10-Q 1 a2041817z10-q.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-1004 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE --- SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2001 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE --- SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission file number 0-23789 FLOUR CITY INTERNATIONAL, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) NEVADA 62-170915 ----------------------- ------------------------------- (State of Incorporation) (I.R.S. Employer Identification No.) 1044 FORDTOWN ROAD KINGSPORT, TN 37663 -------------------------------------------------- (Address of principal executive offices, zip code) (423) 349-8692 --------------------------------------------------------------------- (Registrant's telephone number, including area code) 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 -- -- There were 5,315,278 shares of common stock outstanding at March 15, 2001. FLOUR CITY INTERNATIONAL, INC. INDEX --------------------------------------------------------------------------------

2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FLOUR CITY INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands except per share data) (unaudited)

See Notes to Condensed Consolidated Financial Statements 3 FLOUR CITY INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands except per share data)

See Notes to Condensed Consolidated Financial Statements 4 FLOUR CITY INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

See Notes to Condensed Consolidated Financial Statements 5 FLOUR CITY INTERNATIONAL, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. GENERAL The condensed consolidated financial statements include the accounts of Flour City International, Inc. and its wholly owned and majority owned subsidiary companies after elimination of material intercompany accounts and transactions. Less than majority owned affiliates over which the Company exercises significant influence are accounted for as equity investments. Less than twenty percent owned affiliates over which the Company cannot exercise significant influence are carried at cost. When reading the financial information contained in this Quarterly Report, reference should be made to the financial statements, schedules, and notes, included in the Company's Annual Report on Form 10-K for the year ended October 31, 2000. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates, including those related to contracts, litigation, and contingencies, based on current available information. Changes in facts and circumstances may result in revised estimates. In the opinion of management, the Condensed Consolidated Financial Statements include all material adjustments necessary to present fairly the Company's financial position, results of operations, and cash flows. Such adjustments are of a normal recurring nature. The Company's construction projects are awarded in a competitive bidding process. Due to the nature of the process the Company has experienced and may continue to experience significant delays in project awards which have caused and may continue to cause substantial variations in quarterly results. The results for this interim period are not necessarily indicative of results for the entire year or any other interim period. 2. SIGNIFICANT ACCOUNTING PRINCIPLES In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES which defines derivatives, requires that all derivatives be carried at fair value and provides for hedge accounting when certain conditions are met. SFAS No. 133, as amended by SFAS No. 137, is effective for the Company in fiscal 2002. Although the Company has not fully assessed the implication of SFAS No. 133 as amended, the Company does not believe that the adoption of this statement will have a material effect on its financial condition or results of operations. In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB 101). SAB 101, as amended, summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements. The adoption of the provision of SAB 101 is not expected to have a material effect on the Company's consolidated operating results, statement of financial position or cash flows. SAB 101 is required to be adopted by the Company no later than the fourth quarter of 2001. 6 3. ACCOUNTS RECEIVABLE, NET (in thousands) Accounts receivable are net of allowance for doubtful accounts of $435 at January 31, 2001, and October 31, 2000, respectively. In accordance with the terms of long-term contracts, customers withhold certain percentages of billings until completion and acceptance of performance under the contracts. Final payments of all such amounts withheld which might not be received within a one-year period from January 31, 2001 and October 31, 2000, are $7,478 and $7,142, respectively. In conformity with trade practice, however, the full amount of accounts receivable has been included in current assets. . 4. OTHER INCOME (EXPENSE), NET (in thousands)

