FLEXSTEEL INDUSTRIES, INC. FORM 11-K DATED 12-31-2003
SECURITIES
AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
(Mark One)
|
| [X] |
|
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
|
|
For the fiscal year
ended December 31, 2003
or
|
| [ ] |
|
TRANSITION
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE
REQUIRED] |
|
For the transition
period from _________________ to _________________
Commission file number
0-5151
|
| A) |
|
Full title of
the plan and the address of the plan, if different from that of issuer named
below: |
Flexsteel Industries,
Inc. Salaried Employees Retirement and 401(k) Plan
|
| B) |
|
Name of issuer
of the securities held pursuant to the plan and the address of its principal
executive office: |
Flexsteel Industries,
Inc., P.O. Box 877, Dubuque, IA 52004-0877
The
Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees
(or other persons who administer the employee benefit plan) have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
Flexsteel Industries, Inc. Salaried Employees Retirement and 401(k) Plan
(Name of Plan) |
| |
Date: June 15, 2004 |
/s/ R. J. Klosterman
R. J. Klosterman
Executive Vice President of Operations and
Chief Financial Officer |
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Flexsteel Industries, Inc. Salaried
Employees Retirement and 401(k) Plan
Dubuque, Iowa
We have audited the accompanying
statements of net assets available for benefits of the Flexsteel Industries, Inc.
Salaried Employees Retirement and 401(k) Plan (the “Plan”) as of December 31,
2003 and 2002 and the related statements of changes in net assets available for benefits
for the year ended December 31, 2003, the six-month period ended December 31,
2002, and the year ended June 30, 2002. These financial statements are the
responsibility of the Plan’s management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, such financial
statements present fairly, in all material respects, the net assets available for
benefits of the Plan as of December 31, 2003 and 2002 and the changes in net assets
available for benefits for the year ended December 31, 2003, the six-month period
ended December 31, 2002, and the year ended June 30, 2002 in conformity with
accounting principles generally accepted in the United States of America.
Our audits were conducted for the
purpose of forming an opinion on the basic financial statements taken as a whole. The
supplemental schedule of assets (held at end of year) as of December 31, 2003 is
presented for the purpose of additional analysis and is not a required part of the basic
2003 financial statements but is supplementary information required by the Department of
Labor’s Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedule is the responsibility
of the Plan’s management. Such supplemental schedule has been subjected to the
auditing procedures applied in our audit of the basic 2003 financial statements and, in
our opinion, is fairly stated in all material respects when considered in relation to the
basic 2003 financial statements taken as a whole.
May 25, 2004
2
FLEXSTEEL INDUSTRIES, INC. SALARIED
EMPLOYEES RETIREMENT
AND 401(k) PLAN
(PLAN #007 EIN: 42-0442319)
STATEMENTS OF NET ASSETS AVAILABLE
FOR BENEFITS
DECEMBER 31, 2003 AND 2002
|
2003 |
2002 |
| ASSETS: |
|
|
| |
|
| |
|
| Cash | | |
$ | 202 |
|
$ | 24,633 |
|
| Investments: | | |
| Flexsteel Industries, Inc. common stock | | |
| 2,956,208 |
|
| 2,547,693 |
|
| Mutual fund | | |
| 1,968,158 |
|
| |
|
| Common/collective trust fund | | |
| 1,976,072 |
|
| |
|
| Other investments | | |
| 43,693,768 |
|
| 37,502,946 |
|
|
| |
| |
| |
| | | |
| 50,594,408 |
|
| 40,075,272 |
|
| |
| Employer contributions receivable | | |
| 104,244 |
|
| 85,757 |
|
| Employee contributions receivable | | |
| 117,060 |
|
| 114,794 |
|
|
| |
| |
| NET ASSETS AVAILABLE FOR BENEFITS | | |
$ | 50,815,712 |
|
$ | 40,275,823 |
|
|
| |
| |
See notes to financial statements.
