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

(Mark One)
[X]     Annual report pursuant to section 13 or 15(d) of the Securities Exchange
        Act of 1934 for the fiscal year ended July 1, 2000
        or
[ ]     Transition  report  pursuant  to  section 13 or 15(d) of the  Securities
        Exchange  Act of 1934 for the  transition  period from _______ to ______


Commission file number 2-18868

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

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

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

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

               Securities registered pursuant to 12(b) of the Act:
               ---------------------------------------------------
     Title of each class            Name of each exchange on which registered

            None                                       None

           Securities Registered pursuant to Section 12(g) of the Act:
           -----------------------------------------------------------
                     Common Stock, par value $2.00 per share
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes _X_ No ____

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

The  aggregate  market  value  of  voting  stock  held by  nonaffiliates  of the
registrant was $70,383,493 as of August 25, 2000.

Number of shares  outstanding  of each  class of common  stock as of August  25,
2000: 2,227,216 shares of Common Stock, par value $2.00 per share, and 2,388,095
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 13, 2000,
are incorporated by reference into Part III of this Report.

                                       1
<PAGE>
                                     PART I
                                ITEM 1--BUSINESS

Item 1(a)--General Development of Business

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

         The following significant events occurred in fiscal 2000:

   -     On October 1, 1999, the Company acquired the assets of Idea Industries,
         Inc. Idea  Industries  designed,  manufactured  and marketed  ergonomic
         products including adjustable keyboard  mechanisms,  keyboard and mouse
         platforms, wrist rests and CPU holders.

   -     On April 14, 2000,  the Board of Directors of the Company  authorized a
         ten-percent  stock dividend payable on May 19, 2000, to shareholders of
         record on May 5, 2000.  All per share data and weighted  average shares
         outstanding have been adjusted to reflect this dividend.

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

     The Company believes that a dominant portion of the Company's operations is
in a single  industry  segment -- the  design,  manufacture,  and  marketing  of
storage  hardware and  ergonomic  products.  Accordingly,  no separate  industry
segment information is presented.

Item 1(c)--Narrative Description of Business

     Products,  Services,  Markets and Methods of  Distribution.  The  Company's
storage products include a complete line of decorative and utility wall-attached
shelving systems.  Drawer slides  manufactured by the Company include precision,
Euro-style and utility slides.  Precision drawer slides use ball bearings, while
Euro-style and utility  drawer slides use rollers.  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 wrists rests and floating mousepads.

     Approximately  27% of the Company's sales were to the consumer market,  71%
of the Company's sales were to original  equipment  manufacturers  and specialty
distributors,  and 2% of the Company's sales were to the office furniture dealer
network. Most sales are made through independent sales representatives.

     New Product and Capital  Spending  Information.  Management  believes  that
capital spending in fiscal 2001 will remain consistent with the $9,112,810 spent
in fiscal 2000.  The cost to complete the items  classified as  construction  in
progress at July 1, 2000, was estimated to be  approximately  $4.5 million.  The
fiscal 2001  spending  will reflect  investments  made to improve  manufacturing
technology and 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.

     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 materially
adverse effect upon

                                       2
<PAGE>
the  Company.  The Company  estimates  that at present it has over 1,300  active
customers with approximately 35,000 outlets, of which the five largest customers
account for  approximately  19% of sales and no one of which  accounts  for more
than 6% 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.  The Company does not believe that any portion of its
business is subject to  renegotiation  of profits or termination of contracts or
subcontracts at the election of the government.

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

     Research,  Design and  Development.  Approximately  $1,690,000 was spent in
fiscal  2000  in the  development  of new  products  and in the  improvement  of
existing  products;  approximately  $1,543,000  was  spent  in  fiscal  1999 and
$1,225,000  in fiscal 1998 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  effect  upon  the  capital
expenditures, earnings and competitive position of the Company.

     Employees.  At July 1, 2000, the Company employed 890 persons.  None of the
Company's employees are represented by collective bargaining agents.

Item 1(d)--Information About Foreign Operations

     The  Company's  Canadian  operation   accounted  for  approximately  7%  of
consolidated sales. Approximately 4% of consolidated net sales were derived from
export  shipments  from the Company's  United States  operations to customers in
other  foreign  countries.  The Company  does not know of any  particular  risks
attendant  thereto,  except that  fluctuating  exchange rates between the United
States and  Canadian  currencies  and other  factors  beyond the  control of the
Company, such as tariff and foreign economic policies, may affect future results
of such  business.  Reference  is made to Notes 2, 3 and 13 of the  Notes to the
Company's Consolidated Financial Statements contained herein for the fiscal year
ended July 1, 2000, for a presentation of additional  information concerning the
Company's foreign operations.

                               ITEM 2--PROPERTIES

     The  Company  owned or  leased  the  following  offices  and  manufacturing
facilities as of July 1, 2000:
<TABLE>
        Location                                  Description                                   Interest
<S>                                 <C>                                                          <C>
Grand Rapids, Michigan              Executive offices and manufacturing facilities;              Owned
                                    444,000 sq. ft. on 41 acres.

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

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

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

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 July
1,  2000,   the  Company  spent   approximately   $28,000,000   for   expansion,
modernization and improvements of its facilities and equipment.

                                       3
<PAGE>
                            ITEM 3--LEGAL PROCEEDINGS

     In September  1999,  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.  As of July 1, 2000,  the  purchaser is in default
under the lease  agreement and the landlord has filed suit against the purchaser
and the Company as the  guarantor.  The claim is for payment of the unpaid rent,
unpaid property taxes, building repairs and legal costs.

     A former  employee in  connection  with  benefits  paid under an  executive
retirement  plan has also sued the Company.  The initial  ruling was in favor of
the former employee; however, the Company has filed an appeal in the case.

     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, the
ultimate liability for these matters,  taking into account established  accruals
of  approximately  $880,000,  will not have a materially  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 July 1, 2000.

              ADDITIONAL ITEM--EXECUTIVE OFFICERS OF THE REGISTRANT

     The executive officers of the Company were, at July 1, 2000, as follows:
<TABLE>
                                                                                       Year First Elected
    Name                        Age           Positions and Offices Held               an Executive Officer
-----------------------------------------------------------------------------------------------------------
<S>                             <C>           <C>                                             <C>
William R. Dutmers              44            Chairman of the Board of Directors,
                                              Chief Executive Officer and President           1998

Michael G. Van Rooy             48            Senior Vice President of Manufacturing          1993

James S. Dahlke                 50            Vice President of Business Development          1999
</TABLE>

     Mr.  Dutmers was named  Chairman of the Board of Directors in January 1998.
Mr. Dutmers has been a member of the Board of Directors since April 1996. He was
named Chief  Executive  Officer and President in May 1999.  Mr.  Dutmers was the
President of G & L, Inc., a business consulting firm, from 1991 to 1997.

     Mr. Van Rooy has been 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.

     Mr. Dahlke was named the Vice President of Business  Development in 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.

     All terms of office are on an annual  basis and will  expire on October 13,
2000.

                                       4
<PAGE>
                                     PART II

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

     Market Price.  The Company's  Common Stock is traded on the NASDAQ National
Market under the ticker  symbol  KNAP.  Stock price  quotations  can be found in
major daily  newspapers  (listed  KnapeV) and in the Wall Street Journal (listed
KnapeVogt).  As of August 25, 2000, there were approximately  3,100 shareholders
of the Company's Common Stock and Class B Common Stock.
<TABLE>
                                                    Fiscal 2000                            Fiscal 1999
                                       -----------------------------------------------------------------------------
Quarter                                       High                Low               High                Low
--------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                <C>                <C>                 <C>
First                                        $16.02             $11.93             $20.68              $15.34
Second                                       $15.80             $12.56             $18.64              $15.00
Third                                        $16.36             $12.44             $16.36              $10.91
Fourth                                       $16.00             $13.52             $16.25              $10.91
</TABLE>

     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.
<TABLE>
                                                                         Per Share Cash Dividends
                                                                         ------------------------
Year Ended July 1, 2000                                        Common Stock               Class B Common Stock
-----------------------                                        ------------               --------------------
<S>                                                                <C>                            <C>
First Quarter                                                      $.15                           $.136
Second Quarter                                                     $.15                           $.136
Third Quarter                                                      $.15                           $.136
Fourth Quarter                                                     $.165                          $.15
</TABLE>
<TABLE>
                                                                         Per Share Cash Dividends
                                                                         ------------------------
Year Ended June 30, 1999                                       Common Stock               Class B Common Stock
------------------------                                       ------------               --------------------
<S>                                                                <C>                            <C>
First Quarter                                                      $.15                           $.136
Second Quarter                                                     $.15                           $.136
Third Quarter                                                      $.15                           $.136
Fourth Quarter                                                     $.15                           $.136
</TABLE>

     On August 4, 2000,  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 8, 2000, to
shareholders of record on August 25, 2000.

                                       5
<PAGE>
                         ITEM 6--SELECTED FINANCIAL DATA
<TABLE>
For the Year Ended                               2000              1999                1998               1997             1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>               <C>               <C>               <C>                <C>
                                                                    (a)               (b)               (c)                (d)
Summary of Operations
Net sales................................    $149,836,870      $150,259,355      $181,632,570      $176,630,294       $163,012,030
  Sales growth %.........................          (0.3)%           (17.3)%              2.8%              8.4%             (3.1)%
Gross profit.............................      40,961,356        36,092,104        42,299,900        43,548,529         38,603,382
  Gross profit %.........................           27.3%             24.0%             23.3%             24.7%              23.7%
Selling and administrative...............      26,400,042        25,721,924        29,152,388        28,436,330         27,438,017
  Selling and administrative %...........           17.6%             17.1%             16.1%             16.1%              16.8%
Operating income (loss)..................      14,456,314         9,770,180       (2,644,764)        14,738,964          7,669,365
  Operating income (loss) %..............            9.6%              6.5%            (1.5)%              8.3%               4.7%
Income (loss) from continuing
   operations............................       8,423,730         6,161,769       (8,369,182)         8,325,228          3,103,058
Loss from discontinued operation.........               -                 -       (1,368,278)          (471,624)        (3,037,926)
Net income (loss)........................       8,423,730         6,161,769       (9,737,460)         7,853,604             65,132

