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 June 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
$1,059,000. The market value is based on $.3750 as of July 15,
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 June 30, 1997. 2,462,973 shares
Documents incorporated by reference: None
<PAGE>
PEERLESS TUBE COMPANY
TABLE OF CONTENTS
Page
Part I Financial Information
Item I Financial Statements (Unaudited)
Balance Sheets as of June 30, 1997 and
December 31, 1996. (Unaudited) 3
Statement of Operations for the Quarters
Ended June 30, 1997 And 1996 (Unaudited)
and for the Six Month Period ended
June 30, 1997 and 1996 (Unaudited). 4-5
Statement of Cash Flows - for the Six
Month Period ended June 30, 1997 and
1996. (Unaudited) 6
Notes to the Consolidated Financial
Statements 7-8
Item II Management's Discussions & Analysis of
the Financial Conditions and Results of
Operations 9-10
Part II Other Information
Item 5 11
Item 6 11
Signatures 12
<PAGE>
<TABLE>
<CAPTION>
(Unaudited)
June 30, 1997 December 31, 1996
-----------------------------------------
(rounded to nearest thousand)
<S> <C> <C>
Assets
Current Assets:
Cash $ 254,000 $ 227,000
Accounts receivable, less allowances
for doubtful accounts of $256,000
and $235,000 for 1997 and 1996 respectively 1,461,000 2,195,000
Inventories 2,460,000 2,660,000
Prepaid expenses 46,000 78,000
Other assets current assets 64,000 63,000
- -----------------------------------------------------------------------------------
Total Current Assets $ 4,285,000 $ 5,223,000
Property, Plant and Equipment, Net 3,772,000 4,124,000
Other assets 682,000 683,000
Deferred tax assets, net of valuation
allowances of $4,143,000 and $4,800,000,
respectively
- -------------------------------------------------------------------------------------
Total Assets $ 8,739,000 $ 10,030,000
____________________________________________________________________________________
- ------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 2,264,000 $ 2,573,000
Accrued Liabilities 1,617,000 1,489,000
Revolving credit line 954,000 1,119,000
Current portion of long-term debt 197,000 267,000
- -----------------------------------------------------------------------------------
Total current liabilities $ 5,032,000 $ 5,448,000
Long Term Debt 698,000 484,000
Other Liabilities 70,000 70,000
- -----------------------------------------------------------------------------------
Total Liabilities $ 5,800,000 $ 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 (14,538,000) (13,449,000)
Less 73,962 shares of stock in treasury,
at cost (344,000) (344,000)
- ------------------------------------------------------------------------------------
Stockholders' equity 2,939,000 4,028,000
- ------------------------------------------------------------------------------------
Total Liabilities and stockholders'
equity $ 8,739,000 $ 10,030,000
____________________________________________________________________________________
- ------------------------------------------------------------------------------------
</TABLE>
The accompanying notes should be read in conjunction
with the financial statements.
<PAGE>
<TABLE>
<CAPTION>
Peerless Tube Company (Unaudited)
Statement of Operations
For the Quarter Ended June 30, 1997 June 30, 1996
- -----------------------------------------------------------------------------------------
(rounded to nearest thousand except per share amounts)
<S> <C> <C>
Net Sales $ 3,875,000 $ 6,547,000
Cost of sales 4,283,000 5,822,000
- -----------------------------------------------------------------------------------------
Gross Profit (Loss) (408,000) 725,000
Selling, general, and administrative expenses 525,000 706,000
- -----------------------------------------------------------------------------------------
Income (loss) from operations $ (933,000) $ 19,000
Interest expense (79,000) (199,000)
Other Income - Net 2,000 28,000
- -----------------------------------------------------------------------------------------
Net Loss $ (1,010,000) $ (152,000)
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Accumulated Deficit:
Beginning of period $ (13,528,000) $ (14,562,000)
End of period $ (14,538,000) $ (14,714,000)
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Net Loss per share ($0.41) ($0.06)
- ------------------------------------------------------------------------------------------
Weighted average shares outstanding 2,462,973 2,462,973
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes should be read in
conjunction with the financial statements.
<PAGE>
<TABLE>
<CAPTION>
Peerless Tube Company (Unaudited)
Statement of Operations
For the Six Months Ended June 30, 1997 June 30, 1996
- -----------------------------------------------------------------------------------------
(rounded to nearest thousand except per share amounts)
<S> <C> <C>
Net Sales $ 8,551,000 $ 12,908,000
Cost of sales 8,276,000 11,530,000
- -----------------------------------------------------------------------------------------
Gross Profit (Loss) 275,000 1,378,000
Selling, general, and administrative expenses 1,209,000 1,462,000
- -----------------------------------------------------------------------------------------
Income (loss) from operations $ (934,000) $ ( 84,000)
Interest expense (162,000) (411,000)
Other Income - Net 7,000 ( 4,000)
- ------------------------------------------------------------------------------------------
Net Loss $ (1,089,000) $ (499,000)
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Accumulated Deficit:
Beginning of period $ (13,449,000) $ (14,215,000)
End of period $ (14,538,000) $ (14,714,000)
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Net Loss per share ($0.44) ($0.20)
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Weighted average shares outstanding 2,462,973 2,462,973
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes should be read in
conjunction with the financial statements.
