SECURITIES EXCHANGE COMMISSION
WASHINGTON, DC 20549
10-Q
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1997 Commission File No. 1-7215
PEERLESS TUBE COMPANY
New Jersey 22-1191280 (IRS Identification)
58-76 Locust Avenue
Bloomfield, New Jersey 07003
Telephone: 201-743-5100
Securities registered pursuant to section 12 (g) of the act:
Title of Class Exchange
Common stock $1.33-1/3 par value Over the counter (PLSU)
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed under Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
As of the filing date, the aggregate market value of the voting stock held by
non affiliates of the Registrant was approximately $862,000. The market value is
based on $.3500 as of September 26, 1997, which is the last recorded trade.
During the quarter, actual trades of relatively small amounts of the Company's
shares of stock have ranged in transaction price from $.3125-$.3750.
Common Stock, Par Value $1.33-1/3
Outstanding at September 30, 1997. 2,462,973 shares
Documents incorporated by reference: None
<PAGE>
<TABLE>
<CAPTION>
PEERLESS TUBE COMPANY
TABLE OF CONTENTS
<S> <C> <C>
Part I Financial Information
Item I Financial Statements (Unaudited)
Balance Sheets as of September 30, 1997 and December 31, 1996.
(Unaudited) 3
Statement of Operations for the Quarters Ended September 30, 1997 4-5
and 1996 (Unaudited) and for the Nine Month periods ended
September 30, 1997 and 1996 (Unaudited).
Statement of Cash Flows - for the Nine Month Period ended
September 30, 1997 and 1996. (Unaudited) 6
Notes to the Consolidated Financial Statements 7-8
Item II Management's Discussions & Analysis of the Financial 9-10
Conditions and Results of Operations
Part II Other Information
Item 5 11
Item 6 11
Signatures 12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(Unaudited)
Peerless Tube Company September 30, 1997 December 31, 1996
-----------------------------------------------
Balance Sheet (rounded to nearest thousand)
<S> <C> <C>
Assets
Current Assets:
Cash .............................................. $ 192,000 $ 227,000
Accounts receivable, less allowance for doubtful
accounts of $270,000 and $253,000 for 1997
and 199, respectively .......................... 1,297,000 2,195,000
Inventories ....................................... 2,016,000 2,660,000
Prepaid expenses .................................. 52,000 78,000
Other current assets .............................. 53,000 63,000
---------- ----------
Total Current Assets ......................... $ 3,610,000 $ 5,223,000
Property, Plant and Equipment , Net ............... 3,583,000 4,124,000
Other assets ...................................... 682,000 683,000
Deferred tax assets, net of valuation allowance of
$4,143,000 and $4,800,000, respectively
--------- ----------
Total Assets ................................. $ 7,875,000 $ 10,030,000
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable .................................. $ 2,046,000 $ 2,573,000
Accrued Liabilities ............................... 1,408,000 1,489,000
Revolving credit line ............................. 620,000 1,119,000
Current portion of long-term debt ................. 178,000 267,000
---------- -----------
Total current liabilities .................... $ 4,252,000 $ 5,448, 000
Long Term Debt .................................... 901,000 484,000
Other Liabilities ................................. 70,000 70,000
---------- -----------
Total Liabilities ............................ $ 5,223,000 $ 6,002,000
---------- -----------
Commitments and contingencies
Stockholders' equity:
Common stock, $1.33-1/3 par value; authorized
5,000,000 shares; issued and outstanding
2,536,935 shares ............................... 3,382,000 3,382,000
Additional paid-in capital ..................... 14,439,000 14,439,000
Accumulated deficit ............................ (14,825,000) (13,449,000)
Less 73,962 shares of stock in treasury, at cost (344,000) (344,000)
---------- ----------
Stockholders' equity ......................... 2,652,000 4,028,000
---------- ----------
Total Liabilities and stockholders' equity .... $ 7,875,000 $10,030,000
========== ==========
The accompanying notes should be read in conjunction with the financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Peerless Tube Company (Unaudited)
Statement of Operations
For the Quarter Ended September 30, 1997 September 30, 1996
- --------------------------------------------------------------------------------------------------------------------------------- (R
(rounded to nearest thousand except per share amounts)
<S> <C> <C>
Net Sales ...................................... $ 3,974,000 $ 5,261,000
Cost of sales .................................. 3,797,000 4,653,000
------------ ------------
Gross Profit (Loss) ............................ 177,000 608,000
Selling, general, and administrative expenses .. (391,000) (608,000)
------------ ------------
Income (loss) from operations .................. $ (214,000) $ 000
Interest expense ............................... 79,000) (208,000)
Other Income - Net ............................. 7,000 105,000
----------- ------------
Net Loss ....................................... $ (286,000) $ (103,000)
=========== ============
Accumulated Deficit:
Beginning period ............................... $(14,538,000) $(14,714,000)
----------- ------------
End of period .................................. $(14,825,000) $(14,817,000)
