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Flexsteel Reports 10% Sales Growth

OutlookThe Company believes that moderate top line growth will continue through the end of calendar year 2013. Residential growth is expected to continue with existing customers and products, and through expanding our product portfolio and customer base. The Company expects this growth to be led by increased demand for upholstered products. The Company expects demand for its commercial products to remain at current levels into the second half of the calendar year. The Company is confident in its ability to take advantage of market opportunities.

The Company remains committed to its 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 increasing profitability. We believe these core strategies are in the best interest of our shareholders.

Conference CallWe will host a conference call on August 15, 2013, at 10:30 a.m. Central Time. To access the call, please dial 1-866-830-5279 and provide the operator with ID#75460761. A replay will be available for two weeks beginning approximately two hours after the conclusion of the call by dialing 1-855-859-2056 and entering ID#75460761.

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 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, supply chain disruptions, litigation, including expenses related to the Indiana civil litigation, the effectiveness of new product introductions and distribution channels, the product mix of sales, pricing pressures, the cost of raw materials and fuel, retention and recruitment of key employees, actions by governments including laws, regulations, taxes and tariffs, inflation, the amount of sales generated and the profit margins thereon, competition (both U.S. and foreign), credit exposure with customers, participation in multi-employer pension plans and general economic conditions. For further information regarding these risks and uncertainties, see the “Risk Factors” section in Item 1A of our most recent Annual Report on Form 10-K.

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)
 
   

 June 30, 

   

 June 30, 

2013 2012

ASSETS

 
CURRENT ASSETS:
Cash $ 10,934 $ 13,970
Trade receivables, net 36,075 33,601
Inventories 92,417 82,689
Other current assets   9,775   5,333
Total current assets 149,201 135,593
 
NONCURRENT ASSETS:
Property, plant, and equipment, net 32,145 29,867
Other assets   11,193   16,212
 
TOTAL $ 192,539 $ 181,672
 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 
CURRENT LIABILITIES:
Accounts payable – trade $ 13,927 $ 12,973
Other current liabilities   21,575   18,876
Total current liabilities 35,502 31,849
 
LONG-TERM LIABILITIES:
Other long-term liabilities   5,800   10,381
Total liabilities 41,302 42,230
 
SHAREHOLDERS’ EQUITY   151,237   139,442
 
TOTAL $ 192,539 $ 181,672
 

 
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share data)
               
Fiscal Year Ended June 30,
2013 2012
NET SALES

 

$

386,189

100.0 % $ 352,089 100.0 %
COST OF GOODS SOLD   (295,720 ) (76.6 )   (266,810 ) (75.8 )
GROSS MARGIN 90,469 23.4 85,279 24.2

SELLING, GENERAL AND ADMINISTRATIVE

 

(70,198

)

(18.2

)

 

(65,033

)

(18.4

)

OPERATING INCOME 20,271 5.2 20,246 5.8
INTEREST AND OTHER INCOME

 

  610   0.2     422   0.1  
INCOME BEFORE INCOME TAXES 20,881 5.4 20,668 5.9
INCOME TAX PROVISION   (7,730 ) (2.0 )   (7,600 ) (2.2 )
NET INCOME

$

13,151

  3.4 % $ 13,068   3.7 %

AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

Basic

 

7,041

 

6,781

Diluted

 

7,326

 

7,008

EARNINGS PER SHARE OF COMMON STOCK:

Basic

$

1.87

$

1.93

Diluted

$

1.80

$

1.86

 
 
Three Months Ended June 30,
2013 2012
NET SALES

 

$

102,010

100.0 % $ 93,936 100.0 %
COST OF GOODS SOLD   (78,229 ) (76.7 )   (70,177 ) (74.7 )
GROSS MARGIN 23,781 23.3 23,759 25.3

SELLING, GENERAL AND ADMINISTRATIVE

 

(17,366

)

(17.0

)

 

(16,962

)

(18.1

)

OPERATING INCOME 6,415 6.3 6,797 7.2
INTEREST AND OTHER INCOME   245   0.2     112   0.1  
INCOME BEFORE INCOME TAXES 6,660 6.5 6,909 7.3
INCOME TAX PROVISION   (2,420 ) (2.4 )   (2,510 ) (2.6 )
NET INCOME

 

$

4,240

  4.1 % $ 4,399   4.7 %

AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

Basic

 

7,106

 

6,855

Diluted

 

7,417

 

7,205

EARNINGS PER SHARE OF COMMON STOCK:

Basic

$

0.60

$

0.64

Diluted

$

0.57

$

0.61

 

 
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
       

Fiscal Year Ended

June 30,

2013

2012

OPERATING ACTIVITIES:

Net income $ 13,151 $ 13,068
Adjustments to reconcile net income to net cash

provided by (used in) operating activities:

Depreciation 3,803 2,835
Deferred income taxes 414 23
Stock-based compensation expense 869 1,056
Provision for losses on accounts receivable (215 ) (150 )
Other non-cash, net 69 7
Gain on disposition of capital assets (18 ) (34 )
Changes in operating assets and liabilities   (12,168 )   (7,828 )
Net cash provided by operating activities   5,905     8,977  
 

INVESTING ACTIVITIES:

Net sales (purchases) of investments 187 (372 )
Proceeds from sale of capital assets 21 34
Capital expenditures   (6,225 )   (10,939 )
Net cash used in investing activities   (6,017 )   (11,277 )
 

FINANCING ACTIVITIES:

Dividends paid (4,213 ) (2,535 )
Proceeds from issuance of common stock   1,289     916  
Net cash used in financing activities   (2,924 )   (1,619 )
 

Decrease in cash

(3,036 ) (3,919 )
Cash at beginning of period   13,970     17,889  
Cash at end of period $ 10,934   $ 13,970  
 




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