What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-08-19 compared with 2025-08-22 · 104 added, 174 removed, 518 unchanged (35% of the section changed)

13 unchanged sentences

We have audited the accompanying consolidated balance sheets of Flexsteel Industries, Inc.

and subsidiaries (the “Company”) as of June 30, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows, for each of the three years in the period ended June 30, 2025, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2025, in conformity with accounting principles generally accepted in the United States of America.

and subsidiaries (the "Company") as of June 30, 2026 and June 30, 2025, the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended June 30, 2026, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2026 and June 30, 2025, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2026, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 19, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.

10 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Inventories — Refer to Notes 1 and 3 to the financial statements

9 unchanged sentences

• We tested the design and operating effectiveness of internal controls over the inventory valuation process, including controls over the inputs that are used in management’s inventory markdown for the excess of the cost over the amount expected to be realized.

• We tested management's process to determine the inventory markdowns and net realizable value of inventory through inquiries of management, and evaluation of accounting policies and process documentation.

• We tested management's methodology to determine the markdowns to net realizable value of inventory through inquiries of management, and evaluation of accounting policies and process documentation.

• We tested the accuracy and completeness of the Company’s measurement of inventory markdowns using a sampling approach.

2 unchanged sentences

• We performed retrospective reviews of actual products sold in the current year against prior year inventory markdowns to net realizable value.

Mexicali Right-of-Use Asset Impairment — Refer to Notes 1 and 2 to the financial statements

Critical Audit Matter Description

The Company periodically reviews the carrying value of long-lived assets and estimated depreciable or amortizable lives for continued appropriateness.

This review is based upon projections of anticipated future cash flows and is performed whenever events or changes in circumstances indicate that asset carrying values may not be recoverable or that the estimated depreciable or amortizable lives may have changed.

Events that result in an impairment review may include a significant decrease in the operating performance of the long-lived asset, or the decision to close a manufacturing facility, or distribution center.

If it is determined estimated fair value, less cost to sell, is less than the carrying value, the asset is written down to its fair value.

In the third quarter of fiscal year 2025, indicators arose that the right-of-use asset assigned to the Company’s manufacturing facility in Mexicali, Mexico may not be fully recoverable.

As a result of management’s analysis, management concluded that the right-of-use asset related to this lease is not fully recoverable and recorded a $14.1 million impairment in fiscal year 2025.

We identified the Mexicali Right-of-Use Asset Impairment as a critical audit matter because the impairment assessment involves significant judgment due to the estimation of future cash flows and fair values.

Key assumptions, sublease rental income per square foot and discount rate, are influenced by economic conditions and are inherently subjective.

Because of the materiality of the impairment and the complexity of the assumptions, auditing management’s estimates of estimated fair value required subjective auditor judgment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the sublease rental income per square foot and selection of discount rate, among others:

• We tested the effectiveness of controls over management’s valuation, including those over the sublease rental income per square foot and selection of discount rate.

• We inquired of management regarding the viability of subleasing the manufacturing facility and appropriate sublease rental income per square foot.

• We evaluated the reasonableness of management’s plan to sublease the Mexicali, Mexico manufacturing facility through:

o Inspection of internal communications between management and the Board of Directors

o Inspection of historical subleasing agreements between the Company and tenants.

• We evaluated the methods and inputs used by management to determine the fair value of the lease right-of-use asset, as well as evaluated management's analysis to assess the sensitivity of sublease rental income per square foot and discount rate.

• With the assistance of fair value specialists, we evaluated the reasonableness of the sublease rental income per square foot by:

o Testing the source information underlying the determination of sublease rental income per square foot and testing the mathematical accuracy of the information

o Comparing sublease rental income per square foot to market data

o Developing ranges of independent estimates and comparing those to the sublease rental income per square foot selected by management.

• With the assistance of fair value specialists, we evaluated the reasonableness of the discount rate by:

o Testing the source information underlying the determination of the discount rate and testing the mathematical accuracy of the information

o Comparing the discount rate to market data

o Developing ranges of independent estimates and comparing those to the discount rate selected by management

o Evaluating the application of the discount rate on the anticipated future cash flows and recalculating the net present value.

