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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) February 7, 2007
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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, 2007, 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, 2007.
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, 2007 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 Second Quarter and Year-To-Date Operating Results
DUBUQUE, Iowa--(BUSINESS WIRE)--Feb. 7, 2007--Flexsteel
Industries, Inc. (NASDAQ:FLXS) today reported sales and earnings for
its second quarter and fiscal year-to-date ended December 31, 2006.
Net sales for the fiscal quarter ended December 31, 2006 were
$105.7 million compared to the prior year quarter of $106.3 million, a
decrease of 0.6%. Net income for the current quarter was $1.4 million
or $0.21 per share, compared to $0.5 million or $0.07 per share in the
prior year quarter.
Net sales for the six months ended December 31, 2006 were $207.0
million compared to $203.7 million in the prior year six-month period,
an increase of 1.6%. Net income for the six months ended December 31,
2006 was $2.0 million or $0.30 per share, compared to net income of
$1.5 million or $0.22 per share for the six months ended December 31,
2005.
For the quarter ended December 31, 2006, residential net sales
were $67.0 million, compared to $69.6 million, a decrease of 3.7% from
the prior year quarter. Recreational vehicle net sales were $14.9
million, compared to $15.9 million, a decrease of 6.2% from the prior
year quarter. Commercial net sales were $23.8 million, compared to
$20.8 million in the prior year quarter, an increase of 14.1%.
For the six months ended December 31, 2006, residential net sales
were $128.8 million, an increase of 0.9% from the six months ended
December 31, 2005. Recreational vehicle net sales were $30.8 million,
a decrease of 9.7% from the six months ended December 31, 2005.
Commercial net sales were $47.4 million, an increase of 13.2% from the
six months ended December 31, 2005.
Gross margin for the quarter ended December 31, 2006 was 18.7%
compared to 18.5% in the prior year quarter. For the six months ended
December 31, 2006, the gross margin was 18.4% compared to 19.1% for
the prior year six-month period. Changes in product mix and continued
pricing pressures combined with continued under absorption of fixed
manufacturing costs have negatively impacted gross margin during the
current six-month period, as compared to the prior year six-month
period.
Selling, general and administrative expenses were 16.4% and 17.5%
of net sales for the quarters ended December 31, 2006 and 2005,
respectively. For the six months ended December 31, 2006 and 2005,
selling, general and administrative expenses were 16.7% and 17.7%,
respectively. The decrease in selling, general and administrative
costs on a quarterly and year-to-date basis in comparison to prior
year periods is due primarily to lower selling expenses, and to a
lesser extent to lower collection related expenses and a reduction in
stock-based compensation expense.
Working capital (current assets less current liabilities) at
December 31, 2006 was $96.8 million. Net cash provided by operating
activities was $11.3 million for the six months ended December 31,
2006. Fluctuations in net cash provided by operating activities were
primarily the result of a reduction in finished product and raw
material inventories. The decrease of approximately $5.2 million in
finished product inventory is primarily due to improved inventory
turns. The decrease of approximately $2.5 million in raw material
inventory is due to lower levels of domestic manufacturing.
Capital expenditures were $3.0 million during the first six months
of fiscal year 2007. Depreciation and amortization expense was $2.7
million in each of the six-month periods ended December 31, 2006 and
2005. The Company expects that capital expenditures will be
approximately $9.0 million for the remainder of the fiscal year,
including approximately $6.0 million for the purchase of a west coast
warehouse building. The Company believes that existing credit
facilities are adequate for its capital requirements for the remainder
of fiscal year 2007.
All earnings per share amounts are on a diluted basis.
Outlook
The residential and vehicle markets continued soft through the
Company's second fiscal quarter. Sales of products into commercial
applications showed continued strength. The Company expects these
business conditions to continue through the remainder of the 2007
fiscal year.
The Company continues to explore cost control opportunities in all
facets of its business and will continue to evaluate and implement
sell price increases for products, as warranted. The Company believes
it has the necessary inventories and product offerings in place to
take advantage of opportunities for expansion of certain markets, such
as commercial office and hospitality. The Company will continue its
strategy of providing furniture from a wide selection of domestically
manufactured and imported products.
Analysts Conference Call
We will host a conference call for analysts on Friday, February 9,
2007, at 10:30 a.m. Central Time. To access the call, please dial
1-888-275-4480 and provide the operator with ID# 3126710. 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# 3126710.
