SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
Commission File No. 0-27958
FLANDERS CORPORATION
-------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 13-3368271
-------------------------------- ------------------------
(State or other jurisdiction of (IRS Employer ID Number)
incorporation or organization.)
2399 26th Avenue North, St. Petersburg, Florida 33734
----------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (727) 822-4411
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date (November 14, 2000).
24,352,629 shares common stock, par value $.001 per share
(Title of Class)
<PAGE>
FLANDERS CORPORATION
FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 30, 2000
PART I - FINANCIAL INFORMATION Page
Item 1 -
Financial Statements
Consolidated Condensed Balance Sheets at September 30, 2000
(unaudited) and December 31, 1999 3
Consolidated Condensed Statements of Operations (unaudited) for
the three months and nine months ended September 30, 2000 and
1999 4
Consolidated Condensed Statements of Stockholders' Equity for
the nine months ended September 30, 2000 (unaudited) and the
year ended December 31, 1999 5
Consolidated Condensed Statements of Cash Flows (unaudited) for
the three months and nine months ended September 30, 2000 and
1999 6
Notes to Consolidated Condensed Financial Statements (unaudited) 7
Item 2 -
Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
Item 3 -
Quantitative and Qualitative Disclosures About Market Risk 17
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 19
Item 2 - Changes in Securities and Use of Proceeds 19
Item 3 - Defaults Upon Senior Securities 19
Item 4 - Submission of Matters to a Vote of Security Holders 19
Item 5 - Other Information 19
Item 6 - Exhibits and Reports on Form 8-K 19
SIGNATURES 22
Page 2
<PAGE>
Part I - Financial Information
Item 1. Financial Statements
<TABLE>
<CAPTION>
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
September 30, December 31,
ASSETS 2000 1999
------ ------------- -------------
(unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 2,734,641 $ 824,220
Receivables:
Trade, net of allowance for doubtful accounts of
$671,885 at 9/30/00 and $487,321 at 12/31/99 33,850,520 29,023,225
Other 1,082,887 1,415,794
Inventories (Note B) 30,239,063 25,901,700
Deferred taxes 1,849,481 1,849,481
Other current assets 2,929,025 1,959,725
Net assets of discontinued operations 3,612,026 5,217,737
------------- -------------
Total current assets 76,297,643 66,191,882
Related party receivables 4,935,931 4,369,028
Other assets 3,252,877 4,113,491
Intangible assets, net of accumulated amortization of
$2,598,801 at 9/30/00 and $1,948,073 at 12/31/99 29,701,706 30,022,487
Property and equipment, net of accumulated depreciation of
$23,525,698 at 9/30/00 and $18,839,580 at 12/31/99 69,452,790 65,253,828
------------- -------------
$ 183,640,947 $ 169,950,716
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Current maturities of long-term debt (Note D) $ 1,140,507 $ 1,115,184
Accounts payable 19,512,170 15,760,022
Accrued expenses and other current liabilities 4,345,053 3,895,274
------------- -------------
Total current liabilities 24,997,730 20,770,480
Long-term debt, less current maturities (Note D) 43,461,197 31,212,985
Deferred income taxes 5,960,584 5,840,654
Commitments and contingencies (Note E)
Stockholders' equity
Preferred stock, no par value, 10,000,000 shares authorized;
none issued -- --
Common stock, $.001 par value; 50,000,000 shares authorized;
issued and outstanding: 24,352,629 shares at 9/30/00 and
25,435,583 shares at 12/31/99 24,353 25,436
Additional paid-in capital 88,949,015 91,798,188
Notes receivable (2,162,879) (2,014,094)
Retained earnings 22,410,947 22,317,067
------------- -------------
Total stockholders' equity 109,221,436 112,126,597
------------- -------------
$ 183,640,947 $ 169,950,716
============= =============
</TABLE>
See Notes to Consolidated Condensed Financial Statements
Page 3
<PAGE>
<TABLE>
<CAPTION>
FLANDERS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ------------------------------
2000 1999 2000 1999
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 60,156,511 $ 48,658,081 $ 154,289,446 $ 130,994,040
Cost of goods sold 53,134,601 34,923,695 123,182,754 95,207,769
------------ ------------ ------------- -------------
Gross profit 7,021,910 13,734,386 31,106,692 35,786,271
Operating expenses 9,513,636 9,454,262 28,078,715 25,152,321
------------ ------------ ------------- -------------
Operating income (loss) from
continuing operations (2,491,726) 4,280,124 3,027,977 10,633,950
Nonoperating expense from continuing operations (434,026) (382,548) (886,440) (675,089)
------------ ------------ ------------- -------------
Earnings (loss) from continuing operations
before income taxes (2,925,752) 3,897,576 2,141,537 9,958,861
Provision (benefit) for income taxes (1,080,300) 1,619,099 1,126,615 4,134,336
------------ ------------ ------------- -------------
Earnings (loss) from continuing operations (1,845,452) 2,278,477 1,014,922 5,824,525
Loss from operations of discontinued operations,
net of tax benefit of $242,535 and $14,864 for the
3 months ended September 30, 2000 and 1999 and
$614,028 and $219,313 for the 9 months ended
September 30, 2000 and 1999, respectively (363,923) (20,917) (921,042) (309,177)
------------ ------------ ------------- -------------
Net earnings (loss) $ (2,209,375) $ 2,257,560 $ 93,880 $ 5,515,348
============ ============ ============= =============
Earnings (loss) per share from continuing operations
Basic $ (0.07) $ 0.09 $ 0.04 $ 0.23
============ ============ ============= =============
Diluted $ (0.07) $ 0.09 $ 0.04 $ 0.22
============ ============ ============= =============
Loss per share from discontinued operations
Basic $ (0.01) $ (0.00) $ (0.04) $ (0.01)
============ ============ ============= =============
Diluted $ (0.01) $ (0.00) $ (0.04) $ (0.01)
============ ============ ============= =============
Net earnings (loss) per share
Basic $ (0.09) $ 0.09 $ 0.00 $ 0.22
============ ============ ============= =============
Diluted $ (0.09) $ 0.09 $ 0.00 $ 0.21
============ ============ ============= =============
Weighted average common and common
equivalent shares outstanding:
Basic 25,039,550 25,264,583 25,193,337 25,291,416
============ ============ ============= =============
Diluted 25,039,550 26,341,566 26,042,228 26,590,413
============ ============ ============= =============
</TABLE>
See Notes to Consolidated Condensed Financial Statements
Page 4
<PAGE>
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Common Paid-In Notes Retained
Stock Capital Receivable Earnings
-------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1999 $ 25,624 $ 91,837,257 $(1,760,000) $19,499,933
Issuance of 94,544 shares of common stock related to
certain acquisitions 95 (95) -- --
