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Flexsteel Reports Third Quarter Sales And Net Income Gains

The Company continues to experience increases in the cost of certain raw materials, such as steel, polyester fiber, fabric and leather, and finished products. We are implementing price increases to help mitigate the impact of the increased material and finished product costs, however, we will continue to experience downward pressure on gross margin until we realize the full benefits of these sell price increases and see an end to the cost increases.

We remain committed to our core strategies, which include a wide range of quality product offerings and price points to the residential and commercial markets, combined with a conservative approach to business. We will maintain our focus on a strong balance sheet through emphasis on cash flow and improving profitability. We believe these core strategies are in the best interest of our shareholders.

Conference CallWe will host a conference call on April 20, 2011, at 10:30 a.m. Central Time. To access the call, please dial 1-866-830-5279 and provide the operator with ID# 49982384. 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# 49982384.

Forward-Looking StatementsStatements, 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, inflation, 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 FlexsteelFlexsteel 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)
(in thousands)
 
March 31, June 30,
2011 2010

ASSETS
 
CURRENT ASSETS:
Cash $ 12,201 $ 8,278
Trade receivables, net 35,612 35,748
Inventories 74,737 72,637
Other 5,320 5,126
Total current assets 127,870 121,789
 
NONCURRENT ASSETS:
Property, plant, and equipment, net 20,453 21,614
Other assets 15,867 14,267
 
TOTAL $ 164,190 $ 157,670
 

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
CURRENT LIABILITIES:
Accounts payable – trade $ 10,778 $ 10,815
Accrued liabilities 19,375 20,174
Total current liabilities 30,153 30,989
 
LONG-TERM LIABILITIES:
Other long-term liabilities 9,485 9,069
Total liabilities 39,638 40,058
 
SHAREHOLDERS’ EQUITY 124,552 117,612
 
TOTAL $ 164,190 $ 157,670
 

       
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share data)
 
Three Months Ended Nine Months Ended
March 31, March 31,
2011     2010 2011     2010
NET SALES $ 85,175 $ 81,451 $ 255,226 $ 240,916
COST OF GOODS SOLD (66,968 ) (63,418 ) (198,589 ) (186,286 )
GROSS MARGIN 18,207 18,033 56,637 54,630
SELLING, GENERAL AND
ADMINISTRATIVE (14,561 ) (14,122 ) (44,966 ) (43,526 )
FACILITY CLOSING COSTS     (1,016 )  
OPERATING INCOME 3,646   3,911   10,655   11,104  

OTHER INCOME (EXPENSE):
Interest and other income 129 115 244 238
Interest expense   (206 )   (439 )
Total 129   (91 ) 244   (201 )

INCOME BEFORE INCOME TAXES
3,775 3,820 10,899 10,903
INCOME TAX PROVISION (1,320 ) (1,500 ) (3,970 ) (4,240 )
NET INCOME $ 2,455   $ 2,320   $ 6,929   $ 6,663  
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
Basic 6,710   6,622 6,687   6,596  
Diluted 6,968   6,739 6,910   6,666  
EARNINGS PER SHARE OF
COMMON STOCK:
Basic $ 0.37   $ 0.35 $ 1.04   $ 1.01  
Diluted $ 0.35   $ 0.34 $ 1.00   $ 1.00  
 

 
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
 
Nine Months Ended
March 31,
2011     2010

OPERATING ACTIVITIES:
Net income $ 6,929 $ 6,663
Adjustments to reconcile net income to net cash

provided by (used in) operating activities:
Depreciation 2,028 2,261
Deferred income taxes (809 ) (1,009 )
Stock-based compensation expense 844 681
Provision for losses on accounts receivable 890 789
Gain on disposition of capital assets (108 ) (15 )
Changes in operating assets and liabilities (3,755 ) 9,865  
Net cash provided by operating activities 6,019   19,235  
 

INVESTING ACTIVITIES:
Net purchases of investments (230 ) (283 )
Proceeds from sale of capital assets 143 20
Capital expenditures (991 ) (1,175 )
Net cash used in investing activities (1,078 ) (1,438 )
 

FINANCING ACTIVITIES:
Net repayment of borrowings (10,000 )
Dividends paid (1,336 ) (988 )
Proceeds from issuance of common stock 318   292  
Net cash used in financing activities (1,018 ) (10,696 )
 
Increase in cash 3,923 7,101
Cash at beginning of period 8,278   1,714  
Cash at end of period $ 12,201   $ 8,815  

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