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
March 31, 1997 Commission File No. 1-7215
PEERLESS TUBE COMPANY
New Jersey 22-1191280 (IRS Identification)
58-76 Locust Avenue
Bloomfield, New Jersey 07003
Telephone: 973-743-5100
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 May 19,
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 $.3750-$.43.
Common Stock, Par Value $1.33-1/3
Outstanding at March 31, 1997. 2,462,973 shares
Documents incorporated by reference: None
<PAGE>
TABLE OF CONTENTS
Item Page
Part I Financial Information
Balance Sheets as of March 31, 1997
and December 31, 1996 3
Statement of Operations for the Quarters
Ended March 31, 1997 and 1996. 4
Statement of Cash Flows - For the Quarters
ended March 31, 1997 and 1996 5
Notes to the Financial Statements 8-9
Management's Discussion & Analysis of the
Financial Conditions and Results of Operations 6-7
Part II Other Information
Item 5 10
Item 6 10
Signatures 11
<PAGE>
<TABLE>
<CAPTION>
PEERLESS TUBE COMPANY
BALANCE SHEET
March 31 December 31,
_____________________________________
1997 1996
(rounded to nearest thousand)
<S> <C> <C>
Assets
Current Assets:
Cash $ 411,000 $ 227,000
Accounts receivable, less
allowances for doubtful
accounts of $235,000 for 1997
and 1996 respectively 1,476,000 2,195,000
Inventories 3,391,000 2,660,000
Prepaid expenses 52,000 78,000
Other assets 63,000 63,000
Total Current Assets $ 5,393,000 $ 5,223,000
Property, Plant and Equipment 3,948,000 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 $ 10,023,000 $ 10,030,000
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Liabilities & Stockholders' Equity
Current Liabilities:
Accounts payable $ 2,535,000 $ 2,573,000
Accrued Liabilities 1,495,000 1,489,000
Revolving credit line 1,003,000 1,119,000
Current portion of
long-term debt 225,000 267,000
- -----------------------------------------------------------------------------------------
Total current liabilities $ 5,258,000 $ 5,448,000
Long Term Debt 746,000 484,000
Other Liabilities 70,000 70,000
- -----------------------------------------------------------------------------------------
Total Liabilities $ 6,074,000 $ 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 (13,528,000) (13,449,000)
Less 73,962 shares of stock
in treasury, at cost (344,000) (344,000)
- ------------------------------------------------------------------------------------------
Stockholders' equity 3,949,000 4,028,000
- ------------------------------------------------------------------------------------------
Total Liabilities and
stockholders' equity $ 10,023,000 $ 10,030,000
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes should be read in conjunction with the financial
statements.
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations
For the Quarter Ended March 31, 1997 1996
- --------------------------------------------------------------------------
(rounded to nearest thousand
except per share amounts)
<S> <C> <C>
Net Sales $ 4,676,000 $ 6,361,000
Cost of sales 3,993,000 5,708,000
Gross Profit 683,000 653,000
Selling, general, and
administrative expenses 684,000 756,000
Income (loss) from operations $ (1,000) $ (103,000)
Interest expenses (83,000) (212,000)
Other Income (expenses) 5,000 ( 32,000)
Net Income (loss) $ (79,000) $ (347,000)
Accumulated Deficit:
Beginning of period $(13,449,000) $ (14,215,000)
End of period $(13,528,000) $ (14,562,000)
Net Income (loss) per share ($0.03) ($0.14)
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
Statement of Cash Flows For The Quarter ended March 31,
1997 1996
- -------------------------------------------------------------------------
(rounded to nearest thousand)
Cash flows from operating
activities:
<S> <C> <C>
Net loss ($78,000) ($347,000)
Adjustment to reconcile net
loss to net cash provided by
operating activities:
Depreciation and amortization 176,000 270,000
Provision for bad debts 88,000 36,000
Deferred gain (30,000)
(Increase) Decrease in
operating assets:
Accounts receivable 631,000 769,000
Inventories (731,000) (147,000)
Prepaid expenses 26,000 (31,000)
Other current assets 6,000
Increase (Decrease) - in
operating liabilities:
Accounts payable (38,000) (577,000)
Accrued liabilities 7,000 370,000
- -----------------------------------------------------------------------------------------
Total Adjustments $159,000 $666,000
- -----------------------------------------------------------------------------------------
Net cash provided by
operating activities $ 81,000 $319,000
Cash flows from financing
activities:
Net (repayments) borrowing under
credit line (116,000) (491,000)
Reduction of long term debt and
current maturities 219,000 (164,000)
- -----------------------------------------------------------------------------------------
Net cash used in financing
activities $103,000 ($655,000)
- -----------------------------------------------------------------------------------------
Net Increase (Decrease) in cash 184,000 (336,000)
Cash - beginning of the period 227,000 660,000
- -----------------------------------------------------------------------------------------
Cash - end of period $411,000 $324,000
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</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 financial statements for the quarters ended March 31, 1997
and 1996 have been prepared by the Company without audit. These financial
statements herein prepared by the Company have been prepared in accordance
with the instructions to Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's Annual Report Form 10-K for the year ended December 31, 1996.
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. 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 accompanying financial statements contemplate continuation of the
Company as a going concern. Since 1988, however, the Company has suffered
recurring losses from operations and negative cash flows.
The Company's management is continually evaluating and reshaping its
business to improve the operational results of the Company. Also the
Company has, along with its asset-based lender, amended its agreement to
continue to provide certain loans for operations.
With the cooperation of its secured lender, management believes the
actions presently being taken to improve the Company's operating
performance will provide adequate working capital, help minimize further
financial losses, and create the opportunity for the Company to continue
as a going concern.
