Flexsteel Industries (FLXS) 10-Q 17 Oct 14 2015 FY Quarterly report Financial data

Document_And_Entity_Informatio

Document And Entity Information	3 Months Ended
	Sep. 30, 2014
Document And Entity Information [Abstract]	'
Document Type	'10-Q
Amendment Flag	'false
Document Period End Date	30-Sep-14
Document Fiscal Year Focus	'2015
Document Fiscal Period Focus	'FY
Entity Registrant Name	'FLEXSTEEL INDUSTRIES INC
Entity Central Index Key	'0000037472
Current Fiscal Year End Date	'--06-30
Entity Filer Category	'Accelerated Filer
Entity Common Stock, Shares Outstanding	7,403,087
Entity Well-known Seasoned Issuer	'No
Entity Current Reporting Status	'Yes
Entity Voluntary Filers	'No

Consolidated_Balance_Sheets

Consolidated Balance Sheets (USD $)	Sep. 30, 2014	Jun. 30, 2014
In Thousands, unless otherwise specified
ASSETS	'	'
Cash	$10,307	$22,176
Trade receivables - less allowance for doubtful accounts: 2012, $0; 2011, $2,000	40,941	38,536
Inventories	106,160	97,940
Deferred income taxes	4,230	4,230
Other	3,782	2,528
Total current assets	165,420	165,410
NONCURRENT ASSETS:	'	'
Property, plant and equipment, net	56,737	31,900
Deferred income taxes	2,150	2,170
Other assets	11,081	10,733
TOTAL	235,388	210,213
LIABILITIES AND SHAREHOLDERS' EQUITY	'	'
Accounts payable - trade	25,479	15,818
Notes payable	11,996	'
Accrued liabilities:	'	'
Payroll and related items	6,144	8,452
Insurance	4,813	4,602
Other	9,756	7,894
Total current liabilities	58,188	36,766
LONG-TERM LIABILITIES:	'	'
Deferred compensation	3,692	3,396
Other liabilities	3,062	3,316
Total liabilities	64,942	43,478
COMMITMENTS AND CONTINGENCIES (Note 12)	'	'
SHAREHOLDERS' EQUITY:	'	'
Cumulative preferred stock - $50 par value; authorized 60,000 shares; outstanding - none	'	'
Undesignated (subordinated) stock - $1 par value; authorized 700,000 shares; outstanding - none	'	'
Common stock - $1 par value; authorized 15,000,000 shares; outstanding 2012, 0,000,000 shares; 2011, 6,710,612 shares	7,403	7,371
Additional paid-in capital	15,628	15,386
Retained earnings	148,779	145,234
Accumulated other comprehensive loss	-1,364	-1,256
Total shareholders' equity	170,446	166,735
TOTAL	$235,388	$210,213

Consolidated_Balance_Sheets_Pa

Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2014	Jun. 30, 2014
In Thousands, except Share data, unless otherwise specified
Consolidated Balance Sheets [Abstract]	'	'
Trade receivables, allowance for doubtful accounts	$1,364	$1,370
Cumulative Preferred stock, par value	$50	$50
Cumulative Preferred stock, authorized	60,000	60,000
Cumulative Preferred stock, outstanding	0	0
Undesignated (subordinated) stock, par value	$1	$1
Undesignated (subordinated) stock, authorized	700,000	700,000
Undesignated (subordinated) stock, outstanding	0	0
Common stock, par value	$1	$1
Common stock, authorized	15,000,000	15,000,000
Common stock, outstanding	7,403,087	7,370,735