Common Stock Data
Diluted earnings per share from
     continuing operations...............            1.80              1.13           (1.28)               1.28               0.48
Diluted earnings per share from
     discontinued operation..............               -                 -           (0.21)              (0.07)             (0.47)
Diluted earnings per share...............            1.80              1.13           (1.49)               1.21               0.01
Weighted-average shares
     outstanding-diluted.................       4,684,125         5,445,009        6,550,184          6,493,561          6,486,961
Dividends per share--common..............           0.615             0.600            0.600              0.600              0.600
Dividends per share--Class B common......           0.559             0.545            0.545              0.545              0.545
Year-end stock price.....................           15.25             16.02            20.45              14.55              14.32

Year-end Financial Position
Total assets.............................      88,287,652        75,059,989      104,033,087        125,741,698        129,225,159
Working capital..........................      16,378,393        18,135,700       38,276,167         39,266,034         39,535,991
Current ratio............................             1.7               2.0              2.5                4.2                4.0
Long-term debt...........................      20,050,000        17,700,000        9,700,000         29,000,000         35,000,000
Long-term debt as a % of total capital...           36.6%             35.8%            13.6%              28.3%              33.6%
Stockholders' equity.....................      34,706,630        31,758,785       61,756,674         73,460,498         69,173,750

Other Data/Key Ratios
Cash flow from operating activities......      17,269,946        13,471,459       23,234,772         16,186,397         13,485,377
Capital expenditures.....................       9,112,810         4,786,263        4,228,552          7,763,482          8,032,779
Depreciation and amortization............       5,862,588         5,914,739        7,966,383          7,728,603          7,345,353
Return on average assets.................           10.3%              6.9%           (8.5)%               6.2%               0.0%
Return on average equity.................           25.3%             13.2%          (14.4)%              11.0%               0.1%
Number of employees......................             890               846              944              1,061              1,084
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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.

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

(d)        1996 figures include an inventory liquidation of $863,000 recorded in
           cost of sales,  a  restructuring  charge of  $3,496,000  recorded  in
           operating expenses,  and an income tax benefit of $1,534,000,  for an
           after-tax effect of $2,825,000,  or $0.44 per diluted share. The 1996
           figures also include an after-tax  charge of  $2,700,000 to recognize
           the estimated loss on the sale of Roll-it, the Company's discontinued
           store fixture operation.

                                       6
<PAGE>
       ITEM 7--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

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

Overview

     The Company increased consolidated net income to $8.4 million, or $1.80 per
diluted share in fiscal 2000,  from $6.2 million,  or $1.13 per diluted share in
the prior year. Overall, the net income increase reflects the Company's emphasis
on  continuous  improvement  in all aspects of its business.  Specifically,  the
implementation  of  lean  manufacturing  techniques  reduced  production  costs,
improving  the  Company's  gross  margins and  profitability.  In addition,  the
Company has accomplished the following key items during fiscal 2000:

    -    On October 1, 1999, the Company acquired the assets of Idea Industries,
         Inc. Idea  Industries  designed,  manufactured  and marketed  ergonomic
         products including adjustable keyboard  mechanisms,  keyboard and mouse
         platforms,  wrist rests and CPU holders.  This acquisition expanded the
         Company's ergonomic offering and provided another distribution channel,
         the office furniture dealers.

   -     On April 14, 2000,  the Board of Directors of the Company  authorized a
         ten-percent  stock dividend payable on May 19, 2000, to shareholders of
         record on May 5, 2000.  All per share data and weighted  average shares
         outstanding have been adjusted to reflect this dividend.

Results of Operations

     The table below  shows  certain  items in the  Consolidated  Statements  of
Operations from continuing operations as a percentage of net sales:
<TABLE>
                                                               July 1,          June 30,             June 30,
Year ended                                                      2000              1999                 1998
---------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                <C>                <C>
Net sales.........................................            100.0%             100.0%             100.0%
Cost of sales.....................................             72.7               76.0               76.7
                                                        -------------------------------------------------------
  Gross profit                                                 27.3               24.0               23.3
Selling and administrative expenses...............             17.6               17.1               16.1
Restructuring and impairment of assets............               .1                 .4                8.7
                                                        -------------------------------------------------------
  Operating income (loss).........................              9.6                6.5               (1.5)
Interest expense..................................              1.0                 .5                 .6
Other expense (income)............................                -                (.2)                .3
                                                        -------------------------------------------------------
Income (loss) from continuing operations
   before income taxes............................              8.6                6.2               (2.4)
Income taxes - continuing operations..............              3.1                2.1                2.2
                                                        -------------------------------------------------------
Income (loss) from continuing operations..........              5.5%               4.1%              (4.6)%
---------------------------------------------------------------------------------------------------------------
</TABLE>
Sales

     In accordance  with  Statement of Financial  Accounting  Standards No. 131,
Disclosure about Segments of an Enterprise and Related Information,  the Company
operates as a single reportable  segment,  storage  products.  While the Company
does not maintain its sales records by product category, management believes the
table below (unaudited)  approximates  total net sales (in millions) for each of
the product categories:

                                       7
<PAGE>
<TABLE>
                                      July 1,                      June 30,                      June 30,
Year ended                             2000             %            1999            %             1998            %
-----------------------------------------------------------------------------------------------------------------------
<S>                                  <C>              <C>          <C>              <C>          <C>              <C>
Shelving systems                     $   49.3         32.9%        $   55.5         37.0%        $   83.0         45.7%
Drawer slides                            70.0         46.7%            70.8         47.1%            69.8         38.4%
Hardware/Other                           30.5         20.4%            24.0         15.9%            28.8         15.9%
-----------------------------------------------------------------------------------------------------------------------

Total                                $  149.8          100%        $  150.3          100%        $  181.6          100%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

     Net sales in fiscal 2000 were  $149.8  million.  This was a slight  decline
from fiscal 1999 and was due  exclusively to the impact of Hirsh sales in fiscal
1999.  Excluding  the impact of The Hirsh  Company,  which was sold in September
1998,  fiscal 1999 net sales were $142.8  million.  Accordingly,  on like sales,
fiscal 2000 net sales actually increased approximately $7.0 million or 4.9%. The
growth  resulted  from the  ergonomic  products  introduced  as a result  of the
acquisition  of Idea  Industries  and strong  sales of the  Company's  precision
drawer  slides.  The Company  continues  to  successfully  target the OEM office
furniture  market with its products,  however,  the retail market remains highly
competitive  and  price  sensitive.  As  a  result,   management  must  evaluate
opportunities in this market on a customer by customer basis.

     Net  sales in  fiscal  1999  declined  $31.4  million,  or 17.3% to  $150.3
million.  The most significant decline was in shelving systems and was primarily
due to the sales  contribution  of Hirsh. In addition,  the Company  performed a
profitability review of its current product offerings and decided to discontinue
certain product lines which were either  unprofitable or provided only a minimal
return.  Specifically,  the Company opted to re-deploy  production assets, which
were utilized to produce  certain  utility  slides to the production of the more
profitable  precision  drawer  slides.  While this decision  improved the bottom
line, it did result in lower net sales for fiscal 1999.

Gross Profit

     Gross  profit,  as a  percentage  of net sales,  was 27.3% in fiscal  2000,
compared to 24.0% in fiscal  1999,  and 23.3% in fiscal  1998.  The  significant
improvement in the fiscal 2000 margins compared to fiscal 1999 can be attributed
to the  introduction of more profitable  products  resulting in a more favorable
product  mix. In  addition,  the  emphasis on lean  manufacturing  continues  to
identify and  eliminate  non-value-added  operations  from the  business,  thus,
reducing costs.

     The  improvement  in gross profit in fiscal 1999 from fiscal 1998  reflects
the sale of Hirsh and the  discontinuance  of other  low-margin  product  lines,
which resulted in a more  favorable  product mix. In the third quarter of fiscal
1999,   the  Company   started  to  realize  some  of  the  benefits   from  the
implementation  of lean  manufacturing  techniques,  which not only  resulted in
reduced manufacturing costs, but also allowed the Company to improve its service
to its customers.  These  improvements  were partially offset by the $.4 million
inventory write-off incurred with product line discontinuance.

     During  fiscal  2001,  the Company  expects its margins to benefit from the
introduction  of new  products and the  utilization  of  continuous  improvement
techniques in its manufacturing operations.

Selling and Administrative

     Selling and administrative  expenses, as a percent of net sales, were 17.6%
in fiscal 2000,  compared to 17.1% in fiscal 1999 and 16.1% in fiscal 1998.  The
increase in fiscal 2000 represents costs incurred to launch several new products
and costs, such as royalties and goodwill, associated with the Idea acquisition.

     The increase in fiscal 1999 compared to fiscal 1998 reflects  severance and
strategic  planning costs incurred  during the year.  These  increases were only
partially  offset by reductions in costs,  which are variable with  performance,
such as incentive programs and commissions.

Restructuring/Impairment

     In fiscal 2000, the Company  recorded a loss of $105,000 in accordance with
Financial  Accounting  Standard No. 121. The loss  reflected  management's  best
estimate of the loss to be incurred on the sale of the  Company's  former powder
coat facility. Following the fiscal 2000 year-end,  management signed a buy/sell
agreement on the facility  with a third party and  anticipates  closing the sale
during the first quarter of fiscal 2001.

     In the  second  quarter  of fiscal  1999,  as a result of the  decision  to
re-deploy  certain  utility slide  production  assets,  the Company  recorded an
impairment  loss of $.6 million pre-tax to write the related tooling assets down
to their  estimated  fair value.  In addition,  excess  inventory of $.4 million
pre-tax related to the  discontinued  product lines was charged directly to cost
of sales.
                                       8
<PAGE>
     In September 1998, the Company sold Hirsh, a wholly-owned  subsidiary.  The
sale of Hirsh  reflected the Company's  desire to enhance its corporate  margins
and profitability and remain focused on its core products.  The sale resulted in
a pre-tax  loss of $11.8  million,  which  was  included  in the June 30,  1998,
financial results. The loss included the write-off of the unamortized balance of
goodwill  recorded in connection  with the purchase of Hirsh. In connection with
the  sale,  the  Company  recognized  an  additional  tax cost of $1.0  million,
resulting in a total loss related to the sale of Hirsh of $12.8 million.

     A pre-tax  restructuring  charge of $4.0  million was recorded in the third
quarter of fiscal  1998 for Knape & Vogt  Canada.  In March  1998,  Knape & Vogt
announced its plans to reorganize its Canadian operation,  including the sale of
the Company's manufacturing facility and equipment in the Toronto area. The sale
was completed in May of 1998.  The Company  continues to sell and distribute its
products in Canada and maintains a sales office in the Toronto area.

