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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) February 4, 2004
(Exact name of registrant as specified in its charter)
Flexsteel Industries, Inc.
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Minnesota 0-5151 42-0442319
________________________________________________________________________________
Registrant's telephone number, including area code 563-556-7730
Item 5. Other Events
On February 4, 2004, Flexsteel Industries, Inc. Announces Second Quarter
and Year-to-Date Operating Results. See the Press Release attached hereto and
incorporated herein for further information.
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 hereunto duly authorized.
Flexsteel Industries, Inc.
____________________________________
(Registrant)
Date: February 4, 2004 By: /s/ R. J. Klosterman
____________________________________
R. J. Klosterman
Financial Vice President &
Principal Financial Officer
Exhibit 99
Flexsteel Announces Second Quarter and
Year-to-Date Operating Results
DUBUQUE, Iowa--(BUSINESS WIRE)--Feb. 4, 2004--Flexsteel
Industries, Inc. (Nasdaq:FLXS) today reported sales and earnings for
its second quarter ended December 31, 2003.
Effective September 18, 2003, Flexsteel Industries, Inc. acquired
DMI Furniture, Inc. (DMI) in a business combination accounted for as a
purchase. The operating results of DMI for the period September 18
through December 31, 2003 are included in the reported amounts.
Net sales for the fiscal quarter ended December 31, 2003 were
$109.1 million compared to the prior year quarter of $73.6 million, an
increase of 48.3 %. Net income for the current quarter was $3.0
million or $0.46 per share compared to the prior year quarter of $2.2
million or $0.35 per share.
Net sales for the six months ended December 31, 2003 were $186.0
million compared to $143.6 million in the prior year six months, an
increase of 29.5%. Net income for the six months ended December 31,
2003 of $4.9 million or $0.75 per share increased from net income for
the six months ended December 31, 2002 of $4.2 million or $0.67 per
share.
During the current quarter, residential net sales were $75.8
million (includes $24.8 million of DMI), an increase of 50.2% from the
prior year quarter. Recreational vehicle net sales were $20.0 million,
an increase of 12.4%. Commercial net sales were $13.3 million
(includes $7.3 million of DMI), an increase of 150.2%.
For the six months ended December 31, 2003, residential net sales
were $125.3 million (includes $26.5 million of DMI), an increase of
29.8% over the six months ended December 31, 2002. Recreational
vehicle net sales were $40.4 million, an increase of 7.6%. Commercial
net sales were $20.3 million (includes $8.7 million of DMI), an
increase of 112.7%. The increase in net sales reflects improved
industry performance for vehicle and commercial products in addition
to DMI net sales.
Gross margin for the quarter ended December 31, 2003 was 21.3%
compared to 23.5% in the prior year quarter. For the six months ended
December 31, 2003 the gross margin was 21.5% compared to 22.7% for the
prior year six-month period. The decreased gross margin percentage
reflects a lower gross margin on DMI products.
Selling, general and administrative expenses were 16.9% and 19.0%
for the quarters ended December 31, 2003 and 2002, respectively. For
the six months ended December 31, 2003 and 2002, selling, general and
administrative expenses were 17.4% and 18.6%, respectively. The
decrease in the percentage of selling, general and administrative
expenses is due primarily to the lower percentage cost related to DMI
sales.
During the prior year six months ended December 31, 2002, the
Company recorded a net gain (after tax) of $0.2 million or $0.04 per
share on the sale of land.
Working capital at December 31, 2003 was $82.9 million, which
includes cash, cash equivalents and investments of $3.5 million. Cash
and investments have decreased from June 30, 2003 due to the purchase
of DMI that required $19.3 million and the reduction of long-term debt
of $4.7 million. Working capital has increased by $15.2 million from
June 30, 2003. Working capital has decreased by $2.5 million from
September 30, 2003 to December 31, 2003, primarily due to the
reduction of long-term debt.
Capital expenditures, excluding the acquisition of DMI, were $3.2
million during the first six months of fiscal 2004 and $3.4 million in
the first six months of fiscal 2003. The Company expects that capital
expenditures will be approximately $3.3 million over the remainder of
fiscal 2004. Depreciation expense was $2.7 million and $2.4 million
for the six months ended December 31, 2003 and 2002, respectively.
All earnings per share amounts are on a diluted basis.
The Company will host a conference call Thursday, February 5,
2004, at 10:00 a.m. Central Time. The dial-in-number is 800-556-3831
with an access code of 00566. A replay will be available for two weeks
beginning approximately four hours after the conclusion of the call.