Interest on notes receivable secured by common shares -- -- (254,094) --
Issuance and release from escrow of 245,899 shares of -- 988,028 -- --
Purchase and retirement of 283,300 shares of common (283) (1,027,002) -- --
Net earnings -- -- -- 2,817,134
-------- ------------ ----------- -----------
Balance, December 31, 1999 25,436 91,798,188 (2,014,094) 22,317,067
Purchase and retirement of 1,082,954 shares of common
stock (unaudited) (1,083) (2,849,173) -- --
Interest on notes receivable secured by common shares -- -- (148,785) --
Net earnings (unaudited) -- -- -- 93,880
-------- ------------ ----------- -----------
Balance, September 30, 2000 (unaudited) $ 24,353 $ 88,949,015 $(2,162,879) $22,410,947
======== ============ =========== ===========
</TABLE>
See Notes to Consolidated Condensed Financial Statements
Page 5
<PAGE>
<TABLE>
<CAPTION>
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ----------------------------
2000 1999 2000 1999
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by continuing operations $ 2,694,167 $ 3,082,463 $ 909,145 $ 1,876,091
Net cash used in discontinued operations (1,325,094) (162,265) (665,934) (631,137)
----------- ------------ ------------ ------------
Net cash provided by operating activities 1,369,073 2,920,198 243,211 1,244,954
----------- ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions, net of cash received -- -- -- (1,786,692)
Purchase of property and equipment (1,545,558) (1,391,134) (6,542,420) (3,215,277)
Net advances on notes receivable (44,290) -- (259,049) --
Net (increase) decrease in other assets (556,762) -- (825,824) --
----------- ------------ ------------ ------------
Net cash used in investing activities of
continuing operations (2,146,610) (1,391,134) (7,627,293) (5,001,969)
Net cash used in investing activities of
discontinued operations (2,977) (248,064) (57,277) (871,510)
----------- ------------ ------------ ------------
Net cash used in investing activities (2,149,587) (1,639,198) (7,684,570) (5,873,479)
----------- ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from sale of bonds -- -- 3,897,694 --
Repurchase of common shares (2,775,715) -- (2,850,256) (1,027,310)
Net proceeds from revolving credit agreement 2,485,257 -- 13,290,401 --
Net change in long-term borrowings (291,402) (395,792) (4,914,560) 6,381,643
----------- ------------ ------------ ------------
Net cash provided by (used in) financing activities
of continuing operations (581,860) (395,792) 9,423,279 5,354,333
Net cash used in financing activities of
discontinued operations (18,029) (22,249) (71,499) (65,188)
----------- ------------ ------------ ------------
Net cash provided by (used in) financing activities (599,889) (418,041) 9,351,780 5,289,145
----------- ------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents (1,380,403) 862,959 1,910,421 660,620
CASH AND CASH EQUIVALENTS
Beginning of period 4,115,044 13,470,346 824,220 13,672,685
----------- ------------ ------------ ------------
End of period $ 2,734,641 $ 14,333,305 $ 2,734,641 $ 14,333,305
=========== ============ ============ ============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes $ -- $ 210,963 $ 421,654 $ 2,313,458
=========== ============ ============ ============
Interest $ 585,165 $ 313,960 $ 1,567,959 $ 904,801
=========== ============ ============ ============
</TABLE>
See Notes to Consolidated Condensed Financial Statements
Page 6
<PAGE>
FLANDERS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Page 22
Note A. Nature of Business and Interim Financial Statements
Nature of business:
We design, manufacture and market a broad range of air filtration products,
including:
o High Efficiency Particulate Air (HEPA) filters (at least 99.97%
efficient) in various grades, for use in critical applications.
o Absolute Isolation Barriers which are customized stand-alone units,
typically manufactured of stainless steel, used in various industries
which require absolute control over contaminants.
o Industrial mid-range specialty filters used in a wide variety of
industries, including paint facilities, automobile factories, chemical
treatment plants, mushroom farms, coal mines, oil refineries and power
plants.
o Carbon filters, both in bonded panels and activated charcoal beds, used
to remove gaseous contaminants, odors and toxic chemical vapors in
various commercial and industrial applications.
o Commercial and industrial filters for use in office and general
manufacturing environments.
o Residential heating and air conditioning filters.
o Specialized air filter housings, for use in multi-stage filtration
applications.
o Other related products, including electrostatic dust precipitators,
tubing insulation, ductwork and equipment cleaning chemicals, custom air
handlers and specialized filter housings.
We also design and manufacture much of our own production equipment to allow for
highly automated manufacturing of these products. Furthermore, we produce
glass-based filter media for many of our products to maintain control over the
quality and composition of such media.
Interim financial statements:
The interim consolidated condensed financial statements presented herein are
unaudited and have been prepared in accordance with the instructions to Form
10-Q and Article 10 of Regulation S-X. These statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in our annual report on Form 10-K for the year ended December 31, 1999.
The accompanying consolidated condensed financial statements have not been
examined by independent accountants in accordance with generally accepted
auditing standards, but in the opinion of management such financial statements
include all adjustments (consisting only of normal recurring adjustments)
necessary to summarize fairly our financial position, results of operations, and
cash flows. The results of operations and cash flows for the three months and
nine months ended September 30, 2000 may not be indicative of the results that
may be expected for the year ending December 31, 2000.
Earnings per common share:
We have adopted FASB Statement No. 128 which requires the presentation of
earnings per share by all entities that have outstanding common stock or
potential common stock, such as options, warrants and convertible securities,
that trade in a public market. Those entities that have only common stock
outstanding are required to present basic earnings per-share amounts. Basic
per-share amounts are computed by dividing net earnings (loss) (the numerator)
by the weighted-average number of common shares outstanding (the denominator).
All other entities are required to present basic and diluted per-share amounts.
Diluted per-share amounts assume the conversion, exercise or issuance of all
potential common stock instruments unless the effect is to reduce the loss or
increase the income per common share from continuing operations.
