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 June 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 (August 16, 2000).
25,395,583 shares common stock, par value $.001 per share
(Title of Class)
<PAGE>
FLANDERS CORPORATION
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 2000
PART I - FINANCIAL INFORMATION Page
Item 1 -
Financial Statements
Consolidated Condensed Balance Sheets at June 30,
2000 (unaudited) and December 31, 1999 3
Consolidated Condensed Statements of Earnings
(unaudited) for the three months and six months
ended June 30, 2000 and 1999 4
Consolidated Condensed Statements of Stockholders'
Equity for the six months ended June 30, 2000
(unaudited) and the year ended December 31, 1999 5
Consolidated Condensed Statements of Cash Flows
(unaudited) for the three months and six months
ended June 30, 2000 and 1999 6
Notes to Consolidated Condensed Financial Statements 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 18
Item 2 - Changes in Securities and Use of Proceeds 18
Item 3 - Defaults Upon Senior Securities 18
Item 4 - Submission of Matters to a Vote of Security Holders 18
Item 5 - Other Information 18
Item 6 - Exhibits and Reports on Form 8-K 18
SIGNATURES 21
Page 2
<PAGE>
Part I - Financial Information
Item 1. Financial Statements
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 2000 1999
-------------------------------------------------------------- ------------- -------------
(unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 4,115,044 $ 824,220
Receivables:
Trade, net of allowance for doubtful accounts of
$569,328 at 6/30/00 and $487,321 at 12/31/99 34,438,076 29,023,225
Other 1,001,979 1,415,794
Inventories (Note B) 33,008,337 25,901,700
Deferred taxes 1,849,481 1,849,481
Other current assets 2,505,785 1,959,725
Net assets of discontinued operations 4,666,347 5,217,737
------------- -------------
Total current assets 81,585,049 66,191,882
Related party receivables 4,845,481 4,369,028
Other assets 4,394,944 4,113,491
Intangible assets, net of accumulated amortization of
$2,243,751 at 6/30/00 and $1,948,073 at 12/31/99 30,026,809 30,022,487
Property and equipment, net of accumulated depreciation of
$21,912,134 at 6/30/00 and $18,839,580 at 12/31/99 67,178,136 65,253,828
------------- -------------
$ 188,030,419 $ 169,950,716
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------------------------------- ------------- -------------
Current liabilities
Current maturities of long-term debt $ 1,082,473 $ 1,115,184
Accounts payable 20,923,274 15,760,022
Accrued expenses and other current liabilities 4,652,188 3,895,274
------------- -------------
Total current liabilities 26,657,935 20,770,480
Long-term debt, less current maturities 41,325,376 31,212,985
Deferred income taxes 5,840,584 5,840,654
Commitments and contingencies
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: 25,395,583 shares at 6/30/00 and
25,435,583 shares at 12/31/99 25,396 25,436
Additional paid-in capital 91,673,226 91,798,188
Notes receivable (2,112,420) (2,014,094)
Retained earnings 24,620,322 22,317,067
------------- -------------
Total stockholders' equity 114,206,524 112,126,597
------------- -------------
$ 188,030,419 $ 169,950,716
============= =============
</TABLE>
Page 3
<PAGE>
FLANDERS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- -----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 50,033,661 $ 44,706,108 $ 94,132,935 $ 82,335,959
Cost of goods sold 38,698,340 32,514,929 70,048,153 60,284,074
------------ ------------ ------------ ------------
Gross profit 11,335,321 12,191,179 24,084,782 22,051,885
Operating expenses 9,263,304 8,334,569 18,565,079 15,698,059
------------ ------------ ------------ ------------
Operating income from continuing operations 2,072,017 3,856,610 5,519,703 6,353,826
Nonoperating expense from continuing operations (323,103) (197,878) (452,414) (292,541)
------------ ------------ ------------ ------------
Earnings from continuing operations before
income taxes 1,748,914 3,658,732 5,067,289 6,061,285
Provision for income taxes 789,565 1,518,442 2,206,915 2,515,237
------------ ------------ ------------ ------------
Earnings from continuing operations 959,349 2,140,290 2,860,374 3,546,048
Loss from operations of discontinued operations,
net of tax benefit of $136,696 and $93,442 for the
3 months ended June 30, 2000 and 1999 and
$371,493 and $204,449 for the 6 months ended
June 30, 2000 and 1999, respectively (204,924) (131,710) (557,119) (288,260)
------------ ------------ ------------ ------------
Net earnings $ 754,425 $ 2,008,580 $ 2,303,255 $ 3,257,788
============ ============ ============ ============
Earnings per share from continuing operations
Basic $ 0.04 $ 0.08 $ 0.11 $ 0.14
============ ============ ============ ============
Diluted $ 0.04 $ 0.08 $ 0.11 $ 0.13
============ ============ ============ ============
Loss per share from discontinued operations
Basic $ (0.01) $ (0.01) $ (0.02) $ (0.01)
============ ============ ============ ============
Diluted $ (0.01) $ (0.00) $ (0.02) $ (0.01)
============ ============ ============ ============
Net earnings per share
Basic $ 0.03 $ 0.08 $ 0.09 $ 0.13
============ ============ ============ ============
Diluted $ 0.03 $ 0.08 $ 0.09 $ 0.12
============ ============ ============ ============
Weighted average common and common
equivalent shares outstanding:
Basic 25,261,880 25,395,225 25,270,231 25,304,833
============ ============ ============ ============
Diluted 26,472,188 26,702,985 26,540,066 26,714,836
============ ============ ============ ============
</TABLE>
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
