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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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, 2006
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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, 2006, Flexsteel Industries, Inc. Announces First Quarter
Fiscal 2007 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,
2006.
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, 2006 By: /s/ Timothy E. Hall
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Timothy E. Hall
Vice President-Finance, CFO,
and Secretary
Principal Financial Officer
Exhibit 99.1
Flexsteel Announces First Quarter Fiscal 2007 Operating Results
DUBUQUE, Iowa--(BUSINESS WIRE)--Oct. 19, 2006--Flexsteel
Industries, Inc. (NASDAQ:FLXS) today reported sales and earnings for
its first fiscal quarter ended September 30, 2006.
The Company reported net sales for the quarter ended September 30,
2006 of $101.3 million compared to the prior year quarter of $97.4
million, an increase of 4.0%. Net income for the current quarter was
$0.6 million or $0.09 per share compared to $1.0 million or $0.15 per
share in the prior year quarter, a decrease of 42.9%.
For the quarter ended September 30, 2006, residential net sales
were $56.9 million, a decrease of 2.2% from the prior year quarter net
sales of $58.1 million. Recreational vehicle net sales were $15.9
million, a decrease of 12.8% from the prior year quarter net sales of
$18.3 million. Commercial net sales were $28.5 million compared to
$21.0 million in the prior year quarter, an increase of 35.7%.
Gross margin for the quarter ended September 30, 2006 was 18.2%
compared to 19.6% in the prior year quarter. The gross margin decline
is a result of increased manufacturing and warehousing costs, and
under absorption of fixed manufacturing costs.
Selling, general and administrative expenses were 17.1% and 17.9%
of net sales for the quarters ended September 30, 2006 and 2005,
respectively. The decrease in quarterly SG&A expenses is due primarily
to lower collection related expenses and reduction in other
administrative expenses when compared to the prior year quarter.
Working capital (current assets less current liabilities) at
September 30, 2006 was $97.5 million compared to $86.6 million at
September 30, 2005. Net cash provided by operating activities was $4.9
million at September 30, 2006. Net cash used in operating activities
was $6.8 million at September 30, 2005.
Capital expenditures were $0.6 million for the quarter ended
September 30, 2006. Depreciation and amortization expense was $1.4
million and $1.3 million for the fiscal quarters ended September 30,
2006 and 2005, respectively. The Company expects that capital
expenditures will be approximately $4.0 million for the remainder of
the 2007 fiscal year as compared to $3.4 million for the prior fiscal
year.
All earnings per share amounts are on a diluted basis.
Outlook
The U. S. economy and the U.S. furniture industry, including
Flexsteel, have always been impacted by world events. However, with
the increasing globalization of world markets and economies, the
impact of change, both positive and negative, is felt sooner and
stronger than ever before. As conflicts play out in various regions of
the world, there is uncertainty related to interest rates and
volatility with respect to energy costs, factors that we believe will
continue to have an adverse effect on the demand for the products that
we design, manufacture and market.
Retail furniture stores, the primary driver of demand for our
residential seating products, have faced a very challenging business
environment for the last eighteen months. The demand for recreational
vehicles at the wholesale level is the main driving force for our
products in the recreational vehicle seating application. Despite the
generally favorable longer-term demographics that are expected by the
recreational vehicle industry, current demand at the wholesale level
has been soft. Improvement in this industry is not expected until the
next model year is introduced late in our fourth quarter of the 2007
fiscal year. Our products intended for commercial applications have
been well received and the demand for these products is expected to
remain strong for the remainder of the 2007 fiscal year.
We continue to take actions to address top line growth for each
product application and our overall profitability by focusing on those
areas that we can control or significantly influence including: new
product introductions, refining existing product offerings, adjusting
selling and delivery prices, adjusting production capacity and levels
and implementing cost control measures for inventory and capital
expenditures. Our management believes that we are in a position to
respond to the rapid changes that are affecting most of the markets we
serve. We will continue to develop products for alternative
applications and distribution.
We believe that our strategy of providing furniture from a
selection of domestically manufactured and imported products is sound
business practice. We believe that this blended strategy gives us the
opportunity to successfully participate in all the important avenues
of furniture distribution in the United States.
