UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

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

                For the Quarterly Period Ended December 31, 1998

                                       OR

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


           For the Transition Period From ___________ To _____________

                         Commission File Number 2-18868

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

         Michigan                                       38-0722920
(State of Incorporation)                      (IRS Employer Identification No.)

    2700 Oak Industrial Drive, NE
        Grand Rapids, Michigan                            49505
(Address of principal executive offices)                (Zip Code)

                                 (616) 459-3311
                               (Telephone Number)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                            YES __X__   NO ______

        2,445,844 common shares were outstanding as of January 29, 1999.
        2,249,290 Class B common shares were outstanding as of January 29, 1999.

The Exhibit Index appears on page 14.
<PAGE>
               KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

                                      INDEX

                                                                        Page No.

PART I.   FINANCIAL INFORMATION

     Item 1.  Financial Statements.

        Condensed Consolidated Balance Sheets
        --December 31, 1998 and June 30, 1998..................................2

        Condensed Consolidated Statements of Income
        --Six Months and Three Months Ended December 31, 1998 and 1997.........3

        Condensed Consolidated Statements of Cash Flows
        --Six Months Ended December 31, 1998 and 1997..........................4

        Notes to Condensed Consolidated Financial Statements.................5-6

     Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations...........................7-10

     Item 3.  Quantitative and Qualitative Disclosures About Market Risk......11

PART II.  OTHER INFORMATION

     Item 6.  Exhibits and Reports on Form 8-K................................12

SIGNATURES....................................................................13

EXHIBIT INDEX.................................................................14


                                        1
<PAGE>
               KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

                          PART I. FINANCIAL INFORMATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
                                                                               (Unaudited)           (Audited)
                                                                              Dec. 31, 1998        June 30, 1998
                                                                          -----------------    -----------------
Assets
<S>                                                                       <C>                   <C>
Current assets
     Cash and equivalents                                                 $       2,348,083      $      3,057,158
     Accounts receivable - net                                                   22,036,426            25,677,043
     Inventories                                                                 13,271,547            12,808,532
     Prepaid expenses and other                                                   2,416,861             2,882,694
     Net assets held for sale                                                             -            18,648,000
                                                                          -----------------     -----------------
Total current assets                                                             40,072,917            63,073,427
                                                                          -----------------     -----------------
Property, plant and equipment                                                    63,926,292            60,901,901
Less accumulated depreciation                                                    29,077,400            24,247,181
                                                                          -----------------     -----------------
      Net property, plant and equipment                                          34,848,892            36,654,720
                                                                          -----------------     -----------------
Other assets                                                                      4,173,944             4,304,940
                                                                          -----------------     -----------------
                                                                          $      79,095,753      $    104,033,087
                                                                          =================     =================


Liabilities and Stockholders' Equity

Current liabilities
     Accounts payable                                                      $     12,354,067      $     17,765,610
     Other accrued liabilities                                                    6,507,871             7,031,650
                                                                           ----------------      ----------------
Total current liabilities                                                        18,861,938            24,797,260
                                                                           ----------------      ----------------
Long-term debt                                                                   15,800,000             9,700,000
Deferred income taxes and other long-term liabilities                             8,240,493             7,779,153
                                                                           ----------------      ----------------
     Total liabilities                                                           42,902,431            42,276,413
                                                                           ----------------      ----------------
Stockholders' Equity
Common stock                                                                      9,390,268            11,871,250
Additional paid-in capital                                                        9,515,508            33,724,990
Restricted stock grants                                                            (118,125)                    -
Accumulated other comprehensive income:
     Foreign currency translation adjustment                                       (157,453)                    -
     Minimum supplemental executive retirement plan
      liability adjustment                                                         (447,189)                    -
Retained earnings                                                                18,010,313            16,160,434
                                                                           ----------------      ----------------
       Total stockholders' equity                                                36,193,322            61,756,674
                                                                           ----------------      ----------------
                                                                           $     79,095,753      $    104,033,087
                                                                           ================      ================
</TABLE>
See accompanying notes.                                  

