SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 2O549
FORM 1O-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1995 Commission file number O-5151
FLEXSTEEL INDUSTRIES, INC.
Incorporated in State of Minnesota I.R.S. Identification No. 42-O442319
FLEXSTEEL INDUSTRIES, INC.
P. O. BOX 877
DUBUQUE, IOWA 52OO4-0877
Area code 319 Telephone 556-773O
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, and (2) has been subject to such filing
requirements for the past 9O days. Yes _X_ . No.___.
Common Stock - $1.OO Par Value
Shares Outstanding as of March 31, 1995 7,187,290
FLEXSTEEL INDUSTRIES, INC.
CONDENSED BALANCE SHEETS (UNAUDITED)
MARCH 31, JUNE 3O,
1995 1994
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................... $ 4,042,007 $ 3,385,573
Temporary investments ....................... 7,898,751 9,718,350
Trade receivables - Less allowance for
doubtful accounts: March 31, 1995,
$2,343,260; June 3O, 1994, $1,960,231 ..... 30,548,727 25,615,426
Inventories ................................. 26,411,816 26,585,397
Deferred income tax ......................... 2,340,000 2,340,000
Other assets ................................ 804,922 913,301
Total current assets ........... 72,046,223 68,558,047
PROPERTY, PLANT, AND EQUIPMENT - At cost
less accumulated depreciation:
March 31, 1995, $42,767,345;
June 3O, 1994, $40,204,983 .................. 24,020,491 18,829,053
OTHER ASSETS .................................. 5,964,514 7,701,079
TOTAL ..................... $ 102,031,228 $ 95,088,179
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade.................... $ 8,050,421 $ 4,871,630
Dividends payable ........................... 862,586 858,601
Accrued liabilities ......................... 12,777,400 11,755,413
Current portion of long-term debt ........... 3,285,000 3,285,000
Total current liabilities ...... 24,975,407 20,770,644
LONG-TERM DEBT ................................ 70,000 105,000
DEFERRED COMPENSATION ......................... 2,946,429 2,923,729
SHAREHOLDERS' EQUITY:
Common Stock - $1 par value; authorized
15,OOO,OOO shares; issued March 31, 1995,
7,187,290 shares; June 30, 1994,
7,155,012 shares .......................... 7,187,290 7,155,012
Additional paid-in capital .................. 1,329,749 1,015,940
Retained earnings ........................... 65,713,353 63,437,854
Unrealized investment (loss) ................ (191,000) (320,000)
Total .......................... 74,039,392 71,288,806
TOTAL ..................... $ 102,031,228 $ 95,088,179
See accompanying Notes.
FLEXSTEEL INDUSTRIES, INC.
CONDENSED STATEMENTS OF EARNINGS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net Sales ................. $56,782,512 $52,637,630 $159,945,268 $143,580,585
Operating Expenses:
Cost of goods sold ...... 44,704,954 40,667,811 124,927,973 111,008,148
Selling, general and
administrative expenses 9,430,329 9,336,324 27,834,181 25,927,081
Total ............... 54,135,283 50,004,135 152,762,154 136,935,229
Operating Income .......... 2,647,229 2,633,495 7,183,114 6,645,356
Interest and Other:
Income .................. 211,013 259,771 680,602 1,002,383
Expense ................. 95,334 70,590 277,547 190,470
Net ................. 115,679 189,181 403,055 811,913
Income Before Income Taxes 2,762,908 2,822,676 7,586,169 7,457,269
Provision for Income Taxes 995,000 1,035,000 2,725,000 2,700,000
Net Income ............. $ 1,767,908 $ 1,787,676 $ 4,861,169 $ 4,757,269
Average Number of Common
Shares Outstanding ........ 7,184,157 7,147,575 7,173,856 7,136,721
Per Share of Common Stock:
Net Earnings .............. $ .25 $ .25 $ .68 $ .67
Dividends ................. $ .12 $ .12 $ .36 $ .36
</TABLE>
See accompanying Notes.