/s/ Deloitte & Touche LLP

35 unchanged sentences

Trade receivables - less allowances:

2025, $ 1,790 ;

2024, $ 2,440

Assets held for sale

June 30, 2026, $ 2,040 , June 30, 2025, $ 1,790

Total current assets

13 unchanged sentences

Operating lease liabilities, less current maturities

Line of credit

Other liabilities

5 unchanged sentences

8,629 shares issued

and 5,307 shares outstanding as of June 30, 2025, and 8,407 shares issued and

and 4,107 shares outstanding as of June 30, 2026;

8,514 shares issued and

5,307 shares outstanding as of June 30, 2025

1 unchanged sentence

Treasury stock, at cost;

3,207 shares as of June 30, 2025 and

2024, respectively

4,522 shares as of June 30, 2026, and 3,207 as of June 30, 2025

Retained earnings

Accumulated other comprehensive income

Total shareholders' equity

12 unchanged sentences

(Gain) on disposal of assets held for sale

Environmental remediation

Other expense

Operating income

2 unchanged sentences

Interest (expense)

Total other income (expense)

Income before income taxes

Income tax provision (benefit)

Income tax provision

Net income and comprehensive income

7 unchanged sentences

Balance at June 30, 2023

Issuance of common stock:

Stock-based compensation

Vesting of restricted stock units and restricted shares

Vesting of restricted stock units

Stock options exercised, net

Treasury stock purchases

1 unchanged sentence

Balance at June 30, 2024

Issuance of common stock:

Stock-based compensation

Vesting of restricted stock units and restricted shares

Vesting of restricted stock units

Stock options exercised, net

Treasury stock purchases

Cash dividends declared

Balance at June 30, 2025

Issuance of common stock:

Stock-based compensation

Vesting of restricted stock units and restricted shares

Vesting of restricted stock units

Stock options exercised, net

Treasury stock purchases

Cash dividends declared

11 unchanged sentences

Stock-based compensation expense

Change in provision for losses on accounts receivable

Provision for credit losses

Right-of-use asset impairment

(Gain) on disposition of property, plant and equipment

Loss (gain) on disposition of property, plant and equipment

Changes in operating assets and liabilities:

Trade receivables

Other current assets

Other current and non-current assets

Accounts payable - trade

6 unchanged sentences

Capital expenditures

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

FINANCING ACTIVITIES:

6 unchanged sentences

Net cash (used in) financing activities

Increase in cash and cash equivalents

(Decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

10 unchanged sentences

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS – Flexsteel Industries, Inc., and Subsidiaries (the “Company” or “Flexsteel” or “Our”) is one of the largest manufacturers, importers, and marketers of furniture products in the United States.

Product offerings include a wide variety of furniture such as sofas, loveseats, chairs, reclining rocking chairs, swivel rockers, sofa beds, convertible bedding units, occasional tables, desks, dining tables and chairs, kitchen storage, bedroom furniture, and outdoor furniture.

A featured component in most of the upholstered furniture is a unique steel drop-in seat spring from which the name “Flexsteel” is derived.

The Company distributes its products throughout the United States through its e-commerce channel and dealer sales force.

DESCRIPTION OF BUSINESS – Flexsteel Industries, Inc.

and Subsidiaries (the “Company,” “Flexsteel,” or “Our”) is one of the largest residential furniture manufacturers, importers, and marketers in the U.S.

Flexsteel addresses different consumer groups through our core brand, Flexsteel, and several category-specific sub-brands:

Zecliner, Statements, Zen, Perfect Match, and Pulse, all of which have unique value propositions tailored to specific consumer needs.

We offer a wide assortment of product solutions for different areas within the home including stationary and motion sofas, loveseats, chairs, and sectionals, as well as bedroom furniture, dining tables and chairs, occasional and entertainment tables, and kitchen storage.

For more than 130 years, Flexsteel has strived to create strong consumer value with unmatched quality, comfort, and durability, backed by innovation and highlighted by its patented Blue Steel Spring technology, designed to deliver lasting comfort and support.

Today, Flexsteel products are available nationwide through retail partners and online channels.

PRINCIPLES OF CONSOLIDATION – The consolidated financial statements include the accounts of Flexsteel Industries, Inc.

4 unchanged sentences

Ultimate results could differ from those estimates.

FAIR VALUE – The Company’s cash and cash equivalents, investments, accounts receivable, other current assets, accounts payable and certain accrued liabilities are carried at amounts which reasonably approximate their fair value due to their short-term nature.

