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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) August 22, 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 August 22, 2007, Flexsteel Industries, Inc. Announced Fourth Quarter and
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 August
22, 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.
--------------------------
(Registrant)
Date: August 23, 2007 By: /s/ Timothy E. Hall
----------------------------- ----------------------------------
Timothy E. Hall
Vice President-Finance, CFO,
and Secretary
Principal Financial Officer
Exhibit 99.1
Flexsteel Announces Fourth Quarter and Fiscal 2007 Operating Results
DUBUQUE, Iowa--(BUSINESS WIRE)--Aug. 22, 2007--Flexsteel
Industries, Inc. (NASDAQ:FLXS) today reported sales and earnings for
its fourth quarter and fiscal year ended June 30, 2007.
Net sales for the fourth quarter ended June 30, 2007 were $114.3
million compared to the prior year quarter of $112.3 million, an
increase of 2%. Residential net sales were $71.5 million, compared to
$70.4 million, an increase of 2% from the prior year quarter.
Commercial net sales were $25.1 million for the quarter ended June 30,
2007, compared to $23.3 million in the prior year quarter, an increase
of 8%. Recreational vehicle net sales were $17.7 million for the
quarter ended June 30, 2007, compared to $18.7 million, a decrease of
5% from the prior year quarter.
Net sales for the fiscal year ended June 30, 2007 were $425.4
million compared to $426.4 million in the prior fiscal year.
Residential net sales were $259.7 million, a decrease of 3% from the
fiscal year ended June 30, 2006. Commercial net sales were $99.5
million for the fiscal year ended June 30, 2007, an increase of 15%
from the fiscal year ended June 30, 2006. Recreational vehicle net
sales were $66.2 million for the fiscal year ended June 30, 2007, a
decrease of 8% from the fiscal year ended June 30, 2006.
Net income for the quarter ended June 30, 2007 was $5.8 million or
$0.89 per share. Financial results for the quarter were favorably
impacted by two significant non-recurring events. The Company sold a
commercial property, which resulted in a pre-tax gain of approximately
$4.0 million, or $0.37 per share after tax. This gain is reported as
"Gain on sale of capital assets." The Company also realized a
non-taxable gain on life insurance of $0.5 million, or $0.08 per
share. This gain is included in "Interest and other income." Excluding
these items, net income for the quarter ended June 30, 2007 was $2.8
million, or $0.44 per share compared to $1.5 million, or $0.23 per
share for the prior year quarter.
Net income for the fiscal year ended June 30, 2007 was $9.3
million or $1.42 per share. Results for the fiscal year include the
two non-recurring items listed above and the gain on the sale of
vacant land that was reported in a prior quarter, which resulted in a
pre-tax gain of approximately $0.4 million, or $0.04 per share after
tax. This gain is also reported as "Gain on sale of capital assets" on
the attached income statement. Excluding these three items net income
for the year ended June 30, 2007 was $6.1 million, or $0.93 per share,
compared to $4.7 million, or $0.72 per share for the prior fiscal
year, an increase of $1.4 million or 28%.
The information regarding non-recurring items is non-GAAP
disclosure. Investors should consider these non-GAAP measures in
addition to, and not as a substitute for, financial performance
measures prepared in accordance with GAAP. We believe this information
is relevant to our investors due to the significance of these items on
net income and earnings per share and have included a table in the
financial statements demonstrating the impact on earnings.
Gross margin for the quarter ended June 30, 2007 was 19.7%
compared to 18.8% in the prior year quarter. This improvement is
primarily due to the impact of changes in product mix and higher
absorption of fixed manufacturing costs. Gross margin was 19.1% for
the fiscal years ended June 30, 2007 and 2006.
Selling, general and administrative expenses were 15.8% and 16.4%
of net sales for the quarters ended June 30, 2007 and 2006,
respectively. For the fiscal years ended June 30, 2007 and 2006,
selling, general and administrative expenses were 16.7% and 17.1%,
respectively. This decrease in selling, general and administrative
expenses for the current quarter and on a year-to-date basis in
comparison to the prior year periods is due primarily to lower
marketing and sales support expenses and lower bad debt expenses.
All earnings per share amounts are on a diluted basis.
Working capital (current assets less current liabilities) at June
30, 2007 was $99.3 million. Net cash provided by operating activities
was $10.3 million for the fiscal year ended June 30, 2007 compared to
net cash used in operating activities of $7.3 million in fiscal year
2006. The fluctuations in net cash provided by operating activities
were primarily the result of changes in net income, changes in
inventory and accounts payable related to sourcing of finished product
and changes in accounts receivable due to sales volume and collection
patterns.
Capital expenditures were $10.8 million during the fiscal year
2007, including approximately $6.0 million for the purchase of a west
coast warehouse and approximately $1.5 million for a warehouse
addition in Indiana to support the growth of foreign-sourced furniture
products. The remainder of expenditures was primarily for delivery and
manufacturing equipment. Depreciation and amortization expense was
$5.3 million and $5.5 million for the fiscal years ended June 30, 2007
and 2006, respectively. The Company expects that capital expenditures
will be approximately $3.0 million in fiscal year 2008.
Outlook
Consistent with industry-wide trends, orders for residential and
vehicle markets continued soft throughout the Company's fourth fiscal
quarter period. The Company expects this softness to continue through
the first half of fiscal year 2008. Orders for products into
commercial applications slowed in the fourth quarter of the 2007
fiscal year and we expect this moderation to continue into fiscal year
2008.