                                        2
<PAGE>
               KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
<TABLE>
                                                          For the Six Months Ended                   For the Three Months Ended
                                                    Dec. 31, 1998          Dec. 31, 1997        Dec. 31, 1998         Dec. 31, 1997
                                                    -------------          -------------        -------------         -------------
<S>                                                <C>                    <C>                  <C>                   <C>
Net sales                                          $     80,037,720       $     87,336,259     $     36,359,076      $   42,677,957

Cost of sales                                            61,490,520             65,588,877           27,705,780          32,434,480
                                                   ----------------       ----------------     ----------------      --------------
Gross profit                                             18,547,200             21,747,382            8,653,296          10,243,477

Selling and administrative expenses                      12,899,773             13,981,742            6,691,504           6,767,474

Impairment loss                                             600,000                      -              600,000                   -
                                                   ----------------       ----------------     ----------------      --------------
Operating income                                          5,047,427              7,765,640            1,361,792           3,476,003

Other expenses (income)                                    (330,727)               746,404              (44,380)            323,793
                                                   ----------------       ----------------     ----------------      --------------
Income from continuing operations
   before income taxes                                    5,378,154              7,019,236            1,406,172           3,152,210

Income taxes - continuing operations                      1,831,000              2,532,000              381,000           1,135,000
                                                   ----------------       ----------------     ----------------      --------------
Income from continuing operations                         3,547,154              4,487,236            1,025,172           2,017,210

Loss from discontinued operation,
   net of taxes                                                   -                (93,639)                   -            (294,525)
                                                   ----------------       ----------------     ----------------      --------------
Net income                                         $      3,547,154       $      4,393,597     $      1,025,172      $    1,722,685
                                                   ================       ================     ================      ==============

Basic earnings per share:
Income from continuing operations                            $  .66               $    .76             $    .21            $    .34
Loss from discontinued operation                                  -                   (.02)                   -                (.05)
                                                   ----------------       ----------------     ----------------      --------------
Net income per share                                         $  .66               $    .74             $    .21            $    .29
                                                   ================       ================     ================      ==============

Weighted average shares outstanding                       5,377,363              5,915,080            4,803,596           5,915,666

Diluted earnings per share:
Income from continuing operations                            $  .66               $    .75             $    .21                 .34
Loss from discontinued operation                                  -                   (.01)                   -                (.05)
                                                   ----------------       ----------------     ----------------      --------------
Net income per share                                         $  .66               $    .74             $    .21            $    .29
                                                   ================       ================     ================      ==============
Weighted average shares outstanding                       5,395,805              5,949,990            4,814,648           5,951,026

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

Cash dividend - Class B common stock                         $  .30               $    .30             $    .15            $    .15
</TABLE>
See accompanying notes.
                                       3
<PAGE>
               KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>

                                                                          Six Months Ended

                                                                  Dec. 31, 1998       Dec. 31, 1997
                                                                 ---------------     ---------------
<S>                                                              <C>                 <C>
Operating Activities:
     Net income                                                  $  3,547,154        $  4,393,597
     Non-cash items:
         Depreciation and amortization                              3,138,106           3,826,709
         Deferred income taxes                                       (284,295)            155,000
         Other long-term liabilities                                  176,583            (210,597)
         Impairment loss                                              600,000                   -
         Stock grants earned                                          118,125                   -
         Changes in operating assets and liabilities:
                  Accounts receivable                               3,550,016             119,686
                  Inventories                                        (463,015)         (2,477,121)
                  Net assets of discontinued operation                141,448
                  Other current assets                              1,150,238            (297,528)
                  Accounts payable and accrued expenses            (6,214,089)          7,152,629
     Net cash provided by operating activities                      5,318,823          12,803,823
                                                                 ------------         -----------

Investing Activities:
     Additions to property, plant and equipment                    (1,316,005)         (2,673,543)
     Sale of property, plant and equipment                                  -               1,705
     Sale of Hirsh subsidiary                                      18,129,569                   -
     Payments for other assets                                       (202,825)            807,138
     Net cash provided by (used for) investing activities          16,610,739          (1,864,700)
                                                                 ------------         -----------