NOTE 3: INVENTORIES
Inventories are comprised to the following:
Inventories March 31, December 31,
1997 1996
Raw materials $ 1,930,000 $1,724,000
Work-in-process 32,000 29,000
Finish Goods 1,429,000 907,000
Total $ 3,391,000 $2,660,000
<PAGE>
NOTE 4 - ACCRUED LIABILITIES
Accrued liabilities is comprised of the following:
Accrued Liabilities March 31, December 31,
1997 1996
Payroll, payroll taxes, and
payroll related costs $ 475,000 $ 437,000
Health benefits 60,000 180,000
All other 960,000 872,000
Total $1,495,000 $1,489,000
NOTE 5 - LONG-TERM DEBT/REVOLVING CREDIT LINE
Long-term debt is comprised of the following:
Long-term debt
March 31, December 31,
1997 1996
Equipment loan secured by
substantially all the Com-
pay's machinery and equipment
payable to a lender, renegotiated
March 1997, termination date
January 31, 2000. The loan bears
interest at the prime +4%. $ 900,000 $ 639,000
Various purchase money capital
leases for manufacturing
and office equipment, final
payment due in 1998, with
interest rates at an average 18%. 71,000 112,000
________ _______
971,000 751,000
Less current portion (225,000 (267,000)
Long-term debt $ 746,000 $ 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 quarters ended March 31, 1997 and 1996 totaled
$4,676,000 and $6,361,000 respectively. The decrease in sales
of $1,684,000 or 26.5% is a result of the closing of the Puerto
Rico facility in November 1996 and the loss of a major customer
during the first quarter of 1996.
The breakdown of the overall sales decrease from all sources for
the first quarter ended March 31, 1997 and 1996 respectively was
as follow:
<TABLE>
<S> <C> <C> <C> <C>
Net Sales 1997 1996 Change %
Cans $4,272,000 $4,585,000 ($313,000) -7%
Metal Tubes 257,000 1,717,000 ($1,460,000) -85%
Miscellaneous 147,000 59,000 88,000 149%
__________ __________ __________ ____
Total $4,676,000 $6,361,000 ($1,773,000) -28%
</TABLE>
In the first quarter of 1997, two customers accounted for 61%
(35% and 27%) of the Company's sales. The 1997 market outlook
for aluminum aerosols containers is expected to remain in a
growth mode at approximately 3.5%. However, the overall market
outlook for aluminum tubes remains soft, a result of the
increased demand from the plastic tube market.
Gross Profit Trends and Discussion
The gross profit on sales for the quarter ended March 31, 1997
was $683,000, or 15% on sales of $4,676,000. For the quarter
ended March 31, 1996 the gross profit was $653,000 or 10% of net
sales for the quarter ended March 31, 1996. The improvement
in gross profit for the quarter ended March 31, 1997 as compared
to the quarter ended March 31, 1996 relates entirely to product
mix. The increased sales in percent to total sales of aerosol
cans, which has higher margins than tubes, lower spending,
manpower reductions, while at the same time improving
efficiencies as compared to 1996, have helped offset the 26.5%
loss in sales volume.
The improvement in gross profit and operating results will
continue to be gradual considering the Company's high "fixed"
costs. While the Company has been successful in reducing these
costs, it is important the Company continue to improve its
value-added output. The Company's management believes that, with
the continued growth of the aluminum aerosol market,
approximately 3.5% per year, and new product line, offerings
should provide additional sales that would help cover fixed
operating costs and provide the Company with increased volume and
gross margins that will be sufficient to meet cash requirements.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the quarter
ended, March 31, 1997 were $684,000 or 15.0% of sales. For the
quarter ended March 31, 1996, selling, general and administrative
expenses were $756,000 or 12.0% of net sales. The majority of
these cost tend to be fixed in nature resulting in the quarter
ended March 1997 percentage to net sales to be higher than March
1996.
<PAGE>
Interest Expense and Other Expenses, net
Interest expense for the quarter ended March 31, 1997 was $83,000
as compared to $212,000 in 1996. The interest decrease of
approximately $129,000 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 had working capital of $134,000 at March 31, 1997
which was approximately a $359,000 gain in working capital from
December 31, 1997. Overall the Company had a net increase in
cash of $184,000 for the three months ended March 31, 1997 as
compared to a net decrease in cash of $366,000 for the three
months ended March 31, 1996.
The debt-to-equity ratio at March 31, 1997 was 1.54:1 compared to
1:49:1 at December 31, 1996. The change in this financial ratio
was adversely impacted by the Company's first quarter 1997 loss.
For the quarter ended March 31, 1997, cash provided by operating
activities was $81,000 compared to $319,000 provided by operating
activities for the same period in 1996. The primary source of
this cash in the quarter ended March 31, 1997 was the liquidation
of accounts receivable, which decreased $631,000 in the quarter.
The long term debt was restructured in March 1997 increasing the
availability of cash approximately $300,000. Overall for the
quarter ended March 31, 1997, because of the debt restructuring,
the Company had a net increase in cash of $184,000 compared to a
net decrease of $336,000 in 1996.
Management continues to manage its cash resources during periods
of losses. The Company believes that 1997 will require continued
resourcefulness to cash management. In the first quarter of 1997
the Company's management has already responded with
additional labor cut-backs there by maximizing the production
man/machine ratios.
<PAGE>
PART II OTHER INFORMATION
ITEM 5:
There were no dividends declared in the quarter.
ITEM 6:
On May 15, 1997 the Company filed a Form 12b requesting a filing
extension of the Quarterly Report Form 10-Q for the quarter
ended March 31, 1997.
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
