Welcome to the Flexsteel Industries, Inc. Fiscal Year 2015 First Quarter Earnings Release Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session with instructions following at that time. At this time, I will turn the call over to Mr. Tim Hall, Flexsteel’s Vice President of Finance and Chief Financial Officer.

Thank you, Heather. Welcome to Flexsteel’s conference call for the first quarter ended September 30, 2014. Joining me this morning is Ms. Karel Czanderna, our President and Chief Executive Officer. Our comments today may include forward-looking statements. While these statements reflect our best judgment at the present time, they are subject to risk and uncertainties, as described in our SEC filings. Accordingly, our actual results may differ materially from the current expectations. The company assumes no obligation to update or revise any forward-looking matters discussed during this call. I will make some comments on first quarter results before I turn the call over to Karel for her comments. Yesterday, we reported record first quarter net sales and net income. First quarter sales were $109 million, an increase of 4% over the prior year quarter. Earnings per diluted share for the quarter were $0.64 versus $0.51 in the prior year quarter. As first discussed, three quarters ago, we entered into a confidential agreement to settle Indiana Civil Litigation and eliminate the ongoing costs and distractions of the litigation. Excluding these litigation costs, adjusted earnings per share for the current quarter were $0.65 and $0.59 for the prior year quarter. Adjusted for these special charges, SG&A of 16.8% for the first quarter compares to adjusted SG&A of 16.5% for the first quarter of 2014. Accounts receivable have increased $2.4 million above June 30, 2014 balance primarily due to the timing of collection. Our day sales outstanding remained in the 33 to 36 day range at the end of the first fiscal quarter. On September 30, 2014 our inventories were $8 million higher than at June 30, 2014 to support anticipated increased sales volume in upholstered, ready-to-assemble and case good product categories. We actively manage inventory to meet market conditions. Capital expenditures totaled $26 million for the first fiscal quarter, including $24 million for the distribution facility located in Edgerton, Kansas. Depreciation expense was $1.1 million. Capital expenditures for the balance of the fiscal year will include $5 million to support ordinary operations and $8 million to $10 million to complete the interior and equip the distribution facility. Our balance sheet remained strong. Working capital at September 30, 2014 was $107 million. We borrowed $12 million for the purchase of the distribution facility and our cash balance was $10 million at the end of the first quarter. I will now turn the call over to Karel for her comments and business review.

Good morning and thank you for joining our conference call. Sales continued to grow this quarter, up another 4% from first quarter 2014 and up 19% from two years ago. The adjusted net income grew faster than sales, up 14% versus first quarter 2014 to 4.6% of sales. The earnings for the fiscal year were driven by another 9% revenue growth in upholstered seating sold by retailers and ready-to-assemble products sold online, both targeting the residential market. During this quarter, we completed integrating the Wynwood branded bedroom, dining and office furniture for the home into the sales, customer service, marketing, systems, warehousing and distribution model for Flexsteel upholstered seating sold to furniture retailers. These updated case goods lines are not called the Flexsteel Wynwood Collection. Flexsteel products sold by retailers for the whole home are now represented by one sales force invoiced together and shipped on the Flexsteel fleet to the dealers. With the upholstery line for the home being so broad and deep plus the Flexsteel Wynwood Collection, retailers can now eliminate suppliers and consolidate business with Flexsteel. Introducing a wide range of compelling products on a six-month cycle has been key to our success with brick and click retailers engaging customers even more heavily than before. Our residential growth at retail is balanced across independent retailers and major accounts, which have confidence in product availability due to Flexsteel's strong balance sheet and long track record of delivering quality products as promised. The Flexsteel gallery and studio dedicated space at retail now covers over 2.9 million square feet and has expanded by 50 new galleries and studios in the past year. In addition, we are doing business with more top-100 retailers than ever before. The growth of the commercial markets we serve remains dramatic. We actively manage the portfolio…

(Operator Instructions). Your first question comes from the line of [Bob Rabits with STG]. Your line is open.