Page 7
<PAGE>
Note B. Inventories
Our inventories consist of the following at September 30, 2000 and December 31,
1999:
<TABLE>
<CAPTION>
9/30/00 12/31/99
----------- -----------
<S> <C> <C>
Finished goods $12,328,873 $12,041,722
Work in progress 2,461,833 1,665,953
Raw materials 15,593,767 12,382,025
----------- -----------
30,384,473 26,089,700
Less allowance for obsolete raw materials 145,410 188,000
----------- -----------
$30,239,063 $25,901,700
=========== ===========
</TABLE>
Note C. Stock Options and Warrants
The following table summarizes the activity related to our stock options and
warrants for the nine months ended September 30, 2000 and the year ended
December 31, 1999:
<TABLE>
<CAPTION>
Weighted Average
Exercise Price Exercise Price
per Share per Share
Stock ----------------------------- -----------------
Warrants Options Warrants Options Warrants Options
-------------------- ----------------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January 1, 1999 637,239 6,930,370 $5.54 - 14.73 $ 1.00 - 9.50 $ 9.57 $ 3.70
Granted - 157,850 - 2.50 - 4.75 - 2.97
Exercised - - - - - -
Canceled or expired (25,000) (82,520) 9.63 2.50 - 9.50 9.63 5.29
-------------------
Outstanding at December 31, 1999 612,239 7,005,700 5.54 - 14.73 1.00 - 9.50 9.57 3.66
Granted - - - - - -
Exercised - - - - - -
Canceled or expired (49,515) - 5.54 - 8.16 - 6.12 -
-------------------
Outstanding at September 30, 2000 562,724 7,005,700 $5.95 - 14.73 $ 1.00 - 9.50 $ 9.87 $ 3.66
===================
Exercisable at September 30, 2000 562,724 6,852,850 $5.95 - 14.73 $ 1.00 - 9.50 $ 9.87 $ 3.68
===================
</TABLE>
The options and warrants expire at various dates ranging from October 2000
through December 2008.
Note D. Changes in Debt Agreements
On February 9, 2000, we completed the extension of our $45,000,000 revolving
credit facility with a bank. The credit facility consists of a $30,000,000
working capital facility and a $15,000,000 line of credit to support issuances
of letters of credit. Outstanding balances on the working capital facility bear
interest, at our option, at either (a) the "prime" rate of interest publicly
announced by the bank, which was 9.5% at September 30, 2000, or (b) the "LIBOR"
rate as reported by the Wall Street Journal, which was 6.62% at September 30,
2000, plus an amount equal to 1.00% to 1.95%, depending on the ratio of total
liabilities to tangible net worth. As of September 30, 2000, we had used
$24,660,153 of the working capital facility and had issued $9,400,000 of letters
of credit against the line of credit, leaving approximately $5.3 million
available for future borrowings and $5.6 million available for future letters of
credit. Unless this credit facility is renewed, it will expire in June 2002.
As of March 1, 2000, we entered into a Loan Agreement and issued a Note to a
regional development authority and such authority issued Industrial Development
Revenue Bonds for an aggregate of $4,000,000, to be used in the construction of
a glass recycling facility in Johnston County, North Carolina. This new facility
is expected to be
Page 8
<PAGE>
completed by the end of the first quarter of 2001. The Note extends for a term
of fifteen years and bears interest at a variable rate determined by the
remarketing agent of the Bonds on a weekly basis equal to the minimum rate
necessary to sell such Bonds at their par value. In May 2000, we entered into an
interest rate swap which is a hedge which effectively fixes the interest rate of
the Bonds, and another $4,500,000 of additional debt, to a rate of 5.14% per
annum. The Bonds are collateralized by a $4,000,000 letter of credit which
expires in June 2002.
Note E. Litigation
There were no material additions to, or changes in status of, any ongoing,
threatened or pending legal proceedings during the three months ended September
30, 2000. See "Item 3 - Legal Proceedings" in our annual report on Form 10-K for
the year ended December 31, 1999. From time to time, we are a party to various
legal proceedings incidental to our business. In the opinion of management, none
of these proceedings is material to the conduct of our business, operations or
financial condition.
Note F. New Accounting Standards
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). Subsequently, the original
implementation date for SFAS 133 was deferred. SFAS 133 requires a company to
recognize all derivatives on the balance sheet as either an asset or a
liability, measured at fair value. The statement also requires a company to
recognize changes in the derivative's fair value currently in earnings unless it
meets specific hedge accounting criteria. The Company currently expects to adopt
SFAS 133 for its fiscal year beginning January 1, 2001. Management does not
expect the adoption of SFAS 133 to have a material impact on the Company's
consolidated financial statements.
Page 9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussions should be read in conjunction with our Consolidated
Condensed Financial Statements and the notes thereto presented herein in "Item 1
- Financial Statements" and the audited consolidated financial statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in our report on Form 10-K for the year ended December 31,
1999. The information set forth in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" includes forward-looking
statements that involve risks and uncertainties. Many factors, including those
discussed below under "Factors That May Affect Future Results" could cause
actual results to differ materially from those contained in the forward-looking
statements below.
On March 21, 2000, we announced that we had engaged the investment banking firm
PaineWebber Incorporated to help us explore strategic alternatives, including
the possible sale of the Company.
Overview
Flanders is a full-range air filtration product company engaged in designing,
manufacturing and marketing high performance, mid-range and standard-grade air
filtration products and certain related products and services. We focus on those
products with high replacement potential. We also design and manufacture much of
our own production equipment and also produce glass-based media for many of our
air filtration products.
Results of Operations for Three Months Ended September 30, 2000 Compared to
September 30, 1999
The following table summarizes our results of operations as a percentage of net
sales for the three months ended September 30, 2000 and 1999.
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-----------------------------------------
2000 1999
------------------- -------------------
(Dollar amounts in thousands)
Amount Percent Amount Percent
--------- ------- --------- -------
<S> <C> <C> <C> <C>
Net sales $ 60,157 100.0% $ 48,658 100.0%
Gross profit 7,022 11.7 13,734 28.2
Operating expenses 9,514 15.8 9,454 19.4
Operating income (loss) from
continuing operations (2,492) (4.1) 4,280 8.8
Provision (benefit) for income taxes (1,080) (1.8) 1,619 3.3
Earnings (loss) from continuing operations (1,845) (3.1) 2,278 4.7
Loss from discontinued operations (364) (0.6) (21) (0.0)
Net earnings (loss) (2,209) (3.7) 2,258 4.6
</TABLE>
Net sales: Net sales for the third quarter of 2000 increased by $11,499,000, or
23.6%, to $60,157,000 from $48,658,000 for the third quarter of 1999. This
increase represents growth in our core business which management believes is
attributable to our efforts to expand on our market presence with mid-range
industrial end users and our success in securing expanded contracts for our
consumer products with leading U.S. retailers. Management attributes much of
this success to our ability to add customers during the height of the seasonally
busy third quarter, when our competitors were forced to turn away business
because of capacity constraints.