Consolidated_Statements_Of_Ope

Consolidated Statements Of Operations (USD $)	3 Months Ended
Share data in Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Consolidated Statements Of Operations [Abstract]	'	'
NET SALES	$108,666,000	$104,348,000
COST OF GOODS SOLD	-83,146,000	-80,703,000
GROSS MARGIN	25,520,000	23,645,000
SELLING, GENERAL AND ADMINISTRATIVE	-18,391,000	-18,209,000
OPERATING INCOME (LOSS)	7,129,000	5,436,000
OTHER INCOME (EXPENSE):	'	'
Interest and other income	619,000	502,000
INCOME (LOSS) BEFORE INCOME TAXES	7,748,000	5,938,000
INCOME TAX (PROVISION) BENEFIT	-2,870,000	-2,170,000
NET INCOME (LOSS)	$4,878,000	$3,768,000
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:	'	'
Basic	7,371	7,125
Diluted	7,667	7,432
EARNINGS (LOSS) PER SHARE OF COMMON STOCK:	'	'
Basic	$0.66	$0.53
Diluted	$0.64	$0.51
CASH DIVIDENDS DECLARED PER COMMON SHARE	$0.18	$0.15

Consolidated_Statements_Of_Com

Consolidated Statements Of Comprehensive Income (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Accumulated Other Comprehensive Income (Loss) [Abstract]	'	'
Net income	$4,878	$3,768
Unrealized (losses) gains on securities in supplemental retirement plans	-29	139
Reclassification of Realized gain on supplemental retirement plans to other income	-145	-444
Other Comprehensive Income(Loss) Before Taxes	-174	-305
Income tax benefit (expense) related to securities in supplemental retirement plans gains (losses)	66	116
Other comprehensive (loss) income, net of tax	-108	-189
Comprehensive income	$4,770	$3,579

Consolidated_Statements_Of_Cas

Consolidated Statements Of Cash Flows (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
OPERATING ACTIVITIES:	'	'
Net income (loss)	$4,878	$3,768
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	'	'
Depreciation	1,096	1,011
Deferred income taxes	86	-244
Stock-based compensation expense	282	151
Excess tax benefit from stock-based payment arrangements	113	-46
Provision for losses on accounts receivable	-19	86
Gain on disposition of capital assets	-21	-5
Changes in operating assets and liabilities:	'	'
Trade receivables	-2,387	-2,937
Inventories	-8,220	-4,714
Other current assets	-1,165	-413
Other assets	-409	17
Accounts payable - trade	9,565	2,445
Accrued liabilities	-618	1,570
Other long-term liabilities	-254	137
Supplemental retirement plans	227	417
Net cash provided by operating activities	3,154	1,243
INVESTING ACTIVITIES:	'	'
Purchases of investments	-1,318	-574
Proceeds from sales of investments	1,228	250
Proceeds from sale of capital assets	26	11
Capital expenditures	-25,841	-679
Net cash (used in) provided by investing activities	-25,905	-992
FINANCING ACTIVITIES:	'	'
(Repayments of) proceeds from short-term borrowings, net	11,996	'
Dividends paid	-1,106	-1,066
Proceeds from issuance of common stock	105	460
Excess tax benefit from stock-based payment arrangements	-113	46
Net cash used in financing activities	10,882	-560
Increase (decrease) in cash and cash equivalents	-11,869	-309
Cash and cash equivalents at beginning of year	22,176	10,934
Cash and cash equivalents at end of year	10,307	10,625
SUPPLEMENTAL INFORMATION CASH PAID DURING THE PERIOD FOR:	'	'
Income taxes paid (refunded)	1,510	278
Capital Expenditures Incurred but Not yet Paid	$131	$151

Summary_Of_Significant_Account

Summary Of Significant Accounting Policies	3 Months Ended
	Sep. 30, 2014
Summary Of Significant Accounting Policies [Abstract]	'
Summary Of Significant Accounting Policies	'
		1	The consolidated financial statements included herein have been prepared by Flexsteel Industries, Inc. and Subsidiaries (the “Company” or “Flexsteel”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  The information furnished in the consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of such consolidated financial statements.  Operating results for the three-month period ended September 30, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2015.  Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.  Except to the extent updated or described below, the significant accounting policies set forth in Note 1 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2014, appropriately represent, in all material respects, the current status of accounting policies and are incorporated by reference.
	DESCRIPTION OF BUSINESS – Flexsteel Industries, Inc. and Subsidiaries (the “Company”) was incorporated in 1929 and is one of the oldest and largest manufacturers, importers and marketers of residential and commercial upholstered and wooden furniture products in the United States.  Product offerings include a wide variety of upholstered and wood furniture such as sofas, loveseats, chairs, reclining and rocker-reclining chairs, swivel rockers, sofa beds, convertible bedding units, occasional tables, desks, dining tables and chairs and bedroom furniture.  The Company’s products are intended for use in home, office, hotel, healthcare and other commercial applications.  A featured component in most of the upholstered furniture is a unique steel drop-in seat spring from which our name “Flexsteel” is derived.  The Company distributes its products throughout the United States through the Company’s sales force and various independent representatives.

