-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RGvIo2pg+vpHUAVnqGzk8VNsWLG2gmLRS58fQpodIa3mmFXt9RVXpfYwWbuABzO0 NeF7HURh52YL+dvoGy2rJg== 0000076954-97-000002.txt : 19970314 0000076954-97-000002.hdr.sgml : 19970314 ACCESSION NUMBER: 0000076954-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEERLESS MANUFACTURING CO CENTRAL INDEX KEY: 0000076954 STANDARD INDUSTRIAL CLASSIFICATION: 3569 IRS NUMBER: 750724417 STATE OF INCORPORATION: TX FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-05214 FILM NUMBER: 97533966 BUSINESS ADDRESS: STREET 1: 2819 WALNUT HILL LN CITY: DALLAS STATE: TX ZIP: 75229 BUSINESS PHONE: 2143576181 MAIL ADDRESS: STREET 1: P.O. BOX 540667 CITY: DALLAS STATE: TX ZIP: 75354 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Form 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended December 31, 1996 Commission File Number 0-5214 Peerless Mfg. Co. ________________________________________________________________________ (Exact name of registrant as specified in its charter) Texas 75-0724417 ________________________________________________________________________ (State or other jurisdiction of ( I.R.S. Employer incorporation or organization) identification No.) 2819 Walnut Hill Lane Dallas, Texas 75229 P. O. Box 540667 Dallas, Texas 75354 ________________________________________________________________________ (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (214) 357-6181 None ________________________________________________________________________ Former name, former address and former fiscal year, if changed since last report. Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceeding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Class Outstanding at December 31, 1996 _____________________________ _________________________________ Common stock, $1.00 par value 1,454,742 Shares PEERLESS MFG. CO. INDEX Page Number Part I: Financial Information _________ Condensed Consolidated Balance Sheets for the periods ended December 31, 1996 and June 30, 1996 3 Condensed Consolidated Statements of Earnings for the three and six months ended December 31, 1996 and 1995 4 Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 1996 and 1995 5 Notes to the Condensed Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 9 Part II: Other Information 10 Exhibits 11 - 12 Signatures 13 2 of 13 PEERLESS MFG. CO. CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 31, JUNE 30, 1996 1996 _____________ _____________ ASSETS (UNAUDITED) (AUDITED) Current assets: Cash and cash equivalents $140,831 $2,082,329 Short term investments 248,950 246,659 Accounts receivable 11,355,273 8,700,762 Inventories: Raw materials 1,044,908 1,094,774 Work in process 3,043,315 2,757,798 Finished goods 18,395 286,393 Deferred income taxes 226,214 226,214 Other 330,522 620,072 ----------- ----------- Total current assets 16,408,408 16,015,001 Property,plant and equipment-net 1,423,676 1,213,859 Property held for investment-net 920,913 948,775 Other assets 380,280 453,390 ----------- ----------- $19,133,277 $18,631,025 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $400,000 $0 Accounts payable-trade 4,327,413 4,329,645 Advance payments from customers 1,159,595 435,549 Commissions payable 745,614 566,766 Accrued liabilities 834,053 1,332,441 ----------- ----------- Total current liabilities 7,466,675 6,664,401 Deferred income taxes 86,768 86,768 Stockholders' equity: Common stock-authorized 4,000,000 shares of $1 par value; issued and outstanding, 1,454,742 shares at September 30, 1996 and 1,446,742 at June 30, 1996 1,454,742 1,446,742 Additional paid-in capital 2,562,129 2,489,879 Unamortized value of restricted stock issue (89,275) (33,750) Cumulative foreign currency translation adjustment (25,453) 23,842 Retained earnings 7,677,691 7,953,143 ----------- ----------- 11,579,834 11,879,856 ----------- ----------- $19,133,277 $18,631,025 =========== =========== The accompanying notes are an integral part of these statements. 3 of 13
PEERLESS MFG. CO. CONDENSED STATEMENTS OF EARNINGS (UNAUDITED) Three Months Ended Six Months Ended __________________________ ___________________________ December 31, December 31, __________________________ ___________________________ 1996 1995 1996 1995 __________ __________ ___________ ___________ Net sales $9,761,204 $9,206,547 $17,276,653 $15,307,009 Cost of goods sold 6,722,071 6,501,070 12,127,299 11,254,278 ---------- ---------- ---------- ---------- Gross profit 3,039,133 2,705,477 5,149,354 4,052,731 Operating expenses Marketing and engineering 2,255,765 1,927,711 4,346,493 3,710,133 General and administrative 504,290 365,979 900,547 672,946 ---------- ---------- ---------- ---------- Operating earnings(loss) 279,078 411,787 (97,686) (330,348) Other income(expense) Interest (993) 15,531 11,003 30,112 Sundry 156,067 (36,649) 182,741 (31,239) ---------- ---------- ---------- ---------- 155,074 (21,118) 193,744 (1,127) ---------- ---------- ---------- ---------- before Federal Income Tax 434,152 390,669 96,058 (331,475) Federal Income Tax Current 64,799 111,324 7,825 (117,586) Deferred 0 0 0 0 ---------- ---------- ---------- ---------- 64,799 111,324 7,825 (117,586) ---------- ---------- ---------- ---------- Net earnings(loss) 369,353 279,345 88,233 (213,889) ========== ========== ========== ========== Earnings(loss) per common share $0.25 $0.19 $0.06 ($0.15) ========== ========== ========== ========== Weighted average number of common shares outstanding 1,454,742 1,446,742 1,454,101 1,446,742 ========== ========== ========== ========== Cash dividend per common share $0.125 $0.125 $0.250 $0.250 ========== ========== ========== ========== The accompanying notes are an integral part of these statements. 4 of 13
PEERLESS MFG. CO. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the six months ended December 31, _________________________ 1996 1995 ____________ ____________ Cash flows from operating activities: Net earnings(loss) from operating activities $88,233 ($213,889) Adjustments to reconcile net earnings to net cash provided (used) by operating activities: Depreciation and amortization 166,561 167,121 Other 24,725 31,679 Changes in assets and liabilities (Increase) decrease in: Accounts receivable (2,654,511) (1,340,884) Inventories 32,347 (687,169) Other current assets 289,550 (34,590) Other assets 61,124 256,349 Increase (decrease) in: Accounts payable (2,230) 884,050 Commissions payable 178,848 (119,578) Advance payments from customers 724,046 572,340 Accrued liabilities (498,388) (64,314) ---------- ---------- (1,677,928) (334,996) ---------- ---------- Net cash (used in) provided by continuing operations (1,589,695) (548,885) Cash flows from investing activities: Net purchases of short term investments (2,291) (11,105) Purchase of equipment net of disposals (336,531) (28,198) ---------- ---------- Net cash used in investing activities (338,822) (39,303) Cash flows from financing activities: Dividends paid (363,686) (361,696) Net borrowing 400,000 0 ---------- ---------- Net cash used in financing activities 36,314 (361,696) Effect of exchange rate on cash (49,295) (4,604) ---------- ---------- Net increase (decrease) in cash and cash equivalents (1,941,498) (954,488) Cash and cash equivalents at beginning of period 2,082,329 961,747 ---------- ---------- Cash and cash equivalents at end period $140,831 $7,259 ========== ========== The accompanying notes are an integral part of these statements 5 of 13
PEERLESS MFG. CO. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of only the normal recurring accruals, necessary to present fairly its financial position as of December 31,and June 30, 1996 and the results of operations and cash flows for the six months ended December 31, 1996 and 1995. 2. The results for the interim periods are not necessarily indicative of the results to be expected for the full year. Peerless Mfg. Co. designs and manufactures custom contracted pressure vessels and other products to customer specifications, sales of which are obtained by competitive bids and may result in material sales and profitability increases or decreases when comparing interim periods between years. The Company generally recognizes sales of custom-contracted products at the completion of the manufacturing process, which is normally less than one year. The percentage-of-completion method is used for significant long-term contracts. 3. The adjusted backlog of uncompleted orders and letters of intent at December 31, 1996 was approximately $24,800,000 as compared to a December 31, 1995 backlog of $19,000,000. The Company has scheduled approximately 90% of the backlog for shipment in the third and fourth quarters of the current fiscal year. 4. The Company has a formal agreement with a bank for a $5,000,000 continuing line of credit, renewable annually. Under the terms of this agreement, loans bear interest at the prevailing prime rate and the Company is required to pay 1/4 of 1% per annum on the unused portion of the facility. The Company had $400,000 outstanding under this line at December 31, 1996, and no loans outstanding December 31, 1995. 5. The Company consolidates the accounts of its wholly-owned foreign subsidiaries, Peerless Europe Limited, Peerless International N.V. and its wholly-owned foreign subsidiary, Peerless Europe B.V. All significant intercompany accounts and transactions have been eliminated in the consolidation. 6 of 13 PEERLESS MFG. CO. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are subject to inherent risks and uncertainties, some of which cannot be predicted or quantified. Actual results could differ materially from those projected in the forward-looking statements as a result of changes in market conditions, increased competition, or other factors. Capital Resources and Liquidity - - ------------------------------- As a general policy, the Company maintains corporate liquidity at a level adequate to support existing operations and planned internal growth, and to allow continued operations through periods of unanticipated adversity. Cash and equivalents decreased $1,941,498 from June 30, 1996. Company operations used $1,589,695 of cash during the six months ended December 31, 1996. Additional uses of cash for the six months ended December 31, 1996 included expenditures of $336,531 for fixed asset acquisitions and dividend payments of $363,686. As indicated, operations used $1,589,695 of cash in the six months ended December 31, 1996. Funds used in operations were primarily from increases in accounts receivable of $2,654,511 and payments of accounts payable and accrued liabilities of $2,230 and $498,388 respectively. These uses of cash were offset by provisions by advances from customers and increases in commissions to agents of $724,046 and $178,848 respectively, and decreases in inventories, and other assets of $32,347 and $350,674 respectively. The Company has historically financed and continues to finance plant expansion, equipment purchases, acquisitions and working capital requirements primarily through the retention of earnings, which is reflected by the absence of long-term debt. In addition to retained earnings, the Company has from time to time used a short-term bank credit line of $5,000,000 to supplement working capital. At December 31, 1996 the Company had currently drawn down $400,000 on this line of credit. The Company has no material commitments for capital expenditures other than its established program of maintaining existing plant and equipment. 7 of 13 Changes - Second Quarter of Fiscal 1997 vs. Second Quarter 1996 - - --------------------------------------------------------------- Results of 2nd Qtr. Six Months Operations 1997 vs.1996 1997 vs. 1996 - - ------------------- -------------------- --------------------- Sales $554,657 increase $1,969,644 increase 6.0% 12.9% Sales for the three months ended December 31, 1996 compare favorably to sales for the three months ended December 31, 1995. Sales for the six months ended December 31, 1996 compare favorably to sales for the six months ended December 31, 1995 reflecting increased product shipment and fewer delays by customers in taking product as scheduled. - - ------------------- -------------------- --------------------- Gross Profit $333,656 increase $1,096,623 increase 12.3% 27.1% Gross profit increase resulted from increased sales recorded in the three months ended December 31, 1996. Gross profit as a percent of sales was 31.1% for the three months ended December 31, 1996 vs. 29.4% for the three months ended December 31, 1995. The increase in the gross profit percentage in the current quarter and six month period was primarily due to the higher profits available on the mix of products shipped in Fiscal 1997 vs. Fiscal 1996. - - ------------------- -------------------- --------------------- Operating Expenses $466,365 increase $863,961 increase 20.3% 19.7% Operating expenses increased $466,365 from second quarter Fiscal 1997 vs. second quarter Fiscal 1996. This increase is primarily attributable to agent commissions and engineering expenses of approximately $160,000 each, and other administrative expenses of approximately $140,000. These increases reflect the operating expenses as a base to realize additional sales as reflected in the increased sales and gross profits realized in the three months ended December 31, 1996 vs. the three months ended December 31, 1995. 8 of 13 - - ------------------- -------------------- --------------------- Other Income(Expense) $176,619 increase $194,871 increase Changes in other income reflect gains related to foreign exchange transactions of approximately $168,000 in the three months ended December 31, 1996 vs. losses related to foreign exchange transactions of approximately $28,000 in the three months ended December 31, 1995. - - ------------------- -------------------- --------------------- Net Earnings (Loss) $90,008 increase $302,122 increase The increase in net earnings for the three months ended December 31, 1996, when compared to the preceding Fiscal year, reflects the foreign exchange gains and reduction of taxes of approximately $196,000 and $46,000 respectively offset by decreases in operating earnings and interest income of approximately $133,000 and $16,000 respectively. 