SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
(Mark One)
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
____ SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1999
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 0-5214
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 preceding 12 months (or for shorter periods 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.
Class Outstanding at November 12, 1999
Common stock, $1.00 par value 1,456,492 Shares
<PAGE>
PEERLESS MFG. CO.
INDEX
Page
Number
------
Part I: Financial Information
Item 1: Consolidated Financial Statements
Condensed Consolidated Balance Sheets for the
periods ended September 30, 1999 and June 30, 1999. 3
Condensed Consolidated Statements of Earnings for
for the three months ended September 30, 1999 and 1998. 4
Condensed Consolidated Statements of Cash Flows for
the three months ended September 30, 1999 and 1998. 5
Notes to the Condensed Consolidated Financial Statements. 6 - 7
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations. 8 - 11
Part II: Other Information
Legal Proceedings 12
Exhibits and Reports 12 - 13
Signatures 14
2 of 14
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
PEERLESS MFG. CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30, June 30,
1999 1999
---------- ----------
<S> <C> <C>
Assets: (UNAUDITED) (AUDITED)
Current assets:
Cash and cash equivalents $ 429,551 $ 210,866
Short term investments 273,343 273,343
Accounts receivable-principally trade-net
of allowance for doubtful accounts of
$714,387 at September 30, 1999 and
$685,330 at June 30, 1999 13,145,145 12,195,037
Inventories:
Raw materials 769,975 961,450
Work in process 1,441,236 2,522,182
Finished goods 734,635 247,338
Costs and earnings in excess of billings
on uncompleted contracts 3,596,932 3,268,181
Other 1,663,645 777,635
---------- ----------
Total current assets 22,054,462 20,456,032
Property, plant and equipment-at Cost,
less accumulated depreciation 2,028,285 2,102,546
Property held for investment-at Cost,
less accumulated depreciation 68,900 68,900
Deferred income taxes 59,613 59,613
Other assets 868,548 791,681
---------- ----------
$25,079,808 $23,478,772
========== ==========
<PAGE>
Liabilities and Stockholders' Equity:
Current liabilities:
Notes payable $ 600,000 $ 0
Accounts payable-trade 6,673,422 5,626,058
Billings in excess of costs and
earnings on uncompleted contracts 508,263 572,970
Commissions payable 1,428,801 1,204,584
Accrued liabilities:
Compensation 814,508 1,188,165
Warranty 190,808 313,773
Deferred income taxes 42,736 42,736
Other 381,044 38,669
---------- ----------
Total current liabilities 10,639,582 8,986,955
Stockholders' equity:
Common stock-authorized 10,000,000 shares
of $1 par value; issued and outstanding,
1,456,492 shares at September 30, 1999
and 1,452,492 shares at June 30, 1999 1,456,492 1,452,492
Additional paid-in capital 2,573,295 2,539,951
Unamortized value of restricted stock grants (3,171) (4,719)
Accumulated other comprehensive income(loss) (117,272) (103,824)
Retained earnings 10,530,882 10,607,917
---------- ----------
14,440,226 14,491,817
---------- ----------
$25,079,808 $23,478,772
========== ==========
The accompanying notes are an integral part of these statements.
</TABLE>
3 of 14
<PAGE>
<TABLE>
PEERLESS MFG. CO.
CONDENSED STATEMENTS OF EARNINGS
(UNAUDITED)
Three Months Ended
September 30,
---------------------------
1999 1998
---------- ---------
<S> <C> <C>
Revenues $12,307,071 $9,369,690
Cost of goods sold 8,664,242 6,426,571
---------- ---------
Gross profit 3,642,829 2,943,119
Operating expenses 3,260,580 2,591,155
---------- ---------
Operating income 382,249 351,964
Other income(expense)
Interest income 1,577 6,994
Interest expense (8,940) (17,944)
Foreign exchange gains(losses) 77,475 (27,504)
Other, net (6,845) (2,185)
---------- ---------
63,267 (40,639)
---------- ---------
Earnings from operations
before Federal income tax 445,516 311,325
Federal income tax
Current 159,668 104,704
Deferred (741) 6,868
---------- ---------
158,927 111,572
---------- ---------
Net earnings 286,589 199,753
========== =========
Basic and diluted earnings per share $0.20 $0.14
Basic weighted average shares 1,452,796 1,457,492
Dilutive options 8,689 2,981
---------- ---------
Adjusted weighted average shares 1,461,485 1,460,473
========== =========
Cash dividend per common share $0.125 $0.125
========== =========
The accompanying notes are an integral part of these statements.
</TABLE>
4 of 14
<PAGE>
<TABLE>
PEERLESS MFG. CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the three months ended
September 30,
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 286,589 $ 199,753
Adjustments to reconcile earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 99,460 94,707
Other 1,548 (5,281)
Changes in operating assets and liabilities
Accounts receivable (950,108) 3,861,477
Inventories 785,124 40,909
Cost and earnings in excess of billings
on uncompleted contracts (328,751) (177,316)
Other current assets (886,010) 5,051
Other assets (84,074) (87,979)
Accounts payable 1,047,364 (2,227,528)
Billings in excess of costs and earnings
on uncompleted contracts (64,707) 101,254
Commissions payable 224,217 (106,476)
Accrued liabilities (336,309) (807,431)
--------- ---------
(492,246) 691,387
--------- ---------
Net cash provided by (used in) operating activities (205,657) 891,140
Cash flows from investing activities:
Net purchases of property and equipment (18,683) (22,619)
Cash flows from financing activities:
Net change in short-term borrowings 600,000 (200,000)
Sales of common stock 37,344 0
Dividends paid (181,562) (182,187)
--------- ---------
Net cash provided by (used in) financing activities 455,782 (382,187)
Effect of exchange rate on cash and cash equivalents (12,757) 27,639
--------- ---------
Net increase in cash and cash equivalents 218,685 513,973
Cash and cash equivalents at beginning of period 210,866 428,482
--------- ---------
Cash and cash equivalents at end period $ 429,551 $ 942,455
========= =========
The accompanying notes are an integral part of these statements.