5. SEGMENT INFORMATION The Company is engaged in one industry segment: designing, engineering, manufacturing, and installation of custom curtainwall systems for the construction industry. The Company's systems are sold through long-term construction contracts to general contractors and owners of high-rise and special purpose buildings. The Company manages its business in three segments based on geographical location: North America, Pacific Rim and Europe. The accounting policies for each segment are the same as for the consolidated Company. Intersegment revenues consist of design and engineering performed by one segment for another. In consolidation, such intersegment revenues are eliminated against the receiving segment's cost of revenues. Segment profit or loss includes all items that comprise net income for the respective segments. Geographic financial information follows: SEGMENT REVENUES AND PROFIT (in thousands)

Segment assets are the total assets of the segments. Unallocated corporate assets consist primarily of cash and certificates of deposit. 7

6. COMPREHENSIVE INCOME (in thousands) Comprehensive income for the Company is comprised of the change in foreign currency translation adjustments. The foreign currency translation adjustment occurs as a result of translating the financial statements of the Company's foreign operations into United States Dollars. Since the Company's operations that give rise to the foreign currency translation adjustment are located primarily in countries that have little or no income tax, and whose accumulated earnings are not expected to be repatriated, no tax adjustment has been applied to the change in the foreign currency translation adjustment. Comprehensive income is as follows:

7. CONTINGENCIES The Company is party to various legal actions that are common and frequent in the construction industry none of which represent material claims. Prior to the Company's purchase in January 1997 of FCAM from Armco, FCAM operated facilities that allegedly generated hazardous substances. FCAM has been named as a potentially responsible party (PRP) in relation to several sites for actions that allegedly occurred prior to the Company's purchase of FCAM. Pursuant to the terms of the Armco sale, Armco agreed to defend, indemnify and hold harmless the Company in connection with certain lawsuits, including environmental claims associated with any property owned by FCAM at or before the date of sale. Any and all cleanup responsibility and litigation with respect to such environmental claims has been assumed by Armco pursuant to the sale agreement. The Company believes that to the extent FCAM incurs any loss or liability in connection with any such actions, it will be fully compensated by Armco. In the opinion of management, any ultimate liability with respect to these actions will not have a material impact on the financial position of the Company. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Flour City International, Inc. and its majority owned subsidiaries (the "Company" or the "Registrant") is primarily engaged in the design, engineering, manufacturing, and installation of custom curtainwall systems for the construction industry with operations primarily in the United States, Asia and Europe. The Company's primary operating units are Flour City Architectural Metals, Inc. ("FCAM"), Flour City Architectural Metals (Asia) Ltd. ("FCAM Asia") and Flour City Arlo Corporation (FC-Arlo, a consolidated joint venture formed in May 1998 in which the Company has a 55% ownership) and Flour City Architectural Metals (UK) Ltd. The Company works closely with architects, general contractors and owners/developers in the development and construction of highly recognizable mid-rise and high-rise office buildings, public-use buildings such as courthouses and airport terminals and other well-known landmark buildings and uniquely designed structures. ------------------------------------------------------------------------------- THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES SUCH AS: THE DEPENDENCE OF THE COMPANY ON A SMALL NUMBER OF LARGE CONTRACTS; THE SENSITIVITY OF THE COMPANY'S BUSINESS TO GLOBAL ECONOMIC CONDITIONS; REFERENCES TO THE EXPECTED LEVELS OF GROSS MARGINS AND EXPENSES; THE COLLECTABILITY OF RECEIVABLES; THE ADEQUACY OF CASH FLOWS AND THE NEED TO ENSURE ACCESS TO ADEQUATE WORKING CAPITAL. THESE FORWARD-LOOKING STATEMENTS AND OTHER STATEMENTS MADE ELSEWHERE IN THIS REPORT ARE MADE IN RELIANCE ON THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THE SECTION BELOW ENTITLED "FACTORS THAT MAY AFFECT FUTURE RESULTS" SETS FORTH AND INCORPORATES BY REFERENCE CERTAIN FACTORS THAT COULD CAUSE ACTUAL FINANCIAL RESULTS OF THE COMPANY TO DIFFER MATERIALLY FROM THESE STATEMENTS. ------------------------------------------------------------------------------- RESULTS OF OPERATIONS REVENUES: Revenues for the quarter ended January 31, 2001 increased to $20.4 million, an increase of 58.3% or $7.5 million, from $12.9 million as reported in the quarter ended January 31, 2000. The increase is primarily the result of increased project activities in the three geographical regions. Revenues in North America increased during the first quarter reaching $10.6 million, or an increase of 136.7% or $6.1 million from the same quarter last year. Pacific Rim revenues in the first quarter of this year totaled $8.0 million, a slight decrease of 4.9% compared to $8.4 million in the same quarter last year. The European operations started generating revenues during the first quarter of 2001, which amounted to $1.8 million. GROSS MARGIN: Gross margin for the quarter ended January 31, 2001, was $4.0 million, or 19.7% of revenues, compared to $2.3 million, or 18.2% of revenue, for the same quarter in the prior year. The increase in gross margin is primarily due to a change in project mix in different regions. Gross margin in North America was 20.6% as compared to 9.6% for the same quarter last year. Gross margin in the Pacific Rim was 16.8% as compared to 22.7% for the same quarter last year. Gross margin for Europe for the quarter ended was 27.0%. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and administrative expenses for the quarter ended January 31, 2001 totaled $2.9 million, or 14.3% of revenues, compared to $2.4 million, or 18.2% of revenues, for the same quarter last year. The increase of $0.6 million or 24.3% is attributable to and in support of 9 the 58.3% increase in revenue as the Company continues to build its infrastructure in anticipation of future growth. Selling, general and administrative expenses, as a percent of revenue, in North America, Pacific Rim and Europe in the first quarter of fiscal year 2001 were 11.2%, or $1.2 million, 12.3%, or $1.0 million, and 8.0%, or $0.1 million, respectively. During the first quarter of last year, selling, general and administrative expenses in North America and Pacific Rim 19.0%, or $0.9 million, and 12.1%, or $1.0 million, respectively. Unallocated Corporate selling, general and administrative expenses totaled $0.6 as compared to $0.5 for the same quarter last year. BACKLOG. The Company's backlog totaled $94.9 million at January 31, 2001 of which, $58.0 million was from North America, $20.1 million from Pacific Rim, and $16.8 million from Europe. Bids outstanding at January 31, 2001 totaled $389.5 million, $170.0 million in North America, $188.8 million in Pacific Rim, and $30.7 million in the United Kingdom. LIQUIDITY AND CAPITAL RESOURCES The Company manages its liquidity through the allocation of working capital among North American, Pacific Rim and European operations as needed and through the use of import loans and bank loans that are secured with restricted cash. The Company attempts to structure payment arrangements with its customers to match costs incurred under projects. To the extent the Company is not able to match payments with costs, it relies on its cash reserves and its credit facilities to meet its working capital needs. Management expects to increase its credit facilities in order to ensure that the Company will have sufficient liquidity to meet its business needs for the foreseeable future. Sources of liquidity generally available to the Company include cash from operations, cash and cash equivalents, availability under existing credit facilities, and borrowings from other sources. In order to sustain the expected growth of the revenues worldwide, management anticipates the need for additional working capital and cash to finance the construction projects. Failure to obtain such financing could have a material adverse effect on the Company. Management is currently working with various banks and investment bankers to obtain such financing. The Company may also explore other sources of capital, which could include equity financing. OPERATING ACTIVITIES. The Company used $3.1 million in cash in operating activities for the quarter ended January 31, 2001, compared to $0.6 million for the same quarter of last year. Construction projects typically result in cash in-flows being less than cash outflows until units are installed on the building, which can be as long as twelve months from the beginning of the project. Significant uses of cash from operations during the quarter included a net increase in costs and estimated earnings in excess of billings of $1.1 million as a result of an increase in construction activities and a decrease in accounts payable of $1.2 million. In addition, the Company had settled with a major supplier of one of the projects in North America and recognized $4.3 million in receivable from such supplier. Source of funds for the quarter was primarily from the decrease in accounts receivable of $2.4 million. INVESTING ACTIVITIES. Capital expenditures amounted to $0.1 million of cash during the quarter ended January 31, 2001, compared to $0.5 million in the same quarter last year. FINANCING ACTIVITIES. The Company increased borrowings under lines of credit by $2.4 million during the quarter ended January 31, 2001 compared to $0.8 million in reduction during the same quarter last year. Minority interest in the equity of the Company's joint venture decreased by $0.01 million as compared to an increased of $1.0 million during the same quarter last year. EFFECT OF EXCHANGE RATES. The effect of exchange rates primarily on intercompany receivables caused an increase to Other Comprehensive Income of $0.02 million. Exchange rate fluctuations were not a material contributor to cash flows during the quarter ended January 31, 2001. GENERAL. The Company attempts to structure payment arrangements with its customers to match costs incurred under projects. To the extent the Company is not able to match costs, it relies on its cash reserves and its credit facility to meet its working capital needs. As of January 31, 2001 and 2000, the Company had working capital in excess of $18.9 million and $20.9 million, respectively. CONTINGENCIES. See note 7 to the Condensed Consolidated Financial Statements for a discussion of environmental liabilities and loss contingency established for a lawsuit. 