Financing Activities:
     Cash dividends paid                                           (1,697,275)         (1,876,663)
     Proceeds from issuance of common stock                           569,943             206,771
     Repurchase and retirement of common stock                    (27,544,264)                  -
     Borrowings (payments) on long-term debt                        6,100,000         (10,200,000)
     Net cash used for financing activities                       (22,571,596)        (11,869,892)
                                                                 ------------        ------------

Effect of Exchange Rate Changes on Cash                               (67,041)              8,607
                                                                 ------------        ------------

Net Decrease in Cash and Equivalents                                 (709,075)           (922,162)

Cash and equivalents, beginning of year                             3,057,158           1,146,546
                                                                 ------------        ------------

Cash and equivalents, end of period                              $  2,348,083        $    224,384
                                                                 ============        ============

Cash Paid During the Period - interest                           $    295,792        $    756,628
                            - income taxes                       $  2,359,000        $  2,091,110
</TABLE>
See accompanying notes.
                                       4
<PAGE>
               KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note 1 - Basis of Financial Statement Preparation

The  accompanying  unaudited  condensed  consolidated  financial  statements and
related notes have been prepared  pursuant to the rules and  regulations  of the
Securities  and Exchange  Commission.  The  information  furnished  reflects all
adjustments  which are,  in the  opinion  of  management,  necessary  for a fair
statement  of the results of  operations  and  consist of only normal  recurring
adjustments.  Interim results are not necessarily  indicative of the results for
the year-end and are subject to year-end  adjustments,  and audit by independent
public accountants.  The balance sheet at June 30, 1998, has been taken from the
audited financial statements at that date. The condensed  consolidated financial
statements  and notes  should be read in  conjunction  with the  Company's  1998
annual report.

Note 2 - Common Stock and Per Share Information

Income per share is determined  based on the weighted  average  number of shares
outstanding  during each period.  The numerator was the same for the calculation
of both basic and diluted  earnings per share.  The denominator was increased in
the diluted  computation due to the recognition of stock options as common stock
equivalents.

Common  stock  is $2 par - shares  authorized  6,000,000  of  common  stock  and
4,000,000 of Class B common stock.

Note 3 - Inventories

Inventories  are  valued  at the  lower of FIFO  (first-in,  first-out)  cost or
market. Inventories are summarized as follows:
<TABLE>
                                                 Dec. 31, 1998             June 30, 1998
                                                 -------------             -------------
<S>                                               <C>                     <C>
Finished products                                 $  8,057,694            $    7,369,923
Work in process                                      1,907,568                 1,719,891
Raw materials                                        3,306,285                 3,718,718
                                                    ----------            --------------

Total                                             $ 13,271,547            $   12,808,532
                                                  ============            ==============
</TABLE>
Note 4 - New Accounting Standards Not Yet Adopted

Statement of Accounting Standards (SFAS) No. 131, "Disclosures About Segments of
an  Enterprise  and Related  Information"  will be adopted by the Company in the
fourth quarter of fiscal 1999. The statement  establishes  standards for the way
that public  enterprises  report  information about operating segments in annual
financial  statements  and  requires  reporting  of selected  information  about
operating segments in interim financial statements issued to the public. It also
establishes   standards  for  disclosures   regarding   products  and  services,
geographic areas and major customers. SFAS No. 131 defines operating segments as
components  of an  enterprise  about which  separate  financial  information  is
available that is evaluated  regularly by the chief operating  decision maker in
deciding how to allocate resources and in assessing performance.

SFAS No. 132,  "Employers'  Disclosures About Pensions and Other  Postretirement
Benefits"  will be adopted by the Company in the fourth  quarter of fiscal 1999.
The statement  revises  existing  disclosure  requirements for pension and other
postretirement  benefit plans. Its intent is to improve the understandability of
benefit  disclosures,  to  eliminate  certain  requirements  that the  Financial
Accounting  Standards Board believes are no longer  necessary and to standardize
footnote disclosures.