Inventories

Inventories	3 Months Ended
	Sep. 30, 2014
Inventories [Abstract]	'
Inventories	'
	2.   INVENTORIES
	The Company values inventory at the lower of cost or net realizable value. Raw steel is valued on the last-in, first-out (“LIFO”) method. Other inventories are valued on the first-in, first-out (“FIFO”) method. Inventories valued on the LIFO method would have been approximately $1.6 million and $1.4 million higher at September 30, 2014 and June 30, 2014, respectively, if they had been valued on the FIFO method. At September 30, 2014 and June 30, 2014 the total value of LIFO inventory was $2.8 million and $2.7 million, respectively. A comparison of inventories is as follows:
	(in thousands)	September 30,		June 30,
		2014		2014
	Raw materials	$	11,550	$	11,603
	Work in process and finished parts		5,737		5,470
	Finished goods		88,873		80,867
	Total	$	106,160	$	97,940

Fair_Value_Measurements

Fair Value Measurements	3 Months Ended
	Sep. 30, 2014
Fair Value Measurements [Abstract]	'
Fair Value Disclosures [Text Block]	'
		3	FAIR VALUE MEASUREMENTS
	The Company’s cash, accounts receivable, other current assets, accounts payable and certain accrued liabilities are carried at amounts which reasonably approximate their fair value due to their short-term nature.  Generally accepted accounting principles on fair value measurement for certain financial assets and liabilities require that each asset and liability carried at fair value be classified into one of the following categories: Level 1: Quoted market prices in active markets for identical assets and liabilities; Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data; or Level 3: Unobservable inputs that are not corroborated by market data.   The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period.
	The Company maintains supplemental retirement plans, collectively referred to as the Supplemental Plan, which provides for additional annual defined contributions toward retirement benefits to certain of the Company’s executive officers. Funds of the Supplemental Plan are held in a Rabbi Trust. The assets held in the Rabbi Trust are not available for general corporate purposes. The Rabbi Trust is subject to creditor claims in the event of insolvency, but otherwise must be used only for purposes of providing benefits under the plans. As of September 30, 2014, the Company’s Supplemental Plan assets, held in the Rabbi Trust, were invested in stock and bond funds and are recorded in the Consolidated Balance Sheets at fair market value.  As of September 30, 2014, the Supplemental Plan Assets were $3.8 million, with $0.8 million of the Supplemental Plan assets classified as “Other Current Assets” and $3.0 million as “Other Assets” in the Consolidated Balance Sheets. As of June 30, 2014, the Supplemental Plan assets were $3.8 million, with $0.7 million classified as “Other Current Assets” and $3.1 million classified as “Other Assets” in the Consolidated Balance Sheets. These assets are classified as Level 2 in accordance with fair value accounting as described above.

