SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the quarterly period ended September 30, 2002
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQURIED]
For the transition period from to
Commission file number 0-5151
Incorporated in State of Minnesota I.R.S. Identification No. 42-0442319
FLEXSTEEL INDUSTRIES, INC.
P. O. BOX 877
DUBUQUE, IOWA 52004-0877
Area code 563 Telephone 556-7730
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_. No ___.
Common Stock - $1.00 Par Value
Shares Outstanding as of September 30, 2002 6,238,006
-----------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, June 30,
2002 2002
------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ....................................... $ 14,480,094 $ 5,375,683
Investments ..................................................... 11,138,503 15,876,088
Trade receivables - less allowance for doubtful accounts:
September 30, 2002, $2,800,000;
June 30, 2002, $2,540,000 ................................... 30,598,442 31,361,285
Inventories ..................................................... 32,512,669 30,322,288
Deferred income taxes ........................................... 4,500,000 4,500,000
Other ........................................................... 1,441,535 1,316,136
------------- -------------
Total current assets ................................................ 94,671,243 88,751,480
PROPERTY, PLANT, AND EQUIPMENT
At cost less accumulated depreciation:
September 30, 2002, $64,604,237
June 30, 2002, $63,674,333 ...................................... 21,216,898 20,558,338
DEFERRED INCOME TAXES ............................................... 700,000 700,000
OTHER ASSETS ........................................................ 8,301,590 8,739,940
------------- -------------
TOTAL ............................................................... $ 124,889,731 $ 118,749,758
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade ............................................ $ 9,514,530 $ 4,876,260
Accrued liabilities:
Payroll and related items ....................................... 4,704,685 5,454,501
Insurance ....................................................... 7,505,610 7,066,148
Restructuring ................................................... 1,714,129 1,700,609
Other ........................................................... 7,062,010 6,775,889
Industrial revenue bonds payable .................................... 650,000 650,000
------------- -------------
Total current liabilities ........................................... 31,150,964 26,523,407
DEFERRED COMPENSATION ............................................... 4,632,286 4,509,782
------------- -------------
Total liabilities ................................................... 35,783,250 31,033,189
------------- -------------
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 September 30, 2002, 6,238,006 shares;
outstanding June 30, 2002, 6,198,551 shares ................. 6,238,006 6,198,551
Additional paid-in capital ...................................... 974,989 492,223
Retained earnings ............................................... 81,976,026 80,756,107
Accumulated other comprehensive income (loss) ................... (82,540) 269,688
------------- -------------
Total shareholders' equity .......................................... 89,106,481 87,716,569
------------- -------------
TOTAL ............................................................... $ 124,889,731 $ 118,749,758
============= =============
See accompanying Notes to Consolidated Financial Statements (Unaudited).
- --------------------------------------------------------------------------------
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended
September 30,
-----------------------------
2002 2001
------------ ------------
NET SALES ............................................................. $ 70,019,376 $ 63,207,570
COST OF GOODS SOLD .................................................... (54,726,815) (50,447,109)
------------ ------------
GROSS MARGIN .......................................................... 15,292,561 12,760,461
SELLING, GENERAL AND ADMINISTRATIVE ................................... (12,677,317) (12,704,168)
GAIN ON SALE OF LAND .................................................. 403,065
------------ ------------
OPERATING INCOME ...................................................... 3,018,309 56,293
------------ ------------
OTHER:
Interest and other income ........................................ 315,339 258,622
Interest expense ................................................. (2,788) (8,022)
------------ ------------
Total ................................................................. 312,551 250,600
------------ ------------
INCOME BEFORE INCOME TAXES ............................................ 3,330,860 306,893
PROVISION FOR INCOME TAXES ............................................ (1,300,000) (110,000)
------------ ------------
NET INCOME ............................................................ $ 2,030,860 $ 196,893
============ ============
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
BASIC .......................................................... 6,212,912 6,058,693
============ ============
DILUTED ........................................................ 6,323,010 6,112,397
============ ============
EARNINGS PER SHARE OF COMMON STOCK:
BASIC ......................................................... $ 0.33 $ 0.03
============ ============
DILUTED ....................................................... $ 0.32 $ 0.03
============ ============
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
Three Months Ended
September 30,
-----------------------------
2002 2001
------------ ------------
NET INCOME ............................................................ $ 2,030,860 $ 196,893
------------ ------------
OTHER COMPREHENSIVE INCOME (LOSS), BEFORE TAX:
Unrealized gains (losses) on securities arising during period .... (584,748) (516,857)
Reclassification adjustment for losses included in net income .... 13,047 16,500
------------ ------------
Other comprehensive income (loss), before tax ......................... (571,701) (500,357)
------------ ------------
INCOME TAX BENEFIT (EXPENSE):
Income tax benefit related to securities losses arising during period . 224,561 185,035
Income tax expense related to securities reclassification adjustment .. (5,088) (5,907)
------------ ------------
Income tax benefit related to other comprehensive income (loss) ....... 219,473 179,128
------------ ------------
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX ......................... (352,228) (321,229)
------------ ------------
COMPREHENSIVE INCOME (LOSS) ........................................... $ 1,678,632 $ (124,336)
============ ============
See accompanying Notes to Consolidated Financial Statements (Unaudited).