common stock related to certain acquisitions -- 988,028 -- --
Purchase and retirement of 283,300 shares of common
stock (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 40,000 shares of common
stock (unaudited) (40) (124,962) -- --
Interest on notes receivable secured by common shares
(unaudited) -- -- (98,326) --
Net earnings (unaudited) -- -- -- 2,303,255
------------ ------------ ------------ ------------
Balance, June 30, 2000 (unaudited) $ 25,396 $ 91,673,226 $ (2,112,420) $ 24,620,322
============ ============ ============ ============
</TABLE>
Page 5
<PAGE>
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash used by continuing operations $ (3,428,835) $ (2,179,573) $ (1,434,563) $ (1,206,372)
Net cash provided (used) by discontinued
operations 1,231,525 245,087 659,160 (468,872)
------------ ------------ ------------ ------------
Net cash used by operating activities (2,197,310) (1,934,486) (775,403) (1,675,244)
------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions, net of cash received (300,000) (1,786,692) (300,000) (1,786,692)
Purchase of property and equipment (1,830,719) (1,105,657) (4,996,862) (1,824,143)
Net advances on notes receivable (120,266) -- (214,759) --
Net decrease in other assets (73,772) -- (269,062) --
------------ ------------ ------------ ------------
Net cash used in investing activities of
continuing operations (2,324,757) (2,892,349) (5,780,683) (3,610,835)
Net cash used in investing activities of
discontinued operations (11,215) (582,551) (54,300) (623,446)
------------ ------------ ------------ ------------
Net cash used in investing activities (2,335,972) (3,474,900) (5,834,983) (4,234,281)
------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from sale of bonds -- -- 3,897,694 --
Repurchase of common shares (125,000) (1,027,310) (125,000) (1,027,310)
Net proceeds from revolving credit agreement 8,846,845 7,842,932 10,805,144 6,777,435
Net principal payments on long-term borrowings (4,260,285) -- (4,623,158) --
------------ ------------ ------------ ------------
Net cash provided by financing activities
of continuing operations 4,461,560 6,815,622 9,954,680 5,750,125
Net cash provided (used) by financing
activities of discontinued operations (22,427) 728,329 (53,470) (42,939)
------------ ------------ ------------ ------------
Net cash provided provided by financing
activities 4,439,133 7,543,951 9,901,210 5,707,186
------------ ------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents (94,149) 2,134,565 3,290,824 (202,339)
CASH AND CASH EQUIVALENTS
Beginning of period 4,209,193 11,335,781 824,220 13,672,685
------------ ------------ ------------ ------------
End of period $ 4,115,044 $ 13,470,346 $ 4,115,044 $ 13,470,346
============ ============ ============ ============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes $ -- $ 1,278,047 $ 421,654 $ 2,102,495
============ ============ ============ ============
Interest $ 554,184 $ 296,337 $ 982,794 $ 590,841
============ ============ ============ ============
</TABLE>
Page 6
<PAGE>
FLANDERS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
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 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 six months ended June 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 (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>
FLANDERS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note B. Inventories
Our inventories consist of the following at June 30, 2000 and December 31, 1999:
<TABLE>
<CAPTION>
6/30/00 12/31/99
----------- -----------
<S> <C> <C>
Finished goods $14,846,665 $12,041,722
Work in progress 2,009,148 1,665,953
Raw materials 16,298,364 12,382,025
----------- -----------
33,154,177 26,089,700
Less allowance for obsolete raw materials 145,840 188,000
----------- -----------
$33,008,337 $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 six months ended June 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> <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 (10,256) - 8.13 - 8.13 -
----------------------
Outstanding at June 30, 2000 601,983 7,005,700 $5.54 - 14.73 $1.00 - 9.50 $ 9.57 $ 3.66
======================
Exercisable at June 30, 2000 601,983 6,852,850 $5.54 - 14.73 $1.00 - 9.50 $ 9.57 $ 3.68
======================
</TABLE>
The options and warrants expire at various dates ranging from September 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 the option of the Company, at either (a) the "prime" rate of
interest publicly announced by the bank, which was 9.5% at June 30, 2000, or (b)
the "LIBOR" rate as reported by the Wall Street Journal, which was 6.649% at
June 30, 2000, plus an amount equal to 1.00% to 1.95%, depending on the ratio of
total liabilities of the Company to its tangible net worth. As of June 30, 2000,
the Company had used $22,175,000 of the working capital facility and had issued
$9,400,000 of letters of credit against the line of credit, leaving
approximately $7.8 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 completed by the end of the third quarter of 2000. The Note
extends for a term of fifteen years and bears interest at a
Page 8
<PAGE>
FLANDERS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
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
During May 2000, we settled a lawsuit between a prior owner of a subsidiary and
that subsidiary, whereby the prior owner alleged that he was due additional
payments according to a contingent gain clause in the purchase agreement. The
settlement included a general release for all parties, and required the
subsidiary to make a one-time payment of $300,000, which was recorded as
additional goodwill.