10 FACTORS THAT MAY AFFECT FUTURE RESULTS GENERAL. The Company's projects are awarded by private or governmental entities in a competitive bidding process. Due to the nature of the bidding and award process, the Company has experienced, and in the future expects to experience, significant delays in project awards. No assurance can be given that the timing of a project award will be consistent with the Company's expectations. In addition, numerous factors, many of which are out of the Company's ability to control, have caused and will continue to cause substantial variations in its results of operations in any quarterly or annual reporting period. Some of these factors are: - Downturns in one or more segments of the construction industry; - Changes in economic conditions; - The failure of project owners to obtain adequate construction financing; - The failure of project general contractors to schedule other trades in a manner most efficient for Flour City; - The Company's failure to obtain or delays in awards of major projects; - The cancellation or delay of major projects, including cancellations or delays caused by job-site labor problems and jurisdictional disputes; - The Company's failure to timely replace projects that have been completed or are nearing completion; - Dependence on large projects, the delay or abandonment of which could adversely affect the Company; and - The need to ensure access to adequate working capital to support expanded business operations. Any of these factors could cause the Company's results of operations to fluctuate significantly from period to period, including on a quarterly basis. FOREIGN EXCHANGE RISKS. The Company generally attempts to mitigate foreign exchange risk by entering into contracts providing for payment in United States dollars instead of the local currency wherever possible. Nonetheless, local currency must be used to pay for local labor, raw materials or other local country costs of operations. The Company currently has contracts denominated in the Hong Kong dollar, Thai Baht, British Pound and Philippine peso. Future contracts may be denominated in the currency of other countries. The Company maintains cash, short-term debt (based on floating interest rates), accounts receivable, and accounts payable in several currencies. The functional currencies in which those accounts are maintained match the functional currencies of construction contracts in process. Accounts are also maintained in United States dollars in certain countries in which the Company operates. The following table shows the January 31, 2001, United States dollar translated balances of selected non-US dollar denominated current accounts by the currency in which they are maintained:

Materials and services to perform project contracts are procured globally. Aluminum extrusion is typically the largest material cost and is generally denominated in United States dollars. Glass purchases are generally denominated in United States dollars unless sourced locally in a foreign locale. The expenses associated with erection services are generally denominated in local currency. To the extent that foreign currencies weaken against the United States dollar, the Company will experience translation gains or losses due to the revaluation of accounts payable, accounts receivable and other asset and liability accounts. The Company generally attempts to contract to secure compensation for devaluation of local currencies relative to the United States dollar. In these instances, although the Company may incur translation losses, the Company seeks to offset such losses by increases in the amount of local currency payable to the Company under contract so as to approximate the original United States dollar equivalent value of the contract. There can be no assurance that the Company will be successful in negotiating contracts with terms that maintain a United States dollar equivalency. As of January 31, 2001 the Company's backlog of non-US dollar based contracts totaled approximately $29.9 million. There are no contract provisions to ensure compensation for devaluation of local currency relative to the United States dollar. Exchange rate fluctuations in local currency denominated contracts that do not have a United States dollar equivalency, and in exchange rates in general, could have a material adverse effect on the Company's financial position, results of operations, and cash flows. 