9 of 13 PEERLESS MFG. CO. PART II OTHER INFORMATION Item 1 -- Legal proceedings - - --------------------------- Reference is made to Form 10-K Annual Report, as amended, Item 3, Page 6, "Legal Proceedings" for the Fiscal year ended June 30, 1996. For the three months ended December 31, 1996 there were no new proceedings filed against the Company. Item 4 -- Submission of Matters to a Vote of Security Holders - - ------------------------------------------------------------- The Company held its annual meeting on November 21, 1996. At this meeting, the shareholders elected as directors of the Company, Sherrill Stone, Donald A. Sillers, Jr., David D. Battershell, Bernard S. Lee, and Joseph V. Mariner, Jr. The tabulation of the votes with respect to the election of directors is as follows: Nominee Shares For Shares Withheld --------- ---------- --------------- Sherrill Stone 1,299,098 10,048 Donald A. Sillers, Jr. 1,297,368 11,778 David D. Battershell 1,298,368 10,778 Bernard S. Lee 1,298,905 10,241 Joseph V. Mariner, Jr. 1,295,393 13,753 The shareholders approved the adoption of the Peerless Mfg. Co. 1995 Stock Option and Restricted Stock Plan. The tabulation of the votes with respect to the approval of the Plan is as follows: For 900,347 Against 122,641 Abstain 11,767 Non-Votes 274,391 Item 9 -- Exhibits and Reports -- Form 8-K - - ------------------------------------------ There were no reports on Form 8-K for the three months ended December 31, 1996. 10 of 13 EXHIBITS: 3(a) The Company's Articles of Incorporation, as amended to date (filed as Exhibit 1 to the Company's Registration Statement on Form S-1, Registration No. 2-35767, and amended by the Company's December 12, 1990 Form 8 amending Exhibit 3(a) to the Company's Annual Report on Form 10-K dated June 30, 1990, and incorporated herein by reference). 3(b) The Company's Bylaws, as amended to date (filed as Exhibit 3(b) to the Company's Annual Report on Form 10- K, dated June 30, 1993, and incorporated herein by reference). 10(a) Incentive Compensation Plan effective January 1, 1981, as amended January 23, 1991 (filed as Exhibit 10(b) to the Company's Annual Report on Form 10-K, dated June 30, 1991, and incorporated herein by reference). 10(b) 1985 Restricted Stock Plan for Peerless Mfg. Co., effective December 13, 1985 (filed as Exhibit 10(b) to the Company's Annual Report on Form 10-K, dated June 30, 1993, and incorporated herein by reference). 10(c) 1991 Restricted Stock Plan for Non-Employee Directors of Peerless Mfg. Co., adopted subject to shareholder approval May 24, 1991, and approved by shareholders November 20, 1991 (filed as Exhibit 10(e) to the Company's Annual Report on Form 10-K dated June 30, 1991, and incorporated herein by reference). 10(d) Employment Agreement, dated as of April 29, 1994, by and between the Company and Sherrill Stone (filed as Exhibit 10(d) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1994, and incorporated herein by reference). 11 of 13 10(e) Agreement, dated as of April 29, 1994, by and between the Company and Sherrill Stone (filed as Exhibit 10(e) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1994, and incorporated herein by reference). 10(f) Loan Agreement, dated as of December 14, 1993, between NationsBank of Texas, N.A. and the Company (filed as Exhibit 10(f) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1994, and incorporated herein by reference). 10(g) Second Amended and Restated Loan Agreement, dated as of February 13, 1995, by and between NationsBank of Texas, N.A. and the Company (filed as Exhibit 10(g) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996, and incorporated herein by reference). 10(h) Third Amended and Restated Loan Agreement, dated as of December 12, 1995, by and between NationsBank of Texas, N.A. and the Company (filed as Exhibit 10(f) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996, and incorporated herein by reference). 21 Subsidiaries of the Company (filed as Exhibit 21 to the Company's Annual Report on Form 10-K dated June 30, 1993, and incorporated herein by reference). 27 Financial Data Schedule.* *Filed herewith 12 of 13 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 thereto duly authorized. PEERLESS MFG. CO. -- Registrant Dated: February 14, 1997 /s/ SHERRILL STONE /s/ KENT J. VAN HOUTEN - - ------------------------------ ------------------------------- Sherrill Stone Kent J. Van Houten Chairman, President and Secretary - Treasurer and Chief Executive Officer Chief Financial Officer 13 of 13 EX-27 2
5 6-MOS JUN-30-1997 DEC-31-1996 140,831 248,950 11,495,590 140,317 4,106,618 16,408,408 7,760,305 5,415,716 19,133,277 7,466,675 0 0 0 1,454,742 10,125,092 19,133,277 17,276,653 17,276,653 12,127,299 12,127,299 4,326,486 26,575 6,591 96,058 7,825 88,233 0 0 0 88,233 .06 0
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