The Company is currently  evaluating  the impact,  if any, that SFAS No. 131 and
SFAS No. 132 may have on its financial statements.

                                       5
<PAGE>
Effective for fiscal years beginning after June 15, 1999, the Company must adopt
SFAS No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities".
The statement requires companies to recognize all derivative contracts as either
assets or  liabilities  in the balance  sheet and to measure them at fair value.
Then based on certain  conditions,  it is determined  whether the  derivative is
considered to be a hedge instrument, which determines when the resulting gain or
loss on the derivative is recognized.  Historically, the Company has not entered
into  derivative  contracts  either to hedge existing  risks or for  speculative
purposes. Accordingly, the Company does not expect adoption of this new standard
to affect its financial statements.

Note 5 - Comprehensive Income

SFAS No. 130, "Reporting Comprehensive Income", issued in June 1997, was adopted
by the Company in the first quarter ended  September  30, 1998.  This  statement
requires that all  components of  comprehensive  income and total  comprehensive
income  be  reported  in  one  of the  following:  a  statement  of  income  and
comprehensive  income,  a statement  of  comprehensive  income or a statement of
stockholders'  equity.  Comprehensive  income is comprised of net income and all
changes to stockholders'  equity,  except those due to investments by owners and
distributions to owners.

Comprehensive income and its components consist of the following:
<TABLE>
                                                       Six Months Ended December 31,           Three Months Ended December 31,
                                                     1998                   1997                 1998                    1997
                                                     ----                   ----                 ----                    ----
<S>                                             <C>                    <C>                  <C>                  <C>
Net income                                      $     3,547,154        $     4,393,597      $     1,025,172      $     1,722,685
Other comprehensive income:
  Foreign currency translation adjustment              (157,453)              (373,370)             (64,817)            (368,847)
  Minimum SERP liability adjustment                    (447,189)                     -             (447,189)                   -
                                                ----------------       ---------------      ---------------      ---------------
Comprehensive income                            $     2,942,512        $     4,020,227      $       513,166      $     1,353,838
                                                ===============        ===============      ===============      ===============
</TABLE>
Note 6 - Sale of The Hirsh Company

On September 1, 1998, the Company sold The Hirsh Company (Hirsh), a wholly-owned
subsidiary.  This resulted in a pre-tax loss of $11,800,000,  which was included
in the June 30, 1998,  financial results. The loss includes 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  $1,000,000,  resulting  in a total loss related to the sale of Hirsh of
$12,800,000.

Note 7 - Stock Repurchase

On  September 1, 1998,  the Company  announced  its  intention to purchase up to
1,200,000  shares of the  Company's  common  stock  pursuant to a Dutch  Auction
self-tender  offer  at a price  range  of $19 to $22 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  1,350,000.  The Dutch
Auction was concluded on October 7, 1998, with the purchase of 1,230,784  shares
at a price of $21 per share.  An additional  58,200 shares were purchased in the
second quarter of fiscal 1999 for approximately $1,069,000.

At the January 22, 1999 Board of Directors  meeting,  the Board approved another
400,000 shares for the stock repurchase program.

Note 8 - Impairment Loss

During the second  quarter of fiscal  1999,  the  Company  decided to  re-deploy
certain  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.

                                       6
<PAGE>
               KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

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

Certain  matters  discussed in this section include  forward-looking  statements
involving  risks  and  uncertainties.  When  used in this  document,  the  words
"believes," "expected,"  "anticipates," "goal," and similar expressions identify
forward-looking  statements.  Forward-looking  statements  include,  but are not
limited to, statements  concerning future  improvements in gross profit, and the
expected ability of the Company and its key customers,  dealers and suppliers to
successfully  manage Year 2000 issues.  Such  statements  are subject to certain
risks and  uncertainties  which would cause actual results to differ  materially
from those expressed or implied by such forward-looking statements.  Readers are
cautioned not to place undue reliance on those forward-looking  statements which
speak only as of the date of this report.