3
FLEXSTEEL INDUSTRIES, INC. SALARIED
EMPLOYEES RETIREMENT
AND 401(k) PLAN
(PLAN #007 EIN: 42-0442319)
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2003, SIX-MONTH PERIOD ENDED DECEMBER 31,
2002,
AND YEAR ENDED JUNE 30, 2002
|
Period Ended |
|
| |
|
December 31,
2003
(12 Months) |
December 31,
2002
(6 Months) |
June 30,
2002
(12 Months) |
| |
| ADDITIONS: |
|
|
| |
|
| |
|
| |
|
| Employee contributions | | |
$ | 1,847,525 |
|
$ | 835,178 |
|
$ | 1,438,730 |
|
| Employer contributions | | |
| 1,353,015 |
|
| 649,727 |
|
| 218,546 |
|
| Investment income | | |
| 674,020 |
|
| 365,958 |
|
| 334,701 |
|
| Net appreciation (depreciation) in fair value | | |
| of assets | | |
| 7,206,547 |
|
| (2,322,421 |
) |
| (1,419,645 |
) |
| Transfer from merged plan (Note 1) | | |
| |
|
| 21,699,452 |
|
| |
|
| Transfers from other plans (Note 1) | | |
| 210,477 |
|
| 252,451 |
|
| |
|
| Receipt from demutualization (Note 4) | | |
| |
|
| |
|
| 709,100 |
|
|
| |
| |
| |
| |
| Total net additions | | |
| 11,291,584 |
|
| 21,480,345 |
|
| 1,281,432 |
|
| |
| DISTRIBUTIONS AND EXPENSES | | |
| (751,695 |
) |
| (1,226,025 |
) |
| (582,031 |
) |
|
| |
| |
| |
| |
| NET INCREASE | | |
| 10,539,889 |
|
| 20,254,320 |
|
| 699,401 |
|
| |
| NET ASSETS AVAILABLE FOR BENEFITS-- | | |
| Beginning of period | | |
| 40,275,823 |
|
| 20,021,503 |
|
| 19,322,102 |
|
|
| |
| |
| |
| |
| NET ASSETS AVAILABLE FOR BENEFITS-- | | |
| End of period | | |
$ | 50,815,712 |
|
$ | 40,275,823 |
|
$ | 20,021,503 |
|
|
| |
| |
| |
See notes to financial statements.
4
FLEXSTEEL INDUSTRIES, INC. SALARIED
EMPLOYEES RETIREMENT
AND 401(k) PLAN
(PLAN #007 EIN: 42-0442319)
NOTES TO FINANCIAL STATEMENTS
YEAR
ENDED DECEMBER 31, 2003, SIX-MONTH PERIOD ENDED DECEMBER 31, 2002,
AND YEAR ENDED JUNE
30, 2002
| 1. |
|
DESCRIPTION
OF THE PLAN |
| |
The following
description of the Flexsteel Industries, Inc. Salaried Employees Retirement and
401(k) Plan (the “Plan”) is provided for general information purposes
only. Participants should refer to the plan document for more complete
information. |
| |
General—The Plan is a defined contribution plan covering
substantially all salaried employees of Flexsteel Industries, Inc. (the
“Company”) who have reached the age of 21 and have completed one year
of service. Participation is voluntary. The plan administrator controls and
manages the operation and administration of the Plan. Assets of the Plan are
held by the Principal Life Insurance Company (the “Custodian”), except
for the Flexsteel Industries, Inc. common stock fund that is held by the
American Trust & Savings Bank of Dubuque, Iowa (the “Trustee”). A
committee appointed by the Board of Directors of the Company administers the
Plan. The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (“ERISA”), as amended. |
| |
Fiscal Year-End—Effective July 1, 2002, the Plan’s
fiscal year-end was changed from June 30 to December 31. |
| |
Transfers—Effective July 1, 2002, the Plan combined with the
Flexsteel Industries, Inc. Salaried Employees Retirement Plan (“Plan
#006”). To reflect this combination, all of the net assets of Plan #006 as
of July 1, 2002 have been recorded as a transfer of $21,699,452 to the Plan in
the statement of changes in net assets available for benefits. |
| |
During the year ended December 31, 2003, the six-month period ended
December 31, 2002, and the year ended June 30, 2002, the Plan received
transfers from other company benefit plans totaling $210,477, $252,451, and
zero, respectively, related to certain employee job classification changes.