Other Expenses/(Income) and Income Taxes

     Interest  expense was $1.4 million in fiscal 2000,  compared to $.8 million
and $1.2 million,  respectively,  in fiscal years 1999 and 1998. The increase in
interest  expense  during  fiscal 2000  reflects the higher level of  borrowings
needed  to  support  the  Idea  acquisition,   capital  expenditures  and  share
repurchases.  The lower interest  expense  incurred in fiscal 1999 reflected the
lower average borrowing levels resulting from proceeds received from the sale of
Hirsh, along with improved cash flow from operating activities.

     Other miscellaneous expense was $2,345 in fiscal 2000 compared to income of
$.4 million in fiscal 1999.  Fiscal 1999 included  interest received on Michigan
Single Business Tax refunds and two patent infringement  settlements,  partially
offset by losses incurred on the disposal of fixed assets.

     The  effective  tax rate was 35.4% in  fiscal  2000,  compared  to 33.9% in
fiscal  1999.  See  Note  10 to  the  Consolidated  Financial  Statements  for a
reconciliation of the effective tax rate.

Net Income

     Income from continuing operations in fiscal 2000 was $8.4 million, or $1.80
per diluted share  compared to $6.2 million or $1.13 per diluted share in fiscal
1999 and a net loss of $8.4 million,  or $1.28 per diluted share in fiscal 1998.
The loss recorded in fiscal 1998 was primarily due to the losses incurred on the
sale of Hirsh and the restructuring of Knape & Vogt Canada.

     The results of operations of Roll-it,  net of income taxes,  were presented
as a  discontinued  operation  in fiscal 1998.  On March 27,  1998,  the Company
signed an agreement to sell Roll-it which resulted in an additional  loss of $.9
million, due to the difference between the original estimate and the actual loss
from the sale of Roll-it.

     Net  income  was $8.4  million or $1.80 per  diluted  share in fiscal  2000
compared to $6.2  million,  or $1.13 per diluted share in fiscal 1999 and a loss
of $9.7 million,  or $1.49 per diluted  share in fiscal 1998.  The increase over
fiscal 1999 reflected the gross profit improvement  achieved during fiscal 2000.
The  improvement  in fiscal  1999  compared  to fiscal 1998 was due to the $12.8
million  after-tax  charge  recorded  for the sale of  Hirsh,  the $3.4  million
restructuring  charge  for Knape & Vogt  Canada and the  additional  loss of $.9
million on the sale of Roll-it,  all in fiscal 1998. Without these charges,  net
income would have been $7.4 million, or $1.14 per diluted share in fiscal 1998.

Liquidity And Capital Resources

     Cash flows from operating activities generated $17.3 million in fiscal 2000
compared to $13.5 million in fiscal 1999 and $23.2  million in fiscal 1998.  The
improvement  in fiscal 2000  compared to fiscal  1999  reflected  the higher net
income  earned  during the year and improved  working  capital  performance.  In
fiscal  1999,  the  cash  flows  from  the  change  in  accounts   payable  were
substantially  lower than in fiscal 1998, due to two factors.  First,  in fiscal
1998,  the Company  adopted a more  aggressive  payment policy with its vendors,
which resulted in a higher accounts  payable balance and a significant  one-time
increase in cash flows.  Second, even though the Company was still utilizing the
more  aggressive  payment  policy  with its  vendors  in fiscal  1999,  payables
decreased due to the sale of Hirsh.

     Cash flows used in investing  activities were $14.1 million in fiscal 2000.
During fiscal 2000, the Company  incurred $9.1 million of capital  expenditures,
compared to $4.8  million  and $4.2  million,  respectively,  in fiscal 1999 and
1998. The  expenditures  in fiscal 2000 were primarily for  improvements  in the
Company's manufacturing process, including the completion of the new powder coat
paint line and the new facility at the Company's Indiana  subsidiary and tooling
for new products.  Management believes that capital  expenditures will remain at
approximately  the same level in fiscal 2001, as investments are made to improve
manufacturing  technology and to bring new products and product  enhancements to
the  Company's  customers.   The  cost  to  complete  the  items  classified  as
construction in progress at July 1, 2000, was estimated to be approximately $4.5
million. Investing activities in fiscal 2000 also included the net cash paid for
the acquisition of Idea Industries, Inc.

     On October 1, 1999, the Company acquired substantially all of the assets of
Idea Industries, Inc. (Idea). Idea designed, manufactured and marketed ergonomic
products, including adjustable keyboard mechanisms,  keyboard and computer mouse

                                       9
<PAGE>
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 the 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 is  being
amortized on a straight-line basis over 15 years.

     The  terms  of  the  Idea  acquisition  agreement  provide  for  additional
consideration  to be paid if Idea's sales exceed certain  targeted  levels.  The
maximum amount of contingent  consideration is $550,000 payable through 2001. In
calendar year 1999, the additional  consideration payment was $41,797, which has
been included in goodwill. Any additional consideration paid will be recorded as
goodwill when payment is made.

     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.

     Following  the  financial  strategy  announced in fiscal 1998,  the Company
completed  a Dutch  Auction  early in the second  quarter of fiscal  1999.  This
resulted in the repurchase of 1,353,862 shares of the Company's stock at a price
of $19.09 per share. In addition,  the Company repurchased an additional 633,810
shares at prices ranging from approximately $12 to $17 per share through July 1,
2000. In total, the cost of the repurchased shares was $35.7 million.

     At the August 20, 1999, Board of Directors  meeting,  the Board approved an
additional 440,000 shares for the stock repurchase program. At July 1, 2000, the
Company has remaining authorization to repurchase an additional 375,791 shares.

     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 ten shares held.
All per share data and weighted average shares outstanding have been restated to
reflect the 10% stock dividend.

     During fiscal 1999, the Company renegotiated its revolving credit facility.
The new facility allows for borrowings up to $45 million and expires on November
1, 2004. In addition,  the Company  entered into an interest rate swap agreement
in order to fix the  interest  rate on a  portion  of the  borrowings  under the
revolving  credit facility.  The swap agreement,  which expires on June 1, 2006,
fixed the interest on $17 million of  borrowings  through  August 31, 1999,  and
increased to $20 million on September 1, 1999. The swap agreement fixed the rate
at 6.25% plus the Company's credit spread on the revolving credit agreement.

     On October 29, 1999,  the revolving  credit  facility was amended to modify
certain  covenants.  At July 1, 2000, the Company was in compliance  with all of
the covenants.

     The Company's outstanding debt at July 1, 2000, was $20.1 million, compared
to $17.7 million in fiscal 1999.  The debt to total  capital ratio  increased to
36.6% at July 1, 2000,  from 35.8% at June 30,  1999.  The Company  continues to
manage its debt levels in an effort to reach its targeted capital structure. The
Company  believes that cash flows from  operations and funds available under the
credit  facility  will be sufficient to fund working  capital  requirements  and
capital expenditures in fiscal 2001.

Legal Contingencies

     In September  1999,  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. As of July 1, 2000,  the purchaser is in default on
the lease  agreement  and the landlord has filed suit against the  purchaser and
the  Company as the  guarantor.  The claim is for  payment  of the unpaid  rent,
unpaid property taxes, building repairs and legal costs.

     A former  employee in  connection  with  benefits  paid under an  executive
retirement  plan has also sued the Company.  The initial  ruling was in favor of
the former employee; however, the Company has filed an appeal in the case.

     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, the
ultimate liability for these matters,  taking into account established  accruals
of  approximately  $880,000,  will not have a materially  adverse  effect on the
Company's financial position or the results of its operations.

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.

                                       10
<PAGE>
Year 2000 Readiness Disclosure

     As of the date of this  report,  the Company has not  experienced  any Year
2000  issues  arising  from its  systems or those of its  material  vendors  and
suppliers.  To the extent  that there may be any  ongoing  Year 2000 issues that
might arise at a later  date,  the  Company  has  contingency  plans in place to
address such issues.

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.



                                       11
<PAGE>
                ITEM 7A--QUANTITATIVE AND QUALITATIVE DISCLOSURES
                                ABOUT MARKET RISK

     The  Company is  exposed  to market  risks,  which  include  changes in the
foreign  currency  exchange rate as measured against the U.S. dollar and changes
in U.S. interest rates. The Company holds a derivative instrument in the form of
an interest rate swap, which is viewed as a risk management tool and is not used
for trading or speculative purposes.  The intent of the interest rate swap is to
effectively  fix the interest  rate on part of the  borrowings  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 5 - 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 July 1, 2000, 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.
<TABLE>
Liability                                                    Amount                    Maturity Date
---------                                                    -------                   -------------
<S>                                                          <C>                       <C>
Variable rate revolving credit
  agreement                                                  $45 million               November 1, 2004
  First $20,000,000 at an interest rate of 6.84%
      plus weighted average credit spread of .5%
  Amounts in excess of $20,000,000 had an interest rate
      ranging from 5.39% to 7.51% in 2000

Interest Rate Swaps
Notional amount                                              $17 million               August 31, 1999
  Increased to                                               $20 million               June 1, 2006
  Pay fixed/Receive variable - 6.84%
     Pay fixed interest rate - 6.25%
</TABLE>

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

                                       12
<PAGE>
               ITEM 8--FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Immediately  following are the  consolidated  balance sheets of the Company
and its subsidiaries as of July 1, 2000, and the related consolidated statements
of income,  stockholders'  equity and cash flows for each of the three  years in
the  period  ended  July 1,  2000,  the notes  thereto,  summary  of  accounting
policies, and the independent auditors' report.