<PAGE>
<TABLE>
<CAPTION>
Peerless Tube Company (Unaudited)
Statement of Cash Flows For The Six Months ended June 30,
---------------------------------
1997 1996
(rounded to nearest thousand)
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($1,089,000) ($499,000)
Adjustment to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 352,000 554,000
Provision for bad debts 20,000 26,000
Deferred gain (60,000)
(Increase) Decrease in operating assets:
Accounts receivable 714,000 903,000
Inventories 200,000 504,000
Prepaid expenses 32,000 (123,000)
Other current assets (1,000) 11,000
Other Assets 1,000
Increase (Decrease) - in operating liabilities:
Accounts payable (309,000) (855,000)
Accrued liabilities 128,000 405,000
- --------------------------------------------------------------------------------------------
Total Adjustments $1,137,000 $1,365,000
- ---------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 48,000 $ 866,000
Cash flows from financing activities:
Net (repayments) borrowing under credit line (165,000) (946,000)
Proceeds From Long Term Debt 308,000
Reduction of long term debt and current maturities (164,000) (325,000)
- ---------------------------------------------------------------------------------------------
Net cash used in financing activities ($ 21,000) ($1,271,000)
- ---------------------------------------------------------------------------------------------
Net Increase (Decrease) in cash 27,000 (405,000)
Cash - beginning of the period 227,000 660,000
- ---------------------------------------------------------------------------------------------
Cash - end of period $ 254,000 $ 255,000
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes should be read in
conjunction with the financial statements.
<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 there to 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 Quarter ended March 31,
1997.
In the opinion of management, these financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary
to present fairly the financial position, results of operations, and
cash flows for the Company. Certain information and foot notes
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 result 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 maintaining of stabilized 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 costs and is diligently monitoring its
costs and expenses.
<PAGE>
NOTE 3: INVENTORIES
Inventories are comprised to the following:
Inventories June 30, December 31,
1997 1996
- ----------------------------------------------------------------------
Raw materials $1,584,000 $1,724,000
Work-in-process 32,000 29,000
Finished Goods 844,000 907,000
- ----------------------------------------------------------------------
Total $2,460,000 $2,660,000
- ----------------------------------------------------------------------
NOTE 4 - ACCRUED LIABILITIES
Accrued liabilities is comprised of the following:
Accrued Liabilities June 30, December 31,
1997 1996
- ----------------------------------------------------------------------
Payroll, payroll taxes, and payroll
related costs $ 678,000 $ 437,000
Health benefits 60,000 180,000
All other 879,000 872,000
- ----------------------------------------------------------------------
Total $1,617,000 $1,489,000
- ----------------------------------------------------------------------
NOTE 5 - LONG-TERM DEBT/REVOLVING CREDIT LINE
Long-term debt is comprised of the following:
Long-term debt
- ----------------------------------------------------------------------
June 30, December 31,
1997 1996
Equipment loan secured by substanti-
ally all the Compay's machinery and
equipment payable to a lender,
renegotiated March 1997, termination
date January 31, 2000. The loan
bears interest at the prime +4%. $ 853,000 $ 639,000
Various purchase money capital leases
for manufacturing and office equip-
ment, final payment due in 1998, with
interest rates at an average 18%. 42,000 112,000
-----------------------------
895,000 751,000
Less current portion (197,000) (267,000)
-----------------------------
Long-term debt $ 698,000 $ 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 June 30, 1997 and 1996 totaled $3,875,000
and $6,547,000 respectively. The sales for the six months ended June
30, 1997 and 1996 were $8,551,000 and $12,908,000 respectively,
resulting in a decrease of $4,357,000 or 33.7%. A significant part of
the decline in sales for the three and six month periods ended June 30,
1997 vs. 1996 is attributable to the closing of the Puerto Rico
Facility in November 1996. Sales from the Puerto Rico Facility for the six
months ended June 30, 1996 were $2,804,000.