</TABLE>
5 of 14
<PAGE>
PEERLESS MFG. CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements of Peerless
Mfg. Co. and its subsidiaries (the "Company") have been prepared
without audit. In our opinion, the financial statements reflect
all adjustments necessary to present fairly the results of
operations for the three months ended September 30, 1999 and 1998,
the Company's financial position at September 30, 1999, and June
30, 1999, and cash flows for the three months ended September 30,
1999 and 1998. These adjustments are of a normal, recurring
nature which are, in the opinion of management, necessary for a
fair presentation of the financial position and results of
operations for the interim periods.
Certain notes and other information have been condensed or omitted
from the interim financial statements presented in this Quarterly
Report on Form 10-Q. Therefore, these financial statements should
be read in conjunction with our Annual Report Form 10-K, as
amended, for the Fiscal year ended June 30, 1999 and the
consolidated financial statements and notes included in our June
30, 1999, audited financial statements.
2. The results for interim periods are not necessarily indicative of
the results to be expected for the full year. Peerless Mfg. Co.
designs and manufactures custom contracted pressure vessels and
other products 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. We generally recognize sales of custom-
contracted products at the completion of the manufacturing
process, which is normally less than one year. The percentage-of-
completion method is used for long-term contracts.
6 of 14
<PAGE>
3. We have formal agreements with Bank of America N.A., formerly
NationsBank N.A., and Chase Bank of Texas N.A. for $3,500,000 each
for an aggregate of $7,000,000 continuing lines of credit,
renewable annually. Under the terms of these agreements, loans
bear interest at the prevailing prime rate and we are required to
pay 1/4 of 1% per annum on the unused portion of the facility. In
addition, Chase Bank of Texas provides us a LIBOR rate option. As
of September 30, 1999, we had $600,000 outstanding against these
lines of credit. Nothing was outstanding at June 30, 1999.
4. We consolidate the accounts of our wholly-owned foreign
subsidiaries, Peerless Europe Limited and Peerless Europe B.V.
All significant intercompany accounts and transactions have been
eliminated in the consolidation.
5. We identify reportable segments based on management responsibility
within our corporate structure. We have two reportable industry
segments which are set out below:
<TABLE>
Gas/Liquid Catalytic Unallocated Consolidated
Filtration Reduction Corporate
Systems Expenses
---------- --------- ----------- ------------
<S> <C> <C> <C> <C>
First Quarter
2000
-------------
Revenues from
Customers $9,415,000 $2,892,000 - $12,307,000
Segment
profit(loss) $891,000 $642,000 ($1,151,000) $382,000
First Quarter
1999
-------------
Revenues from
Customers $8,985,000 $385,000 - $9,370,000
Segment
profit(loss) $1,273,000 ($53,000) ($868,000) $352,000
</TABLE>
7 of 14
<PAGE>
Item 2. Management's discussion and analysis of financial condition
and results of operations.
PEERLESS MFG. CO.
This report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. Such statements are subject to
inherent risks and uncertainties, some of which cannot be predicted or
quantified. Actual results could differ materially from those
projected in the forward-looking statements as a result of changes in
market conditions, increased competition, global and domestic economic
conditions, or other factors. The following discussion and analysis
should be read in conjunction with the attached consolidated financial
statements and notes thereto, and with the Company's audited financial
statements and notes thereto for the fiscal year ended June 30, 1999.
Capital Resources and Liquidity
As a general policy, corporate liquidity is maintained 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 increased $219,000 from June 30, 1999. Net
earnings of $287,000, increases in short term borrowings of $600,000,
increases in accounts payable of $1,047,000 and commissions payable of
$224,000, and decreases in inventory of $785,000 increased cash flow
for the period. These positive cash flows were offset by increases in
accounts receivable of $950,000; increases in other assets of $970,000
consisting primarily of advances to subcontractors; decreases in
accrued liabilities of $336,000 and dividends paid of $182,000.
We continue 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 our balance sheet. In addition to retained earnings, we have
from time to time used two short-term bank credit lines totaling
$7,000,000 to supplement working capital. We currently have no
material commitments for capital expenditures other than with respect
to our established plant and equipment maintenance program.
8 of 14
<PAGE>
REVENUE: Revenue increased 31% from $9,370,000 for the three months
ended September 30, 1998 to $12,307,000 for the three months ended
September 30, 1999. The increase in revenue was attributed primarily
to the increased sales of Catalytic Reduction Systems which increased
from $385,000 in the first quarter of Fiscal year 1999 to $2,892,000 in
the first quarter of Fiscal year 2000.
The backlog of uncompleted orders and letters of intent at September
30, 1999 was approximately $25,400,000 as compared to a September 30,
1998 backlog of $21,300,000. Of the $25,400,000 backlog at September
30, 1999, approximately 80% is scheduled to be completed in the current
fiscal year.
GROSS PROFIT: Gross profit increased 24% from $2,943,000 for the three
months ended September 30,1998 to $3,643,000 for the three months ended
September 30, 1999. The increased gross profit is primarily
attributable to the greater revenue from SCR product sales for the
three months ended September 30,1999. Gross profit as a percent of
revenue decreased from 31.4% for the first quarter of Fiscal year 1999
to 29.6% for the first quarter of Fiscal year 2000. The gross profit
percentage declined because a subcontractor for two major contracts
filed bankruptcy and increased our costs to complete the contracts.
