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 September 30, 1995. Commission File Number 0-5214
Peerless Mfg. Co.
________________________________________________________________________
(Exact name of registrant as specified in its charter)
Texas 75-0724417
________________________________________________________________________
(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
________________________________________________________________________
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (214) 357-6181
None
________________________________________________________________________
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 preceeding 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
___ ___
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 September 30, 1995
_____________________________ _________________________________
Common stock, $1.00 par value 1,446,742 Shares
PEERLESS MFG. CO.
INDEX
Page
Number
Part I: Financial Information _________
Condensed Consolidated Balance Sheets for the
periods ended September 30, 1995 and June 30, 1995 3
Condensed Consolidated Statements of Earnings
for the three months ended September 30, 1995
and 1994 4
Condensed Consolidated Statement of Cash Flows for
the three months ended September 30, 1995 and 1994 5
Notes to the Condensed Consolidated Financial 6
Statements
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
<C> <C>
SEPTEMBER 30, JUNE 30,
_____________ _____________
1995 1995
_____________ _____________
<S>
ASSETS (UNAUDITED) (AUDITED)
Current assets:
Cash and cash equivalents $714,428 $961,747
Short term investments 1,364,388 821,968
Accounts receivable 7,299,154 9,135,623
Inventories:
Raw materials 856,281 988,275
Work in process 3,346,756 1,590,050
Finished goods 223,539 238,449
Deferred income taxes 232,554 232,554
Other 508,199 334,876
___________ ___________
Total current assets 14,545,299 14,303,542
Property,plant and equipment-net 1,238,084 1,282,275
Property held for investment-net 937,724 952,823
Other assets 360,576 617,415
___________ ___________
$17,081,683 $17,156,055
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $0 $0
Accounts payable-trade 3,666,132 3,096,025
Advance payments from customers 981,029 600,957
Commissions payable 415,220 509,512
Accrued liabilities 986,164 1,065,878
___________ ___________
Total current liabilities 6,048,545 5,272,372
Deferred income taxes 97,704 97,704
Stockholders' equity:
Common stock-authorized 4,000,000 shares of $1 par
value; issued and outstanding, 1,446,742 shares 1,446,742 1,446,742
Additional paid-in capital 2,493,428 2,493,428
Unamortized value of restricted stock issue (81,268) (97,107)
Cumulative foreign currency translation adjustment 44,650 56,110
Retained earnings 7,031,882 7,886,806
___________ ___________
10,935,434 11,785,979
___________ ___________
$17,081,683 $17,156,055
=========== ===========
<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
__________________________
September 30,
__________________________
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1995 1994
__________ ___________
<S>
Net sales $6,100,462 $10,169,140
Cost of goods sold 4,753,208 6,344,001
__________ __________
Gross profit 1,347,254 3,825,139
Operating expenses
Marketing and engineering 1,782,422 1,778,921
General and administrative 306,967 416,778
__________ __________
Operating income(loss) (742,135) 1,629,440
Other income(expense)
Interest 14,581 1,138
Sundry 5,410 (60,311)
__________ __________
19,991 (59,173)
__________ __________
Earnings(loss) from operations
before Federal income tax (722,144) 1,570,267
Federal income tax
Current (228,910) 530,187
Deferred 0 0
__________ __________
(228,910) 530,187
__________ __________
Net earnings(loss) (493,234) 1,040,080
========== ==========
Net earnings per common share ($0.34) $0.72
========== ==========
Weighted average number of common
shares outstanding 1,446,742 1,437,192
========== ==========
Cash dividend per common share $0.125 $0.125
========== ==========
<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 three months ended
September 30,
___________________________
<C> <C>
1995 1994
<S> __________ ___________
Cash flows from operating activities:
Net earnings(loss) from operating activities ($493,234) $1,040,080
Adjustments to reconcile net earnings to net
cash provided (used) by operating activities:
Depreciation and amortization 82,270 92,992
Other 15,839 8,551
Changes in assets and liabilities
(Increase) decrease in:
Accounts receivable 1,836,469 817,997
Inventories (1,609,802) 1,980,444
Other current assets (173,323) 32,785
Other assets 256,839 (2,640)
Increase (decrease) in:
Accounts payable 570,107 (353,100)
Commissions payable (94,292) 128,476
Advance payments from customers 380,072 (1,877,331)
Income taxes payable 0 200,614
Accrued liabilities (260,557) (28,347)
___________ ___________
1,003,622 1,000,441
___________ ___________
Cash provided by continuing operations 510,388 2,040,521
Cash flows from investing activities:
Net purchases of short term investments (542,420) (942,394)
Purchase of equipment net of disposals (22,984) (82,321)
___________ ___________
Net cash used in investing activities (565,404) (1,024,715)
Cash flows from financing activities:
Dividends paid (180,843) (179,593)
Net borrowing 0 (260,400)
___________ ___________
Net cash used in financing activities (180,843) (439,993)
Effect of exchange rate on cash (11,460) 20,043
___________ ___________
Net increase (decrease) in cash
and cash equivalents (247,319) 595,856
Cash and cash equivalents at beginning of period 961,747 619,990
___________ ___________
Cash and cash equivalents at end period $714,428 $1,215,846
=========== ===========
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PEERLESS MFG. CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments,
consisting of only the normal recurring accruals, necessary
to present fairly its financial position as of September 30,
1995 and 1994 and the results of operations and cash flows
for the three 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 products 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 September 30, 1995 was approximately $19,100,000
as compared to a September 30, 1994 backlog of $16,339,000.
