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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) October 19, 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 October 19, 2005, Flexsteel Industries, Inc. Announces First Quarter
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 October 19,
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: October 20, 2005 By: /s/ Timothy E. Hall
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Timothy E. Hall
Vice President, CFO, and Treasurer
Principal Financial Officer
Exhibit 99.1
Flexsteel Announces First Quarter Operating Results
DUBUQUE, Iowa--(BUSINESS WIRE)--Oct. 19, 2005--Flexsteel Industries, Inc.
(NASDAQ:FLXS) today reported sales and earnings for its first quarter ended
September 30, 2005.
Net sales for the quarter ended September 30, 2005 were $97.4 million
compared to the prior year quarter of $97.9 million, a decrease of 0.4%. Net
income for the current quarter was $1.0 million or $0.15 per share compared to
$1.2 million or $0.18 per share in the prior year quarter, a decrease of 17.9%.
The prior year quarter included a net gain (after tax) of $0.4 million or $0.06
per share on the sale of a former manufacturing facility.
For the quarter ended September 30, 2005, residential net sales were $58.1
million, compared to $59.0 million, a decrease of 1.5% from the prior year
quarter. Recreational vehicle net sales were $18.3 million, compared to $21.8
million, a decrease of 16.3% from the prior year quarter. The decline in
recreational vehicle net sales is due primarily to a weaker wholesale market
environment. Commercial net sales were $21.0 million, compared to $17.1 million
in the prior year quarter, an increase of 23.5%. The increase in commercial net
sales is primarily due to improved commercial office product offerings and
improved industry performance for hospitality products.
Gross margin for the quarter ended September 30, 2005 was 19.6% compared to
18.2% in the prior year quarter. The gross margin improvement in comparison to
the prior year is a result of changes in product mix and selected price
increases implemented to offset increases in raw material and transportation
costs incurred during the prior fiscal year.
Selling, general and administrative expenses were 17.9% and 16.7% of net
sales for the quarters ended September 30, 2005 and 2004, respectively. The
increase in selling, general and administrative expenses is due to increases in
advertising, selling supplies and professional fees.
Working capital (current assets less current liabilities) at September 30,
2005 was $86.6 million, which includes cash, cash equivalents and investments of
$3.0 million. Net cash used in operating activities was $6.8 million and $1.8
million at September 30, 2005 and 2004, respectively. Fluctuations in net cash
used in operating activities were primarily the result of changes in accounts
receivable, inventories and accounts payable. The increase in inventories in
fiscal 2006 relates primarily to the expansion of import programs.
Capital expenditures were $0.2 million for the first quarter of fiscal
2006. Depreciation and amortization expense was $1.3 million and $1.5 million
for the fiscal quarters ended September 30, 2005 and 2004, respectively. The
Company expects that capital expenditures will be approximately $4.0 million for
the remainder of the fiscal year.
All earnings per share amounts are on a diluted basis.
Outlook
Flexsteel Industries, Inc., and the furniture industry in general, continue
to be impacted by increases in raw material and energy costs, as well as lower
consumer confidence and higher interest rates. While the increases in raw
material costs were modest during the first quarter ended September 30, 2005,
the month of October has been dominated by news of unprecedented cost increases
for poly foam and other materials with petrochemical content, which are major
components in our seating products, as well as increases or expected increases
in other key components such as fabric, steel and plywood. At the same time, the
furniture manufacturing industry, including Flexsteel, is faced with competition
and pricing pressures from imported products. The Company expects these adverse
business conditions to continue to have an impact on its results of operations
through the remainder of the fiscal year.
In response to the aforementioned challenges, the Company is implementing
sell price increases for seating products, and continues to explore cost control
opportunities in all facets of its business. The Company believes it has the
necessary inventories, product offerings and commitments in place to take
advantage of opportunities for expansion of certain markets, such as commercial
office and hospitality. The Company believes 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 Thursday, October
20, 2005, at 10:30 a.m. Central Time. To access the call, please dial
1-888-275-4480 and provide the operator with ID# 9654740. 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# 9654740.