GAAP on fair value measurement for certain financial assets and liabilities require that each asset and liability carried at fair value be classified into one of the following categories:

FAIR VALUE – The Company’s cash and cash equivalents, investments, accounts receivable, other current assets, accounts payable and certain accrued liabilities are carried at amounts that approximate their fair value due to their short-term nature.

Under GAAP, financial assets and liabilities measured at fair value are classified into one of three levels based on the inputs used in the valuation::

Quoted market prices in active markets for identical assets and liabilities;

6 unchanged sentences

INVENTORIES – Inventories are stated at the lower of cost or net realizable value utilizing the first‑in - first‑out (“FIFO”) method.

Cost of manufactured inventory includes materials, labor and overhead.

In addition, finished goods inventory includes capitalized freight, import duties, and warehousing costs.

Cost of manufactured inventory includes materials, freight, import duties and tariffs, labor and overhead.

In addition, sourced finished goods inventory includes the purchase price of the product and capitalized freight, import duties and tariffs, and warehousing costs.

Our inventory valuation reflects markdowns for the excess of the cost over the amount expected to be realized and considers obsolete and excess inventory.

7 unchanged sentences

The assets held for sale are being marketed for sale and it is the Company’s intention to complete the sale of the assets within the upcoming year.

RESTRUCTURING COSTS - The Company groups exit or disposal cost obligations into three categories:

involuntary employee termination benefits, costs to terminate contracts, and other associated costs.

Involuntary employee termination benefits must be a one-time benefit, and this element of restructuring cost is recognized as incurred upon communication of the plan to the identified employees.

Costs to terminate contracts are recognized upon termination agreement with the provider.

Other associated restructuring costs are expensed as incurred.

Any inventory impairment costs as a result of restructuring activities are accounted for as cost of goods sold.

LEASES – The Company accounts for its leases in accordance with ASC 842, Leases.

23 unchanged sentences

These contract liabilities are reported within “Accounts payable - trade” in the consolidated balance sheets.

As of June 30, 2025 , the Company had $ 0.25 million of customer deposits.

As of June 30, 2024 , the Company had $ 0.14 million of customer deposits.

The Company had $ 0.44 million and $ 0.25 million of customer deposits as of June 30, 2026 and 2025, respectively.

The Company follows the following practical expedients and policy elections:

18 unchanged sentences

The Company recognizes in its financial statements the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

In December 2019, the FASB issued ASU 2019-12 “Income Taxes Simplifying the Accounting for Income Taxes (Topic 740)” as part of its initiative to reduce complexity in the accounting standards.

The amendments in ASU 2019-12 eliminate certain exceptions related to the approach for interim period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences.

EARNINGS PER SHARE (EPS) – Basic EPS of common stock is based on the weighted-average number of common shares outstanding during each fiscal year.

25 unchanged sentences

RECENT ACCOUNTING STANDARDS PENDING ADOPTION – In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses”, which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses.

Disaggregation of Income Statement Expenses”, which requires disclosure in the notes to the financial statements of specified information about certain costs and

The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027.

1 unchanged sentence

The Company is currently evaluating the disclosure impacts of this ASU on its consolidated financial statements.

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2023 09 “Improvements to Income Tax Disclosures.” The amendments in this ASU are intended to increase transparency through improvements to income tax disclosures primarily related to the income tax rate reconciliation and income taxes paid information.

This ASU will become effective for us for the annual period beginning in fiscal year 2026, with early adoption permitted.

The Company is currently evaluating the effect that the new guidance will have on our related disclosures, but do not expect this guidance will have a material impact on our financial position and results of operations.

RECENTLY ADOPTED ACCOUNTING STANDARDS – In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures which requires business entities to enhance segment disclosures about significant segment expenses and disclose the position and title of the chief operating decision maker.

The ASU also requires that a public entity with a single reportable segment, like the Company, provide all of the disclosures required as part of ASU 2023-07 and all existing disclosures required by Topic 280.

The ASU was adopted July 1, 2024, and has been applied retrospectively to all prior periods presented.

The adoption did not have an impact on the Company’s consolidated balance sheets or results of operations.

See Note 12, Segment Information .

RECENTLY ADOPTED ACCOUNTING STANDARDS – In December 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No.

2023-09, Improvements to Income Tax Disclosures.

The amendments in this ASU are intended to increase transparency through enhanced income tax disclosures, primarily related to the rate reconciliation and income taxes paid.