11 FLUCTUATING QUARTERLY RESULTS OF OPERATIONS. The Company has experienced, and in the future is expected to continue to experience, substantial variations in its results of operations because of a number of factors, many of which are outside the Company's control. In particular, the Company's operating results may vary because of downturns in one or more segments of the building construction industry, changes in economic conditions, the Company's failure to obtain, or delays in awards of, major projects, the cancellation of major projects, changes in construction schedules for major projects or the Company's failure to timely replace projects that have been completed or are nearing completion. Any of these factors could result in the periodic inefficient or underutilization of the Company's resources and could cause the Company's operating results to fluctuate significantly from period to period, including on a quarterly basis. FIXED PRICE CONTRACTS. Of the Company's $94.9 million backlog at January 31, 2001, most consisted of projects being performed on a fixed price basis. In bidding on projects, the Company estimates its costs, including projected increases in costs of labor, material and services. Despite these estimates, costs and gross profit realized on a fixed price contract may vary from estimated amounts because of unforeseen conditions or changes in job conditions, variations in labor and equipment productivity over the terms of contracts, higher than expected increases in labor or material costs and other factors. These variations could have a material adverse effect on the Company's business, financial condition and results of operations for any period. VARIATIONS IN BACKLOG; DEPENDENCE ON LARGE CONTRACTS. The Company's backlog can be significantly affected by the receipt, or loss, of individual contracts. For example, approximately $70.8 million, representing 74.6% of the company's backlog at January 31, 20001 is attributable to four contracts. In the event one or more large contracts were terminated or their scope reduced, the Company's backlog could decrease substantially. The Company's future business and results of operations may be adversely affected if it is unable to replace significant contracts when lost or completed, or if it otherwise fails to maintain a sufficient level of backlog. See "Management's Discussion and Analysis of Financial Conditions and Results of Operations". DEPENDENCE ON CONSTRUCTION INDUSTRY. The Company earns virtually all of its revenues in the building construction industry, which is subject to local, regional and national economic cycles. The Company's revenues and cash flows depend to a significant degree on major construction projects. These projects maybe adversely affected by general or specific economic conditions. If construction activity declines significantly in the Company's principal markets, the Company's business, financial condition and results of operations would be adversely affected. CAPACITY CONSTRAINTS; DEPENDENCE ON SUBCONTRACTORS. The Company routinely relies on subcontractors to perform a significant portion of its fabrication, erection and project detailing to fulfill projects that the Company cannot fulfill in-house due to capacity constraints or that are in markets in which the Company has not established a strong local presence. With respect to these projects, the Company's success depends on its ability to retain and successfully manage these subcontractors. Any difficulty in attracting and retaining qualified subcontractors on terms and conditions favorable to the Company could have an adverse effect on the Company's ability to complete these projects in a timely and cost effective manner. UNION CONTRACTORS. The Company currently is a party to a number of collective bargaining agreements with various unions representing some of the company's fabrication and erection employees. These contracts expire or are subject to expiration at various times in the future. The inability of the Company to renew such contracts could result in work stoppages and other labor disturbances, which could disrupt the Company's business and adversely affect the Company's results of operations. REVENUE RECOGNITION ESTIMATES. The Company recognizes revenues using the percentage of completion accounting method. Under this method, revenues are recognized based on the ratio that costs incurred to date bear to the total estimated costs to complete the project. Estimated losses on contracts are recognized in full when the Company determines that a loss will be incurred. The Company frequently reviews and revises revenues and total cost estimates as work progresses on a contract and as contracts are modified. Accordingly, revenue adjustments based upon the revised completion percentage are reflected in the period that estimates are revised. Although revenue estimates are based upon management assumptions supported by historical experience, these estimates could vary materially from actual results. To the extent percentage of completion adjustments reduce previously reported revenues, the Company would recognize a charge against operating results, which could have a material adverse effect on the Company's results of operations for the applicable period. COMPETITION. Many small and various large companies offer fabrication, erection and related services that compete with those provided by the Company. Local and regional companies offer competition in one or more of the Company's geographic markets or product segments. Out of state or