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 revaluations, 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, importer and
marketer of quality upholstered and wood furniture for residential, recreational
vehicle, office, 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)
September 30, June 30,
2005 2005
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents............ $ 1,461,258 $ 1,706,584
Investments.......................... 1,574,616 1,508,751
Trade receivables, net............... 43,024,399 48,355,070
Inventories.......................... 83,141,045 69,945,400
Other................................ 5,782,824 6,281,869
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Total current assets.................... 134,984,142 127,797,674
NONCURRENT ASSETS:
Property, plant, and equipment, net.. 25,100,586 26,140,914
Other assets......................... 13,091,438 12,719,090
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TOTAL................................... $ 173,176,166 $ 166,657,678
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade............... $ 14,772,513 $ 16,259,905
Notes payable.......................... 12,642,977 5,000,000
Accrued liabilities.................... 20,996,740 21,149,428
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Total current liabilities............... 48,412,230 42,409,333
LONG-TERM LIABILITIES:
Long-term debt......................... 12,800,000 12,800,000
Other long-term liabilities............ 6,731,674 6,650,625
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Total liabilities....................... 67,943,904 61,859,958
SHAREHOLDERS' EQUITY.................... 105,232,262 104,797,720
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TOTAL................................... $ 173,176,166 $ 166,657,678
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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended
September 30,
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2005 2004
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NET SALES............................... $ 97,435,163 $ 97,855,557
COST OF GOODS SOLD...................... (78,291,968) (80,000,703)
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GROSS MARGIN............................ 19,143,195 17,854,854
SELLING, GENERAL AND ADMINISTRATIVE..... (17,486,666) (16,339,888)
GAIN ON SALE OF FACILITY................ 608,613
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OPERATING INCOME........................ 1,656,529 2,123,579
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OTHER INCOME (EXPENSE):
Interest and other income............ 169,305 133,686
Interest expense..................... (260,281) (277,123)
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Total............................. (90,976) (143,437)
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INCOME BEFORE INCOME TAXES.............. 1,565,553 1,980,142
PROVISION FOR INCOME TAXES.............. (580,000) (780,000)
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NET INCOME.............................. $ 985,553 $ 1,200,142
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AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
Basic.............................. 6,547,362 6,508,386
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Diluted............................ 6,563,180 6,583,846
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EARNINGS PER SHARE OF COMMON STOCK:
Basic.............................. $ 0.15 $ 0.18
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Diluted............................ $ 0.15 $ 0.18
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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended
September 30,
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2005 2004
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OPERATING ACTIVITIES:
Net income................................$ 985,553 $ 1,200,142
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization........... 1,320,997 1,481,773
Gain on disposition of capital assets... (18,950) (608,613)
Changes in operating assets and
liabilities............................ (9,096,331) (3,825,562)
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Net cash used in operating activities..... (6,808,731) (1,752,260)
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INVESTING ACTIVITIES:
Net purchases and sales of investments.. (27,942) 152,308
Proceeds from sale of capital assets.... 18,950 1,547,175
Capital expenditures.................... (238,889) (972,266)
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Net cash (used in) provided by investing
activities............................... (247,881) 727,217
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FINANCING ACTIVITIES:
Net proceeds of borrowings.............. 7,642,977 2,946,787
Dividends paid.......................... (850,387) (844,250)
Proceeds from issuance of common stock.. 18,696 37,852
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Net cash provided by financing activities 6,811,286 2,140,389
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(Decrease) increase in cash and cash
equivalents.............................. (245,326) 1,115,346
Cash and cash equivalents at beginning of
period................................... 1,706,584 2,476,521
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Cash and cash equivalents at end of
period...................................$ 1,461,258 $ 3,591,867
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CONTACT: Flexsteel Industries, Inc., Dubuque
Timothy E. Hall, Chief Financial Officer, 563-585-8392