RESULTS OF OPERATIONS

Net Sales

The following  table  indicates the Company's sales (in millions) and percentage
of total sales by product  category  for the six month and three  month  periods
ended December 31, 1998 and 1997:
<TABLE>
                              Six Months Ended December 31,                          Three Months Ended December 31,
                           1998                         1997                         1998                       1997
                           ----                         ----                         ----                       ----
<S>                     <C>         <C>              <C>         <C>              <C>          <C>            <C>        <C>
Shelving systems        $31.4        39.2%           $41.1        47.1%           $12.0         32.9%         $19.4        45.4%
Drawer slides            36.3        45.3%            31.9        36.5%            18.7         51.3%          16.3        38.2%
Hardware                 12.3        15.5%            14.3        16.4%             5.7         15.8%           7.0        16.4%
                       ------       ------           -----       ------           -----        ------        ------       ------
Total                   $80.0       100.0%           $87.3       100.0%           $36.4        100.0%         $42.7       100.0%
                       ======       ======           =====       ======           =====        ======        ======       ======
</TABLE>
Net sales for the second  quarter and first six months of fiscal 1999  decreased
$6.3 million and $7.3 million, respectively,  from the same periods in the prior
year.  The  decrease  in net  sales  was  attributable  to the sale of the Hirsh
Company in September 1998. This was also the reason for the significant  decline
in shelving systems during fiscal 1999.  Excluding the contribution of the Hirsh
sales in the prior year,  second quarter fiscal 1999 sales increased 7.4 percent
and net sales for the first six  months of fiscal  1999  increased  6.0  percent
compared to the same periods in fiscal 1998.

The overall sales growth as well as the growth in drawer slides was attributable
to the rapid growth in the precision  drawer slide business.  Sales of precision
slides  increased  approximately 35 percent in the second quarter of fiscal 1999
compared to the second quarter of fiscal 1998.

Gross Profit

Gross profit, as a percentage of net sales, was 23.8% for the second quarter and
23.2 % for the first six  months of fiscal  1999  compared  to 24.0% and  24.9%,
respectively,  for  the  same  periods  in the  prior  year.  The  gross  profit
improvement realized in the second quarter of fiscal 1999 reflects the Company's
focus on its  manufacturing  process  combined with its continued  evaluation of
customer and product line profitability.  As a result of the evaluation process,
the Company  recorded a reserve of $400,000 for potentially  obsolete  inventory
related to certain product lines it has decided to discontinue.

Operating Expenses

Selling and  administrative  expenses,  as a  percentage  of net sales,  for the
second  quarter of fiscal  1999  increased  from 15.9% in the same period in the
prior year to 18.4%.  For the six month period ended December 31, 1998,  selling
and general  administrative  expenses,  as a percentage  of net sales,  of 16.1%
remained  comparable  to the prior  year of 16.0%.  The  increase  in the second
quarter was primarily  attributable to severance  payments and costs  associated
with the Company's strategic planning effort.

As a result of the decision to re-deploy certain  production assets, the Company
also  recorded an  impairment  loss of $600,000 in the second  quarter of fiscal
1999.  This loss reflects the write-down of the related  tooling assets to their
estimated fair value.

                                       7
<PAGE>
               KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

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

Other Expenses/(Income)

Interest  expense was  $188,613  for the quarter and $305,778 for the six months
ended December 31, 1998,  compared to $307,921 and $717,112,  respectively,  for
the same  periods in the prior  year.  The  decrease  in  interest  expense  was
attributable  to the fact that the Company  has  reduced  its average  borrowing
level during fiscal 1999.

Other income was $232,993 for the second  quarter and $636,505 for the first six
months of fiscal 1999.  This  compares to other  expense of $15,872 and $29,292,
respectively,  for fiscal 1998.  The income  recognized  in fiscal 1999 reflects
interest  income received on Michigan Single Business tax refunds and two patent
infringement settlements.

Income Taxes

The effective tax rates for the quarter and six months ended  December 31, 1998,
were 27.1% and 34.0%  compared with the rates of 36.0% and 36.1%,  respectively,
for the same  periods in the prior  year.  The  decrease  was  primarily  due to
foreign tax credits recognized in the second quarter of fiscal 1999.