- --------------------------------------------------------------------------------
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
Three Months Ended
September 30,
-----------------------------
2002 2001
------------ ------------
OPERATING ACTIVITIES:
Net Income ................................................... $ 2,030,860 $ 196,893
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ............................................. 1,158,880 1,394,928
(Gain) loss on disposition of capital assets ............. (422,065) (15,530)
Changes in operating assets and liabilities:
Trade receivables ..................................... 506,970 (1,661,612)
Inventories ............................................. (2,190,381) 244,533
Other current assets .................................... (125,397) 500,585
Other assets ............................................ (15,077) (15,076)
Accounts payable - trade ................................ 4,638,270 (258,012)
Accrued liabilities ..................................... 482,120 1,212,547
Deferred compensation ................................... 122,504 120,000
------------ ------------
Net cash provided by operating activities .................... 6,186,684 1,719,256
------------ ------------
INVESTING ACTIVITIES:
Purchases of investments ................................. (2,877,801) (4,139,734)
Proceeds from sales of investments ....................... 7,693,225 609,253
Payments received from customers on notes ................ 279,231 36,084
Proceeds from sales of capital assets .................... 581,196 19,100
Capital expenditures ..................................... (1,976,570) (52,290)
------------ ------------
Net cash provided by (used in) investing activities .......... 3,699,281 (3,527,587)
------------ ------------
FINANCING ACTIVITIES:
Dividends paid ........................................... (805,785) (784,447)
Proceeds from issuance of common stock ................... 24,231 18,626
------------ ------------
Net cash used in financing activities ........................ (781,554) (765,821)
------------ ------------
Increase (decrease) in cash and cash equivalents ............. 9,104,411 (2,574,152)
Cash and cash equivalents at beginning of year ............... 5,375,683 10,048,562
------------ ------------
Cash and cash equivalents at end of period ................... $ 14,480,094 $ 7,474,410
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest ................................................ $ 2,700 $ 8,500
Income taxes ............................................ $ 1,425,000 $ 19,000
See accompanying Notes to Consolidated Financial Statements (Unaudited).
- --------------------------------------------------------------------------------
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. These financial statements do not include certain information and footnotes
required by accounting principles generally accepted in the United States
of America for complete financial statements. However, in the opinion of
management, all adjustments considered necessary for a fair presentation
have been included and are of a normal recurring nature. Operating results
for the three-month period ended September 30, 2002 are not necessarily
indicative of the results that may be expected for the fiscal year ending
June 30, 2003.
DESCRIPTION OF BUSINESS - Flexsteel Industries, Inc. (the Company)
manufactures a broad line of 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 has two wholly owned
subsidiaries: (1) Desert Dreams, Inc. owns and leases a commercial building
to an unrelated entity, and (2) Four Seasons, Inc. operates three retail
furniture stores. All significant intercompany accounts and transactions
have been eliminated.
