FORM 10-K
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended June 30, 2001
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-5151
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FLEXSTEEL INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 42-0442319
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. BOX 877, DUBUQUE, IOWA 52004-0877
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (319) 556-7730
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
NASDAQ
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $1.00 PAR VALUE
(Title of Class)
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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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant as of August 10, 2001 which is within 60 days
prior to the date of filing:
Common Stock, Par Value $1.00 Per Share: $32,046,000
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of August 10, 2001:
CLASS SHARES OUTSTANDING
---------------------------------- ----------------------
Common Stock, $ 1.00 Par Value Shares 6,070,159
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF REGISTRANT'S ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR
ENDING JUNE 30, 2001 IN PARTS I, II, AND IV. IN PART III, PORTIONS OF THE
REGISTRANT'S 2001 PROXY STATEMENT, TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION WITHIN 120 DAYS OF THE REGISTRANT'S FISCAL YEAR END.
Exhibit Index -- page 6
PART I
ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
The registrant was incorporated in 1929 and has been in the furniture
seating business ever since. For more detailed information see the registrant's
Annual Report for the Fiscal Year Ended June 30, 2001 which is incorporated
herein by reference.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The registrant's significant operating segment is the manufacture of
upholstered seating. The second segment is the operation of five retail
furniture stores. For more detailed financial information see the registrant's
Annual Report for the Fiscal Year Ended June 30, 2001 which is incorporated
herein by reference.
The registrant's upholstered seating business has three primary areas of
application -- residential seating, recreational vehicle seating and commercial
seating. Set forth below, in tabular form, is information for the past three
fiscal years showing the registrant's sales of upholstered seating attributable
to each of the areas of application described above:
SALES FOR UPHOLSTERED SEATING APPLICATIONS
2001 2000 1999
------------ ------------ ------------
AMOUNT OF AMOUNT OF AMOUNT OF
SALES SALES SALES
------------ ------------ ------------
Residential Seating ............ $199,900,000 $185,100,000 $160,700,000
Recreational Vehicle Seating ... 66,400,000 94,500,000 88,000,000
Commercial Seating ............. 18,500,000 20,500,000 23,400,000
------------ ------------ ------------
Upholstered Seating Total ...... $284,800,000 $300,100,000 $272,100,000
============ ============ ============
(c) NARRATIVE DESCRIPTION OF BUSINESS
(1) (i), (ii), (vii) The registrant's primary business is the design,
manufacture and sale of a broad line of quality upholstered furniture for
residential, commercial, and recreational vehicle seating use. The registrant's
classes of products include a variety of wood and upholstered furniture
including upholstered sofas, loveseats, chairs, reclining and rocker-reclining
chairs, swivel rockers, sofa beds and convertible bedding units, some of which
are for the home, office, motorhome, travel trailer, vans, health care and
hotels. Featured as a basic component in most of the upholstered furniture is a
unique drop-in-seat spring. The registrant primarily distributes its products
throughout most of the United States through the registrant's sales force to
approximately 3,000 furniture dealers (including five Company owned stores),
department stores, recreational vehicle manufacturers and van converters, and
hospitality and healthcare facilities. The registrant's products are also sold
to several national chains, some of which sell on a private label basis.
(iii) Sources and availability of raw materials essential to the
business:
The registrant's furniture products utilize various species of hardwood
lumber obtained from Arkansas, Mississippi, Missouri and elsewhere. In addition
to hardwood lumber and engineered wood products, principal raw materials
utilized in the manufacturing process include bar and wire stock, high carbon
spring steel, fabrics, leather and polyurethane. While the registrant purchases
these materials from outside suppliers, it is not dependent upon any single
source of supply. The raw materials are all readily available.
2
(iv) Material patents and licenses:
The registrant owns the American and Canadian improvement patents to its
Flexsteel seat spring, as well as, patents on convertible beds and various other
recreational vehicle seating products. In addition, it holds licenses to
manufacture certain rocker-recliners. The registrant does not consider its
patents and licenses material to its business.
(v) The registrant's business is not considered seasonal.
(viii) The approximate dollar amounts of backlog of orders believed to be
firm as of the end of the last fiscal year and the proceeding two fiscal years
are as follows:
JUNE 30, 2001 JUNE 30, 2000 JUNE 30, 1999
--------------------- --------------------- ---------------------
$25,500,000 * $30,600,000 $28,100,000
*All of this amount is expected to be filled in fiscal year ending June 30,
2002.
(ix) Competitive conditions:
The furniture industry is highly competitive. There are numerous
furniture manufactures in the United States. Although the registrant is one of
the largest manufacturers of upholstered furniture in the United States,
according to the registrant's best information it manufactures and sells less
than 4% of the upholstered furniture sold in the United States. The registrant's
principal method of meeting competition is by emphasizing its product
performance and to use its sales force.
(x) Expenditures on Research Activities:
Most items in the upholstered seating line are designed by the
registrant's own design staff. New models and designs of furniture, as well as
new fabrics, are introduced continuously. The registrant estimates that
approximately 40% of its upholstered seating line are redesigned in whole or in
part each year. In the last three fiscal years, these redesign activities
involved the following expenditures:
FISCAL YEAR ENDING EXPENDITURES
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June 30, 2001 $2,090,000
June 30, 2000 $2,170,000
June 30, 1999 $1,930,000
(xi) Approximately 2,400 people were employed by the registrant as of
June 30, 2001; additionally 2,600 people were employed as of June 30, 2000 and
2,400 people as of June 30, 1999.
(d) FINANCIAL INFORMATION ABOUT DOMESTIC OPERATIONS
Financial information about domestic operations is set forth in the
registrant's Annual Report for the Fiscal Year Ended June 30, 2001 which is
incorporated herein by reference. The registrant has no foreign operations and
makes minimal export sales.
3
ITEM 2. PROPERTIES
(a) THE REGISTRANT OWNS THE FOLLOWING MANUFACTURING PLANTS:
APPROXIMATE
LOCATION SIZE (SQUARE FEET) PRINCIPAL OPERATIONS
------------------------ -------------------- --------------------------------------------
Dubuque, Iowa 853,000 Upholstered Furniture- Recreational Vehicle
- Metal Working
Lancaster, Pennsylvania 216,000 Upholstered Furniture - Recreational Vehicle
Riverside, California 236,000 Upholstered Furniture - Recreational Vehicle
Harrison, Arkansas 123,000 Woodworking Plant
New Paris, Indiana 168,000 Recreational Vehicle - Metal Working
Dublin, Georgia 242,400 Upholstered Furniture - Recreational Vehicle
Starkville, Mississippi 349,000 Upholstered Furniture- Woodworking Plant
Elkhart, Indiana 99,500 Recreational Vehicle - Metal Working
The registrant's operating plants are well suited for their manufacturing
purposes and have been updated and expanded from time to time as conditions
warrant. There is adequate production capacity to meet present market demands.
The registrant leases one production facility in Harrison, Arkansas of
approximately 93,000 sq. feet for upholstered furniture.
The registrant leases showrooms for displaying its products in the
furniture marts in High Point, North Carolina and San Francisco, California.
The registrant leases one warehouse in Vancouver, Washington of
approximately 15,750 sq. feet for storing its products prior to distribution.
(b) OIL AND GAS OPERATIONS: NONE.
ITEM 3. LEGAL PROCEEDINGS
The Company has no material legal proceedings pending. All pending
litigation is ordinary routine litigation incidental to the business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter no matter was submitted to a vote of security
holders.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the registrant, their ages, positions (in each
case as of June 30, 2001), and the month and year they were first elected or
appointed an officer of the registrant, are as follows:
NAME (AGE) POSITION (DATE FIRST BECAME OFFICER)
------------------------- ------------------------------------------------------------------------
K. B. Lauritsen (58) President / Chief Executive Officer (November 1979)
E. J. Monaghan (62) Executive Vice President / Chief Operating Officer (November 1979)
R. J. Klosterman (53) Vice President Finance / Chief Financial Officer & Secretary (June 1989)
J. R. Richardson (57) Senior Vice President of Marketing (November 1979)
T. D. Burkart (58) Senior Vice President of Vehicle Seating (February 1984)
P. M. Crahan (53) Vice President (June 1989)
J. T. Bertsch (46) Vice President (June 1989)
Each named executive officer has held the same office of an executive or
management position with the registrant for at least five years.
4
Cautionary Statement Relevant to Forward-Looking Information for the Purpose of
"Safe Harbor" Provisions and Private Securities Litigation Reform Act of 1995
The Company and its representatives may from time to time make written or
oral forward-looking statements with respect to long-term goals of the Company,
including statements contained in the Company's filings with the Securities and
Exchange Commission and in its reports to shareholders.
Statements, including those in this report, which are not historical or
current facts are "forward-looking statements" made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. There are
certain important factors that could cause results to differ materially from
those anticipated by some of the statements made herein. Investors are cautioned
that all forward-looking statements involve risk and uncertainty. Some of the
factors that could affect results are the effectiveness of new product
introductions, the product mix of our sales, the cost of raw materials, the
amount of sales generated and the profit margins thereon, credit risk from
customers or volatility in the major markets, competition and general economic
conditions.
The Company specifically declines to undertake any obligation to publicly
revise any forward-looking statements that have been made to reflect events or
circumstances after the date of such statements or to reflect the occurrence of
anticipated or unanticipated events.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
The NASDAQ -- National Market System is the principal market on which the
registrant's Common Stock is being traded. The market prices for the stock and
the dividends paid per common share, for each quarterly period during the past
two years is shown in the registrant's Annual Report for the Fiscal Year Ended
June 30, 2001, and is incorporated herein by reference.
There were approximately 1,800 holders of Common Stock of the registrant
as of June 30, 2001; as well as 2,600 and 2,700 holders of Common Stock of the
registrant as of June 30, 2000, and June 30, 1999, respectively.
ITEM 6. SELECTED FINANCIAL DATA
This information is contained on page 6 in the registrant's Annual Report
for the Fiscal Year Ended June 30, 2001, under the caption "Five Year Review"
and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's discussion and analysis is contained on page 15 and page 16
in the registrant's Annual Report for the Fiscal Year Ended June 30, 2001 and is
incorporated herein by reference.
ITEM 7a. QUANTITATIVE INFORMATION ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of the Company included in the
financial report section of the Annual Report for the Fiscal Year Ended June 30,
2001, are incorporated herein by reference:
PAGE(S)
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Consolidated Balance Sheets, June 30, 2001, 2000........................................................ 8
Consolidated Statements of Income and Comprehensive Income -Years Ended June 30, 2001, 2000, 1999....... 9
Consolidated Statements of Changes in Shareholders' Equity - Years ended June 30, 2001, 2000, 1999...... 10
Consolidated Statements of Cash Flows - Years Ended June 30, 2001, 2000, 1999........................... 11
Quarterly Financial Data -- Years Ended June 30, 2001, 2000............................................. 14
Notes to Consolidated Financial Statements.............................................................. 12 - 14
Independent Auditors' Report............................................................................ 7
5
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
During fiscal 2001 there were no changes in or disagreements with
accountants on accounting procedures or accounting and financial disclosures.
PART III
ITEMS 10, 11, 12. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT, EXECUTIVE
COMPENSATION AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The information identifying directors of the registrant, executive
compensation and beneficial ownership of registrant stock and supplementary data
is contained in the registrant's fiscal 2001 definitive Proxy Statement to be
filed with the Securities and Exchange Commission and is incorporated herein by
reference. Executive officers are identified in Part I, item 4 above.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is contained under the heading "Certain Relationships
and Related Transactions" in the registrant's fiscal 2001 definitive Proxy
Statement to be filed with the Securities and Exchange Commission and is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
The financial statements of the registrant included in the Annual Report
for the Fiscal Year Ended June 30, 2001, are incorporated herein by reference as
set forth above in Item 8.
(2) Schedules
The following financial schedules for the years ended 2001, 2000 and 1999
are submitted herewith:
PAGE
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Schedule VIII -- Reserves 9
Other schedules are omitted because they are not required or are not
applicable or because the required information is included in the financial
statements incorporated by reference above.
(3) Exhibit No.
3.1 Restated Article of Incorporation by reference to Exhibits to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
June 30, 1988.
3.2 Bylaws of the Registrant incorporated by reference to Exhibits to
the Annual Report on Form 10-K for the fiscal year ended June 30,
1994.
4 Instruments defining the rights of security holders, including
indentures. The issuer has not filed, but agrees to furnish upon
request to the Commission copies of the Mississippi Industrial
Development Revenue Bond Agreement issued regarding the issuer's
facilities in Starkville, MS.
10.1 1989 Stock Option Plan, as amended, incorporated by reference from
the 1992 Flexsteel definitive proxy statement.*
10.2 1995 Stock Option Plan incorporated by reference from the 1995
Flexsteel definitive proxy statement.*
10.3 Management Incentive Plan incorporated by reference from the 1980
Flexsteel definitive proxy statement - commission file #0-5151.*
10.4 1999 Stock Option Plan incorporated by reference from the 1999
Flexsteel definitive proxy statement.*
6
10.5 Flexsteel Industries, Inc. Voluntary Deferred Compensation Plan. *
10.6 Flexsteel Industries, Inc. Restoration Retirement Plan. *
10.7 Flexsteel Industries, Inc. Senior Officer Supplemental Retirement
Plan.*
13 Annual Report for the Fiscal Year Ended June 30, 2001.
22 2001 definitive Proxy Statement incorporated by reference is to be
filed with the Securities Exchange Commission on or before
December 1, 2001.
23.1 Independent Auditors' Report.
23.2 Consent of Independent Auditors.
99 2001 Form 11-K for Salaried Employee's Savings Plan 401(k).
*Management contracts and arrangements required to be filed
pursuant to Item 14(c) of this report.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the last quarter of the fiscal
year ended June 30, 2001.
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: September 21, 2001 FLEXSTEEL INDUSTRIES, INC.