Great. Thanks for taking the questions. Karel, I think you touched on it, talking about the sales growth of 4% in the quarter that was coming up against the tough comp. It’s the right way to look at this say over the past two years, is that kind of the way on average you’d out say 8% or 9%. Is that the way you guys are thinking about it?

Bob, I think if you look at the trend line of our net sales growth over the last couple of years. And you look at it from a dollar perspective versus a percentage growth perspective. You will be able to see the trend line that we're on.

So, it is fair to kind of like spread it out overtime, I guess this is what you’re saying. I mean it came in a little light versus my model that's the only reason I mentioned it, but like I said, it was a very tough comp. Is that fair?

Yes.

Okay, great.

It is a tough comp. And also I think as you look at it overtime, Bob, you'll see that every now and then there is a quarter. So, we could sort of say typically our first quarter is a little lower than our fourth quarter, except last year it wasn't. So, we do have some pieces where we might vary a little bit from quarter-to-quarter. And in our commercial businesses obviously the orders can come in; we can get a giant order and then not so many orders. Okay?

Sure. Yes, great. Okay. Thank you. The second question, 4% sales growth 31% increase in operating income which is phenomenal, operating leverage. Tim is there anything, any special item in there or anything that would cause that sort of ratio to be so high and not to get greedy, but what sort of expectations we have for the rest of the year?

So our press release points out two items that were special; the gain on insurance and then also the differences in the litigation cost. So other than those, I don't have anything special that I want to point out to you, Bob.

And sorry just a quickly follow-up on litigation, I thought that was behind use. It was a small amount in the quarter obviously, $0.8 million, but is there some lingering cost associated with that that we will see throughout the rest of the year?

That’s correct.

Okay, great. Thanks very much. I’ll hop back in the queue.

Thank you.

(Operator Instructions). Once again you have a question from the line of [Bob Rabits with STG]. Your line is open.

Great. Sorry, I guess there are no other questioners. I had a couple more, if I may?

Okay.

Kind of a broader question, it’s been in the news quite a bit lately. I’m curious as to how a strong dollar affects your business. I know the bulk of your manufacturing, if not all of it, is in North America, but you also source from overseas. So there might be a benefit there but there would also be presumably some price competitive advantage to the foreign exporters specifically from Asia. So I was just wondering if you could offer some comments on the strong dollar and what it means.

Most of our business is denominated in U.S. dollars and so that’s the way our model works. So the impact on the dollar changing relative to other currencies does not have a big impact.

Okay. So, from a competitive standpoint also Tim, I mean you’re not -- do you see a lot of competition from say lower cost foreign manufacturers or is that just typically a fairly stable situation?

I would call it a fairly stable situation.

Okay, terrific. And then just one quick one on the financing for the acquisition of the distribution facility, I have cash half dead, it sounds like the 12 million. Is that from the credit facility?

That's correct.

So that's LIBOR plus 1%, is that right?

Well, we have two credit facilities and we’ve got some out of both of them.

Okay, great. Thanks very much.

Okay.

Your next question comes from Bruce Baughman with Franklin Templeton. Your line is open.

Good morning.

Good morning.

Good morning.

Thanks for taking the question. You've mentioned in the release that you're assessing business information system requirements. Can you give us any feel for the timeframe and what the objectives of the assessment might be?

Bruce, this is Karel. Thanks very much for your question by the way. What we’re looking at is modernizing the business systems on which our company runs. We currently have two separate systems that one came in as a subsidiary and one has been part of the original business. And both of those systems, we would like to update them into one more modernized business system. Over the next year probably, we'll be defining the business requirements and taking the system and then we'll have to go into implementation after that. So this is a multiyear initiative for us.

Okay, thank you very much.

There are no further questions at this time. I will turn the call back over to our presenters.

Thank you for participating in our conference call today. We are pleased our business continues to grow and delivers solid operating results. Our team remains dedicated to creating value for our customers and shareholders. We appreciate your interest in Flexsteel Industries.

This concludes today’s conference call. You may now disconnect.