The Company adopted this guidance effective as of the end of fiscal 2026.

The adoption affected the Company's income tax disclosures but did not have an impact on its financial position, results of operations, or cash flows.

See Note 10, Income Taxes, for additional information.

The Company accounts for its leases in accordance with ASU 842, Leases.

19 unchanged sentences

This technique involves estimates and uncertainties and actual results could differ.

The impairment charge is included within

operating income in the Consolidated Statements of Income and Comprehensive Income under right-of-use asset impairment.

The remaining carrying value of the ROU asset related to the Mexicali lease was $ 13.5 million at June 30, 2025.

The impairment charge is included within operating income in the Consolidated Statements of Income and Comprehensive Income under right-of-use asset impairment.

For the year ended June 30, 2026, the Company evaluated the triggering events described in ASC 360-10-35-21 and considered current operating, market, legal and economic conditions.

Based on this evaluation, management concluded that no new events or changes in circumstances occurred during the year that would indicate the carrying amount of the Mexicali ROU asset may not be recoverable.

Accordingly, management determined that an additional recoverability test under ASC 360 was not required.

The remaining carrying value of the Mexicali ROU asset, after reflecting normal current-year lease accounting activity, lease was $ 12.4 million as of June 30, 2026.

No impairment was recognized during the year.

The components of the Company’s leases reflected on the Company’s consolidated statements of income were as follows:

40 unchanged sentences

Less accumulated depreciation

The Company recognized no impairment charges for fiscal years 2025, 2024, and 2023 .

The Company recognized impairment charges of $ 0.1 million, nil, and $ 0.1 million for fiscal years 2026, 2025, and 2024 , respectively.

RESTRUCTURING

16 unchanged sentences

All expenses related to the manufacturing network optimization restructuring plan were incurred and paid during the year ended June 30, 2024.

The roll forward of the accrued restructuring costs is as follows, for the years ended June 30, 2025, 2024, and 2023:

(in thousands)

Accrual balance at June 30, 2023

Costs incurred

Expenses paid

Accrual balance at June 30, 2024

Costs incurred

Expenses paid

Accrual balance at June 30, 2025

ASSETS HELD FOR SALE

13 unchanged sentences

CREDIT ARRANGEMENTS

On September 8, 2021, the Company, as the borrower, entered into a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association (the “Lender”), and the other lenders thereto.

The Credit Agreement has a five-year term and provides for up to an $ 85 million revolving line of credit.

3 unchanged sentences

The Credit Agreement contains customary representations, warranties, and covenants, including a financial covenant to maintain a fixed coverage ratio of not less than 1.00 to 1.00.

In addition, the Loan Agreement places restrictions on the Company’s ability to incur additional indebtedness, to create liens or other encumbrances, to sell or otherwise dispose of assets, and to merge or consolidate with other entities.

In addition, the Credit Agreement places restrictions on the Company’s ability to incur additional indebtedness, to create liens or other encumbrances, to sell or otherwise dispose of assets, and to merge or consolidate with other entities.

As of June 30, 2026, management believes the Company was in compliance with all covenants.

On April 18, 2022, the Company entered into a first amendment to the Credit Agreement (“First Amendment to the Credit Agreement”), with the Lender, and the lenders thereto.

On April 18, 2022, the Company, as the borrower, entered into a first amendment to the Credit Agreement (“First Amendment to the Credit Agreement”), with the Lender and the lenders thereto.

The amendment to the Credit Agreement changed the definition of the term ‘Payment Conditions’ and further defined default or event of default and the calculation of the Fixed Charge Coverage Ratio.

4 unchanged sentences

The amendment reduced the maximum revolving line of credit amount to $ 55 million and modified certain definitions in the Credit Agreement which include dollar figures derived from the maximum revolver amount.

The reduction in the maximum revolving line of credit amount was initiated by the Company to better align with current and projected borrowing availability under the terms of the Credit Agreement.

The Company initiated the amendment to better align with current and projected borrowing availability under the Credit Agreement.

As of June 30, 2026 , there were no outstanding borrowings under the Credit Agreement, exclusive of fees and letters of credit.

2 unchanged sentences

In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations.

As of June 30, 2023, it was determined the Company had reached a more-likely-than-not position that the Company will realize the entirety of its deferred tax assets.

