are included in the tables below.

The
following table provides information on the Companys fixed maturity
investments as of June 29, 2002 and June 30, 2001 that are sensitive to changes
in interest rates. The table also presents the corresponding interest rate swap
on this debt. Since the interest rate swap effectively fixes the interest rate
on the notional amount of debt, changes in interest rates have no current effect
on the interest expense recorded by the Company on the portion of the debt
covered by the interest rate swap.

`Fiscal 2002:
------------
Liability                                                     Amount                    Maturity Date
---------                                                     ---------                 -------------
Variable rate revolving credit
  agreement                                                   $20,000,000               November 1, 2004
  First $20,000,000 at an interest rate of 1.9050%
      plus weighted average credit spread of .625%
  Amounts in excess of $20,000,000 had an interest rate
      ranging from 2.295% to 2.655%

Interest Rate Swaps
-------------------
Notional amount                                               $20,000,000               June 1, 2006
  Pay fixed/Receive variable - 1.8975%
     Pay fixed interest rate - 6.25%

Fiscal 2001:
------------
Liability
---------
Variable rate revolving credit
  agreement                                                   $23,750,000               November 1, 2004
  First $20,000,000 at an interest rate of 4.00%
      plus weighted average credit spread of .625%
  Amounts in excess of $20,000,000 had an interest rate
      ranging from 4.455% to 7.68%

Interest Rate Swaps
-------------------
Notional amount                                               $20,000,000               June 1, 2006
  Pay fixed/Receive variable - 4.00%
     Pay fixed interest rate - 6.25%`

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 profits and retained earnings. The Company
attempts to minimize currency exposure risk through working capital management.
The Company does not hedge its exposure to translation gains and losses relating
to foreign currency net asset exposures.

14

---

# ITEM 8--FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Immediately
following are the consolidated balance sheets of the Company and its
subsidiaries as of June 29, 2002 and June 30, 2001, and the related consolidated
statements of operations, stockholders equity and cash flows for each of
the three years in the period ended June 29, 2002, the notes thereto, and the
independent auditors report.

15

---

Knape & Vogt Manufacturing Company and Subsidiaries
                                Consolidated Statements of Operations

`========================================================================================================================
   Year Ended                                                   June 29, 2002        June 30, 2001         July 1, 2000
   ------------------------------------------------------------------------------------------------------------------------

   Net Sales                                                    $ 131,868,842        $ 143,912,863        $ 152,905,868

   Cost of Sales                                                  101,799,505          110,350,007          116,145,055
   ------------------------------------------------------------------------------------------------------------------------

   Gross Profit                                                    30,069,337           33,562,856           36,760,813
   ------------------------------------------------------------------------------------------------------------------------

   Expenses
        Selling                                                    17,121,333           17,681,717           16,637,045
        Administrative and general                                  4,650,657            5,453,784            5,590,980
        Restructuring and impairment of assets                        935,000              300,000              105,000
   ------------------------------------------------------------------------------------------------------------------------

   Total Expenses                                                  22,706,990           23,435,501           22,333,025
   ------------------------------------------------------------------------------------------------------------------------

   Operating Income                                                 7,362,347           10,127,355           14,427,788
   ------------------------------------------------------------------------------------------------------------------------

   Other Expenses (Income)
        Interest                                                    1,484,868            1,611,942            1,407,239
        Other, net                                                    (34,567)             (66,652)             (26,181)
   ------------------------------------------------------------------------------------------------------------------------

   Total Other Expenses                                             1,450,301            1,545,290            1,381,058
   ------------------------------------------------------------------------------------------------------------------------

   Income Before Income Taxes                                       5,912,046            8,582,065           13,046,730

   Income Taxes                                                     2,123,000            2,967,000            4,623,000
   ------------------------------------------------------------------------------------------------------------------------

   Net Income                                                   $   3,789,046        $   5,615,065        $   8,423,730
   ========================================================================================================================

   Basic Earnings Per Share                                     $        0.83        $        1.22        $        1.80
   ========================================================================================================================
   Basic Weighted-Average Shares Outstanding                        4,569,942            4,616,881            4,679,918
   ------------------------------------------------------------------------------------------------------------------------

   Diluted Earnings Per Share                                   $        0.83        $        1.22        $        1.80
   ========================================================================================================================
   Diluted Weighted-Average Shares Outstanding                      4,569,942            4,618,250            4,684,125
   ------------------------------------------------------------------------------------------------------------------------

   Dividends Per Share
        Common stock                                            $        .660        $        .660        $        .615
        Class B common stock                                    $        .600        $        .600        $        .559
   ------------------------------------------------------------------------------------------------------------------------
                                                         See accompanying notes to consolidated financial statements.`

16

---

Knape & Vogt Manufacturing Company and Subsidiaries
                                     Consolidated Balance Sheets

`====================================================================================================================


                                                                                June 29, 2002       June 30, 2001
--------------------------------------------------------------------------------------------------------------------

Assets

Current Assets
     Cash                                                                    $      5,430,543    $      2,113,940
     Accounts receivable, less allowances of $755,000 and $561,000,
          respectively                                                             17,025,929          17,822,214
     Refundable income taxes                                                                -             136,832
     Inventories                                                                   13,162,145          14,290,096
     Prepaid expenses                                                               1,530,967           1,436,107
        Net assets held for sale                                                            -           1,698,521
--------------------------------------------------------------------------------------------------------------------

Total Current Assets                                                               37,149,584          37,497,710
--------------------------------------------------------------------------------------------------------------------

Property and Equipment
     Land and improvements                                                          1,175,615           1,175,115
     Buildings                                                                     16,095,973          16,041,892
        Machinery and equipment                                                    62,930,700          60,288,479
     Construction in progress                                                         537,677           2,044,247
--------------------------------------------------------------------------------------------------------------------

                                                                                   80,739,965          79,549,733
     Less accumulated depreciation                                                 43,479,535          38,524,582
--------------------------------------------------------------------------------------------------------------------

Net Property and Equipment                                                         37,260,430          41,025,151
--------------------------------------------------------------------------------------------------------------------

Goodwill, net of accumulated amortization of $1,099,000 and
            $735,000, respectively                                                  4,772,837           5,137,697
--------------------------------------------------------------------------------------------------------------------

Prepaid Pension Cost                                                                8,416,900           5,896,250
--------------------------------------------------------------------------------------------------------------------

Other Assets                                                                          291,667             246,585
--------------------------------------------------------------------------------------------------------------------

                                                                             $     87,891,418    $     89,803,393
====================================================================================================================
                                                        See accompanying notes to consolidated financial statements.`

17

---

Knape & Vogt Manufacturing Company and Subsidiaries
                                     Consolidated Balance Sheets

`============================================================================================================================


                                                                                         June 29, 2002      June 30, 2001
----------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity

Current Liabilities
     Accounts payable                                                                 $      9,849,513    $    10,366,596
     Accruals:
         Income taxes                                                                           28,401                  -
         Accrued compensation                                                                2,057,635          2,063,900
         Accrued customer rebates and cooperative advertising                                2,764,828          1,730,905
         Other                                                                               5,263,396          4,870,706
----------------------------------------------------------------------------------------------------------------------------

Total Current Liabilities                                                                   19,963,773         19,032,107

Other Retirement Benefits                                                                    4,539,268          4,560,288

Long-Term Debt                                                                              20,000,000         23,750,000

Deferred Income Taxes                                                                        5,573,000          4,785,000

Interest Rate Swap Agreement                                                                 1,602,158            543,301
----------------------------------------------------------------------------------------------------------------------------

Total Liabilities                                                                           51,678,199         52,670,696
----------------------------------------------------------------------------------------------------------------------------

Stockholders' Equity
     Stock:
         Common, $2 par - 6,000,000 shares authorized; 2,272,754 and 2,277,921 issued        4,545,508          4,555,842
         Class B common, $2 par - 4,000,000 shares authorized; 2,244,398 and 2,339,920
              issued                                                                         4,488,796          4,679,840
         Preferred - 2,000,000 shares authorized and unissued                                        -                  -
     Additional paid-in capital                                                              7,550,062          8,502,727
     Unearned stock grant                                                                      (94,500)           (94,500)
     Accumulated other comprehensive loss                                                   (2,154,460)        (1,476,092)
     Retained earnings                                                                      21,877,813         20,964,880
----------------------------------------------------------------------------------------------------------------------------

Total Stockholders' Equity                                                                  36,213,219         37,132,697
----------------------------------------------------------------------------------------------------------------------------