Income from Continuing Operations

Income from  continuing  operations  was  $1,025,172  for the second quarter and
$3,547,154  for the first six months of 1999.  This compares to  $2,017,210  and
$4,487,236, respectively, for the same periods in the prior year.

Loss from Discontinued Operation

The  second  quarter  and first six  months of fiscal  1999 do not  include  any
income, or loss,  recorded on discontinued  operation,  due to the fact that the
discontinued operation, Roll-it, was sold in fiscal 1998. Loss from discontinued
operation for the second quarter of fiscal 1998 was $294,525 or $.05 per diluted
share and for the  first six  months  of  fiscal  1998 was  $93,639  or $.01 per
diluted share.

Net Income

For the quarter ended  December 31, 1998,  net income was $1,025,172 or $.21 per
diluted  share  compared to  $1,722,685 or $.29 per diluted share for the second
quarter of last year.  Net income of  $3,547,154,  or $.66 per diluted share was
recorded for the first six months of fiscal 1999 compared to $4,393,597, or $.74
for the same period in the prior year. The impairment loss and related inventory
obsolescence  reserve  recorded  in the second  quarter of fiscal  1999 were the
primary reasons for the decline on both a quarterly and year to date basis.

Due to the impact  that the  repurchase  of shares as part of the Dutch  Auction
tender offer had on the weighted  average shares  outstanding  computation,  the
quarterly  earnings  per  diluted  share  for  fiscal  1999 of $.42 in the first
quarter and $.21 in the second  quarter do not equal the six month  earnings per
diluted share of $.66.

Liquidity and Capital Resources

Net cash from operating  activities for the first six months provided $5,318,823
as compared to  $12,803,823  for the first six months of fiscal 1998.  In fiscal
1999, the current liabilities are substantially lower than at June 30, 1998, due
to two factors.  First, in the prior year, 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 is still  utilizing  the more  aggressive  payment  policy with its
vendors,  payables  have  decreased  in fiscal 1999 due to the sale of the Hirsh
Company.

                                       8
<PAGE>
               KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

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

Capital  expenditures  totaled  $1,316,005 for the six months ended December 31,
1998,  compared to $2,673,543 for the six months ended December 31, 1997. Due to
the  strategic  planning  efforts  currently  underway  at  the  Company,  it is
difficult  for   management  to  predict  the   anticipated   level  of  capital
expenditures  for the remainder of the year,  however,  there are no significant
capital  commitments  existing at December  31,  1998.  The  strategic  planning
efforts  should be  substantially  completed by the end of the third  quarter of
fiscal 1999. In fiscal 1999, the Company  recorded  $18,129,569 of proceeds from
the sale of the Hirsh subsidiary. The related loss was recorded in fiscal 1998.

In early October 1998, the Company completed the Dutch Auction tender offer with
the repurchase of 1,230,784 shares of stock at $21 per share. Through the end of
the second quarter of fiscal 1999, the Company repurchased another 58,200 shares
on the open market.  For the six months ended December 31, 1998, the Company has
returned  $29.2  million to its  shareholders  through the  repurchase of common
stock and  issuance of  dividends.  At the January 22, 1999  meeting,  the Board
approved another 400,000 shares for the stock repurchase program.

The Company has been able to  successfully  fund these  repurchases  while still
maintaining a long-term debt balance of $15.8 million at December 31, 1998. This
compares  to a  long-term  debt  balance of $18.8  million one year ago and $9.7
million at June 30, 1998.  The  continued  strong cash flows from  operations of
$5.3 million for the first six months of fiscal 1999 and the cash  received from
the sale of the Hirsh  Company  have  enabled KV to reduce  long-term  debt when
compared  to the same  period in the prior year and still  return a  significant
amount of cash to its shareholders.  The increase from the June 30, 1998 balance
reflects amounts borrowed to fund the Dutch Auction tender offer.