-------------------------
By: /S/ K. B. LAURITSEN
-------------------------------------
K. B. LAURITSEN
PRESIDENT, CHIEF EXECUTIVE OFFICER
and
PRINCIPAL EXECUTIVE OFFICER
By: /S/ R. J. KLOSTERMAN
-------------------------------------
R. J. KLOSTERMAN
VICE PRESIDENT OF FINANCE
and
PRINCIPAL FINANCIAL OFFICER
7
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: September 21, 2001 /S/ K. BRUCE LAURITSEN
---------------------------- ------------------------------------------
K. Bruce Lauritsen
DIRECTOR
Date: September 21, 2001 /S/ EDWARD J. MONAGHAN
---------------------------- ------------------------------------------
Edward J. Monaghan
DIRECTOR
Date: September 21, 2001 /S/ JAMES R. RICHARDSON
---------------------------- ------------------------------------------
James R. Richardson
DIRECTOR
Date: September 21, 2001 /S/ JEFFREY T. BERTSCH
---------------------------- ------------------------------------------
Jeffrey T. Bertsch
DIRECTOR
Date: September 21, 2001 /S/ L. BRUCE BOYLEN
---------------------------- ------------------------------------------
L. Bruce Boylen
DIRECTOR
Date: September 21, 2001 /S/ PATRICK M. CRAHAN
---------------------------- ------------------------------------------
Patrick M. Crahan
DIRECTOR
Date: September 21, 2001 /S/ LYNN J. DAVIS
---------------------------- ------------------------------------------
Lynn J. Davis
DIRECTOR
Date: September 21, 2001 /S/ THOMAS E. HOLLORAN
---------------------------- ------------------------------------------
Thomas E. Holloran
DIRECTOR
Date: September 21, 2001 /S/ MARVIN M. STERN
---------------------------- ------------------------------------------
Marvin M. Stern
DIRECTOR
8
SCHEDULE VIII
FLEXSTEEL INDUSTRIES, INC.
RESERVES
FOR THE YEARS ENDED JUNE 30, 2001, 2000 AND 1999
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------------------------------------------- ------------ ------------ ------------ -------------
DEDUCTIONS
BALANCE AT ADDITIONS FROM BALANCE AT
BEGINNING OF CHARGED TO RESERVES CLOSE OF YEAR
DESCRIPTION YEAR INCOME (NOTE)
-------------------------------------------- ------------ ------------ ------------ -------------
Allowance for Doubtful Accounts:
2001 ....................................... $ 2,250,000 $ 4,178,000 ($ 4,478,000) $ 1,950,000
============ ============ ============ ============
2000 ....................................... $ 2,503,000 $ 187,000 ($ 440,000) $ 2,250,000
============ ============ ============ ============
1999 ....................................... $ 2,198,000 $ 544,000 ($ 239,000) $ 2,503,000
============ ============ ============ ============
--------------------
NOTE -- UNCOLLECTIBLE ACCOUNTS CHARGED AGAINST RESERVE, LESS RECOVERIES.
9
EXHITIB 10.5
FLEXSTEEL INDUSTRIES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
This Agreement is made this ______ day of _________, 20__, by and
between FLEXSTEEL INDUSTRIES, INC., a Minnesota corporation (hereinafter the
"Corporation") and _____________________________________________________________
(hereinafter collectively "Employees" and individually as "Employee").
WHEREAS, the above named Employees are all Executive Officers of the
Corporation as appointed by the Board of Directors of the Corporation; and
WHEREAS, the Corporation desires to allow Employees to defer a portion
of their annual salary, bonus or management incentive to a future period;
In consideration of the Agreements hereinafter contained, the parties
hereto agree as follows:
1. Plan Year and Fiscal Year. The "Plan Year" shall be a calendar year.
The "Fiscal Year" shall be July 1 to June 30 of each year.
2. Salary, Bonuses and Management Incentive. The Corporation shall pay
the Employee from time to time during the term of his employment hereunder, such
salary, bonus and management incentive as the Board of Directors may determine
from time to time.
3. Voluntary Deferral of Salary and Bonus.
A. Salary Deferral. Each Employee shall have the right to elect
to defer not less than 10 percent nor more than 30 percent of
his salary ("Deferral Salary Percentage") each year provided
an election is made by the Employee by December 20 of the year
preceding the Plan Year. The Corporation will provide Employee
with an appropriate form on which to make the deferral
election (see Exhibit A attached). The Deferral Salary
Percentage will be withheld from each salary check received by
the Employee. The Deferral Salary Percentage shall be invested
in accordance with paragraph 6 herein.
B. Bonus Deferral. Each Employee will have the right to elect to
defer not less than 10 percent and no more than 100 percent of
his annual cash bonus (Deferral Bonus Percentage), if any,
which maybe declared and subsequently paid within seventy five
(75) days after the end of each fiscal year by designating the
percentage on or before
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June 20th of the year preceding the Plan Year on a form
provided by the Corporation (see Exhibit B attached). The
Deferral Bonus Percentage will be withheld from bonus checks
received by the Employee. The Deferral Bonus Percentage shall
be invested in accordance with paragraph 6 herein.
C. Management Incentive Award (AWARD). Each Employee will have
the right to elect to defer not less than one year nor more
than three years of his Award, if any, which may be declared
and subsequently paid within seventy five (75) days after the
end of each fiscal year by designating the amount of deferral
on or before June 20th each year preceding the Plan Year on a
form provided by the Corporation (See Exhibit C attached). The
Award to be received in Corporation Stock is held by the
Corporation in a separate account for the Employee (See
Paragraph 5 below). The shares shall be subject to the same
restrictions as any shares awarded under the Management
Incentive Plan. Dividends paid on deferred shares will be
deferred and credited to the Employee's separate account.
Dividends shall be invested in accordance with paragraph 6
herein.
D. Payment. To the extent the Employee elects to defer salary or
bonus, or management incentive his salary and bonus checks and
management incentive stock shall be reduced accordingly.
4. Vesting. Subject to the Award vesting provisions of paragraph 3.C.,
all amounts deferred shall be fully vested in the Employee deferring either
salary, bonus, or management incentive.
5. Accounting. The Corporation shall keep a separate "Account" for each
Employee's salary, bonus and management incentive deferrals. The accounting
shall include the date of deferral, amount of each deferral and the number of
corporate shares deferred. The Corporation shall credit to the book reserve (the
"Deferred Compensation Account") established for this purpose, the deferral of
each Employee's Account as each deferral occurs. A statement shall be provided
to each Employee at the end of each Plan Year.
6. Investment of Deferred Compensation Account. The Employee shall have
the right to select prior to December 20 of each Plan Year on the following
investment options:
A. Prime interest rate effective on the first day of the Plan
Year; or
B. S & P 500 Index, annual return at the end of each Plan Year;
or
C. A percentage of their account under Option A and a percentage
under Option B.
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Each Employee's Account shall be credited annually with the earnings
based on the average monthly account balance for the Plan Year multiplied by the
investment option selected by the Employee. The Employee shall select his
election option on or before December 20 preceding each Plan Year (See Exhibit D
attached). If the Employee fails to make an investment election for any
particular Plan Year, the prior election selected by the Employee shall be used.
If the Employee has no investment election of record, then investment election A
above shall apply.
7. Payment of Deferred Compensation Account. Each Employee's Account
will be paid to him upon the earliest of the Employee's death, disability, age
65, or retirement (as defined in the Corporation's Employees Retirement Salaried
Plan).
The method of payment for each Employee's Account will be paid in
accordance with the election form signed by the Employee (see Exhibit E
attached). Additionally, the Employee shall have the right to designate a
beneficiary to receive the remaining proceeds (see Exhibit F attached), if the
Employee should die prior to receiving all of his payments. If an Employee fails
to execute a beneficiary designation or if there is no beneficiary alive at the
time of distribution, then the proceeds due Employee will be paid to the
Employee's estate. The beneficiary designation may be changed at any time during
Employee's lifetime as long as the Employee is competent or by the Employee's
attorney-in-fact who is specifically authorized to make the change.
8. Disability. For purposes of this Agreement, an Employee shall be
deemed to be disabled if the Board of Directors of the Corporation shall find on
the basis of medical evidence satisfactory to the Board of Directors that the
Employee is totally disabled, mentally or physically, so as to prevent him from
engaging in his customary employment by the Corporation and that such disability
will be permanent and continuous during the remainder of his life.
9. Board of Directors Right to Modify Payout. Notwithstanding anything
herein to the contrary, the Board of Directors of Corporation shall have the
right in its sole discretion to vary the manner and time of making any payment
to an Employee provided for in this Agreement, provided such distribution is
paid over a shorter period than that designated in any election made by the
Employee.
10. Employee Treated as Unsecured Creditor. Nothing contained in this
Agreement and no action taken pursuant to the provisions of this Agreement shall
create or be construed to create a trust of any kind, or a fiduciary
relationship between the Corporation and the Employee, or his designated
beneficiary or any other person. Any funds which may be invested under the
provisions of this Agreement shall continue for all purposes to be part of the
general funds of the Corporation and no person other than the Corporation shall
by virtue of the provisions of this Agreement have any interest in such funds.
To the extent that any person acquires a right to receive payments from the
Corporation under this Agreement, such rights shall be no greater than the
rights of any unsecured general creditor of the Corporation. All deferred
amounts shall be deemed unsecured and unfunded.
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11. Assignability. The right of any Employee or any other person to the
payment of deferred compensation or other benefits under this Agreement shall
not be assigned, transferred, pledged or encumbered except by will or by the
laws of descent and distributions.
12. Competency. If the Corporation shall find that any person to whom
any payment is payable under this Agreement is unable to care for his affairs
because of illness or accident, or is a minor, any payment due (unless a prior
claim therefore shall have been made by a duly appointed conservator, or other
legal representative) may be made to the spouse, a child, a parent, or a brother
or sister, or to any such person deemed by the Board of Directors of the
Corporation to have incurred expense for such person otherwise entitled to
payment, in such manner and proportions as the Board of Directors of the
Corporation may determine. Any such payment shall be a complete discharge of the
liability of the Corporation under this Agreement.
13. Employment Rights. Nothing contained herein shall be construed as
conferring upon the Employee the right to continue in the employ of the
Corporation as an Executive or in any other capacity.
14. Interpretation and Construction. The Board of Directors of the
Corporation shall have full power and authority to interpret, construe, and
administer this Agreement and the Board of Directors interpretation and
construction thereof, and actions thereunder, including any valuation of the
Deferred Compensation Account, or the amount or recipient of the payment to be
made therefrom, shall be binding and conclusive on all persons for all purposes.
No member of the Board of Directors shall be liable to any person for any action
taken or omitted in connection with the interpretation and administration of
this Agreement unless attributable to his own willful misconduct or lack of good
faith.
15. Amendments. Corporation shall have the right to amend this
Agreement without Employees' approval for the purpose of including additional
employees under this Agreement or to comply with tax laws to insure that all
amounts deferred are deferred for tax purposes. Any other amendment may only be
made with the consent of all of the parties.
16. Employee Who is a Member of Board of Directors. If an Employee to
this Agreement is a member of the Board of Directors of the Corporation, that
Employee agrees by signing this Agreement not to partake in any decisions under
paragraphs 8, 9, 12, 14, 15, and 19 which affect his own Deferred Compensation
Account or any matters relating thereto.
17. State Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Iowa.
18. Binding Effect. This Agreement shall be binding upon and in inure
to the benefit of the Corporation and its successors and assigns, and the
Employee, his successors, assigns, heirs, executors, administrators and
beneficiaries.
19. Right to Terminate Agreement. The Board of Directors of the
Corporation shall have the right to terminate this Agreement at the end of any
calendar year, provided it gives at least thirty
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(30) day notice to the Employees of the termination of the Agreement. If the
Agreement is terminated, any sums previously paid in will be subject to the
Agreement, but the Employee shall not be entitled to defer any additional
salary, bonus or management incentive under this Agreement.
20. Counterparts. This Agreement may be signed in Counterparts by the
parties hereto.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officers and the Employees have hereunto set his
hand on the date set opposite their signature.
FLEXSTEEL INDUSTRIES, INC.
By: ____________________________________
K. Bruce Lauritsen, President
Date: __________________________________
By: ____________________________________
Ronald J. Klosterman, Secretary
Date: __________________________________
By: ____________________________________
__________________, Employee
Date: __________________________________
By: ____________________________________
__________________, Employee
Date: __________________________________
By: ____________________________________
__________________, Employee
Date: __________________________________
-5-
EXHIBIT A
FLEXSTEEL INDUSTRIES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
ANNUAL ELECTIVE SALARY DEFERRAL
Under the Voluntary Deferred Compensation Plan Agreement with Flexsteel
Industries, Inc., I _______________________, elect to defer _____% of my Salary
earned for calendar year ________.
Signature ________________________
Title ________________________
Date ________________________
-6-
EXHIBIT B
FLEXSTEEL INDUSTRIES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
ANNUAL ELECTIVE CASH BONUS AWARD DEFERRAL
Under the Voluntary Deferred Compensation Plan Agreement with Flexsteel
Industries, Inc., I _______________________, elect to defer _____% of my Annual
Cash Bonus Award earned for fiscal year ________.
Signature ________________________
Title ________________________
Date ________________________
-7-
EXHIBIT C
FLEXSTEEL INDUSTRIES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
ANNUAL ELECTIVE MANAGEMENT INCENTIVE STOCK AWARD DEFERRAL
Under the Voluntary Deferred Compensation Plan Agreement with Flexsteel
Industries, Inc., I _______________________, elect to defer _____% of my
Management Incentive Award of Flexsteel Common Stock earned for fiscal year
________.
Signature ________________________
Title ________________________
Date ________________________
-8-
EXHIBIT D
FLEXSTEEL INDUSTRIES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
EMPLOYEE'S ELECTION OF INVESTMENT OPTIONS
Under the Voluntary Deferred Compensation Plan Agreement with Flexsteel
Industries, Inc., I _______________________, elect to have my Deferred
Compensation Account credited in accordance with the following investment
option:
[ ] A. Prime rate effective on the first day of the Plan
Year
[ ] B. S & P Index, annual return at the end of each Plan
Year
[ ] C. ____% credited in accordance with Option A above;
____% credited in accordance with Option B above
(percentages must add up to 100%)
Signature ________________________
Title ________________________
Date ________________________
-9-
EXHIBIT E
FLEXSTEEL INDUSTRIES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
EMPLOYEE'S ELECTION OF METHOD OF PAYMENT
Under the Voluntary Deferred Compensation Plan Agreement with Flexsteel
Industries, Inc., I _______________________, elect to receive my Deferred
Compensation Account as follows (check one of the boxes below):
[ ] A. In a lump sum within thirty (30) days of the event
requiring payment.
[ ] B. In approximate equal annual amounts over a five (5)
year period with the first payment due within thirty
(30) days after the event requiring payment.
[ ] C. In approximate equal annual amounts over a ten (10)
year period with the first payment due within thirty
(30) days after the event requiring payment.
[ ] D. In approximate equal semi-annual amounts over a five
(5) year period with the first payment due within
thirty (30) days after the event requiring payment.
[ ] E. In approximate equal semi-annual amounts over a ten
(10) year period with the first payment due within
thirty (30) days after the event requiring payment.
Notwithstanding the above, I acknowledge that the Corporation has the
authority to accelerate the payments pursuant to paragraph ______ of the
Deferred Compensation Plan.
