ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
The registrant was incorporated in 1929 and has been in the furniture seating business ever since. For more detailed information see the registrant's 1996 Annual Report to Shareholders which is incorporated herein by reference.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The registrant's operations consist of one industry segment: upholstered seating. For more detailed financial information see the registrant's 1996 Annual Report to Shareholders which is incorporated herein by reference.
The registrant's upholstered seating business has three primary areas of application: home seating, vehicle seating and commercial seating. Set forth below, in tabular form, is information for the past three fiscal years showing the registrant's sales of upholstered seating attributable to each of the areas of application described above:
(c) NARRATIVE DESCRIPTION OF BUSINESS
(1) (i), (ii), (vii) The registrant is engaged in one segment of business, namely, the manufacture and sale of a broad line of quality upholstered furniture for the retail furniture market, contract furniture market and recreational vehicle furniture market. The registrant's classes of products include a variety of wood and upholstered furniture including upholstered reclining and rocker-reclining chairs, swivel rockers, chairs, sofas, sofa beds, loveseats and convertible bedding units, some or all of which are for the home, office, recreational vehicles, vans and mobile homes. Featured as a basic component in most of the upholstered furniture is a unique drop-in-seat spring. The registrant primarily distributes its products throughout most of the United States through the registrant's sales force to approximately 3,000 furniture dealers, department stores and R.V. manufacturers. The registrant's products are also sold to several national chains, some of which sell on a private label basis.
(iii) Sources and availability of raw materials essential to the business:
The registrant's furniture products utilize oak, gum and other species of hardwood lumber obtained from Arkansas, Mississippi, Missouri and elsewhere. In addition to lumber and plywood, principal raw materials utilized in the manufacturing process include bar and wire stock, high carbon spring steel, fabrics and polyurethane. While the registrant purchases these materials from outside suppliers, it is not dependent upon any single source of supply. The raw materials are all readily available.
(iv) Material patents and licenses:
The registrant owns the American and Canadian improvement patents to its Flexsteel seat spring, as well as, patents on convertible beds and various other recreational vehicle seating products. In addition, it holds licenses to manufacture certain rocker-recliners. The registrant does not consider its patents and licenses material to its business.
(v) The registrant's business is not considered seasonal.
(viii) The approximate dollar amounts of backlog of orders believed to be firm as of the end of the last fiscal year and the preceding fiscal year are as follows:
JUNE 30, 1996 JUNE 30, 1995 --------------------------- -------------------------- $22,600,000* $20,400,000
*All of this amount is expected to be filled and billed in fiscal year ending June 30, 1997.
(x) Competitive conditions:
The furniture industry is highly competitive. There are numerous furniture manufacturers in the United States. Although the registrant is one of the largest manufacturers of upholstered furniture in the United States, according to the registrant's best information it manufactures and sells less than 4% of the upholstered furniture sold in the United States. The registrant's principal method of meeting competition is to emphasize its product performance and to use its sales force.
(xi) Expenditures on Research Activities:
Most items in the upholstered seating line are designed by the registrant's own design staff. New models and designs of furniture, as well as new fabrics, are introduced continuously. The registrant estimates that approximately 40% of its upholstered seating line is redesigned in whole or in part each year. In the last three fiscal years, these redesign activities involved the following expenditures:
FISCAL YEAR ENDING EXPENDITURES ------------------------- ------------------------- June 30, 1994 $1,340,000 June 30, 1995 $1,490,000 June 30, 1996 $1,485,000
(xiii) Approximately 2,200 people are employed by the registrant.
(d) FINANCIAL INFORMATION ABOUT DOMESTIC OPERATIONS
The registrant has no foreign operations and makes minimal export sales. Financial information about domestic operations is set forth in the registrant's 1996 Annual Report to Shareholders which is incorporated herein by reference.
ITEM 2.
ITEM 2. PROPERTIES
(a) THE REGISTRANT OWNS THE FOLLOWING MANUFACTURING PLANTS:
* Production at this plant has ceased and the plant is for sale.
The registrant's operating plants are well suited for their manufacturing purposes and have been updated and expanded from time to time as conditions warrant. There is adequate production capacity to meet present market demands.
The registrant leases showrooms for displaying its products in the furniture marts in High Point, North Carolina and San Francisco, California.
The registrant leases one warehouse in Vancouver, Washington of approximately 15,750 sq. feet for storing its products prior to distribution.
(b) OIL AND GAS OPERATIONS: NONE.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Company has no material legal proceedings pending other than ordinary routine litigation incidental to the business.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter no matter was submitted to a vote of security holders.
The 1995 Stock Option Plan was approved and all nominee directors re-elected at the December 5, 1995 annual shareholders' meeting.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the registrant, their ages, positions (in each case as of June 30, 1996), and the month and year they were first elected or appointed an officer of the registrant, are as follows:
Each named executive officer has held the same office or an executive or management position with the registrant for at least five years.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
The NASDAQ -- National Market System, is the principal market on which the registrant's Common Stock is being traded. The market prices for the stock and the dividends paid per common share, for each quarterly period during the past two years is shown in the registrant's Annual Report to Shareholders for the Year Ended June 30, 1996, and is incorporated herein by reference.
