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, 2000 Commission file No. 1-7215
PEERLESS TUBE COMPANY
New Jersey 22-1191280 (IRS Identification)
58-76 LOCUST AVENUE
BLOOMFIELD, NEW JERSEY 07003
TELEPHONE: 201-742-5100
Securities registered pursuant to section 12(g) of the act:
Title of Class Exchange
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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 $542,000. The market value is
based on $.22 as of May 2, 2000, 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 $.1800 - $.2800.
Common Stock, Par Value $1.33-1/3
Outstanding at March 31, 2000 2,462,973 shares
Documents incorporated by reference: None
PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 1
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PEERLESS TUBE COMPANY
TABLE OF CONTENTS
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<S> <C> <C> <C>
PART I FINANCIAL INFORMATION
ITEM I FINANCIAL STATEMENTS
Balance sheets as of March 31, 2000 (unaudited) and December 31, 1999 3
Statements of operations for the quarters ended March 31, 2000 (unaudited)
and 1999 (unaudited) 4
Statements of cash flows - for the quarters ended March 31, 2000 (unaudited)
and 1999 (unaudited) 5
Notes to the financial statements 6-7
ITEM II MANAGEMENT'S DISCUSSIONS & ANALYSIS OF THE FINANCIAL CONDITIONS 8-9
AND RESULTS OF OPERATIONS
PART II OTHER INFORMATION
Item 5 9
Item 6 9
Signatures 10
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PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 2
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PEERLESS TUBE COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
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(unaudited)
(rounded to nearest thousand)
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<S> <C> <C>
ASSETS
Current assets:
Cash $ 76,000 $ 50,000
Accounts receivable, less allowance for doubtful accounts of $100,000 1,421,000 1,373,000
Inventories 945,000 919,000
Prepaid expenses 60,000 63,000
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Total current assets 2,502,000 2,405,000
Property, plant and equipment, net 1,320,000 1,418,000
Deferred financing costs 157,000 165,000
Deferred tax assets, net of valuation allowance of $5,701,000
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Total assets $ 3,979,000 $ 3,988,000
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable $ 1,486,000 $ 740,000
Accrued liabilities 482,000 595,000
Revolving credit line 946,000 1,184,000
Current portion of long-term debt 307,000 307,000
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Total current liabilities 3,221,000 2,826,000
Long-term debt 1,638,000 1,715,000
Other liabilities 181,000 273,000
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Total liabilities 5,050,000 4,814,000
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Commitments and contingencies
Stockholders' deficiency:
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 18,548,000 18,303,000
Less - 73,962 shares of stock in treasury, at cost (344,000) (344,000)
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Total stockholders' deficiency 1,071,000 826,000
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Total liabilities and stockholders' deficiency $ 3,979,000 $ 3,988,000
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THE ACCOMPANYING NOTES SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS.
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PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 3
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PEERLESS TUBE COMPANY
STATEMENTS OF OPERATIONS FOR THE QUARTERS ENDED
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<CAPTION>
March 31, 2000 March 31, 1999
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(unaudited)
(rounded to nearest thousand except per share amount)
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<S> <C> <C>
Net sales $ 3,488,000 $ 3,828,000
Cost of sales 3,216,000 3,698,000
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Gross profit 272,000 130,000
Selling, general and administrative expenses 423,000 397,000
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Loss from operations 151,000 267,000
Interest expense 117,000 58,000
Other income 23,000 330,000
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Net income (loss) (245,000) 5,000
Accumulated deficiency:
Beginning of period 18,303,000 18,028,000
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End of period $ 18,548,000 $ 18,023,000
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Net income (loss) per share $ (0.10) $ 0.00
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Weighted average shares outstanding 2,462,973 2,462,973
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THE ACCOMPANYING NOTES SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS.
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PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 4
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PEERLESS TUBE COMPANY
STATEMENTS OF CASH FLOWS FOR THE QUARTERS ENDED
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<CAPTION>
March 31, 2000 March 31, 1999
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(unaudited)
(rounded to nearest thousand)
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Cash flows from operating activities:
Net income (loss) $ (245,000) $ 5,000
Adjustment to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 106,000 180,000
(Increase) decrease in operating assets:
Accounts receivable (48,000) (761,000)
Inventories (26,000) 243,000
Prepaid expenses 3,000 11,000
Other current assets
Increase (decrease) in operating liabilities:
Accounts payable 746,000 308,000
Accrued liabilities (113,000) (26,000)
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Total adjustments 668,000 (45,000)
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Net cash provided by (used in) operating activities 423,000 (40,000)
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Cash flows from financing activities:
Net borrowings (repayment) under credit line (238,000) 161,000
Reduction of long-term debt and other liabilities (159,000) 95,000
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Net cash provided by (used in) financing activities (397,000) 66,000
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Net increase in cash 26,000 26,000
Cash - beginning of period 50,000 15,000
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Cash - end of period $ 76,000 $ 41,000
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THE ACCOMPANYING NOTES SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS.
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PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 5
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PEERLESS TUBE COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 1: PREPARATION OF FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared by the
Company 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 From 10-K for the year ended
December 31, 1999.