FLEXSTEEL INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOW (UNAUDITED)
Nine Months Ended
March 31,
1995 1994
OPERATING ACTIVITIES:
Net Income .................................... $ 4,861,169 $ 4,757,269
Adjustments to reconcile net income to net
cash provided by operating activities ......... 2,449,279 (3,600,164)
Net cash provided by operating activities ..... 7,310,448 1,157,105
INVESTING ACTIVITIES:
Construction funds held in escrow .......... 1,958,276 (3,185,000)
Purchases of temporary investments ......... (2,144,546) (1,197,783)
Proceeds from sales of temporary investments 3,964,145 6,096,172
Additions to property, plant and equipment . (8,157,306) (3,225,978)
Net cash (used in) investing activities ....... (4,379,431) (1,512,589)
FINANCING ACTIVITIES:
Proceeds from long-term debt ............... 3,250,000
Repayment of long-term debt ................ (35,000) (35,000)
Payment of dividends ....................... (2,585,670) (2,571,615)
Payments to reacquire stock ................ (720) (4,166)
Proceeds from issuance of stock ............ 346,807 341,797
Net cash provided by (used in) financing
activities ................................. (2,274,583) 981,016
Increase in cash and cash equivalents ......... 656,434 625,532
Cash and cash equivalents at beginning of year 3,385,573 4,391,400
Cash and cash equivalents at end of period .... $ 4,042,007 $ 5,016,932
See accompanying Notes.
NOTES (UNAUDITED)
1. The accompanying condensed financial statements, which are unaudited,
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis, which is consistent with
that followed in the financial statements for the year ended June 30,
1994. The statements include all adjustments (comprising only normal
recurring accruals) which are, in the opinion of management, necessary
to a fair statement of the financial position and results of
operations and cash flows, prepared on a summary basis, as of such
dates and for the stated dates then ended. The results of operations
for the nine month period ended March 31, 1995 are not necessarily
indicative of the results which may be expected for the year ending
June 3O, 1995.
2. The earnings per share are based on the average number of common
shares outstanding during each period.
3. The inventories are categorized as follows:
March 31, June 3O,
1995 1994
Raw materials...................... $13,255,610 $16,369,701
Work in process and finished parts. 8,001,874 6,621,585
Finished goods..................... 5,154,332 3,594,111
Total............. $26,411,816 $26,585,397
4. Interest paid during the nine month period ended March 31, 1995 and
1994 was $101,000 and $13,000, respectively. Income taxes paid during
the nine month period ended March 31, 1995 and 1994 were $3,173,000
and $4,220,000, respectively.
5. In September 1993, the Company established a nonqualified trust,
referred to as a "Rabbi" trust, to fund deferred compensation
benefits. This arrangement offers a degree of assurance for the
payment of such benefits to certain officers of the Company. Trust
assets are subject to the claims of creditors and are not the property
of the participants. Assets held in the trust at March 31, 1995
totaled $2,355,000 and are classified as "Other Assets" in the
Company's financial statements. The trust's earnings are recorded as
an additional liability to fund the benefits and are considered to be
interest expense to the Company.
6. The Company is obligated for Mississippi Industrial Revenue Bonds of
$3,250,000 which were issued in March, 1994 for the financing of plant
and equipment. The obligations are variable rate demand bonds and are
due in annual maturities of $325,000 through 2004.
FLEXSTEEL INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONDENSED STATEMENT
OF EARNINGS
Financial Condition - The Company's cash, cash equivalents, and temporary
investments decreased by $1,163,165. Accounts receivable increased by $4,933,000
reflecting a higher level of shipments, while inventories decreased by $174,000
in comparison to June 30, 1994 levels. Capital expenditures were $8,165,000 for
plant additions, manufacturing and delivery equipment. Working capital decreased
$717,000 for the nine month period. In the next three months approximately
$1,500,000 will be spent on manufacturing and delivery equipment, and on the
completion of manufacturing facility improvements.