Therefore, the Company reversed the previously recorded valuation allowance against the federal and state deferred tax assets recorded as of June 30, 2022, of $ 9.8 million.

Income tax expense was calculated based upon the following components of income before income taxes for the years ended June 30:

The One Big Beautiful Bill Act (“OBBBA”), enacted into law on July 4, 2025, introduced significant changes to the U.S.

federal income tax laws.

The OBBBA made permanent certain expiring provisions of the Tax Cuts and Job Act of 2017 (TCJA) and modified other provisions of the TCJA, as well as the Inflation Reduction Act of 2022 (the “IRA”).

These changes included the permanent extension of 100% “bonus” depreciation for certain property, the permanent restoration of the tax-basis EBITDA-based limitation on the deductibility of business interest expense subject to certain modifications to the computation of tax-basis EBITDA, and the immediate expensing of qualified domestic research and development expenses.

The OBBBA contained various effective dates with certain provisions becoming effective in 2025 and others in 2026 and beyond.

The Company has reflected the impact of the OBBBA on current and deferred income taxes in its Consolidated Balance Sheets and Consolidated Statements of Income and Comprehensive Income.

Income tax expense was calculated based upon the following components of income (loss) before income taxes for the years ended June 30:

(in thousands)

United States

Outside the United States

Income before income taxes

The income tax (provision) benefit is as follows for the years ended June 30:

The income tax provision is as follows for the years ended June 30:

(in thousands)

Federal - current

State and other - current

Reconciliation between the U.S.

federal statutory tax rate and the effective tax rate is as follows for the years ended June 30:

federal statutory tax rate and the effective tax rate in accordance with the guidance in ASU 2023-09 is as follows for the years ended June 30, 2026:

June 30, 2026

(in thousands)

Federal statutory tax rate

State and local income taxes, net of federal income tax effect*

Foreign tax effects

Effect of cross border tax laws

Nontaxable or nondeductible items:

Executive compensation limitation

Stock compensation

Changes in uncertain tax positions

Other adjustments

*State taxes in Indiana, Pennsylvania, California and Illinois made up the majority of the tax effect in this category.

Reconciliation between the U.S.

federal statutory tax rate and the effective tax rate in accordance with the guidance prior to the adoption of ASU 2023-09 for the years ended June 30:

Federal statutory tax rate

State taxes, net of federal effect

2 unchanged sentences

Stock based compensation

Section 162(m)

Executive compensation limitation

Foreign adjustments

Expired state credits

Research & development credit

Research and development credit

Remeasurement of deferred tax assets and valuation

1 unchanged sentence

Effective tax rate

A reconciliation of income taxes paid (net of refunds received) by jurisdiction is as follows:

(in thousands)

state and local:

state and local

Total foreign

Total income taxes paid (net of refunds received)

The components of the gross liabilities related to unrecognized tax benefits and the related deferred tax assets are as follows:

14 unchanged sentences

Balance at June 30

The Company records interest expense and penalties related to income taxes as income tax expense in the consolidated statements of income.

The Company records interest expense and penalties related to income taxes as income tax expense in the Consolidated Statements of Income and Comprehensive Income.

The Company does not expect that there will be any positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

The amount of unrecognized tax benefits as of June 30, 2025, and 2024 that if recognized, would affect the effective tax rate was $ 0.6 million and $ 0.4 million respectively.

The amount of

unrecognized tax benefits as of June 30, 2026, and 2025 that if recognized, would affect the effective tax rate was $ 0.7 million and $ 0.6 million respectively.

The primary components of deferred tax assets and (liabilities) are as follows:

9 unchanged sentences

Lease liabilities

Research & development expenditure

Research and development expenditure

On June 30, 2026, certain state tax attribute carryforwards of $ 0.3 million were available, with $ 0.1 million of credits expiring beginning in fiscal years 2026 through 2028 , and $ 0.1 million of state NOLs carryforward.

Some of the state NOL carryforwards will have an indefinite carryforward and some will expire in varying amounts between 2035 and 2041.

As of June 30, 2023, it was determined that the Company has reached a more-likely-than-not position that the Company will realize the entirety of its state attribute carryforwards and its U.S.

federal deferred tax assets.

The Company is subject to U.S.

1 unchanged sentence

Generally, fiscal years 2022 through 2026 remain open to examination by the Internal Revenue Service or other taxing jurisdictions to which the Company is subject.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States.

