Flexsteel Industries Announces First Quarter Earnings

    DUBUQUE, Iowa--Oct. 16, 2001--Flexsteel Industries :

FLEXSTEEL INDUSTRIES, INC.
FINANCIAL INFORMATION
FIRST QUARTER ENDED SEPTEMBER 30, 2001

                                           THREE MONTHS ENDED
                                             SEPTEMBER 30,
                                        -------------------------
                                           2001           2000
                                        -----------   -----------

Net Sales                               $63,207,570   $70,032,843

Operating Income                            116,293     2,715,957

Income before Income Taxes                  306,893     2,982,376

Income Taxes                                110,000     1,100,000

Net Income                              $   196,893   $ 1,882,376

Per Share Common Stock:
     Net Earnings - Basic               $      0.03   $      0.30
     Net Earnings - Assuming Dilution   $      0.03   $      0.30

     Dividends                          $      0.13   $      0.13

Average Common Shares Outstanding:
     Basic                                6,058,693     6,206,161
     Assuming Dilution                    6,112,397     6,270,806

    Net sales for the first quarter were $63.2 million, a decrease of $6.8 million or 10% compared to net sales of $70.0 million in fiscal year 2001. Residential shipments decreased by $5.1 million or 11% from the amounts reported in the prior year quarter. Shipments of vehicle seating products decreased by $1.3 million or 7% compared to the prior year quarter. Commercial shipments decreased by $0.4 million or 9% from the amounts reported in the prior year quarter. The decline in net sales reflects the current slow down in the economy and a lack of consumer confidence.
    Operating income for the quarter ended September 30, 2001 declined 96% to $0.1 million from $2.7 million reported in the year earlier quarter. The decline in operating income reflects the lower sales and production volume, which adversely affected the absorption of fixed costs.
    Net Income for the first quarter was $0.2 million or $0.03 per diluted share and is 90% lower than the net income of $1.9 million or $0.30 per diluted share reported in the prior year quarter.
    Net sales for the quarter ended September 30, 2000 have been adjusted to reflect the implementation of Emerging Issues Task Force No. 00-10, Accounting for Shipping and Handling Fees and Costs, which had no effect on previously reported net income.