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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 7, 2005
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FLEXSTEEL INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Minnesota 0-5151 42-0442319
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3400 Jackson Street, Dubuque, Iowa 52001
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 563-556-7730
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On February 7, 2005, Flexsteel Industries, Inc. Announces Second Quarter
and Year-To-Date Operating Results. See the Press Release attached hereto
as Exhibit 99.1 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
Exhibit 99.1 - Press Release by Flexsteel Industries, Inc. on February 7,
2005.
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.
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(Registrant)
Date: February 8, 2005 By: /s/ R. J. Klosterman
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R. J. Klosterman
Financial Vice President &
Principal Financial Officer
Exhibit 99.1
Flexsteel Announces Second Quarter and
Year-To-Date Operating Results
DUBUQUE, Iowa--(BUSINESS WIRE)--Feb. 7, 2005--Flexsteel
Industries, Inc. (NASDAQ:FLXS) today reported sales and earnings for
its second quarter ended December 31, 2004.
Net sales for the fiscal quarter ended December 31, 2004 were
$105.0 million compared to the prior year quarter of $109.1 million, a
decrease of 3.7%. Net income for the current quarter decreased to $1.6
million or $0.24 per share from the prior year quarter of $3.0 million
or $0.46 per share.
Net sales for the six months ended December 31, 2004 were $202.9
million compared to $186.0 million in the prior year six months, an
increase of 9.1%. Net income for the six months ended December 31,
2004 of $2.8 million or $0.42 per share decreased from net income for
the six months ended December 31, 2003 of $4.9 million or $0.75 per
share. Flexsteel acquired DMI Furniture, Inc. ("DMI") in a business
combination accounted for as a purchase as of September 17, 2003. The
net sales and operating results being reported for the prior year
includes the net sales and operating results of DMI for the period
September 18, 2003 through December 31, 2003. The net sales reported
above include $58.0 million and $35.2 million of DMI for the six
months ended December 31, 2004 and 2003, respectively.
For the quarter ended December 31, 2004, residential net sales
were $70.6 million, compared to $75.8 million, a decrease of 6.9% from
the prior year quarter. Recreational vehicle net sales were $18.9
million, compared to $20.0 million, a decrease of 5.4% from the prior
year quarter. Commercial net sales were $15.5 million, compared to
$13.3 million in the prior year quarter, an increase of 16.8%.
For the six months ended December 31, 2004, residential net sales
were $129.6 million, an increase of 3.5% from the six months ended
December 31, 2003. Recreational vehicle net sales were $40.7 million,
an increase of 0.8% from the six months ended December 31, 2003.
Commercial net sales were $32.6 million, an increase of 60.2% from the
six months ended December 31, 2003. The increase in net sales reflects
improved industry performance for commercial products in addition to
the inclusion of DMI net sales for the entire six months in 2004.
Gross margin for the quarter ended December 31, 2004 was 19.4%
compared to 21.3% in the prior year quarter. For the six months ended
December 31, 2004, the gross margin was 18.9% compared to 21.5% for
the prior year six-month period. The decreased gross margin percentage
reflects increased costs for materials, especially steel and component
parts that have steel content, and petroleum related items, including
poly foam and fuel.
Selling, general and administrative expenses were 16.8% and 16.9%
of net sales for the quarters ended December 31, 2004 and 2003,
respectively. For the six months ended December 31, 2004 and 2003,
selling, general and administrative expenses were 16.8% and 17.4%,
respectively. The decrease in the percentage of selling, general and
administrative expenses on a fiscal year-to-date basis is primarily
due to the discontinuation of the Company's retail operations in
November 2003.
During the six months ended December 31, 2004, the Company
recorded a gain on the sale of a former manufacturing facility of $0.6
million.
Working capital (current assets less current liabilities) at
December 31, 2004 was $88.2 million including cash, cash equivalents
and investments of $2.7 million. Working capital increased by $4.9
million from June 30, 2004 with operations generating $3.1 million and
an increase in long-term borrowings of $1.8 million.
Capital expenditures were $2.5 million for the second quarter of
fiscal 2005 primarily for delivery and manufacturing equipment.
Depreciation and amortization expense was approximately $2.9 million
and $2.7 million for the six-month periods ended December 31, 2004 and
2003, respectively. The Company expects that capital expenditures will
be approximately $2.0 million for the remainder of the fiscal year.
All earnings per share amounts are on a diluted basis.
Outlook
Margin pressures that started near the end of calendar year 2003
have continued throughout 2004. The cost of steel and component parts
that have steel content and petroleum related items, including fuel
and poly foam, have remained high or have continued to increase in
cost. The Company initiated actions during the fourth quarter of
fiscal year 2004 and first quarter of fiscal year 2005 in response to
these cost increases. These actions included a review of the Company's
selling prices, margins and production capacity levels resulting in
selected price increases and implementation of cost control measures
for inventories and capital assets. These actions have contributed to
an improved gross margin for the second quarter when compared to the
first quarter of the current fiscal year. These actions will continue
during the remainder of the fiscal year. The uncertainties in the
national and international economic and political fronts appear to
have the U. S. consumers taking a wait and see attitude toward
furniture purchases. The Company anticipates that these trends may
continue through the remainder of the fiscal year. The Company
continues to believe that its strategy of providing furniture from a
wide selection of domestically manufactured and imported products is
sound business practice and will continue.