2. Inventories are categorized as follows:
September 30, June 30,
2002 2002
------------- -------------
Raw materials ............................ $ 15,025,296 $ 15,623,962
Work in process and finished parts ....... 7,881,224 8,092,398
Finished goods ........................... 9,606,149 6,605,928
------------- -------------
Total ............... $ 32,512,669 $ 30,322,288
============= =============
3. 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 110,098 shares and 53,704 shares in quarters ended September 30,
2002 and 2001, respectively. The Company calculates the dilutive effect of
outstanding options using the treasury stock method. Options to purchase
9,000 and 136,000 shares of common stock were outstanding during the three
months ended September 30, 2002 and 2001, respectively, but were not
included in the computation of diluted earnings per share as their exercise
prices were greater than the average market price of the common shares.
4. ACCOUNTING DEVELOPMENTS - In August 2001, the FASB issued SFAS No. 144,
ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS. SFAS No.
144 addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and supersedes SFAS No. 121, ACCOUNTING FOR
THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE
DISPOSED OF, along with certain other reporting standards. SFAS No. 144 was
effective for the Company on July 1, 2002. The adoption of SFAS No. 144 did
not have a material impact on the Company's financial position or results
of operations.
In April 2002, the FASB issued SFAS No. 145, RESCISSION OF FASB STATEMENTS
NO. 4, 44, AND 64, AMENDMENT OF FASB STATEMENT NO. 13, AND TECHNICAL
CORRECTIONS. SFAS No. 145 was effective for the Company on July 1, 2002.
The adoption of the technical corrections contained in SFAS No. 145 did not
have a material impact on the Company's financial position or results of
operations.
In June 2002, the FASB issued SFAS No. 146, ACCOUNTING FOR COSTS ASSOCIATED
WITH EXIT OR DISPOSAL Activities. SFAS No. 146 addresses financial
accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
LIABILITY RECOGNITION FOR CERTAIN EMPLOYEE TERMINATION BENEFITS AND OTHER
COSTS TO EXIT AN ACTIVITY (INCLUDING CERTAIN COSTS INCURRED IN A
RESTRUCTURING). SFAS No. 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized when the
liability is incurred. Under EITF 94-3, a liability for an exit cost was
recognized at the date of an entity's commitment to an exit plan. SFAS No.
146 will be effective for exit or disposal activities that are initiated by
the Company after December 31, 2002.
5. RESTRUCTURING - The Company established an accrual for restructuring
liabilities in fiscal 2002 for estimated employee separation costs and
facility closing costs related to the closure of (1) the Elkhart, Indiana
manufacturing facility and (2) a retail store. The accrual includes
estimated employee severance, inventory write-offs, and lease commitments
with no future benefit to the Company. Utilization of the accrual may
differ from the initial restructuring charge as amounts are paid and become
known to the Company.
The following table summarizes the activity related to the restructuring
charges during the quarter ended September 30, 2002:
Employee Facility
Separation Closing
Costs Costs Total
---------- ---------- ----------
Accrued restructuring costs at June 30, 2002 ....... $ 431,793 $1,268,816 $1,700,609
Recovery (utilization) for the period ended
September 30, 2002 .............................. 13,520 13,520
---------- ---------- ----------
Accrued restructuring costs at September 30, 2002 .. $ 431,793 $1,282,336 $1,714,129
========== ========== ==========
6. SEGMENTS - The Company operates in two reportable operating segments:
(1) Seating Products and (2) Retail Stores. The Seating Products segment
involves the manufacturing of a broad line of upholstered furniture for
residential, recreational vehicle, and commercial seating markets. The
Company's products are sold primarily throughout the United States by the
Company's internal sales force and various independent representatives. The
Retail Stores segment involves the operation of three retail furniture
stores that offer the Company's residential seating products for sale
directly to consumers. No single customer accounted for more than 10% of
sales in either of the Company's two segments.
Segment operating income is based on profit or loss from operations before
interest income and expense, other income and income taxes.