|
| |
Contributions and Vesting—The Plan allows eligible employees
to elect to have from 1% to 50% (sales personnel are subject to a 4% maximum; an
amendment effective January 1, 2004 increased the sales personnel maximum
to 6%) of their basic pretax pay contributed to the Plan. Employee contributions
are by law subject to a maximum of $12,000 in calendar year 2003. The Company
contributes an amount equal to 25% of the first 4% of pay the employee
contributes. Participant and company basic contributions are 100% vested. The
Company, at its option, may also contribute additional amounts to be allocated
among all participants based on the participants’ pay; such additional
discretionary contributions vest over 7 years (20% after 3 years, 40% after 4
years, 60% after 5 years, 80% after 6 years, and 100% after 7 years).
Discretionary company contributions may be made in either cash or company stock,
at the Company’s discretion. In addition, the Company contributes 4% of pay
up to the social security limit and 6% of pay in excess of this limit on a
monthly basis. Forfeited balances of terminated participants may first be
applied to pay expenses which would otherwise be paid by the Company.
Forfeitures not used to pay expenses shall be applied to reduce future company
contributions. |
5
| |
Participant Accounts—Individual accounts are maintained for
each plan participant. Each participant’s account is credited with the
Company’s contribution and allocations of plan earnings, and is charged
with an allocation of plan losses and administrative expenses. Allocations are
based on compensation, participant investment elections, and account balances,
as defined. The benefit to which a participant is entitled is the benefit that
can be provided from the participant’s vested account. |
| |
Investments—Plan participants direct their contributions to
any of the 18 investment accounts available: |
| |
1. |
|
Flexsteel
Industries, Inc. common stock, which consists of the Company’s common stock. |
| |
2. |
|
Guaranteed
Interest Account, which is an insurance company account that provides a guaranteed
interest rate for a five-year period. |
| |
3. |
|
Money
Market Account, which is an investment account primarily invested in commercial paper
with maturities of one year or less. |
| |
4. |
|
Private
Market Bond and Mortgage Account, which is an investment account that provides for
competitive yield debt securities. |
| |
5. |
|
Large
Cap Stock Index Fund, which is a pooled investment account invested in the common
stock of those firms included in the Standard & Poor’s 500 Stock Index. |
| |
6. |
|
Large
Company Growth Account, which primarily invests in larger companies that management
believes have an above-average potential for growth of capital, earnings, and dividends. |
| |
7. |
|
Mid
Cap Stock Index Fund, which is a pooled investment account invested in the common
stock of those firms included in the Standard & Poor’s 400 Mid Cap Stock Index. |
| |
8. |
|
Small
Company Blend Stock Fund, which invests in stocks of smaller seasoned companies. |
| |
9. |
|
Large
Company Blend Account, which consists of common stock and other equity securities,
and also may include short-term money market instruments, cash, or cash equivalents. |
| |
10. |
|
International
Stock Account, which invests in stocks of companies in Western Europe and Asia. |
| |
11. |
|
Stable
Value Select Fund, which is an investment account that consists of assets whose
principal value remains stable. |
| |
12. |
|
Large
Cap Value Account, which is an investment account that seeks long-term growth of
capital. |
| |
13. |
|
Lifetime
Strategic Income Account, which is an investment account that seeks current income. |
6
| |
14. |
|
Lifetime
2010, 2020, 2030, and 2050 Accounts, which are investment accounts that seek
long-term growth of capital and current income. |
| |
15. |
|
Vanguard
Explorer Fund, which is a mutual fund that seeks to provide long-term capital
appreciation. |
| |
Payment of Benefits—Distributions of benefits are paid upon
retirement, death, disability, and in certain hardship cases. Distributions, in
certain cases, may also occur on termination of the Plan or disposition of
substantially all of the Company’s assets to another entity. Otherwise,
benefits will be distributed on the later of the date the participant attains
age 65, the tenth anniversary of the participant’s entry date, or the date
the participant ceases to be an employee. If a participant’s vested account
balance has never exceeded $5,000, the entire vested account balance shall be
payable as a single lump sum upon retirement, death, or termination. For
participants whose vested account balance exceeds $5,000, benefits are paid in
an automatic form unless an optional form has been selected by the participant
or their beneficiary: |
| |
Automatic Forms—The automatic form of retirement benefits shall be
in the form of an immediate survivorship life annuity with installment refund
for participants with a spouse or a single life annuity with installment refund
for participants without a spouse. |
| |
The automatic form of death benefits shall be: (1) a qualified preretirement
