10-Q 1 0001.txt FORM 10-Q 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 -------------- -------- 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 PEERLESS TUBE COMPANY TABLE OF CONTENTS
PAGE ---- 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
PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 2 PEERLESS TUBE COMPANY BALANCE SHEETS
March 31, 2000 December 31, 1999 -------------- ----------------- (unaudited) (rounded to nearest thousand) -------------------------------------------------------------------------- ----------------------- --------------------- 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 -------------------------------------------------------------------------- ----------------------- --------------------- 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 -------------------------------------------------------------------------- ----------------------- --------------------- Total assets $ 3,979,000 $ 3,988,000 ========================================================================== ======================= ===================== 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 -------------------------------------------------------------------------- ----------------------- --------------------- Total current liabilities 3,221,000 2,826,000 Long-term debt 1,638,000 1,715,000 Other liabilities 181,000 273,000 -------------------------------------------------------------------------- ----------------------- --------------------- Total liabilities 5,050,000 4,814,000 -------------------------------------------------------------------------- ----------------------- --------------------- 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) -------------------------------------------------------------------------- ----------------------- --------------------- Total stockholders' deficiency 1,071,000 826,000 -------------------------------------------------------------------------- ----------------------- --------------------- Total liabilities and stockholders' deficiency $ 3,979,000 $ 3,988,000 ========================================================================== ======================= ===================== THE ACCOMPANYING NOTES SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS.
PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 3 PEERLESS TUBE COMPANY STATEMENTS OF OPERATIONS FOR THE QUARTERS ENDED
March 31, 2000 March 31, 1999 -------------- -------------- (unaudited) (rounded to nearest thousand except per share amount) -------------------------------------------------------------------------- ----------------------- --------------------- Net sales $ 3,488,000 $ 3,828,000 Cost of sales 3,216,000 3,698,000 -------------------------------------------------------------------------- ----------------------- --------------------- Gross profit 272,000 130,000 Selling, general and administrative expenses 423,000 397,000 -------------------------------------------------------------------------- ----------------------- --------------------- Loss from operations 151,000 267,000 Interest expense 117,000 58,000 Other income 23,000 330,000 -------------------------------------------------------------------------- ----------------------- --------------------- Net income (loss) (245,000) 5,000 Accumulated deficiency: Beginning of period 18,303,000 18,028,000 -------------------------------------------------------------------------- ----------------------- --------------------- End of period $ 18,548,000 $ 18,023,000 ========================================================================== ======================= ===================== Net income (loss) per share $ (0.10) $ 0.00 ========================================================================== ======================= ===================== Weighted average shares outstanding 2,462,973 2,462,973 ========================================================================== ======================= ===================== THE ACCOMPANYING NOTES SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS.
PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 4 PEERLESS TUBE COMPANY STATEMENTS OF CASH FLOWS FOR THE QUARTERS ENDED
March 31, 2000 March 31, 1999 -------------- -------------- (unaudited) (rounded to nearest thousand) ----------------------------------------------------------------------------- --------------------- -------------------- 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) ----------------------------------------------------------------------------- ------------------- --------------------- Total adjustments 668,000 (45,000) ----------------------------------------------------------------------------- ------------------- --------------------- Net cash provided by (used in) operating activities 423,000 (40,000) ----------------------------------------------------------------------------- ------------------- --------------------- 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 ----------------------------------------------------------------------------- ------------------- --------------------- Net cash provided by (used in) financing activities (397,000) 66,000 ----------------------------------------------------------------------------- ------------------- --------------------- Net increase in cash 26,000 26,000 Cash - beginning of period 50,000 15,000 ----------------------------------------------------------------------------- ------------------- --------------------- Cash - end of period $ 76,000 $ 41,000 ============================================================================= =================== ===================== THE ACCOMPANYING NOTES SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS.
PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 5 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:
-------------------------------------------------------------------------- ----------------------- ------------------------ INVENTORIES MARCH 31, 2000 DECEMBER 31, 1999 -------------------------------------------------------------------------- ----------------------- ------------------------ Raw materials $ 437,000 $ 510,000 Finished goods 508,000 409,000 -------------------------------------------------------------------------- ----------------------- ------------------------ Total $ 945,000 $ 919,000 -------------------------------------------------------------------------- ----------------------- ------------------------
PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 6 NOTE 4: ACCRUED LIABILITIES Accrued liabilities is comprised of the following:
-------------------------------------------------------------------------- ----------------------- ------------------------ ACCRUED LIABILITIES MARCH 31, 2000 DECEMBER 31, 1999 -------------------------------------------------------------------------- ----------------------- ------------------------ Payroll, payroll taxes, and payroll related costs $ 227,000 $ 168,000 All other 255,000 427,000 -------------------------------------------------------------------------- ----------------------- ------------------------ Total $ 482,000 $ 595,000 -------------------------------------------------------------------------- ----------------------- ------------------------
NOTE 5: LONG-TERM DEBT Long-term debt is comprised of the following:
-------------------------------------------------------------------------- ----------------------- ------------------------ LONG-TERM DEBT MARCH 31, 2000 DECEMBER 31, 1999 -------------------------------------------------------------------------- ----------------------- ------------------------ 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 -------------------------------------------------------------------------- ----------------------- ------------------------ Long-term debt $ 1,638,000 $ 1,715,000 -------------------------------------------------------------------------- ----------------------- ------------------------
PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 7 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:
------------------------- ------------------ ------------------- ------------------ ------------------ 1ST QUARTER 1ST QUARTER $ % NET SALES 2000 1999 CHANGE CHANGE ------------------------- ------------------ ------------------- ------------------ ------------------ 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) ------------------------- ------------------ ------------------- ------------------ ------------------ Total $ 3,488,000 $ 3,828,000 $ (340,000) (8.9) ------------------------- ------------------ ------------------- ------------------ ------------------
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 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 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: ----------------------------- Fredric Remington Jr. Chairman By: ----------------------------- Richard W. Potts President PEERLESS TUBE COMPANY - March 31, 2000 Quarterly Report 10Q 10