                                                                                      $     87,891,418    $    89,803,393
============================================================================================================================
                                                        See accompanying notes to consolidated financial statements.`

18

---

Knape & Vogt Manufacturing Company and Subsidiaries
                           Consolidated Statements of Stockholders' Equity

`=================================================================================================================================


                                                                                       Accumulated
                                                        Additional     Restricted            other
                                            Common         paid-in         stock     comprehensive       Retained
                                             stock         capital        grants     income (loss)       earnings           Total
---------------------------------------------------------------------------------------------------------------------------------

Balance, June 30, 1999                 $ 8,622,750   $   4,409,415   $         -   $      (478,606)  $ 19,205,226  $   31,758,785
Comprehensive income:
    Net income                                   -               -             -                 -      8,423,730       8,423,730
    Foreign currency translation
       adjustment                                -               -             -            (9,019)             -               -
    Minimum SERP adjustment, net of
       tax benefit of $353,000                   -               -             -          (681,952)             -               -
                                                                                     ----------------
    Other comprehensive loss                     -               -             -          (690,971)             -        (690,971)
                                                                                     ----------------               ---------------
Comprehensive income                             -               -             -                 -              -       7,732,759
                                                                                                                    ---------------
Cash dividends                                   -               -             -                 -     (2,741,146)     (2,741,146)
10% stock dividend                         841,308       5,783,992                                     (6,631,421)         (6,121)
Stock issued under stock option plan        26,610         173,623             -                 -              -         200,233
Tax benefit from exercise
       of stock options                          -           8,671             -                 -              -           8,671
Stock grants issued                         12,000          82,500       (94,500)                -              -               -
Repurchase and retirement of
       shares of common stock             (271,258)     (1,975,293)            -                 -              -      (2,246,551)
-----------------------------------------------------------------------------------------------------------------------------------

Balance, July 1, 2000                    9,231,410       8,482,908       (94,500)       (1,169,577)    18,256,389      34,706,630
Comprehensive income:
    Net income                                   -               -             -                 -      5,615,065       5,615,065
    Foreign currency translation
       adjustment                                -               -             -           (47,557)             -               -
    Minimum SERP adjustment, net of
       tax benefit of $53,000                    -               -             -            94,343              -               -
    Loss on derivative instrument, net of
       tax benefit of $190,000                   -               -             -          (353,301)             -               -
                                                                                     ----------------
    Other comprehensive loss                     -               -             -          (306,515)             -        (306,515)
                                                                                     ----------------               ---------------
Comprehensive income                             -               -             -                 -              -       5,308,550
                                                                                                                    ---------------
Cash dividends                                   -               -             -                 -     (2,906,574)     (2,906,574)
Restricted stock issued                      3,296          21,787             -                 -              -          25,083
Stock issued under stock option plan         3,656          12,266             -                 -              -          15,922
Tax benefit from exercise
       of stock options                          -           3,623             -                 -              -           3,623
Repurchase and retirement of
      shares of common stock                (2,680)        (17,857)            -                 -              -         (20,537)
-----------------------------------------------------------------------------------------------------------------------------------

Balance, June 30, 2001                   9,235,682       8,502,727       (94,500)       (1,476,092)    20,964,880      37,132,697
Comprehensive income:
    Net income                                   -               -             -                 -      3,789,046       3,789,046
    Foreign currency translation
       adjustment                                -               -             -               930              -               -
    Minimum SERP adjustment, net of
       tax benefit of $4,000                     -               -             -             8,559              -               -
    Loss on derivative instrument, net of
       tax benefit of $371,000                   -               -             -          (687,857)             -               -
                                                                                     ----------------
    Other comprehensive loss                     -               -             -          (678,368)             -        (678,368)
                                                                                     ----------------               ---------------
Comprehensive income                             -               -             -                 -              -       3,110,678
                                                                                                                    ---------------
Cash dividends                                   -               -             -                 -     (2,876,113)     (2,876,113)
Restricted stock issued                      1,634           8,979             -                 -              -          10,613
Repurchase and retirement of
      shares of common stock              (203,012)       (961,644)            -                 -              -      (1,164,656)
-----------------------------------------------------------------------------------------------------------------------------------

Balance, June 29, 2002                 $ 9,034,304   $   7,550,062   $   (94,500)  $    (2,154,460)  $ 21,877,813  $   36,213,219
===================================================================================================================================
                                                        See accompanying notes to consolidated financial statements.`

19

---

Knape & Vogt Manufacturing Company and Subsidiaries
                                Consolidated Statements of Cash Flows

`=========================================================================================================================


                                                                          June 29,         June 30,          July 1,
Year Ended                                                                    2002             2001             2000
-------------------------------------------------------------------------------------------------------------------------

Operating Activities
     Net income                                                        $   3,789,046    $   5,615,065    $   8,423,730
     Adjustments to reconcile net income to net cash provided by
         operating activities:
         Depreciation of fixed assets                                      6,260,983        5,758,085        5,027,282
         Amortization of other assets                                        432,310          582,562          835,306
         Increase (decrease) in deferred income taxes                      1,153,000          700,000         (308,000)
         Increase (decrease) in supplemental retirement benefits              (8,311)         224,150          299,101
         Increase in prepaid pensions                                     (2,519,499)      (2,629,211)      (1,175,341)
         Restructuring and impairment of assets                              935,000          300,000          105,000
         Loss on disposal of property and equipment                          305,279          352,978           37,855
         Changes in operating assets and liabilities (net of
              acquisition):
                  Accounts receivable                                      1,030,341        2,773,260       (1,045,595)
                  Refundable income taxes                                    132,065                -                -
                  Inventories                                              1,127,951          802,297       (1,692,041)
                  Other current assets                                         8,947         (222,605)         683,326
                  Accounts payable                                          (495,865)      (2,182,455)       2,515,619
                  Accruals                                                 1,203,046       (3,285,887)       3,563,704
-------------------------------------------------------------------------------------------------------------------------

     Net cash provided by operating activities                            13,354,293        8,788,239       17,269,946
-------------------------------------------------------------------------------------------------------------------------

Investing Activities
     Additions to property and equipment                                  (3,935,470)      (9,282,239)      (9,112,810)
     Proceeds from sales of property and equipment                         1,784,925            7,301            4,330
     Net cash paid for acquisition                                                 -         (505,745)      (5,309,674)
     Other, net                                                             (112,532)         (11,228)         328,332
-------------------------------------------------------------------------------------------------------------------------

     Net cash used for investing activities                               (2,263,077)      (9,791,911)     (14,089,822)
-------------------------------------------------------------------------------------------------------------------------

Financing Activities
     Proceeds from issuance of common stock                                        -           15,922          200,233
        Repurchase and retirement of common stock                         (1,164,656)         (20,537)      (2,246,551)
     Dividends paid                                                       (2,876,113)      (2,906,574)      (2,747,267)
     Borrowings/(repayments) on long-term debt                            (3,750,000)       3,700,000        2,350,000
-------------------------------------------------------------------------------------------------------------------------

     Net cash provided by (used for) financing activities                 (7,790,769)         788,811       (2,443,585)
-------------------------------------------------------------------------------------------------------------------------

Effect of Exchange Rate Changes on Cash                                       16,156          (22,821)          (5,919)
-------------------------------------------------------------------------------------------------------------------------

Net Increase (Decrease) in Cash                                            3,316,603         (237,682)         730,620

Cash, beginning of year                                                    2,113,940        2,351,622        1,621,002
-------------------------------------------------------------------------------------------------------------------------

Cash, end of year                                                      $   5,430,543    $   2,113,940    $   2,351,622
=========================================================================================================================

Supplemental Information:
      Interest paid                                                    $   1,512,746    $   1,598,162    $   1,383,957
      Income taxes paid                                                    2,015,000        3,757,130        4,345,000
=========================================================================================================================
                                                     See accompanying notes to consolidated financial statements.`