                                       13
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                      Consolidated Statements of Operations
<TABLE>
------------------------------------------------------------------------------------------------------------------------
Year ended                                                      July 1, 2000         June 30, 1999        June 30, 1998
------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>                  <C>                  <C>
   Net Sales                                                    $ 149,836,870        $ 150,259,355        $ 181,632,570

   Cost of Sales                                                  108,875,514          114,167,251          139,332,670
   ---------------------------------------------------------------------------------------------------------------------
   Gross Profit                                                    40,961,356           36,092,104           42,299,900
   ---------------------------------------------------------------------------------------------------------------------
   Expenses
        Selling and shipping                                       20,891,588           19,953,864           22,594,546
        Administrative and general                                  5,508,454            5,768,060            6,557,842
        Restructuring and impairment of assets                        105,000              600,000           15,792,276
   ---------------------------------------------------------------------------------------------------------------------
   Total Expenses                                                  26,505,042           26,321,924           44,944,664
   ---------------------------------------------------------------------------------------------------------------------
   Operating Income (Loss)                                         14,456,314            9,770,180           (2,644,764)
   ---------------------------------------------------------------------------------------------------------------------
   Other Expenses (Income)
        Interest                                                    1,407,239              802,202            1,224,394
        Other, net                                                      2,345             (355,791)             569,024
   ---------------------------------------------------------------------------------------------------------------------
   Total Other Expenses                                             1,409,584              446,411            1,793,418
   ---------------------------------------------------------------------------------------------------------------------
   Income (Loss) From Continuing Operations Before
        Income Taxes                                               13,046,730            9,323,769           (4,438,182)
   Income Taxes - Continuing Operations                             4,623,000            3,162,000            3,931,000
   ---------------------------------------------------------------------------------------------------------------------
   Income (Loss) From Continuing Operations                         8,423,730            6,161,769           (8,369,182)
   ---------------------------------------------------------------------------------------------------------------------
   Discontinued Operation, Net of Income Taxes
        Loss from operations                                                -                    -             (431,010)
        Estimated loss on sale                                              -                    -             (937,268)
   ---------------------------------------------------------------------------------------------------------------------
   Total Discontinued Operation, Net of
        Income Taxes                                                        -                    -           (1,368,278)
   ---------------------------------------------------------------------------------------------------------------------
   Net Income (Loss)                                              $ 8,423,730          $ 6,161,769         $ (9,737,460)
   ---------------------------------------------------------------------------------------------------------------------
   Basic Earnings Per Share
        Income (loss) from continuing operations                    $    1.80            $    1.13           $    (1.29)
        Loss from discontinued operation                                    -                    -                (0.21)
   ---------------------------------------------------------------------------------------------------------------------
   Net Income (Loss) Per Share                                      $    1.80            $    1.13           $    (1.50)
   ---------------------------------------------------------------------------------------------------------------------
   Weighted Average Shares Outstanding                              4,679,918            5,432,192            6,512,418
   ---------------------------------------------------------------------------------------------------------------------
   Diluted Earnings Per Share
        Income (loss) from continuing operations                    $    1.80            $    1.13           $    (1.28)
        Loss from discontinued operation                                    -                    -                (0.21)
   ---------------------------------------------------------------------------------------------------------------------
   Net Income (Loss) Per Share                                      $    1.80            $    1.13           $    (1.49)
   ---------------------------------------------------------------------------------------------------------------------
   Weighted Average Shares Outstanding                              4,684,125            5,445,009            6,550,184
   ---------------------------------------------------------------------------------------------------------------------
   Dividends Per Share
        Common stock                                               $     .615           $     .600            $    .600
        Class B common stock                                       $     .559           $     .545            $    .545
   ---------------------------------------------------------------------------------------------------------------------
</TABLE>
                    See accompanying notes to consolidated financial statements.

                                       14
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                           Consolidated Balance Sheets
<TABLE>
------------------------------------------------------------------------------------------------------------------
                                                                                 July 1, 2000       June 30, 1999
------------------------------------------------------------------------------------------------------------------
Assets
<S>                                                                             <C>                 <C>
Current Assets
     Cash                                                                       $   2,351,622       $   1,621,002
     Accounts receivable, less allowances of $556,000 and $389,000,
          respectively                                                             20,631,951          18,930,039
     Refundable income taxes                                                          140,086             140,708
     Inventories                                                                   15,092,393          13,149,649
     Prepaid expenses                                                               1,213,607           1,868,101
     Net assets held for sale                                                       1,779,405                   -
------------------------------------------------------------------------------------------------------------------
Total Current Assets                                                               41,209,064          35,709,499
------------------------------------------------------------------------------------------------------------------
Property and Equipment
     Land and improvements                                                          1,156,531           1,815,127
     Buildings                                                                     14,489,756          14,436,028
     Machinery and equipment                                                       53,349,222          48,180,990
     Construction in progress                                                       4,636,979           2,224,266
------------------------------------------------------------------------------------------------------------------
                                                                                   73,632,488          66,656,411
     Less accumulated depreciation                                                 35,270,625          31,357,471
------------------------------------------------------------------------------------------------------------------
Net Property and Equipment                                                         38,361,863          35,298,940
------------------------------------------------------------------------------------------------------------------
Goodwill, net                                                                       4,978,420             575,433
------------------------------------------------------------------------------------------------------------------
Other Assets                                                                        3,738,305           3,476,117
------------------------------------------------------------------------------------------------------------------
                                                                                $  88,287,652       $  75,059,989
------------------------------------------------------------------------------------------------------------------
</TABLE>
                    See accompanying notes to consolidated financial statements.

                                       15
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                           Consolidated Balance Sheets
<TABLE>
------------------------------------------------------------------------------------------------------------------
                                                                                 July 1, 2000       June 30, 1999
------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
<S>                                                                             <C>                 <C>
Current Liabilities
     Accounts payable                                                           $  12,833,665       $   9,129,514
     Accruals:
         Income taxes                                                               1,317,297             732,344
         Taxes other than income                                                      560,809             864,734
         Compensation                                                               4,689,373           3,055,717
         Restructuring costs                                                          252,241             377,515
         Miscellaneous                                                              5,177,286           3,413,975
------------------------------------------------------------------------------------------------------------------
Total Current Liabilities                                                          24,830,671          17,573,799

Supplemental Retirement Benefits                                                    4,488,351           3,155,405

Long-Term Debt                                                                     20,050,000          17,700,000

Deferred Income Taxes                                                               4,212,000           4,872,000
------------------------------------------------------------------------------------------------------------------
Total Liabilities                                                                  53,581,022          43,301,204
------------------------------------------------------------------------------------------------------------------
Stockholders' Equity
     Stock:
         Common, $2 par - 6,000,000 shares authorized; 2,222,852 and
              2,073,148 issued                                                      4,445,704           4,146,296
         Class B common, $2 par - 4,000,000 shares authorized; 2,392,853
              and 2,238,227 issued                                                  4,785,706           4,476,454
         Preferred - 2,000,000 shares authorized and unissued                               -                   -
     Additional paid-in capital                                                     8,482,908           4,409,415
     Unearned stock grant                                                             (94,500)                  -
     Accumulated other comprehensive income (loss)                                 (1,169,577)           (478,606)
     Retained earnings                                                             18,256,389          19,205,226
------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity                                                         34,706,630          31,758,785
------------------------------------------------------------------------------------------------------------------
                                                                                $  88,287,652       $  75,059,989
------------------------------------------------------------------------------------------------------------------
</TABLE>
                    See accompanying notes to consolidated financial statements.

                                       16
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                 Consolidated Statements of Stockholders' Equity
<TABLE>
--------------------------------------------------------------------------------------------------------------------------

                                                                                      Accumulated
                                                        Additional     Restricted        other
                                          Common         paid-in         stock       comprehensive      Retained
                                          stock          capital        grants       income (loss)      earnings           Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>             <C>              <C>           <C>              <C>             <C>
Balance, July 1, 1997                 $ 11,807,658    $ 33,340,541     $       -     $  (1,345,978)   $  29,658,277   $  73,460,498
Net loss for 1998                                -               -             -                 -       (9,737,460)     (9,737,460)
Cash dividends                                   -               -             -                 -       (3,760,383)     (3,760,383)
Stock issued under stock option plan        63,592         384,449             -                 -                -         448,041
Foreign currency translation                     -               -             -          (259,327)               -        (259,327)
     adjustment
Sale of Knape & Vogt Canada assets               -               -             -         1,605,305                -       1,605,305
------------------------------------------------------------------------------------------------------------------------------------

Balance, June 30, 1998                  11,871,250      33,724,990             -                 -       16,160,434      61,756,674
Net income for 1999                              -               -             -                 -        6,161,769       6,161,769
Cash dividends                                   -               -             -                 -       (3,116,977)     (3,116,977)
Stock issued under stock option plan        75,986         472,431             -                 -                -         548,417
Tax benefit from exercise
      of stock options                           -          69,133             -                 -                -          69,133
Stock grants issued                         21,000         215,250      (236,250)                -                -               -
Stock grants earned                              -               -       236,250                 -                -         236,250
Repurchase and retirement of
      shares of common stock            (3,345,486)    (30,072,389)            -                 -                -     (33,417,875)
Foreign currency translation                     -               -             -           (29,983)               -         (29,983)
     adjustment
Minimum SERP adjustment, net of tax
      benefit of $263,901                        -               -             -          (448,623)               -        (448,623)
------------------------------------------------------------------------------------------------------------------------------------

Balance, June 30, 1999                   8,622,750       4,409,415             -          (478,606)      19,205,226      31,758,785
Net income for 2000                              -               -             -                 -        8,423,730       8,423,730
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)
Foreign currency translation                     -               -             -            (9,019)               -          (9,019)
     adjustment
Minimum SERP adjustment, net of tax
      benefit of $353,000                        -               -             -          (681,952)               -        (681,952)
------------------------------------------------------------------------------------------------------------------------------------
Balance, July 1, 2000                  $ 9,231,410     $ 8,482,908     $ (94,500)    $  (1,169,577)   $  18,256,389    $ 34,706,630
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
                    See accompanying notes to consolidated financial statements.