Signature ________________________
Title ________________________
Date ________________________
-10-
EXHIBIT F
FLEXSTEEL INDUSTRIES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION OF EMPLOYEE
Under the Voluntary Deferred Compensation Plan Agreement with Flexsteel
Industries, Inc., I _______________________, hereby designate the following as
beneficiary of any portion of my Deferred Compensation Account which has not
been paid prior to my death:
A. Primary Beneficiary: ________________________________
B. Contingent Beneficiary: ________________________________
Signature ________________________
Title ________________________
Date ________________________
-11-
EXHIBIT 10.6
FLEXSTEEL INDUSTRIES, INC.
RESTORATION RETIREMENT PLAN
This Agreement is made this ____ day of ______________, 20___, by and
between FLEXSTEEL INDUSTRIES, INC., a Minnesota corporation (hereinafter the
"Corporation") and ____________________________________________________________
(hereinafter collectively "Employees" and individually as "Employee").
WHEREAS, the above named Employees are all Executive Officers of the
Corporation as appointed by the Board of Directors of the Corporation; and
WHEREAS, the Corporation desires to contribute to the future retirement
benefits of the Employees in addition to those contributions made under the
Flexsteel Industries, Inc. Salaried Employees Retirement Plan.
In consideration of the Agreements hereinafter contained, the parties
hereto agree as follows:
1. Plan Year and Fiscal Year. The "Plan Year" shall be a calendar year.
The "Fiscal Year" shall be July 1 to June 30 of each year.
2. Salary, Bonuses and Management Incentive. Beginning in the year
2001, and until the Employee reaches the age of 65, the Company shall make an
annual contribution by the 15th day of January of each year equal to seven
percent (7%) of the total of the following: the sum of the Employee's base
salary plus Annual Cash Bonus Award for the previous calendar year (including
any voluntary deferrals), less the amount of that sum which qualifies for
contributions under the Flexsteel Industries, Inc. Salaried Employees Retirement
Plan.
3. Vesting. Benefits under this Plan shall be considered fully vested
as of the date of this Agreement.
4. Accounting. The Company shall maintain a separate Account into which
all contributions for the Employee under this Plan shall be credited. Employee's
Account shall be credited annually with the earnings based on the income that
the Company earns on the monies invested in the Rabbi Trust created for
investment of contributions.
5. Payment of Employee Account. Each Employee's Account will be paid to
him upon the earliest of the Employee's death, disability, age 65, or retirement
(as defined in the Corporation's Employees Retirement Salaried Plan).
-1-
The method of payment for each Employee's Account will be paid in
accordance with the election form signed by the Employee (see Exhibit A
attached). Additionally, the Employee shall have the right to designate a
beneficiary to receive the remaining proceeds (see Exhibit B attached), if the
Employee should die prior to receiving all of his payments. If an Employee fails
to execute a beneficiary designation or if there is no beneficiary alive at the
time of distribution, then the proceeds due Employee will be paid to the
Employee's estate. The beneficiary designation may be changed at any time during
Employee's lifetime as long as the Employee is competent or by the Employee's
attorney-in-fact who is specifically authorized to make the change.
6. Disability. For purposes of this Agreement, an Employee shall be
deemed to be disabled if the Board of Directors of the Corporation shall find on
the basis of medical evidence satisfactory to the Board of Directors that the
Employee is totally disabled, mentally or physically, so as to prevent him from
engaging in his customary employment by the Corporation and that such disability
will be permanent and continuous during the remainder of his life.
7. Board of Directors Right to Modify Payout. Notwithstanding anything
herein to the contrary, the Board of Directors of Corporation shall have the
right in its sole discretion to vary the manner and time of making any payment
to an Employee provided for in this Agreement, provided such distribution is
paid over a shorter period than that designated in any election made by the
Employee.
8. Unfunded Arrangement. It is the intention of the parties that the
Company is not required to establish any unfunded arrangement to pay any
obligation under this Plan for tax purposes, for purposes of Title I of ERISA or
for any other purposes. The Employee recognizes and agrees that the Employee has
the legal status of a general unsecured creditor and this Plan constitutes a
mere promise of the Company to make benefit payments in the future. However,
Company reserves the right to establish any unfunded arrangement to pay any
obligation hereunder in any manner it deems appropriate, provided the unfunded
arrangement will not be deemed constructively received by Employee for federal
income tax purposes. Furthermore, any trust created by the Company and assets
held by the trust to assist it in meeting its obligations under the Plan will
conform to the terms of the model trust, as described in Revenue Procedure
92-64, 1992-33 I.R.B. 11. Notwithstanding the above, the Company has established
a Rabbi Trust as an unfunded arrangement to pay the obligations hereunder.
9. Assignability. Employee's payments hereunder are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of the Employee or of
Employee's beneficiary.
10. Competency. If the Corporation shall find that any person to whom
any payment is payable under this Agreement is unable to care for his affairs
because of illness or accident, or is a minor, any payment due (unless a prior
claim therefore shall have been made by a duly appointed
-2-
conservator, or other legal representative) may be made to the spouse, a child,
a parent, or a brother or sister, or to any such person deemed by the Board of
Directors of the Corporation to have incurred expense for such person otherwise
entitled to payment, in such manner and proportions as the Board of Directors of
the Corporation may determine. Any such payment shall be a complete discharge of
the liability of the Corporation under this Agreement.
11. Employment Rights. Nothing contained herein shall be construed as
conferring upon the Employee the right to continue in the employ of the
Corporation as an Executive or in any other capacity.
12. Relationship to Other Benefits. Any deferred compensation payable
under this Agreement shall not be deemed salary or other compensation to the
Employee for the purpose of computing benefits to which he or she may be
entitled under any pension plan or other arrangement of the Corporation for the
benefit of its Employees.
13. Interpretation and Construction. The Board of Directors of the
Corporation shall have full power and authority to interpret, construe, and
administer this Agreement and the Board of Directors interpretation and
construction thereof, and actions thereunder, including any valuation of the
Deferred Compensation Account, or the amount or recipient of the payment to be
made therefrom, shall be binding and conclusive on all persons for all purposes.
No member of the Board of Directors shall be liable to any person for any action
taken or omitted in connection with the interpretation and administration of
this Agreement unless attributable to his own willful misconduct or lack of good
faith.
14. Amendments. Corporation shall have the right to amend this
Agreement without Employees' approval for the purpose of including additional
employees under this Agreement. Any other amendment may only be made with the
consent of all of the parties.
15. Employee Who is a Member of Board of Directors. If an Employee to
this Agreement is a member of the Board of Directors of the Corporation, that
Employee agrees by signing this Agreement not to partake in any decisions under
paragraphs 6, 7, 10, 13, 14, and 18 which affect his own Account or any matters
relating thereto.
16. State Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Iowa.
17. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Corporation and its successors and assigns, and the Employee,
his successors, assigns, heirs, executors, administrators and beneficiaries.
18. Right to Terminate Agreement. The Board of Directors of the
Corporation shall have the right to terminate this Agreement at the end of any
calendar year, provided it gives at least
-3-
thirty (30) day notice to the Employees of the termination of the Agreement. If
the Agreement is terminated, any sums previously paid in will be subject to the
Agreement.
19. Savings Clause. Any provisions of this Plan, that if given effect
would serve to invalidate or disqualify the Plan, shall be null and void.
20. Counterparts. This Agreement may be signed in Counterparts by the
parties hereto.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officers and the Employees have hereunto set his
hand on the date set opposite their signature.
FLEXSTEEL INDUSTRIES, INC.
By: ____________________________________
K. Bruce Lauritsen, President
Date: __________________________________
By: ____________________________________
Ronald J. Klosterman, Secretary
Date: __________________________________
By: ____________________________________
________________, Employee
Date: __________________________________
By: ____________________________________
_________________, Employee
Date: __________________________________
By: ____________________________________
__________________, Employee
Date: __________________________________
-4-
EXHIBIT A
FLEXSTEEL INDUSTRIES, INC.
RESTORATION RETIREMENT PLAN
EMPLOYEE'S ELECTION OF METHOD OF PAYMENT
Under the Restoration Retirement Plan Agreement with Flexsteel
Industries, Inc., I, ______________________________, elect to receive my Plan
Account as follows (check one of the boxes below):
[ ] A. In a lump sum within thirty (30) days of the event
requiring payment.
[ ] B. In approximate equal annual amounts over a five (5)
year period with the first payment due within thirty
(30) days after the event requiring payment.
[ ] C. In approximate equal annual amounts over a ten (10)
year period with the first payment due within thirty
(30) days after the event requiring payment.
[ ] D. In approximate equal semi-annual amounts over a five
(5) year period with the first payment due within
thirty (30) days after the event requiring payment.
[ ] E. In approximate equal semi-annual amounts over a ten
(10) year period with the first payment due within
thirty (30) days after the event requiring payment.
Notwithstanding the above, I acknowledge that the Corporation has the
authority to accelerate the payments pursuant to paragraph 7 of the Plan.
Signature ________________________
Title ________________________
Date ________________________
-5-
EXHIBIT B
FLEXSTEEL INDUSTRIES, INC.
RESTORATION RETIREMENT PLAN
BENEFICIARY DESIGNATION OF EMPLOYEE
Under the Restoration Retirement Plan Agreement with Flexsteel
Industries, Inc., I, ______________________________, hereby designate the
following as beneficiary of any portion of my Plan Account which has not been
paid prior to death:
A. Primary Beneficiary: ________________________________
B. Contingent Beneficiary: ________________________________
Signature ________________________
Title ________________________
Date ________________________
-6-
EXHIBIT 10.7
FLEXSTEEL INDUSTRIES, INC.
SENIOR OFFICER SUPPLEMENTAL RETIREMENT PLAN
This Senior Officer Supplemental Retirement Plan (the "Plan") is
entered into this ____ day of ____________, 20__, between Flexsteel Industries,
Inc., a Minnesota corporation having its principal office in Dubuque, Iowa (the
"Company") and ________________ (the "Employee"), a resident of
___________County and the state of __________, whose date of birth is ______ ,
_____.
WHEREAS, the Employee has been employed by the Company for many years
and is now actively employed by the Company as a full time senior officer with
an unusual ability and experience; and
WHEREAS, the Employee in the past has rendered the Company valuable
service, and it is the desire of the Company to have the benefit of this
continued employment, loyalty, service and counsel and also to assist said
Employee in providing for retirement, as well as the contingencies of
disability, old age dependency and death.
NOW, THEREFORE, it is hereby agreed:
1. PRIOR PLAN. This Plan supercedes the Senior Officer Deferred
Compensation Plan (the "Prior Plan") entered into by the parties by agreement
dated ____________. The Prior Plan is hereby terminated, and is of no further
force or effect.
2. DISABILITY BENEFIT. Should the Employee before his sixty-fifth
(65th)birthday, while in the employ of the Company become disabled, the Company
(beginning at a date to be determined by the Company but within thirty (30) days
from the date of disability) will commence to pay to the Employee the sum of
Five Thousand Dollars ($5,000.00) per month for the duration of the disability,
until death, or until Employee attains the age of 65, whichever occurs first.
The payments made under this paragraph stand alone and do not reduce the
benefits paid under paragraph 3 concerning Retirement Benefit. The vesting of
paragraph 3 Retirement Benefit payments shall continue during such period of
disability. Payments will be paid under this paragraph only if Employee is
totally separated from Company service (including part time service). For
purposes of this Agreement, an Employee shall be deemed to be disabled if the
Board of Directors of the Corporation shall find on the basis of medical
evidence satisfactory to the Board of Directors that the Employee is totally
disabled, mentally or physically, so as to prevent him from engaging in his
customary employment by the Corporation and that such disability will be
permanent and continuous during the remainder of his life.
3. PRE-AGE 65 DEATH BENEFIT. If the Employee dies prior to age 65 and
while in the employment of the Company (whether or not disabled under paragraph
1 or subject to the provisions of paragraph 5 hereof), the Company shall,
beginning at a date to be determined by the Company but within thirty (30) days
from the date of the Employee's death, pay monthly
-1-
installments of Five Thousand Dollars ($5,000.00) to the Employee's Beneficiary,
as that term is defined in paragraph 10 hereof, for a continuous period of 180
months or until the Employee would have attained the age of 65, whichever period
is shorter.
4. RETIREMENT BENEFIT.
(A) CONTRIBUTIONS TO AGE 65. Beginning in the year 2001 and
until the Employee reaches the age of 65, the Company shall make an annual
contribution by the 15th day of January of each year equal to _____% of the sum
of the Employee's Base Salary plus Annual Cash Bonus Award for the previous
calendar year (including any voluntary deferrals). Prior to the first annual
contribution, an opening account balance shall be established by a one-time
Company contribution of $__________, based on the discounted present value of
the Prior Plan balance as of June 30, 2000.
(B) CONTRIBUTIONS AFTER AGE 65. Annual contributions under
this paragraph shall continue for amounts earned by the Employee beyond age 65;
however, annual contributions for such contributions shall equal 5.5% of the sum
of the Employee's Base Salary plus Annual Cash Bonus Award for the previous
calendar year (including any voluntary deferrals).
(C) VESTING. Benefits under this Plan shall be considered
fully vested as of the date of this Agreement.
(D) ACCOUNTING. The Company shall maintain a separate Account
into which all contributions for the Employee under this Plan shall be credited.
Employee's Account shall be credited annually with the earnings based on the
income that the Company earns on the monies invested in the Rabbi Trust created
pursuant to paragraph 13 herein.
(E) PAYMENT. Each Employee's Account will be paid to him
beginning upon the Employee's 65th birthday. Payments made of contributions
credited to the opening account balance as described in subparagraph (A) above,
and all earnings thereon, shall be paid in approximately equal monthly payments
over a fifteen (15) year period with the first payment due within thirty (30)
days of the Employee's 65th birthday. Payments made pursuant to this paragraph
of contributions credited after the date of this Agreement, and all earnings
thereon, shall be paid in accordance with the election form signed by the
Employee (see Exhibit "A" attached). Additionally, the Employee shall have the
right to designate a beneficiary to receive the remaining proceeds (see Exhibit
"B" attached), if the Employee should die prior to receiving all of his
payments. If an Employee fails to execute a beneficiary designation or if the
beneficiary is not alive at the time of distribution, then the proceeds due
Employee will be paid to the Employee's estate. The beneficiary designation may
be changed at any time during Employee's lifetime as long as the Employee is
competent or by the Employee's attorney-in-fact who is specifically authorized
to make the change.
5. AGREEMENT NOT TO COMPETE. The Employee shall forfeit all rights to
paragraph 4 Retirement Benefit payments if at any time after he ceases to be
employed by the Company he enters into or takes part in, any business,
profession or other endeavor, either as an
-2-
employee, agent, independent contractor, owner, lender, financier or otherwise
which, in the opinion of the Board of Directors of the Company, shall be in
direct competition with the Company, unless he obtains the written consent of
the Board of Directors.