Credit_Arrangements

Credit Arrangements	3 Months Ended
	Sep. 30, 2014
Credit Arrangements [Abstract]	'
Credit Arrangements	'
	4.   CREDIT ARRANGEMENTS
	The Company maintains a credit agreement which provides short-term working capital financing up to $25.0 million with interest of LIBOR plus 1%  (1.1565% at September 30, 2014), including up to $4.0 million of letters of credit. Letters of credit outstanding at September 30, 2014 totaled $2.9 million.  The Company utilized $8.0 million of borrowing availability under the credit facility during the period, which is classified as “Notes Payable” in the Consolidated Balance Sheets, in addition to the aforementioned letters of credit, leaving borrowing availability of $14.1 million. The credit agreement expires June 30, 2016. At September 30, 2014, the Company was in compliance with all of the financial covenants contained in the credit agreement.
	An officer of the Company is a director at a bank where the Company maintains an additional unsecured $8.0 million line of credit, with interest at prime minus 2% (1.25% at September 30, 2014), and where its routine banking transactions are processed. The Company utilized borrowing availability during the period and $4.0 million was outstanding on the line of credit at September 30, 2014, which is classified as “Notes Payable” in the Consolidated Balance Sheets. The credit agreement expires February 13, 2015. In addition, the Supplemental Plan assets, held in a Rabbi Trust, of $3.8 million are administered by this bank's trust department. The Company receives no special services or pricing on the services performed by the bank due to the directorship of this officer.
	Fair value of the Company’s debt approximates the carrying value.

Earnings_Per_Share

Earnings Per Share	3 Months Ended
	Sep. 30, 2014
Earnings Per Share [Abstract]	'
Earnings Per Share	'
		5	EARNINGS PER SHARE
	Basic earnings per share (EPS) of common stock is based on the weighted-average number of common shares outstanding during each period. Diluted earnings per share of common stock includes the dilutive effect of potential common shares outstanding.  The Company’s potential common shares outstanding are stock options and shares associated with the long-term management incentive compensation plan. The Company calculates the dilutive effect of outstanding options using the treasury stock method.  Anti-dilutive shares are not included in the computation of diluted EPS when their exercise price is greater than the average closing market price of the common shares. The Company calculates the dilutive effect of shares related to the long-term management incentive compensation plan based on the number of shares, if any, that would be issuable if the end of the fiscal period were the end of the contingency period.
	In computing EPS for the quarters ended September 30, 2014 and 2013, net income as reported for each respective period is divided by the fully diluted weighted average number of shares outstanding:
		September 30,
	(in thousands)	2014	2013
	Basic shares	7,371	7,125
	Potential common shares:
	Stock options	283	294
	Long-term incentive plan	13	13
		296	307
	Diluted shares	7,667	7,432
	Anti-dilutive shares	-	-

Acquisition_of_Assets

Acquisition of Assets	3 Months Ended
	Sep. 30, 2014
Property, Plant and Equipment [Abstract]	'
Property, Plant And Equipment	'
	6.  ACQUISITION OF ASSETS
	On September 26, 2014, the Company completed the acquisition of a 500,000 square foot building on 26.6 acres of land in Edgerton, Kansas for $24 million, to be used as a distribution facility. The Company utilized cash of $12 million and borrowing availability of $12 million to acquire the land and building.

Litigation

Litigation	3 Months Ended
	Sep. 30, 2014
Litigation [Abstract]	'
Litigation	'
	7.  LITIGATION
	Indiana Civil Litigation – In December 2013, the Company entered into a confidential agreement to settle the Indiana Civil Litigation. The Company paid $6.3 million to Plaintiffs to settle the matter without admission of wrongdoing. The Company continues to believe that it did not cause or contribute to the contamination. This settlement was recorded as litigation settlement costs in the Consolidated Statements of Income.
	During the quarters ended September 30, 2014 and 2013, the Company recorded $0.1 million and $0.9 million, respectively, in legal and other related expenses that were incurred responding to the lawsuits and pursuing insurance coverage. These expenses are included in SG&A expense in the consolidated statements of income.
	The Company will continue to pursue the recovery of additional defense and settlement costs from insurance carriers. Based on policy language and jurisdiction, insurance coverage is in question. The Company filed an appeal to the Iowa Supreme Court regarding two adverse opinions of an Iowa District Court regarding coverage issues. The Iowa Court of Appeals reversed the District Court, ruling in favor of the Company, and the Iowa Supreme Court denied further review. The cases have now been returned to the Iowa District Court for further proceedings.
	Other Proceedings – From time to time, the Company is subject to various other legal proceedings, including lawsuits, which arise out of, and are incidental to, the conduct of the Company’s business. The Company does not consider any of such other proceedings that are currently pending, individually or in the aggregate, to be material to its business or likely to result in a material effect on its consolidated operating results, financial condition, or cash flows.