                                       17
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                      Consolidated Statements of Cash Flows
<TABLE>
--------------------------------------------------------------------------------------------------------------------------
                                                                          July 1,          June 30,          June 30,
Year ended                                                                 2000              1999             1998
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>               <C>              <C>
Operating Activities
     Net income (loss)                                                 $   8,423,730     $  6,161,769     $  (9,737,460)
     Adjustments to reconcile net income (loss)
     to net cash provided by
         operating activities:
         Depreciation of fixed assets                                      5,027,282        5,123,290         6,604,799
         Amortization of other assets                                        835,306          791,449         1,361,584
         Decrease in deferred income taxes                                  (308,000)        (810,856)         (752,000)
         Increase in supplemental retirement benefits                        299,101          605,313           264,957
         Increase in prepaid pensions                                     (1,175,341)               -                 -
         Decrease in deferred lease costs                                          -          (93,248)         (556,992)
         Loss on sale of the discontinued operation                                -                -           937,268
         Write-off of foreign currency translation adjustment                      -                -         1,605,305
         Loss on sale of The Hirsh Company                                         -                -        12,800,000
         Impairment loss                                                     105,000          600,000                 -
         Loss on disposal of property and equipment                           37,855          593,431                 -
         Stock grants earned                                                       -          236,250                 -
         Changes in operating assets and liabilities
         (net of  acquisition):
              Decrease (increase) in:
                  Accounts receivable                                     (1,045,595)       6,717,542          (809,180)
                  Refundable income taxes                                          -           33,961         1,157,735
                  Inventories                                             (1,692,041)        (341,117)        1,903,218
                  Net assets of discontinued operation                             -                -          (995,000)
                  Net assets held for sale                                         -          490,116                 -
                  Prepaid expenses                                           683,326          882,696           384,903
              Increase (decrease) in:
                  Accounts payable                                         2,515,619       (8,631,246)        8,776,835
                  Accrued restructuring costs                               (123,512)        (436,172)          672,004
                  Accruals                                                 3,687,216        1,548,281          (383,204)
------------------------------------------------------------------------------------------------------------------------

     Net cash provided by operating activities                            17,269,946       13,471,459        23,234,772
------------------------------------------------------------------------------------------------------------------------
Investing Activities
     Additions to property and equipment                                  (9,112,810)      (4,786,263)       (4,228,552)
     Proceeds from sales of property and equipment                             4,330           20,250         2,564,744
     Net cash paid for acquisition                                        (5,309,674)               -                 -
     Proceeds from the sale of The Hirsh Company                                   -       18,157,884                 -
     Disposition of discontinued operation                                         -                -         2,045,364
     Other, net                                                              328,332         (312,330)          803,530
------------------------------------------------------------------------------------------------------------------------
     Net cash provided by (used for) investing activities                (14,089,822)      13,079,541         1,185,086
------------------------------------------------------------------------------------------------------------------------

Financing Activities
     Proceeds from issuance of common stock                                  200,233          548,417           448,041
     Repurchase and retirement of common stock                            (2,246,551)     (33,417,875)                -
     Cash dividends declared                                              (2,747,267)      (3,116,977)       (3,760,383)
     Borrowings (payments) on long-term debt                               2,350,000        8,000,000       (19,300,000)
------------------------------------------------------------------------------------------------------------------------
     Net cash used for financing activities                               (2,443,585)     (27,986,435)      (22,612,342)
------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes on Cash                                       (5,919)            (721)          103,096
------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash                                              730,620       (1,436,156)        1,910,612

Cash, beginning of year                                                    1,621,002        3,057,158         1,146,546
------------------------------------------------------------------------------------------------------------------------
Cash, end of year                                                      $   2,351,622     $  1,621,002    $    3,057,158
------------------------------------------------------------------------------------------------------------------------
</TABLE>
                    See accompanying notes to consolidated financial statements.

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



1. Summary of Significant
   Accounting
   Policies

     Principles of Consolidation

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

     Year End

     Effective July 1, 1999,  the Company  adopted a 52- or 53-week fiscal year,
     changing the year-end date from June 30 to the Saturday  nearest the end of
     June. The year ended July 1, 2000, contained 52 weeks.

     Description of Business,  Revenue  Recognition and  Concentration of Credit
     Risk

     The  Company  designs,   manufactures  and  distributes   storage  products
     including  decorative and utility  wall-attached  shelving systems,  drawer
     slides, kitchen and closet storage products, ergonomic products and cabinet
     hardware.  On August 20, 1996,  the Company  announced its decision to sell
     its store fixture operation and this portion of the business was shown as a
     discontinued  operation.  The sale of Roll-it was  completed in March 1998.
     The Company primarily sells its products to hardware chains,  home centers,
     specialty distributors and original equipment  manufacturers and recognizes
     revenue upon shipment of products to customers. No single customer accounts
     for more than 10% of  consolidated  sales.  The  Company  performs  ongoing
     credit evaluations and maintains reserves for potential credit losses.

     Foreign Currency Translation

     The accounts of the foreign  subsidiary are translated into U.S. dollars in
     accordance with Statement of Financial  Accounting Standards (SFAS) No. 52.
     Assets and  liabilities are translated at year-end  exchange rates.  Income
     and expense  accounts are  translated at average  exchange  rates in effect
     during the year. Translation adjustments resulting from fluctuations in the
     exchange rates are recorded in accumulated  other  comprehensive  income, a
     separate component of stockholders' equity.

     Fair Value of Financial Instruments

     The carrying amounts of the Company's financial instruments,  which consist
     of cash, receivables, bank revolving credit agreement and accounts payable,
     approximate  their fair values.  The fair market value of the interest rate
     swap  agreement  at July 1,  2000,  was  approximately  $798,000  based  on
     information received from the issuing financial institution.

     Cash Equivalents

     From time to time, the Company holds short-term investments with a maturity
     of  three  months  or  less  when  purchased   which  are  considered  cash
     equivalents.

     Inventories

     Inventories are stated at the lower of FIFO  (first-in,  first-out) cost or
     market.

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

     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 July 1, 2000, was approximately $4.5 million.

     Accounting for the Impairment of Long-Lived Assets

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

     Goodwill

     Goodwill  represents  the amount by which the cost of businesses  purchased
     exceeds the fair value of the net assets  acquired.  Goodwill is  amortized
     over periods of 15 to 40 years using the straight-line method.  Accumulated
     amortization  of goodwill was  $388,095  and $138,285 at July 1, 2000,  and
     June 30, 1999, respectively.  The Company periodically reviews goodwill for
     impairment based upon undiscounted operating income over the remaining life
     of the goodwill.  While the estimates are based on management's  historical
     experience and assumptions  regarding  future  operations,  the amounts the
     Company will ultimately  realize could differ from those used in the fiscal
     2000 SFAS No. 121 analysis.

     Income Taxes

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

     Use of Estimates in Preparation of Financial Statements

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

     Advertising

     Costs incurred for advertising,  including costs incurred under cooperative
     advertising programs with customers, are expensed as incurred.  Advertising
     expense was $1,038,000 in 2000, $799,000 in 1999, and $636,000 in 1998.

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


     Earnings Per Share

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

     The following table reconciles the numerators and denominators  used in the
     calculations of basic and diluted EPS for each of the last three years:
<TABLE>
                                                 2000            1999           1998
---------------------------------------------------------------------------------------
<S>                                          <C>             <C>           <C>
     Numerators:
       Numerator for both basic and
       diluted EPS, net income (loss)        $8,423,730      $6,161,769    $(9,737,460)
---------------------------------------------------------------------------------------
     Denominators:
       Denominator for basic EPS,
       weighted-average common
       shares outstanding                     4,679,918       5,432,192      6,512,418
       Potentially dilutive shares
       resulting from stock option
       plans                                      4,207          12,817         37,766
---------------------------------------------------------------------------------------
       Denominator for diluted EPS            4,684,125       5,445,009      6,550,184
---------------------------------------------------------------------------------------
</TABLE>
     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.
<TABLE>
                                      2000            1999           1998
     ------------------------------------------------------------------------
     <S>                             <C>             <C>             <C>
     Exercise Price
     $16.74                          11,192          15,125              -
     $18.18                          10,725          14,850              -
</TABLE>
     Derivative Financial Instruments

     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.

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


     New Accounting Standards

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
     Accounting for Derivative Instruments and Hedging Activities.  SFAS No. 133
     requires  companies to recognize  all  derivatives  on the balance sheet at
     fair value and establishes  accounting rules for changes in fair value that
     result from hedging activities.  SFAS No. 133 is effective for fiscal years
     beginning  after June 15, 2000.  Based on  management's  evaluation  of its
     derivative  instrument,  it does not believe that  adoption of the standard
     will have a  material  effect  on its  financial  position  or  results  of
     operations.

     Reclassifications

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


2. Restructuring and
   Impairment of Assets

     A  restructuring  charge  of  $3,392,276,  or $0.52 per  diluted  share was
     recorded in the third  quarter of fiscal 1998 for Knape & Vogt  Canada.  In
     March 1998,  Knape & Vogt  announced its plans to  reorganize  its Canadian
     operation,  including the sale of the Company's  manufacturing facility and
     equipment in the Toronto area.  The sale was completed in May of 1998.  The
     Company  continues  to sell and  distribute  its  products  in  Canada  and
     maintain a sales office in the Toronto area.

     In September  1998,  the Company  sold The Hirsh  Company,  a  wholly-owned
     subsidiary.   Hirsh  manufactured   free-standing  shelving,  wood  storage
     products  and  workshop  accessories.  The  sale  resulted  in  a  loss  of
     $12,800,000,  which was included in the  restructuring  and  impairment  of
     assets line of the fiscal 1998  consolidated  statement of operations.  The
     loss included the write-off of the unamortized balance of goodwill recorded
     in connection with the purchase of Hirsh.

     In connection with its restructuring  activities,  the Company has recorded
     reserves for various costs to be incurred.  Amounts paid or charged against
     these reserves were as follows:
<TABLE>
                      Fiscal 1998   Costs Paid       June 30,   Costs Paid    June 30,   Costs Paid     July 1,
                      Additions     or Charged          1998    or Charged       1999    or Charged       2000
    -----------------------------------------------------------------------------------------------------------
    <S>               <C>           <C>             <C>        <C>          <C>         <C>           <C>
    Facilities and
    equipment         $1,076,453    $(1,063,232)    $13,221    $(13,221)    $     -      $      -     $      -
    Severance            994,698       (575,269)    419,429    (358,095)     61,334       (61,334)           -
    Settlement cost      681,300       (303,037)    378,263     (80,101)    298,162       (45,921)     252,241
    Other exit costs     340,650       (322,631)     18,019           -      18,019       (18,019)           -
    -----------------------------------------------------------------------------------------------------------
    Total             $3,093,101    $(2,264,169)   $828,932   $(451,417)   $377,515     $(125,274)    $252,241
    -----------------------------------------------------------------------------------------------------------
</TABLE>
                                       22
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements

     Summary operating results for Hirsh (in thousands) were as follows:
<TABLE>
     Year ended June 30,                           1998
     ----------------------------------------------------
     <S>                                       <C>
     Revenues                                  $  35,634
     Costs and expenses                           47,880
     ----------------------------------------------------
     Loss before taxes                           (12,246)
     Income tax expense                              998
     ----------------------------------------------------
     Net loss                                  $ (13,244)
     ----------------------------------------------------
</TABLE>
     During the second quarter of fiscal 1999, the Company  decided to re-deploy
     certain drawer slide production  assets to product lines considered to have
     higher growth  potential.  This  resulted in the  write-down of the tooling
     ($.6 million pre-tax) and excess  inventory ($.4 million  pre-tax,  charged
     directly to cost of sales) related to the discontinued product lines.