OPERATING EXPENSES: Operating expenses increased 26% from $2,591,000
for the three months ended September 30, 1998 to $3,261,000 for the
three months ended September 30,1999. The increase in operating
expenses is due primarily to the increased volume of contracts
processed. Operating expenses decreased as a percent of revenue from
27.6% for the first quarter of Fiscal year 1999 to 26.5% for the first
quarter of Fiscal year 2000.
OTHER INCOME/(EXPENSE): We recognized net other income of
approximately $63,000 for the three months ended September 30, 1999
compared to net other expenses of approximately $40,000 for the three
months ended September 30, 1998. Foreign exchange gains of
approximately $105,000 were the primary contributor to other income.
9 of 14
<PAGE>
YEAR 2000 COMPLIANCE:
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields
containing a two-digit year is commonly referred to as "the Year 2000
Compliance issue". As the Year 2000 approaches, such systems may be
unable to accurately process certain date-based information.
As the case with most other companies using computers in their
operations, we are in the process of addressing the Year 2000
Compliance issue. We began converting our information systems in 1996
through the purchase of a new information system that is already Year
2000 compliant. We have incurred and expended approximately $150,000
through September 30, 1999 for remediation costs associated with our
Year 2000 compliance activities to date and we expect to incur and
expense an additional $20,000 in the future to remediate our
information systems and to write off unamortized costs for systems
replaced. In addition to these remediation costs expended, we have
also capitalized approximately $340,000 of capital expenditures through
September 30, 1999 for the replacement and upgrading of purchased
software and hardware for our existing systems. Our new system was
implemented during the quarter ending March 31, 1999, and was
successfully tested. Time sensitive schedules, purchase orders and
invoices were successfully generated.
We purchase computer hardware and software products from third parties
for incorporation into our products and these third-party products may
be affected by the Year 2000 problem. There can be no guarantee; that
these products or the systems of other companies on which our systems
and operations rely will be timely converted or that the failure of
these systems would not have an adverse effect on our systems. We have
advised our customers inquiring about this issue to contact our vendors
for Year 2000 information. We are in the process of consulting with
such vendors in an effort to ascertain whether they have addressed the
risk of Year 2000 problems in the systems we currently use.
We believe that all Year 2000 remediation efforts for our business will
be completed on time and within budget estimates. Should any critical
service providers, suppliers or customers be unable to achieve timely
compliance, there may be an adverse impact on our operations. Our
current assessment of risks, based on the most reasonable worst case
scenario, is that there will be no significant adverse impact on our
operations or financial performance. We believe that if any disruption
to operations does occur, it will be isolated and/or short-term in
duration.
10 of 14
<PAGE>
INTERNATIONAL MARKETS:
Demand for the Company's products in Southeast Asia has declined as a
result of the current financial situation there. However, recent
economic reports indicate business activity is improving in Southeast
Asia.
SCR Products:
Inquiries for the purchase of SCR environmental protection products
have increased. As previously reported, new SCR opportunities are the
result of the new gas turbine powered electric generating facilities
being built to fill demand for electric power in the U.S. These
projects require clean burning gas which in turn creates the
opportunity to sell the Company's gas cleaning equipment. Coal fired
electric power plants are also adding SCR products to comply with US
Government mandated lower NOx emission levels.
11 of 14
<PAGE>
PEERLESS MFG. CO.
PART II
OTHER INFORMATION
Item 1 -- Legal proceedings
Reference is made to Form 10-K Annual Report, as amended, Item 3,
Page 5, "Legal Proceedings" for the Fiscal year ended June 30,
1999. For the three months ended September 31, 1999 there were no
material developments or new proceedings filed against the
Company.
Item 6 -- Exhibits and Reports -- Form 8-K
(a) EXHIBITS:
References to the Company's SEC File Number 0-05214.
3(a) Articles of Incorporation, as amended to date (filed as
Exhibit 3(a) to our Quarterly Report on Form 10-Q, dated
December 31, 1997, and incorporated herein by reference).
3(b) Bylaws, as amended to date (filed as Exhibit 3(b) to our
Annual Report on Form 10-K, dated June 30, 1997, and
incorporated herein by reference).
10(a) Incentive Compensation Plan effective January 1, 1981, as
amended January 23, 1991 (filed as Exhibit 10(b) to our
Annual Report on Form 10-K, dated June 30, 1991, and
incorporated herein by reference).
10(b) 1985 Restricted Stock Plan for Peerless Mfg. Co., effective
December 13, 1985 (filed as Exhibit 10(b) to our Annual
Report on Form 10-K, dated June 30, 1993, and incorporated
herein by reference).
10(c) 1991 Restricted Stock Plan for Non-Employee Directors of
Peerless Mfg. Co., adopted subject to shareholder approval
May 24, 1991, and approved by shareholders November 20, 1991
(filed as Exhibit 10(e) to our Annual Report on Form 10-K
dated June 30, 1991, and incorporated herein by reference).
12 of 14
<PAGE>
10(d) Employment Agreement, dated as of April 29, 1994, by and
between Peerless Mfg. Co. and Sherrill Stone (filed as
Exhibit 10(d) to our Annual Report on Form 10-K for the
Fiscal year ended June 30, 1994, and incorporated herein by
reference).
10(e) Agreement, dated as of April 29, 1994 by and between Peerless
Mfg. Co. and Sherrill Stone (filed as Exhibit 10(e) to our
Annual Report on Form 10-K dated June 30, 1994 and
incorporated herein by reference).
10(f) Seventh Amended and Restated Loan Agreement, dated as of
December 12, 1998, between Bank of America N.A., formerly
NationsBank of Texas, N.A., and Peerless Mfg. Co. (filed as
Exhibit 10(f) to our Quarterly Report on Form 10-Q, dated
December 31, 1998 and incorporated herein by reference).