6. LEAVE OF ABSENCE. The Board of Directors may, in its sole
discretion, permit the Employee to take a leave of absence for a reasonable
period of time. During this time the Employee will be considered to be still in
the employ of the Company for purposes of this Plan.
7. EARLY WITHDRAWAL OF BENEFIT PAYMENTS. The Board of Directors of the
Company may permit early withdrawal under section 2, 3 or 4 of the Plan for an
unforeseeable emergency. An unforeseeable emergency is defined as a severe
financial hardship to the Employee resulting from a sudden and unexpected
illness or accident of the Employee, loss of the Employee's property due to
casualty, or other similar extraordinary or unforeseeable circumstance arising
as a result of events beyond the control of the Employee. An early withdrawal
which is approved by the Board of Directors of the Company is limited to the
amount necessary to meet the emergency.
8. ASSIGNABILITY. Employee's payments hereunder are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of the Employee or of
Employee's beneficiary.
9. AMENDMENT This Plan may be amended from time to time but only during
the lifetime of the Employee and only by written consent to each amendment
signed by both Employer and Employee.
10. BENEFICIARY DESIGNATION. See attached addendum.
11. EMPLOYEE RIGHTS. This Plan creates no right in the Employee to
continue in the Company's employ for any specific length of time, nor does it
create any other rights in the Employee or obligations on the part of the
Company, except those set forth in this Plan. If Employee is not in default of
any of the provisions of this Plan and Company fails to pay any obligation due
Employee under this Plan, Employee shall have the right to pursue any legal
action available against company in order to recover the amount due from Company
and Employee shall be reimbursed for all expenses, including, but not limited
to, reasonable attorney fees incurred in pursuing collection of amounts due
hereunder.
12. DOUBLE BENEFITS. Any benefits accruing to an Employee under this
Plan will not affect his benefits under any other Company agreements or plans.
13. COMPETENCY. If the Corporation shall find that any person to whom
any payment is payable under this Agreement is unable to care for his affairs
because of illness or accident, or is a minor, any payment due (unless a prior
claim therefore shall have been made by a duly appointed conservator, or other
legal representative) may be made to the spouse, a child, a parent, or a brother
or sister, or to any such person deemed by the Board of Directors of the
Corporation to have incurred expense for such person otherwise entitled to
payment, in such manner
-3-
and proportions as the Board of Directors of the Corporation may determine. Any
such payment shall be a complete discharge of the liability of the Corporation
under this Agreement.
14. EMPLOYEE WHO IS A MEMBER OF BOARD OF DIRECTORS. If an Employee to
this Agreement is a member of the Board of Directors of the Corporation, that
Employee agrees by signing this Agreement not to partake in any decisions under
paragraphs 5, 6, 7, 9 and 13 which affect his own Account or any matters
relating thereto.
15. UNFUNDED ARRANGEMENT. It is the intention of the parties that the
Company is not required to establish any unfunded arrangement to pay any
obligation under this Plan for tax purposes, for purposes of Title I of ERISA or
for any other purposes. The Employee recognizes and agrees that the Employee has
the legal status of a general unsecured creditor and this Plan constitutes a
mere promise of the Company to make benefit payments in the future. However,
Company reserves the right to establish any unfunded arrangement to pay any
obligation hereunder in any manner it deems appropriate, provided the unfunded
arrangement will not be deemed constructively received by Employee for federal
income tax purposes. Furthermore, any trust created by the Company and assets
held by the trust to assist it in meeting its obligations under the Plan will
conform to the terms of the model trust, as described in Revenue Procedure
92-64, 1992-33 I.R.B. 11. Notwithstanding the above, the Company has established
a Rabbi Trust as an unfunded arrangement to pay the obligations hereunder.
16. SAVINGS CLAUSE. Any provisions of this Plan, that if given effect
would serve to invalidate or disqualify the Plan, shall be null and void.
17. LAW GOVERNING. This Plan shall be governed by the laws of the State
of Iowa.
18. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the Corporation and its successors and assigns, and the Employee,
his successors, assigns, heirs, executors, administrators and beneficiaries.
IN WITNESS WHEREOF, the parties hereunto have executed this Agreement
at Dubuque, in the County of Dubuque, in the county of Dubuque, state of Iowa on
this _________ day of ___________, 20__.
FLEXSTEEL INDUSTRIES, INC.
By: ____________________________________
K. Bruce Lauritsen, President
Date: __________________________________
By: ____________________________________
Ronald J. Klosterman, Secretary
Date: __________________________________
By: ____________________________________
________________, Employee
Date: __________________________________
-4-
EXHIBIT A
FLEXSTEEL INDUSTRIES, INC.
SENIOR OFFICER SUPPLEMENTAL RETIREMENT PLAN
EMPLOYEE'S ELECTION OF METHOD OF PAYMENT
Under the Senior Officer Supplemental Retirement Plan Agreement (the
"Agreement") with Flexsteel Industries, Inc., I, ______________________________,
elect to receive the balance of my Plan Account attributable to contributions
made subsequent to the date of the Agreement as follows (check one of the boxes
below):
[ ] A. In a lump sum within thirty (30) days of the event
requiring payment.
[ ] B. In approximate equal annual amounts over a five (5)
year period with the first payment due within thirty
(30) days after the event requiring payment.
[ ] C. In approximate equal annual amounts over a ten (10)
year period with the first payment due within thirty
(30) days after the event requiring payment.
[ ] D. In approximate equal annual payments over a fifteen
(15) year period with the first payment due within
thirty (30) days after the event requiring payment.
[ ] E. In approximate equal semi-annual amounts over a five
(5) year period with the first payment due within
thirty (30) days after the event requiring payment.
[ ] F. In approximate equal semi-annual amounts over a ten
(10) year period with the first payment due within
thirty (30) days after the event requiring payment.
[ ] G. In approximate equal semi-annual amounts over a
fifteen (15) year period with the first payment due
within thirty (30) days after the event requiring
payment.
Signature ________________________
Title ________________________
Date ________________________
-5-
EXHIBIT B
FLEXSTEEL INDUSTRIES, INC.
SENIOR OFFICER SUPPLEMENTAL RETIREMENT PLAN
BENEFICIARY DESIGNATION OF EMPLOYEE
Under the Senior Officer Supplemental Retirement Plan Agreement with
Flexsteel Industries, Inc., I, ______________________________, hereby designate
the following as beneficiary of any portion of my Plan Account which has not
been paid prior to death:
A. Primary Beneficiary: ________________________________
B. Contingent Beneficiary: ________________________________
Signature ________________________
Title ________________________
Date ________________________
-6-
Exhibit 13
strength
IN COMFORT
[PHOTOS]
Flexsteel Industries, Incorporated
annual report
FISCAL YEAR ENDED JUNE 30, 2001
FINANCIAL highlights [Amounts in thousands except per share data]
[BAR CHART]
net sales
MILLIONS OF DOLLARS
1992 165,526
1993 185,813
1994 204,804
1995 218,476
1996 214,887
1997 230,501
1998 247,740
1999 272,130
2000 300,066
2001 284,773
Year Ended June 30, 2001 2000 1999
-------------------------------------------------------------------------
Net Sales $ 284,773 $ 300,066 $ 272,130
Operating Income 6,543 17,679 15,398
Income Before 7,274 18,658 16,217
Income Taxes
Net Income 4,594 11,928 10,317
[BAR CHART]
earnings per share
DOLLARS
1992 0.24
1993 0.87
1994 0.94
1995 0.72
1996 0.63
1997 0.86
1998 1.08
1999 1.51
2000 1.82
2001 0.74
Year Ended June 30, 2001 2000 1999
---------------------------------------------------------------------------
Per Share of Common Stock:
Average Shares Outstanding:
Basic 6,108 6,458 6,775
Diluted 6,174 6,562 6,850
Earnings:
Basic $ 0.75 $ 1.85 $ 1.52
Diluted 0.74 1.82 1.51
Cash Dividends 0.52 0.52 0.48
[PHOTO]
THE MELANGE COLLECTION COMBINES BEAUTIFUL FABRICS WITH POPULAR LEATHER.
INTRODUCED IN APRIL, IT HAS BECOME A POPULAR-SELLING COLLECTION.
[PHOTO]
HANDSOME AND PRACTICAL SEATING FOR RESTAURANTS OR INSTITUTIONAL DINING ROOMS
FROM OUR COMMERCIAL SEATING DIVISION.
TO OUR shareholders
Flexsteel has not been immune to the current business downturn, but careful
business practices have allowed us to fare better than much of the furniture
industry. Our traditional strengths not only help us now, but also give us every
reason for continued optimism for the future.
Sales for the fiscal year ended June 30, 2001, were $284,773,000, compared to
$300,066,000 for the year ended in 2000. Earnings were $4,594,000, or $0.74 per
share, compared to $11,928,000 or $1.82 per share last year.
In Flexsteel's history of more than a century of manufacturing and marketing of
seating, we have witnessed downturns in the economy before. The characteristics
of each disruption have been different; in the current case, the entire industry
of residential furniture has been affected as some of the largest regional and
national dealers have either discontinued operations or dramatically downsized.
Still, at Flexsteel our core market for residential furnishings remains the
independent dealer. Our strong dealer service and our dependable quality product
have been instrumental in our increasing our market share with those dealers
while absorbing the loss of volume from some of the national retailers.
The disruption in recreational vehicle seating has been more severe. Many of our
customers have reduced orders because dealers at the retail level have not
replenished their inventories. But even here, we were able not only to add new
customers, but also to establish ourselves in new RV market niches.
In our commercial or contract seating business, we continue to develop new
products for established customers and to open new accounts. Innovative products
and marketing techniques are both expanding our markets and developing new ones.
We feel that Flexsteel's significant financial strength and history of careful
management contributed to our being selected by Forbes as one the 200 Best Small
Businesses for 2000. This is exemplified by the fact that Flexsteel has paid
dividends for 237 consecutive quarters.
In this report, we will try to show you what we are doing to maintain
Flexsteel's product quality, keep up with a changing world, and protect your
investment.
TRENDS IN GLOBALIZATION
These are active times, filled with opportunity. Competition is global. Leaps in
technology have made access to global markets feasible; more sources, for
example, are becoming available to us in the Pacific Rim. As a result, some
furniture makers, like those in the apparel industry, are evolving into
furniture marketers.
This is especially true in the cases of wood and leather. We obtain beautiful
wood products -- carved chairs, occasional and game tables, wood trim for
upholstered pieces -- from all over the world. Leather hides may also be
well-traveled: they may grow in South America, be tanned in Europe, sewn to fit
our frames in almost any country, and finally upholstered in our own American
plants.
We are always alert to new market possibilities and realize that profits follow
when we respond quickly to these fast-moving opportunities.
TRENDS IN RETAIL ENVIRONMENTS
Retailers are learning the value of providing customers with integrated shopping
experiences. Flexsteel's comprehensive programs for our Comfort Gallery and
Comfort Seating Showroom help our dealers provide just such environments. We
have seen tremendous growth in our Gallery program, with 282 Galleries now in
operation and over fifty on the drawing boards. Eighteen Comfort Seating
Showrooms are in operation. We introduced at our Spring Market our new Gold and
Platinum upgrade programs for Comfort Galleries. These comprehensive programs
help our dealers enlarge and redesign their galleries and received enthusiastic
response.
A crucial part of the total retail environment is the availability of home
accessories. By working with an accessory firm and a marketer of area rugs, we
help our dealers to offer an enriched shopping experience while expanding their
profit opportunities.
At June 30, 2001 2000 1999
-----------------------------------------------------------------------
Working Capital $ 55,402 $ 52,016 $ 50,210
Net Plant and 24,554 26,837 25,912
Equipment
Total Assets 110,294 114,876 112,684
Shareholders' Equity 85,062 85,196 81,166
[BAR CHART]
book value per share
DOLLARS
1992 9.17
1993 9.57
1994 9.98
1995 10.28
1996 10.45
1997 10.86
1998 11.49
1999 12.50
2000 13.81
2001 14.10
[BAR CHART]
return on common equity
PERCENT
1992 2.6%
1993 9.1%
1994 9.5%
1995 7.1%
1996 6.1%
1997 8.0%
1998 9.7%
1999 12.7%
2000 14.0%
2001 5.4%
We now provide these dealers with a monthly retail advertising package including
print, direct mail, radio and television for their use, while we reinforce their
efforts with an extensive national advertising program enhancing Flexsteel name
recognition.
INNOVATIONS
We have numerous aesthetic and safety improvements in our furnishings for motor
homes. We are also introducing greatly improved mechanisms that will allow
significant improvements in recliner design and ease of operation. We have
popular new designs for our commercial customers, and handsome new "below-deck"
seating and sleeping accommodations for the yacht market.
Especially exciting is the forthcoming introduction of a signature collection of
beautiful residential furniture by the popular designer and Emmy-award winning
TV personality Christopher Lowell.
TECHNOLOGY AND OUR MARKETING
Our Web site continues to draw high interest among consumers. Web site visitors
will soon find a fascinating Sneak Preview video catalog that will allow them to
look at any style in available fabrics. A special Cyber Resource Center will
give our dealers instant information on prices, fabric availability, and order
status.
STAYING THE COURSE
Despite business disruptions, we feel it essential that we protect the capacity
of your company to meet future demands. While we've taken measures to reduce
overhead, shortened work time where necessary, and reduced capital expenditures,
we've devoted great effort to keeping our talented associates. They will guide
us in the business upturns that will surely come.
A CHANGE AT THE HELM
Following John Easter's retirement, L. Bruce Boylen, stepped into the
chairmanship. Mr. Boylen brought to Flexsteel a comprehensive knowledge of the
recreational vehicle market, having served as vice president of Fleetwood
Enterprises Incorporated. He also served as a Flexsteel director for seven years
and brings us valuable expertise in marketing and management.
Although retired from Sears, John Easter has given us the benefit of his
extensive experience and knowledge in furniture retailing for seven years on our
Board, the last three as your Chairman. Now as he goes into well-earned full
retirement he takes with him our heartfelt thanks and good wishes.
OUR COMMITMENT TO YOU
We are committed to following a thoughtful Strategic Plan, which includes
current and long-term methods to continue the Flexsteel achievement story
through:
* partnering with our dealers
* upholding the famous Flexsteel quality
* continuing to increase our market share
* judicious expansion of product lines
* responding to new market patterns
AN EXCELLENT FUTURE
We owe our thanks to our talented and capable associates, our loyal customers,
our excellent vendors and especially to you, our shareholders. It is your
contributions that have made possible Flexsteel's long history of financial
strength and performance. We rely on these relationships and their wealth of
experience to accomplish our strategic goals and continue our strong record of
service to you.