The breakdown of the overall sales decrease from all sources for the
second quarter ended June 1997 and 1996 respectively was as follows:
2nd Quarter 2nd Quarter $ %
Net Sales 1997 1996 Change Change
Cans $3,573,000 $5,088,000 ($1,515,000) -29.8%
Metal Tubes $ 207,000 $1,323,000 ($1,116,000) -84.4%
Miscellaneous $ 95,000 $ 136,000 ($ 41,000) -30.1%
---------- ---------- ------------
Total $3,875,000 $6,547,000 ($2,672,000) -40.8%
---------- ---------- ------------
---------- ---------- ------------
In the second quarter ending June 30, 1997, two customers accounted for
58% (23% and 35%) of the Company's sales. The 1997 market outlook for
aluminum tubes continues to be soft as a result of the increased demand
from the plastic tube market. Aerosol sales were weak during the
second quarter, June 30, 1997, as compared with the second quarter
ended June 30, 1996. Aerosol sales to the Company's major customers
will significantly influence the level of sales and also margins for
the year ended 1997.
Gross Profit Trends and Discussion
The gross profit (loss) on sales for the quarter ended June 30, 1997
was ($408,000), or (10.5%) on sales of $3,875,000 as compared with the
quarter ended June 30, 1996 the gross profit was $725,000 or 11.1% on
sales of $6,547,000. For the six months ended June 30, 1997 the gross
profit was $275,000 or 3.2% on sales of $8,551,000 compared to
$1,378,000 or 10.6% on sales of $12,908,000 for the six months ended
June 30, 1996. The decrease in gross profit for the quarter and six
months ended June 30, 1997 as compared to the quarter and six months
ended June 30, 1996 is mainly a result of lower than anticipated
aerosol sales and a change in product mix. The total decrease in sales
for quarter and six months ended June 30, 1997 as compared with the
quarter and six months ended June 30, 1996 is $2,672,000 and
$4,357,000 respectively. The total decrease in sales, quarter ended
June 1997 vs June 1996 is related to $1,515,000 in aerosols cans along
with a decrease in aluminum tubes which is largely a result of the
closing of the Puerto Rico Facility, $992,000.
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 June
30, 1997 were $525,000 or 13.5% of sales. For the six months ended
June 30, 1997 Selling, General and Administrative expenses totaled
$1,209,000 or 14.1% of sales. For the quarter ended June 30, 1996
Selling, general and administrative expenses were $706,000 or 10.8% and
for the six months ended June 30, 1996 $1,462,000 or 11.3% on sales of
$3,875,000 and $12,888,000 respectively. This reflects a decrease in
Selling, General and Administration expenses of $180,000 for the six
months ended June 30, 1997. Additional Selling, General and
Administrative expense reductions have already been implemented for the
balance of 1997 and management expects further decreases in Selling,
General and Administrative expenses.
Interest Expense and Other Expenses, net
Interest expense for the quarter ended June 30, 1997 was $79,000 as
compared to $199,000 in 1996. The decrease of $120,000 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 $747,000 at June 30, 1997
which is approximately a $522,000 decrease in working capital from
December 31, 1996.
For the six months end June 30, 1997 cash provided by operating
activities was $48,000 as compared with $866,000 provided from
operations for the same period in 1996. The primary source of this
cash, for the period ended June 30, 1997, was the liquidation of
$714,000 of Accounts Receivable.
Due to the debt restructuring, the Company had a net increase in cash
of $27,000 for the six months ended June 30, 1997 compared to a net
decrease of $405,000 in 1996. The loan agreement between the Company
and its secured lender was amended in both March and July 1997 to
provide additional availability of cash in the amounts of $300,000 and
$250,000 respectively.
The debt-to-equity ratio at June 30, 1997 was 1.97:1 compared to 1.49:1
at December 1996. The change in this financial ratio was adversely
impacted by the Company's losses for the six months ended June 30,
1997.
<PAGE>
PART II OTHER INFORMATION
ITEM 5:
There were no dividends declared in the quarter.
ITEM 6:
On August 13, 1997 the Company filed a Form 12b requesting a filing
extension of 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
------------------------------
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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 254,000
<SECURITIES> 0
<RECEIVABLES> 1,717,000
<ALLOWANCES> (256,000)
<INVENTORY> 2,460,000
<CURRENT-ASSETS> 4,285,000
<PP&E> 22,890,000
<DEPRECIATION> (19,118,000)
<TOTAL-ASSETS> 8,739,000
<CURRENT-LIABILITIES> 5,032,000
<BONDS> 0
0
(344,000)
<COMMON> 3,382,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8,739,000
<SALES> 8,865,000
<TOTAL-REVENUES> 8,551,000
<CGS> 8,276,000
<TOTAL-COSTS> 9,485,000
<OTHER-EXPENSES> (7,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 162,000
<INCOME-PRETAX> (1,089,000)
<INCOME-TAX> (1,089,000)
<INCOME-CONTINUING> (1,089,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,089,000)
<EPS-PRIMARY> (.41)
<EPS-DILUTED> 0
</TABLE>
