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 September 30, 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 September 30, 1995 7,210,748
FLEXSTEEL INDUSTRIES, INC.
CONDENSED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, JUNE 3O,
1995 1995
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................... $ 3,767,134 $ 5,768,537
Temporary investments at fair value
based on quoted market price.............. 10,554,547 8,268,615
Trade receivables - Less allowance for
doubtful accounts: September 30, 1995,
$1,738,438; June 3O, 1995, $2,160,211..... 27,351,312 22,905,047
Inventories................................. 24,310,414 25,921,674
Deferred income taxes....................... 2,000,000 2,000,000
Other assets................................ 432,994 844,557
Total current assets........... 68,416,401 65,708,430
PROPERTY, PLANT, AND EQUIPMENT - At cost
less accumulated depreciation:
September 30, 1995, $42,510,441;
June 3O, 1995, $41,623,972.................. 24,087,658 24,376,052
OTHER ASSETS.................................. 6,297,490 6,186,144
TOTAL..................... $98,801,549 $96,270,626
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade.................... $ 5,906,178 $ 4,756,991
Dividends payable........................... 865,290 863,175
Accrued liabilities......................... 12,376,595 10,856,550
Industrial revenue bonds payable............ 2,960,000 2,960,000
Total current liabilities...... 22,108,063 19,436,716
LONG-TERM DEBT................................ 70,000 70,000
DEFERRED COMPENSATION......................... 2,934,529 2,940,329
SHAREHOLDERS' EQUITY:
Common Stock - $1 par value; authorized
15,OOO,OOO shares; issued September 30,
7,210,748 shares; June 30, 7,193,124
shares.................................... 7,210,748 7,193,124
Additional paid-in capital.................. 1,568,700 1,386,754
Retained earnings........................... 64,762,509 65,199,703
Unrealized investment gain.................. 147,000 44,000
Total.......................... 73,688,957 73,823,581
TOTAL..................... $98,801,549 $96,270,626
See accompanying Notes.
FLEXSTEEL INDUSTRIES, INC.
CONDENSED STATEMENTS OF EARNINGS (UNAUDITED)
Three Months Ended
September 30,
1995 1994
Net Sales.............................. $49,226,728 $50,811,739
Operating Expenses:
Cost of goods sold................... 39,369,427 39,336,663
Selling, general and
administrative expenses............ 9,342,266 9,152,160
Total............................ 48,711,693 48,488,823
Operating Income....................... 515,035 2,322,916
Interest and Other:
Income.............................. 243,619 246,726
Expense............................. 90,558 87,801
Net............................. 153,061 158,925
Earnings Before Income Taxes.......... 668,096 2,481,841
Provision for Income Taxes............ 240,000 885,000
Net Earnings....................... $ 428,096 $ 1,596,841
Average Number of Common
Shares Outstanding.................... 7,204,873 7,158,251
Per Share of Common Stock:
Net Earnings.......................... $ .06 $ .22
Dividends............................. $ .12 $ .12
See accompanying Notes.
FLEXSTEEL INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOW (UNAUDITED)
Three Months Ended
September 30,
1995 1994
OPERATING ACTIVITIES:
Net Income........................................ $ 428,096 $ 1,596,841
Adjustments to reconcile net income to net
cash provided by operating activities............. 1,396,679 1,199,795
Net cash provided by operating activities......... 1,824,775 2,796,636
INVESTING ACTIVITIES:
Purchases of temporary investments............. (2,778,425) (1,957,241)
Proceeds from sales of temporary investments... 492,493 1,989,067
Additions to property, plant and equipment..... (874,526) (2,586,219)
Construction funds held in escrow.............. 450,605
Net cash (used in) investing activities........... (3,160,458) (2,103,788)
FINANCING ACTIVITIES:
Payment of dividends........................... (865,290) (858,601)
Proceeds from issuance of stock................ 199,570 225,111
Net cash (used in) financing activities........... (665,720) (633,490)
Increase (decrease) in cash
and cash equivalents............................ (2,001,403) 59,358
Cash and cash equivalents at beginning of year.... 5,768,537 3,385,573
Cash and cash equivalents at end of period........ $3,767,134 $3,444,931
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, 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 three-month period ended September 30, 1995
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:
September 30, June 3O,
1995 1995
Raw materials...................... $12,220,261 $14,186,359
Work in process and finished parts. 7,399,797 7,546,079
Finished goods..................... 4,690,356 4,189,236
Total............. $24,310,414 $25,921,674
4. Interest paid during the three-month periods ended September 30, 1995 and
1994 was $33,000 and $30,100, respectively. Income taxes paid during the
three-month periods ended September 30, 1995 and 1994 were $72,000 and
$106,500, 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 September 30, 1995 totaled $2,586,541 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. During the quarter ending 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 quarter ended September 30, 1995.
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 $285,000. Accounts receivable increased by $4,446,000
and inventories decreased by $1,611,000. Capital expenditures were $875,000 for
plant improvements, manufacturing, and delivery equipment. Working capital
increased by $37,000 for the quarter. In the next nine months approximately
$1,600,000 will be spent for manufacturing and delivery equipment.
Economic Conditions - The Company anticipates that demand for its seating
products will improve gradually, from current levels, throughout the second half
of the fiscal year. The Company is continually reviewing all areas of product
cost to identify and implement cost savings, which in conjunction with
previously implemented price increases, investments in computerized
manufacturing equipment, plant layout improvements, and production
consolidation, will help offset cost increases for materials and assist in
maintaining margins in a very price-competitive marketplace. Profitability
improvements should result from improved manufacturing efficiencies and
continued efforts to control, and reduce, costs while maintaining sales volume
and margins.
Results of Operations for the Quarter - Sales decreased by approximately
$1,585,000, compared to the prior year quarter. Recreational Vehicle product
sales volume decreased $2,070,000 while Home Furnishings increased $505,000.
Cost of goods sold increased $33,000 despite the sales volume decrease due to
costs of approximately $470,000, or $.04 per share after tax, associated with
closing the Sweetwater, TN, facility, and lower margins caused by higher
material costs. Selling, general, and administrative costs increased
approximately $190,000, reflecting modest increases in fixed costs. The
aforementioned changes resulted in a decrease in net income after taxes of
$1,167,000, or $.16 per share, compared to the quarter ended September 30, 1994.
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: October 27, 1995 By: /s/ R. J. Klosterman
R. J. Klosterman,
Financial Vice President &
Principal Financial Officer