/s/ K. Bruce Lauritsen
K. BRUCE LAURITSEN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
/s/ L. Bruce Boylen
L. BRUCE BOYLEN
CHAIRMAN OF THE BOARD
[PHOTO]
K. BRUCE LAURITSEN
PRESIDENT &
CHIEF EXECUTIVE OFFICER
[PHOTO]
L. BRUCE BOYLEN
CHAIRMAN OF THE BOARD,
FLEXSTEEL INDUSTRIES, INC.
FLEXSTEEL | 1
strength
IN DESIGN
[PHOTO]
THIS CHAIR AND OTTOMAN PAIR TYPIFIES THE HANDSOME COMFORT AND BROAD-BASED APPEAL
OF THE MELANGE COLLECTION.
We design Flexsteel to be beautiful. We make it comfortable. And we build it to
last.
This has been the Flexsteel philosophy for over a century. The beauty of our
fine upholstered furniture draws retailers into our markets and customers to our
dealers' showrooms.
Once in a Flexsteel Comfort Gallery or Comfort Seating Showroom, the customer
finds that shopping for furniture can be a much more rounded experience than
merely selecting a frame and seeing how it will look in a chosen fabric. Here
the customer can create the room of her dreams. She can select accent tables and
other accessories in complementary styles.
creating
THE ROOM OF HER DREAMS
These include area rugs from Feizy, and such other items as lamps and wall
hangings from The Accessory Group. Product offerings from these suppliers expand
choices for both dealers and customers.
Later this year we'll be introducing exciting new designs in a signature
collection created for us by the Emmy-award-winning decorator Christopher
Lowell, the popular TV personality.
Flexsteel's "home furnishings that go down the road" fit beautifully into
today's more fluid and spherical, less boxy, motor homes' interiors. They're
also designed for optimum space use. Our new Versaflex power sofa features
multi-position recline, a bed and a slide-out ottoman. Motor home manufacturers
can now provide a luxurious sleeping, working and eating area in only 76" of
overall space.
The Flexsteel name is a powerful selling aid in motor homes and converted vans.
Manufacturers report that customers instantly recognize the Flexsteel name on
their captain's chairs and bucket seats.
[PHOTO] PHOTO COURTESY WINNEBAGO INDUSTRIES
SPACIOUS LIVING AREA IN THE ITASCA(R) HORIZON BY WINNEBAGO. TRUE LIVING-ROOM
COMFORT WITH FLEXSTEEL FURNITURE IN THE SLIDE-OUT ROOM.
2 | FLEXSTEEL
Our Commercial Seating division has introduced new task chairs, restaurant
tables and chairs, and casino chairs and stools for the gaming industry. They've
published a new Designbook to acclaim from interior designers. This useful tool
helps designers put together complete presentations of Flexsteel sofas, chairs
and tables for installations such as clubs, hotels and restaurants.
Our own designers work closely with these interior specialists because today
there's a competitive premium in customization. Just as the retail customer
demands a custom sofa, commercial interior designers and motor home builders
have their own unique requirements.
drawing
ON OUR COMBINED SKILLS
We have long found that our experience in metalworking - building our famous
seat spring - has given us a competitive advantage in RV seating. Now we find a
similar synergy between home furnishings, RV seating and commercial seating.
Drawing on our combined skills and experience, we're able to respond quickly to
design requests, create the design and deliver a prototype more quickly than
ever.
AND EXECUTION
We have a strong story for dealers to tell, to sell.
Many of our retailers report second- and third-generation customers who choose
Flexsteel because our fine upholstered furniture has proven itself in their
parents' and grandparents' homes.
We've always been proud of our frames; for decades we've warranted them for
life. Today, our frames are lighter and stronger than ever. Engineered wood is
not only better for furniture but also helps conserve a valuable renewable
resource. Our unitized seat spring construction has distinguished Flexsteel
furniture since 1927; it is so strong that it, too, is warranted for life.
Besides the competitive advantage of our abilities in metal and fabric working,
our experience in, and knowledge of, safety help us sell to both the
recreational vehicle and maritime markets. Our seating for van conversions,
motor homes, travel trailers and maritime vessels meets or exceeds all
applicable safety codes.
quality
FOR GENERATIONS
The Flexsteel name has stood for quality for generations. We take pride in that
reputation and never stop striving to uphold and strengthen it.
[PHOTO]
LEATHER RECLINERS ARE NATURALLY HANDSOME. FLEXSTEEL RECLINERS ALSO OFFER
SUPERIOR COMFORT AND LIFETIME WARRANTIES.
[PHOTO]
ACCESSORIES ARE PROMINENTLY DISPLAYED IN THIS KIOSK. AN INNOVATION FROM
FLEXSTEEL TO HELP COMFORT GALLERY DEALERS MAXIMIZE SALES AND PROFITS.
[PHOTO]
THIS INVITING CONVERSATIONAL GROUPING IS PART OF A LINE DEVELOPED BY THE
COMMERCIAL SEATING DIVISION. BOTH HANDSOME AND PRACTICAL, IT SERVES THE GROWING
NEEDS OF THE HOSPITALITY INDUSTRY.
A VERSATILE TRADITIONAL GROUP INCLUDES A SPECTACULAR DOUBLE-ARM CHAISE. FOR A
TRANSITIONAL LOOK, THE CUSTOMER CAN SUBSTITUTE TAPERED LEGS FOR THE TRADITIONAL
PLEATS.
FLEXSTEEL | 3
building
ON OUR STRENGTH
[PHOTO]
THIS SLEEK BUCKET SEAT TYPIFIES BOTH THE HANDSOME AUTOMOTIVE STYLING AND
SMOOTHLY-OPERATING POWER CONTROLS DEVELOPED BY FLEXSTEEL DESIGNERS AND
ENGINEERS.
At Flexsteel, we've never sat on our laurels.
Nor do we now. This interim period has given us the opportunity to actively
pursue new markets. We are actually signing up new customers in all the markets
we serve.
pursue
NEW MARKETS
We've added seventy-six Flexsteel Comfort Galleries this year. Our Commercial
Seating division, armed with the new Designbook and an aggressive sales force,
is reaching such new areas as the limited service hospitality industry and the
casino industry. The Recreational Vehicle Seating division is increasing our
business in yachts. The strengths of our RV and Commercial Seating divisions
draw on each other to open new markets with exciting potential, such as the
growing cruise ship industry.
In our Strategic Plan, we recognized last year the first signs of the present
downturn. We are adhering to that plan, guarding those assets we'll need in the
future while taking advantage of the leaps in technology that help us control
costs in the present.
Digital technology, by allowing instant communication between our nation-wide
factory network, enormously reduces paper handling, errors and lost time.
Sophisticated computer-controlled fabric cutting gives us a technological
competitive advantage in all our seating markets. This advantage is somewhat
diluted by the necessity of supplying customers with highly individualized
designs, but we counter that by setting up "work cells." These production units
specialize in currently popular products, such as the metal daybeds we are now
supplying to hotels.
Our Web site has been redesigned and continues to generate enormous interest.
Over fifty thousand visitors per month spend an average of fifteen minutes per
visit at our site.
[PHOTO]
RECLINING SECTIONALS OFFER VERSATILE CASUAL COMFORT. THIS BEAUTIFUL GROUPING BY
FLEXSTEEL ALSO OFFERS OUR UNIQUE SPRING SET IN A METAL SEAT FRAME FOR LIFETIME
COMFORT.
4 | FLEXSTEEL
Market studies show that most furniture buyers today have previously researched
their choices on the Web. Soon visitors to the Flexsteel site will be able to
see desired frame-and-fabric combinations right on their home computers.
We help our dealers sell. A special Web site section, the Cyber Resource Center,
gives our retailers real-time information on style introductions and
modifications, fabric availability, order status, and upcoming promotions. We
help our dealers maximize their return-per-square-foot with a complete line of
tables, our accessories program, our huge selection of exclusive fabrics, and
our newest Comfort Gallery upgrade program. We also provide retailers a
comprehensive monthly advertising package. It includes print and electronic ads
the retailer can adapt to his market.
enhance
OUR RETAILERS' EFFORTS
We support and enhance our retailers' efforts with a year-round national
advertising program. Full-page ads in the most widely-distributed
home-and-garden magazines present our beautiful designs in handsome settings and
add to Flexsteel's name recognition.
[PHOTO]
EVEN A TASK CHAIR CAN BE SMART-LOOKING AS WELL AS COMFORTABLE. ONE OF OUR
ENTRIES INTO THE GROWING OFFICE FURNITURE MARKET.
[PHOTO]
WE'VE MODIFIED OUR POPULAR WEST INDIES GROUP FOR COMMERCIAL INSTALLATIONS. IT
INCLUDES TABLES AND A SELECTION OF UPHOLSTERED FURNITURE.
FOR THE FUTURE
We are constantly improving efficiency and quality.
In the future we'll see less paperwork at Flexsteel. There will be more digital
solutions. There will be more information on our Web site, including this Annual
Report, and more dealer services at our Cyber Resource Center.
respond
MORE QUICKLY
There'll be greater coordination between our procurement department and our
vendors, making more use of e-commerce and reducing cycle time, especially in
imports. We'll be able to respond more quickly to custom needs, not only for
home furnishings but also in Commercial and Recreational Vehicle Seating. We're
reducing obsolescence and improving inventory turns and controls.
We expect continued change and some weaknesses in the retail sector. Sound
financial strength and careful management will once again support us. We'll stay
focused on our Strategic Plan, continue costs controls, and open new
distribution channels.
We're protecting your investment. As you see Flexsteel in more places than ever
- in living rooms, on the road, on the sea, in hotels and cruise ships, in
yachts and casinos, in restaurants and assisted-living centers - you'll be
seeing Flexsteel growth.
Please visit our Web site: flexsteel.com. Among other things you'll see some
great letters from customers who have discovered Flexsteel quality.
We want you to be as proud of your company as we are.
[PHOTO]
COMFORT GALLERIES, LIKE THIS ONE IN CALLAN'S, ARE PLEASING SHOPPING ENVIRONMENTS
FULL OF IDEAS. SHOPPERS CAN PUT TOGETHER ROOMS WITH SOFAS, CHAIRS, ACCENT TABLES
AND OTHER ACCESSORIES.
LEATHER IS PERENNIALLY POPULAR. HERE WE'VE PRESENTED IT IN A MASSIVE SCALE. THE
PRESS-BACK LOUNGE CHAIR, OTTOMAN AND SOFA ARE HANDSOME AND COMFORTABLE.
FLEXSTEEL | 5
Five year
REVIEW
[ALL AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA]
FISCAL YEAR ENDED JUNE 30, 2001 2000 1999 1998 1997
---------- ---------- ---------- ---------- ----------
SUMMARY OF OPERATIONS (4)
Net Sales (1) ............................. $ 284,773 $ 300,066 $ 272,130 $ 247,740 $ 230,501
Cost of Goods Sold (1) .................... 224,352 235,824 212,576 196,960 184,162
Operating Income .......................... 6,543 17,679 15,398 9,868 7,888
Interest and Other Income ................. 1,063 1,439 1,134 2,015 1,931
Interest Expense .......................... 331 461 315 356 345
Income Before Income Taxes ................ 7,274 18,658 16,217 11,527 9,473
Income Taxes .............................. 2,680 6,730 5,900 3,925 3,425
Net Income (2) (3) (5) .................... 4,594 11,928 10,317 7,602 6,048
Earnings per Common Share: (2) (3) (5)
Basic ................................... 0.75 1.85 1.52 1.09 0.86
Diluted ................................. 0.74 1.82 1.51 1.08 0.86
Cash Dividends per Common Share ........... 0.52 0.52 0.48 0.48 0.48
STATISTICAL SUMMARY
Average Common Shares Outstanding:
Basic ................................... 6,108 6,458 6,775 6,959 7,024
Diluted ................................. 6,174 6,562 6,850 7,035 7,072
Book Value per Common Share ............... 14.10 13.81 12.50 11.49 10.86
Total Assets .............................. 110,294 114,876 112,684 104,673 99,173
Property, Plant and Equipment, net ........ 24,554 26,837 25,912 23,096 26,214
Capital Expenditures ...................... 2,817 6,718 8,398 2,392 5,273
Working Capital ........................... 55,402 52,016 50,210 50,549 44,357
Long-Term Debt ............................ 0 0 0 0 0
Shareholders' Equity ...................... 85,062 85,196 81,166 78,080 75,238
SELECTED RATIOS
Net Income as Percent of Sales ............ 1.6% 4.0% 3.8% 3.1% 2.6%
Current Ratio ............................. 3.6 to 1 3.0 to 1 2.8 to 1 3.1 to 1 3.1 to 1
Return on Ending Common Equity ............ 5.4% 14.0% 12.7% 9.7% 8.0%
Return on Beginning Common Equity ......... 5.4% 14.7% 13.2% 10.1% 8.2%
Average Number of Employees ............... 2,410 2,570 2,400 2,330 2,320
(1)Net sales and cost of goods sold reflect a reclassification of delivery
charges in order to comply with Emerging Issues Task Force No. 00-10,
ACCOUNTING FOR SHIPPING AND HANDLING FEES AND COSTS.
(2)2000 income and per share amounts reflect a gain on the sale of land of
approximately $1,250,000 ($790,000 net of income tax) or $0.12 per share and
a non-taxable gain from life insurance proceeds of approximately $405,000 or
$0.06 per share.
(3)1998 income and per share amounts reflect a non-taxable gain from life
insurance proceeds of approximately $720,000 or $0.10 per share.
(4)On March 18, 1997, the Company acquired certain assets of Dygert Seating,
Inc., and the related production facilities for $6,934,000.
(5)1997 income and per share amounts reflect a gain on the sale of a production
facility of approximately $350,000 (net of income taxes) or $0.05 per share.
6 | FLEXSTEEL
Reports
OF AUDITORS'
AND MANAGEMENT
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS OF FLEXSTEEL INDUSTRIES, INC.:
We have audited the accompanying consolidated balance sheets of Flexsteel
Industries, Inc. (the Company) as of June 30, 2001 and 2000, and the related
consolidated statements of income, comprehensive income, changes in
shareholders' equity and cash flows for each of the three years in the period
ended June 30, 2001. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
June 30, 2001 and 2000, and the results of its operations and cash flows for
each of the three years in the period ended June 30, 2001, in conformity with
accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
MINNEAPOLIS, MINNESOTA
AUGUST 10, 2001
REPORT OF MANAGEMENT
TO THE SHAREHOLDERS OF FLEXSTEEL INDUSTRIES, INC.:
Management is responsible for the financial and operating information contained
in this Annual Report, including the consolidated financial statements covered
by the report of Deloitte & Touche LLP, our independent auditors. The statements
were prepared in conformity with accounting principles generally accepted in the
United States of America and include amounts based on estimates and judgments of
management.