survivor annuity for participants who have a spouse to whom they have been
continuously married throughout the one-year period ending on the date of their
death, or (2) a single-sum payment to the participant’s beneficiary for
participants who do not have a spouse who is entitled to the qualified
preretirement survivor annuity. |
| |
Optional Forms—The optional forms of retirement benefits shall be:
(1) straight life annuity, (2) single life annuities with certain
periods of 5, 10, or 15 years, (3) single life annuity with installment
refund, (4) survivorship life annuities with installment refund and
survivorship percentages of 50%, 66-2/3%, or 100%, (5) fixed period
annuities, (6) a series of installments chosen by the participant with a
minimum payment each year beginning with age 70-1/2 (full flexibility option),
or (7) single-sum payment. |
| |
The optional forms of death benefits are a single-sum payment and any
annuity that is an optional form of retirement benefit. However, the full
flexibility option shall not be available if the beneficiary is not the spouse
of the deceased participant. |
| 2. |
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES |
| |
Basis
of Accounting—The financial statements have been prepared on the accrual
basis in accordance with accounting principles generally accepted in the United States of
America. |
| |
Use
of Estimates—The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from those
estimates. |
| |
Investments—The
Plan invests in various investment securities. Investment securities, in general, are
exposed to various risks, such as interest rate, credit, and overall market volatility.
Due to the level of risk associated with certain investment securities, it is reasonably
possible that changes in |
7
| |
the values of investment securities will occur in the near term and that such
changes could materially affect the amounts reported in the statements of net
assets available for benefits. |
| |
Investment Valuation and Income Recognition—Investments in
common stock are recorded at market value based on market quotations. Other
investments are stated at market value as determined by the Trustee and
Custodian based on the market value of the funds and the participation in each
fund, except for the investment contract. The investment contract is not fully
benefit responsive and is stated at fair value as determined by the Custodian.
Net realized and unrealized appreciation (depreciation) of investments
represents the increase (decrease) in the market value of investments from the
beginning of the period or from the date of purchase (if purchased during the
year) to the end of the period, as well as the difference between the sales
proceeds and the sum of the market values of the investments held at the
beginning of the period and sold during the period and the cost of any
investments purchased and sold during the period. |
| |
Expenses—Certain administrative expenses of the Plan, such as
contract administration, record-keeping, and transaction fees, are paid by the
Plan. Certain other administrative fees, such as audit fees of the Plan, are
paid by the Company. Administrative expenses charged to the Plan were not
significant. Expenses paid by the Company were $30,570, $25,033, and $33,094 for
the year ended December 31, 2003, six-month period ended December 31,
2002, and year ended June 30, 2002, respectively. |
| |
Payment of Benefits—Benefit payments to participants are
recorded upon distribution. |
| |
Investments
that represent 5% or more of the Plan’s net assets were as follows:
|
|
December 31,
2003 |
December 31,
2002 |
| |
| Flexsteel Industries, Inc. common stock* |
|
|
| |
|
| |
|
| (131,387 and 152,693 shares, respectively) | | |
$ | 2,956,208 |
|
$ | 2,547,693 |
|
| Principal Guaranteed Interest Account* | | |
| 12,731,459 |
|
| 12,147,702 |
|
| Principal Private Market Bond and Mortgage Account* | | |
| 5,405,458 |
|
| 5,598,744 |
|
| Principal Large Cap Stock Index Fund* | | |
| 12,255,678 |
|
| 2,611,970 |
|
| Principal Small Company Blend Stock Fund* | | |
| 4,422,782 |
|
| 2,783,214 |
|
| Principal International Stock Account* | | |
| 2,551,881 |
|
| |
|
| Principal Large Company Blend Account* | | |
| |
|
| 7,072,082 |
|
| Principal Money Market Account* | | |
| |
|
| 2,113,072 |
|
* Denotes party-in-interest
8
| |
The net appreciation (depreciation) in the fair value of investments was as
follows: |
|
Year Ended
December 31,
2003 |
Six Months
Ended
December 31,
2002 |
Year Ended
June 30,
2002 |
| |
| Flexsteel Industries, Inc. common stock |
|
|
$ | 833,166 |
|
$ | 107,979 |
|
$ | 559,971 |
|
| Mutual funds | | |
| 156,254 |
|
| — |
|
| — |
|
| Common/collective trust funds | | |
| 331 |
|
| — |
|
| — |
|
| Other investments | | |
| 6,216,796 |
|
| (2,430,400 |
) |
| (1,979,616 |
) |
|
| |
| |
| |
| | | |
$ | 7,206,547 |
|
$ | (2,322,421 |
) |
$ | (1,419,645 |
) |
|
| |
| |
| |
| |
Principal Life Insurance Company, the Custodian, elected to demutualize and
become a public company. As a result, the Plan received cash in the amount of
$709,100 in December 2001. The cash received was allocated to each participant
account based on their respective balance and their investment fund(s) election.