10(g) Amended and Restated Loan Agreement, dated as of December 12,
1998, by and between Chase Bank of Texas N.A, and Peerless
Mfg. Co. (Filed as Exhibit 10(g) to our Quarterly Report on
Form 10-Q, dated December 21, 1998 and incorporated herein by
reference).
10(h) Peerless Mfg. Co. 1995 Stock Option and Restricted Stock
Plan, adopted by the Board of Directors December 31, 1995 and
approved by the Shareholders on November 21, 1996 (filed as
Exhibit 10(h) to our Annual Report on Form 10-K dated June
30, 1997 and incorporated herein by reference), as amended by
Amendment No. 1 dated November 11, 1999.*
10(i) Rights Agreement between Peerless Mfg. Co. and ChaseMellon
Shareholder Services, L.L.C., adopted by the Board of
Directors May 21, 1997 (filed as Exhibit 1 to our
Registration Statement on Form 8-A(File No. 0-05214) and
incorporated herein by reference).
10(j) Employment Agreement dated as of July 23, 1999 by and between
Peerless Mfg. Co. and G.D. Cornwell.*
10(k) Agreement dated as of July 23, 1999 by and between Peerless
Mfg. Co. and G.D. Cornwell.*
21 Our Subsidiaries (filed as Exhibit 21 too our Annual Report
on Form 10-K dated June 30, 1999, and incorporated herein by
reference).
27 Financial Data Schedule.*
*Filed herewith
(b) Reports on form 8-K. None.
13 of 14
<PAGE>
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.
Dated: November 12, 1999
/s/ Sherrill Stone /s/ Paul W. Willey
By: Sherrill Stone By: Paul W. Willey
Chairman, President and Chief Financial Officer
Chief Executive Officer
/s/ Kent J. Van Houten
By: Kent J. Van Houten
Controller
Chief Accounting Officer
14 of 14
EXHIBIT 10(h)
AMENDMENT NO. 1 TO THE
PEERLESS MFG. CO.
1995 STOCK OPTION
AND RESTRICTED STOCK PLAN
WHEREAS, the Peerless Mfg. Co. (the "Company") 1995 Stock Option
and Restricted Stock Plan (the "Plan") was previously adopted to
attract and retain the best available personnel for positions of
substantial responsibility and to provide incentives to such personnel
to promote the success of the business of Peerless Mfg. Co. and its
subsidiaries;
WHEREAS, certain options granted under the Plan are intended to
qualify as "incentive stock options" ("Qualified Options") pursuant to
Section 422 of the Internal Revenue Code of 1986, as amended from time
to time, while certain other options granted under the Plan will
constitute nonqualified options ("Nonqualified Options");
WHEREAS, the Compensation Committee ("Compensation Committee") and
the Board of Directors of Peerless Mfg. Co., a Texas corporation (the
"Company") authorized an additional 20,000 shares of the Company's
Common Stock, $1.00 par value per share (the "Additional Shares") for
issuance pursuant to Nonqualified Options to be issued pursuant to the
Plan, subject to approval of the Nasdaq National MarketR Notification
Form for Listing of Additional Shares (the "Nasdaq Application") with
respect to such shares;
WHEREAS, Compensation Committee and the Board of Directors
directed and approved this Amendment to the Plan in order to reflect
the addition of the Additional Shares to the Plan.
NOW THEREFORE, the following provisions of the Plan are hereby
amended and restated as follows, subject to approval of the Nasdaq
Application. All terms not defined herein shall have those definitions
set forth in the Plan for such terms. Except as amended hereby, all
other terms of the Plan remain in full force and effect.
<PAGE>
Section 4 of the Plan is hereby amended and restated as follows:
4. Shares Subject to the Plan. Except as otherwise provided in
Section 19 hereof, the aggregate number of shares of Common Stock
issuable upon the exercise of Options or upon the grant of Restricted
Stock pursuant to this Plan shall be 100,000 shares, plus an additional
20,000 shares which are issuable only as Nonqualified Options. Such
shares may either be authorized but unissued shares or treasury shares.
The Corporation shall, during the term of this Plan, reserve and keep
available a number of shares of Common Stock sufficient to satisfy the
requirements of the Plan. If an Option should expire or become
unexercisable for any reason without having been exercised in full, or
Restricted Stock should fail to vest and be forfeited in whole or in
part for any reason, then the shares that were subject thereto shall,
unless the Plan shall have terminated, be available for the grant of
additional Options or Restricted Stock under this Plan, subject to the
limitations set forth above.
Executed, adopted and approved this 11th day of November 1999, to
be effective from and after the 10th day of September, 1999, by the
Compensation Committee of the Company in accordance with Section 20 of
the Plan.
COMPENSATION COMMITTEE
/s/ JOSEPH V. MARINER
Joseph V. Mariner, Chairman
/s/ DONALD A. SILLERS,JR.
Donald A. Sillers, Jr.
/s/ BERNARD S. LEE
Bernard S. Lee
/s/ DAVID D. BATTERSHELL
David D. Battershell
EXHIBIT 10(j)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 23rd day of July,
1999, between PEERLESS MFG. CO. ("Employer"), and GILBERT DARWYN
CORNWELL ("Employee").
Employment
1.1 Employment and Term. Employer agrees to employ Employee as a
senior executive pursuant to this Agreement from the date hereof until
such employment is terminated as provided herein. This Agreement shall
survive any termination of Employee's employment.
1.2 Duties. Employee agrees to devote his time, attention and
energies to perform the duties of the offices he holds as may be
prescribed from time to time by The Board of Directors and/or the Chief
Executive Officer of Employer.
