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 December 31, 1994 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 December 31, 1994 7,181,334
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FLEXSTEEL INDUSTRIES, INC.
CONDENSED BALANCE SHEETS (UNAUDITED)
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<CAPTION>
DECEMBER 31, JUNE 3O,
1994 1994
ASSETS
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CURRENT ASSETS:
Cash and cash equivalents................... $ 3,602,843 $ 3,385,573
Temporary investments....................... 8,539,505 9,718,350
Trade receivables - Less allowance for
doubtful accounts: December 31, 1994,
$2,183,082; June 3O, 1994, $1,960,231..... 25,187,321 25,615,426
Inventories................................. 29,285,891 26,585,397
Deferred income taxes....................... 2,340,000 2,340,000
Other assets................................ 800,800 913,301
Total current assets........... 69,756,360 68,558,047
PROPERTY, PLANT, AND EQUIPMENT - At cost
less accumulated depreciation:
December 31, 1994, $41,892,457;
June 3O, 1994, $40,204,983.................. 22,277,631 18,829,053
OTHER ASSETS.................................. 6,113,654 7,701,079
TOTAL..................... $98,147,645 $95,088,179
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade.................... $ 6,745,553 $ 4,871,630
Dividends payable........................... 861,760 858,601
Accrued liabilities......................... 11,540,657 11,755,413
Current portion of long-term debt........... 3,285,000 3,285,000
Total current liabilities...... 22,432,970 20,770,644
LONG-TERM DEBT................................ 105,000 105,000
DEFERRED COMPENSATION......................... 2,938,529 2,923,729
SHAREHOLDERS' EQUITY:
Common Stock - $1 par value; authorized
15,000,000 shares; issued December 31,
7,181,334 shares; June 30, 7,155,012
shares.................................... 7,181,334 7,155,012
Additional paid-in capital.................. 1,266,781 1,015,940
Retained earnings........................... 64,808,031 63,437,854
Unrealized investment (loss)................ (585,000) (320,000)
Total.......................... 72,671,146 71,288,806
TOTAL..................... $98,147,645 $95,088,179
</TABLE>
See accompanying Notes.
FLEXSTEEL INDUSTRIES, INC.
CONDENSED STATEMENTS OF EARNINGS (UNAUDITED)
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<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1994 1993 1994 1993
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Net Sales.............................. $52,351,017 $46,583,025 $103,162,756 $90,942,955
Operating Expenses:
Cost of goods sold..................... 40,886,356 36,508,979 80,223,019 70,340,337
Selling, general and
administrative expenses............ 9,251,692 8,153,927 18,403,852 16,590,757
Total............................ 50,138,048 44,662,906 98,626,871 86,931,094
Operating Income....................... 2,212,969 1,920,119 4,535,885 4,011,861
Interest and Other:
Income.............................. 222,863 338,322 469,589 742,612
Expense............................. 94,412 59,790 182,213 119,880
Net............................. 128,451 278,532 287,376 622,732
Earnings Before Income Taxes.......... 2,341,420 2,198,651 4,823,261 4,634,593
Provision for Income Taxes............ 845,000 790,000 1,730,000 1,665,000
Net Earnings....................... $ 1,496,420 $ 1,408,651 3,093,261 2,969,593
Average Number of Common
Shares Outstanding.................... 7,179,160 7,138,152 7,168,706 7,131,294
Per Share of Common Stock:
Net Earnings.......................... $ .21 $ .20 $ .43 $ .42
Dividends............................. $ .12 $ .12 $ .24 $ .24
</TABLE>
See accompanying Notes.
FLEXSTEEL INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOW (UNAUDITED)
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<CAPTION>
Six Months Ended
December, 31,
1994 1993
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OPERATING ACTIVITIES:
Net Income........................................ $3,093,261 $2,969,593
Adjustments to reconcile net income to net
cash (used in) provided by
operating activities........................... 1,143,251 (3,510,078)
Net cash (used in) provided by operating
activities..................................... 4,236,512 (540,485)
INVESTING ACTIVITIES:
Purchases of temporary investments............. (1,957,241) (1,130,452)
Proceeds from sales of temporary investments... 3,136,086 4,946,406
Additions to property, plant and equipment..... (5,375,771) (2,883,918)
Construction funds held in escrow.............. 1,623,605
Net cash provided by (used in) investing
activities..................................... (2,573,321) 932,036
FINANCING ACTIVITIES:
Repayment of long-term debt....................
