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, 1996 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 52004-0877
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 - $1.00 Par Value
Shares Outstanding as of March 31, 1996 7,118,027
FLEXSTEEL INDUSTRIES, INC.
CONDENSED BALANCE SHEETS (UNAUDITED)
MARCH 31, JUNE 3O,
1996 1995
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................... $ 4,672,428 $ 5,768,537
Temporary investments ....................... 9,925,401 8,268,615
Trade receivables - Less allowance for
doubtful accounts: March 31, 1996,
$2,013,500; June 3O, 1995, $2,160,211 ..... 27,304,959 22,905,047
Inventories ................................. 25,491,030 25,921,674
Deferred income tax ......................... 2,000,000 2,000,000
Other assets ................................ 915,721 844,557
Total current assets ........... 70,309,539 65,708,430
PROPERTY, PLANT, AND EQUIPMENT - At cost
less accumulated depreciation:
March 31, 1996, $43,556,774;
June 3O, 1995, $41,623,972 .................. 22,423,457 24,376,052
OTHER ASSETS .................................. 6,513,363 6,186,144
TOTAL..................... $99,246,359 $96,270,626
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade.................... $ 6,565,852 $ 4,756,991
Dividends payable ........................... 854,163 863,175
Accrued liabilities ......................... 12,589,728 10,856,550
Current portion of long-term debt ........... 2,960,000 2,960,000
Total current liabilities ...... 22,969,743 19,436,716
LONG-TERM DEBT ................................ 35,000 70,000
DEFERRED COMPENSATION ......................... 2,920,129 2,940,329
SHAREHOLDERS' EQUITY:
Common Stock - $1 par value; authorized
15,000,000 shares; issued March 31, 1996,
7,118,027 shares; June 30, 1995,
7,193,124 shares .......................... 7,118,027 7,193,124
Additional paid-in capital .................. 763,560 1,386,754
Retained earnings ........................... 65,191,500 65,199,703
Unrealized investment (loss) ................ 248,400 44,000
Total .......................... 73,321,487 73,823,581
TOTAL..................... $99,246,359 $96,270,626
See accompanying Notes.
FLEXSTEEL INDUSTRIES, INC.
CONDENSED STATEMENTS OF EARNINGS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Sales ................. $ 53,213,023 $ 56,782,512 $150,616,934 $159,945,268
Operating Expenses:
Cost of goods sold ...... 41,524,012 44,704,954 119,384,052 124,927,973
Selling, general and
administrative expenses 9,613,268 9,430,329 27,704,974 27,834,181
Total ............... 51,137,280 54,135,283 147,089,026 152,762,154
Operating Income .......... 2,075,743 2,647,229 3,527,908 7,183,114
Interest and Other:
Income .................. 250,896 211,013 766,631 680,602
Expense ................. 88,622 95,334 272,467 277,547
Net ................. 162,274 115,679 494,164 403,055
Income Before Income Taxes 2,238,017 2,762,908 4,022,072 7,586,169
Provision for Income Taxes 805,000 995,000 1,445,000 2,725,000
Net Income ............. $ 1,433,017 $ 1,767,908 $ 2,577,072 $ 4,861,169
Average Number of Common
Shares Outstanding ........ 7,169,878 7,184,157 7,195,857 7,173,856
Per Share of Common Stock:
Net Earnings .............. $ .20 $ .25 $ .36 $ .68
Dividends ................. $ .12 $ .12 $ .36 $ .36
</TABLE>
See accompanying Notes.
FLEXSTEEL INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOW (UNAUDITED)
Nine Months Ended
March 31,
1996 1995
OPERATING ACTIVITIES:
Net Income ....................................... $ 2,577,072 $ 4,861,169
Adjustments to reconcile net income to net
cash provided by operating activities ............ 2,861,218 2,449,279
Net cash provided by operating activities ........ 5,438,290 7,310,448
INVESTING ACTIVITIES:
Construction funds held in escrow ............. 1,958,276
Purchases of temporary investments ............ (4,367,910) (2,144,546)
Proceeds from sales of temporary investments .. 2,711,124 3,964,145
Additions to property, plant and equipment .... (1,559,047) (8,157,306)
Net cash (used in) investing activities .......... (3,215,833) (4,379,431)
FINANCING ACTIVITIES:
Repayment of long-term debt ................... (35,000) (35,000)
Payment of dividends .......................... (2,585,275) (2,585,670)
Payments to reacquire stock ................... (977,853) (720)
Proceeds from issuance of stock ............... 279,562 346,807
Net cash used in financing activities ............ (3,318,566) (2,274,583)
Increase (decrease) in cash and cash equivalents . (1,096,109) 656,434
Cash and cash equivalents at beginning of year ... 5,768,537 3,385,573
Cash and cash equivalents at end of period ....... $ 4,672,428 $ 4,042,007
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 those principles
followed in the financial statements for the year ended June 30, 1995. 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, 1996 are not necessarily indicative of the results which
may be expected for the year ending June 3O, 1996.