1.3 Supervision. Employee shall perform the duties of employment
under the direction and supervision of Employer's Chief Executive
Officer.
Non-Competition
2.1 During Term. During the period of his employment under this
Agreement, Employee shall be employed only by Employer and shall not
engage in any activity in competition with Employer.
2.2 After Termination; Non-Competition. Employee agrees that for a
period of three (3) years following termination of employment, without
regard to the reason for termination, Employee shall not, directly or
indirectly, compete with Employer or perform any services for a
competitor of Employer, including as an employee, consultant, advisor,
owner, partner, participant in a joint venture or corporation, or
otherwise. Employee specifically acknowledges that Employer's products
are sold in a world market, and that Employee has been engaged with
regard to Employer's products and Employer's customers throughout the
world without geographic limitation, and accordingly that the non-
competition agreement contained in this section shall apply without
geographic limitation.
<PAGE>
Confidentiality
3.1 Confidentiality. All written material (including but not
limited to engineered designs, formulas, drawings, studies, reports,
calculations, product designs, product specifications, engineering
specifications, customer specifications, customers names and customer
contacts) of any type pertaining to the business of Employer (the
"Material"), the use or application of such Material, or other
information with respect to customers of Employer, is confidential, and
the sole and exclusive property of Employer without regard to
authorship, and shall not be duplicated or removed from Employer's
office except as required in connection with performance of Employee's
duties hereunder. Upon termination of employment, Employee agrees to
return all such Material and all copies thereof (including electronic
documents and copies) to Employer and Employee shall not retain any
copies (including electronic copies) thereof. Employee further agrees
that the design and application of Employee's products is confidential
and that during Employee's term of employment and during the non-
competition period following termination of employment pursuant to
Section 2 of this Agreement, not to divulge any confidential matters or
confidential written material to any person not subject to a
confidentiality agreement with Employer, except as may be legally
required or required by a customer of Employer in connection with the
customer's use of Employer's products.
Termination
4.1 Termination by Employer.
(a) Employer may terminate Employee's employment hereunder
without cause or reason with thirty (30) days written notice of
termination to Employee. Employer and Employee agree that in the event
of any such termination, both parties will use reasonable efforts to
determine a mutually acceptable continuing relationship (e.g.,
retention as an outside consultant).
(b) If a mutually acceptable alternative agreement cannot be
reached within sixty (60) days after termination, Employee shall
receive as severance compensation for a period of one (1) year
following termination, a lump sum annual payment in an amount equal to
90% of his then current base salary, plus dividends payable under share
grants pursuant to the Employer's Stock Grant Plan, and the full range
of Employer benefits.
4.2 Termination by Employee. Employee may terminate Employee's
employment hereunder upon thirty (30) days written notice to Employer.
4.3 Termination on Death of Employee. This Employment Agreement
shall terminate upon the death of Employee.
4.4 Termination by Disability. Employment may terminate as a
result of Employee becoming permanently disabled, mentally or
physically, and unable to perform the duties hereunder. Employee shall
be paid a minimum of six (6) months salary plus all other existing
Employer disability benefits upon such termination. Employee and
Employer agree to binding arbitration in the event of disagreements
regarding the meaning or intent of this clause.
<PAGE>
4.5 Termination by Retirement. Retirement of Employee is
anticipated at age 65. Retirement prior to age 65 may occur at the
option of Employee. Retirement after age 65 will be at the annual
option of the Board of Directors. Retirement benefits shall be all
normal benefits provided by the Company. Severance benefits defined by
Section 4.1(b) are not to be interpreted as retirement benefits.
Miscellaneous
5.1 This Agreement and that certain Agreement of even date herewith
between Employer and Employee regarding certain agreements effective
upon a change-in-control (as defined therein) are the only agreements
in force between Employer and Employee regarding the subject matter
hereof and the same supersede all prior agreements.
5.2 This Agreement may only be amended by written amendment signed
by Employer and Employee.
5.3 This Agreement shall be governed by the laws of the State of
Texas.
PEERLESS MFG. CO.
____________________________________
CHAIRMAN
BOARD OF DIRECTORS
BY ORDER OF THE BOARD OF DIRECTORS
EMPLOYEE
____________________________________
Gilbert Darwyn Cornwell
EXHIBIT 10(k)
AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of the
23rd day of July, 1999, by and between PEERLESS MFG. CO. (the
"Company"), and GILBERT DARWYN CORNWELL (the "Executive").
WHEREAS, the Executive serves as a senior executive of the Company;
WHEREAS, the Executive possesses knowledge of the business and
affairs of the Company, its policies, methods, personnel and plans for
the future; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that the Executive's contribution to the growth and success
of the Company has been substantial and wishes to offer an inducement
to the Executive to remain in the employ of the Company;
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained,
this Agreement sets forth benefits which the Company will pay to
Executive in the event of termination of Executive's employment, except
as a result of death, disability, retirement or termination by the
Company for Cause, following a "Change in Control" of the Company (in
each case as such terms or events are defined or discussed herein):
1. Term. The term of this Agreement shall continue until the
earlier of (i) the expiration of the third anniversary of the
occurrence of a Change in Control, (ii) the Executive's death, or (iii)
the Executive's earlier voluntary retirement (except for those events
described in Section 3(a)(2)); provided, however, that on each
anniversary of the Change in Control, the period referenced in Section
(i) above shall automatically be extended for an additional year
unless, not later than 90 calendar days prior to such anniversay date,
the Company shall have given written notice to the Executive that it
does not wish to have the term extended.
2. Definitions.
(a) Affiliate and Associate. "Affiliate" and "Associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of
1934, as amended (the "Exchange Act") in effect on the date of this
Agreement.