20

---

# Knape &
Vogt Manufacturing Company and Subsidiaries

Notes to
Consolidated Financial Statements

|1. | Nature of Operations                                       | Knape & Vogt Manufacturing Company and its
wholly owned subsidiaries (the Company) design, manufacture and distribute
kitchen and bath storage solutions and office products for original equipment
manufacturers, specialty distributors, hardware chains and major home centers.
During fiscal 2002, the Company aligned itself into two sales segments: Office
Products and Home and Commercial Products. Products are sold worldwide through
the Companys own sales personnel and through independent sales
representatives. The Company is headquartered in Grand Rapids, Michigan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | ---------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Summary of Significant
        Accounting
        Policies | Principles of Consolidation
The consolidated financial statements include the accounts of Knape & Vogt
Manufacturing Company and its wholly owned domestic and foreign subsidiaries.
All material intercompany balances, transactions and stockholdings have been
eliminated in consolidation.
The Company utilizes a 52- or 53-week fiscal year, which ends on the Saturday
nearest the end of June. The fiscal years ended June 29, 2002, June 30, 2001 and
July 1, 2000 each contained 52 weeks.Revenue Recognition and Concentration of Credit Risk
The Company 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.Shipping and Handling Costs
Shipping and handling costs that are charged to and reimbursed by the customer are
recognized as revenue, while the related expenses incurred by the Company are
recorded as cost of sales in the consolidated statements of operations.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. Translation adjustments resulting from fluctuations in the exchange rates
are recorded in accumulated other comprehensive income, a separate component of
stockholders equity. Foreign exchange gains were $30,335 in fiscal 2002,
$40,291 in fiscal 2001 and $51,643 in fiscal 2000.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.Derivative Financial Instruments
During fiscal 2001, the Company adopted SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities,as amended by SFAS Nos. 137 and 138.
These statements establish accounting and reporting standards requiring that
every derivative instrument be recorded in the balance sheet as an asset or
liability measured at its current fair value and that changes in a
derivatives fair value be recognized currently in the determination of net
income unless specific hedge accounting criteria are met. Adoption of these
statements is described in detail in Note 7.

21

---

# Knape & Vogt Manufacturing Company and Subsidiaries

Notes to
Consolidated Financial Statements

| |  | The Company uses an interest rate swap agreement to modify a portion of the variable
rate revolving line of credit to a fixed rate obligation, thereby reducing the
exposure to market rate fluctuations. The interest rate swap agreement is
designated as a hedge, and effectiveness is determined by matching the principal
balance and terms with that specific obligation. Amounts currently due to or
from interest rate swap counter parties are recorded in interest expense in the
period in which they accrue. The derivative was recognized as a liability on the
balance sheet at its fair value of $1,602,158 at June 29, 2002 and $543,301 at
June 30, 2001.Inventories
Inventories are stated at the lower of FIFO (first-in, first-out) cost or
market.Property, Equipment and Depreciation
Property
and equipment are stated at cost and depreciated, for financial reporting
purposes, using the straight-line method over the estimated useful lives of the
assets. For income tax purposes, accelerated depreciation methods and shorter
useful lives are used. Management estimates that the cost to complete the items
classified in construction in progress at June 29, 2002 was approximately
$467,000. Estimated depreciable lives are as follows: land and improvements, 3
to 20 years; buildings, 3 to 40 years; machinery and equipment, 3 to 20 years.Impairment or Disposal of Long-Lived Assets
In
August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which addresses financial accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets,and the
accounting and reporting provisions of APB Opinion No. 30, Reporting the
Results of Operations, for the disposal of a segment of a business. The
Company adopted SFAS No. 144 in the current fiscal year. The cumulative effect
of adoption did not have a material effect on the operations of the Company.Goodwill
Goodwill
represents the excess of the purchase price over the fair value of net tangible
and identifiable intangible assets of acquired businesses and is amortized using
the straight-line method over periods ranging from 15 to 40 years. Other
intangibles consist primarily of trademarks, brand names and patents that are
being amortized using the straight-line method over periods up to 15 years.Self-Insurance
The
Company is partially self-insured for workers compensation and certain
employee health benefits. The Company is self-insured for environmental issues.
The Company purchases stop-loss coverage in order to limit its exposure to any
significant levels of workers compensation or employee health benefit
claims. Self-insured losses are accrued based upon estimates of the aggregate
liability for uninsured claims incurred using certain actuarial assumptions
followed in the insurance industry and the Companys own historical
experience.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

22

---

# Knape &
Vogt Manufacturing Company and Subsidiaries

Notes to
Consolidated Financial Statements

| |  | Income Taxes
The
Company accounts for certain income and expense items 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 basis 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.Advertising and Customer Rebates
In
2001, the Emerging Issues Task Force (EITF) released its consensus on Issue No.
00-22, Accounting for Certain Points and Other Time-Based Sales Incentive Offers, and Offers for Free Products or Services to be
Delivered in the Future and Issue No. 00-25, Vendor Income
Statement Characterization of Consideration Paid to a Reseller of the
Vendors Products. These consensuses provided guidance on the
classification of expenses related to customer rebate, cooperative advertising
and buydown programs. Adoption of these consensuses by the Company resulted in
reclassifying the expenses for these programs to a component of net sales. Costs
incurred for advertising, including costs incurred under cooperative advertising
programs with customers, are expensed as incurred. Cooperative advertising costs
are recorded as a reduction of gross sales. Advertising expense was $1,889,000
in 2002, $684,000 in 2001, and $1,038,000 in 2000.Earnings Per Share
Basic
earnings per share (EPS) is computed by dividing net income by the
weighted-average number of common shares outstanding in each year. Diluted EPS
is computed by dividing net income by the weighted-average number of common
shares outstanding, plus all shares that would have been outstanding if every
potentially dilutive common share had been issued. The following table
reconciles the numerators and denominators used in the calculations of basic and
diluted EPS for each of the last three years:
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`2002            2001           2000
                        ---------------------------------- ---------------- --------------- --------------
                        Numerators:
                          Numerator for both basic and
                          diluted EPS, net income               $3,789,046      $5,615,065     $8,423,730
                        ---------------------------------- ---------------- --------------- --------------
                        Denominators:
                          Denominator for basic EPS,
                          weighted-average common
                          shares outstanding                     4,569,942       4,616,881      4,679,918
                          Potentially dilutive shares
                          resulting from stock option
                          plans                                          -           1,369          4,207
                        ---------------------------------- ---------------- --------------- --------------
                          Denominator for diluted EPS            4,569,942       4,618,250      4,684,125
                        ================================== ================ =============== ==============`

23

---

# Knape & Vogt Manufacturing Company and Subsidiaries

Notes to
Consolidated Financial Statements

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

`2002            2001           2000
                        ---------------------------------- ---------------- --------------- --------------
                        Exercise Price
                        $13.64                                      19,254          20,410              -
                        $14.09                                      19,800          20,350              -
                        $16.74                                       9,988          10,594         11,192
                        $18.18                                       9,075           9,625         10,725
                        $26.54                                      61,413               -              -`

| |  | Comprehensive Income
Comprehensive
income represents net income and other revenues, expenses, gains and losses that
are excluded from net income and recognized directly as a component of
stockholders equity.New Accounting Standards
In
June 2001, the FASB finalized SFAS No. 141, Business Combinations (SFAS
141). SFAS 141 requires the use of the purchase method of accounting and
prohibits the use of the pooling-of-interest method of accounting for business
combinations initiated after June 30, 2001. SFAS 141 also requires that the
Company recognize acquired intangible assets apart from goodwill if the acquired
intangible assets meet certain criteria. SFAS 141 applies to all business
combinations initiated after June 30, 2001 and for purchase business
combinations completed on or after July 1, 2001. It also requires, upon adoption
of SFAS 142, that the Company reclassify the carrying amounts of intangible
assets and goodwill based on the criteria in SFAS 141.
The
Companys previous business combinations were accounted for using the
purchase method.
In
June 2001, the Financial Accounting Standards Board issued SFAS No. 142,
Goodwill and Other Intangible Assets, effective for the Company in fiscal
2003. Under the new rules, goodwill and intangible assets deemed to have
indefinite lives will no longer be amortized but will be subject to impairment
tests at least annually in accordance with SFAS 142. Other intangible assets
will continue to be amortized over their contractual lives.
The
Company will apply the new rules on accounting for goodwill and other intangible
assets beginning in the first quarter of fiscal 2003. Application of the
nonamortization provisions of SFAS No. 142 is expected to result in an increase
in net earnings of approximately $237,000 ($0.05 per diluted share) per year.
The Company has performed the first of the required impairment tests of goodwill
as of the first day of fiscal 2003 and has determined that the effect of these
tests on the earnings and financial position of the Company will not be
significant in 2003.Use of Estimates in Preparation of Financial Statements
The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States 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.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