Analysts Conference Call
We will host a conference call for analysts on Friday, October 20,
2006, at 10:30 a.m. Central Time. To access the call, please dial
1-888-275-4480 and provide the operator with ID# 6204349. 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# 6204349.
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 our results to differ materially from those
anticipated by some of the statements made in this press release.
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 and distribution channels, the product
mix of sales, pricing pressures, the cost of raw materials and fuel,
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. We specifically decline 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,
2006 2006
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents......... $ 3,363,983 $ 1,985,768
Investments....................... 871,044 817,618
Trade receivables, net............ 47,364,631 51,179,791
Inventories....................... 84,672,252 84,769,972
Other............................. 5,855,301 6,634,121
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Total current assets.................... 142,127,211 145,387,270
NONCURRENT ASSETS:
Property, plant, and equipment,
net.............................. 23,394,373 24,158,041
Other assets...................... 13,570,608 13,780,393
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TOTAL................................... $ 179,092,192 $ 183,325,704
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade............. $ 15,131,207 $ 15,768,435
Notes payable and current maturities
of long-term debt................... 7,482,430 9,466,643
Accrued liabilities.................. 21,991,227 23,164,927
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Total current liabilities............... 44,604,864 48,400,005
LONG-TERM LIABILITIES:
Long-term debt....................... 21,713,839 21,846,386
Other long-term liabilities.......... 5,586,195 5,576,988
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Total liabilities....................... 71,904,898 75,823,379
SHAREHOLDERS' EQUITY.................... 107,187,294 107,502,325
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TOTAL................................... $ 179,092,192 $ 183,325,704
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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended
September 30,
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2006 2005
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NET SALES................................. $101,339,556 $ 97,435,163
COST OF GOODS SOLD........................ (82,934,329) (78,291,968)
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GROSS MARGIN.............................. 18,405,227 19,143,195
SELLING, GENERAL AND ADMINISTRATIVE....... (17,280,977) (17,486,666)
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OPERATING INCOME.......................... 1,124,250 1,656,529
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OTHER INCOME(EXPENSE):
Interest and other income............ 157,720 169,305
Interest expense..................... (388,845) (260,281)
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Total........................... (231,125) (90,976)
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INCOME BEFORE INCOME TAXES................ 893,125 1,565,553
PROVISION FOR INCOME TAXES................ (330,000) (580,000)
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NET INCOME................................ $ 563,125 $ 985,553
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AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
Basic............................... 6,565,028 6,547,362
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Diluted............................. 6,570,874 6,563,180
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EARNINGS PER SHARE OF COMMON STOCK:
Basic............................... $ 0.09 $ 0.15
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Diluted............................. $ 0.09 $ 0.15
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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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2006 2005
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OPERATING ACTIVITIES:
Net income.................................. $ 563,125 $ 985,553
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization........... 1,364,335 1,320,997
Gain on disposition of capital assets... (5,782) (18,950)
Changes in operating assets and
liabilities............................ 2,965,513 (9,096,331)
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Net cash provided by (used in) operating
activities................................. 4,887,191 (6,808,731)
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INVESTING ACTIVITIES:
Net sales (purchases) of investments.... 11,187 (27,942)
Proceeds from sale of capital assets.... 6,700 18,950
Capital expenditures.................... (572,944) (238,889)
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Net cash used in investing activities....... (555,057) (247,881)
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FINANCING ACTIVITIES:
Net (payment) proceeds of borrowings.... (2,116,760) 7,642,977
Dividends paid.......................... (853,287) (850,387)
Proceeds from issuance of common stock.. 16,129 18,696
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Net cash (used in) provided by financing
activities................................. (2,953,918) 6,811,286
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Increase (decrease) in cash and cash
equivalents................................ 1,378,215 (245,326)
Cash and cash equivalents at beginning of
period..................................... 1,985,768 1,706,584
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Cash and cash equivalents at end of period.. $ 3,363,983 $ 1,461,258
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CONTACT: Flexsteel Industries, Inc., Dubuque
Timothy E. Hall, Chief Financial Officer, 563-585-8392