(b) Cause. For "Cause" shall mean that the Executive shall
have committed:
(i) The conviction of Executive, by a court of competent
jurisdiction, of any felony;
(ii) Commission by Executive of an intentional material
act of fraud to his pecuniary benefit in connection with his duties or
in the course of his employment with the Company, as reasonably
determined by the Board;
<PAGE>
(iii) The intentional and continued failure by Executive
to substantially perform his duties hereunder, or the intentional
wrongdoing by Executive resulting in material injury to the Company.
No act, or failure to act, on the part of Executive shall be deemed
"intentional" unless done, or omitted to be done, by Executive not in
good faith and without reasonable belief that his action or omission
was in the best interests of the Company.
(c) Change in Control. A "Change in Control" of the Company
shall have occurred if at any time during the term of this Agreement
any of the following events shall occur:
(i) The Company is merged, consolidated or reorganized into
or with another corporation or other legal person and as a result of
such merger, consolidation or reorganization less than 50.1% of the
combined voting power to elect Directors of the then outstanding
securities of the remaining corporation or legal person or its ultimate
parent immediately after such transaction is available to be received
by all stockholders on a pro rata basis and is actually received in
respect of or exchange for voting securities of the Company pursuant to
such transaction;
(ii) The Company sells all or substantially all of its
assets to any other corporation or other legal person not controlled by
or under common control with the Company;
(iii) Any person or group (including any "person" as such
term is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange
Act has become the beneficial owner (as the term "beneficial owner" is
defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities which when added to
any securities already owned by such person would represent in the
aggregate 50% or more of the then outstanding securities of the Company
which are entitled to vote to elect Directors;
(iv) If at any time, the Continuing Directors then
serving on the Board cease for any reason to constitute at least a
majority thereof;
(v) Any occurrence that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A or any
successor rule or regulation promulgated under the Exchange Act; or
(vi) Such other events that cause a change in control of
the Company, as determined by the Board in its sole discretion;
provided, however, that a Change in Control of the Company shall not be
deemed to have occurred as the result of any transaction having one or
more of the foregoing effects if such transaction is proposed by, and
includes a significant equity participation of, executive officers of
the Company as constituted immediately prior to the occurrence of such
transaction or any Company employee stock ownership plan or pension
plan.
(d) Code. The "Code" shall mean the Internal Revenue Code of
1986, as amended.
<PAGE>
(e) Continuing Director. A "Continuing Director" shall mean a
Director of the Company who (i) is not an Acquiring Person, an
Affiliate or Associate, a representative of an Acquiring Person or
nominated for election by an Acquiring Person, and (ii) was either a
member of the Board of Directors of the Company on the date of this
Agreement or subsequently became a Director of the Company and whose
initial election or initial nomination for election by the Company's
stockholders was approved by a majority of the Continuing Directors
then on the Board of Directors of the Company.
(f) Acquiring Person: An "Acquiring Person" shall mean any
person (as defined in Section 2(d)(iii) of this Agreement) that,
together with all Affiliates and Associates of such person, is the
beneficial owner of 15% or more of the outstanding Common Stock. The
term "Acquiring Person" shall not include the Company, any subsidiary
of the Company, any employee benefit plan of the Company or subsidiary
of the Company, any person holding Common Stock for or pursuant to the
terms of any such plan, or Donald A. Sillers, Jr. or members of his
immediate family.
(g) Employment Term. The "Employment Term" shall be the period
of employment under this Agreement commencing on the day prior to a
Change in Control and continuing until the expiration of this
Agreement.
(h) Severance Compensation. The "Severance Compensation"
shall be:
(i) A lump sum amount equal to 299% of Executive's average
annual compensation reported on his Form W-2 paid by the Company
includable in gross income during the five most recent full calendar
years prior to the Change in Control; provided, however, that in no
event shall the Company pay or be obligated to pay that portion of the
amount due which would result in any payment to or for the benefit of
Executive being an "excess parachute payment" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), in the opinion of tax counsel selected by the Company's
independent accountants and acceptable to Executive, and which would
result in the imposition of an excise tax under Section 4999 of the
Code ("Excess Parachute Payment"). Any payment made pursuant to this
Section shall be reduced only in the amount necessary to avoid
characterization of such payment as an Excess Parachute Payment and
only after reduction, to the extent necessary, of any other payments
(other than payments made under this Agreement) which when aggregated
with the payments hereunder result in the imposition of such excise tax
under Section 4999 of the Code; and
(ii) For a period of three years, provide Executive with
benefits substantially similar to those which Executive was entitled to
receive immediately prior to the date of termination under all of the
Company's "employee welfare benefit plans" within the meaning of
Section 3(1) of The Employee Retirement Income Security Act of 1974, as
amended. Notwithstanding the foregoing provisions of this Section, no
benefits shall be provided or payments made pursuant to this subsection
to the extent that the effect thereof would result in a reduction of
the Severance Payment under subsection (h)(i).
<PAGE>
(i) Termination Date. The "Termination Date" shall be the date
upon which the Executive or the Company effectively terminates the
employment of the Executive.
3. Rights of Executive Upon Change in Control Termination
(a) The Company shall provide the Executive, within ten days
following the Termination Date, Severance Compensation in lieu of
compensation to the Executive for periods subsequent to the Termination
Date, but without affecting the rights of the Executive at law or in
equity, if, following the occurrence of a Change in Control, any of the
following events shall occur:
(1) the Company terminates the Executive's employment during
the Employment Term other than for any of the following reasons:
(i) the Executive dies:
(ii) the Executive becomes permanently disabled and is
unable to work for a period of 180 consecutive days; or
(iii) for Cause.