24

---

# Knape & Vogt Manufacturing Company and Subsidiaries

Notes to
Consolidated Financial Statements

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

|3. | Restructuring and
Impairment of Assets | During fiscal 2000, the Company offered a powder coat facility for sale.  As
a result of this decision, the related assets of $1,698,521 were transferred
to the category Net Assets Held for Sale and a loss of $.1 million was
recorded based upon a buy/sell agreement. In addition, the Company listed a
facility in Muncie, Indiana for sale. Both of these facilities were offered for
sale following the Companys decision to consolidate its manufacturing
facilities. Based upon new information obtained during the third quarter of
fiscal 2001 regarding the current fair market value of the facilities held for
sale, the Company recorded an additional impairment loss of $300,000 pre-tax.
During the second quarter of fiscal 2002, both facilities were sold. No
additional losses were recorded upon the sale of the facilities.
During
the fourth quarter of fiscal 2002, the Company recorded an impairment charge of
$690,000 in accordance with SFAS 144 for certain precision drawer slide tooling.
While the Company will continue to produce the drawer slides, the estimated
future cash flows associated with sales of this particular product line were
less than the cost of the tooling recorded.
During
the fourth quarter of fiscal 2002, the Company also decided to reduce its
workforce in its Grand Rapids, Michigan facility. Those reductions were
committed to by top management prior to the fiscal year end and occurred
during the month of July 2002.  The Company recorded $245,000 in severance
costs at June 29, 2002.
|-- | -------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | Acquisition | On
October 1, 1999, the Company acquired substantially all of the assets of Idea.
Idea designed, manufactured and marketed ergonomic products, including
adjustable keyboard mechanisms, keyboard and computer mouse platforms, wrist
rests and CPU holders. The acquisition was recorded using the purchase method of
accounting. Accordingly, the purchase price was allocated to the assets acquired
and liabilities assumed, based on their estimated fair values at the date of the
acquisition. The cost of the acquisition in excess of net identifiable assets
acquired has been recorded as goodwill and has been amortized using the
straight-line method based on a 15-year life. The Company will discontinue the
amortization of goodwill in fiscal 2003, upon adoption of the provisions of SFAS
No. 142 (see the discussion in Note 2).
The
terms of the Idea acquisition agreement provided for additional consideration to
be paid if Ideas sales exceeded certain targeted levels. The maximum
amount of contingent consideration was $550,000 payable through 2001. In
calendar year 1999, the additional consideration payment was $44,255 and in
calendar year 2000, the remaining contingent consideration was earned and paid.
All additional consideration paid was recorded as goodwill.
The
results of the acquisition were not material to the Companys consolidated
operating results, therefore pro forma financial statements have not been
prepared.
|-- | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | Inventories | Inventories are summarized as follows:
|-- | ----------- | --------------------------------------

`June 29,2002     June 30, 2001
                        --------------------------------------------------------------------------------
                        Finished products                           $     8,767,282    $    9,916,080
                        Work in process                                   1,728,418         1,608,544
                        Raw materials                                     2,666,445         2,765,472
                        --------------------------------------------------------------------------------

                                                                    $    13,162,145    $   14,290,096
                        ================================================================================`

25

---

# Knape & Vogt Manufacturing Company and Subsidiaries

Notes to
Consolidated Financial Statements

|6. | Long-Term Debt | The Company has a revolving credit agreement that provides
for up to $45,000,000 in borrowings through November 1, 2004. At June 29, 2002,
there was a $20,000,000 balance outstanding under this agreement. The interest
rate on the outstanding balance was 6.875%, which was the fixed rate under the
interest rate swap agreement plus an additional 62.5 basis points credit spread.
The interest rate is adjusted to market rates at the end of each interest period
and is based on the LIBOR rate or, at the Companys option, several other
common indices. The agreement requires the Company to pay a non-use fee on
amounts not outstanding under the credit facility. At June 29, 2002, the non-use
fee was .150%. Both the interest rate and the non-use fees on this agreement
fluctuate according to the ratio of the Companys funded debt to EBITDA
(earnings before interest, income taxes, depreciation and amortization).
Compensating balances are not required by this agreement. The Company is
required under this agreement, as amended, to maintain certain financial ratios
and, at June 29, 2002, was in compliance with these covenants.
|-- | -------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. | Derivative Financial
Instruments | The Company has entered into an interest  rate swap  agreement  designated  as a
partial hedge of the Company's  variable rate revolving  credit  agreement.  The
purpose of this swap is to fix the interest rate on the variable rate debt and reduce
the exposure to interest rate fluctuations. At June 29, 2002, the Company had an
interest rate swap with a notional amount of $20,000,000. Under this agreement,
the Company will pay the counterparty interest at a fixed rate of 6.25%, and the
counterparty will pay the Company interest at a variable rate equal to LIBOR.
The LIBOR rate on this agreement was 1.8975% at June 29, 2002. The notional
amount does not represent an amount exchanged by the parties, and thus is not a
measure of exposure of the Company. The variable rate is subject to change over
time as LIBOR fluctuates.
Neither
the Company nor the counterparty, which is a major U.S. bank, is required to
collateralize its obligation under the swap. The Company is exposed to loss if
the counterparty should default. At June 29, 2002, the Company had no exposure
to credit loss on the interest rate swap. The Company does not believe that any
reasonably likely change in interest rates would have a material adverse effect
on the financial position, results of operations or cash flows of the Company.
The
Company has recognized an after-tax loss of $687,857 in fiscal 2002 and $353,301
in fiscal 2001 in other comprehensive income. The loss is made up of the
following components:
|-- | -------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`June 29, 2002                 June 30, 2001
                                                         Pre-Tax      After-Tax      Pre-Tax      After-Tax
                        ------------------------------ ------------- ------------- ------------- -------------
                        Cumulative effect of a
                        change in accounting
                        principle, as of July 1, 2000  $          -   $         -    $  797,871   $   518,616
                        Change in fair value of
                        interest rate swap                (344,273)     (223,356)   (1,311,839)     (852,851)
                        Settlement to interest
                        expense                           (714,584)     (464,501)      (29,333)      (19,066)
                        ------------------------------ ------------- ------------- ------------- -------------
                        Other comprehensive income     $(1,058,857)   $ (687,857)    $(543,301)   $ (353,301)
                        ------------------------------ ------------- ------------- ------------- -------------`

26

---

# Knape & Vogt Manufacturing Company and Subsidiaries

Notes to
Consolidated Financial Statements

|8. | Lease Commitments | The Company leases certain real property and equipment
under operating lease agreements, which expire at various dates through fiscal
2007. 
Annual
minimum rental payments required under all noncancelable-operating leases are as
follows: 2003-$441,000; 2004-$264,000; 2005-$72,000; 2006-$21,000; 2007-$3,000.
Rent expense under all operating leases was approximately $868,000, $749,000 and
$629,000 in fiscal 2002, 2001 and 2000, respectively.
|-- | ----------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9. | 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 assets of the
defined benefit plans consist primarily of equity securities, debt securities
and cash equivalents. The pension and profit-sharing plans at June 29, 2002 and
June 30, 2001 held a combined total of 284,637 shares of the Companys
Class B common stock.
The
postretirement health-care plan covers substantially all employees. The plan is
unfunded and contributory. During fiscal 2002, the Company amended the plan to
place a cap on the Company paid portion of health-care premiums for retirees.
|-- | ---------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`Postretirement
                                                              Pension Benefits      Health-Care Benefits
                        ------------------------------------------------------------------------------------
                                                             2002         2001          2002         2001
                        ------------------------------------------------------------------------------------
                        Change in benefit obligations
                        Benefit obligations at
                            beginning of year         $14,559,092  $13,569,998    $3,198,946   $2,893,226
                        Service cost                      330,579      318,999       174,406      184,055
                        Interest cost                   1,056,040    1,005,090       230,373      211,427
                        Actuarial losses                  641,073      471,253     1,638,012      192,192
                        Benefits paid                    (798,263)    (777,180)     (477,035)    (281,954)
                        Plan amendment                          -            -    (2,894,847)           -
                        Other                                   -      (29,068)            -            -
                        ------------------------------------------------------------------------------------
                        Benefit obligation at end of
                        year                          $15,788,521  $14,559,092    $1,869,855   $3,198,946
                        ------------------------------------------------------------------------------------
                        Change in plan assets
                        Fair value of plan assets
                        at beginning of year          $14,702,734  $14,199,763       $     -      $     -
                        year
                        Actual return on plan assets     (520,320)  (1,341,126)            -            -
                        Employer contributions          2,665,670    2,867,811       477,035      281,954
                        Benefits paid                    (798,263)    (777,180)     (477,035)    (281,954)
                        Other                            (104,482)    (246,534)            -            -
                        ------------------------------------------------------------------------------------
                        Fair value of plan assets at
                        end of year                   $15,945,339  $14,702,734       $     -      $     -
                        ------------------------------------------------------------------------------------
                        Funded status                    $154,414     $143,642   $(1,869,855) $(3,198,946)
                        Unrecognized transition amount    (88,950)    (144,977)      480,376      528,413
                        Unrecognized net actuarial
                            loss                        7,536,151    4,946,945     2,787,251    1,279,527
                        Unrecognized prior service        815,285      954,049    (2,783,857)           -
                        cost
                        ------------------------------------------------------------------------------------
                        Prepaid (accrued) benefit cost $8,416,900   $5,899,659   $(1,386,085) $(1,391,006)
                        ------------------------------------------------------------------------------------
                        Weighted -average assumptions
                        Discount rate                       7.25%         7.5%         7.25%         7.5%
                        Expected return on plan assets       8.5%         8.5%           N/A          N/A
                        ------------------------------------------------------------------------------------`