On September 30, 1998,  the Company filed a  registration  statement for a Stock
Dividend Sale Plan and  announced  its  intention to convert the quarterly  cash
dividends to quarterly stock dividends  beginning in the third quarter of fiscal
1999. At the January 22, 1999 meeting,  the Board deferred a decision on whether
to authorize the  replacement  of the quarterly  cash  dividends  with quarterly
stock  dividends  until fiscal 2000.  The Board intends to further  evaluate the
potential benefits of quarterly stock dividends before proceeding.

Anticipated  cash flow from  operations and available  balances on the revolving
credit line will be utilized to fund working capital,  capital  expenditures and
dividend payments.

Year 2000

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

In 1995,  the  Company  established  a Year  2000  task  force  for  Information
Technology  ("IT") to develop and implement a Year 2000 readiness  program.  The
Company has developed a Year 2000  readiness  plan, and has completed the audit,
assessment  and scope phases of its plan. The Company has completed an inventory
of the software  applications  that it uses.  The Company has also installed its
Corporate  Information System software at its subsidiaries to improve efficiency
and to facilitate Year 2000 compliance. The Company estimates that the readiness
program phase is  approximately  76% complete for the Company's IT systems.  The
Company's  readiness program includes  installing  software releases designed to
cause the software to be Year 2000  compliant.  The Company is in the process of
testing  its IT systems  for Year 2000  compliance,  and will  continue  testing
activities in 1999.

In  addition,  in 1997 the  Company  began  evaluating  non-IT  systems  such as
imbedded  chips in  production  equipment  and  personal  computer  hardware and
software.  With respect to these non-IT  systems,  the company has completed the
audit phase, and the assessment and scope phases are approximately 60% complete.
The company is  presently in the process of testing and  implementation,  and is
upgrading its non-IT systems to become Year 2000  compliant.  The Company's goal
is to complete the remediation of non-IT systems by June 30, 1999.

                                        9
<PAGE>
               KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

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

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

To date, the Company has spent approximately $720,000 on the Year 2000 issue and
expects to spend an additional $144,000 to complete this work.

The Company presently anticipates that it will complete its Year 2000 assessment
and  remediation by December 31, 1999.  However,  there can be no assurance that
the Company will be successful in implementing  its Year 2000  remediation  plan
according to the anticipated schedule. In addition, the Company may be adversely
affected by the inability of other  companies  whose  systems  interact with the
Company to become Year 2000 compliant and by potential interruptions of utility,
communication or transportation systems as a result of Year 2000 issues.

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


                                       10
<PAGE>
               KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

                    QUANTITATIVE AND QUALITATIVE DISCLOSURES
                                ABOUT MARKET RISK

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

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

Foreign Currency Risk -- The Company has a sales office located in Canada. Sales
are typically  denominated in Canadian  dollars,  thereby creating  exposures to
changes in exchange rates.  The changes in the  Canadian/U.S.  exchange rate may
positively or negatively affect the Company's sales, gross margins, and retained
earnings.  The Company  attempts  to minimize  currency  exposure  risk  through
working capital management. There can be no assurance that such an approach will
be  successful,  especially in the event of a significant  and sudden decline in
the value of the Canadian  dollar.  The Company does not hedge  against  foreign
currency risk.



                                       11
<PAGE>
               KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

                           PART II. OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K

         (a)     Exhibits

                    See Exhibit Index

         (b)     Reports on Form 8-K
                    There were no reports on Form 8-K filed for the three months
                    ended December 31, 1998.




                                       12
<PAGE>
                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                          Knape & Vogt Manufacturing Company
                                                     (Registrant)




Date:        February 10, 1999                    /s/ Allan E. Perry    
                                                  Allan E. Perry
                                                  President and
                                                  Chief Executive Officer

Date:        February 10, 1999                    /s/ Jack D. Poindexter 
                                                  Jack D. Poindexter
                                                  Chief Financial Officer,
                                                  Treasurer and Secretary



                                       13
<PAGE>
                                  EXHIBIT INDEX


(27)     Financial Data Schedule






                                       14