Payment of dividends........................... (1,723,084) (1,713,497)
Payments to reacquire stock.................... (720) (1,028)
Proceeds from issuance of stock................ 277,883 209,573
Net cash used in financing activities............. (1,445,921) (1,423,952)
Increase (Decrease) in cash
and cash equivalents............................ 217,270 (1,032,401)
Cash and cash equivalents at beginning of year.... 3,385,573 4,391,400
Cash and cash equivalents at end of period........ $3,602,843 $3,358,999
</TABLE>
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 six month period ended December 31, 1994 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:
December 31, June 3O,
1994 1994
Raw materials...................... $16,240,030 $16,369,701
Work in process and finished parts. 8,056,547 6,621,585
Finished goods..................... 4,989,314 3,594,111
Total............. $29,285,891 $26,585,397
4. Interest paid during the six month periods ended December 31, 1994 and 1993
was $63,300 and $5,000, respectively. Income taxes paid during the six
month periods ended December 31, 1994 and 1993 were $2,170,000 and
$3,106,000, 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 December 31, 1994 totaled $2,286,000 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.
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 $962,000. Accounts receivable decreased by $428,000
while inventories increased by $2,700,000. Capital expenditures were $5,375,000
for plant additions, manufacturing and delivery equipment. Working capital
decreased $464,000 for the six month period. In the next six months
approximately $4,000,000 will be spent for manufacturing facility improvements,
manufacturing and delivery equipment and completion of the Starkville, MS plant
expansion.
Economic Conditions - The Company anticipates that demand for its seating
products will continue with moderate growth throughout fiscal 1995 despite
concerns about the impact of higher interest rates on consumer spending. The
Company's investment in computerized manufacturing equipment, plant expansions,
and new associate training will enhance production efficiencies, help offset
cost increases for raw materials and assist in maintaining margins in the highly
competitive market place. The Company anticipates that the projected increased
sales volume, selective moderate price increases, production efficiency
improvements and absorption of fixed costs will result in increased
profitability compared to the prior fiscal year.
Results of Operations for the Quarter - Sales increased by approximately
$5,768,000, compared to the prior year quarter. The increase in sales volume was
$3,156,000 in Home Furnishings, $1,755,000 in Recreational Vehicle products, and
$857,000 in Commercial Seating. Cost of goods sold increased by approximately
$4,377,000 and selling, general, and administrative expenses increased by
$1,098,000 due to the increase in volume. Interest income decreased by $115,000
due to lower levels of investment and decreased rate of return. The
aforementioned changes resulted in an increase in net income after taxes of
$88,000, or $.01 per share, compared to the quarter ended December 31, 1993.
Results of Operations for the Last Six Months - The Company's sales increased by
$12,220,000. Home Furnishings sales increased approximately $5,500,000, Vehicle
Seating sales increased approximately $5,206,000, and Commercial Seating sales
increased approximately $1,514,000. Cost of goods sold increased by $9,883,000
reflecting the volume increase, and approximately $450,000 of additional costs
due to continued erosion of margins and new associate training costs in the
first quarter of the year. Selling, general, and administrative expenses
increased $1,813,000 with a relatively small portion of the volume increase
being offset by fixed cost control. Interest income decreased by $273,000 due to
lower levels of investment and decreased rate of return, while interest expense
increased by $62,000 due to financing the Starkville, MS expansion, resulting in
a decrease in net income after a tax of $.03 per share. The aforementioned
changes resulted in an increase in net income after taxes of $124,000, or $.01
per share, compared to the six month period ended December 31, 1993.
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: February 13, 1995 By: /s/ M. O. BECKER
M. O. Becker,
Financial Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 3,602,843
<SECURITIES> 8,539,505
<RECEIVABLES> 27,370,403
<ALLOWANCES> 2,183,082
<INVENTORY> 29,285,891
<CURRENT-ASSETS> 69,756,360
<PP&E> 64,170,088
<DEPRECIATION> 41,892,457
<TOTAL-ASSETS> 98,147,645
<CURRENT-LIABILITIES> 22,432,970
<BONDS> 105,000
<COMMON> 7,181,334
0
0
<OTHER-SE> 65,489,812
<TOTAL-LIABILITY-AND-EQUITY> 98,147,645
<SALES> 52,351,017
<TOTAL-REVENUES> 52,573,880
<CGS> 40,886,356
<TOTAL-COSTS> 50,138,048
<OTHER-EXPENSES> 9,251,692
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 94,412
<INCOME-PRETAX> 2,341,420
<INCOME-TAX> 845,000
<INCOME-CONTINUING> 1,496,420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,496,420
<EPS-PRIMARY> .21
<EPS-DILUTED> 0
</TABLE>