27

---

# Knape & Vogt Manufacturing Company and Subsidiaries

Notes to Consolidated Financial Statements

| |  | The net periodic benefit cost related to the defined benefit pension plans is
made up of the following components:
| |  | ------------------------------------------------------------------------------------------------------------------

`Postretirement
                                                               Pension Benefits         Health-Care Benefits
                        -----------------------------------------------------------------------------------------------
                                                        2002        2001        2000      2002        2001      2000
                        -----------------------------------------------------------------------------------------------
                        Service cost                $330,579    $318,999    $298,385  $174,406    $184,055  $127,919
                        Interest cost              1,056,040   1,005,090     908,750   230,373     211,427   189,623
                        Expected return on plan
                        assets                    (1,389,192) (1,193,512) (1,080,874)        -           -         -
                        Net amortization             152,033     104,630     189,155    67,335     107,331   102,610
                        -----------------------------------------------------------------------------------------------

                        Net periodic pension cost   $149,460    $235,207    $315,416  $472,114    $502,813  $420,152
                        ===============================================================================================`

| |  | The health care cost trend rate used to determine the postretirement health-care
benefit obligation was 5.25% for 2002 and will remain at this level going
forward. The trend rate is a significant factor in determining the amounts
reported. A one-percentage-point change in these assumed health-care cost trend
rates would have the following effect:
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`One-Percentage Point                               Increase          Decrease
                        -------------------------------------------------------------------------------
                        Effect on total of service and interest
                            cost components                         $        52,112    $      (42,810)
                        Effect on postretirement health-care
                            benefit obligation                              456,891          (361,969)`

| |  | The Company also has a nonqualified supplemental retirement program for designated
officers of the Company, which includes death and disability benefits. The plan is
funded from the general assets of the Company. The pension benefit obligation and
pension expense under this plan are as follows:
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`2002           2001          2000
                        ----------------------------------- ------------- -------------- -------------
                        Pension benefit obligation            $3,153,183     $3,167,304    $3,318,204
                        Pension expense                          326,753        328,027       343,131`

| |  | The Company's Board of Directors annually approves contributions to the defined
contribution plans. Expense for the discretionary profit-sharing plan amounted to
$750,261, $768,590 and $673,344 in fiscal 2002, 2001 and 2000, respectively.
The Company also provides a 401(k) plan for all of its employees. Employees may
contribute up to 15 percent of their pay. For all hourly employees, the Company will match
50 percent of the first 4 percent that an employee contributes. The amount
expensed for the Company match provision of the plan was $246,229, $274,798 and
$143,791 in fiscal 2002, 2001 and 2000, respectively.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10. | Income Taxes | The components of income before income taxes consist of:
|--- | ------------ | --------------------------------------------------------

`June 29,          June 30,         July 1,
                        Year Ended                             2002              2001            2000
                        --------------------------------------------------------------------------------
                        United States                  $  5,722,943     $   7,950,175    $ 12,056,990
                        Foreign                             189,103           631,890         989,740
                        --------------------------------------------------------------------------------

                        Income before income taxes     $  5,912,046     $   8,582,065    $ 13,046,730
                        ================================================================================`

28

---

# Knape & Vogt Manufacturing Company and Subsidiaries

Notes to
Consolidated Financial Statements

| |  | Income tax expense (benefit) consists of:
| |  | -----------------------------------------

`June 29,         June 30,           July 1,
                        Year Ended                            2002             2001              2000
                        --------------------------------------------------------------------------------
                        Current:
                            United States            $     716,000    $   2,208,000    $    4,600,000
                            State and local                 12,000           59,000           331,000
                        --------------------------------------------------------------------------------

                        Total current                      728,000        2,267,000         4,931,000
                        --------------------------------------------------------------------------------
                        Deferred:
                            United States                1,266,000          403,000          (723,000)
                            Foreign                         83,000          278,000           427,000
                            State and local                 46,000           19,000           (12,000)
                        --------------------------------------------------------------------------------

                        Total deferred                   1,395,000          700,000          (308,000)
                        --------------------------------------------------------------------------------

                        Income tax expense           $   2,123,000    $   2,967,000    $    4,623,000
                        ================================================================================`

| |  | The
difference between the federal statutory tax rate and the effective tax rate on
continuing operations was as follows:
| |  | -------------------------------------------------------------------------------------------------------------------------

`June 29,        June 30,        July 1,
                        Year Ended                              2002            2001           2000
                        ----------------------------------------------------------------------------
                        Federal income taxes at the
                               statutory rate          $   2,010,000   $   2,918,000   $   4,436,000
                        Foreign earnings taxed at
                               foreign statutory rate         19,000          57,000          99,000
                        State and local income taxes          19,000          25,000         104,000
                        Other                                 75,000         (33,000)        (16,000)
                        --------------------------------------------------------------------------------

                        Income tax expense             $   2,123,000   $   2,967,000   $   4,623,000
                        ================================================================================`

| |  | The sources of the net deferred income tax liability were as follows:
| |  | ---------------------------------------------------------------------

`June 29, 2002     June 30, 2001
                        --------------------------------------------------------------------------------
                        Property and equipment                      $     7,544,000    $    6,971,000
                        Pension accrual                                   3,022,000         1,990,000
                        Net operating loss carryforward                           -           (72,000)
                        Supplemental retirement plan                     (1,058,000)         (999,000)
                        Benefit related accruals                           (983,000)         (989,000)
                        Inventory reserves                                 (883,000)         (263,000)
                        Rebates, advertising and royalty accrual           (704,000)         (562,000)
                        Derivative instrument                              (561,000)         (190,000)
                        Basis differences                                         -        (1,436,000)
                        Other                                              (804,000)          335,000
                        --------------------------------------------------------------------------------

                                                                    $     5,573,000    $    4,785,000
                        ================================================================================`

| |  | For
Canadian tax purposes, the Company has net operating losses expiring through
2005 totaling approximately $1,345,000, which has been fully reserved through a
valuation allowance.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

29

---

# Knape & Vogt Manufacturing Company and Subsidiaries

Notes to
Consolidated Financial Statements

|11. | Stock Option Plans | The 1987 Stock Option Plan provided for the grant to
key employees of the Company options, which provided the ability 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 10 years from the grant date. The plan, as amended in
October 1991 and in October 1994, 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. 
Under
the Companys 1997 Stock Incentive plan, up to 660,000 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 55,000 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 is
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 the participant, with the
option price determined in accordance with the plan. The exercise price per
share of common stock purchasable under an option is a single fixed exercise
price equal to 100% of the fair market value of the common stock at the award
date increased by a fixed percentage (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 the option was
granted and expire five years after the grant date. During fiscal 2002, no
options were granted to participants. In fiscal 2001, 281,145 options were
granted to participants at an exercise price of $18.48 per share. Included in
the 198,206 options issued in 2000 are 27,500 options granted to William
Dutmers, Chairman and CEO, which are not part of the 1997 Stock Incentive Plan
(as explained below).
Transactions under the plans are as follows:
|--- | ------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`Weighted-                Weighted-                Weighted-
                                              Average                  Average                  Average
                                June 29,     Exercise    June 30,     Exercise     July 1,     Exercise
Year Ended                          2002        Price        2001        Price        2000        Price
----------------------------- ----------- ------------ ----------- ------------ ----------- ------------
Options outstanding,
    beginning of year            563,214       $18.73     305,151       $18.64     176,931       $18.41
Granted                                -            -     281,145        18.48     198,206        19.04
Exercised                              -            -     (1,828)        14.45    (14,637)        13.78
Forfeited                       (14,366)       $16.34    (21,254)        18.92    (55,349)        20.32
----------------------------- ----------- ------------ ----------- ------------ ----------- ------------