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,
1996 1995
Raw materials...................... $12,384,014 $14,186,359
Work in process and finished parts. 7,509,203 7,546,079
Finished goods..................... 5,597,813 4,189,236
Total............. $25,491,030 $25,921,674
4. Interest paid during the nine month period ended March 31, 1996 and 1995
was $96,000 and $135,000, respectively. Income taxes paid during the nine
month period ended March 31, 1996 and 1995 were $1,061,000 and $3,173,000,
respectively.
5. During the quarter ended September 30, 1995, the Company recorded charges
associated with the closing of its manufacturing facility in Sweetwater,
TN, and production consolidation of Charisma Chairs in Starkville, MS. The
charges recorded and estimated to be incurred are $470,000, and are
included in cost of goods sold for the nine months ended March 31, 1996.
The net, after tax, charge to earnings is $300,000, or $.04 per share.
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 increased by $561,000. Accounts receivable increased by $4,400,000
while inventories decreased by $431,000. Capital expenditures were $1,560,000
for plant improvements, manufacturing, and delivery equipment. Working capital
increased $1,068,000 for the nine month period. In the next three months
approximately $1,400,000 will be spent for manufacturing facility improvements,
manufacturing, and delivery equipment. The Company has repurchased 100,040
shares of its common stock for $977,795 as authorized by the Board of Directors
and announced through a release dated February 1, 1996.
Economic Conditions - The Company anticipates that demand for its seating
products will remain steady for the remainder of calendar year 1996, and at
higher levels than 1995. With the introduction of the Flexsteel "Comfort
Seating" gallery program for independent retail dealers of home furnishings, new
model year product introductions for Recreational Vehicle customers, and
modernized Commercial Seating manufacturing facilities, the Company is well
positioned and prepared to respond to opportunities in all business segments.
Higher volume levels and the above strategies should allow the Company to
maintain profit margins, improve production efficiencies, and absorb fixed costs
resulting in improved profitability during the remainder of 1996.
Results of Operations for the Quarter - Sales decreased by approximately
$3,569,000 compared to the prior year quarter. Sales volume decreased by
$3,527,000 in Home Furnishings and $1,168,000 in Recreational Vehicle products,
while Commercial Seating increased by $1,126,000. Cost of goods sold decreased
by $3,181,000, due to the volume decrease. Selling, general, and administrative
expenses increased by $183,000. Additional costs of approximately $400,000
associated with Flexsteel Gallery program enhancements and increased bad debt
provision, as well as general under absorption of fixed costs, offset volume
related decreases in selling, general, and administrative costs. The
aforementioned changes resulted in a decrease in net income after taxes of
$335,000, or $.05 per share, compared to the quarter ended March 31, 1995.
Results of Operations for the Last Nine Months - Sales decreased by
approximately $9,328,000, compared to the nine month period ended March 31,
1995. Sales decreased by $5,458,000 in Recreational Vehicle products and
$5,112,000 in Home Furnishings, while Commercial Seating increased by
$1,242,000. Cost of goods sold decreased by $5,544,000. volume related decreases
were offset by approximately $470,000, or $.04 per share after tax, associated
with closing the Sweetwater, TN facility and approximately $1,270,000 related to
lower margins and under absorbed fixed costs. Selling, general, and
administrative expenses decreased by $129,000. Additional costs of approximately
$650,000 associated with enhancements to our Flexsteel Gallery program and an
increase in bad debt provision, as well as the fixed nature of many of these
costs, offset any volume related decreases in selling, general, and
administrative costs. The aforementioned changes resulted in a decrease in net
income after taxes of $2,284,000, or $.32 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: April 26, 1996 By: /s/ R. J. Klosterman
R. J. Klosterman
Financial Vice President
and
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 4,672,428
<SECURITIES> 9,925,401
<RECEIVABLES> 29,318,459
<ALLOWANCES> 2,013,500
<INVENTORY> 25,491,030
<CURRENT-ASSETS> 70,309,539
<PP&E> 65,980,231
<DEPRECIATION> 43,556,774
<TOTAL-ASSETS> 99,246,359
<CURRENT-LIABILITIES> 22,969,743
<BONDS> 35,000
0
0
<COMMON> 7,118,027
<OTHER-SE> 66,203,460
<TOTAL-LIABILITY-AND-EQUITY> 99,246,359
<SALES> 53,213,023
<TOTAL-REVENUES> 53,463,919
<CGS> 41,524,012
<TOTAL-COSTS> 51,137,280
<OTHER-EXPENSES> 9,613,268
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 88,622
<INCOME-PRETAX> 2,238,017
<INCOME-TAX> 805,000
<INCOME-CONTINUING> 1,433,017
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,433,017
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0
</TABLE>
