updated 4/13/2011 7:46:15 AM ET 2011-04-13T11:46:15

– Revenues Increase 10% to $244.3 Million –

– Posts Positive Cash Flow From Operating Activities for Fiscal 2010 –

WASHINGTON, N.C., April 13, 2011 (GLOBE NEWSWIRE) -- Flanders Corporation (OTCQX:FLDR) reported financial results for the year ended December 31, 2010.

Harry Smith, Flanders Corporation's Chairman and CEO, said: "2010 was an exciting but challenging year for the company. We realized strong top line revenue growth in a flat economy while we continued with our reorganization plan to reduce the number of rooflines and automate manufacturing. Subsequent to year end, we successfully refinanced our revolving line of credit and disposed of a number of facilities. With all of this now behind us, the streamlined company is looking forward to a prosperous 2011."

Financial Summary

Revenue for the year ended December 31, 2010 was $244.3 million, compared to $222.4 million for the year ended December 31, 2009, an increase of 10%. Gross margin was 16.5%, compared to 19.4% for the same period a year ago. Included in cost of goods sold is a $0.6 million charge resulted from the write-off of inventory and equipment in the fourth quarter. Depreciation included in cost of goods sold increased $1.8 million during 2010. When adjusting for these charges and increases in non cash expenses, adjusted gross margin for 2010 would be 17.5%.

Operating expenses, before plant consolidation and exit costs, loss on sale of and impairment of property, and stock compensation expense, in 2010 was $36.0 million compared to $31.3 million in 2009. This increase is partially attributable to $1.4 million in increased freight costs due to changes in shipping arrangements with customers earlier in 2010 and approximately $1.0 million in higher commissions due to higher revenues. Plant consolidation and exit costs of $13.4 million, losses on impairment of property and equipment of $3.3 million, and losses on sales of properties and equipment of $1.4 million were related to facilities closed by the company in 2010. The Company also recorded stock compensation expense of $5.2 million.

Net loss for the year ended December 31, 2010 was $16.1 million, or $(0.60) per diluted share, compared to net income of $7.0 million, or $0.27 per diluted share, for the year ended December 31, 2009. Adjusted EBITDA for the year ended December 31, 2010 was $13.2 million compared to $18.4 million for the same period a year ago.

John Oakley, President and CFO, noted, "Net sales for our retail product lines posted a solid increase for the year while sales in the commercial and industrial ASHRAE business was flat with the prior year. Our high purity product lines also had a strong sales year, with growth across most of the sales channels serviced by those product lines. We reaffirm our guidance for 2011 as a revenue increase of 8% to 11% as we believe we will continue to see strong performance in our high purity and retail product lines while we expect strengthening in our commercial and industrial ASHRAE product lines over 2011."

Non-GAAP Financial Measures

The Company provides some financial measures not in accordance with generally accepted accounting principles (GAAP) to evaluate the results of the company's operations and believes earnings before interest, taxes, certain noncash and non-operating expenses, extraordinary items, depreciation and amortization (Adjusted EBITDA) provides useful information in the measure of operations. These non-GAAP financial measures are intended to supplement the user's overall understanding of the Company's current financial performance and its prospects for the future. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by identifying certain expenses that, when excluded from the GAAP results, may provide additional understanding of the Company's core operating results or business performance. However, these non-GAAP financial measures are not intended to supersede or replace the Company's GAAP results. A reconciliation of the non-GAAP results to the GAAP results is provided in the "Reconciliation of Net Earnings to Adjusted EBITDA" schedule below.

Conference Call

Chairman of the Board and CEO, Harry Smith and President and CFO John Oakley are scheduled to conduct a conference call at 11:00 a.m. ET on April 13, 2011 to review these results in more detail. To access the call from within the U.S., please dial 866-425-6192, and international callers can access the call by dialing 973-409-9253 approximately 10 minutes prior to the start of the conference call. The conference ID will be 56971234. A telephone replay will be available until midnight Eastern Time on May 13, 2011 by dialing 800-642-1687 or 706-645-9291 and entering pass code 56971234.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements made in this press release other than statements of historical fact, are forward-looking statements. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, among other things: statements and assumptions relating to future growth, as well as management's short-term and long-term performance goals; statements regarding anticipated order patterns from our customers or the anticipated economic conditions of the industries and markets that we serve; statements related to the performance of the U.S. and other economies generally; statements relating to the anticipated effects on results of operations or financial condition from recent and expected developments or events; statements relating to the Flanders' business and growth strategies; and any other statements or assumptions that are not historical facts. Flanders believes that its expectations are based on reasonable assumptions. However, these forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause Flanders' actual results, performance or achievements, or industry results, to differ materially from the Flanders' expectations of future results, performance or achievements expressed or implied by these forward-looking statements. In addition, the Flanders' past results of operations do not necessarily indicate its future results. You should not place undue reliance on any forward-looking statements. These statements speak only as of the date of this press release. Except as otherwise required by applicable laws, Flanders undertakes no obligation to publicly update or revise any forward-looking statements or the risk factors described in this press release, including projected sales and profit levels for any business segment in any given quarter, whether as a result of new information, future events, changed circumstances or any other reason after the date of this press release.