The OBBBA includes a number of provisions which impact the United States tax code.

The regulations impacting the tax code have multiple effective dates ranging from fiscal years beginning January 1, 2025, to fiscal years beginning January 1, 2027.

The Company has not adjusted its provision for income tax or measurement of deferred tax assets as of June 30, 2025, based on the changes that may be triggered by the OBBBA due

to the law being signed on July 4, 2025.

The Company is currently assessing the impact of the OBBBA but does not expect it to have a material impact on our financial position and results of operations.

STOCK-BASED COMPENSATION

5 unchanged sentences

Total stock-based compensation expense was $ 4.6 mil lion, $ 3.9 million and $ 4.6 million for fiscal years 2026, 2025, and 2024, respectively.

On December 14, 2022, the Company’s shareholders approved the Flexsteel Industries, Inc.

2022 Equity Incentive Plan (“2022 Plan”).

The 2022 Plan replaces the Long-Term Incentive Compensation Plan (“LTIP”) and the 2013 Omnibus Stock Plan (collectively, the “Prior Plans”) and no further awards will be made under either of the Prior Plans, but these Prior Plans will continue to govern awards previously granted under them.

The Company’s shareholders approved the Flexsteel Industries, Inc.

2022 Equity Incentive Plan (“2022 Plan”) on December 14, 2022 and approved amendments to the 2022 Plan on December 10, 2025.

The 2022 Plan replaced the Long-Term Incentive Compensation Plan (“LTIP”) and the 2013 Omnibus Stock Plan (collectively, the “Prior Plans”).

No further awards will be made under either of the Prior Plans, but these Prior Plans will continue to govern awards previously granted under them.

(1) 2022 Equity Incentive Plan

10 unchanged sentences

Long-Term Incentive Compensation

The table below sets forth, as of June 30, 2025, the number of unvested PSUs granted at the target performance level for the 2023-2025, 2024-2026, and 2025-2027 performance periods under the 2022 Plan and LTIP (as applicable) and the number of unvested RSUs granted in conjunction with the PSU s.

The table below sets forth, as of June 30, 2026, the number of unvested PSUs granted at the target performance level for the 2024-2026, 2025-2027, and 2026-2028 performance periods under the 2022 Plan and the number of unvested RSUs granted in conjunction with the PSUs.

For PSUs awarded for the three year performance periods ending June 30, 2026, 2027 and 2028, achievement is based on meeting performance goals set for each year within the three year period.

9 unchanged sentences

Unvested as of June 30, 2026

Total unrecognized stock-based compensation related to the unvested PSUs at the target performance level and the related unvested RSUs wa s $ 2.2 million as of June 30, 2025, which is expected to be recognized over a perio d of 0.9 years.

Total unrecognized stock-based compensation related to the unvested PSUs at the target performance level and the related unvested RSUs wa s $ 2.2 million as of June 30, 2026, which is expected to be recognized over a perio d of 1.0 year.

Restricted Shares and RSUs

6 unchanged sentences

Total unrecognized stock-based compensation related to unvested restricted shares and unvested RSUs (not granted in conjunction with the PSUs) wa s $ 0.2 million as of June 30, 2026, which is expected to be recognized over a weighted average period of 1.5 ye ars.

No stock options were granted during fiscal years 2025, 2024, and 2023.

A summary of the activity of the Company’s stock option plans during the years ended June 30, 2025, 2024, and 2023, is presented below:

(in thousands)

Exercise Price

Outstanding at June 30, 2023

Outstanding at June 30, 2024

Outstanding at June 30, 2025

The following table summarizes information for options outstanding at June 30, 2025:

Weighted Average

(in thousands)

18.30 - 19.72

21.96 - 27.57

31.06 - 32.80

43.09 - 47.45

The Company does no t have any unrecognized stock-based compensation expense related to options.

At June 30, 2026, the Company had 59,496 options outstanding under equity incentive plans with a weighted average exercise price of $ 15.37 and weighted average remaining life of 3.7 years.

No options were granted during the period ended June 30, 2026 and there is no remaining unrecognized stock-based compensation expense related to outstanding options as of June 30, 2026.

Stock-based compensation granted outside a plan

12 unchanged sentences

The Company leases and operates three manufacturing facilities in Juarez, Mexico and leases one manufacturing facility in Mexicali, Mexico.