Page 10
<PAGE>
Other Charges and Special Items: During the third quarter of 2000, we formalized
our plan to consolidate our west coast operations, and recorded other charges
and special items totaling approximately $4,275,000 in connection with
consolidating operations and combining organizations and for other nonrecurring
items arising during the quarter. These charges included costs for inventory
adjustments, write-offs, duplicate assets and other miscellaneous items. Without
these one-time charges, pro forma gross profit for the third quarter of 2000
would have decreased by $2,657,000, or 19.5%, to $11,059,000, which represented
18.4% of net sales, compared to $13,734,000, which represented 28.2% of net
sales for the third quarter of 1999. Operating expenses for the third quarter of
2000 would have decreased $178,000, or 1.9%, to $9,276,000, which represented
15.4% of net sales, from $9,454,000, which represented 19.4% of net sales in the
third quarter of 1999. Without these one-time charges, earnings from continuing
operations would have been approximately $720,000, or $0.03 per share.
The decrease in pro forma gross profit percentage was principally attributable
to:
o Delays in implementing our price increases associated with delays in the
production of marketing materials and associated reorganized and
consolidated marketing efforts. Anticipated benefits from this
reorganization, the first stage of which was completed in mid-September,
were not completed in time to have a beneficial impact on our third quarter
results.
o An increase in the percentage of our labor force employed through temporary
services compared to the third quarter of 1999, caused by the continued
tightness in the labor pool of qualified seasonal workers, which increased
average labor costs per hour during the period and resulted in a net
increase in comparable expenses of approximately $450,000.
o Expanded facilities in Salt Lake City, Utah and Tijuana, Mexico, which were
brought partially online during the quarter, experienced additional expenses
associated with completing expansions, reorganizing production schedules,
hiring and training additional laborers, and other inefficiencies typical of
reorganized and expanded manufacturing operations.
o Price concessions made to secure expanded long-term contracts with major
retail customers and new contracts with distributors for mid-range
industrial end users.
The decrease in pro forma operating expenses was principally attributable to
reduced overhead associated with the elimination of redundant positions and the
consolidation of operations, along with the results of our program to
restructure shipping and receiving procedures to reduce freight expenses,
partially offset by increased sales expenses, commission expense, and outgoing
freight related to increased sales.
Loss from discontinued operations: In December 1999, we adopted a formal plan to
close Airseal West, a wholly-owned subsidiary, and sell its various assets and
product lines to unrelated third parties. All dispositions of assets are
expected to be completed before December 31, 2000. The assets to be sold consist
primarily of accounts receivable, inventories, manufacturing equipment, designs
and other intellectual properties. Operating losses from Airseal West were
approximately $364,000 and $21,000, net of income tax benefits, for the third
quarter of 2000 and 1999, respectively.
Provision for income taxes: Our income tax provision for the third quarter of
2000 consisted of a blended state and federal tax rate, excluding the effect of
nondeductible expenses consisting primarily of amortization of goodwill of
approximately $900,000 per year, of approximately 40%.
Page 11
<PAGE>
Results of Operations for the Nine Months Ended September 30, 2000 Compared to
September 30, 1999
The following table summarizes our results of operations as a percentage of net
sales for the nine months ended September 30, 2000 and 1999.
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-----------------------------------------
2000 1999
------------------- -------------------
(Dollar amounts in thousands)
Amount Percent Amount Percent
--------- ------- --------- -------
<S> <C> <C> <C> <C>
Net sales $ 154,289 100.0% $ 130,994 100.0%
Gross profit 31,107 20.2 35,786 27.3
Operating expenses 28,079 18.2 25,152 19.2
Operating income from continuing operations 3,028 2.0 10,634 8.1
Provision for income taxes 1,127 0.7 4,134 3.2
Earnings from continuing operations 1,015 0.7 5,825 4.4
Loss from discontinued operations (921) (0.6) (309) (0.2)
Net earnings 94 0.1 5,515 4.2
</TABLE>
Net sales: Net sales for the first nine months of 2000 increased by $23,295,000,
or 17.8%, to $154,289,000 from $130,994,000 for the first nine months of 1999.
This increase consisted primarily of growth in our core business and our success
in obtaining additional market share.
Gross Profit: Gross profit for the first nine months of 2000 decreased by
$4,679,000, or 13.1%, to $31,107,000, which represented 20.2% of net sales, from
$35,786,000, which represented 27.3% of net sales, for the first nine months of
1999. The decrease in gross margin percentage was primarily due to one-time
charges taken in the third quarter of 2000, higher labor costs in the second and
third quarters of 2000, inbound material shipment costs and material costs in
the second quarter of 2000, along with aggressive pricing to secure new business
during the first three quarters of 2000.
Operating expenses: Operating expenses for the first nine months of 2000
increased by $2,927,000, or 11.6%, to $28,079,000, representing 18.2% of net
sales, from $25,152,000, representing 19.2% of net sales, for the first nine
months of 1999. The increase in operating expenses was caused by an increase in
sales expenses, including a one-time charge for consolidated catalog
replacements in the third quarter of 2000, outbound freight associated with
increased sales, inefficiencies in outbound logistics and increased fuel prices,
partially balanced by our ongoing program to reduce overhead by eliminating
redundant personnel and functions at our subsidiaries.
Loss from discontinued operations: Operating losses from Airseal West were
approximately $921,000 and $309,000, net of income tax benefits, for the first
nine months of 2000 and 1999, respectively.
Effects of Inflation
Our business and operations have not been materially affected by inflation
during the periods for which financial information is presented, except for
increases in temporary seasonal labor and fuel prices, discussed above.
Liquidity and Capital Resources
Our working capital was $51,300,000 at September 30, 2000, compared to
$45,421,000 at December 31, 1999. This includes cash and cash equivalents of
$2,735,000 at September 30, 2000, and $824,000 at December 31, 1999.