=========== ============
Net Loss per share ............................. ($ 0.12) ($ 0.04)
=========== ============
Weighted average shares outstanding ............ 2,462,973 2,462,973
=========== ============
The accompanying notes should be read in conjunction with the financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Peerless Tube Company (Unaudited)
Statement of Operations
For the Nine Months Ended September 30, 1997 September 30, 1996
- -----------------------------------------------------------------------------------------------------------------------------------
(rounded to nearest thousand except per share amounts)
<S> <C> <C>
Net Sales ...................................... $ 12,526,000 $ 18,169,000
Cost of sales .................................. 12,073,000 16,184,000
----------- ----------
Gross Profit (Loss) ............................. 453,000 1,985,000
Selling, general, and administrative expenses ... (1,601,000) (2,070,000)
---------- -----------
Income (loss) from operations ...................$(1,148,000) $ (41,000)
Interest expense ................................ (241,000) (619,000)
Other Income - Net .............................. 13,000 102,000
----------- ----------
Net Loss ........................................$(1,376,000) $ (602,000)
=========== ===========
Accumulated Deficit:
Beginning of period .............................$(13,449,000) $ (14,215,000)
----------- ----------
End of period ...................................$(14,825,000) $ (14,817,000)
=========== ===========
Net Loss per share ..............................($ 0.56) ($ 0.24)
=========== ===========
Weighted average shares outstanding ............. 2,462,973 2,462,973
=========== ===========
</TABLE>
The accompanying should be read in conjunction with the financial statements.
<PAGE>
<TABLE>
<CAPTION>
Peerless Tube Company (Unaudited)
Statement of Cash Flows For The Nine Months ended September 30,
---------------------------------------
1997 1996
(rounded to nearest thousand)
<S> <C> <C>
Cash flows from operating activities:
Net loss ................................................. ($1.376,000) ($ 602,000)
Adjustment to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization ............................ 541,000 787,000
Provision for bad debts .................................. (74,000) 113,000
Deferred gain ............................................ (90,000)
(Increase) Decrease in operating assets:
Accounts receivable ...................................... 972,000 1,734,000
Inventories .............................................. 644,000 (156,000)
Prepaid expenses ......................................... 26,000 (105,000)
Other current assets ..................................... 10,000 (2,000)
Other Assets ............................................. 1,000
Increase (Decrease) - in operating liabilities:
Accounts payable ........................................ (527,000) (711,000)
Accrued liabilities ..................................... (81,000) 556,000
- ----------------------------------------------------------- ----------- -----------
Total Adjustments ......................................... $ 1,512,000 $ 2,126,000
- ----------------------------------------------------------- ----------- -----------
Net cash provided by operating activities ................. $ 136,000 $ 1,524,000
Cash flows from financing activities:
Net (repayments) borrowing under credit line .............. (499,000) (1,215,000)
Reduction of long term debt and current maturities ........ (328,000) (490,000)
Net cash used in financing activities ..................... ($ 171,000) ($1,705,00)
- ----------------------------------------------------------- ----------- -----------
Net Increase (Decrease) in cash ........................... (35,000) (181,000
Cash - beginning of the period ............................ 227,000 660,000
- ----------------------------------------------------------- ----------- -----------
Cash - end of period ..................................... $ 192,000 $ 479,000
=========================================================== =========== ==========
</TABLE>
<PAGE>
PEERLESS TUBE COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 1: PREPARATION OF FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared by the
Company without audit in accordance with Generally Accepted Accounting
Principles. These statements should be read in conjunction with the audited
financial statements and notes included in the Company's Annual Report Form 10-K
for the year ended December 31, 1996 and the Quarterly Report Form 10-Q for the
Quarters ended June 30, 1997 and March 31, 1997.
In the opinion of management, these financial statements include all
adjustments, consisting of normal recurring adjustments, necessary to present
fairly the financial position, results of operations, and cash flows for the
Company. Certain information and footnote disclosure normally included in
financial statements prepared in accordance with Generally Accepted Accounting
Principles have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. The Company believes, however, that
the disclosures in this report are adequate to make the information presented
not misleading in any material respect. There have been no significant changes
in accounting policy since December 31, 1996. The results of operations may not
be indicative of the results that may be expected for the year ending December
31, 1997.