The dial-in-number for the replay is 888-813-1488 and no access code
is required.
For more information, visit our web site at
http://www.flexsteel.com.
Statements, including those in this release, 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, currency
fluctuations, actions by governments including taxes and tariffs, the
amount of sales generated and the profit margins thereon, competition,
both foreign and domestic, credit exposure to our customers, the
ability to successfully integrate DMI into the Company's operations,
and general economic conditions. Any forward-looking statement speaks
only as of the date of this press release. 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 Industries, Inc., headquartered in Dubuque, is one of
the oldest and largest manufacturers and marketers of residential,
recreational vehicle, healthcare and hospitality upholstered seating
in the country. Flexsteel recently purchased DMI Furniture, Inc., a
design, manufacturing and marketing company of residential, commercial
and home office furniture. A long-established company with quality
lines including bedroom and dining room furniture, DMI dovetails with
Flexsteel in philosophy and markets. Both Flexsteel and DMI product
lines are distributed nationally.
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
December 31, June 30,
2003 2003
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............$ 2,278,423 $ 12,811,385
Investments.......................... 1,261,089 9,531,913
Trade receivables, net............... 46,193,855 29,612,278
Inventories.......................... 60,971,572 32,473,287
Other................................ 8,329,964 5,393,426
------------ ------------
Total current assets....................... 119,034,903 89,822,289
PROPERTY, PLANT, AND EQUIPMENT, net........ 30,313,830 20,377,797
OTHER ASSETS............................... 10,946,266 10,500,196
------------ ------------
TOTAL......................................$160,294,999 $120,700,282
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade................$ 12,422,918 $ 2,747,226
Current portion of long-term debt....... 1,000,008
Accrued liabilities..................... 22,697,924 19,409,504
------------ ------------
Total current liabilities.................. 36,120,850 22,156,730
------------ ------------
LONG-TERM LIABILITIES:
Long-term debt, less current portion.... 19,870,345
Other long-term liabilities............. 6,212,164 4,790,225
------------ ------------
Total long-term liabilities................ 26,082,509 4,790,225
------------ ------------
Total liabilities.......................... 62,203,359 26,946,955
SHAREHOLDERS' EQUITY....................... 98,091,640 93,753,327
------------ ------------
TOTAL......................................$160,294,999 $120,700,282
============ ============
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended
December 31, December 31,
--------------------------- ---------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
NET SALES......$109,102,095 $73,580,061 $185,959,134 $143,599,437
COST OF GOODS
SOLD.......... (85,896,001) (56,214,774) (145,902,843) (110,941,589)
------------- ------------- ------------- -------------
GROSS MARGIN... 23,206,094 17,365,287 40,056,291 32,657,848
SELLING,
GENERAL AND
ADMINISTRATIVE (18,370,257) (14,007,513) (32,328,336) (26,684,830)
GAIN ON SALE OF
LAND.......... 403,065
------------- ------------- ------------- -------------
OPERATING
INCOME........ 4,835,837 3,357,774 7,727,955 6,376,083
------------- ------------- ------------- -------------
OTHER:
Interest
and
other
income.. 301,389 291,729 523,505 607,068
Interest
expense. (125,826) (3,260) (170,145) (6,048)
-------------- ------------- ------------- -------------
Total. 175,563 288,469 353,360 601,020
-------------- ------------- ------------- -------------
INCOME BEFORE
INCOME TAXES. 5,011,400 3,646,243 8,081,315 6,977,103
PROVISION FOR
INCOME TAXES. (1,995,000) (1,430,000) (3,200,000) (2,730,000)
-------------- ------------- ------------- -------------
NET INCOME.... $3,016,400 $2,216,243 $4,881,315 $4,247,103
============== ============= ============= =============
AVERAGE NUMBER
OF COMMON
SHARES
OUTSTANDING:
BASIC.. 6,448,814 6,247,512 6,392,624 6,230,212
============= ============= ============= =============
DILUTED 6,520,575 6,358,711 6,475,882 6,340,860
============= ============= ============= =============
EARNINGS PER
SHARE OF
COMMON
STOCK:
BASIC.. $0.47 $0.35 $0.76 $0.68
============= ============= ============= =============
DILUTED $0.46 $0.35 $0.75 $0.67
============= ============= ============= =============
CONTACT: Flexsteel Industries, Inc., Dubuque
Timothy E. Hall, Treasurer, 563-585-8392