Flexsteel Announces Second Quarter and Year to Date Operating Results
DUBUQUE, Iowa--Feb. 7, 2002--Flexsteel Industries, Inc. today reported sales and earning for its second quarter ended December 31, 2001.Net Sales for the fiscal quarter ended December 31, 2001 decreased $8.1 million or 10.9% compared to the prior year quarter. Residential seating sales volume decreased $6.0 million or 11.2%. Recreational vehicle seating sales decreased $2.0 million or 12.4%. Commercial seating sales decreased $0.1 million or 3.2%.
Net sales for the six-months ended December 31, 2001 decreased by $14.9 million or 10.4% compared to the prior year six-month period. Residential seating sales volume decreased $11.0 million or 11.0%. Recreational vehicle seating sales decreased $3.2 million or 9.6%. Commercial seating sales decreased $0.7 million or 7.1%.
Gross margin for the quarter ended December 31, 2001 decreased $3.2 million to $13.2 million or 20.1% of sales from $16.4 million or 22.3% of sales in the prior year quarter. Gross margin decreased $5.0 million to $26.0 million or 20.1% of sales in the current fiscal year to date from $31.0 million or 21.5% of sales reported for the prior fiscal year to date. The reduced gross margin reflects a charge to cost of goods sold of $0.9 million for facility closing costs and increased health insurance costs of $0.7 million.
On November 15, 2001 the Company announced the closing of its Elkhart, Indiana recreational vehicle seating facility and incurred a second quarter charge to cost of goods sold of $0.9 million, or $0.09 per share after taxes. The Company estimates that closing the facility will improve quarterly earnings by $0.01 to $0.02 per share beginning in its third fiscal quarter.
Selling, general and administrative expenses as a percentage of sales were 18.6% and 18.8% for the current quarter and prior year quarter, respectively. Selling, general and administrative expenses as a percentage of sales were 19.3% and 17.9% for the current fiscal year to date and for the prior fiscal year to date, respectively. Selling, general and administrative expenses were negatively impacted by lower absorption of fixed costs, offset by recoveries of previously written off accounts receivable of $0.5 million, or $0.05 per share after taxes.
The above factors resulted in net income for the current year fiscal quarter of $0.7 million or $0.12 per share compared to $1.7 million or $0.28 per share in the prior year fiscal quarter, a net decrease of $1.0 million or $0.16 per share. Fiscal year to date net income of $0.9 million or $0.15 per share compared to $3.6 million or $0.58 per share in the prior year, a net decrease of $2.7 million or $0.43 per share.
Working capital at December 31, 2001 was $58.0 million, which includes cash, cash equivalents and investments of $19.1 million. Working capital increased by $2.6 million from the June 30, 2001 amount.
Capital expenditures were $0.2 million during the first six months of fiscal 2002 and $2.7 million in first six months of fiscal 2001. The Company expects that capital expenditures will be $1.0 million in the next six months, primarily for manufacturing equipment.
All earnings per share amounts are on a fully diluted basis.
The Company will host a conference call Thursday morning, February 7, 2002, at 10:00 a.m. Eastern Standard Time. The dial-in-number is 800-556-3831 with an access code of 00566. A replay will be available through February 14, 2002. The dial-in-number for the replay is 888-813-1488 and no access code is required.
For more information, visit our web site at http://www.flexsteel.com.