NOTE 2: BUSINESS AND DEBT RESTRUCTURING
.
The Company's management continues to evaluate and reshape its business plans to
improve operating results and respond to changes in its very competitive market.
The loan agreement between the Company and its secured lender was amended in
July 1997 to provide additional funding for the Company. Management continues to
seek methods to improve the Company's operating performance including the
stabilization of raw material costs, increased productivity, and the
restructuring of staff.
The highly competitive markets have resulted in lower gross sales with a slight
reduction in gross margins. In view of reduced sales, the Company continues to
reduce its costs and is diligently monitoring its costs and expenses.
NOTE 3: INVENTORIES
Inventories are comprised to the following:
Inventories September 30, December 31,
1997 1996
------------- -----------
Raw materials $ 1,150,000 $1,724,000
Work-in-process 31,000 29,000
Finished Goods 835,000 907,000
Total $ 2,016,000 $2,660,000
NOTE 4 - ACCRUED LIABILITIES
Accrued liabilities is comprised of the following:
Accrued Liabilities September 30, December 31,
1997 1996
------------ -----------
Payroll, payroll taxes, and
payroll related costs $ 537,000 $ 437,000
Health benefits 60,000 180,000
All other 811,000 872,000
---------- ----------
Total $ 1,408,000 $ 1,489,000
NOTE 5 - LONG-TERM DEBT/REVOLVING CREDIT LINE Long-term debt is comprised of the
following:
Long-term debt
September 30, December 31,
1997 1996
------------- ----------
Equipment loan secured by
substantially all the Compay's
machinery and equipment payable
to a lender, renegotiated during
March and July 1997, termination
date January 31, 2000. The loan
bears interest at the prime +3.5% $ 1,056,000 $ 639,000
Various purchase money capital
leases for manufacturing and
office equipment, final payment
due in 1998, with interest rates
at an average 18%. 23,000 112,000
-------------------------------------------
1,079,000 751,000
Less current portion (178,000) (267,000)
-------------------------------------------
Long-term debt $ 901,000 $ 484,000
============================================
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL
CONDITION & RESULTS OF OPERATIONS
SALES AND RESULTS OF OPERATIONS 1997 COMPARED TO 1996
Sales
Sales for the quarter ended September 30, 1997 and 1996 totaled $3,974,000 and
$5,261,000 respectively. The sales for the nine months ended September 30, 1997
and 1996 were $12,526,000 and $18,169,000 respectively, resulting in a decrease
of $5,644,000 or 31.1%. A significant part of the decline in sales for the
quarter and nine months ended September 30, 1997 vs. 1996 is attributable to the
closing of the Puerto Rico Facility in November 1996. Sales attributed to Puerto
Rico this quarter and nine months ended September 30, 1996 were $1,110,000 and
$3,914,000 respectively.
The breakdown of the overall sales decrease from all sources for the third
quarter ended September 1997 and 1996 respectively was as follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
3rd Quarter 3rd Quarter $ %
Net Sales ... 1997 1996 Change Change
Cans ........ $ 3,679,000 $ 3,982,000 ($ 303,000) - 7.6
Metal Tubes . $ 233,000 $ 1,176,000 ($ 943,000) -80.2%
Miscellaneous $ 62,000 $ 103,000 ($ 41,000) -39.8%
--------- ----------- ----------- ------
Total ....... $ 3,974,000 $ 5,261,000 ($1,287,000) -24.5%
========= =========== =========== ======
</TABLE>
In the third quarter ending September 30, 1997, two customers accounted for 59%
(29% and 30%) of the Company's sales. The 1997 market outlook for aluminum tubes
continues to be soft. This is attributed to the increased demand in the
competing plastic tube market. Aerosol sales were softer than anticipated during
the third quarter, September 30, 1997, as compared with the third quarter ended
September 30, 1996. Year End Margins for 1997 will be effected by the product
sales mix for the last quarter of 1997.