About Flanders

Flanders is a leading air filtration products manufacturer. Flanders' products are utilized by many industries, including those associated with commercial and residential heating, ventilation and air conditioning systems, semiconductor manufacturing, ultra-pure materials, biotechnology, pharmaceuticals, synthetics, nuclear power and nuclear materials processing.

For further information on Flanders and its products, visit its web site at http://www.flanderscorp.com/ or contact John Oakley at 252-946-8081.

The Flanders Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6765

 
 
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(unaudited)
         
ASSETS December 31,

2010
December 31,

2009
Current assets    
Cash and cash equivalents $ 594 $ 260
Receivables:    
Trade, net of allowance for doubtful accounts: $1,456 in 2010 and $2,172 in 2009 41,787 33,159
Other 442 407
Inventories, net 24,195 29,415
Deferred income tax asset 9,714 2,566
Assets held for sale 1,117 --
Other current assets 14,110 8,134
Total current assets 91,959 73,941
Property and equipment, net 74,176 71,263
Intangible assets, net 237 280
Notes receivable and other assets 16,262 17,511
Total assets $182,634 $162,995
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities    
Accounts payable $ 33,435 $ 26,856
Accrued expenses 10,857 5,831
Current maturities of long-term debt and capital lease obligations  1,495  1,051
Current portion of exit cost liability 1,136  -- 
Other current liabilities 100 498
Total current liabilities 47,023 34,236
Long-term capital lease obligation, less current maturities 6,686 150
Long-term debt, less current maturities 35,309 33,662
Long-term liabilities, other 2,905 3,085
Deferred income tax liability 2,983 158
Long-term exit cost liabilities 7,902  -- 
Commitments and contingencies    
Stockholders' equity:    
Preferred stock, $.001 par value, 10,000,000 shares authorized; none issued and outstanding as of December 31, 2010 and 2009    
Common stock, $.001 par value; 50,000,000 shares authorized; issued and outstanding: 27,132,838 as of December 2010 and 26,132,838 as of December 2009 27 26
Additional paid-in capital 93,120 88,902
Accumulated other comprehensive loss (883) (908)
Retained earnings (accumulated deficit) (12,438) 3,684
Total stockholders' equity 79,826 91,704
  $ 182,634 $ 162,995
 
 
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
(In thousands, except per share data)
(unaudited)
     
  2010 2009
Net sales $ 244,336 $ 222,380
Cost of goods sold 204,100 179,167
Gross profit 40,236 43,213
Operating expenses 35,956 31,294
Plant consolidation and exit costs 13,433 --
Loss on impairment of property 3,279 --
Loss (gain) on disposal of property and equipment 1,367 (304)
Stock compensation expense 5,219 46
Operating income (loss) (19,018) 12,177
Nonoperating income (expense):    
Other income (expense), net (393) 688
Interest income (expense), net (2,315) (1,338)
Nonoperating income (expense), net (2,708) (650)
Income (loss) from continuing operations before income taxes and extraordinary items (21,726) 11,527
Provision (benefit) for income taxes (5,200) 4,563
Net income (loss) before extraordinary items (16,526) 6,964
Extraordinary gain, net of taxes 404 --
Net income (loss) $ (16,122) $ 6,964
     
Basic earnings per share:    
Income (loss) before extraordinary items $ (.62) $ .27
Extraordinary items $ .02 $  --
Net earnings per share $ (.60) $ .27
     
Diluted earnings per share:    
Income before extraordinary items $ (.62) $ .27
Extraordinary items $ .02 $ --
Net earnings per share $ (.60) $ .27
     
Weighted average common shares outstanding    
Basic 26,793 25,779
Diluted 26,793 25,795
 
 
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Year Ended December 31, 2010 and 2009
(In thousands)
(unaudited)
 
     





Shares




Common


Stock


Additional


Paid-In

Capital
Accumulated

Other

Comprehensive

Loss


Retained


Earnings

(Deficit)