Long-lived assets, including property, plant & equipment and right-of-use assets related to leases, located in the United States and Mexico totaled $ 42.4 million and $ 35.4 million, respectively, at June 30, 2025 and $ 46.6 million and $ 51.5 million, respectively, at June 30, 2024, respectively.

Long-lived assets, including property, plant and equipment and right-of-use assets related to leases, located in the United States and Mexico totaled $ 40.3 million and $ 31.4 million, respectively, at June 30, 2026 and $ 42.4 million and $ 35.4 million, respectively, at June 30, 2025.

BENEFIT AND RETIREMENT PLANS

4 unchanged sentences

The Company contributes to one multi-employer defined benefit pension plan under the terms of collective-bargaining agreements that cover its union-represented employees.

The Company’s participation in the current and previous defined benefit pension plans for the fiscal year ended June 30, 2025, is outlined in the following table.

The Company’s participation in the current and previous defined benefit pension plans for the fiscal year ended June 30, 2026, is o utlined in the following table.

Unless otherwise noted, the most recent Pension Protection Act zone status available in 2026 and 2025 is for the plan’s year-end on December 31, 2025, and 2024, respectively.

The zone status is based on information that the Company received

from the plan and is certified by the plan’s actuary.

The zone status is based on information that the Company received from the plan and is certified by the plan’s actuary.

Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are between 65 percent and 80 percent funded, and plans in the green zone are at least 80 percent funded.

11 unchanged sentences

The Company does not consider any of such other proceedings that are currently pending, individually or in the aggregate, to be material to its business or likely to result in a material effect on its consolidated operating results, financial condition, or cash flows.

QUARTERLY FINANCIAL INFORMATION – UNAUDITED

(in thousands, except per share amounts)

For the Quarter Ended

December 31 (a)

Operating income

Earnings per share:

(a) During the quarter ended December 31, 2024, the Company completed the sale of its Dublin, GA manufacturing facility.

See Note 6, Assets Held for Sale of the Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K for mor information.

(b) During the quarter ended March 31, 2025, the Company determined that the carrying amount of the right of use asset associated with its 12-year lease for a manufacturing facility in Mexicali, Mexico was no longer fully recoverable and recorded a pre-tax non-cash asset impairment charge of $ 14.1 .

See Note 2, Leases, of the Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K for more information .

In addition, during the quarter, the Company completed the sale of an ancillary building, formerly part of its Huntingburg, IN distribution center complex.

The Company recorded a pre-tax gain of $ 0.7 million related to the sale.

(c) During the quarter June 30, 2025, the Company completed the sale of a second ancillary building, formerly part of its Huntingburg, IN distribution center complex.

The Company recorded a pre-tax gain of $ 3.7 million related to the sale .

For the Quarter Ended

December 31 (a)

Operating income

Earnings per share:

(a) During the quarter ended March 31, 2024, the Company recorded expense of $ 2.6 million as a result of the restructuring activity associated with the closure of the Dublin, Georgia facility.

See Note 5 Restructuring , of the Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K for more information.

(b) During the quarter June 30, 2024, the Company recorded income of $ 3.3 million associated with the sale of the Starkville, Mississippi facility.

See Note 6, Assets Held for Sale , of the Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K for more information.

T he Company recorded expense of $ 0.4 million as a result of the restructuring activity associated with the closure of the Dublin, Georgia facility.

See Note 5 Restructuring , of the Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K for more information.

SUBSEQUENT EVENTS

There are no subsequent events as of August 22, 2025.

Subsequent to fiscal year end, on August 18, 2026 the Company, as the borrower, entered into a new $ 30.0 million secured revolving credit facility that replaces the Credit Agreement.

The new facility reduces the Company's maximum borrowing capacity from $ 55.0 million to $ 30.0 million but extends availability with a new maturity date of August 18, 2029 and is expected to better align with current needs and adequately support the Company’s anticipated future requirements for working capital and general corporate purposes.

RELATED PARTY TRANSACTIONS

On April 26, 2026, the Company entered a privately negotiated transaction to repurchase shares of its common stock from a member of the Company's Board of Directors and certain members of the director's immediate family.

The aggregate purchase price was $ 60.2 million for 1,279,870 shares.

The transaction was reviewed and approved by the disinterested members of the Board of Directors in accordance with the Company's related party transaction policy.

No amounts remained outstanding related to the transaction of June 30, 2026.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data