Gross Profit Trends and Discussion
The total decrease in sales for the quarter and nine months ended September 30,
1997 as compared with the quarter and nine months September 30, 1996 is
$1,287,000 and $5,643,000 respectively. The decrease in sales for the quarter
ended September 1997 vs. September 1996 is related to $303,000 in aerosol cans
and a decrease in aluminum tubes, of which $943,000 is attributed to the closing
of the Puerto Rico Facility. The gross profit on sales for the quarter ended
September 30, 1997 was $177,000 or 4.5% on sales of $3,974,000 as compared with
the quarter ended September 30, 1996, the gross profit was $608,000 or 11.5% on
sales of $5,261,000. For the nine months ended September 30, 1997 the gross
profit was $453,000 or 3.6% on sales of $12,526,000 compared to $1,985,000 or
10.9% on sales of $18,169,000 for the nine months ended September 30, 1996. The
decrease in gross profit for the quarter and nine months ended September 30,
1997 as compared to the quarter and nine months ended September 30, 1996 is
mainly a result of lower than anticipated aerosol sales and a change in product
mix.
The Company's gross margins are sensitive to product mix and sales volume. The
Company continues to review its plant utilization and its utilization of
personnel.
Current conditions in its market have changed the ability of the Company to
measure its backlog. This is a result of a switch to "EDI" Electronic Data
Interchange and Just in Time Delivery. The need to respond to these different
purchase plans result in quick changes to the Company's production schedule and
some detraction from gross margins.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the quarter ended September 30,
1997 were $391,000 or 9.8% of sales. For the nine months ended September 30,
1997 Selling, General and Administrative expenses totaled $1,601,000 or 12.8% of
sales. This is based on sales of $3,974,000 and $12,526,000 respectively. For
the quarter ended September 30, 1996 Selling, general and administrative
expenses were $608,000 or 12.8% and for the nine months ended September 30, 1996
$2,069,000 or 11.4% on sales of $5,281,000 and $18,170,000 respectively. This
reflects a decrease in Selling, General and Administration expenses of $468,000
for the nine months ended September 30, 1997. Because of additional cost
reductions that have already been implemented, management expects further
decreases in Selling, General and Administrative expenses.
Interest Expense and Other Expenses, net
Interest expense for the quarter ended September 30, 1997 was $79,000 as
compared to $208,000 in 1996. The decrease of $129,000 primarily resulted from
the termination of the sale-lease back agreement of the Company's Puerto Rico
office and production facility.
Liquidity and Capital Resources
The Company has negative working capital of $642,000 at September 30, 1997 which
is approximately a $417,000 decrease in working capital from December 31, 1996.
For the nine months end September 30, 1997 cash provided from operating
activities was $136,000 as compared with $1,524,000 provided from operations for
the same period in 1996.. The primary source of this cash, for the period ended
September 30, 1997, was the reduction of $972,000 of Accounts Receivable off set
by a reduction in Accounts Payable of ($527,000). Long Term debt increase
$407,000.
As of September 30, 1997 the company had cash and cash equivalents of
approximately $192,000. Net cash provided from operations as of September 30,
1997 was $136,000. Net cash as of September 30, 1997 used in financing
activities was $171,000. As of September 30, 1997 the net decrease in cash from
December 31, 1996 was $35,000.
The debt-to-equity ratio at September 30, 1997 was 1.97:1 compared to 1.49:1 at
December 1996.
<PAGE>
PART II OTHER INFORMATION
ITEM 5:
There were no dividends declared in the quarter.
ITEM 6:
On May 21, 1997 the Company filed the Quarterly Report Form 10-Q for the quarter
ended March 31, 1997. On August 14, 1997 the Company filed the Quarterly Report
Form 10-Q for the quarter ended June 30, 1997.
<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 thereunto duly authorized.
PEERLESS TUBE COMPANY
Registrant
By:/s/Frederic Remington, Jr.
Frederic Remington, Jr.
Chairman
By: /s/Richard W. Potts
Richard W. Potts
President
By:
/s/George J. Blumenschein
George J. Blumenschein
Vice President of Finance
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 192,000
<SECURITIES> 0
<RECEIVABLES> 1,694,000
<ALLOWANCES> (396,000)
<INVENTORY> 2,016,000
<CURRENT-ASSETS> 3,610,000
<PP&E> 22,890,000
<DEPRECIATION> (19,307,000)
<TOTAL-ASSETS> 7,876,000
<CURRENT-LIABILITIES> 4,253,000
<BONDS> 0
0
(344,000)
<COMMON> 3,382,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,876,000
<SALES> 12,816,000
<TOTAL-REVENUES> 12,525,000
<CGS> 12,073,000
<TOTAL-COSTS> 13,674,000
<OTHER-EXPENSES> (13,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 241,000
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,376,000)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