Our trade receivables increased $4,827,000, or 16.6%, to $33,851,000 at
September 30, 2000, from $29,023,000 at December 31, 1999. Days sales
outstanding, the ratio of receivables to average daily sales during the prior
three months was 51.8 days at September 30, 2000, compared to 66.1 days at
December 31, 1999. This unusually low ratio reflects our ability during the
current period of high seasonal demand to require expedited payment on new
Page 12
<PAGE>
accounts, and will probably not be maintained at levels under 60 days. These
ratios for days sales outstanding typically vary between 60 and 70 days,
depending on timing differences in shipments and payments received.
Our continuing operations generated $2,694,000 of cash during the third quarter
of 2000, compared to $3,082,000 generated in the third quarter of 1999.
Historically, our business is seasonal, with our second and third quarters
having higher sales than our first and fourth quarters. In general, we expect
operations to consume cash, or generate substantially less cash than earnings
before taxes, depreciation and amortization, during our first and second
quarters because of increases in inventory and trade accounts receivable. Our
financing activities from continuing operations consumed $582,000 of cash during
the third quarter of 2000, primarily consisting of the use of cash to repurchase
approximately 1,000,000 shares of our common stock. Our investing activities
from continuing operations consumed $2,147,000 of cash during the second quarter
of 2000, primarily used to purchase property and equipment.
On February 9, 2000, we completed the extension of our $45,000,000 revolving
credit facility with SunTrust Bank, N.A. The credit facility consists of a
$30,000,000 working capital facility and a $15,000,000 line of credit to support
issuances of letters of credit. Outstanding balances on the working capital
facility bear interest at our option, at either (a) the "prime" rate of interest
publicly announced by SunTrust Bank, which was 9.5% at September 30, 2000, or
(b) the "LIBOR" rate as reported by the Wall Street Journal, which was 6.62% at
September 30, 2000, plus an amount equal to 1.00% to 1.95%, depending on the
ratio of total liabilities to tangible net worth. As of September 30, 2000, we
had used $24,660,000 of the working capital facility and had issued $9,400,000
of letters of credit against the line of credit, leaving approximately $5.3
million available for future borrowings and $5.6 million available for future
letters of credit. Unless this credit facility is renewed, it will expire in
June 2002.
As of March 1, 2000, we entered into a Loan Agreement and issued a Note to the
Johnston County Industrial Facilities and Pollution Control Financing Authority
and such authority issued Industrial Development Revenue Bonds for an aggregate
of $4,000,000, to be used in the construction of a glass recycling facility in
Johnston County, North Carolina. This new facility is expected to be completed
by the end of the first quarter of 2001. The Note has a term of 15 years and
bears interest at a variable rate determined by the remarketing agent of the
Bonds on a weekly basis equal to the minimum rate necessary to sell such Bonds
at their par value. In May 2000, we entered into an interest rate swap which is
a hedge which effectively fixes the interest rate of the Bonds to a rate of
5.14% per annum. The Bonds are collateralized by a $4,000,000 letter of credit
which expires in June 2002.
Continued expansion of our business may require a substantial capital
investment. Although we have been able to arrange debt facilities or equity
financing to date, there can be no assurance that sufficient debt financing or
equity will continue to be available to us in the future, or that it will be
available on acceptable terms. Failure to obtain sufficient capital could
materially adversely impact our growth strategy.
In 1998, the Board of Directors authorized the repurchase of up to two million
shares of our common stock. As of November 10, 2000, we had repurchased all
2,000,000 shares of its common stock under this authorization. On September 22,
2000, upon completion of the earlier repurchase program, the Board of Directors
authorized the repurchase of up to an additional two million shares of common
stock. These shares may be acquired in the open market or through negotiated
transactions. These repurchases may be made from time to time, depending on
market conditions, share price and other factors. These repurchases are to be
used primarily to satisfy our obligations under its stock option and purchase
plans or any other authorized incentive plans, or for issuance pursuant to
future equity financing.
Outlook
During the third quarter of 2000, we continued to experience significant margin
erosion due to price reductions and concessions used to expand sales, freight
and shipping cost increases, inefficiencies associated with plant expansions,
and other factors. We believe we have taken mitigating or corrective action for
all of these factors, including establishing price increases, replacing and
retraining shipping and logistics personnel, and accelerating training for
expanded facilities. We expect all of these actions to be fully in place by the
end of the year.
We believe the semiconductor industry has been experiencing a cyclical slowdown
in capital spending for new
Page 13
<PAGE>
facilities, and thus on spending for cleanroom filtration products, since the
first quarter of 1997. While we expect capital spending for new semiconductor
facilities to increase in the future, this was not a significant factor in our
overall business during the third quarter of 2000. However, during the first
nine months of the year, we observed definite signs that the semiconductor
industry will require additional capacity in the near future, including price
increases in commodity DRAM markets and several new facility announcements, and
we expect sales for products used in semiconductor plants to increase through
the rest of 2000 and 2001.
We have collected data that indicates that residential filter users replace
their filters, on average, approximately once per year. Manufacturers of
residential furnace and air conditioning systems recommend that these filters be
changed every month. A minor trend toward increased maintenance of these
residential heating and cooling systems could have a positive impact on our
business.
We believe public awareness of issues surrounding indoor air quality has been
increasing during the past five years, and that this trend will continue for the
next several years. We also believe there is an increase in public concern
regarding the effects of indoor air quality on employee productivity, as well as
an increase in interest by standards-making bodies in creating specifications
and techniques for detecting, defining and solving indoor air quality problems.
We further believe there will be an increase in interest in our Absolute
Isolation Barriers in the future because these products may be used in both
semiconductor and pharmaceutical manufacturing plants to prevent
cross-contamination between different lots and different processes being
performed at the same facility. These products also increase production yields
in many applications.
Our most common products, in terms of both unit and dollar volume, are
residential throw-away spun glass filters, which usually sell for prices under
$1.00. Any increase in consumer concern regarding air pollution, airborne
pollens, allergens, and other residential airborne contaminants could result in
replacement of some of these products with higher value products. Our higher
value products include our NaturalAire higher-efficiency filters for residential
use, with associated sales prices typically over $5.00 each. Any such trend
would have a beneficial effect on our business.