Inventories_Tables

Inventories (Tables)	3 Months Ended
	Sep. 30, 2014
Inventories [Abstract]	'
Comparison Of Inventories	'
	(in thousands)	September 30,		June 30,
		2014		2014
	Raw materials	$	11,550	$	11,603
	Work in process and finished parts		5,737		5,470
	Finished goods		88,873		80,867
	Total	$	106,160	$	97,940

Earnings_Per_Share_Tables

Earnings Per Share (Tables)	3 Months Ended
	Sep. 30, 2014
Earnings Per Share [Abstract]	'
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]	'
		September 30,
	(in thousands)	2014	2013
	Basic shares	7,371	7,125
	Potential common shares:
	Stock options	283	294
	Long-term incentive plan	13	13
		296	307
	Diluted shares	7,667	7,432
	Anti-dilutive shares	-	-

Inventories_Details

Inventories (Details) (USD $)	Sep. 30, 2014	Jun. 30, 2014
Inventories [Abstract]	'	'
Raw materials	$11,550,000	$11,603,000
Work in process and finished parts	5,737,000	5,470,000
Finished goods	88,873,000	80,867,000
Total inventories	106,160,000	97,940,000
Inventories valued on the FIFO method	1,600,000	1,400,000
Inventories valued on the LIFO method	$2,800,000	$2,700,000

Fair_Value_Measurements_Detail

Fair Value Measurements (Details) (USD $)	Sep. 30, 2014	Jun. 30, 2014
In Millions, unless otherwise specified
Deferred compensation plan assets	$3.80	$3.80
Other Current Assets [Member]	'	'
Deferred compensation plan assets	0.8	0.7
Other Assets [Member]	'	'
Deferred compensation plan assets	$3	$3.10

Credit_Arrangements_Details

Credit Arrangements (Details) (USD $)	3 Months Ended
In Millions, unless otherwise specified	Sep. 30, 2014
Credit agreement capacity	$25
Interest rate over LIBOR	1.16%
Interest rate under prime rate	1.25%
Line of Credit Facility, Amount Outstanding	8
Assets Held-in-trust	3.8
Letters Of Credit [Member]	'
Credit agreement capacity	4
Line of Credit Facility, Amount Outstanding	2.9
Line of Credit Facility, Remaining Borrowing Capacity	14.1
Unsecured [Member]	'
Credit agreement capacity	8
Line of Credit Facility, Amount Outstanding	$4

Earnings_Per_Share_Details

Earnings Per Share (Details)	3 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Earnings Per Share [Abstract]	'	'
Basic	7,371	7,125
Stock options	283	294
Long-term incentive plan	13	13
Potential common shares, total	296	307
Diluted	7,667	7,432

Acquisition_of_Assets_Details

Acquisition of Assets (Details) (USD $)	Sep. 30, 2014
In Millions, unless otherwise specified	acre
	sqft
Significant Acquisitions and Disposals [Line Items]	'
Area of Real Estate Property	500,000
Area of Land	26.6
Significant Acquisitions and Disposals, Acquisition Costs or Sale Proceeds	$24
Cash [Member]	'
Significant Acquisitions and Disposals [Line Items]	'
Significant Acquisitions and Disposals, Acquisition Costs or Sale Proceeds	12
Loans Payable [Member]	'
Significant Acquisitions and Disposals [Line Items]	'
Significant Acquisitions and Disposals, Acquisition Costs or Sale Proceeds	$12

Litigation_Details

Litigation (Details) (USD $)	3 Months Ended
In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013
Litigation [Abstract]	'	'	'
Litigation Settlement, Expense	'	$6.30	'
Legal and other related expenses	$0.10	'	$0.90