SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended MARCH 31, 1995. Commission File Number 0-5214
Peerless Mfg. Co.
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(Exact name of registrant as specified in its charter)
Texas 75-0724417
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
2819 Walnut Hill Lane Dallas, Texas 75229
P.O. Box 540667 Dallas, Texas 75354
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 214 357-6181
None
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Former name, former address and former fiscal year, if changed since
last report.
Indicate by a 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 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
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by
this report.
Class Outstanding at March 31, 1995
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Common stock, $1.00 par value 1,446,742 Shares
PEERLESS MFG. CO.
INDEX
Page Number
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Part I: Financial Information
Condensed Consolidated Balance Sheets for the
periods ended March 31, 1995 and June 30, 1994. 3
Condensed Consolidated Statements of Earnings
for the three and nine months ended March 31,
1995 and 1994. 4
Condensed Consolidated Statements of Cash Flows for
the nine months ended March 31, 1995 and 1994. 5
Notes to the Condensed Consolidated Financial
Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 & 8
Part II: Other Information 9
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PEERLESS MFG. CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, JUNE 30,
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1995 1994
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(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $900,683 $633,194
Short term investments 2,962,833 636,985
Accounts receivable 4,882,607 8,798,617
Inventories
Raw materials 835,251 823,933
Work in process 1,864,613 3,688,690
Finished goods 200,888 126,333
Refundable income taxes 0 0
Other 150,239 443,050
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Total current assets 11,797,114 15,150,802
Property,plant and equipment-net 1,272,452 1,227,761
Property held for investment-net 952,849 987,263
Deferred income taxes 235,210 235,210
Other assets 335,719 421,430
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$14,593,344 $18,022,466
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LIABILITIES
Current liabilities
Notes payable $0 $260,400
Accounts payable-trade 1,539,198 2,679,907
Advance payments from customers 310,716 2,225,225
Commissions payable 430,687 502,531
Accrued liabilities 725,919 875,331
Federal income tax payable 73,480 323,691
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Total current liabilities 3,080,000 6,867,085
Deferred income taxes 78,991 78,991
Stockholders' equity
Common stock-authorized 4,000,000
shares of $1 par value;issued 1,446,742 shares in
Fiscal 1995 and 1,436,742 shares in Fiscal 1994 1,446,742 1,436,742
Additional paid-in capital 2,488,370 2,383,870
Unamortized value of restricted stock issue (128,578) (49,841)
Cumulative foreign currency translation adjustment (28,439) (76,063)
Retained earnings 7,656,258 7,381,682
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11,434,353 11,076,390
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$14,593,344 $18,022,466
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<FN>
The accompanying notes are an integral part of these statements.
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PEERLESS MFG. CO.
CONDENSED STATEMENTS OF EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
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March 31, March 31,
-------------------------- --------------------------
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Net sales $5,997,882 $7,759,951 $23,479,281 $16,455,213
Cost of goods sold 3,977,265 5,011,682 15,530,858 10,686,709
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Gross profit 2,020,617 2,748,269 7,948,423 5,768,504
Operating expenses
Marketing and engineering 1,754,629 1,594,324 5,227,918 4,297,535
General and administrative 465,749 476,111 1,295,453 1,287,036
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Operating income (199,761) 677,834 1,425,052 183,933
Other income(expense)
Interest 35,335 (22,135) 61,300 14,007
Sundry (57,081) (8,331) (146,886) 281
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(21,746) (30,466) (85,586) 14,288
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Earnings from operations
before Federal income tax (221,507) 647,368 1,339,466 198,221
Federal income tax
Current (23,195) 251,896 524,606 168,092
Deferred 0 0 0 0
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(23,195) 251,896 524,606 168,092
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Net earnings (198,312) 395,472 814,860 30,129
========== ========== ========== ==========
Net earnings per common share ($0.14) $0.27 $0.56 $0.02
========== ========== ========== ==========
Weighted average number of common
shares outstanding 1,446,243 1,436,217 1,446,243 1,436,217
========== ========== ========== ==========
Cash dividend per common share $0.125 $0.125 $0.375 $0.375
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<FN>
The accompanying notes are an integral part of these statements.