Options outstanding at end
    of year                      548,848       $18.80     563,214       $18.73     305,151       $18.64
----------------------------- ----------- ------------ ----------- ------------ ----------- ------------

Options exercisable at end
    of year                      119,530       $20.94      65,974       $14.83      72,574       $14.73
Options available for
    grant, end of year           175,262                  169,570                  214,639
----------------------------- ----------- ------------ ----------- ------------ ----------- ------------

Weighted-average fair
    value of options
    granted during the year            -                    $1.96                    $2.84
----------------------------- -----------              -----------              -----------`

30

---

# Knape & Vogt Manufacturing Company and Subsidiaries

Notes to Consolidated Financial Statements

| |  | A summary of stock options outstanding at June 29, 2002 follows:
| |  | ----------------------------------------------------------------

`Outstanding                             Exercisable
                                                                             Weighted-
                                                                              Average
                                                                Weighted-    Remaining
                                                                 Average    Contractual                 Weighted-
                                                                Exercise       Life                      Average
                             Price Ranges           Shares        Price       (Years)      Shares     Exercise Price
                        ------------------------ ------------- ------------ ------------ ------------ ---------------

                        $12.50 - $14.50                66,554       $14.10          2.1       39,054          $13.87
                        $16.50 - $18.50               420,881       $18.41          3.5       19,063          $17.42
                        $26.50 - $28.50                61,413       $26.54          1.0       61,413          $26.54
                                                 -------------                           ------------
                                                      548,848       $18.80          2.0      119,530          $20.94
                                                 =============                           ============`

| |  | 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 or exceeds 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 and earnings per share as if 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:
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`2001       2000
                        -----------------------------------------------------------------------------
                        Dividends per share                                    $    0.66  $   0.615
                        Expected volatility                                       0.2707     0.3241
                        Risk-free interest rate                                    6.25%      5.81%
                        Expected lives                                               4.0        4.1
                        =============================================================================`

| |  | Under
the accounting provisions of SFAS No. 123, the Companys net income and
earnings per share would have been reduced to the pro forma amounts indicated
below:
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

`2002          2001         2000
                        -----------------------------------------------------------------------------------------
                        Net income:
                            As reported                                $  3,789,046   $ 5,615,065  $ 8,423,730
                            Pro forma                                     3,789,046     5,064,021    7,670,547
                        Earnings per share:
                            As reported                                $       0.83   $      1.22  $      1.80
                            Pro forma                                          0.83          1.10         1.64
                        =========================================================================================`

| |  | Of
the 660,000 shares available for issuance under the 1997 Stock Incentive Plan,
no more than 55,000 shares may be issued as restricted stock. The Executive
Compensation Committee, subject to the approval of the Board of Directors,
determines the eligible persons to whom restricted shares are granted and the
price (if any) to be paid by the participant, the conditions under which the
participants interest in the stock may be forfeited and the period of time
during which the participant is not permitted to sell, transfer, pledge, or
assign the shares of the restricted stock awarded under this Plan. 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.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

31

---

# Knape & Vogt Manufacturing Company and Subsidiaries

Notes to
Consolidated Financial Statements

|    |                      | On
February 1, 2000, Mr. Dutmers was granted 6,600 shares of restricted common
stock and the option to purchase an additional 27,500 shares of the
Companys common stock at a price of $14.43 per share. The grant and the
options will vest if the Company achieves specific financial objectives within a
five-year performance period. During the performance period, the grantee may
vote and receive dividends on the restricted shares, but the shares are subject
to transfer restrictions and are forfeited if the grantee terminates employment
or the Company does not achieve its financial objectives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | -------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|12. | 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 10 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 Business Corporation Act. With respect to
dividend rights, each share of common stock is entitled to cash dividends at
least 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 any time.
On
April 14, 2000, the Board of Directors declared a 10% stock dividend of the
Companys common stock and Class B common stock. On May 19, 2000,
shareholders received one additional share of stock for each 10 shares held. All
per share data and weighted average shares outstanding have been restated to
reflect the 10% stock dividend.
The
Company has a stock repurchase program under which it purchased 101,506 shares
during fiscal 2002 with the price per share ranging from approximately $10 to
$13. At June 29, 2002, the Company has remaining authorization to repurchase an
additional 274,482 shares.
|13. | Business Segments    | During the third quarter of fiscal 2002, the Company
announced its decision to realign its sales, marketing and new product
development efforts around two business segments: Office Products and Home and
Commercial Products. The Office Products segment develops, markets and
distributes its hardware and idea@WORK brand of ergonomic products
primarily to office furniture OEMs and office furniture dealers. The Home and
Commercial Products segment develops, markets and distributes hardware, kitchen
and storage solutions primarily to retailers, specialty distributors and kitchen
OEMs. These products include the Real Solutions for Real Life brand
of storage products. The Company substantially completed this realignment of its
structure during the fourth quarter of fiscal 2002. 
The
following segment information is a summary of the Companys operations by
operating segment for the past three fiscal years. Segment revenue has been
provided on a comparative basis. Due to the reorganization of the Company,
restatement of prior years remaining operating segment results is
impracticable. The accounting policies of the business segments are the same as
those described in the summary of significant accounting policies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

32

---

# Knape & Vogt Manufacturing Company and Subsidiaries

Notes to
Consolidated Financial Statements

| |  | Consolidated Industry Segment Information:
| |  | ------------------------------------------

`Home and
                                                         Office       Commercial     Corporate    Consolidated
                                                        Products       Products      and Other        Total
                                                      -------------- -------------- ------------- --------------
                        Year Ended June 29, 2002:
                          Gross  sales to external
                             customers                  $39,875,143    $96,447,668  $         -    $136,322,811
                          Total assets                    6,749,662     24,963,471    56,178,285     87,891,418
                          Capital expenditures               56,295        164,466     3,714,709      3,935,470
                        Year ended June 30, 2001:
                          Gross sales to external
                             customers                  $48,101,846   $100,632,666  $         -    $148,734,512
                        Year ended July 1, 2000:
                          Gross sales to external
                             customers                  $40,593,729   $117,142,545  $         -    $157,736,274`

| |  | Geographic
information related to net sales, based on location of our customers, and
long-lived assets are summarized between domestic and foreign locations as
follows:
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`Year Ended                       June 29, 2002   June 30, 2001     July 1, 2000
                        ------------------------------- ---------------- --------------- -----------------
                        Net sales:
                          United States                     116,336,049     126,940,678       135,231,609
                          Canada                              9,552,947      10,106,340        10,461,654
                          Other foreign                       5,979,846       6,865,845         7,212,605
                        Fixed assets:
                          United States                      37,260,430      41,025,151        38,361,863
                          Canada                                      -               -                 -
                          Other foreign                               -               -                 -`

|    |                               | The
Company does not believe that it is dependent upon any single customer, since
none accounts for more than 10% of consolidated net sales or operating income.
|--- | ----------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|14. | Quarterly Results
(Unaudited) | The table below sets forth summary unaudited information on a quarterly basis
for the Company.                                                                  

`Year Ended June 29, 2002    1st Quarter   2nd Quarter    3rd Quarter   4th Quarter
                        -----------------------------------------------------------------------------------
                        Net sales                   $33,089,191   $31,153,768    $33,142,872   $34,483,011
                        Gross profit                  7,126,055     6,767,196      7,056,248     9,119,838
                        Operating income              1,770,698     1,471,016      1,714,281     2,406,352
                        Net income                      905,628       744,500        844,627     1,294,291
                        Earnings per share-basic          $0.20         $0.16          $0.19         $0.29
                        Earnings per share-diluted        $0.20         $0.16          $0.19         $0.29
                        Cash dividend-common stock  $     0.165   $     0.165    $     0.165   $     0.165
                        Cash dividend-Class B
                        common stock                $      0.15   $      0.15    $      0.15   $      0.15
                        -----------------------------------------------------------------------------------`