The Company maintains a system of internal controls to provide reasonable
assurance that the books and records reflect the authorized transactions of the
Company. There are limits inherent in all systems of internal control because
their cost should not exceed the benefits derived. The Company believes its
system of internal controls and internal audit functions balance the
cost/benefit relationship.
The Audit & Ethics Committee of the Board of Directors, composed solely of
outside directors, annually recommends to the Board of Directors, the
appointment of the independent auditors that are engaged to audit the
consolidated financial statements of the Company and to express an opinion
thereon. The Audit & Ethics Committee meets periodically with the independent
auditors to review financial reports, accounting and auditing practices and
controls.
K. BRUCE LAURITSEN
PRESIDENT
CHIEF EXECUTIVE OFFICER
RONALD J. KLOSTERMAN
VICE PRESIDENT, FINANCE
CHIEF FINANCIAL OFFICER
SECRETARY
FLEXSTEEL | 7
Consolidated
Balance
SHEETS
JUNE 30,
----------------------------
2001 2000
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................................................. $ 10,048,562 $ 4,000,855
Investments ............................................................... 2,536,469 5,730,888
Trade receivables - less allowance for doubtful accounts
2001, $1,950,000; 2000, $2,250,000 ...................................... 28,363,058 32,053,104
Inventories ............................................................... 31,379,836 32,456,058
Deferred income taxes ..................................................... 2,700,000 3,140,000
Other ..................................................................... 1,546,710 543,711
------------ ------------
Total current assets ......................................................... 76,574,635 77,924,616
PROPERTY, PLANT AND EQUIPMENT, net ........................................... 24,553,962 26,837,475
NOTES RECEIVABLE ............................................................. 415,762 2,752,130
DEFERRED INCOME TAXES ........................................................ 300,000 60,000
OTHER ASSETS ................................................................. 8,450,110 7,302,095
------------ ------------
TOTAL ........................................................................ $110,294,469 $114,876,316
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade ..................................................... $ 5,277,607 $ 6,921,533
Accrued liabilities:
Payroll and related items ................................................. 3,803,071 6,344,417
Insurance ................................................................. 5,863,451 5,977,525
Other accruals ............................................................ 5,253,930 5,364,921
Industrial revenue bonds payable ............................................. 975,000 1,300,000
------------ ------------
Total current liabilities .................................................... 21,173,059 25,908,396
DEFERRED COMPENSATION ........................................................ 4,059,186 3,772,152
------------ ------------
Total liabilities ............................................................ 25,232,245 29,680,548
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 11)
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 2001, 6,034,210 shares; 2000, 6,170,789 shares ................... 6,034,210 6,170,789
Retained earnings ............................................................ 78,272,996 78,268,436
Accumulated other comprehensive income ....................................... 755,018 756,543
------------ ------------
Total shareholders' equity ................................................... 85,062,224 85,195,768
------------ ------------
TOTAL ........................................................................ $110,294,469 $114,876,316
============ ============
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
8 | FLEXSTEEL
Consolidated
Statements
OF INCOME &
COMPREHENSIVE INCOME
CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED JUNE 30,
-------------------------------------------------
2001 2000 1999
------------- ------------- -------------
NET SALES ............................................ $ 284,772,510 $ 300,065,940 $ 272,130,007
COST OF GOODS SOLD ................................... (224,352,469) (235,824,182) (212,575,747)
------------- ------------- -------------
GROSS MARGIN ......................................... 60,420,041 64,241,758 59,554,260
SELLING, GENERAL AND ADMINISTRATIVE .................. (53,877,499) (47,812,467) (44,156,199)
GAIN ON SALE OF LAND ................................. 1,249,806
------------- ------------- -------------
OPERATING INCOME ..................................... 6,542,542 17,679,097 15,398,061
------------- ------------- -------------
OTHER:
Interest and other income ......................... 1,062,629 1,439,293 1,133,814
Interest expense .................................. (331,166) (460,796) (315,289)
------------- ------------- -------------
TOTAL ................................................ 731,463 978,497 818,525
------------- ------------- -------------
INCOME BEFORE INCOME TAXES ........................... 7,274,005 18,657,594 16,216,586
PROVISION FOR INCOME TAXES ........................... (2,680,000) (6,730,000) (5,900,000)
------------- ------------- -------------
NET INCOME ........................................... $ 4,594,005 $ 11,927,594 $ 10,316,586
============= ============= =============
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
BASIC ........................................... 6,107,785 6,457,960 6,774,996
============= ============= =============
DILUTED ......................................... 6,174,320 6,561,968 6,850,115
============= ============= =============
EARNINGS PER SHARE OF COMMON STOCK:
BASIC ........................................... $ 0.75 $ 1.85 $ 1.52
============= ============= =============
DILUTED ......................................... $ 0.74 $ 1.82 $ 1.51
============= ============= =============
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED JUNE 30,
-------------------------------------------------
2001 2000 1999
------------- ------------- -------------
NET INCOME ........................................... $ 4,594,005 $ 11,927,594 $ 10,316,586
------------- ------------- -------------
OTHER COMPREHENSIVE INCOME (LOSS),
BEFORE TAX:
Unrealized gains (losses) on securities
arising during period ........................... (21,374) (389,788) (1,575)
Less:reclassification adjustment for losses
included in net income .......................... 18,961 74,138 192,338
------------- ------------- -------------
Other comprehensive income (loss), before tax ........ (2,413) (315,650) 190,763
------------- ------------- -------------
INCOME TAX BENEFIT (EXPENSE):
Income tax benefit related to securities losses
arising during period ............................. 7,866 143,986 577
Income tax expense related to securities
reclassification adjustment ....................... (6,978) (27,431) (70,494)
------------- ------------- -------------
Income tax expense (benefit) related
to other comprehensive income ..................... 888 116,555 (69,917)
------------- ------------- -------------
OTHER COMPREHENSIVE INCOME (LOSS),
NET OF TAX ......................................... (1,525) (199,095) 120,846
------------- ------------- -------------
COMPREHENSIVE INCOME ................................. $ 4,592,480 $ 11,728,499 $ 10,437,432
============= ============= =============
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
FLEXSTEEL | 9
Consolidated
Statements
OF CHANGES IN
SHAREHOLDERS' EQUITY
COMMON STOCK ADDITIONAL ACCUMULATED OTHER
------------------------- PAID-IN RETAINED COMPREHENSIVE
SHARES PAR VALUE CAPITAL EARNINGS INCOME TOTAL
--------- ------------ ------------ ------------ ------------ ------------
Balance at June 30, 1998 ......... 6,794,730 $ 6,794,730 $ 70,450,282 $ 834,792 $ 78,079,804
Purchase of Company Stock ........ (364,092) (364,092) $ (550,258) (3,810,916) (4,725,266)
Issuance of Company Stock ........ 61,202 61,202 550,258 611,460
Investment Valuation Adjustment .. 120,846 120,846
Cash Dividends ................... (3,237,714) (3,237,714)
Net Income ....................... 10,316,586 10,316,586
--------- ------------ ------------ ------------ ------------ ------------
Balance at June 30, 1999 ......... 6,491,840 6,491,840 73,718,238 955,638 81,165,716
Purchase of Company Stock ........ (385,445) (385,445) (651,621) (4,055,342) (5,092,408)
Issuance of Company Stock ........ 64,394 64,394 651,621 716,015
Investment Valuation Adjustment .. (199,095) (199,095)
Cash Dividends ................... (3,322,054) (3,322,054)
Net Income ....................... 11,927,594 11,927,594
--------- ------------ ------------ ------------ ------------ ------------
Balance at June 30, 2000 ......... 6,170,789 6,170,789 78,268,436 756,543 85,195,768
Purchase of Company Stock ........ (200,038) (200,038) (678,171) (1,418,202) (2,296,411)
Issuance of Company Stock ........ 63,459 63,459 678,171 741,630
Investment Valuation Adjustment .. (1,525) (1,525)
Cash Dividends ................... (3,171,243) (3,171,243)
Net Income ....................... 4,594,005 4,594,005
--------- ------------ ------------ ------------ ------------ ------------
Balance at June 30, 2001 ......... 6,034,210 $ 6,034,210 $ -- $ 78,272,996 $ 755,018 $ 85,062,224
========= ============ ============ ============ ============ ============
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
10 | FLEXSTEEL
Consolidated
Statements
OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30,
----------------------------------------------
2001 2000 1999
------------ ------------ ------------
OPERATING ACTIVITIES:
Net income ............................................... $ 4,594,005 $ 11,927,594 $ 10,316,586
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation .......................................... 5,726,298 5,492,556 5,358,482
(Gain) loss on disposition of capital assets .......... (35,542) (1,278,671) 134,235
Trade receivables ..................................... 5,637,605 (830,818) (2,426,664)
Inventories ........................................... 1,805,222 (2,952,849) (2,895,913)
Other current assets .................................. (1,003,000) (82,305) 171,324
Other assets .......................................... (362,326) 630,602 (616,268)
Accounts payable - trade .............................. (1,643,926) (155,196) 1,284,021
Accrued liabilities ................................... (2,106,659) (1,488,716) 4,583,133
Deferred compensation ................................. 287,034 711,482 8,145
Deferred income taxes ................................. 200,000 500,000 (915,000)
------------ ------------ ------------
Net cash provided by operating activities ................ 13,098,711 12,473,679 15,002,081
------------ ------------ ------------
INVESTING ACTIVITIES:
Purchases of investments ................................. (2,014,525) (1,635,138) (3,750,686)
Proceeds from sales of investments ....................... 4,425,506 4,843,652 4,782,119
Payments received from customers on notes receivable ..... 211,974 50,000
Loans to customers on notes receivable ................... (1,325,000) (2,875,000)
Proceeds from sale of capital assets ..................... 178,997 1,579,166 88,927
Capital expenditures ..................................... (2,817,180) (6,718,094) (8,398,487)
------------ ------------ ------------
Net cash used in investing activities .................... (1,340,228) (4,755,414) (7,278,127)
------------ ------------ ------------
FINANCING ACTIVITIES:
Repayment of borrowings .................................. (325,000) (325,000) (325,000)
Dividends ($0.52, 0.52, 0.48 per share, respectively) .... (3,190,069) (3,306,838) (3,265,025)
Proceeds from issuance of common stock ................... 100,704 120,799 13,114
Repurchase of common stock ............................... (2,296,411) (5,092,409) (4,725,266)
------------ ------------ ------------
Net cash used in financing activities .................... (5,710,776) (8,603,448) (8,302,177)
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents ......... 6,047,707 (885,183) (578,223)
Cash and cash equivalents at beginning of year ........... 4,000,855 4,886,038 5,464,261
------------ ------------ ------------
Cash and cash equivalents at end of year ................. $ 10,048,562 $ 4,000,855 $ 4,886,038
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest ................................................. $ 61,000 $ 64,000 $ 70,000
Income taxes ............................................. $ 4,442,000 $ 7,050,000 $ 5,644,000
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FLEXSTEEL | 11
Notes
TO CONSOLIDATED
FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS - Flexsteel Industries, Inc. (the Company)
manufactures a broad line of quality upholstered furniture for residential,
recreational vehicle and commercial seating use. Products include sofas,
love seats, chairs, reclining and rocker-reclining chairs, swivel rockers,
sofa beds, and convertible bedding units. The Company's products are sold
primarily throughout the United States and Canada, by the Company's
internal sales force and various independent representatives. The Company
has two wholly owned subsidiaries. Desert Dreams, Inc. owns and leases a
commercial building to an unrelated entity. Four Seasons, Inc. operates
five retail furniture stores. All significant intercompany accounts and
transactions have been eliminated.
USE OF ESTIMATES - the preparation of consolidated financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the amounts reported in the consolidated financial statements
and accompanying notes. Actual results could differ from those estimates.
FAIR VALUE - the Company's cash, accounts receivable, accounts payable,
accrued liabilities and other liabilities are carried at amounts which
reasonably approximate their fair value due to their short-term nature.
Notes receivable and the industrial revenue bonds payable are carried at
amounts, which reasonably approximate their fair value due to their
variable interest rates. Fair values of investments in debt and equity
securities are disclosed in Note 2.
CASH EQUIVALENTS - the Company considers highly liquid investments with
original maturities of less than three months as the equivalent of cash.
INVENTORIES - are stated at the lower of cost or market. Raw steel, lumber
and wood frame parts are valued on the last-in, first-out (LIFO) method.
Other inventories are valued on the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT - is stated at cost and depreciated using the
straight-line method. For internal use software, the Company's policy is to
capitalize external direct costs of materials and services, directly
related internal payroll and payroll-related costs, and interest costs.
REVENUE RECOGNITION - is upon delivery of product. Net sales consist of
product sales and related delivery charge revenue, net of adjustments for
estimated returns and allowances.
INSURANCE - the Company is self-insured for health care and most workers'
compensation up to predetermined amounts above which third party insurance
applies. The Company is contingently liable to insurance carriers under its
comprehensive general, product, and vehicle liability policies, as well as
some workers' compensation, and has provided a letter of credit in the
amount of $982,000. Losses are accrued based upon the Company's estimates
of the aggregate liability for claims incurred using certain actuarial
assumptions followed in the insurance industry and based on Company
experience.
INCOME TAXES - deferred income taxes result from temporary differences
between the tax basis of an asset or liability and its reported amount in
the financial statements.
EARNINGS PER SHARE - Basic earnings per share of common stock is based on
the weighted-average number of common shares outstanding during each year.
Diluted earnings per share of common stock takes into effect the dilutive
effect of potential common shares outstanding. The Company's only potential
common shares outstanding are stock options, which resulted in a dilutive
effect of 66,535 shares, 104,008 shares, and 75,119 shares in fiscal 2001,
2000 and 1999, respectively. The Company calculates the dilutive effect of
outstanding options using the treasury stock method.
SEGMENT AND RELATED INFORMATION - Under the "management approach"
methodology prescribed by Statement of Financial Accounting Standards
(SFAS) No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION, the Company operates in two segments. The significant segment
is the manufacture of seating products. The second segment is the operation
of five retail furniture stores. At June 30, 2001, the retail segment had
$2,367,000 of assets. For the fiscal year ended June 30, 2001, the retail
segment had net sales of $4,435,000 and a net loss of $1,488,000. The
fiscal year 2000 amounts for the retail segment were not significant.