Segment information for the quarter ended September 30, 2002 is as follows:
Seating Retail
Products Stores Total
------------ ------------ ------------
Net sales ....................................... $ 68,735,969 $ 1,283,407 $ 70,019,376
Operating income (loss) ......................... 3,283,946 (265,637) 3,018,309
Depreciation .................................... 1,126,953 31,927 1,158,880
Capital expenditures ............................ 1,976,570 0 1,976,570
Assets .......................................... 122,863,706 2,026,025 124,889,731
Segment information for the quarter ended September 30, 2001 is as follows:
Seating Retail
Products Stores Total
------------ ------------ ------------
Net sales ....................................... $ 61,693,453 $ 1,514,117 $ 63,207,570
Operating income (loss) ......................... 636,292 (579,999) 56,293
Depreciation .................................... 1,349,217 45,711 1,394,928
Capital expenditures ............................ 49,353 2,937 52,290
Assets .......................................... 107,651,029 2,827,819 110,478,848
7. RECLASSIFICATIONS - Certain prior year amounts have been reclassified to
conform to the current period presentation. These reclassifications had no
impact on net income or shareholders' equity as previously reported.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations:
- ---------------------
Three months ended September 30, 2002 compared to three months ended September
30, 2001.
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.
CRITICAL ACCOUNTING POLICIES:
The discussion and analysis of the Company's consolidated financial statements
and results of operations are based on consolidated financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America. Preparation of these consolidated financial statements
requires the use of estimates and judgments that affect the reported results.
Actual results may differ from these estimates under different assumptions or
conditions.
USE OF ESTIMATES - the Company uses estimates based on the best information
available in recording transactions and balances resulting from business
operations. Estimates are used for such items as collectability of trade
accounts receivable, inventory valuation, depreciable lives, self-insurance
programs, restructuring costs, warranties and income taxes.
ALLOWANCE FOR DOUBTFUL ACCOUNTS - the Company establishes an allowance for
doubtful accounts through review of open accounts, and historical collection and
allowances amounts. The allowance for doubtful accounts is intended to reduce
trade accounts receivable to the amount that reasonably approximates their fair
value due to their short-term nature. The amount ultimately realized from trade
accounts receivable may differ from the amount estimated in the financial
statements based on collection experience and actual returns and allowances.
INVENTORIES - the Company values inventory 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.
Changes in the market conditions could require a write down of inventory.
SELF-INSURANCE PROGRAMS - 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. Losses are accrued based upon the Company's
estimates of the aggregate liability of claims incurred using certain actuarial
assumptions followed in the insurance industry and based on Company experience.
The actual claims experience could differ from the estimates made by the
Company.
RESTRUCTURING - the Company established an accrual for restructuring liabilities
in fiscal 2002 for estimated employee separation costs and facility closing
costs related to the closure of (1) the Elkhart, Indiana manufacturing facility
and (2) a retail store. The accrual includes estimated employee severance,
inventory write-offs, and lease commitments with no future benefit to the
Company. Utilization of the accrual may differ from the initial restructuring
charge as amounts are paid and become known to the Company.
WARRANTY EXPENSE - the Company estimates the amount of warranty claims on sold
product that may be incurred based on current and historical data. The actual
warranty expense could differ from the estimates made by the Company based on
product performance.
REVENUE RECOGNITION - is upon delivery of product. Net sales consist of product
sales and related delivery charge revenue, net of adjustments for returns and
allowances. The actual amounts for returns and allowances could differ from the
estimated amounts.
The following table has been prepared as an aid in understanding the Company's
results of operations on a comparative basis for the first quarters ended
September 30, 2002 and 2001. Amounts presented are percentages of the Company's
net sales.
First Quarter Ended
September 30,
---------------------
2002 2001
--------- ---------
Net sales.......................................... 100.0% 100.0%
Cost of goods sold................................. (78.2) (79.8)
--------- ---------
Gross margin....................................... 21.8 20.2
Selling, general and administrative expense........ (18.1) (20.1)
Gain on sale of land............................... 0.6
--------- ---------
Operating income................................... 4.3 0.1
Other income, net.................................. 0.5 0.4
--------- ---------
Income before income taxes......................... 4.8 0.5
Income tax expense................................. (1.9) (0.2)
--------- ---------
Net income......................................... 2.9% 0.3%
========= =========
RESULTS OF OPERATIONS FOR THE QUARTER- Net sales for the quarter ended September
30, 2002 increased by $6.8 million or 10.8% compared to the prior year quarter.