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PEERLESS MFG. CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the nine months ended
March 31,
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1995 1994
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<S> <C> <C>
Cash flows from operating activities
Net earnings from operating activities $814,860 $30,129
Adjustments to reconcile net earnings to net
cash provided (used) by operating activities
Depreciation and amortization 295,158 279,001
Other 35,762 69,354
Changes in assets and liabilities
(Increase)decrease in
Accounts receivable 3,993,693 (986,591)
Inventories 1,738,204 (3,175,302)
Other current assets 80,811 (101,280)
Other assets (2,938) 520
Increase(decrease) in
Accounts payable (1,140,712) 830,291
Commissions payable (71,844) (183,090)
Advance payments from customers (1,914,509) 2,388,389
Income taxes payable (250,211) 122,131
Accrued liabilities (149,412) (237,800)
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2,614,002 (994,377)
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Cash provided (used) by
continuing operations 3,428,862 (964,248)
Cash flows from investing activities
Net sales (purchases)
of short-term investments (2,100,644) 787,336
Acquisition of equipment (294,470) (96,020)
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Net cash (used in) provided by
investing activities (2,395,114) 691,316
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Cash flows from financing activities
Dividends paid (540,279) (538,498)
Net borrowing (260,400) 1,510,400
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Net cash used in financing activities (800,679) 971,902
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Effect of exchange rate on cash 47,624 (23,827)
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Net increase (decrease) in cash
and cash equivalents 280,693 675,143
Cash and cash equivalents at beginning of period 619,990 697,439
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Cash and cash equivalents at end period $900,683 $1,372,582
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PEERLESS MFG. CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited consoli-
dated financial statements contain all adjustments, consisting of
only the normal recurring accruals, necessary to present fairly its
financial position as of March 31, 1995 and 1994 and the results
of operations and cash flows for the nine months then ended.
2. The results for the interim periods are not necessarily indicative of
the results to be expected for the full year. Peerless Mfg. Co. designs
and manufactures pressure vessels to customer specifications, sales of
which are obtained by competitive bids and may result in material sales
and profitability increases or decreases when comparing interim periods
between years. The Company recognizes sales of custom-contracted pro-
ducts at the completion of the manufacturing process, which normally is
less than one year.
3. The adjusted backlog of unshipped orders and letters of intent at
March 31, 1995, was approximately $15,100,000 as compared to a
March 31, 1994 backlog of $16,960,000. Of the $15,100,000 backlog
at March 31, 1995, approximately 70% is scheduled to be shipped
in the current fiscal year.
4. The Company has a formal agreement with a bank for a $5,000,000
continuing line of credit, renewable annually. Loans under this
agreement represent the Company's primary short-term borrowing during
the year and bear interest at the prevailing prime rate. Under the
terms of this agreement, the Company is required to pay 1/4 of 1% per
annum on the unused portion of the facility. As of March 31, 1995
the Company had no loans outstanding, with $1,510,000 being outstanding
at March 31, 1994.
5. The Company consolidates the accounts of its wholly-owned foreign
subsidiary, Peerless International N.V. and its wholly-owned foreign
subsidiary, Peerless Europe B.V. and its wholly-owned foreign subsidiary
Peerless Europe Limited. All significant intercompany accounts and
transactions have been eliminated in consolidation.
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PEERLESS MFG. CO.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
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As a general policy, the Company maintains corporate liquidity at a
level adequate to support existing operations and planned internal
growth, and to allow continued operations through periods of
unanticipated adversity.
Cash and cash equivalents increased $280,693 from June 30, 1994.
Company operations provided $814,860 of cash during the nine months.
Offsetting the cash provided by ongoing operations were fixed asset
acquisitions amounting to $294,470, the payment of short-term debt in
the amount of $260,400, payment of dividends of $540,279, and
acquisition of additional short-term investments of $2,100,644.
