10-Q 1 form10q.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 September 30, 2000 Commission File No. 1-7215 PEERLESS TUBE COMPANY New Jersey 22-1191280 (IRS Identification) 58-76 LOCUST AVENUE BLOOMFIELD, NEW JERSEY 07003 TELEPHONE: 201-743-5100 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 $199,626. The market value is based on $.14 as of September 30, 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 $.25 to $.10. Common Stock, Par Value $1.33-1/3 Outstanding at September 30, 2000. 2,462,973 shares Documents incorporated by reference: None PEERLESS TUBE COMPANY - September 30, 2000 Quarterly Report 10Q 1

PEERLESS TUBE COMPANY - September 30, 2000 Quarterly Report 10Q 2

THE ACCOMPANYING NOTES SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS. PEERLESS TUBE COMPANY - September 30, 2000 Quarterly Report 10Q 3

THE ACCOMPANYING NOTES SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS. PEERLESS TUBE COMPANY - September 30, 2000 Quarterly Report 10Q 4

THE ACCOMPANYING NOTES SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS. PEERLESS TUBE COMPANY - September 30, 2000 Quarterly Report 10Q 5 (Unaudited) PEERLESS TUBE COMPANY STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED September 30, 2000 September 30, 1999 ----------------- ------------------ (rounded to nearest thousand) Cash flows from operating activities: Net loss $ 1,007,000 $ 347,000 Adjustment to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 315,000 540,000 (Increase) decrease in operating assets: Accounts receivable 324,000 (490,000) Inventories 145,000 392,000 Prepaid expenses and other current assets 8,000 (23,000) Increase (decrease) in operating liabilities: Accounts payable 470,000 (1,001,000) Accrued liabilities 206,000 (657,000) Other liabilities (48,000) (80,000) -------------------------------------- Total adjustments 1,420,000 1,319,000 ------------------------------------- Net cash provided by (used in) operating activities 413,000 1,666,000 ------------------------------------- Cash flows from financing activities: Net borrowing under credit line -0- 456,000 Net repayments under credit line (218,000) -0- Increase (reduction) of long term debt and current maturities -0- 1,216,000 Repayments of long term debt and current maturities (231,000) -0- ------------------------------------- Net cash used in financing activities (449,000) 1,672,000 ------------------------------------- Net decrease (increase) in cash (36,000) 6,000 Cash - beginning of the period 50,000 15,000 ------------------------------------- Cash - end of period $14,000 $21,000 =========================================================================================================================

THE ACCOMPANYING NOTES SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS. PEERLESS TUBE COMPANY - September 30, 2000 Quarterly Report 10Q 6 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, 1999 and the Quarterly Report Form 10-Q for the Quarters ended June 30, 2000 and March 31, 2000. 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 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, 1999. The results of operations may not be indicative of the results that may be expected for the year ending December 31, 2000. NOTE 2: BUSINESS The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. S9ince 1988, 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 continues to evaluate and reshape its business plans to improve operating results and respond to changes in its very competitive market. Management continues to work towards improving the operating performance of the Company, including the stabilizing of its raw material costs. The Company has entered into an agreement that will result in the Company maximizing its purchasing power with certain key vendors. Also, as the company moves forward it has re-staffed key personnel in the operations area as the Company continues its quest to increase operational productivity. Although the competition remains strong in all areas of the business, the Company has been able to increase its market share in the aluminum tube product line with sales up 34% from the prior year. Sales in the aluminum can product line have decreased by 10% during the same period, largely due to increased competition. PEERLESS TUBE COMPANY - September 30, 2000 Quarterly Report 10Q 7 NOTE 3: DEBT RESTRUCTURING On July 29, 1999, the Company entered into a refinancing agreement with a major, national asset based lender, covering both a new revolving credit facility and a new term loan. Borrowings against the revolving credit facility are based on specific levels of accounts receivable and inventories of the Company and bear interest at the prime rate plus three percent on the outstanding balance. The initial draw against the revolving credit line was approximately $410,000. The term loan, which also carries interest at the prime rate plus three percent, will be amortized equally over 84 months. The initial amount of this loan was $2,150,000. There are minimum borrowing requirements of $1,500,000 and the maximum amount available under the combined borrowings is $5,000,000. The Company has pledged substantially all of its assets as collateral for these loans. In addition, the agreement requires the Company to comply with various financial covenants including restrictions on the amounts of capital expenditures and a prohibition on the payment of dividends on the Company's common stock. NOTE 4: INVENTORIES Inventories are comprised of the following:

NOTE 5: ACCRUED LIABILITIES Accrued liabilities are comprised of the following:

PEERLESS TUBE COMPANY - September 30, 2000 Quarterly Report 10Q 8 NOTE 6 - LONG-TERM DEBT Long-term debt is comprised of the following:

PEERLESS TUBE COMPANY - September 30, 2000 Quarterly Report 10Q 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION & RESULTS OF OPERATIONS SALES AND RESULTS OF OPERATIONS 2000 COMPARED TO 1999 SALES Sales for the quarter ended September 30, 2000 and 1999 totaled $2,976,000 and $3,536,000 respectively, resulting in a decrease of $560,000 or 16%. The sales for the nine months ended September 30, 2000 and 1999 were $9,755,000 and $10,751,000 respectively, resulting in a decrease of $966,000 or 9%. The breakdown of overall sales from all sources for the third quarter ended September 2000 and 1999 respectively was as follows:

In the third quarter ending September 30, 2000, two customers accounted for 41% (25% and 16%) of the Company's sales. GROSS PROFIT TRENDS AND DISCUSSION The gross profit on sales for the quarter ended September 30, 2000 was $78,000 or 2.6% on sales of $2,976,000. For the quarter ended September 30, 1999 the gross profit was $429,000 or 12% on sales of $3,586,000. For the nine months ended September 30, 2000 the gross profit was $495,000 or 5% on sales of $9,755,000 as compared to $854,000 or 8% on sales of $10,751,000 for the nine months ended September 30, 1999. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses for the quarter ended September 30, 2000 were $411,000 or 14% of sales. For the nine months ended September 30, 2000, selling, general and administrative expenses totaled $1,271,000 or 13% of sales. For the quarter ended September 30, 1999, selling, general and administrative expenses were $473,000 or 13% of sales and for the nine months ended September 30, 1999 they were $1,313,000 or 12% of sales. INTEREST EXPENSE AND OTHER EXPENSES, NET Interest expense for the quarter ended September 30, 2000 was $121,000 as compared to $107,000 for the quarter ended September 30, 1999. The differences in interest expense is related to the revolving nature of the line of credit which fluctuates in volume based on sales, rate of collection and inventory value. PEERLESS TUBE COMPANY - September 30, 2000 Quarterly Report 10Q 10 LIQUIDITY AND CAPITAL RESOURCES The Company had negative working capital of $1,392,000 at September 30, 2000, which is approximately a $971,000 decrease in working capital from December 31, 1999. For the nine months ended September 30, 2000 cash provided by operating activities was $413,000 as compared with $1,666,000 provided by operations for the same period in 1999. 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 - September 30, 2000 Quarterly Report 10Q 11 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: Frederic Remington, Jr. Chairman By: Richard W. Potts President

PEERLESS TUBE CO 10-Q