There were no other material additions to, or changes in status of, any ongoing,
threatened or pending legal proceedings during the three months ended June 30,
2000. See "Item 3 - Legal Proceedings" in the Company's 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 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 the Company's 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 June 30, 2000 Compared to June 30,
1999
The following table summarizes our results of operations as a percentage of net
sales for the three months ended June 30, 2000 and 1999.
<TABLE>
<CAPTION>
Three Months Ended
June 30,
----------------------------------------
2000 1999
------------------ -------------------
(Dollar amounts in thousands)
Amount Percent Amount Percent
--------- ------- --------- -------
<S> <C> <C> <C> <C>
Net sales $ 50,034 100.0% $ 44,706 100.0%
Gross profit 11,335 22.7 12,191 27.3
Operating expenses 9,263 18.5 8,335 18.6
Operating income from continuing operations 2,072 4.1 3,857 8.6
Provision for income taxes 790 1.6 1,518 3.4
Earnings from continuing operations 959 1.9 2,140 4.8
Loss from discontinued operations (205) (0.4) (132) (0.3)
Net earnings 754 1.5 2,009 4.5
</TABLE>
Net sales: Net sales for the second quarter of 2000 increased by $5,328,000, or
11.9%, to $50,034,000 from $44,706,000 for the second 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.
Gross Profit: Gross profit for the second quarter of 2000 decreased by $856,000,
or 7.0%, to $11,335,000, which represented 22.7% of net sales, from $12,191,000,
which represented 27.3% of net sales, for the second quarter of 1999. The
decrease in gross profit was principally attributable to:
o An increase in the percentage of our labor force employed through
temporary services compared to the second quarter of 1999, caused by the
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 $350,000.
Page 10
<PAGE>
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 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, including an increase in average selling prices, have
not yet materialized.
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.
o Increased inbound freight costs for raw materials associated with fuel
price increases and routing inefficiencies exacerbated by inadequately
trained shipping personnel and under-qualified logistics management.
Operating expenses: Operating expenses for the second quarter of 2000 increased
by $928,000, or 11.1%, to $9,263,000, representing 18.5% of net sales, from
$8,335,000, representing 18.6% of net sales, for the second quarter of 1999. The
increase in operating expenses was caused primarily by an increase in sales
commissions and related sales expenses commensurate with the increase in sales
of approximately $500,000, as well as an additional increase in outbound freight
expenses of more than $400,000, partially balanced by our ongoing programs to
reduce overhead by eliminating redundant personnel and functions at our
subsidiaries.
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 $205,000 and $132,000, net of income tax benefits, for the second
quarter of 2000 and 1999, respectively.
Provision for income taxes: Our income tax provision for the second 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%.
Results of Operations for the Six Months Ended June 30, 2000 Compared to June
30, 1999
The following table summarizes our results of operations as a percentage of net
sales for the six months ended June 30, 2000 and 1998.