ACCOUNTING DEVELOPMENTS - The Company adopted SFAS No. 133, ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES on July 1, 2000. The
Company's policy is to not use freestanding derivatives and to not enter
into contracts with terms that cannot be designated as normal purchases or
sales. The adoption had no impact on the Company's financial position and
results of operations.
The Company adopted Staff Accounting Bulletin (SAB) No. 101, REVENUE
RECOGNITION IN FINANCIAL STATEMENTS, on January 1, 2001. The adoption had
no impact on the Company's financial position or results of operations.
In September 2000, the Emerging Issues Task Force (EITF) issued No. 00-10,
ACCOUNTING FOR SHIPPING AND HANDLING FEES AND COSTS. EITF No. 00-10 states
that all amounts billed to a customer in a sale transaction, related to
shipping and handling fees, represent revenues earned for the goods
provided and these amounts should be classified as revenue. The Company
adopted EITF No. 00-10 on April 1, 2001. Prior period net sales and costs
of goods sold have been adjusted for this change, which had no effect on
previously reported income.
In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
BUSINESS COMBINATIONS, and SFAS No. 142, GOODWILL AND OTHER INTANGIBLE
ASSETS. SFAS No. 141 eliminates the pooling-of-interests method of
accounting for business combinations after June 30, 2001. SFAS No. 142
establishes new standards for accounting for goodwill and intangible assets
and will be adopted by the Company on July 1, 2001. Management believes
that SFAS No. 141 and 142 will not have a material impact on the Company's
financial position or results of operations.
RECLASSIFICATIONS - certain prior years' amounts have been reclassified to
conform to the fiscal 2001 presentation. These reclassifications had no
impact on net income or shareholders' equity as previously reported.
2. INVESTMENTS
Debt and equity securities are included in Investments and in Other Assets,
at fair value based on quoted market prices, and are classified as
available for sale. The amortized cost and estimated market values of
investments are as follows:
12 | FLEXSTEEL
JUNE 30, 2001 JUNE 30, 2000
----------------------- -----------------------
DEBT EQUITY DEBT EQUITY
SECURITIES SECURITIES SECURITIES SECURITIES
---------- ---------- ---------- ----------
Amortized Cost $3,076,663 $2,781,872 $6,080,606 $2,244,735
Unrealized gains (losses) 25,747 1,168,914 (144,432) 1,284,794
---------- ---------- ---------- ----------
ESTIMATED MARKET VALUE $3,102,410 $3,950,786 $5,936,174 $3,529,529
========== ========== ========== ==========
As of June 30, 2001, the maturities of debt securities are $1,792,003
within one year, $708,134 in one to five years, and $602,273 over five
years.
3. INVENTORIES
Inventories valued on the LIFO method would have been approximately
$1,963,000 and $2,062,000 higher at June 30, 2001 and 2000, respectively,
if they had been valued on the FIFO method. A comparison of inventories is
as follows:
JUNE 30,
--------------------------
2001 2000
----------- -----------
Raw materials........................ $16,343,218 $16,711,084
Work in process and finished parts .. 8,651,210 9,125,346
Finished goods ...................... 6,385,408 6,619,628
----------- -----------
TOTAL................................ $31,379,836 $32,456,058
=========== ===========
4. PROPERTY, PLANT AND EQUIPMENT
JUNE 30,
ESTIMATED ---------------------------
LIFE (YEARS) 2001 2000
------------ ------------ ------------
Land ............................ $ 2,212,790 $ 2,212,790
Buildings and improvements ...... 3-39 30,007,095 29,503,530
Machinery and equipment ......... 3-10 31,320,833 31,074,388
Delivery equipment .............. 3-7 15,930,432 14,945,474
Furniture and fixtures .......... 3-5 5,687,361 6,016,280
------------ ------------
TOTAL ........................... 85,158,511 83,752,462
Less accumulated depreciation ... (60,604,549) (56,914,987)
------------ ------------
NET ............................. $ 24,553,962 $ 26,837,475
============ ============
5. BORROWINGS
The Company is obligated for $975,000 of Industrial Revenue Bonds at June
30, 2001, which were issued for the financing of property, plant and
equipment. The obligations are variable rate demand bonds with a weighted
average rate for the years ended June 30, 2001, 2000 and 1999 of 4.5%, 4.1%
and 3.7% respectively, and are due in annual installments of $325,000
through 2004, if not paid earlier upon demand of the holder. The Company
has issued a letter of credit to guarantee the payment of these bonds in
the event of the default. No amounts were outstanding on this letter at
June 30, 2001.
6. INCOME TAXES
The total income tax provision for the years ended June 30, 2001, 2000 and
1999 was 36.8%, 36.1% and 36.4%, respectively, of income before income
taxes. In fiscal 2000 the effective rate was reduced by 0.7% for nontaxable
life insurance proceeds of $405,000.
Provision - comprised of the following:
2001 2000 1999
----------- ----------- -----------
Federal - current ...... $ 2,550,000 $ 5,520,000 $ 6,115,000
State - current ........ 330,000 710,000 700,000
Deferred ............... (200,000) 500,000 (915,000)
----------- ----------- -----------
TOTAL .................. $ 2,680,000 $ 6,730,000 $ 5,900,000
=========== =========== ===========
Deferred income taxes - comprised of the following:
JUNE 30, 2001 JUNE 30, 2000
------------------------ -------------------------
CURRENT LONG-TERM CURRENT LONG-TERM
---------- ----------- ----------- -----------
Asset allowances $ 720,000 $ 810,000
Other accruals 1,980,000 2,330,000
and allowances
Deferred compensation $ 1,500,000 $ 1,400,000
Property, plant (1,200,000) (1,340,000)
and equipment
---------- ----------- ----------- -----------
TOTAL $2,700,000 $ 300,000 $ 3,140,000 $ 60,000
========== =========== =========== ===========
7. CREDIT ARRANGEMENTS
The Company has lines of credit of $3,000,000 with banks for short-term
borrowings at the prime rate in effect at the date of the loan. On
$1,000,000 of such line the Company is required to maintain compensating
bank balances equal to 5% of the line of credit plus 5% of any amounts
borrowed. There were no short-term bank borrowings during fiscal 2001 or
2000.
8. STOCK OPTIONS
The Company has stock option plans for key employees and directors that
provide for the granting of incentive and nonqualified stock options. Under
the plans, options are granted at an exercise price equal to the fair
market value of the underlying common stock at the date of grant, and may
be exercisable for up to 10 years. All options are exercisable when
granted. At June 30, 2001, 394,650 shares were available for future grants.
The Company applies Accounting Principles Board (APB) Opinion No. 25 and
related interpretations in accounting for its stock option plans, as
permitted under FASB Statement No. 123 ACCOUNTING FOR STOCK-BASED
COMPENSATION (SFAS No. 123). Accordingly, no compensation cost has been
recognized for its stock option plans. Had the compensation cost for the
Company's incentive stock option plans been determined based on the fair
value at the grant dates for awards under those plans consistent with the
methodology of SFAS No. 123, the Company's net income and earnings per
share would have been reduced to the pro forma amounts indicated below:
2001 2000 1999
----------- ----------- -----------
Net IncomeAs reported ..... $ 4,594,005 $11,927,594 $10,316,586
Pro forma ...... 4,431,005 11,736,594 10,171,214
Earnings per share:
Basic As reported .... $ 0.75 $ 1.85 $ 1.52
Pro forma .... 0.73 1.82 1.50
Diluted As reported .... 0.74 1.82 1.51
Pro forma .... 0.72 1.79 1.48
The fair value of each option grant is estimated on the date of grant using
the Black-Sholes option-pricing model with the following weighted-average
assumptions used for grants in fiscal 2001, 2000 and 1999, respectively:
dividend yield of 4.8%, 3.9% and 4.5%; expected volatility of 24.6%, 26.3%
and 27.1%; interest rates of 6.5%, 7.1% and 6.8%; and an expected life of 8
to 10 years on all options.
A summary of the status of the Company's stock option plans as of June 30,
2001, 2000 and 1999 and the changes during the years then ended is
presented below:
SHARES PRICE RANGE
------ --------------
June 30, 1998 Outstanding.... 500,505 $10.25 - 15.75
Granted.................... 106,450 10.50 - 12.75
Exercised.................. (34,088) 10.25 - 11.44
Canceled................... (13,600) 11.13 - 15.75
-------
June 30, 1999 Outstanding ... 559,267 10.25 - 15.75
Granted.................... 112,000 13.25 - 13.59
Exercised.................. (42,872) 10.25 - 11.44
Canceled................... (2,650) 10.25 - 11.44
-------
June 30, 2000 Outstanding ... 625,745 10.25 - 15.75
Granted.................... 135,150 10.56 - 10.75
Exercised.................. (8,000) 10.25 - 10.50
-------
June 30, 2001 Outstanding ... 752,895 10.25 - 15.75
=======
FLEXSTEEL | 13
Significant option groups outstanding at June 30, 2001 and related
weighted-average exercise price and remaining life information follows:
WEIGHTED - AVERAGE
------------------------
OPTIONS EXERCISE LIFE (YEARS)
GRANT DATE OUTSTANDING PRICE REMAINING
-------------------------- ------------ --------- ------------
July 6, 1993 ............. 74,360 $ 14.875 0.1
July 28, 1994 ............ 61,060 10.500 3.0
August 16, 1995 .......... 81,200 11.250 4.1
July 30, 1996 ............ 82,350 10.250 5.0
November 7, 1997 ......... 80,825 11.438 6.3
November 2, 1998 ......... 95,950 10.500 7.3
November 2, 1999 ......... 107,000 13.250 8.3
November 14, 2000 ........ 130,150 10.750 9.3
All other ................ 40,000 12.840 5.7
-------
TOTAL .................... 752,895 11.640 5.9
=======
9. PENSION AND RETIREMENT PLANS
The Company sponsors various defined contribution pension and retirement
plans which cover substantially all employees, other than employees covered
by multi-employer pension plans under collective bargaining agreements. It
is the Company's policy to fund all pension costs accrued. Total pension
and retirement plan expense was $1,683,000 in fiscal 2001, $1,572,000 in
fiscal 2000 and $1,427,000 in fiscal 1999 including $380,000 in fiscal
2001, $363,000 in fiscal 2000 and $330,000 in fiscal 1999 for the Company's
matching contribution to retirement savings plans. The Company's cost for
pension plans is determined as 2% - 6% of each covered employee's wages.
The Company's matching contribution for the retirement savings plans is 25%
- 50% of employee contributions (up to 4% of their earnings). In addition
to the above, amounts charged to pension expense and contributed to
multi-employer defined benefit pension plans administered by others under
collective bargaining agreements were $1,355,000 in fiscal 2001, $1,449,000
in fiscal 2000 and $1,355,000 in fiscal 1999.
The Company has unfunded post-retirement benefit plans with certain
officers. During the year ended June 30, 2000, the Company recorded a
one-time cost adjustment of $474,161 due to a change from a fixed benefit
obligation to a defined contribution obligation. The plans require various
annual contributions for the participants based upon compensation levels
and age. All participants are fully vested. For the years ended 2001, 2000
and 1999, excluding the aforementioned one time cost, the benefit
obligation was increased by interest expense of $305,039, $343,536 and
$247,228, service costs of $285,995, $256,785 and $146,917, and decreased
by payments of $304,000, $363,000 and $386,000, respectively. At June 30,
2001, the benefit obligation was $4,059,186.
10. MANAGEMENT INCENTIVE PLAN
The Company has an incentive plan that provides for shares of common stock
to be awarded to key employees based on a targeted rate of earnings to
common equity as established by the Board of Directors. Shares awarded to
employees are subject to the restriction of continued employment, with
331/3% of the stock received by the employee on the award date and the
remaining shares issued after one and two years. Under the plan 34,397,
53,427 and 45,158 shares were awarded, and the amounts charged to income
were $380,000, $646,000 and $598,000 in fiscal 2001, 2000 and 1999,
respectively. At June 30, 2001, 180,281 shares were available for future
grants.
11. COMMITMENTS AND CONTINGENCIES
Facility Leases - The Company leases certain facilities under various
operating leases. These leases require the company to pay operating costs,
including property taxes, insurance, and maintenance. Total lease expense
related to the various operating leases was approximately $1,410,000,
$630,000 and $518,000 in fiscal 2001, 2000 and 1999, respectively. Expected
future minimum commitments under operating leases and lease guarantees as
of June 30, 2001, were as follows:
YEAR ENDED JUNE 30,
2002 $ 1,466,000
2003 1,327,000
2004 1,343,000
2005 807,000
2006 690,000
Thereafter 2,145,000
-----------
$ 7,778,000
===========
12. SUPPLEMENTARY QUARTERLY
FINANCIAL INFORMATION
(UNAUDITED - in thousands of dollars, except per share amounts)
QUARTERS
--------------------------------------------
2001 1ST 2ND 3RD 4TH
-------- -------- -------- --------
Net Sales (1) .......... $ 70,033 $ 73,917 $ 71,973 $ 68,850
Gross Margin ........... 14,513 16,475 14,645 14,787
Net Income ............. 1,882 1,723 814 174
Earnings Per Share
Basic ................. 0.30 0.28 0.13 0.03
Diluted ............... 0.30 0.28 0.13 0.03
Dividends Per Share .... 0.13 0.13 0.13 0.13
*Market Price:
High .................. 13.00 12.31 13.13 12.18
Low ................... 12.00 10.50 10.75 10.50
QUARTERS
--------------------------------------------
2000 1ST 2ND 3RD 4TH
-------- -------- -------- --------
Net Sales (1) .......... $ 70,669 $ 73,618 $ 78,400 $ 77,379
Gross Margin ........... 15,030 15,577 16,588 17,047
Net Income ............. 2,365 3,589(2) 2,943 3,031
Earnings Per Share:
Basic ................. 0.36 0.55 0.46 0.48
Diluted ............... 0.36 0.54 0.45 0.47
Dividends Per Share .... 0.13 0.13 0.13 0.13
*Market Price:
High .................. 14.63 14.00 14.00 14.13
Low ................... 12.56 12.50 11.75 11.38
(1) Reflects the reclassification of delivery charges to comply with
Emerging Issues Task Force No. 00-10, ACCOUNTING FOR SHIPPING AND
HANDLING FEES AND COSTS.
(2) Includes net gains of $790,000 on the sale of land and $405,000 from
the non-taxable proceeds of life insurance.
* Reflects the market price as quoted by the National Association of
Securities Dealers, Inc.
14 | FLEXSTEEL
Management's discussion
& ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
GENERAL
The following analysis of the results of operations and financial condition of
Flexsteel Industries, Inc. (the Company) should be read in conjunction with the
consolidated financial statements and related notes included elsewhere in this
document.