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)
December 31, June 30,
2006 2006
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents........... $1,108,074 $1,985,768
Investments......................... 922,514 817,618
Trade receivables, net.............. 51,715,380 51,179,791
Inventories......................... 76,952,019 84,769,972
Other............................... 6,516,170 6,634,121
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Total current assets...................... 137,214,157 145,387,270
NONCURRENT ASSETS:
Property, plant, and equipment, net. 24,461,527 24,158,041
Other assets........................ 14,189,129 13,780,393
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TOTAL..................................... $175,864,813 $183,325,704
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade............... $16,256,418 $15,768,435
Notes payable and current maturities of
long-term debt........................ 2,081,957 9,466,643
Accrued liabilities.................... 22,080,225 23,164,927
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Total current liabilities................. 40,418,600 48,400,005
LONG-TERM LIABILITIES:
Long-term debt......................... 21,589,573 21,846,386
Other long-term liabilities............ 5,709,348 5,576,988
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Total liabilities......................... 67,717,521 75,823,379
SHAREHOLDERS' EQUITY...................... 108,147,292 107,502,325
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TOTAL..................................... $175,864,813 $183,325,704
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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended
December 31,
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2006 2005
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NET SALES................................. $105,699,659 $106,301,259
COST OF GOODS SOLD........................ (85,925,703) (86,598,189)
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GROSS MARGIN.............................. 19,773,956 19,703,070
SELLING, GENERAL AND
ADMINISTRATIVE............................ (17,326,814) (18,610,560)
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OPERATING INCOME.......................... 2,447,142 1,092,510
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OTHER INCOME (EXPENSE):
Interest and other income............ 173,287 137,630
Interest expense..................... (391,772) (371,123)
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Total........................... (218,485) (233,493)
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INCOME BEFORE INCOME TAXES................ 2,228,657 859,017
PROVISION FOR INCOME TAXES................ (820,000) (370,000)
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NET INCOME................................ $1,408,657 $489,017
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AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
Basic.............................. 6,566,340 6,560,190
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Diluted............................ 6,579,053 6,583,053
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EARNINGS PER SHARE OF COMMON STOCK:
Basic............................. $0.21 $0.07
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Diluted........................... $0.21 $0.07
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Six Months Ended
December 31,
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2006 2005
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NET SALES................................. $207,039,215 $203,736,422
COST OF GOODS SOLD........................ (168,860,032) (164,890,157)
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GROSS MARGIN.............................. 38,179,183 38,846,265
SELLING, GENERAL AND
ADMINISTRATIVE............................ (34,607,791) (36,097,226)
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OPERATING INCOME.......................... 3,571,392 2,749,039
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OTHER INCOME (EXPENSE):
Interest and other income............ 331,007 306,935
Interest expense..................... (780,617) (631,404)
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Total........................... (449,610) (324,469)
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INCOME BEFORE INCOME TAXES................ 3,121,782 2,424,570
PROVISION FOR INCOME TAXES................ (1,150,000) (950,000)
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NET INCOME................................ $1,971,782 $1,474,570
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AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
Basic.............................. 6,565,684 6,553,776
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Diluted............................ 6,574,963 6,573,116
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EARNINGS PER SHARE OF COMMON STOCK:
Basic............................. $0.30 $0.22
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Diluted........................... $0.30 $0.22
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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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2006 2005
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OPERATING ACTIVITIES:
Net income................................... $1,971,782 $1,474,570
Adjustments to reconcile net income to net
cash
Provided by (used in) operating activities:
Depreciation and amortization............ 2,723,279 2,699,355
Gain on disposition of capital assets.... (15,732) (24,447)
Stock-based compensation expense......... 274,000 427,000
Changes in operating assets and
liabilities............................. 6,348,886 (15,818,842)
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Net cash provided by (used in) operating
activities.................................. 11,302,215 (11,242,364)
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INVESTING ACTIVITIES:
Net purchases and sales of investments... 101,413 88,500
Proceeds from sale of capital assets..... 16,650 58,086
Capital expenditures..................... (2,984,043) (3,064,688)
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Net cash used in investing activities........ (2,865,980) (2,918,102)
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FINANCING ACTIVITIES:
Net proceeds of borrowings............... (7,641,499) 16,806,114
Dividends paid........................... (1,706,737) (2,555,874)
Proceeds from issuance of common stock... 34,307 59,871
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Net cash (used in) provided by financing
activities.................................. (9,313,929) 14,310,111
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(Decrease) increase in cash and cash
equivalents................................. (877,694) 149,645
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... $1,108,074 $1,856,229
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CONTACT: Flexsteel Industries, Inc., Dubuque
Timothy E. Hall, Chief Financial Officer, 563-585-8392