     During fiscal 2000, the Company offered its former powder coat facility for
     sale. As a result of this decision,  the related assets were transferred to
     the  category  "Net  Assets  Held  for  Sale"  and a loss of  $105,000  was
     recorded.  In July 2000,  management  entered into a Buy/Sell agreement for
     the facility and anticipates  closing the sale during fiscal 2001. The loss
     was determined  based upon this Buy/Sell  agreement.  This  transaction was
     treated as a non-cash item for cash flow purposes.

3. Discontinued Operation

     On August 20, 1996, the Company  announced its decision to sell the Roll-it
     division  of  Knape  &  Vogt  Canada  Inc.,  the  Company's  store  fixture
     operation.  Accordingly,  Roll-it was reported as a discontinued operation,
     and the consolidated  financial  statements were  reclassified to segregate
     the net assets and operating  results of the business.  During fiscal 1996,
     the Company  recorded an  estimated  loss of $3.9  million  pre-tax or $2.7
     million after-tax on the sale of Roll-it.

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

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

     Summary operating results of the discontinued operation (in thousands) were
     as follows:
<TABLE>
     Year ended June 30,                            1998
     -------------------------------------------------------
     <S>                                       <C>
     Revenues                                  $  11,865
     Costs and expenses                           12,519
     -------------------------------------------------------
     Loss before taxes                              (654)
     Income tax benefit                             (223)
     -------------------------------------------------------
     Net loss                                  $    (431)
     -------------------------------------------------------
</TABLE>
                                       23
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements

4. Acquisition

     On October 1, 1999, the Company acquired substantially all of the assets of
     Idea  Industries,  Inc.  (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 the 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 is being amortized on a  straight-line  basis over
     15 years.

     The  terms  of  the  Idea  acquisition  agreement  provide  for  additional
     consideration  to be paid if Idea's sales exceed certain  targeted  levels.
     The maximum amount of contingent  consideration is $550,000 payable through
     2001.  In calendar  year 1999,  the  additional  consideration  payment was
     $41,797, which has been included in goodwill. Any additional  consideration
     paid will be recorded as goodwill when payment is made.

     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:
<TABLE>
                                                   July 1, 2000      June 30, 1999
       ----------------------------------------------------------------------------
       <S>                                         <C>              <C>
       Finished products                           $   8,778,556    $   8,523,866
       Work in process                                 2,339,958        1,634,904
       Raw materials and supplies                      3,973,879        2,990,879
       ----------------------------------------------------------------------------
                                                   $  15,092,393    $  13,149,649
       ----------------------------------------------------------------------------
</TABLE>

6. Long-Term Debt

     On June 1, 1999, the Company  replaced its prior credit facility with a new
     revolving   credit  agreement  that  provides  for  up  to  $45,000,000  in
     borrowings  through  November  1,  2004.  At  July  1,  2000,  there  was a
     $20,050,000 balance outstanding under this agreement.  The interest rate on
     the first $20,000,000 of the outstanding  balance was 7.34%,  which was the
     90-day LIBOR rate plus an  additional 50 basis points  credit  spread.  The
     interest rate on the remaining  $50,000 was based on the federal funds rate
     and averaged 7.2% for the month of June 2000. 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 July 1, 2000, the non-use fee was
     .125%.  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 July 1, 2000, was in compliance with these covenants.

     The Company  entered into a seven-year  interest rate swap agreement with a
     notional  amount of $17,000,000  through August 31, 1999, and increasing to
     $20,000,000  thereafter,  which  converts  a  corresponding  amount  of the
     revolving credit  agreement into a fixed-rate  obligation with an effective
     interest  rate of 6.25% plus the  Company's  credit spread on the revolving
     credit agreement. The swap agreement will terminate on June 1, 2006.

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

7. Lease Commitments

     The Company  leases  certain real  property and equipment  under  operating
     lease agreements which expire at various dates through fiscal 2005.

     Annual minimum rental payments required under all  noncancelable  operating
     leases  are  as  follows:  2001-$397,518;   2002-$402,046;   2003-$404,626;
     2004-$227,695;  2005-$45,057.  Rent expense under all operating  leases was
     approximately $629,000,  $553,000, and $1,848,000 in fiscal 2000, 1999, and
     1998, respectively.

     The  signed  agreement  for the sale of the  assets  of Hirsh  (see Note 2)
     included the assumption of the lease for the Hirsh building by the buyer of
     the assets of Hirsh. The Company continues to guarantee to the landlord all
     lease  obligations  through the  expiration  of this lease in August  2000.
     Monthly lease payments are $108,731.

8. 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 July 1,
     2000,  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 6.84% at July 1, 2000. 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  prominent  bank
     institution,  is required to collateralize the respective  obligation under
     the  swap.  The  Company  is  exposed  to loss if the  counterparty  should
     default. At July 1, 2000, 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  materially  adverse  effect on the
     financial position, the results of operations or cash flows of the Company.

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
     Company's Board of Directors  annually  approves  contributions  to defined
     contribution  plans.  The  assets  of the  defined  benefit  plans  consist
     primarily of equity securities,  debt securities and cash equivalents.  The
     pension and profit-sharing plans at July 1, 2000, and June 30, 1999, hold a
     combined total of 284,637 shares of the Company's Class B common stock.

     The defined  postretirement  plan covers  substantially  all  employees and
     provides   certain  health  care   benefits.   The  plan  is  unfunded  and
     contributory.

                                       25
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements

<TABLE>
                                            Pension Benefits          Postretirement Benefits
      ----------------------------------------------------------------------------------------
                                          2000          1999          2000           1999
      ----------------------------------------------------------------------------------------
      <S>                               <C>            <C>            <C>           <C>
      Change in benefit obligations
      Benefit obligations at
        beginning of year               $13,149,390    $12,292,838    $2,106,167   $2,093,739
      Service cost                          298,385        307,112       127,919       97,320
      Interest cost                         908,750        915,727       189,623      146,127
      Actuarial (gains)/losses              502,596        651,301       598,931      (56,649)
      Benefits paid                      (1,290,191)    (1,013,125)     (129,414)    (174,370)
      Other                                   1,068         (4,463)            -            -
      ----------------------------------------------------------------------------------------
      Benefit obligation at end of
      year                              $13,569,998    $13,149,390    $2,893,226   $2,106,167
      ----------------------------------------------------------------------------------------
      Change in plan assets
      Fair value of plan assets
      at beginning of year              $13,833,561    $13,389,253       $     -      $     -
      Actual return on plan assets          253,090        706,224             -            -
      Employer contributions              1,340,651        762,036       129,414      174,370
      Benefits paid                      (1,290,191)    (1,013,125)     (129,414)    (174,370)
      Other                                  62,652        (10,827)            -            -
      ----------------------------------------------------------------------------------------
      Fair value of plan assets at
      end of year                       $14,199,763    $13,833,561       $     -     $      -
      ----------------------------------------------------------------------------------------
      Funded status                        $415,310       $684,171   $(2,893,226) $(2,106,167)
      Unrecognized transition amount       (184,900)      (239,300)      576,450      624,487
      Unrecognized net actuarial
         loss                             2,017,212        643,546     1,146,629      602,271
      Unrecognized prior service cost     1,019,232      1,153,202             -            -
      ----------------------------------------------------------------------------------------
      Prepaid (accrued) benefit cost     $3,266,854     $2,241,619   $(1,170,147)  $( 879,409)
      ----------------------------------------------------------------------------------------
      Weighted -average assumptions
      Discount rate                            7.5%          7.25%         7.5%         7.25%
      Expected return on plan assets           8.5%           8.5%          N/A           N/A
      ----------------------------------------------------------------------------------------
</TABLE>

     The net periodic  benefit cost related to the defined benefit pension plans
     is made up of the following components:
<TABLE>

                                             Pension Benefits                    Post Retirement Benefits
      ----------------------------------------------------------------------------------------------------------
                                    2000          1999        1998            2000          1999        1998
      ----------------------------------------------------------------------------------------------------------
      <S>                         <C>            <C>           <C>           <C>          <C>          <C>
      Service cost                  $298,385     $307,112      $  267,092    $127,919     $ 97,320     $ 85,042
      Interest cost                  908,750      915,727         885,949     189,623      146,127      156,507
      Expected return on
      plan assets                 (1,080,874)    (841,093)     (2,102,398)          -            -            -
      Net amortization               189,155      276,217       1,282,412     102,610       68,497       75,651
      ----------------------------------------------------------------------------------------------------------
      Net periodic pension cost     $315,416     $657,963      $  333,055    $420,152     $311,944     $317,200
      ----------------------------------------------------------------------------------------------------------
</TABLE>
     The  health  care cost  trend  rate used to  determine  the  postretirement
     benefit  obligation was 6.31% for 2000.  This rate  decreases  gradually to
     5.25% in 2002,  and remains at that level  thereafter.  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:

                                       26
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements
<TABLE>
     One-Percentage Point                                      Increase           Decrease
     ---------------------------------------------------------------------------------------
     <S>                                                    <C>                <C>
     Effect on total of service and interest
         cost components                                    $      50,085      $    (41,307)
     Effect on postretirement benefit obligation                  366,314          (309,707)
</TABLE>
     The Company also has a non-qualified  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:
<TABLE>
                                               2000           1999          1998
     -----------------------------------------------------------------------------
     <S>                                   <C>            <C>           <C>
     Pension benefit obligation            $3,318,204     $2,275,996    $1,365,232
     Pension expense                          343,131        435,226       320,534
</TABLE>
     Expense for the  discretionary  profit  sharing plan  amounted to $673,344,
     $744,511 and $758,055 in fiscal 2000, 1999 and 1998, 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 25  percent  of the first 4 percent  that an  employee
     contributes.  The amount  expensed for the Company  match  provision of the
     plan was $143,791,  $195,483,  and $172,550 in fiscal 2000,  1999 and 1998,
     respectively.