As indicated, operations provided $814,860 of cash in the nine months
ended March 31, 1995. Primarily the funds provided by operations
during the current nine month period resulted from a decrease in
Accounts Receivable (net of a decrease in Customer Advances) which
amounted to $2,079,184 and a decrease in Inventories of $1,738,204.
These changes reflect the completion, shipment, and subsequent
collection of two large customer orders. A decrease in Accounts
Payable during the nine months in the amount of $1,140,712 partially
offset the funds provided from the changes in Accounts Receivable and
Inventories.
The Company has historically financed and continues to finance plant
expansion, equipment purchases, acquisitions and working capital
requirements primarily through the retention of earnings, which is
reflected by the absence of long-term debt. In addition to retained
earnings, the Company has from time to time used a short-term bank
credit line of $5,000,000 to supplement working capital. The Company
has no material commitments for capital expenditures other than its
established program of maintaining existing plant and equipment.
CHANGES-3RD QUARTER AND NINE MONTHS of FISCAL 1995
----------------------------------------------------
RESULTS OF 3rd Qtr. Nine Months
OPERATIONS 1994-1995 1994-1995
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Sales ($1,762,069) $7,024,068
-22.71% +42.69%
The decrease of current quarter sales when compared to the previous
year is the result of a failure to complete approximately $2,000,000
of orders which were scheduled to ship during the quarter. These
orders are now rescheduled to ship in the Company's fourth quarter.
Increased sales for the nine months of the current fiscal year was
primarily due to two large shipments in the first quarter totaling
approximately $5,000,000.
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RESULTS OF
OPERATIONS
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Gross Profit Margin ($727,652) $2,179,919
-26.48% +37.79%
Gross margin as a percent of sales was 33.7% and 33.9% for the
quarter and nine months of FY 1995 vs. 35.4% and 35.1% for the same
periods of FY 1994. The decline in gross margin percentages in the
current fiscal year was primarily due to there being a better product
mix of higher margin sales for the three and nine months of fiscal
1994 when compared to the same periods in fiscal 1995.
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Operating Expenses $149,943 $938,800
+7.24% +16.81%
The year to year increase in operating expenses is primarily the
result of a rise of $554,000 in commission cost which is directly
attributable to the increase in sales volume, and to an increase of
$238,000 in the operating costs of the Company's European subsidiaries
and $140,000 increase in SCR engineering expenses which reflects the
significant increase in the level of activities currently being
experienced in those operations.
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Other Income(Loss) $8,720 ($99,874)
Interest income increased for the quarter by $57,000 when compared
to the prior year due to a reduction in accounts receivable and the
purchase of short-term investments. A net loss of approximately
$55,400 from the Company's rental activities was the result of
maintenance work performed on certain rental properties in preparation
for a new lease from previously idle property. Also contributing to
the change in other income or (loss) was a provision for profit
sharing in the amount of $25,000 accrued during the nine months of
fiscal 1995.
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Net Earnings ($593,784) $784,731
The decrease in net earnings for the three months ended March 31,
1995 when compared to the three months of the preceeding fiscal year
is directly attributable to the decline in sales of $1,762,069. The
improvement in net earnings for the nine months of fiscal 1995 is
also the result of significantly improved sales volume when compared
to the nine months of fiscal 1994.
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PEERLESS MFG. CO.
PART II
OTHER INFORMATION
Item 1 --Legal proceedings
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Reference is made to Form 10-K Annual Report, Item 3, Page 9,
Legal proceedings for the fiscal year ended June 30, 1994. For
the three months ended March 31, 1995 there were no new
proceedings filed against the Company.
Item 9 --Exhibits and Reports --Form 8-K
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There were no reports on Form 8-K for the three months ended
March 31, 1995.
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 thereto duly authorized.
PEERLESS MFG. CO.-- Registrant
Dated: May 11, 1995
_____________________________________
Sherrill Stone
Chairman, President and Chief Executive
Officer
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