Of the $19,100,000 backlog at September 30, 1995,
approximately 95% 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.
Under the terms of this agreement, the loans bear interest
at the prevailing prime rate and the Company is required to
pay 1/4 of 1% per annum on the unused portion of the
facility. As of September 30, 1995 and 1994, the Company
had no loans outstanding.
5. The Company consolidates the accounts of its wholly-owned
foreign subsidiaries, Peerless Europe Limited, Peerless
International N.V. and its wholly-owned foreign subsidiary,
Peerless Europe B.V. 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
- -------------------------------
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 equivalents decreased $247,319 from June 30, 1995.
Company operations provided $510,388 of cash during the three
months ended September 30, 1995. Offsetting the cash provided by
ongoing operations were fixed asset acquisitions amounting to
$22,984, payment of dividends of $180,843, and acquisition of
additional short-term investments of $542,420.
As indicated, operations provided $510,388 of cash in the three
months ended September 30, 1995. Primarily the funds provided by
operations during the current three month period resulted from an
increase in Customer Advances on projects of $380,072, an
increase in Accounts Payable of $570,107, collections in Accounts
Receivable decreasing the balance by $1,836,469, offset primarily
by an increase in Inventory for new projects of $1,609,802, and a
Net Loss from operations of $493,234.
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 - First Quarter of Fiscal 1996
--------------------------------------
Results of 1st Qtr.
Operations 1995-1996 @@
_____________________ ____________________________________________________
Sales ($4,068,678)
(40.0%)
The decrease of current quarter sales compared to the previous
year is the result of two large customer orders completed and
shipped in first quarter of fiscal 1995, and of delays in
shipping several significant projects in first quarter of fiscal
1996. These later projects are not lost to the Company, but for
various reasons the sales could not be recorded in the first
quarter.
7 of 9
Results of 1st Qtr.
Operations 1995-1996
_____________________ _____________________________________________________
Gross Profit Margin ($2,477,885)
(64.8%)
Gross margin as a percent of sales was 22.1% in fiscal 1996 vs.
37.6% in fiscal 1995. The decline in gross margin percentages in
the current quarter was primarily due to the low profit margin
available on the mix of products shipped in the current fiscal
year compared to higher margins on products shipped in the same
period in fiscal 1995.
_____________________ ____________________________________________________
Operating Expenses ($106,310)
(4.8%)
The year to year decrease in operating expenses is primarily
attributable to a decrease in agent commissions of approximately
$279,000 and a decrease in engineering expense of approximately
$15,000 partially offset by an increase in sales expense of
$192,000.
_____________________ ______________________________________________________
Other Income(Expense) $79,164
Interest income increased for the quarter by approximately
$13,400 when compared to the prior year. Sundry income increased
approximately $65,000 related primarily to income associated with
certain rental properties and the absence of a profit sharing
accrual in fiscal 1996 vs. fiscal 1995.
____________________ ______________________________________________________
Net Earnings (Loss) ($1,533,314)
The decrease in net earnings for the three months ended September
30, 1995, when compared to the preceding fiscal year, is directly
attributable to the decline in sales of $4,068,678.
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PEERLESS MFG. CO.
PART II
OTHER INFORMATION
Item 1 -- Legal proceedings
- ---------------------------
Reference is made to Form 10-K Annual Report, Item 3, Page
6, Legal Proceedings for the fiscal year ended June 30,
1995. For the three months ended September 30, 1995 there
were no new proceedings filed against the Company.
Item 9 -- Exhibits and Reports -- Form 8-K
- ------------------------------------------
There were no reports on Form 8-K for the three months ended
September 30, 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: November 2, 1995
Sherrill Stone
Chairman, President and
Chief Executive Officer
Kent J. Van Houten
Secretary - Treasurer and
Chief Financial Officer
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