33

---

# Knape & Vogt Manufacturing Company and Subsidiaries

Notes to
Consolidated Financial Statements

`Year Ended June 30, 2001    1st Quarter   2nd Quarter    3rd Quarter   4th Quarter
                        -----------------------------------------------------------------------------------
                        Net sales                   $37,766,995   $36,711,446    $34,496,063   $34,938,359
                        Gross profit                  9,271,640     8,611,313      7,507,734     8,172,169
                        Operating income              3,714,363     2,882,376      1,256,483     2,274,133
                        Net income                    2,180,895     1,615,572        562,791     1,255,807
                        Earnings per share-basic    $      0.47   $      0.35    $      0.12   $      0.27
                        Earnings per share-diluted  $      0.47   $      0.35    $      0.12   $      0.27
                        Cash dividend-common stock  $     0.165   $     0.165    $     0.165   $     0.165
                        Cash dividend-Class B
                        common stock                $      0.15   $      0.15    $      0.15   $      0.15
                        -----------------------------------------------------------------------------------`

|15. | Commitments and
Contingencies | In September 1998 when the Company sold The Hirsh Company, the purchaser
assumed the lease for the facility located in Skokie, Illinois.  The Company
guaranteed all of the lease obligations to the landlord through the expiration of the lease
in August 2000. During fiscal 2000, the purchaser defaulted on the lease
agreement. In May 2000, the landlord filed suit in the Cook County, Illinois
Circuit Court against the purchaser and the Company as the guarantor. The claim
is for unpaid rent, unpaid property taxes, building repairs and legal costs.
The
Company was sued in the Kent County, Michigan Circuit Court in 1997 by a former
employee seeking additional benefits under an executive retirement plan. The
Circuit Court ruled in favor of the plaintiff, but in June 2002, the Circuit
Court was reversed on the Companys appeal to the Michigan Court of
Appeals. The plaintiff has filed a delayed request for leave to appeal to the
Michigan Supreme Court. In August 2002, the plaintiff filed a lawsuit seeking
these retirement benefits in the Federal District Court for the Western District
of Michigan.
Canada
Customs and Revenue Agency (CCRA) has performed an audit of the
Companys sales to its wholly owned subsidiary, Knape & Vogt Canada.
Results from a joint review by the Company and its customs broker indicate that
the Company may be liable for the underpayment of duties in a range estimated
from $150,000 to $350,000 on certain customs transactions. The Company has made
an accrual within the range of the estimated liability. The Company has also
received a determination from CCRA that Knape & Vogt Canada is not the
importer of record. The Company is appealing the determination letter and
believes that based on the information available at this time, any additional
liability pertaining to this issue will not have a material adverse effect on
the Companys earnings.
The
Company is also subject to other legal proceedings and claims, which arise in
the ordinary course of its business.
In
the opinion of management, based on the information presently known and taking
into account established accruals of approximately $1,285,000 at June 29, 2002,
the ultimate liability for these matters would not have a material adverse
effect on the Companys financial position or the results of its
operations.
|--- | ----------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

34

---

## Independent
Auditors Report

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

We have audited the
accompanying consolidated balance sheet of Knape & Vogt Manufacturing
Company and subsidiaries as of June 29, 2002, and the related consolidated
statements of operations, stockholders equity and cash flows for the year
ended June 29, 2002. Our audit also included the financial statement schedule
listed in the Index at Item 14. These consolidated financial statements and
financial statement schedule are the responsibility of the Companys
management. Our responsibility is to express an opinion on these consolidated
financial statements and financial statement schedule based on our audit.

We conducted our audit in
accordance with auditing standards generally accepted in the United States.
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 audit provides a
reasonable basis for our opinion.

In our opinion, such
consolidated financial statements present fairly, in all material respects, the
financial position of Knape & Vogt Manufacturing Company and subsidiaries at
June 29, 2002 and the results of their operations and their cash flows for the
year ended June 29, 2002 in conformity with accounting principles generally
accepted in the United States. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

/s/ Deloitte & Touche, LLP
Grand Rapids, Michigan
July 26, 2002

35

---

## 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, 2001, and the related consolidated
statements of operations, stockholders equity and cash flows for each of
the two years in the period ended June 30, 2001. 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 auditing standards generally accepted in the United States.
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, 2001, and the results of their operations
and their cash flows for each of the two years in the period ended June 30, 2001
in conformity with accounting principles generally accepted in the United
States.

/s/ BDO Seidman, LLP
Grand Rapids, Michigan
July 26, 2001

36

---

# ITEM 9--CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On March 8, 2002, the
Companys Board of Directors approved of a change in its independent
accountant from BDO Seidman LLP (BDO) to Deloitte & Touche LLP
(Deloitte) based upon the recommendation of the Audit Committee.
BDOs report on the Companys financial statements for the past two
fiscal years did not contain an adverse opinion or a disclaimer of opinion and
was not qualified or modified as to uncertainty, audit scope, or accounting
principles. During 2000, 2001, and a portion of 2002, preceding the Boards
decision to change independent accountants, there were no disagreements with BDO
on any matter of accounting principles or practices, financial statement
disclosure, auditing scope or procedure, which disagreement(s), if not resolved,
would have caused BDO to refer to the matter of the disagreement(s) in
connection with its reports. During that same period of time, there were no
reportable events as described in item 304(a)(1)(b) of the Securities and
Exchange Commissions 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
11, 2002, 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 2002 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 11, 2002, 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 11, 2002, 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 11,
2002, filed pursuant to Regulation 14A.

37

---

# PART IV

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

|(a)        (1)        Financial Statements                                                                                                                                                                                                                      |                                                                                                   
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------
|The following financial statements, all of which are set forth in Item 8, are
filed as part of this report.                                                                                                                                                    
|Consolidated Statements of Operations 
Consolidated Balance Sheets               
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows          
Notes to Consolidated Financial Statements     
Independent Auditors' Reports | Page Number in
10-K Report
16           
17-18      
19           
20           
21-34      
35-36
|(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.                                                                                                        
|Schedule II -- Independent Auditors' Report
                      
Valuation and Qualifying Accounts and Reserves                                                                                                                                               | Page Number in
10-K Report
39           
40                                                       
|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 42 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 29, 2002.                                                                                                                                                                   

38

---

# Independent
Auditors Report on Schedule

Knape & Vogt Manufacturing Company
Grand Rapids, Michigan

We have audited the financial statements of Knape & Vogt Manufacturing
Company as of June 29, 2002 and for the year then ended, and have issued our
report thereon dated July 26, 2002, which is contained in Item 8 of this Form
10-K.  Our audit also included the financial statement schedule of Knape & Vogt Manufacturing
Company listed in Item 14. This financial statement schedule
is the responsibility of the Companys management. Our responsibility is to
express an opinion based on our audit. In our opinion, the financial statement
schedule, when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set
forth therein.

/s/ Deloitte & Touche, LLP
Grand Rapids, Michigan
July 26, 2002

39

---

# Knape & Vogt Manufacturing Company and Subsidiaries

Schedule II -
Valuation and Qualifying Accounts and Reserves

`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
----------------------------------- --------------- ---------------- ---------------- --------------
Year ended June 29, 2002:
 Allowances deducted from
  Assets:
    Accounts receivable for:
      Doubtful accounts                  $ 447,000        $ 489,000        $ 303,000      $ 633,000
      Cash discounts                       114,000            8,000                -        122,000
                                    --------------- ---------------- ---------------- --------------
                                         $ 561,000        $ 497,000        $ 303,000      $ 755,000
   Inventory obsolescence               $1,015,000        $ 949,000        $ 525,000     $1,439,000



Year ended June 30, 2001:
 Allowances deducted from
  Assets:
    Accounts receivable for:
      Doubtful accounts                  $ 409,000        $ 438,000         $ 400,000     $ 447,000
      Cash discounts                       147,000                -            33,000       114,000
                                    --------------- ---------------- ----------------- -------------
                                         $ 556,000        $ 438,000         $ 433,000     $ 561,000
   Inventory obsolescence                $ 910,000        $ 422,000         $ 317,000    $1,015,000



Year ended July 1, 2000:
 Allowances deducted from
  Assets:
    Accounts receivable for:
      Doubtful accounts                   $ 242,000      $ 187,000         $20,000        $ 409,000
      Cash discounts                        147,000              -               -          147,000
----------------------------------- ---------------- -------------- --------------- ----------------
                                          $ 389,000      $ 187,000         $20,000        $ 556,000
   Inventory obsolescence                $1,095,000      $ 168,000        $353,000        $ 910,000`

40

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# 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                                
| | By                                

## Date:  August 28, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below
on August 28, 2002, by the following persons on behalf of the registrant in the capacities indicated.

|/s/ William R. Dutmers
William R. Dutmers, Chairman of the Board and Chief Executive Officer |  | /s/ John E. Fallon
John E. Fallon, Director        
|-------------------------------------------------------------------------------------------- |  | ---------------------------------------------------
|/s/ Thomas A. Hilborn
Thomas A. Hilborn, Director                                            |  | /s/ Michael J. Kregor
Michael J. Kregor, Director  
|/s/ Richard S. Knape
Richard S. Knape, Director                                              |  | /s/ Robert J. Knape
Robert J. Knape, Director      
|/s/ Gregory Lambert
Gregory Lambert, Director                                                |  | /s/ Christopher Norman
Christopher Norman, Director