10. Income Taxes

     The components of income (loss) from  continuing  operations  before income
     taxes consists of:
<TABLE>
                                         July 1,         June 30,        June 30,
     Year ended                           2000             1999            1998
     --------------------------------------------------------------------------------
     <S>                            <C>              <C>              <C>
     United States                  $  12,056,990    $   9,098,594    $   (919,274)
     Foreign                              989,740          225,175      (3,518,908)
     --------------------------------------------------------------------------------
     Income (loss) from
         continuing operations
         before income taxes        $  13,046,730    $   9,323,769    $ (4,438,182)
     --------------------------------------------------------------------------------
</TABLE>
     Income tax expense from continuing operations consists of:
<TABLE>
                                      July 1,         June 30,          June 30,
     Year ended                        2000             1999              1998
     --------------------------------------------------------------------------------
     <S>                          <C>              <C>              <C>
     Current:
         United States            $   4,557,000    $   3,950,000    $    3,740,000
         Foreign                              -                -           541,000
         State and local                331,000          326,000           368,000
     --------------------------------------------------------------------------------
     Total current                    4,888,000        4,276,000         4,649,000
     --------------------------------------------------------------------------------
     Deferred:
         United States                 (680,000)      (1,133,000)          377,000
         Foreign                        427,000           97,000          (955,000)
         State and local                (12,000)         (78,000)         (140,000)
     --------------------------------------------------------------------------------
     Total deferred                    (265,000)      (1,114,000)         (718,000)
     --------------------------------------------------------------------------------
     Income tax expense           $   4,623,000    $   3,162,000    $    3,931,000
     --------------------------------------------------------------------------------
</TABLE>
                                       27
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements

     The difference between the federal statutory tax rate and the effective tax
     rate on continuing operations was as follows:
<TABLE>
                                          July 1,        June 30,       June 30,
     Year ended                            2000            1999           1998
     ----------------------------------------------------------------------------
     <S>                            <C>             <C>              <C>
     Income (loss) from
            continuing operations   $   4,436,000   $   3,170,000    $ (1,509,000)
     Foreign earnings taxed at
            different rate                 99,000          20,000         237,000
     Nondeductible losses-Hirsh Sale            -               -       5,012,000
     Write-off of foreign currency
            translation adjustment              -               -         546,000
     State and local income taxes         104,000         102,000         530,000
     Tax credits and other                (16,000)       (130,000)       (885,000)
     -------------------------------------------------------------------------------
     Income tax expense             $   4,623,000   $   3,162,000   $   3,931,000
     -------------------------------------------------------------------------------
</TABLE>
     The sources of the net deferred income tax liability were as follows:
<TABLE>
                                                  July 1, 2000       June 30, 1999
     ------------------------------------------------------------------------------
     <S>                                         <C>                <C>
     Property and equipment                      $     7,108,000    $    6,978,000
     Pension accrual                                   1,111,000           762,000
     Net operating loss carryforward                    (369,000)         (797,000)
     Supplemental retirement plan                     (1,044,000)         (693,000)
     Benefit related accruals                           (996,000)                -
     Stock basis of Canadian subsidiary               (1,436,000)       (1,436,000)
     Other                                              (162,000)           58,000
     ------------------------------------------------------------------------------
                                                 $     4,212,000    $    4,872,000
     ------------------------------------------------------------------------------
</TABLE>
     For Canadian tax purposes,  the Company has net operating  losses  expiring
     through 2005 totaling approximately  $1,800,000.  The tax benefit reflected
     above for these  loss  carryforwards  is net of a  valuation  allowance  of
     $476,000.

11. Stock Option Plans

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

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

     Shareholders  at the 1997 annual meeting  approved the Company's 1997 Stock
     Incentive  Plan.  Under this 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 will be
     determined based on the amount of the participant's  election under the EVA
     bonus plan.  Each  participant  may elect to receive options by electing to
     forego a portion  of the cash  bonus  that may be earned by them,  with the
     option price determined in accordance with the plan. The exercise price per
     share of common stock  purchasable  under an option shall be a single fixed
     exercise  price equal to 100% of the fair market  value of the common stock
     at the award date increased by a fixed  percentage  increase (based on U.S.
     Treasury  Securities plus 2% less a projected  dividend  yield)  compounded
     annually  over the term of the option.  In general,  the options vest three
     years after the date the option was granted and expire five years after the
     grant date.  During fiscal 2000 and 1999,  198,206 and 195,635 options were
     granted to participants at an exercise price of $19.04 per share and $26.54
     per share, respectively. Included in the 198,206 options are 27,500 options
     granted to William Dutmers, Chairman, President and CEO, which are not part
     of the 1997 Stock Incentive Plan (as explained below).

     Transactions under the plans are as follows:
<TABLE>
                                                             Weighted               Weighted
                                                             average                average
                                              July 1,        exercise   June 30,    exercise
     Year ended                                2000           price       1999       price
     --------------------------------------------------------------------------------------
     <S>                                      <C>            <C>       <C>          <C>
     Options outstanding,
         beginning of year                    176,931        $18.41     147,445     $13.91
     Granted                                  198,206         19.04     195,635      26.54
     Exercised                                (14,637)        13.78     (38,416)     17.75
     Forfeited                                (55,349)        20.32    (127,733)     26.54
     --------------------------------------------------------------------------------------
     Options outstanding and
         exercisable, end of year             305,151        $18.64     176,931     $17.92
     --------------------------------------------------------------------------------------
     Options available for grant,
         end of year                          214,639                   136,373
     --------------------------------------------------------------------------------------
     Weighted average fair value of
         options granted during the year        $2.84                     $1.99
     --------------------------------------------------------------------------------------
</TABLE>
     The Company  accounts  for its stock option  plans in  accordance  with APB
     Opinion 25,  Accounting  for Stock Issued to Employees.  Since the exercise
     price of the Company's  employee  stock options  equals the market price of
     the  underlying  stock on the date of the grant,  no  compensation  cost is
     recognized  under  APB  Opinion  25.  In  accordance  with  SFAS  No.  123,
     Accounting for Stock-Based Compensation, the Company is required to provide
     pro forma  information  regarding  net income 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:
<TABLE>
                                                                 2000         1999
     --------------------------------------------------------------------------------
     <S>                                                    <C>          <C>
     Dividends per share                                    $   0.615    $   0.600
     Expected volatility                                       0.3241       0.3251
     Risk-free interest rate                                    5.70%        5.45%
     Expected lives                                               2.3          5.4
     --------------------------------------------------------------------------------
</TABLE>
                                       29
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements

     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:
<TABLE>
                                                            2000              1999
     ----------------------------------------------------------------------------------
     <S>                                              <C>                <C>
     Net income:
           As reported                                $   8,423,730      $   6,161,769
           Pro forma                                      7,860,825          5,772,277
     Earnings per share:
           As reported                                $        1.80      $        1.13
           Pro forma                                           1.68               1.06
     ----------------------------------------------------------------------------------
</TABLE>
     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  shall,  subject to the  approval of the
     Board of Directors,  determine the eligible  persons to whom, and the price
     (if  any) to be paid  by the  participant.  The  participant  shall  not be
     permitted to sell, transfer, pledge, or assign the shares of the restricted
     stock awarded under this Plan.  Subject to these limits,  the Committee has
     sole discretion to set,  accelerate or waive the restrictions of the stock.
     Except as provided  above,  upon  issuance  of the  restricted  stock,  the
     participant  will have all the rights of a shareholder  with respect to the
     shares,  including  the right to vote them and to receive all dividends and
     other related distributions. If termination of employment occurs within the
     restricted  period,  all shares of stock still subject to restriction  will
     vest  or  be  forfeited  in  accordance   with  the  terms  and  conditions
     established by the Committee.

     On July 1, 1998, Mr. Dutmers was granted 11,550 shares of common stock. The
     stock was subject to  restrictions  on transfer for one year. The stock was
     the principal  compensation  for one year's  service by Mr.  Dutmers to the
     Company as Chairman of the Board of Directors.  In addition,  under the EVA
     bonus plan, Mr. Dutmers was eligible to receive a target bonus of 65% times
     the value of the above  awarded  shares which was  determined  by using the
     average stock price in the 30-day period  preceding the date of grant.  Mr.
     Dutmers  elected to receive up to 50% of his fiscal  1999  target  bonus in
     leveraged stock options.  The deferred  compensation expense related to the
     restricted  stock grants was amortized to expense on a straight-line  basis
     over the one-year period.

     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.

                                       30
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements

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

     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 ten shares
     held. All per share data and weighted average shares  outstanding have been
     restated to reflect the 10% stock dividend.

     On September 1, 1998, the Company announced its intention to purchase up to
     1,320,000  shares of the Company's common stock pursuant to a Dutch Auction
     self-tender offer at a price range of $17.27 to $20 per share. The Board of
     Directors  also  approved  the  purchase in the open market or in privately
     negotiated transactions,  following the completion of the Dutch Auction, of
     shares  of common  stock in an amount  which  when  added to the  number of
     shares  of  common  stock  purchased  in  the  Dutch  Auction  would  equal
     1,485,000.  The Dutch  Auction was  concluded on October 7, 1998,  with the
     purchase of 1,353,862 shares at a price of $19.09 per share. At the January
     22, 1999,  Board of Directors  meeting,  the Board approved another 440,000
     shares  for the  stock  repurchase  program.  Utilizing  both of the  Board
     authorizations,  the Company has  purchased an  additional  633,810  shares
     through  the end of the fiscal 2000 with the price per share  ranging  from
     approximately $12 to $17. In total, the Company spent  approximately  $35.7
     million on share repurchases.

13. Business Segments

     Effective  for the year ended June 30, 1999,  the Company  adopted SFAS No.
     131, Disclosure about Segments of an Enterprise and Related Information. In
     accordance  with SFAS No. 131,  the Company  operates on a worldwide  basis
     within a single reportable  segment,  storage  products.  The nature of the
     products,   production  processes,   types  of  customers  and  methods  of
     distribution  are consistent  across the Company and its  subsidiaries  and
     therefore have been  aggregated  into one reported  segment.  The Company's
     primary product  categories  include  shelving  systems,  drawer slides and
     builder's hardware.

     Geographic  information  related  to net sales and  long-lived  assets  are
     summarized between domestic and foreign locations as follows:

                                       31
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements
<TABLE>
     Year ended                         July 1, 2000    June 30, 1999    June 30, 1998
     ----------------------------------------------------------------------------------
     <S>                                <C>             <C>               <C>
     Net sales:
       United States                    $132,432,934    $133,805,266      $158,810,004
       Canada                             10,881,653       9,919,229        14,868,871
       Other foreign                       6,522,283       6,534,860         7,953,695
     Long-lived assets:
       United States                      38,361,863      35,298,940        36,654,720
       Canada                                      -               -                 -
       Other foreign                               -               -                 -
</TABLE>
     The Company does not believe that it is dependent upon any single customer,
     since  none  account  for  more  than 10% of  consolidated  net  sales  and
     operating income.