The Company continues to explore cost control opportunities in all
facets of its business. The Company believes it has the necessary
inventories and product offerings in place to take advantage of
opportunities for expansion of market share in certain markets, such
as commercial office and hospitality. The Company anticipates
continuing 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 Thursday, August
23, 2007, at 10:30 a.m. Central Time. To access the call, please dial
1-888-275-4480 and provide the operator with ID# 1581003. 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# 1581003.
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)
June 30, June 30,
2007 2006
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............. $ 900,326 $ 1,985,768
Investments............................ 976,180 817,618
Trade receivables, net................. 56,273,874 51,179,791
Inventories............................ 78,756,985 84,769,972
Other.................................. 5,609,045 6,634,121
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Total current assets........................ 142,516,410 145,387,270
NONCURRENT ASSETS:
Property, plant, and equipment, net.... 28,168,244 24,158,041
Other assets........................... 13,479,528 13,780,393
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TOTAL....................................... $184,164,182 $183,325,704
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade.................. $ 13,607,485 $ 15,768,435
Notes payable and current maturities of
long-term debt........................... 7,030,059 9,466,643
Accrued liabilities....................... 22,540,063 23,164,927
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Total current liabilities................... 43,177,607 48,400,005
LONG-TERM LIABILITIES:
Long-term debt............................ 21,336,352 21,846,386
Other long-term liabilities............... 5,535,113 5,576,988
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Total liabilities........................... 70,049,072 75,823,379
SHAREHOLDERS' EQUITY........................ 114,115,110 107,502,325
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TOTAL....................................... $184,164,182 $183,325,704
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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Fiscal Year Ended
June 30, June 30,
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2007 2006 2007 2006
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NET SALES..... $114,289,285 $112,325,883 $425,399,951 $426,407,585
COST OF GOODS
SOLD......... (91,723,335) (91,198,852) (344,176,763) (345,068,305)
------------- ------------- ------------- -------------
GROSS MARGIN.. 22,565,950 21,127,031 81,223,188 81,339,280
SELLING,
GENERAL AND
ADMINI-
STRATIVE..... (18,009,657) (18,457,644) (70,895,260) (72,778,577)
GAIN ON SALE
OF CAPITAL
ASSETS....... 3,978,027 --- 4,370,712 ---
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OPERATING
INCOME....... 8,534,320 2,669,387 14,698,640 8,560,703
------------- ------------- ------------- -------------
OTHER INCOME
(EXPENSE):
Interest and
other
income..... 817,494 220,728 1,276,857 774,783
Interest
expense.... (381,212) (438,370) (1,491,510) (1,557,303)
------------- ------------- ------------- -------------
Total..... 436,282 (217,642) (214,653) (782,520)
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INCOME BEFORE
INCOME TAXES. 8,970,602 2,451,745 14,483,987 7,778,183
PROVISION FOR
INCOME TAXES. (3,130,000) (970,000) (5,150,000) (3,060,000)
------------- ------------- ------------- -------------
NET INCOME.... $5,840,602 $1,481,745 $9,333,987 $4,718,183
============= ============= ============= =============
AVERAGE NUMBER
OF COMMON
SHARES
OUTSTANDING:
Basic...... 6,570,467 6,563,750 6,567,522 6,558,440
============= ============= ============= =============
Diluted.... 6,593,813 6,579,647 6,582,558 6,577,278
============= ============= ============= =============
EARNINGS PER
SHARE OF
COMMON STOCK:
Basic...... $0.89 $0.23 $1.42 $0.72
============= ============= ============= =============
Diluted.... $0.89 $0.23 $1.42 $0.72
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NON-GAAP DISCLOSURE (UNAUDITED)
Three Months Ended Fiscal Year Ended
June 30, 2007 June 30, 2007
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$ in millions $ per share $ in millions $ per share
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GAAP net
income....... $5.8 $0.89 $9.3 $1.42
Adjustments
to reconcile
net income:
Gain on sale
of capital
assets, net
of tax G... (2.5) (0.37) (2.7) (0.41)
Non-taxable
gain on
life
insurance.. (0.5) (0.08) (0.5) (0.08)
------------- ------------- ------------- -------------
NON-GAAP Net
Income....... $2.8 $0.44 $6.1 $0.93
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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Fiscal Year Ended
June 30,
-----------------------------
2007 2006
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OPERATING ACTIVITIES:
Net income............................. $ 9,333,987 $ 4,718,183
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization...... 5,270,651 5,485,884
Gain on disposition of capital
assets............................ (4,407,682) (55,504)
Stock-based compensation expense... 274,000 427,000
Changes in operating assets and
liabilities....................... (179,841) (17,830,432)
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Net cash provided by (used in)
operating activities.................. 10,291,115 (7,254,869)
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INVESTING ACTIVITIES:
Net purchases and sales of
investments....................... (298,124) 655,252
Proceeds from sale of capital
assets............................ 6,039,946 89,786
Capital expenditures............... (10,839,479) (850,444)
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Net cash used in investing activities.. (5,097,657) (105,406)
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FINANCING ACTIVITIES:
Net (repayments of) proceeds from
borrowings........................ (2,946,618) 10,952,559
Dividends paid..................... (3,414,369) (3,408,994)
Proceeds from issuance of common
stock............................. 82,087 95,894
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Net cash (used in) provided by
financing activities.................. (6,278,900) 7,639,459
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(Decrease) increase in cash and cash
equivalents........................... (1,085,442) 279,184
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................................ $ 900,326 $ 1,985,768
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CONTACT: Flexsteel Industries, Inc., Dubuque
Timothy E. Hall, Chief Financial Officer, 563-585-8392