Economic Conditions - Demand for the Company's seating products is currently
lower than the strong double-digit increases recorded during the first nine
months of the fiscal year. Consumer spending on residential products at the
retail level has slowed and higher interest rates have reduced the demand for
Recreational Vehicle products. The Company is experiencing significant increases
in material costs, especially polyurethane foam, and moderate increases in labor
and benefits costs. The Company is implementing moderate sell price increases to
offset the higher material and labor costs, however, the sell price increases
will not materially impact the Company's results until the first quarter of the
next fiscal year. The Company continues its efforts to improve production
efficiencies through investment in computerized manufacturing equipment, plant
layout improvements and training of manufacturing associates.
Results of Operations for the Quarter - Sales increased by approximately
$4,145,000, compared to the prior year quarter. The increase in sales volume was
$3,734,000 in Home Furnishings and $443,000 in Commercial Seating, with a
$32,000 decrease in Recreational Vehicle products. Cost of goods sold increased
by approximately $4,037,000, reflecting the volume increase, and approximately
$800,000 of of additional costs due to margin erosion, increased material costs,
and production inefficiencies. Selling, general, and administrative expenses
increased by $94,000 with fixed cost controls absorbing most volume related
increases. The aforementioned changes resulted in a decrease in net income of
$20,000, with no change in per share earnings, compared to the quarter ended
March 31, 1994.
Results of Operations for the Last Nine Months - The Company's sales increased
by $16,365,000. Home Furnishings sales increased approximately $9,234,000,
Vehicle Seating sales increased approximately $5,174,000, and Commercial Seating
sales increased approximately $1,957,000. Cost of goods sold increased by
$13,920,000 reflecting the volume increase, and approximately $1,250,000 of
additional costs due to lower margins, increased material costs, and production
inefficiencies. Selling, general, and administrative expenses increased
$1,907,000 with approximately $1,000,000 of volume related increase absorbed
through fixed cost control. Interest income decreased by $322,000 due to lower
levels of investment and decreased rate of return, while interest expense
increased by $87,000 due to financing the Starkville, MS expansion, adversely
impacting net income after tax by $.04 per share. The aforementioned changes
resulted in an increase in net income after taxes of $104,000 or $.01 per share,
compared to the nine month period ended March 31, 1995.
PART II OTHER INFORMATION
The registrant did not file a report on Form 8-K during the quarter for which
this report is filed.
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 officer thereunto duly authorized.
FLEXSTEEL INDUSTRIES, INC.
Date: May 4, 1995 By: /s/ R. J. Klosterman
R. J. Klosterman
Financial Vice President
and
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FLEXSTEEL INDUSTRIES, INC.
FORM 10-Q SUPPLEMENTAL SCHEDULE
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,042,007
<SECURITIES> 7,898,751
<RECEIVABLES> 32,891,987
<ALLOWANCES> 2,343,260
<INVENTORY> 26,411,816
<CURRENT-ASSETS> 72,046,223
<PP&E> 66,787,836
<DEPRECIATION> 42,767,345
<TOTAL-ASSETS> 102,031,228
<CURRENT-LIABILITIES> 24,975,407
<BONDS> 70,000
<COMMON> 7,187,290
0
0
<OTHER-SE> 66,852,102
<TOTAL-LIABILITY-AND-EQUITY> 102,031,228
<SALES> 56,782,512
<TOTAL-REVENUES> 56,993,525
<CGS> 44,704,954
<TOTAL-COSTS> 54,135,283
<OTHER-EXPENSES> 9,430,329
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 95,334
<INCOME-PRETAX> 2,762,908
<INCOME-TAX> 995,000
<INCOME-CONTINUING> 1,767,908
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,767,908
<EPS-PRIMARY> .25
<EPS-DILUTED> 0
</TABLE>
