Flexsteel Industries, Inc. Announces Revised Expectations for Fourth Quarter Operating Results

    DUBUQUE, Iowa--July 17, 2001--Flexsteel Industries, Inc. announced today that it expects net income in the fourth quarter ending June 30, 2001 to be approximately breaking even, which is below the consensus estimate of $0.17 per diluted share. The Company earned $0.48 per diluted share in last year's fourth quarter. Estimated net sales for the fourth quarter are $65 million or 12% less than the record net sales of $73.8 million reported in the previous year quarter.
    "The reduced net earnings expectation is due to several customers announcing the discontinuance of operations during the last 60 days resulting in lower shipments and abnormally high bad debts," said Flexsteel President and Chief Executive Officer, K. Bruce Lauritsen. "We expect that credit losses will return to historical levels during the first quarter of fiscal year 2002. We anticipate that sales will be lower during the first two quarters of fiscal year 2002 compared to the first half of fiscal year 2001. The expected decline is due to these major customers discontinuing operations, an industry wide slowdown, reduced consumer confidence, and uncertainty in the stock market which seems to have been unaffected by the recent declines in the interest rates," Lauritsen stated.
    The Company anticipates net sales for the fiscal year ended June 30, 2001 will be approximately $270 million or 6% less than the record net sales for the fiscal year ended June 30, 2000 of $286.9 million. Estimated net income for the fiscal year ended June 30, 2001 will be approximately $4.5 million or 62% less than the record $11.9 million or $1.82 per diluted common share reported in the fiscal year ended June 30, 2001.
    In addition to identifying additional sales growth areas, the Company is focusing on inventory management, minimizing capital expenditures, credit exposure and has implemented reduced work hours in an effort to retain the team that performed well to produce the record sales and profits of the prior year.

    Forward-Looking Information

    Any forward-looking statements contained in this report represent management's current expectations based on present information and current assumptions. Actual results could differ materially from those, which are anticipated or projected due to a number of factors. These factors include, but are not limited to, effectiveness of new product introductions; the product mix of our sales, the cost of raw materials, the amount of sales generated and the profit margins thereon or the volatility in the major markets, competition and general economic conditions, and other risks and factors identified from time to time in the Company's reports filed with the Security and Exchange Commission.