14. Supplemental Cash Flow
    Information

     Total interest paid during the years ended July 1, 2000,  June 30, 1999 and
     1998, was $1,383,957, $754,166 and $1,310,066, respectively.

     Total income taxes paid during the years ended July 1, 2000,  June 30, 1999
     and 1998, were $4,345,000, $3,912,773 and $3,686,753, respectively.

15. Quarterly Results
    (Unaudited)

     The table below sets forth  summary  unaudited  information  on a quarterly
     basis for the Company.
<TABLE>
     Year ended July 1, 2000     1st Quarter   2nd Quarter    3rd Quarter   4th Quarter
     -----------------------------------------------------------------------------------
     <S>                         <C>           <C>            <C>           <C>
     Net sales                   $35,687,624   $35,798,890    $38,704,961   $39,645,395
     Gross profit                  9,393,510     9,923,657     10,509,283    11,134,906
     Net income                    2,044,812     2,130,343      2,176,589     2,071,986
     Earnings per share, net-
      diluted                           0.44          0.45           0.46          0.45
     Cash dividend-common
      stock                             0.15          0.15           0.15         0.165
     Cash dividend-Class B
      common stock               $     0.136   $     0.136    $     0.136   $     0.15
     -----------------------------------------------------------------------------------

     Year ended June 30, 1999    1st Quarter   2nd Quarter    3rd Quarter   4th Quarter
     -----------------------------------------------------------------------------------
     Net sales                   $43,678,644   $36,359,076    $36,038,270   $34,183,365
     Gross profit                  9,893,904     8,653,296      8,945,301     8,599,603
     Net income                    2,521,982     1,025,172      1,565,117     1,049,498
     Earnings per share, net-
      diluted                           0.38          0.19           0.31          0.22
     Cash dividend-common
      stock                             0.15          0.15           0.15          0.15
     Cash dividend-Class B
      common stock                 $   0.136     $   0.136      $   0.136     $   0.136
     -----------------------------------------------------------------------------------
</TABLE>
                                       32
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
                   Notes to Consolidated Financial Statements
<TABLE>
     Year ended June 30, 1998    1st Quarter   2nd Quarter    3rd Quarter   4th Quarter
     -----------------------------------------------------------------------------------
     <S>                         <C>           <C>            <C>            <C>
     Net sales                   $44,658,302   $42,677,957    $49,469,554    $44,826,757
     Gross profit                 11,503,905    10,243,477     11,554,926      8,997,592
     Income (loss) from
      continuing operations        2,470,026     2,017,210    (1,056,822)   (11,799,596)
     Income (loss) from
      discontinued operation         200,886     (294,525)    (1,274,639)             -
     Net income (loss)             2,670,912     1,722,685    (2,331,461)   (11,799,596)
     Earnings (loss) per share
      from continuing
      operations-diluted                0.38          0.31         (0.16)         (1.79)
     Earnings (loss) per share
      from discontinued
      operation-diluted                 0.03         (0.05)        (0.19)             -
     Earnings (loss) per share,
      net-diluted                       0.41          0.26         (0.35)         (1.79)
     Cash dividend-common
      stock                             0.15          0.15          0.15           0.15
     Cash dividend-Class B
      common stock                  $  0.136      $  0.136      $  0.136        $  0.136
     -----------------------------------------------------------------------------------
</TABLE>

16. Commitments and
    Contingencies

     As  described  in Note 7,  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.  As of July 1,  2000,  the
     purchaser is in default on the lease  agreement  and the landlord has filed
     suit against the purchaser and the Company as the  guarantor.  The claim is
     for unpaid rent, unpaid property taxes, building repairs and legal costs.

     A former  employee in  connection  with  benefits  paid under an  executive
     retirement plan has also sued the Company.  The initial ruling was in favor
     of the former  employee;  however,  the  Company has filed an appeal in the
     case.

     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, the
     ultimate  liability  for these  matters,  taking into  account  established
     accruals of  approximately  $880,000,  will not have a  materially  adverse
     effect  on  the  Company's   financial  position  or  the  results  of  its
     operations.

                                       33
<PAGE>
Independent Auditors' Report


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

We have audited the  accompanying  consolidated  balance  sheets of Knape & Vogt
Manufacturing Company and subsidiaries as of July 1, 2000 and June 30, 1999, and
the related consolidated statements of operations, stockholders' equity and cash
flows  for each of the three  years in the  period  ended  July 1,  2000.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of  Knape & Vogt
Manufacturing  Company and  subsidiaries  at July 1, 2000 and June 30, 1999, and
the results of their operations and their cash flows for each of the three years
in the  period  ended  July 1,  2000,  in  conformity  with  generally  accepted
accounting principles.


BDO Seidman, LLP
Grand Rapids, Michigan
July 28, 2000

                                       34
<PAGE>
          ITEM 9--DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

                                    PART III

           ITEM 10--DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Directors of  Registrant.  Information  relating to directors  and director
nominees of the Company,  contained in the Company's  definitive Proxy Statement
for its Annual  Meeting of  Shareholders  to be held October 13, 2000, 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
2000 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 13, 2000, 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 13, 2000, 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 13, 2000,  filed
pursuant to Regulation 14A.

                                       35
<PAGE>
                                     PART IV

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

     (a) (1) Financial Statements

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

                                                                  Page Number in
                                                                    10-K Report
                                                                    -----------
     Consolidated Statements of Operations                              14
     Consolidated Balance Sheets                                        15
     Consolidated Statements of Stockholders' Equity                    17
     Consolidated Statements of Cash Flows                              18
     Notes to Consolidated Financial Statements                         19
     Independent Auditors' Report                                       34


          (2) Financial Statement Schedule

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

                                                                  Page Number in
                                                                    10-K Report
                                                                    -----------
     Independent Auditors' Report on Schedule                           37
     Schedule II -- Valuation and Qualifying Accounts and Reserves      38


     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 40 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 July 1, 2000.

                                       36
<PAGE>
                    Independent Auditors' Report on Schedule





Knape & Vogt Manufacturing Company
Grand Rapids, Michigan

The audits  referred  to in our  report  dated July 28,  2000,  relating  to the
consolidated financial statements of Knape & Vogt Manufacturing Company which is
contained  in Item 8 of this Form  10-K,  included  the  audit of the  financial
statement schedule listed in the accompanying table of contents.  This financial
statement  schedule  is the  responsibility  of the  Company's  management.  Our
responsibility  is to express an opinion on this  financial  statement  schedule
based upon our audits.

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



BDO Seidman, LLP
Grand Rapids, Michigan
July 28, 2000




                                       37
<PAGE>
               Knape & Vogt Manufacturing Company and Subsidiaries
          Schedule II - Valuation and Qualifying Accounts and Reserves

<TABLE>
             Column A                     Column B          Column C            Column D          Column E
----------------------------------------------------------------------------------------------------------
                                          Balance          Charged to                             Balance
                                         beginning          costs and                             end of
Description                              of period         expenses(1)       Deductions(1)(2)     period
----------------------------------------------------------------------------------------------------------
<S>                                      <C>               <C>               <C>                 <C>
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

Year ended June 30, 1999:
 Allowances deducted from
  assets:
    Accounts receivable for:
      Doubtful accounts                  $ 177,000        $ 336,000           $ 271,000         $ 242,000
      Cash discounts                       175,000                -              28,000           147,000
----------------------------------------------------------------------------------------------------------
                                         $ 352,000        $ 336,000           $ 299,000         $ 389,000

Year ended June 30, 1998:
 Allowances deducted from
  assets:
    Accounts receivable for:
      Doubtful accounts                  $ 268,000        $ 390,000           $ 481,000          $177,000
      Cash discounts                       257,000                -              82,000           175,000
----------------------------------------------------------------------------------------------------------
                                          $525,000        $ 390,000           $ 563,000          $352,000
</TABLE>


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

   (2)   Year ended June 30,  1998  balances  include  the  reclassification  of
         allowances recorded for The Hirsh Company to net assets held for sale.

                                       38
<PAGE>
                                   SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.




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


                               By  /s/ Leslie J. Cummings
                                   Leslie J. Cummings, Vice President of Finance


Date:  September 15, 2000


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report has been signed below on September 15, 2000, by the following  persons on
behalf of the registrant in the capacities indicated.


/s/ William R. Dutmers                            /s/ John E. Fallon
William R. Dutmers, Chairman of the Board,        John E. Fallon, Director
Chief Executive Officer and President

/s/ Thomas A. Hilborn                             /s/ Michael J. Kregor
Thomas A. Hilborn, Director                       Michael J. Kregor, Director

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

/s/ Robert J. Knape                               /s/ Gregory Lambert
Robert J. Knape, Director                         Gregory Lambert, Director

                                       39
<PAGE>
                       KNAPE & VOGT MANUFACTURING COMPANY
                            ANNUAL REPORT - FORM 10-K

                                  EXHIBIT INDEX

3(a)     Certificate  of  Amendment to the  Articles of  Incorporation,  and the
         Restated Articles of Incorporation of the Company,  which 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)    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(g)    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(h)    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(i)    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.

21       Subsidiaries of Registrant.


                                       40
<PAGE>
23       Consent of BDO Seidman, LLP, independent public accountants.

27       Financial Data Schedule.








                                       41
<PAGE>
                                   EXHIBIT 21

         SCHEDULE OF SUBSIDIARIES OF KNAPE & VOGT MANUFACTURING COMPANY


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

Feeny Manufacturing Company (organized under the laws of Michigan)






                                       42
<PAGE>
                                   EXHIBIT 23


   Consent of Independent Certified Public Accountants


We hereby  consent to the  incorporation  by reference of our reports dated July
28, 2000,  relating to the  consolidated  financial  statements  and schedule of
Knape & Vogt  Manufacturing  Company,  appearing  in that  Corporation's  annual
report on Form  10-K for the year  ended  July 1,  2000,  in that  corporation's
previously  filed  Form S-8  Registration  Statements  (file  numbers  33-20227,
33-43704, 33-88206 and 33-88212).



/s/ BDO Seidman, LLP
BDO Seidman, LLP
Grand Rapids, Michigan
September 15, 2000

                                       43