Currently, the largest domestic market for air filtration products is for
mid-range ASHRAE-rated products and HVAC systems, typically used in commercial
and industrial buildings. Historically, our penetration of this market has been
relatively small, but we have engaged in an aggressive program to establish a
significant presence in this market, including establishing relationships with
new distributors and filter specialty wholesalers serving this market. We
believe our ability to offer a "one stop" supply of air filtration products to
HVAC distributors and wholesalers, coupled with our newly developed product
catalog and national distributor strategy, may increase our share of this
market. We have also begun a campaign to increase the sophistication of the end
users in this marketplace through technical seminars and the introduction of new
high-profile specialty items, which we believe will enable us to expand sales to
these customers. We anticipate that our recently developed electrostatic
filters, electronic filtration units and environmental tobacco smoke systems
will enable us to expand sales to these customers.
This Outlook section, and other portions of this document, include certain
"forward-looking statements" within the meaning of that term in Section 27A of
the Securities Act of 1933, and Section 21E of the Securities Exchange Act of
1934, including, among others, those statements preceded by, following or
including the words "believe," "expect," "intend," "anticipate" or similar
expressions. These forward-looking statements are based largely on the current
expectations of management and are subject to a number of assumptions, risks and
uncertainties. Our actual results could differ materially from these
forward-looking statements. Important factors to consider in evaluating such
forward-looking statements include those discussed below under the heading
"Factors That May Affect Future Results" as well as:
o the shortage of reliable market data regarding the air filtration
market,
o changes in external competitive market factors or in our internal
budgeting process which might impact trends in our results of
operations,
o anticipated working capital or other cash requirements,
o changes in our business strategy or an inability to execute our strategy
due to unanticipated changes in the market,
o product obsolescence due to the development of new technologies, and
o various competitive factors that may prevent us from competing
successfully in the marketplace.
Page 14
<PAGE>
In light of these risks and uncertainties, there can be no assurance that the
events contemplated by the forward-looking statements contained in this Form
10-Q will in fact occur.
Factors That May Affect Future Results
Our Failure to Manage Future Growth Could Adversely Impact Our Business Due to
the Strain on Our Management, Financial and Other Resources
If our business continues to grow, the additional growth will place burdens on
management to manage such growth while maintaining profitability. We have no
guarantee that we will be able to do so. Due to our recent acquisitions and
expansions, our net sales increased by approximately 344% from 1995 through
1999, (a compound annual growth rate of 45%). We may not continue to expand at
this rate. Our ability to compete effectively and manage future growth depends
on our ability to:
o recruit, train and manage our work force, particularly in the areas of
corporate management, accounting, research and development and
operations,
o manage production and inventory levels to meet product demand,
o manage and improve production quality,
o expand both the range of customers and the geographic scope of our
customer base, and
o improve financial and management controls, reporting systems and
procedures.
Any failure to manage growth effectively could have a material adverse effect on
our business, financial condition and results of operations.
We Must Develop, Produce and Sell New Products That Keep Up With Rapid
Technological Change to Maintain Approximately 15% of Our Revenues and Maintain
Value of Our Inventory and Other Assets
As of September 30, 2000, approximately 15% of our revenues resulted from sales
of high-end filtration products that are especially vulnerable to new technology
development. Our ability to remain competitive in this area will depend in part
upon our ability to:
o anticipate technological changes,
o develop new and enhanced filtration systems that meet our customers'
needs, and
o introduce these systems at competitive prices in a timely and
cost-efficient manner.
We have no assurance that we will successfully anticipate future technological
changes or that technologies or systems developed by others will not render our
technology obsolete. Additionally, we have no assurance that the products we
develop will be commercially viable. A failure to successfully anticipate future
technological changes could also require us to write down inventories, equipment
or other assets associated with obsolete products or dispose of these assets at
a price lower than book value, which could have a material adverse effect on our
financial condition and results of operations.
Our Business May Suffer if Our Competitive Strategy is Not Successful
Our continued success depends on our ability to compete in an industry that is
highly competitive. This competition may increase as new competitors enter the
market. Several of these competitors may have longer operating histories and
greater financial, marketing and other resources than we do. Additionally, our
competitors may introduce new products or enhancements to products that could
cause a decline in sales or loss of market acceptance of our existing products.
Under our current competitive strategy, we endeavor to remain competitive by:
o increasing our market share,
o expanding our market through the introduction of new products which
require periodic replacement, and
o improving operating efficiencies.
Although our executive management team continues to review and monitor our
strategic plans, we have no assurance that we will be able to follow our current
strategy or that this strategy will be successful.
Page 15
<PAGE>
Our Business May Suffer if Our Strategy to Increase the Size and Customer Base
of the Air Filtration Market is Unsuccessful
We are developing new products as part of our strategy to increase the size and
customer base of the air filtration market. We have no assurance that this
strategy will be successful. We have no guarantee that any new products we
develop will gain acceptance in the marketplace, or that these products will be
successful. Additionally, we have no assurance we will be able to recoup the
expenditures associated with the development of these products. To succeed in
this area we must:
o increase public awareness of the issues surrounding indoor air quality,
o adequately address the unknown requirements of the potential customer
base,
o develop new products that are competitive in terms of price, performance
and quality, and
o avoid significant increases in current expenditure levels in
development, marketing and consumer education.
We May Experience Critical Equipment Failure Which Could Have a Material Adverse
Effect on Our Business
If we experience extended periods of downtime due to the malfunction or failure
of our automated production equipment, our business, financial condition and
operations may suffer. We design, manufacture and assemble the majority of the
automated production equipment used in our facilities. We also use other
technologically advanced equipment for which manufacturers may have limited
production capability or service experience. If we are unable to quickly repair
our equipment or quickly obtain new equipment or parts from outside
manufacturers, we could experience extended periods of downtime in the event of
malfunction or equipment failure.
Our Plan to Centralize Overhead Functions May Not Produce the Anticipated
Benefits to Our Operating Results
We are currently implementing plans to centralize and eliminate duplication of
efforts between our subsidiaries in the following areas:
o purchasing,
o production planning,
o shipping coordination,
o marketing,
o accounting,
o personnel management,
o risk management, and
o benefit plan administration.
We have no assurance that cutting overhead in this fashion will have the
anticipated benefits to our operating results. Additionally, we have no
assurance that these reorganizations will not significantly disrupt the
operations of the affected subsidiaries.