41

---

# 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 were filed as Exhibit 3(a) of
the Registrants Form 10-K Annual Report for the fiscal year ended June 30,
1987, are incorporated by reference.              
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3(b)  | Bylaws as amended April 23, 1999, filed as Exhibit 3.1 of the Registrants
Form 10-Q Third Quarter Report for the fiscal year June 30, 1999, are
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 June 1, 1999, which was filed as Exhibit
10(d) of the Registrants Form 10-K Annual Report for the fiscal year ended
June 30, 1999, is incorporated by reference.                                                                               
|10(e) | First amendment dated October 29, 1999, to Loan agreement with Old Kent Bank,
filed as Exhibit 10.1 of the Registrants Form 10-Q Second Quarter Report
for the fiscal year July 1, 2000, is incorporated by reference.                                                                 
|10(f) | Second amendment dated May 31, 2002, to Loan agreement with Fifth Third Bank,
filed herewith.                                                                                                                                                                                           
|10(g) | Interest swap agreement with Bank One dated June 1, 1999, which was filed as
Exhibit 10(e) of the Registrants Form 10-K Annual Report for the fiscal
year ended June 30, 1999, is incorporated by reference.                                                                           
|10(h) | 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(i) | Restricted Share Grant Agreement dated February 1, 2000, between Knape &
Vogt Manufacturing Company and William R. Dutmers, filed as Exhibit 10.1 of the
Registrants Form 10-Q Third Quarter Report for the fiscal year July 1,
2000, is incorporated by reference.                    
|10(j) | Stock Option Agreement for Nonqualified Stock Option dated February 1, 2000,
between Knape & Vogt Manufacturing Company and William R. Dutmers, filed as
Exhibit 10.2 of the Registrants Form 10-Q Third Quarter Report for the
fiscal year July 1, 2000, is incorporated by reference.

42

---

|21    | Subsidiaries of Registrant.                                                                                                                                                                                         
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|23(a) | Consent of Deloitte & Touche, LLP, independent public accountants.                                                                                                                                                  
|23(b) | Consent of BDO Seidman LLP, independent public accountants.                                                                                                                                                         
|99.1  | Certificate of the Chairman of the Board and Chief Executive Officer of Knape & Vogt Manufacturing Company pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
|99.2  | Certificate of the Vice President of Finance and Treasurer of
Knape & Vogt Manufacturing Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.          

43

---

# 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)



---

# EXHIBIT 23
(a)

## INDEPENDENT
AUDITORS CONSENT

We consent to the
incorporation by reference in Registration Statement Nos. 33-20227, 33-43794,
33-88206 and 33-88212 of Knape & Vogt Manufacturing Company on Form S-8 of
our report dated July 26, 2002, appearing in this Annual Report on Form 10-K of
Knape & Vogt Manufacturing Company for the year ended June 29, 2002.

/s/ Deloitte & Touche, LLP
Grand Rapids, Michigan
August 28, 2002



---

# EXHIBIT 23
(b)

## Consent of
Independent Certified Public Accountants

We consent to the
incorporation by reference in Registration Statement Nos. 33-20227, 33-43794, 33-88206 and
33-88212 of Knape & Vogt Manufacturing Company on Form S-8 of our report dated July 26, 2001,
appearing in the Annual Report on Form 10-K of Knape & Vogt Manufacturing
Company for the year ended June 30, 2001.

/s/ BDO Seidman, LLP
Grand Rapids, Michigan
August 28, 2002



---

Exhibit 10(f)

# SECOND
AMENDMENT TO LOAN AGREEMENT

THIS
SECOND AMENDMENT TO LOAN AGREEMENT (the Amendment), is made
as of May 31, 2002, by and between KNAPE & VOGT MANUFACTURING
COMPANY, as a Michigan corporation (the Borrower) and FIFTH
THIRD BANK (formerly OLD KENT BANK), a Michigan banking corporation (the
Bank).

R E C I T A L S :

|A. | Borrower and Bank have signed a Loan Agreement, dated as of June 1, 1999 and amended October 29, 1999
           (the "Loan Agreement"), providing for Bank to extend to Borrower a revolving bank credit of up to
           $45,000,000;
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|B. | Borrower and Bank wish to amend the Loan Agreement on the terms and conditions set forth in this
           Agreement.                                                                                                                    

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

| | 1.      Restatement of Warranties and Representations. Borrower hereby confirms
to Bank that the warranties and representations set forth in the Loan Agreement
were true, accurate and complete when made and remain true, accurate and
complete as of the date of this Amendment.
        2.      No Events of Default; Compliance with Covenants. Borrower hereby confirms
and acknowledges to Bank that no event of default has occurred under the Loan
Agreement as of the date of this Amendment, and that as of the date of this
Amendment, Borrower has complied with all of the affirmative and negative
covenants set forth in the Loan Agreement. 
        3.      Covenants.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | Section 4.7 of the Loan Agreement is amended in its entirety to read as follows:
| | --- | --------------------------------------------------------------------------------
| |     |                                                                                 
| | (b) | Section 4.9 of the Loan Agreement is amended in its entirety to read as follows:
| |     |                                                                                 

| | 4.      Letters of Credit. Subject to the terms and conditions set forth below,
Bank may, in its sole discretion, at any time and from time to time until the
Termination Date provided in the Revolving Credit Note, at the request of
Borrower, issue standby and documentary letters of credit (Letters of
Credit) for the account of Borrower, provided that the aggregate
outstanding amounts of the Revolving Credit Loans, outstanding Letters of Credit
and the unreimbursed draws under Letters of Credit may not exceed the Revolving
Credit Commitment. The issuance by Bank of Letters of Credit is subject to the
following terms and conditions:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | each letter of credit shall expire not later than three (3) business days prior to the Termination Date;                                                                                                                                                                                                                                                      
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | for each letter of credit requested, Borrower shall sign and properly complete
Banks standard Application for Irrevocable Standby Letter of Credit and
Reimbursement and Security Agreement;                                                                                                                                                                 
| | (c) | for each Letter of Credit, Borrower shall have paid Bank an issuance fee in an amount determined by Bank
                               in its sole discretion; and                                                                                                                                                                                           
| | (d) | each outstanding Letter of Credit and all drawings under Letters of Credit for
which Borrower has not reimbursed Bank shall be treated as Revolving Credit
Loans under the Loan Agreement and all drawings under Letters of Credit for
which Borrower has not reimbursed Bank shall bear interest at the Prime Rate
provided for in the Revolving Credit Note.

| | 5.      Other Provisions Not Effected. Except as hereby amended, no other provisions of the Loan Agreement
shall be amended and all provisions of the Loan Agreement, as amended, shall hereafter remain
in full and effect.
        6.      Undefined Terms. All capitalized terms that are not defined in this Amendment shall have the meanings
provided in the Loan Agreement.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---

IN WITNESS WHEREOF, the parties have signed and delivered this Amendment on the date set forth in the
             first paragraph of this Amendment.

| | KNAPE & VOGT MANUFACTURING COMPANY
By ________________________________________
Its ________________________________________FIFTH THIRD BANK
By _______________________________________
        George Bailey, Vice President
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---

# EXHIBIT 99-1

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

| | (1) | the Annual Report on Form 10-K for the fiscal year ended June 29, 2002
which this statement accompanies fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934, and                     
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | the information contained in the Annual Report on Form 10-K for
the fiscal year ended June 29, 2002 fairly presents, in all material respects, the
financial condition and results of operations of Knape & Vogt Manufacturing Company.

Dated: August 28, 2002

| | /s/ William R. Dutmers

William R. Dutmers
Chairman of the Board and
Chief Executive Officer | 
| | -------------------------------------------------------------------------------------------- | 



---

# EXHIBIT 99-2

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

| | (1) | the Annual Report on Form 10-K for the fiscal year ended June 29, 2002
which this statement accompanies fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934, and                     
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | the information contained in the Annual Report on Form 10-K for
the fiscal year ended June 29, 2002 fairly presents, in all material respects, the
financial condition and results of operations of Knape & Vogt Manufacturing Company.

Dated: August 28, 2002

| | /s/ Leslie J. Cummings

Leslie J. Cummings
Vice President of Finance and
Treasurer | 
| | ---------------------------------------------------------------------------------- |