Analysts Conference Call
The Company will host a conference call for analysts on Tuesday,
February 8, 2005, at 10:30 a.m. Central Time. To access the call,
please dial 1-888-275-4480 and provide the operator with ID# 2584192.
A replay will be available for two weeks beginning approximately two
hours after the conclusion of the call by dialing 1-800-642-1687 and
entering ID# 2584192.
Forward-Looking Statements
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 sales, the cost of raw materials, foreign currency
valuations, actions by governments including taxes and tariffs, the
amount of sales generated and the profit margins thereon, competition
(both foreign and domestic), changes in interest rates, credit
exposure with customers 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.
About Flexsteel
Flexsteel Industries, Inc. is headquartered in Dubuque, Iowa, and
was incorporated in 1929. Flexsteel is a designer, manufacturer,
marketer and importer of quality upholstered and wood furniture.
Products are primarily for the residential, recreational vehicle,
hospitality and healthcare markets. All products are distributed
nationally.
For more information, visit our web site at
http://www.flexsteel.com.
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
December 31, June 30,
2004 2004
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents............ $1,645,121 $2,476,521
Investments.......................... 1,026,394 1,271,417
Trade receivables, net............... 47,060,771 48,169,780
Inventories.......................... 72,294,872 68,880,118
Other................................ 5,499,649 6,690,979
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Total current assets....................... 127,526,807 127,488,815
NONCURRENT ASSETS:
Property, plant, and equipment, net.. 29,025,492 30,326,505
Other assets......................... 12,000,368 11,703,391
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TOTAL......................................$168,552,667 $169,518,711
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade................ $13,524,368 $12,272,405
Notes payable........................... 6,750,000 9,022,090
Accrued liabilities..................... 19,006,546 22,842,020
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Total current liabilities.................. 39,280,914 44,136,515
LONG-TERM LIABILITIES:
Long-term debt.......................... 19,400,000 17,583,336
Other long-term liabilities............. 6,272,873 6,187,118
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Total liabilities.......................... 64,953,787 67,906,969
SHAREHOLDERS' EQUITY....................... 103,598,880 101,611,742
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TOTAL......................................$168,552,667 $169,518,711
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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended
December 31, December 31,
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2004 2003 2004 2003
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NET SALES......$105,050,826 $109,102,095 $202,906,383 $185,959,134
COST OF GOODS
SOLD.......... (84,650,206) (85,896,001) (164,650,909) (145,902,843)
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GROSS MARGIN... 20,400,620 23,206,094 38,255,474 40,056,291
SELLING,
GENERAL AND
ADMINI-
STRATIVE...... (17,670,182) (18,370,257) (34,010,070) (32,328,336)
GAIN ON SALE OF
FACILITY...... 608,613
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OPERATING
INCOME........ 2,730,438 4,835,837 4,854,017 7,727,955
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OTHER INCOME
(EXPENSE):
Interest
and other
income... 161,000 301,389 294,686 523,505
Interest
expense.. (266,870) (125,826) (543,993) (170,145)
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Total (105,870) 175,563 (249,307) 353,360
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INCOME BEFORE
INCOME TAXES.. 2,624,568 5,011,400 4,604,710 8,081,315
PROVISION FOR
INCOME TAXES.. (1,020,000) (1,995,000) (1,800,000) (3,200,000)
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NET INCOME..... $1,604,568 $3,016,400 $2,804,710 $4,881,315
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AVERAGE NUMBER
OF COMMON
SHARES
OUTSTANDING:
Basic... 6,537,071 6,448,814 6,522,729 6,392,624
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Diluted. 6,617,606 6,520,575 6,600,727 6,475,882
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EARNINGS PER
SHARE OF
COMMON
STOCK:
Basic... $0.25 $0.47 $0.43 $0.76
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Diluted. $0.24 $0.46 $0.42 $0.75
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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended
December 31,
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2004 2003
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OPERATING ACTIVITIES:
Net income.............................. $2,804,710 $4,881,315
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization....... 2,937,938 2,714,097
(Gain) loss on disposition of
capital assets..................... (608,513) 214,425
Changes in operating assets and
liabilities, net of acquisitions... (3,014,076) 569,164
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Net cash provided by operating
activities............................. 2,120,059 8,379,001
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INVESTING ACTIVITIES:
Net purchases and sales of
investments........................ 44,230 8,327,622
Payments received from customers on
notes receivable................... 172,350
Proceeds from sale of capital assets 1,581,575 73,478
Capital expenditures................ (2,508,987) (3,168,662)
Acquisition of DMI Furniture, Inc.,
net of cash acquired............... (19,322,174)
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Net cash used in investing activities... (883,182) (13,917,386)
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FINANCING ACTIVITIES:
Net proceeds and repayment of
borrowings......................... (455,427) (4,676,258)
Dividends paid...................... (1,693,817) (835,817)
Proceeds from issuance of common
stock.............................. 80,967 517,498
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Net cash used in financing activities... (2,068,277) (4,994,577)
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Decrease in cash and cash equivalents... (831,400) (10,532,962)
Cash and cash equivalents at beginning
of period.............................. 2,476,521 12,811,385
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Cash and cash equivalents at end of
period................................. $1,645,121 $2,278,423
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CONTACT: Flexsteel Industries, Inc., Dubuque
Timothy E. Hall, Treasurer, 563-585-8392