Our Success Depends on Our Ability to Retain and Attract Key Personnel
Our success and future operating results depend in part upon our ability to
retain our executives and key personnel, many of whom would be difficult to
replace. Our success also depends on our ability to attract highly qualified
engineering, manufacturing, technical, sales and support personnel for our
operations. Competition for such personnel, particularly qualified engineers, is
intense, and there can be no assurance that we will be successful in attracting
or retaining such personnel. Our failure to attract or retain such persons could
have a material adverse effect on our business, financial condition and results
of operations.
Our Current Distribution Channels May be Unavailable if Our Manufacturers'
Representatives Decide to Work Primarily With One of Our Competitors
We provide our manufacturers' representatives with the ability to offer a full
product line of air filtration products to existing and new customers. Some of
our competitors offer similar arrangements. We do not have exclusive
relationships with most of our representatives. Consequently, if our
representatives decide to work primarily with one of our competitors, our
current distribution channels, and hence, our sales, could be significantly
reduced.
Page 16
<PAGE>
Management Controls a Significant Percentage of Our Stock
As of September 30, 2000, our directors and executive officers beneficially held
approximately 43.4% of our outstanding common stock. As a result, such
shareholders effectively control or significantly influence all matters
requiring shareholder approval. These matters include the election of directors
and approval of significant corporate transactions. Such concentration of
ownership may also have the effect of delaying or preventing a change in
control.
We May be Required to Issue Stock in the Future That Will Dilute the Value of
Our Existing Stock
If we issue the following securities, such securities may dilute the value of
the securities that our existing stockholders now hold.
We have granted warrants to purchase of total of 562,724 of our shares of common
stock to various parties with exercise prices ranging from $5.95 to $14.73 per
share. All of the warrants are currently exercisable. As a result, if the
warrant holders exercise these warrants, we will issue shares of stock that will
generally be available for sale in the public market.
We have granted options to purchase a total of 7,005,700 shares of common stock
to various parties with exercise prices ranging from $1.00 to $9.50 per share.
The majority of these options are currently exercisable. Additionally, most of
the common stock issuable upon the exercise of these options is registered on a
Form S-8. As a result, if the option holders exercise these options, we will
issue shares of stock that will generally be available for sale in the public
market.
Our Business Can be Significantly Affected by Environmental Laws
The constantly changing body of environmental laws and regulations may
significantly influence our business and products. Changes in clean air
regulations may cause currently unanticipated fluctuations in demand, both in
terms of quantity and product mix, which could have a negative effect on our
ability to meet shipping deadlines and which could shorten the life cycles of
certain of our air filtration products in the marketplace. These laws and
regulations require that certain environmental standards be met and impose
liability for the failure to comply with such standards. While we endeavor at
each of our facilities to assure compliance with environmental laws and
regulations, we cannot be certain that our operations or activities, or
historical operations by others at our locations, will not result in civil or
criminal enforcement actions or private actions that could have a materially
adverse effect on our business. We have, in the past, and may, in the future,
purchase or lease properties with unresolved potential violations of federal or
state environmental regulations. In these transactions, we have been successful
in obtaining sufficient indemnification and mitigating the impact of the issues
without recognizing significant expenses associated with litigation and cleanup.
However, purchasing or leasing these properties requires us to weigh the cost of
resolving these issues and the likelihood of litigation against the potential
economic and business benefits of the transaction. If we fail to correctly
identify, resolve and obtain indemnification against these risks, they could
have a material adverse impact on our financial position.
Because of the foregoing factors, as well as other variables affecting our
operating results, past financial performance should not be considered a
reliable indicator of future performance, and investors should not use
historical trends to anticipate results or trends in future periods.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to various market risks, including changes in foreign currency
exchange rates and interest rate risks. Market risk is the potential loss
arising from adverse change in market rates and prices, such as foreign currency
exchange and interest rates. For us, these exposures are primarily related to
the sale of product to foreign customers and changes in interest rates.
The fair value of our total debt at September 30, 2000 was approximately
$44,602,000. We have entered into an interest rate swap agreement related to
$8,500,000 of this amount, related to two outstanding Industrial Revenue Bonds.
These swap agreements are hedges which have the effect of fixing the interest
rate of these two IRB's at 5.14% per annum.
Page 17
<PAGE>
Market risk for the remaining $36,102,000 was estimated as the potential
decrease (increase) in future earnings and cash flows resulting from a
hypothetical 10% increase (decrease) in our estimated weighted average borrowing
rate at September 30, 2000. Although most of the interest on our debt is indexed
to a market rate, there would be no material effect on the future earnings or
cash flows related to our total debt for such a hypothetical change.
Our financial position is not materially affected by fluctuations in currencies
against the U.S. dollar, since assets held outside the United States are
negligible. Our sensitivity analysis of the effects of changes in foreign
currency exchange rates does not factor in a potential change in sales levels of
contracts in local currencies, as the preponderance of our foreign sales occur
over short periods of time or are demarcated in U.S. dollars.
We do not have any derivatives or other financial instruments for trading or
speculative purposes.
Page 18
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There were no material additions to, or changes in status of, any ongoing,
threatened or pending legal proceedings during the three months ended
September 30, 2000. From time to time, we are a party to various legal
proceedings incidental to our business. None of these proceedings is
material to the conduct of our business, operations or financial condition.
Item 2. Changes in Securities and Use of Proceeds - None.
Item 3. Defaults Upon Senior Securities - None.
Item 4. Submission of Matters to a Vote of Security Holders - None.
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
3.1 Articles of Incorporation for Flanders Corporation, filed with the
Form 8-A dated March 8, 1996, incorporated herein by reference.
3.2 Bylaws of Flanders Corporation, filed with the Form 8-A dated
March 8, 1996, incorporated herein by reference.
10.1 Indemnification Agreement between Flanders Corporation, Steven K.
Clark, Robert Amerson and Thomas Allan, filed with the Form 10-K
dated December 31, 1995, and incorporated herein by reference.
10.2 Stock Purchase Agreement between Flanders Corporation and the
Shareholders of Eco-Air Products, Inc. dated May 7, 1998, filed
with the Form 8-K dated June 30, 1998, and incorporated herein by
reference.
10.3 Amendment dated May 20, 1998 to Stock Purchase Agreement by and
between the Registrant and the Shareholders of Eco-Air Products,
Inc. dated May 7, 1998, filed with the Form 8-K dated June 30,
1998, and incorporated herein by reference.