Total
Balance, January 1, 2008 25,524 $ 26 $ 87,253 $ (1,231) $ (3,280) $ 82,768
Stock option award compensation -- -- 46 -- -- 46
Purchase and retirement of 391 shares of common stock (391) (1) (2,500) -- --  (2,501)
Issuance of 1,000 shares of common stock upon exercise of options 1,000 1 2,499 -- -- 2,500
Tax benefit from stock options -- -- 1,604 -- -- 1,604
Comprehensive earnings            
Net earnings -- -- -- -- 6,964 6,964
Gain on cash flow hedges -- -- -- 323 -- 323
Total comprehensive earnings, net of tax           7,287
Balance, December 31, 2009 26,133 $ 26 $ 88,902  $ (908) $ 3,684 $ 91,704
Stock option award compensation     354     354
Purchase and retirement of common shares (312) -- (1,000)     (1,000)
Common shares issued 1,312 1 4,864     4,865
Comprehensive income (loss):            
Net loss   -- -- -- (16,122) (16,122)
Gain on cash flow hedges   -- -- 25 -- 25
Total comprehensive earnings, net of tax   -- --     (16,097)
Balance, December 31, 2010 27,133 $ 27 $ 93,120 $ (883) $ (12,438) $ 79,826
 
 
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
(In thousands)
(unaudited)
 
  2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES    
Net income (loss) $  (16,122)  $ 6,964
Adjustments to reconcile net income to net cash (used in) provided by operating activities:    
Depreciation and amortization expense 7,386  5,778
Provision for bad debts 1,316  2,095
Write-off of investment and related notes receivable 616  --
Stock compensation expense 5,219  46 
Extraordinary gain (404)  -- 
Proceeds from insurance claims  --  1,135
Tax impact of stock options exercised  --  (1,604)
Amortization of deferred gain (72)  (60) 
Impairment of fixed assets 3,279  -- 
(Gain) loss on disposal of property and equipment 1,367  (304)
Deferred income taxes (4,345)  1,704
Change in working capital components:    
Increase in accounts receivable (9,944)  (10,293)
Increase in other receivables (35) (127)
Decrease in inventory 5,220  2,135 
(Increase) decrease in other current assets (7,363)  5,946
(Increase) decrease in other assets (368)  8
Increase (decrease) in accounts payable 6,579  (3,443)
Increase in accrued expenses 5,026  10,366
Decrease in other current liabilities  (398)  (5,682)
Increase in exit cost liability 9,038  -- 
Decrease in other non-current liabilities (62) (603)
Net cash provided by operating activities 5,933  14,061
CASH FLOWS FROM INVESTING ACTIVITIES    
Purchase of property and equipment (12,076)  (15,019)
Proceeds from sale of property and equipment 2,216 259
Proceeds from insurance claim on building and equipment 1,885  466
Proceeds from notes receivable 2,450 5,046
Loans made to notes receivable (707) (3,807) 
Net cash used in investing activities  $ (6,232) $ (13,055) 
     
     
CONSOLIDATED STATEMENTS OF CASH FLOWS—Continued    
Years Ended December 31,    
(In thousands)    
(unaudited)    
     
  2010 2009
CASH FLOWS FROM FINANCING ACTIVITIES    
Principal payments on long-term borrowings $ (3,009) $ (3,095)
Proceeds from revolving credit agreement 235,844 224,550
Payments on revolving credit agreement (232,152) (224,143)
Proceeds from long-term borrowings 1,081 --
Payment of debt issuance costs (131) (66)
Tax impact of stock options exercised -- 1,604
Purchase of common stock (1,000) --
Net cash provided by (used in) financing activities 633 (1,150)
Net increase (decrease) in cash and cash equivalents 334 (144)
CASH AND CASH EQUIVALENTS    
Beginning of year 260 404
End of year $ 594 $ 260
     
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION    
Cash paid during year for:    
Income taxes $ 2,447 $ 877
Interest, net of amounts capitalized to property, and equipment $ 1,788 $ 1,633
Interest capitalized to property, and equipment $ 404 $ 759
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES    
Sale of building/equipment for note receivable $ 400 $ 1,279
Purchase of building with debt $ -- $ 6,080
Sale of equipment for accounts payable offset $ 830  $ --
Cashless exercise of common stock $ -- $ (2,500)
Acquisition of capital lease assets $ 6,981  $ --
 
 
RECONCILIATION OF NET EARNINGS TO ADJUSTED EBITDA
(In thousands)
(unaudited)
 
  December 31,

2010
December 31,

2009
Net income (loss) $ (16,122) $ 6,964
Interest expense, net 2,315 1,338
Income tax expense (benefit) (5,200) 4,563
Depreciation and amortization 7,386 5,778
Plant consolidation and exit costs 13,433 --
Loss on impairment of property and write-off of inventory and equipment related to closed facilities; loss on disposal of property and equipment 5,250 (304)
Noncash stock compensation expense 5,219 46
Other, net 900  --
Adjusted EBITDA $ 13,181  $ 18,385
CONTACT: John Oakley
         President and Chief Financial Officer
         252-946-8081

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