(2) the Executive terminates his employment after such Change
in Control and the occurrence of at least one of the following events:
(i) a change in the positions held by Executive or an
adverse change in the nature or scope of the authorities, functions or
duties attached to the positions with the Company that the Executive
had immediately prior to the Change in Control, any reduction in the
Executive's salary during the Employment Term or any reduction in bonus
or incentive compensation (based upon the dollar amount of bonus or
incentive compensation that the Executive received from the Company for
the fiscal year preceding the year in which the Change in Control
occurred or for the fiscal year preceding the year in which the
Termination Date occurs, whichever is the larger amount) or a
significant reduction in scope or value of the aggregate other monetary
or nonmonetary benefits to which the Executive was entitled from the
Company immediately prior to the Change in Control, any of which is not
remedied within ten calendar days after receipt by the Company of
written notice from the Executive of such change, reduction, alteration
or termination, as the case may be;
(ii) a determination by the Executive made in good faith
that as a result of a Change in Control and a change in circumstances
thereafter significantly affecting his position, changes in the
composition or policies of the Board, or of other events of material
effect, he has been rendered substantially unable to carry out, or has
been substantially hindered in the performance of, the authorities,
functions or duties attached to his position immediately prior to the
Change in Control, which situation is not remedied within ten calendar
days after receipt by the Company of written notice from the Executive
of such determination;
<PAGE>
(iii) a change in the positions held by Executive or the
occurrence, as determined by Executive in good faith, of an adverse
change in the nature or scope of his authorities, powers, functions,
responsibilities or duties as the Chairman of the Board, President and
Chief Executive Officer of the Company; any reduction in Salary; any
reduction in Executive's bonus or incentive compensation (based upon
the greater of the dollar amount of bonus and other incentive
compensation that Executive received for the year preceding the Change
in Control or the average yearly amount of bonus and incentive
compensation that Executive received during the five years preceding
the Change in Control); a termination, reduction or alteration of the
disability policies or life or disability insurance benefits maintained
for Executive, any alteration or reduction of expense allowances or
reimbursement policies; or a reduction in scope or value of the
aggregate other benefits to which Executive was entitled prior to the
Change in Control;
(iv) the liquidation, dissolution, merger, consolidation
or reorganization of the Company or transfer of all or substantially
all of its business and/or assets, unless the successor or successors
(by liquidation, merger, consolidation, reorganization or otherwise) to
which all or substantially all of its business and/or assets have been
transferred (directly or by operation of law) shall have specifically
assumed all duties and obligations of the Company under this Agreement
pursuant to Section 16;
(v) the relocation of the Company's principal executive
offices, or the requirement by the Company that Executive have as his
principal location of work any location not within the greater Dallas,
Texas metropolitan area or that he travel away from his office in the
course of discharging his duties hereunder significantly more (in terms
of either consecutive days or aggregate days in any calendar year) than
required of him prior to the Change in Control; or
(vi) the Company commits any breach of this Agreement.
<PAGE>
(b) Notwithstanding the above section or any other provision of
this Agreement, in no event shall the Company pay or be obligated to
pay the Executive an amount which would be an Excess Parachute Payment.
For purposes of this Agreement, the term "Excess Parachute Payment"
shall mean any payment or any portion thereof which would be an "excess
parachute payment" within the meaning of Section 280G of the Code, and
would result in the imposition of an excise tax under Section 4999 of
the Code, in the opinion of tax counsel selected by the Company's
independent accountants and acceptable to the Executive. If it is
established pursuant to a final determination of a court or an Internal
Revenue Service administrative appeals proceeding that, notwithstanding
the good faith of the Executive and the Company in applying the terms
of this Agreement, a payment (or portion thereof) made is an Excess
Parachute Payment, then, except as hereafter provided, the Executive
shall have an obligation to repay the Company upon demand an amount
equal to the minimum amount (but without interest) necessary to ensure
that no payment made or to be made by the Company pursuant to this
Agreement is an Excess Parachute Payment; provided, however, that if,
in the opinion of tax counsel selected by the Company's independent
accountants and acceptable to the Executive, such repayment will not
ensure that no Excess Parachute Payment would be made hereunder, then
(1) no such repayment obligation will exist and (2) the Company shall
pay to the Executive an additional amount in cash equal to the amount
necessary to cause the amount of the aggregate after-tax cash
compensation and benefits otherwise receivable by the Executive to be
equal to the aggregate after-tax cash compensation and benefits he
would have received as if Sections 280G and 4999 of the Code had not
been enacted.
(c) Upon written notice given by the Executive to the Company
prior to the receipt of Severance Compensation, the Executive, at his
sole option, may elect to have all or any part of any such amount paid
to him, without interest, on an installment basis selected by him.
(d) The payment of Severance Compensation by the Company to the
Executive shall not affect any rights and benefits which the Executive
may have pursuant to any other agreement, policy, plan, program or
arrangement of the Company providing benefits to the Executive prior to
the Termination Date, which rights shall be governed by the terms
thereof, except that payments hereunder after termination shall reduce
by an equal amount any sums payable after termination under the
Employment Agreement, dated the date hereof, by and between the Company
and the Executive. The Company shall provide to the Executive
throughout the Employment Term benefits substantially similar to those
which the Executive was receiving or entitled to receive immediately
prior to the Termination Date. Such benefits as provided by the
Company, however, shall be reduced to the extent comparable benefits
are actually received by the Executive during the Employment Term as a
result of employment other than with the Company.
(e) The Company shall have no right of set-off or counterclaim
in respect of any claim, debt or obligation against any payment or
benefit to or for the benefit of the Executive provided for in this
Agreement.