Residential sales volume increased $4.2 million or 10.2%. Recreational vehicle
seating sales increased $3.1 million or 18.5%. Commercial seating volume
decreased $0.5 million or 11.3%. The increase in net sales reflects a recovery
in the economy and rising consumer confidence.
Gross margin increased $2.5 million to $15.3 million or 21.8% of net sales in
the current quarter, from $12.8 million or 20.2% in the prior year quarter. The
increase in gross margin largely reflects higher sales and production volume,
which resulted in improved absorption of fixed costs and, to a lesser degree,
changes in product mix.
Selling, general and administrative expenses as a percentage of net sales were
18.1% and 20.1% for the current quarter and prior year quarter, respectively.
The cost percentage decrease was due to improved fixed cost absorption on the
higher net sales.
During the current quarter, the Company sold land adjacent to its Lancaster,
Pennsylvania factory at a net gain (after tax) of $0.2 million or $0.04 per
share.
The above factors resulted in current fiscal quarter net income of $2.0 million
or $0.32 per share. Excluding the current quarter gain on sale of land, net
income was $1.8 million or $0.28 per share, significantly higher than the prior
year quarter of $0.2 million or $0.03 per share, an increase of $1.6 million or
$0.25 per share.
All earnings per share amounts are on a diluted basis.
Liquidity and Capital Resources:
- -------------------------------
Working capital at September 30, 2002 was $63.5 million, which includes cash,
cash equivalents and investments of $25.6 million. Working capital increased by
$1.3 million from the June 30, 2002 amount.
Cash, cash equivalents and investments increased by $4.4 million during the
quarter ended September 30, 2002. Net cash provided by operating activities was
$6.2 million during the current quarter versus $1.7 million in the prior year
quarter. The increase in cash and cash equivalents primarily resulted from the
maturity of certain short-term investments and an increase in accounts payable.
Capital expenditures were $2.0 million during the first three months of fiscal
year 2003 and $0.1 million in the prior year quarter. The current quarter
expenditures were incurred primarily for manufacturing equipment and delivery
equipment. During the next nine months, it is anticipated that $1.0 million will
be spent on manufacturing and delivery equipment. The funds for projected
capital expenditures are expected to be provided by cash generated from
operations and available cash.
Item 3. Quantitative and Qualitative Information About Market Risk
Not applicable
Item 4. Controls and Procedures
With the participation of management, the Company's chief executive officer and
chief financial officer evaluated the Company's disclosure controls and
procedures on October 8, 2002. Based on this evaluation, the chief executive
officer and the chief financial officer concluded that the disclosure controls
and procedures are effective in connection with the Company's filing of its
quarterly report on Form 10-Q for the quarterly period ended September 30, 2002.
Subsequent to October 8, 2002 through the date of this filing of Form 10-Q for
the quarterly period ended September 30, 2002, there have been no significant
changes in the Company's internal controls or in other factors that could
significantly affect these controls.
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 herein. Investors are cautioned
that all forward-looking statements involve risk and uncertainty. Some of the
factors that could affect results are the cyclical nature of the furniture
industry, 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, competition, both foreign and domestic, credit exposure to our
customers, 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 OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
The registrant did not file a report on Form 8-K during the quarter for which
this report is filed.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned officer thereunto duly authorized.
FLEXSTEEL INDUSTRIES, INC.
Date: October 18, 2002 By: /S/ R. J. Klosterman
---------------- ---------------------------------
R.J. Klosterman
Financial Vice President &
Principal Financial Officer
CERTIFICATION BY CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, K. Bruce Lauritsen, Chief Executive Officer of Flexsteel Industries, Inc.,
certify that:
1. I have reviewed this quarterly report on Form 10-Q of Flexsteel
Industries, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: October 18, 2002
----------------------
By: /S/ K. BRUCE LAURITSEN
------------------------------------
K. Bruce Lauritsen
Chief Executive Officer
CERTIFICATION BY CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Ronald J. Klosterman, Chief Financial Officer of Flexsteel Industries, Inc.,
certify that:
1. I have reviewed this quarterly report on Form 10-Q of Flexsteel
Industries, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: October 18, 2002
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By: /S/ R. J. KLOSTERMAN
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Ronald J. Klosterman
Chief Financial Officer