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Jay McIntosh

Flexsteel sales jump 19% in quarter

Litigation expense sends earnings down

DUBUQUE, Iowa — Flexsteel Inds.' sales of $113 million in its fiscal second quarter were up 19% from a year earlier, with good performance in both its residential and commercial furniture segments, the company reported.

Earnings for the quarter ended Dec. 31 declined 60% to $1.2 million or 16 cents per share because of a $6.25 million expense to settle litigation. Without that expense, adjusted net income was $4.5 million or 60 cents per share, compared with $3.3 million or 46 cents per share a year earlier, the company said.

Residential segment sales of $92 million were up 19% in the quarter and commercial sales of $21 million were up 18%, officials said.

Sales for the six months ended Dec. 31 were up 17% to $217 million, with residential sales growing 18% to $175 million and the commercial side up 13% to $42 million.

Net income for the six months was $4.9 million or 66 cents per share, down 14.8% from $5.8 million or 80 cents per share a year earlier. Adjusted for the litigation expense, the net income was $8.9 million or $1.18 per share, the company said.

"The company believes that top line growth will continue through the end of fiscal year 2014," officials said in a press release. "Residential growth is expected to continue with existing customers and products, and through expanding our product portfolio and customer base. The company expects this growth to be led by increased demand for upholstered and ready-to-assemble products."

In the litigation settlement, Flexsteel paid $6.25 million to settle claims of groundwater contamination at properties it once owned in Elkhart, Ind. The company did not admit wrongdoing and said it settled the suit "to eliminate the ongoing costs and distraction of the litigation." It said its insurers had paid $1.7 million in defense costs, and Flexsteel is seeking to recover settlement costs as well.

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