international companies may provide competition in any market. The Company competes for every project it obtains. Although the company believes customers consider, among other things, the availability and technical capabilities of equipment and personnel, efficiency, safety record and reputation, price competition usually is the primary factor in determining which qualified contractor is awarded a contract. Competition may result in pressure on pricing and operation margins, and the effects of competitive pressure in the industry could continue indefinitely. Some of the Company's competitors may have greater capital and other resources than the Company and are well established in their respective markets. There can be no assurance that the Company's competitors will not substantially increase their commitment of resources devoted to competing aggressively with the Company or that the Company will be able to compete profitably with its competitors. SUBSTANTIAL LIQUIDITY REQUIREMENTS. The Company's operations require significant amounts of working capital to procure materials for contracts to be performed over relatively long periods, and for purchases and modifications of heavy-duty and specialized fabrication equipment. In addition, the Company's contract arrangements with customers sometimes require the Company to provide payment and performance bonds to partially secure the Company's obligations under its contracts, which may require the Company to incur significant expenditures prior to receipt of payments. Furthermore, the Company's customers often will retain a portion of amounts otherwise payable to the Company during the course of a project as a guarantee of completion of that project. To the extent the Company is unable to receive progress payments in the early stages of a project, the Company's cash flow could be reduced, which could have a material adverse effect on the Company's business, financial condition and results of operations. DEPENDENCE UPON KEY PERSONNEL. The Company's success depends on the continued services of the Company's senior management and key employees as well as the Company's ability to attract additional members to its management team with experience in the steel fabrication and erection industry. The unexpected loss of the services of any of the Company's management of other key personnel, or its inability to attract new management when necessary, could have a material adverse affect upon the Company. GOVERNMENTAL REGULATION. Many aspects of the Company's operations are subject to governmental regulations in the United States and in other countries in which the Company operates, including regulations relating to occupational health and workplace safety, principally the Occupational Safety and Health Act and regulations thereunder. In addition, the Company is subject to licensure and holds or has applied for licenses in each of the states in the United States in which it operates and in certain local jurisdictions within such states. Although the Company believes that it is in material compliance with applicable laws and permitting requirements, there can be no assurance that it will be able to maintain this status. Further, the Company cannot determine to what extent future operations and earnings of the Company may be affected by new legislation, new regulations or changes in or new interpretations of existing regulations. POLITICAL UNCERTAINTIES. The Company operates in several countries, primarily in North America, Asia and Europe. Economic development in countries in which the Company operates may be limited by the imposition of measures intended to control economic conditions and the inadequate development of an infrastructure to support manufacturing and large-scale construction projects. Changes in governmental policies as well as general economic conditions including interest rates or rates of inflation could have a material adverse affect on the Company's financial position, results of operations, and cash flows. ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As of January 31, 2001 and October 31, 2000, the Company had no holdings of commodity-based instruments, long-term debt instruments, forward contracts, futures contracts, firmly committed foreign sales contracts, interest rate swaps, currency swaps, or other items in the nature of derivative financial instruments. The Company maintains cash, short-term debt (based on floating interest rates), accounts receivable, and accounts payable in several currencies. For a discussion of foreign exchange risks, see "Factors That May Affect Future Results" in Management's Discussion and Analysis of Financial Conditions and Results of Operations, in Item 2 of this report. 12 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS None (b) REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended January 31, 2001. 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, on the 19th day of March, 2001. FLOUR CITY INTERNATIONAL, INC. /s/ EDWARD M. BOYLE, III ------------------------------------------ Edward M. Boyle, III President /s/ JOHNSON K. FONG ------------------------------------- Johnson K. Fong Chief Financial Officer 13

FLOUR CITY INTERNATIONAL INC 10-Q