There were approximately 1,646 holders of Common Stock of the registrant as of June 30, 1996.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
This information is contained on page 6 in the registrant's Annual Report to Shareholders for the Year Ended June 30, 1996, under the caption "Five Year Review" and is incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis is contained on page 7 in the registrant's Annual Report to Shareholders for the Year Ended June 30, 1996 and is incorporated herein by reference.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of the Company included in the financial report section of the Annual Report to Shareholders for the Year Ended June 30, 1996, are incorporated herein by reference:
PAGE ------ Balance Sheets, June 30, 1996, 1995......................... 8 Statements of Income and Retained Earnings -- Years Ended June 30, 1996, 1995, 1994................ 9 Statements of Cash Flows -- Years Ended June 30, 1996, 1995, 1994................ 10 Quarterly Financial Data 1996, 1995......................... 12 Notes to Financial Statements............................... 11-12 Independent Auditors' Report................................ 9
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
During fiscal 1996 there were no changes in or disagreements with accountants on accounting procedures or accounting and financial disclosures.
PART III
ITEMS 10, 11, 12. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT, EXECUTIVE COMPENSATION AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information identifying directors of the registrant, executive compensation and beneficial ownership of registrant stock and supplementary data is contained in the registrant's 1996 definitive Proxy Statement to be filed with the Securities and Exchange Commission and is incorporated herein by reference. Executive officers are identified in Part I, Item 4 above.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is contained under the heading "Certain Relationships and Related Transactions" in the registrant's 1996 definitive Proxy Statement to be filed with the Securities and Exchange Commission and is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
The financial statements of the registrant included in the Annual Report to Shareholders for the Year Ended June 30, 1996, are incorporated herein by reference as set forth above in ITEM 8.
(2) Schedules
The following financial schedule for the years ended 1996, 1995 and 1994 is submitted herewith:
PAGE ---- SCHEDULE VIII -- Reserves............................................ 8
Other schedules are omitted because they are not required or are not applicable or because the required information is included in the financial statements incorporated by reference above.
(3) Exhibits
3.1 Restated Articles of Incorporation incorporated by reference to Exhibits to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1988.
3.2 Bylaws of the Registrant incorporated by reference to Exhibits to the Annual Report on Form 10-K for the fiscal year ended June 30, 1994.
11 Computation of Earnings Per Share attached as EXHIBIT 1 hereto
13 Annual Report to Shareholders for the Year Ended June 30, 1996, attached as EXHIBIT 2 hereto
99 1996 Form 11-K for Salaried Employees' Savings Plan 401(k) attached as EXHIBIT 3 hereto
23 Independent Auditors' Report attached as EXHIBIT 4 hereto
22 1996 definitive Proxy Statement incorporated by reference is to be filed with the Securities and Exchange Commission on or before December 1, 1996.
23 Consent of Independent Auditors attached as EXHIBIT 6 hereto
4 Instruments defining the rights of security holders, including indentures.
The issuer has not filed, but agrees to furnish upon request to the Commission copies of the Mississippi Industrial Development Revenue Bond Agreement issued regarding the issuer's facilities in Starkville, MS.
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the last quarter of the fiscal year ended June 30, 1996.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: September 10, 1996 FLEXSTEEL INDUSTRIES, INC.
By: /S/ K. B. LAURITSEN ----------------------------------- K. B. LAURITSEN PRESIDENT, CHIEF EXECUTIVE OFFICER and PRINCIPAL EXECUTIVE OFFICER
By: /S/ R. J. KLOSTERMAN ----------------------------------- R. J. KLOSTERMAN VICE PRESIDENT OF FINANCE and PRINCIPAL FINANCIAL OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: September 10, 1996 /S/ FRANK H. BERTSCH ------------------------------- ------------------------------------- Frank H. Bertsch DIRECTOR
Date: September 10, 1996 /S/ J. B. CRAHAN ------------------------------ ------------------------------------- J. B. Crahan DIRECTOR
Date: September 10, 1996 /S/ ART D. RICHARDSON ------------------------------- ------------------------------------- Art D. Richardson DIRECTOR
Date: September 10, 1996 /S/ K. BRUCE LAURITSEN ------------------------------- ------------------------------------ K. Bruce Lauritsen DIRECTOR
Date: September 10, 1996 /S/ EDWARD J. MONAGHAN ------------------------------- ------------------------------------- Edward J. Monaghan DIRECTOR
Date: September 10, 1996 /S/ JAMES G. PETERSON ------------------------------- ------------------------------------- James G. Peterson DIRECTOR
Date: September 10, 1996 /S/ THOMAS E. HOLLORAN ------------------------------- ------------------------------------- Thomas E. Holloran DIRECTOR
Date: September 10, 1996 /S/ JAMES R. RICHARDSON ------------------------------- ------------------------------------- James R. Richardson DIRECTOR
Date: September 10, 1996 /S/ L. BRUCE BOYLEN ------------------------------- ------------------------------------- L. Bruce Boylen DIRECTOR
Date: September 10, 1996 /S/ JOHN R. EASTER ------------------------------- ------------------------------------- John R. Easter DIRECTOR
SCHEDULE VIII
FLEXSTEEL INDUSTRIES, INC.
RESERVES FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994
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NOTE -- UNCOLLECTIBLE ACCOUNTS CHARGED AGAINST RESERVE, LESS RECOVERIES.