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, 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 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, 1996 7,019,507
---------
FLEXSTEEL INDUSTRIES, INC.
CONDENSED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, JUNE 30,
1996 1996
------------ ----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................... $ 3,751,064 $ 3,867,742
Temporary investments at fair value
based on quoted market price.............. 10,161,018 8,940,603
Trade receivables - Less allowance for
doubtful accounts: September 30, 1996,
$2,229,172; June 30, 1996, $2,152,810..... 26,560,972 24,464,171
Inventories................................. 25,340,868 26,082,857
Deferred income taxes....................... 2,010,000 2,010,000
Other assets................................ 442,385 732,054
---------- ----------
Total current assets........... 68,266,307 66,097,427
PROPERTY, PLANT, AND EQUIPMENT - At cost
less accumulated depreciation:
September 30, 1996, $44,968,877;
June 3O, 1996, $44,211,432.................. 24,087,865 23,046,224
OTHER ASSETS.................................. 6,755,857 6,730,513
---------- ----------
TOTAL..................... $99,110,029 $95,874,164
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade.................... $ 4,884,075 $ 3,574,232
Dividends payable........................... 842,341 850,274
Accrued liabilities......................... 13,765,984 11,662,410
Industrial revenue bonds payable............ 2,635,000 2,635,000
---------- ----------
Total current liabilities...... 22,127,400 18,721,916
---------- ----------
LONG-TERM DEBT................................ 35,000 35,000
---------- ----------
DEFERRED COMPENSATION......................... 2,974,247 2,969,847
---------- ----------
SHAREHOLDERS' EQUITY:
Common Stock - $1 par value; authorized
15,OOO,OOO shares; issued September 30,
7,019,507 shares; June 30, 7,095,044
shares.................................... 7,019,507 7,095,044
Additional paid-in capital.................. 556,632
Retained earnings........................... 66,676,375 66,266,325
Unrealized investment gain.................. 277,500 229,400
---------- ----------
Total.......................... 73,973,382 74,147,401
---------- ----------
TOTAL..................... $99,110,029 $95,874,164
========== ==========
See accompanying Notes.
- --------------------------------------------------------------------------------
FLEXSTEEL INDUSTRIES, INC.
CONDENSED STATEMENTS OF EARNINGS (UNAUDITED)
Three Months Ended
September 30,
1996 1995
---------- ----------
Net Sales.............................. $52,019,059 $49,226,728
---------- ----------
Operating Expenses:
Cost of goods sold................... 40,644,601 39,369,427
Selling, general and
administrative expenses............ 9,297,379 9,342,266
---------- ----------
Total............................ 49,941,980 48,711,693
---------- ----------
Operating Income....................... 2,077,079 515,035
---------- ----------
Interest and Other:
Income.............................. 301,370 243,619
Expense............................. 86,967 90,558
---------- ----------
Net............................. 214,403 153,061
---------- ----------
Earnings Before Income Taxes.......... 2,291,482 668,096
Provision for Income Taxes............ 830,000 240,000
---------- ----------
Net Earnings....................... $ 1,461,482 $ 428,096
========== =========
Average Number of Common
Shares Outstanding.................... 7,062,391 7,204,873
========== =========
Per Share of Common Stock:
Net Earnings.......................... $ .21 $ .06
Dividends............................. $ .12 $ .12
See accompanying Notes.
- --------------------------------------------------------------------------------
FLEXSTEEL INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOW (UNAUDITED)
Three Months Ended
September 30,
1996 1995
---------- ----------
OPERATING ACTIVITIES:
Net Income ....................................... $ 1,461,482 $ 428,096
Adjustments to reconcile net income to net
cash provided by operating activities ............ 3,543,427 1,396,679
---------- ----------
Net cash provided by operating activities ........ 5,004,909 1,824,775
---------- ----------
INVESTING ACTIVITIES:
Purchases of temporary investments ............ (1,669,198) (2,778,425)
Proceeds from sales of temporary investments .. 496,883 492,493
Additions to property, plant and equipment .... (2,265,671) (874,526)
---------- ----------
Net cash (used in) investing activities .......... (3,437,986) (3,160,458)
---------- ----------
FINANCING ACTIVITIES:
Payment of dividends .......................... (842,341) (865,290)
Proceeds from issuance of stock (4,463 shares) 48,740 199,570
Repurchase of common stock (80,000 shares) .... (890,000)
---------- ----------
Net cash (used in) financing activities .......... (1,683,601) (665,720)
---------- ----------
Increase (decrease) in cash
and cash equivalents ........................... (116,678) (2,001,403)
Cash and cash equivalents at beginning of year ... 3,867,742 5,768,537
---------- ----------
Cash and cash equivalents at end of period ....... $ 3,751,064 $ 3,767,134
========== ==========
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, 1996. 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,
1996 are not necessarily indicative of the results which may be expected
for the year ending June 3O, 1997.
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,
1996 1995
---- ----
Raw materials...................... $12,274,712 $12,936,114
Work in process and finished parts. 7,341,190 7,594,621
Finished goods..................... 5,724,966 5,552,122
---------- ----------
Total............. $25,340,868 $26,082,857
========== ==========
4. Interest paid during the three-month periods ended September 30, 1996
and 1995 was $27,000 and $33,000, respectively. Income taxes paid
during the three-month periods ended September 30, 1996 and 1995 were
$30,000 and $72,000, respectively.
5. 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 $1,104,000. Accounts receivable increased by $2,097,000
and inventories decreased by $742,000. Capital expenditures were $2,266,000 for
manufacturing and delivery equipment. Working capital decreased by $1,237,000
for the quarter. In the next nine months approximately $2,250,000 will be spent
for manufacturing and delivery equipment.
Economic Conditions - The Company anticipates that demand for its seating
products will continue at current levels for the remainder of the fiscal year,
assuming there are no significant changes on the national level in regards to
interest rates or consumer spending. Management continues to focus on product
line simplification as a means to improve quality, service, and delivery times.
Operating profits should improve as a result of product line refinements and
productivity improvements.
Results of Operations for the Quarter - Sales increased by approximately
$2,792,000, compared to the prior year quarter. Commercial Seating volume
increased $1,207,000, Recreational Vehicle product increased $1,023,000, and
Home Furnishings increased $562,000. Cost of goods sold increased $1,275,000.
Volume related cost increases were partially offset by approximately $500,000 in
production related efficiency improvements and fixed cost absorption when
compared to the prior year quarter. In addition, prior year numbers included
costs of $470,000, or $.04 per share after tax, associated with closing the
Sweetwater, TN. production facility. Selling, general, and administrative costs
decreased by $45,000, as the Company was able to absorb approximately $550,000
of volume related increases through fixed cost control and lower bad debt
provision. The aforementioned changes resulted in an increase in net income
after taxes of $1,033,000, or $.15 per share, compared to the quarter ended
September 30, 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: October 25 1996 By: /s/ R. J. Klosterman
--------------------
R. J. Klosterman,
Financial Vice President &
Principal Financial Officer