In the opinion of management, these financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the financial position, result 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 tot he 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 present not
misleading in any material respect. There have been no significant changes in
accounting policy since December 31, 1999. The results of operations may not be
indicative of the results that may be excepted for the year ending December 31,
2000.
NOTE 2: BUSINESS AND DEBT RESTRUCTURING
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern. Since 1998, however, the Company
has suffered recurring losses from operations and negative cash flows and
currently has a stockholders' deficiency. These conditions raise substantial
doubt about its ability to continue as a going concern.
The Company's management has continually evaluated and reshaped its business to
improve the operational results of the Company and respond to the changes in the
economic and competitive market in which the Company operates. Major cost and
head count reduction programs previously implemented focused on reduction of
pension and employee benefits, particularly changes to healthcare benefits.
Except for periodic additions to meet peaks in sales demand, the Company has
reduced its workforce, both salaried and hourly. Management introduced and
implemented new programs to improve its production, inventory management and
management cost accounting systems.
With the anticipated cooperation of its secured lender and the additional
consolidation of plant assets, management believes that actions presently being
taken to improve the Company's operating performance including reduction of
staffing levels and stabilization of raw material prices will provide adequate
working capital, help minimize the financial losses, and create the opportunity
for the Company to continue as a going concern.
NOTE 3: INVENTORIES
Inventories are comprised of the following:
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INVENTORIES MARCH 31, 2000 DECEMBER 31, 1999
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<S> <C> <C>
Raw materials $ 437,000 $ 510,000
Finished goods 508,000 409,000
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Total $ 945,000 $ 919,000
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PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 6
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NOTE 4: ACCRUED LIABILITIES
Accrued liabilities is comprised of the following:
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ACCRUED LIABILITIES MARCH 31, 2000 DECEMBER 31, 1999
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<S> <C> <C>
Payroll, payroll taxes, and payroll related costs $ 227,000 $ 168,000
All other 255,000 427,000
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Total $ 482,000 $ 595,000
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NOTE 5: LONG-TERM DEBT
Long-term debt is comprised of the following:
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<CAPTION>
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LONG-TERM DEBT MARCH 31, 2000 DECEMBER 31, 1999
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<S> <C> <C>
Equipment term loan payable in monthly installments of $25,600
plus interest through July 1, 2006. The loan bears interest
at the prime rate plus 3% $ 1,945,000 $ 2,022,000
Less current portion 307,000 307,000
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Long-term debt $ 1,638,000 $ 1,715,000
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PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 7
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
THE FINANICAL CONDITION & RESULTS OF OPERATIONS
SALES AND RESULTS OF OPERATIONS 2000 COMPARED TO 1999
SALES
Sales for the quarter ended March 31, 2000 and 1999 totaled $3,488,000 and
$3,828,000, respectively.
The breakdown of overall sales from all sources for the first quarter ended
March 31, 2000 and 1999, respectively, was as follows:
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1ST QUARTER 1ST QUARTER $ %
NET SALES 2000 1999 CHANGE CHANGE
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<S> <C> <C> <C> <C>
Cans $ 2,832,000 $ 3,354,000 $ (522,000) (15.6)
Metal Tubes 426,000 242,000 184,000 76.0
Miscellaneous 230,000 232,000 (2,000) (0.8)
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Total $ 3,488,000 $ 3,828,000 $ (340,000) (8.9)
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GROSS PROFIT TRENDS AND DISCUSSION
The gross profit on sales for the quarter ended March 31, 2000 was $272,000, or
8% on sales of $3,488,000, as compared with the quarter ended March 31, 1999
where the gross profit on sales was $130,000, or 3% on sales of $3,828,000. This
improvement is due to lower raw material costs and reduced payroll.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the quarter ended March 31,
2000 were $423,000 or 12% of sales. For the quarter ended March 31, 1999
selling, general and administrative expenses were $397,000 or 10% of net sales.
INTEREST EXPENSE AND OTHER EXPENSES, NET
Interest expense for the quarter ended March 31, 2000 was $117,000 as compared
to $58,000 for the quarter ended March 31, 1999. In the first quarter of 1999
the Company had a one time credit of $308,000 resulting from the termination of
the Company's overfunded defined benefit pension plan.
PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 8
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LIQUIDITY AND CAPITAL RESOURCES
The Company has negative working capital of $719,000 at March 31, 2000 which is
approximately a $298,000 decrease in working capital from December 31, 1999.
For the three months ended March 31, 2000 cash provided by operating activities
was $423,000 compared to $40,000 used in operating activities for the same
period in 1999. The Company continues to work closely with its secured lenders.
The Company's revolving credit line for the quarter ended March 31, 2000 was
$946,000 as compared with $1,184,000 as of December 31, 1999 a decrease of
$238,000.
The Company's management has continually evaluated and reshaped its business to
improve the operational results of the Company and respond to the changes in the
economic and competitive market in which the Company operates. Except for
periodic additions to meet peaks in sales demands, the Company has reduced its
workforce, both salary and hourly. Also, management has introduced and
implemented new programs to improve its production and inventory management.
PART II - OTHER INFORMATION
ITEM 5:
There were no dividends declared in the quarter.
ITEM 6:
None.
PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 9
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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:
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Fredric Remington Jr.
Chairman
By:
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Richard W. Potts
President
PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 10