<PAGE>
(f) Without limiting the rights of the Executive at law or in
equity, if the Company fails to make any payment required to be made
hereunder on a timely basis, the Company shall pay interest on the
amount thereof on demand at an annualized rate of interest equal to
120% of the then applicable Federal rate determined under Section
1274(d) of the Code, compounded semi-annually (but in no event shall
such interest exceed the highest lawful rate).
(g) Any termination of Executive's employment or removal of
Executive as an elected officer of the Company following the
commencement of any discussion authorized by the Board with a third
person that ultimately results in a Change in Control involving that
person or a different third party shall be deemed to be a termination
or removal of Executive after a Change in Control for purposes of this
Agreement and shall entitle Executive to all benefits under this
Agreement.
4. No Mitigation Required. In the event that this Agreement or
the employment of the Executive hereunder is terminated, the Executive
shall not be obligated to mitigate his damages nor the amount of any
payment provided for in this Agreement by seeking other employment or
otherwise, and except for the termination of benefits pursuant to
Section 3(d), the acceptance of employment elsewhere after termination
shall in no way reduce the amount of Severance Compensation payable
hereunder.
5. Successors; Binding Agreement.
(a) The Company will require any successor and any corporation
or other legal person (including any "person" as defined in Section
2(d)(iii) of this Agreement) which is in control of such successor (as
"control" is defined in Regulation 230.405 or any successor rule or
regulation promulgated under the Securities Act of 1933, as amended) to
all or substantially all of the business and/or assets of the Company
(by purchase, merger, consolidation or otherwise), by agreement in form
and substance satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a
material breach of this Agreement by the Company. Notwithstanding the
foregoing, any such assumption shall not, in any way, affect or limit
the liability of the Company under the terms of this Agreement or
release the Company from any obligation hereunder. As used in this
Agreement, "Company" shall mean the Company as herein before defined
and any succcssor to its business and/or all or part of its assets as
aforesaid which executes and delivers the agreement provided for in
this Section 5 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder
shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
<PAGE>
6. Notice. The Company shall give written notice to Executive
within ten days after any Change in Control. Failure to give such
notice shall constitute a material breach of this Agreement. For
purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed
to have been duly given when delivered or received after being mailed
by United States registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Gilbert Darwyn Cornwell
2202 Greenbriar Court
Grand Prairie, TX 75050
If to the Company:
Peerless Mfg. Co.
Attn: Secretary
2819 Walnut Hill Lane
Dallas, TX 75229
or to such other address as any party may have furnished to the other
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
7. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and such
officer as may be specifically designated by the Board. No waiver by
either party hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, unless specifically referred to
herein, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this agreement. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the substantive laws of the State of
Texas, without regard to principles of conflicts of law.
8. Validity. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
<PAGE>
10. Employment Rights. Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or
the Executive to have the Executive remain in the employment of the
Company prior to any Change in Control; provided, however, that any
termination of employment of the Executive or removal of the Executive
as Chairman of the Board and an elected officer of the Company
following the commencement of any discussion authorized by the Board of
Directors of the Company with a third person that ultimately results in
a Change in Control shall be deemed to be a termination or removal of
the Executive after a Change in Control for purposes of this Agreement
and shall entitle the Executive to all Severance Compensation.
Notwithstanding any other provision hereof to the contrary, the
Executive may, at any time during the Employment Term, upon the giving
of 30 days prior written notice, terminate his employment with the
Company. If this Agreement or the employment of the Executive is
terminated under circumstances in which the Executive is not entitled
to any Severance Compensation, the Executive shall have no further
obligation or liability to the Company hereunder or otherwise with
respect to his prior or any future employment by the Company.
11. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other
taxes as shall be required pursuant to any law or government regulation
or ruling; provided, however, that no withholding pursuant to Section
4999 of the Code shall be made unless, in the opinion of tax counsel
selected by the Company's independent accountant and acceptable to the
Executive, such withholding relates to payments which result in the
imposition of an excise tax pursuant to Section 4999 of the Code.
12. Enforcement Fees. All costs of litigation necessary for
Executive to defend the validity of this Agreement are to be paid by
Employer or its successors or assigns. The Company shall pay and be
solely responsible for any and all attorneys' and related fees and
expenses incurred by the Executive as a result of the Company's failure
to perform this Agreement or any provision thereof or as a result of
the Company or any person contesting the validity or enforceability of
this Agreement or any provision thereof as aforesaid.
<PAGE>
13. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Executive is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or
in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, including with respect to Executive's
rights under that certain Employment Agreement of even date herewith,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective on the date and year first above written.
PEERLESS MFG. CO.
____________________________________
Sherrill Stone
Chairman of the Board
By Order of the Board of Directors
EXECUTIVE
____________________________________
Gilbert Darwyn Cornwell
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 429,551
<SECURITIES> 273,343
<RECEIVABLES> 13,859,532
<ALLOWANCES> 714,387
<INVENTORY> 2,945,846
<CURRENT-ASSETS> 22,054,462
<PP&E> 8,407,790
<DEPRECIATION> 6,310,605
<TOTAL-ASSETS> 25,079,808
<CURRENT-LIABILITIES> 10,639,582
<BONDS> 0
0
0
<COMMON> 1,456,492
<OTHER-SE> 12,983,734
<TOTAL-LIABILITY-AND-EQUITY> 25,079,808
<SALES> 12,307,071
<TOTAL-REVENUES> 12,307,071
<CGS> 8,664,242
<TOTAL-COSTS> 8,664,242
<OTHER-EXPENSES> 2,372,722
<LOSS-PROVISION> 14,105
<INTEREST-EXPENSE> 8,940
<INCOME-PRETAX> 445,516
<INCOME-TAX> 158,927
<INCOME-CONTINUING> 286,589
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 286,589
<EPS-BASIC> 0.20
<EPS-DILUTED> 0.20
</TABLE>