RESULTS OF OPERATIONS
The following table has been prepared as an aid in understanding the Company's
results of operations on a comparative basis for the years ended June 30, 2001,
2000 and 1999. Amounts presented are percentages of the Company's net sales.
FOR THE YEARS ENDED JUNE 30,
---------------------------
2001 2000 1999
----- ----- -----
Net sales ..................................... 100.0% 100.0% 100.0%
Cost of goods sold ............................ (78.8) (78.6) (78.1)
----- ----- -----
Gross margin .................................. 21.2 21.4 21.9
Selling, general and administrative expenses .. (18.9) (15.9) (16.2)
Gain on sale of land .......................... -- 0.4 --
----- ----- -----
Operating income .............................. 2.3 5.9 5.7
Other income, net ............................. 0.3 0.3 0.3
----- ----- -----
Income before income taxes .................... 2.6 6.2 6.0
Income tax expense ............................ (1.0) (2.2) (2.2)
------- ------- -------
Net income .................................... 1.6% 4.0% 3.8%
======= ======= =======
FISCAL 2001 COMPARED TO FISCAL 2000
Net sales for 2001 decreased by $15.3 million or 5.1% compared to 2000.
Residential seating sales volume increased $14.8 million or 8.0%. Vehicle
seating sales decreased $28.1 million or 29.7%. Commercial seating sales volume
decreased $2.0 million or 9.8%.
Gross margin decreased $3.8 million to $60.4 million, or 21.2% of sales, in
2001, from $64.2 million, or 21.4% in 2000. Gross margin decreased due to the
decrease in net sales and changes in product mix.
Selling, general and administrative expenses as a percentage of sales were 18.9%
and 15.9% for 2001 and 2000 respectively. The amount of selling, general and
administrative costs increased due to expenses for bad debts, advertising, and
health insurance, and costs associated with the beginning of retail operations.
During the second quarter of 2000 the Company sold land adjacent to its
Lancaster, Pennsylvania, production facility at a gain of approximately $1.2
million.
Net other income was $0.7 million in fiscal 2001 and $1.0 million in fiscal
2000. During the second quarter of 2000 the Company realized a non-taxable gain
on the proceeds of life insurance of $0.4 million.
The effective tax rate in 2001 was 36.8% compared to 36.1% in 2000. The lower
effective income tax rate in 2000 is attributable to the non-taxable gain on the
proceeds of life insurance.
The above factors resulted in 2001 fiscal year net income of $4.6 million or
$0.74 per diluted share compared to $11.9 million or $1.82 per diluted share in
fiscal 2000, a net decrease of $7.3 million or $1.08 per share. Excluding the
fiscal year 2000 gain on the sale of land of $0.8 million or $0.12 per share and
$0.06 per share or $0.4 million from the proceeds of life insurance, net income
for the fiscal year ended June 30, 2001 declined $0.90 per share or $6.1
million.
FISCAL 2000 COMPARED TO FISCAL 1999
Net sales for 2000 increased by $27.9 million or 10.3% compared to 1999.
Residential seating sales volume increased $24.7 million or 15.4%. Vehicle
seating sales increased $6.2 million or 7.1%. Commercial seating sales volume
decreased $3.0 million or 12.9%.
Gross margin increased $4.7 million to $64.2 million, or 21.4% of sales, in
2000, from $59.6 million, or 21.9% in 1999. The gross margin increase was due to
improved utilization of available production capacity and changes in product
mix.
Selling, general and administrative expenses as a percentage of sales were 15.9%
and 16.2% for 2000 and 1999 respectively. The cost percentage decrease was due
to management's continued efforts to control fixed costs as volume increased.
During the second quarter of 2000 the Company sold land adjacent to its
Lancaster, Pennsylvania, production facility at a gain of approximately $1.2
million.
Net other income was $1.0 million in 2000 and $0.8 million for 1999. During the
second quarter of 2000 the Company realized a non-taxable gain on the proceeds
of life insurance of $0.4 million.
The effective tax rate in 2000 was 36.1% compared to 36.4% in 1999. The lower
effective income tax rate in 2000 is attributable to the non-taxable gain on the
proceeds of life insurance.
The above factors resulted in 2000 fiscal year net income of $11.9 million or
$1.82 per diluted share compared to $10.3 million or $1.51 per diluted share in
fiscal 1999, a net increase of $1.6 million or $0.31 per share.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 30, 2001, is $55.4 million, which includes cash, cash
equivalents and investments of $12.6 million. Working capital increased by $3.4
million from the June 30, 2000 amount.
Net cash provided by operating activities was $13.1 million, $12.5 million and
$15.0 million in fiscal 2001, 2000 and 1999, respectively. Fluctuations in net
cash provided by operating activities are primarily the result of changes in net
income and changes in trade receivables, inventory and accrued liabilities.
Capital expenditures were $2.8 million, $6.7 million and $8.4 million for fiscal
2001, 2000 and 1999, respectively. The current year expenditures were incurred
primarily for manufacturing and delivery equipment. Projected capital spending
for fiscal 2002 is $2.0 million. The projected capital expenditures will be for
manufacturing and delivery equipment. The funds for projected capital
expenditures are expected to be provided from cash generated from operations and
available cash.
Financing activities utilized net cash of $5.7 million, $8.6 million and $8.3
million in fiscal 2001, 2000 and 1999, respectively. Under existing Board
authority, the Company repurchased 200,038, 385,445 and 364,092 shares of its
outstanding common stock during fiscal 2001, 2000, and 1999, respectively. At
June 30, 2001, under existing authorizations, the Company may repurchase 5,340
shares.
FINANCING ARRANGEMENTS
The Company has lines of credit of $3.0 million with banks for short-term
borrowings, which have not been utilized since 1979. The Company has outstanding
borrowings of $975,000 in the form of variable rate demand industrial
development revenue bonds. During fiscal 2001, the weighted-
FLEXSTEEL | 15
average interest rate on the industrial development revenue bonds was 4.5%.
FORWARD-LOOKING STATEMENTS
Cautionary Statement Relevant to Forward-Looking Information for the Purpose of
"Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995
- The Company and its representatives may from time to time make written or oral
forward-looking statements with respect to long-term goals of the Company,
including statements contained in the Company's filings with the Securities and
Exchange Commission and in its reports to stockholders.
Statements, including those in this report, which are not historical or current
facts are "forward-looking statements" made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. There are
certain important factors that could cause results to differ materially from
those anticipated by some of the statements made here-in. Investors are
cautioned that all forward-looking statements involve risk and uncertainty. Some
of the factors that could affect results are the effectiveness of new product
introductions, the product mix of our sales, the cost of raw materials, the
amount of sales generated and the profit margins thereon, credit risk from
customers or volatility in the major markets, competition and general economic
conditions.
The Company specifically declines to undertake any obligation to publicly revise
any forward-looking statements that have been made to reflect events or
circumstances after the date of such statements or to reflect the occurrence of
anticipated or unanticipated events.
Flexsteel
EXECUTIVE COMMITTEE
[PHOTO]
(STANDING) THOMAS D. BURKART, JEFFREY T. BERTSCH, JAMES R. RICHARDSON, PATRICK
M. CRAHAN; (SEATED) K. BRUCE LAURITSEN, EDWARD J. MONAGHAN, RONALD J. KLOSTERMAN
16 | FLEXSTEEL
plant locations
* Flexsteel Industries, Inc.
DUBUQUE, IOWA 52001
(563) 556-7730
P. M. Crahan, General Manager
Flexsteel Industries, Inc.
DUBLIN, GEORGIA 31040
(478) 272-6911
M.C. Dixon, General Manager
Flexsteel Industries, Inc.
LANCASTER, PENNSYLVANIA 17604
(717) 392-4161
T. P. Fecteau, General Manager
Flexsteel Industries, Inc.
RIVERSIDE, CALIFORNIA 92504
(909) 354-2440
T. D. Burkart, General Manager
Flexsteel Industries, Inc.
NEW PARIS, INDIANA 46553
(219) 831-4050
J. E. Gilbertson, General Manager
Flexsteel Industries, Inc.
HARRISON, ARKANSAS 72601
(870) 743-1101
M. J. Feldman, General Manager
Metal Division
DUBUQUE, IOWA 52001
(563) 556-7730
J. E. Gilbertson, General Manager
Commercial Seating Division
STARKVILLE, MISSISSIPPI 39760
(662) 323-5481
S. P. Salmon, General Manager
Elkhart Division
ELKHART, INDIANA 46515
(219) 262-4675
D. L. Dygert, General Manager
Vancouver Distribution Center
VANCOUVER, WASHINGTON 98668
(206) 696-9955
T. D. Burkart, General Manager
* Executive Offices
permanent showrooms
Dubuque, Iowa
High Point, North Carolina
San Francisco, California
internet
http://flexsteel.com
directors & officers
L. Bruce Boylen
Chairman of the Board of Directors
Retired Vice President
Fleetwood Enterprises, Inc.
K. Bruce Lauritsen
President
Chief Executive Officer
Director
Edward J. Monaghan
Executive Vice President
Chief Operating Officer
Director
James R. Richardson
Senior Vice President, Marketing
Director
Jeffrey T. Bertsch
Vice President
Director
Patrick M. Crahan
Vice President
Director
Lynn J. Davis
Director
Senior Vice President
ADC Telecommunications, Inc.
Thomas E. Holloran
Director
Professor, Graduate School of
Business, University of St. Thomas
St. Paul, Minnesota
Marvin M. Stern
Director
Retired Vice President
Sears, Roebuck & Company
Carolyn T. B. Bleile
Vice President
Thomas D. Burkart
Senior Vice President, Vehicle Seating
Kevin F. Crahan
Vice President
Keith R. Feuerhaken
Vice President
James E. Gilbertson
Vice President
Timothy E. Hall
Treasurer - Assistant Secretary
James M. Higgins
Vice President, Commercial Seating
Ronald J. Klosterman
Vice President, Finance
Chief Financial Officer
Secretary
Michael A. Santillo
Vice President
audit committee
Thomas E. Holloran, Chairman
Lynn J. Davis
Marvin M. Stern
compensation &
nominating committee
L. Bruce Boylen, Chairman
Thomas E. Holloran
Marvin M. Stern
marketing & planning
committee
Marvin M. Stern, Chairman
Jeffrey T. Bertsch
Patrick M. Crahan
Lynn J. Davis
Edward J. Monaghan
James R. Richardson
transfer agent & registrar
Wells Fargo Shareowner Services
P. O. Box 64854
South St. Paul,
Minnesota 55164-0854
general counsel
Irving C. MacDonald
Minneapolis, Minnesota
O'Connor and Thomas, P.C.
Dubuque, Iowa
national over-the-counter
NASDAQ symbol
FLXS
annual meeting
December 10, 2001, 2:00 p.m.
Hilton Minneapolis
1001 Marquette Avenue
Minneapolis, Minnesota 55403
AFFIRMATIVE ACTION POLICY
It is the policy of Flexsteel Industries, Inc., that all employees and potential
employees shall be judged on the basis of qualifications and ability, without
regard to age, sex, race, creed, color or national origin in all personnel
actions. No employee or applicant for employment shall receive discriminatory
treatment because of physical or mental disability in regard to any position for
which the employee or applicant for employment is qualified. Employment
opportunities, and job advancement opportunities will be provided for qualified
disabled veterans and veterans of the Vietnam era. This policy is consistent
with the Company's plan for "Affirmative Action" in implementing the intent and
provisions of the various laws relating to employment and non-discrimination.
ANNUAL REPORT ON FORM 10-K AVAILABLE
A copy of the Company's annual report on Form 10-K, as filed with the Securities
and Exchange Commission, can be obtained without charge by writing to:
Office of the Secretary, Flexsteel Industries, Inc.
P.O. Box 877
Dubuque, Iowa 52004-0877
shown on the front cover
TO BE FEATURED IN OUR FALL ADVERTISING CAMPAIGN, THE BEAUTIFUL VERSAILLES
COLLECTION TYPIFIES THE SUPERB RESULTS POSSIBLE WHEN FLEXSTEEL COMBINES ITS
DESIGN STRENGTH AND UPHOLSTERY ABILITIES WITH THE MANY GLOBAL SOURCES AND
TALENTS AVAILABLE. THE HANDSOME WOOD TRIM IS ALL HANDCARVED.
(C) 2001 FLEXSTEEL INDUSTRIES, INC.
[PHOTO] PHOTO COURTESY CARVER YACHTS
THE SPACIOUS MAIN CABIN OF THE CARVER 570 VOYAGER YACHT IS AN INVITATION TO
ENJOY THE DELIGHTS OF CRUISING. LEATHER IS A NATURAL CHOICE HERE, OFFERING
HANDSOME AND DURABLE COMFORT IN THE FLEXSTEEL RECLINING SECTIONAL AND SWIVEL
CHAIRS. THE CAPTAIN'S CHAIR ON THE BRIDGE IS ALSO BY FLEXSTEEL.
beauty
& COMFORT AT SEA
[LOGO] FLEXSTEEL (R) BULK RATE
AMERICA'S SEATING SPECIALIST U.S. Postage
PAID
------------------------------------- Permit # 10
Dubuque, IA
P.O. Box 877 * Dubuque IA 52004-0877
EXHIBIT 23.1
INDEPENDENT AUDITORS' REPORT
Flexsteel Industries, Inc.:
We have audited the consolidated financial statements of Flexsteel
Industries, Inc. (the Company) as of June 30, 2001 and 2000 and for each of the
three years in the period ended June 30, 2001, and have issued our report
thereon dated August 10, 2001. Such financial statements and report are included
in your Annual Report for the Fiscal Year Ended June 30, 2001 and are
incorporated herein by reference. Our audits also included the financial
statement schedule of Flexsteel Industries, Inc., listed in Item 14. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statement schedule
based on our audits. In our opinion, such financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
August 10, 2001
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
Flexsteel Industries, Inc.:
We consent to the incorporation by reference in Registration Statement
No. 33-1836 on Form S-8 as amended by Post-Effective Amendment No. 1 for the
Flexsteel Salaried Employees' Savings Plan 401(k) and in Registration Statement
No. 2-86782 on Form S-8 as amended by Post-Effective Amendment No. 3 for the
Flexsteel 1983 Stock Option Plan and in Registration Statement No. 33-26267 on
Form S-8 for the Flexsteel 1989 Stock Option Plan and in Registration Statement
No. 333-1413 on Form S-8 for the Flexsteel 1995 Stock Option Plan and in
Registration Statement No. 333-45768 on Form S-8 for the Flexsteel 1999 Stock
Option Plan of our reports dated August 10, 2001 appearing in and incorporated
by reference in the Annual Report on Form 10-K of Flexsteel Industries, Inc. for
the year ended June 30, 2001.
DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
September 20, 2001