|
| 5. |
|
RELATED-PARTY
TRANSACTIONS |
| |
The Plan invests in Pooled Separate Accounts and the Guaranteed Interest Account
that are managed by the Custodian. The Plan also invests in the Company’s
common stock. These transactions qualify as exempt party-in-interest
transactions. |
| |
Although it has not expressed any intention to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions set forth in ERISA. In the event that the Plan is
terminated, participants would become 100% vested in their account. |
| 7. |
|
FEDERAL
INCOME TAX STATUS |
| |
The Internal Revenue Service has determined and informed the Company by letter
dated September 27, 2002 that the Plan qualifies under the applicable sections
of the Internal Revenue Code (“IRC”) and, therefore, the related trust
is not subject to tax under current tax law. Once qualified, the Plan is
required to operate in conformity with the IRC to maintain its tax
qualification. The Plan has been amended since receiving the determination
letter. The plan administrator believes the Plan is currently designed and is
being operated in compliance with the applicable requirements of the IRC and, as
a result, no provision for income taxes is believed necessary. |
* * * * * *
9
SUPPLEMENTAL SCHEDULE
FLEXSTEEL INDUSTRIES, INC.
SALARIED
EMPLOYEES RETIREMENT AND 401(k) PLAN
(PLAN #007 EIN: 42-0442319)
SCHEDULE H, LINE 4i--SCHEDULE OF
ASSETS (Held At End of Year)
DECEMBER 31, 2003
| |
Current
Value |
| |
| Flexsteel Industries, Inc. common stock(1) |
|
|
$ | 2,956,208 |
|
| Vanguard Explorer Fund | | |
| 1,968,158 |
|
| Principal Life Insurance Company(2): | | |
| Guaranteed Interest Account | | |
| 12,731,459 |
|
| Stable Value Select Fund | | |
| 1,976,072 |
|
| Pooled Separate Accounts: | | |
| Money Market Account | | |
| 728 |
|
| Private Market Bond and Mortgage Account | | |
| 5,405,458 |
|
| Large Cap Stock Index Fund | | |
| 12,255,678 |
|
| Large Company Growth Account | | |
| 2,096,690 |
|
| Large Company Blend Account | | |
| 25,386 |
|
| Mid Cap Stock Index Fund | | |
| 1,804,990 |
|
| Small Company Blend Stock Fund | | |
| 4,422,782 |
|
| Large Cap Value Account | | |
| 801,474 |
|
| International Stock Account | | |
| 2,551,881 |
|
| Lifetime Strategic Income Account | | |
| 128,464 |
|
| Lifetime 2010 Account | | |
| 1,130,974 |
|
| Lifetime 2020 Account | | |
| 259,796 |
|
| Lifetime 2030 Account | | |
| 73,356 |
|
| Lifetime 2050 Account | | |
| 4,652 |
|
|
| |
| |
| | | |
$ | 50,594,206 |
|
|
| |
| (1) |
|
Flexsteel
Industries, Inc., the Plan Sponsor, is known to be a party-in-interest.
|
| (2) |
|
Principal Life
Insurance Company, the Custodian, is known to be a party-in-interest.
|
11