Certain statements made in this release are not based on historical facts, but are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as "believes," "expects," "estimates," "may," "will," "should," or "anticipates" or the negative thereof or other variations thereon or comparable terminology. These statements reflect the Company's judgment with respect to the future and investors are cautioned that all forward-looking statements involve risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Some of the factors that could affect results are the cyclical nature of the furniture industry, the 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, competition, both foreign and domestic, credit exposure to customers and general economic conditions. Any forward-looking statement speaks only as of the date of this press release, and the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
December 31, June 30,
2001 2001
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $15,895,678 $10,048,562
Investments.......................... 3,248,062 2,536,469
Trade receivables - less allowance
for doubtful accounts:
December 31, 2001, $2,500,000
June 30, 2001, $1,950,000.......... 24,243,474 28,363,058
Inventories.......................... 30,337,241 31,379,836
Deferred income taxes................ 2,700,000 2,700,000
Other................................ 1,537,487 1,546,710
------------ ------------
Total current assets........... 77,961,942 76,574,635
PROPERTY, PLANT, AND EQUIPMENT
At cost less accumulated.............
depreciation: December 31,
2001, $62,864,290; June 30,
2001, $60,604,549................... 21,773,102 24,553,962
NOTES RECEIVABLE....................... 377,915 415,762
DEFFERRED INCOME TAXES................. 300,000 300,000
OTHER ASSETS........................... 8,725,664 8,450,110
------------ ------------
TOTAL..........................$109,138,623 $110,294,469
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade............. $2,919,139 $5,277,607
Accrued liabilities:
Payroll and related items.......... 3,802,088 3,803,071
Insurance.......................... 5,705,105 5,863,451
Other accruals..................... 6,557,235 5,253,930
Industrial revenue bonds payable..... 975,000 975,000
------------ ------------
Total current liabilities...... 19,958,567 21,173,059
DEFERRED COMPENSATION.................. 4,490,902 4,059,186
------------ ------------
Total liabilities.................. 24,449,469 25,232,245
------------ ------------
SHAREHOLDERS' EQUITY:
Common Stock - $1 par value;
authorized 15,000,000 shares;
issued December 31, 2001,
6,072,020 shares; issued June
30, 2001, 6,034,210 shares......... 6,072,020 6,034,210
Additional paid-in capital........... 379,206
Retained earnings.................... 77,602,164 78,272,996
Accumulated other comprehensive
income............................. 635,764 755,018
------------ ------------
Total shareholders' equity.... 84,689,154 85,062,224
------------ ------------
TOTAL...................$109,138,623 $110,294,469
============ ============
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended
December 31, December 31,
------------------------- ---------------------------
2001 2000 2001 2000
------------ ------------ ------------- -------------
NET SALES .......$65,826,772 $73,917,362 $129,034,342 $143,950,204
COST OF GOODS
SOLD ...........(52,599,938) (57,442,657) (103,047,047) (112,962,246)
------------ ------------ ------------- -------------
GROSS MARGIN .... 13,226,834 16,474,705 25,987,295 30,987,958
SELLING, GENERAL
AND
ADMINISTRATIVE..(12,250,806) (13,908,702) (24,894,974) (25,705,998)
------------ ------------ ------------- -------------
OPERATING INCOME 976,028 2,566,003 1,092,321 5,281,960
------------ ------------ ------------- -------------
OTHER:
Interest and
other income .. 224,833 250,447 483,455 609,875
Interest expense (60,103) (93,286) (128,125) (186,295)
------------ ------------ ------------- -------------
Total ...... 164,730 157,161 355,330 423,580
------------ ------------ ------------- -------------
INCOME BEFORE
INCOME TAXES ... 1,140,758 2,723,164 1,447,651 5,705,540
PROVISION FOR
INCOME TAXES ... (430,000) (1,000,000) (540,000) (2,100,000)
------------ ------------ ------------- -------------
NET INCOME ...... $710,758 $1,723,164 $907,651 $3,605,540
============ ============ ============= =============
AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING:
BASIC ...... 6,072,020 6,119,763 6,065,357 6,162,545
============ ============ ============= =============
DILUTED .... 6,120,703 6,186,848 6,116,550 6,228,410
============ ============ ============= =============
EARNINGS PER
SHARE OF
COMMON STOCK:
BASIC ...... $0.12 $0.28 $0.15 $0.59
============ ============ ============= =============
DILUTED .... $0.12 $0.28 $0.15 $0.58
============ ============ ============= =============