10.4 Promissory Note from Precisionaire, Inc. to SunTrust Bank, Tampa
Bay, in the amount of $2,134,524 dated August 28, 1997, filed with
the Form S-1 dated September 15, 1997 (Reg No. 333-33635), and
incorporated herein by reference.
10.5 Assumption Agreement between POF Realty, Precisionaire, Inc., Polk
County Industrial Development Authority and SunTrust Bank, dated
August 1, 1997, filed with the Form S-1 dated September 15, 1997
(Reg No. 333-33635), and incorporated herein by reference.
10.6 Mortgage Deed and Security Agreement between Precisionaire, Inc.
and Sun Trust Bank, Tampa Bay dated August 28, 1997, filed with
the Form S-1 dated September 15, 1997 (Reg No. 333-33635), and
incorporated herein by reference.
Page 19
<PAGE>
10.7 Credit Agreement between Flanders Corporation, SunTrust Bank,
Tampa Bay and Zions First National Bank, dated November 10, 1997,
filed with the Form 10-K dated December 31, 1997, and incorporated
herein by reference.
10.8 Loan Agreement between Will-Kankakee Regional Development
Authority and Flanders Corporation dated December 15, 1997, filed
with the Form 10-K dated December 31, 1997, and incorporated
herein by reference.
10.9 Letter of Credit Agreement between Flanders Corporation and
SunTrust Bank, Tampa Bay, dated April 1, 1998, filed with the Form
10-Q dated March 31, 1998, and incorporated herein by reference.
10.10 Credit Agreement between Flanders Corporation, SunTrust Equitable
Securities Corporation and SunTrust Bank, dated February 9, 2000,
filed with the Form 10-K dated December 31, 1999, and incorporated
herein by reference.
10.11 Loan Agreement between Flanders Corporation and the Johnston
County Industrial Facilities and Pollution Control Financing
Authority, dated April 1, 1998, filed with the Form 10-Q dated
March 31, 1998, and incorporated herein by reference.
10.12 Loan Agreement between Flanders Corporation and the Johnston
County Industrial Facilities and Pollution Control Financing
Authority, dated March 1, 2000, filed with the Form 10-K dated
December 31, 1999, and incorporated herein by reference.
10.13 Flanders Corporation 1996 Director Option Plan, filed with the
Form 10-K dated December 31, 1995, and incorporated herein by
reference.
10.14 Employment Agreement between Elite Acquisitions, Inc., Flanders
Filters, Inc., and Steven K. Clark, filed with the Form 10-K dated
December 31, 1995, and incorporated herein by reference.
10.15 Amendment to Employment Agreement between Elite Acquisitions,
Inc., Flanders Filters, Inc., and Steven K. Clark, filed with the
Form S-1 dated October 21, 1996 (Reg. No. 333-14655), and
incorporated herein by reference.
10.16 Amendment to Employment Agreement between Elite Acquisitions,
Inc., Flanders Filters, Inc., and Steven K. Clark, filed with the
Form 10-K dated December 31, 1997, and incorporated herein by
reference.
10.17 Amendment to Employment Agreement between Elite Acquisitions,
Inc., Flanders Filters, Inc., and Steven K. Clark, filed with Form
10-K dated December 31, 1999, and incorporated herein by
reference.
10.18 Employment Agreement between Elite Acquisitions, Inc., Flanders
Filters, Inc. and Robert R. Amerson, filed with the Form 10-K
dated December 31, 1995, and incorporated herein by reference.
10.19 Amendment to Employment Agreement between Elite Acquisitions,
Inc., Flanders Filters, Inc., and Robert R. Amerson, filed with
the Form S-1 dated October 21, 1996 (Reg. No. 333-14655), and
incorporated herein by reference.
10.20 Amendment to Employment Agreement between Elite Acquisitions,
Inc., Flanders Filters, Inc., and Robert R. Amerson, filed with
the Form 10-K dated December 31, 1997, and incorporated herein by
reference.
10.21 Amendment to Employment Agreement between Elite Acquisitions,
Inc., Flanders Filters, Inc., and Robert R. Amerson, filed with
Form 10-K dated December 31, 1999, and incorporated herein by
reference.
10.22 Stock Option Agreement between Elite Acquisitions, Inc. and Robert
R. Amerson, filed with the Form 10-K dated December 31, 1995, and
incorporated herein by reference.
Page 20
<PAGE>
10.23 Stock Option Agreement between Flanders Corporation and Robert R.
Amerson dated February 22, 1996, filed with the Form S-8 dated
July 21, 1997, and incorporated herein by reference.
10.24 Amendment to Stock Option Agreement between Flanders Corporation
and Robert R. Amerson dated December 22, 1999, filed with the Form
10-K dated December 31, 1999, and incorporated herein by
reference.
10.25 Stock Option Agreement between Flanders Corporation and Robert R.
Amerson dated June 3, 1996, filed with the Form S-8 dated July 21,
1997, and incorporated herein by reference.
10.26 Stock Option Agreement between Elite Acquisitions, Inc., and
Steven K. Clark, filed with the Form 10-K dated December 31, 1995,
and incorporated herein by reference.
10.27 Stock Option Agreement between Flanders Corporation and Steven K.
Clark dated February 22, 1996, filed with the Form S-8 dated July
21, 1997, and incorporated herein by reference.
10.28 Amendment to Stock Option Agreement between Flanders Corporation
and Steven K. Clark dated December 22, 1999, filed with the Form
10-K dated December 31, 1999, and incorporated herein by
reference.
10.29 Stock Option Agreement between Flanders Corporation and Steven K.
Clark dated June 3, 1996, filed with the Form S-8 dated July 21,
1997, and incorporated herein by reference.
10.30 Note Agreement between Steven K. Clark and Flanders Corporation,
dated April 24, 1999, filed with the Form 10-K dated December 31,
1999, and incorporated herein by reference.
10.31 Note Agreement between Robert R. Amerson and Flanders Corporation,
dated April 24, 1999, filed with the Form 10-K dated December 31,
1999, and incorporated herein by reference.
27 Financial Data Schedule.
(b) Reports on Form 8-K - None
Page 21
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Dated this 15th day of November, 2000.
FLANDERS CORPORATION
By: /s/ Robert R. Amerson
----------------------
Robert R. Amerson
President, Chief Executive Officer
and Director
By: /s/ Steven K. Clark
----------------------
Steven K. Clark
Chief Operating Officer, Vice President/
Chief Financial Officer, Principal
Accounting Officer and Director
Page 22