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
2000 1999
------------------ -------------------
(Dollar amounts in thousands)
Amount Percent Amount Percent
--------- ------- --------- -------
<S> <C> <C> <C> <C>
Net sales $ 94,133 100.0% $ 82,336 100.0%
Gross profit 24,085 25.6 22,052 26.8
Operating expenses 18,565 19.7 15,698 19.1
Operating income from continuing operations 5,520 5.9 6,354 7.7
Provision for income taxes 2,207 2.3 2,515 3.1
Earnings from continuing operations 2,860 3.0 3,546 4.3
Loss from discontinued operations (557) (0.6) (288) (0.3)
Net earnings 2,303 2.4 3,258 4.0
</TABLE>
Page 11
<PAGE>
Net sales: Net sales for the first half of 2000 increased by $11,797,000, or
14.3%, to $94,133,000 from $82,336,000 for the first half 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 half of 2000 increased by $2,033,000,
or 9.2%, to $24,085,000, which represented 25.6% of net sales, from $22,052,000,
which represented 26.8% of net sales, for the first half of 1999. The decrease
in gross margin percentage was due to higher labor costs, inbound material
shipment costs and material costs in the second quarter of 2000, along with
aggressive pricing to secure new business.
Operating expenses: Operating expenses for the first half of 2000 increased by
$2,867,000, or 18.3%, to $18,565,000, representing 19.7% of net sales, from
$15,698,000, representing 19.1% of net sales, for the first half of 1999. The
increase in operating expenses was caused by an increase in sales expenses and
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 $557,000 and $288,000, net of income tax benefits, for the first
half 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 $54,927,000 at June 30, 2000, compared to $45,421,000 at
December 31, 1999. This includes cash and cash equivalents of $4,115,000 at June
30, 2000, and $824,000 at December 31, 1999.
Our trade receivables increased $5,415,000, or 18.7%, to $34,438,000 at June 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 62.6
days at June 30, 2000, compared to 66.1 days at December 31, 1999. 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 consumed $3,429,000 of cash during the second quarter
of 2000, compared to $2,180,000 consumed in the second quarter of 1999. This
difference in operating cash flows was primarily due to the decline in net
earnings between the comparable quarters. Historically, our business is
seasonal, with our second and third quarters having higher sales than our first
and fourth quarters. We attempt to moderate swings in labor requirements and
product shortages due to this seasonal variance by increasing inventories in the
first quarter and first part of the second quarter. Larger inventories reduce
the likelihood of stock shortages during our busy season and help smooth out our
labor requirements. We anticipate that current excess inventory will be sold
during our busy season and will return to historical norms by the end of the
third quarter of 2000. 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 generated $4,462,000 of cash during the second quarter of
2000, primarily consisting of the issuance of debt. Our investing activities
from continuing operations consumed $2,325,000 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 the option of the Company, at either (a) the "prime"
rate of interest publicly announced by SunTrust Bank, which was 9.5% at June 30,
2000, or (b) the "LIBOR" rate as reported by the Wall Street Journal, which was
6.649% at June 30, 2000, plus an amount equal to 1.00% to 1.95%, depending on
the ratio of total liabilities of the Company to its tangible net worth. As of
June 30, 2000, the Company had used $22,175,000 of the working capital facility
and had issued $9,400,000 of letters of credit against the line of credit,
leaving approximately $7.8 million available for future
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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 third quarter of 2000. 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 the Company's common stock. As of August 16, 2000, the Company had
repurchased 1,054,650 shares of its common stock under this authorization; thus,
as of this date, up to an additional 945,350 shares are available for
repurchase. 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 the Company's obligations under its stock
option and purchase plans or any other authorized incentive plans, or for
issuance pursuant to future equity financing by the Company.
Outlook
During the second quarter of 2000, we experienced 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 accelerated 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 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 second quarter of
2000. However, during the first half 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.
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.
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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.
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.
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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 20% of Our Revenues and Maintain
Value of Our Inventory and Other Assets
As of June 30, 2000, approximately 20% 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.
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
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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.
Management Controls a Significant Percentage of Our Stock
As of June 30, 2000, our directors and executive officers beneficially held
approximately 41.8% 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 601,983 of our shares of common
stock to various parties with exercise prices ranging from $5.54 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
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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 June 30, 2000 was approximately $42,408,000.
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. Market risk for the remaining $33,908,000 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 June 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 exchanges rates does not factor in a potential change in sales levels
of local currency prices, 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.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
During May 2000, we settled a lawsuit between a prior owner of a subsidiary
and that subsidiary, whereby the prior owner alleged that he was due
additional payments according to a contingent gain clause in the purchase
agreement (Wes Adair v. Air Seal Filter Housings, Inc., Case No. 45109.645
in the 240th District Court of Fort Bend County, Texas). The settlement
agreement included a general release for all parties, and required the
subsidiary to make a one-time payment of $300,000.
There were no other material additions to, or changes in status of, any
ongoing, threatened or pending legal proceedings during the three months
ended June 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.
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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.
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.
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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.
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
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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 17th day of August, 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
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