-----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, HvmPWAS5cZ7GMvTR809pcffd1a5aWQT1S6GtzMpl35Ph7OPZAdMX6njR2UWRfwbQ y8JKa9mcVen0qBMqi2Y0tQ== 0000950134-06-006259.txt : 20061024 0000950134-06-006259.hdr.sgml : 20061024 20060330150648 ACCESSION NUMBER: 0000950134-06-006259 CONFORMED SUBMISSION TYPE: CORRESP PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20060330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEERLESS MANUFACTURING CO CENTRAL INDEX KEY: 0000076954 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT, NEC [3569] IRS NUMBER: 750724417 STATE OF INCORPORATION: TX FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: CORRESP 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 CORRESP 1 filename1.htm corresp
 

         
PEERLESS MFG. CO.
  (PEERLESS LOGO)   CORPORATE HEADQUARTERS

2819 WALNUT HILL LANE
DALLAS, TEXAS 75229
P.O. BOX 540667
DALLAS, TEXAS 75354
 
   
 
  TELEPHONE (214) 357-6181
 
  FAX (214) 351-0194
 
  www.peerlessmfg.com
March 30, 2006
Rufus Decker
Accounting Branch Chief
Securities and Exchange Commission
Washington, D.C. 20549-7010
     
RE:
  Form 10-K for the year ended June 30, 2005
 
  Form 10-Q for the quarter ended December 31, 2005
 
  File No. 0-5214
Dear Mr. Decker:
     We have received and reviewed your letter dated March 3, 2006. We respectfully submit the attached responses to the points raised in your letter.
     As instructed in your letter, we acknowledge that: (i) the Company is responsible for the adequacy and accuracy of the disclosures in our filings, (ii) staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking additional action with respect to the filing, and (iii) the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the Untied States.
     Should you have further questions or need additional information, please do not hesitate to contact us.
Regards,
/s/ Henry G. Schopfer, III
Henry G. Schopfer, III
Chief Finance Officer

Page 1 of 15

 

Peerless Mfg. Co.   Form 10-K for the year ended June 30, 2005
File No. 0-5214   Form 10-Q for the quarter ended December 31, 2005
FORM 10-K FOR THE YEAR ENDED JUNE 30, 2005
General
1.   Where a comment below requests additional disclosures or other revisions to be made, please show us in your response what the revisions will look like. These revisions should be included in future filings.
RESPONSE: In responding to the below comments where additional disclosures or other revisions need to be made, we have included what the revisions will look like and will include the revisions in future filings.

Page 2 of 15

 

Peerless Mfg. Co.   Form 10-K for the year ended June 30, 2005
File No. 0-5214   Form 10-Q for the quarter ended December 31, 2005
FORM 10-K FOR THE YEAR ENDED JUNE 30, 2005
Item 7. Management’s Discussion and Analysis
Results of Operations — Consolidated
Gross Profit Margin, page 12
2.   Please disclose the types of expenses that you include in each of the following line items: cost of goods sold, sales and marketing, engineering and project management, and general administrative. Please disclose whether you include inbound freight charges, purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs, and the other costs of your distribution network in the cost of goods sold line item. With exception of warehousing costs, if you currently exclude a portion of these costs from cost of goods sold, please disclose:
  •   In a footnote the line items that these excluded costs are included in and the amounts included in each line item for each period presented, and
 
  •   In MD&A that your gross margins may not be comparable to those of other entities, since some entities include all of the costs related of their distribution network in cost of goods sold and others like you exclude a portion of them from gross margin, including them instead in another line item, such as general and administrative expenses.
RESPONSE: The disclosures will be expanded to incorporate the types of expenses included in each item. The revised disclosure, in the respective sections, would be similar to the following:
“Cost of goods sold includes manufacturing and distribution costs for products sold. These costs include material, direct labor, indirect labor, manufacturing overhead, sub-contract work, inbound freight, outbound freight, purchasing, receiving, inspection, warehousing, internal transfer costs, and other costs of our manufacturing and distribution processes.”
(Note: As the cost of goods sold line item does not exclude any portion of these costs, no additional disclosures will be added in a footnote or MD&A.)
“Sales and marketing expenses include payroll, employee benefits, stock-based compensation and other employee-related costs associated with sales and marketing personnel. Additionally, sales and marketing expenses include travel and entertainment, advertising, promotions, trade shows, seminars, and other programs.”
“Engineering and project management expenses include payroll, employee benefits, stock-based compensation and other employee-related costs associated with engineering, project management and field service personnel. Additionally, engineering and project management expenses include the cost of sub-contracted engineering services.”
“General and administrative costs include payroll, employee benefits, stock-based compensation and other employee-related costs and departmental functional costs associated with executive management, finance, accounting, human resources, information systems, and other administrative employees. Additionally, general and administrative costs include facility costs, insurance, audit fees, legal fees, reporting expense, professional services, and other administrative fees.”

Page 3 of 15

 

Peerless Mfg. Co.   Form 10-K for the year ended June 30, 2005
File No. 0-5214   Form 10-Q for the quarter ended December 31, 2005
FORM 10-K FOR THE YEAR ENDED JUNE 30, 2005
Item 7. Management’s Discussion and Analysis
Results of Operations — Consolidated
Gross Profit Margin, page 12
3.   Given that selling margin excludes amounts that are included in gross profit margin, which is calculated and presented in accordance with GAAP on your statements of operations, we would expect to see all of the disclosures required by Item 10(e)(1)(i) of Regulation S-K. Please provide these disclosures, or tell us how you determined they are not necessary.
RESPONSE: We will discontinue the discussion of selling margin and limit our discussion to gross profit margin, as calculated in accordance with GAAP and presented in our financial statements.

Page 4 of 15

 

Peerless Mfg. Co.   Form 10-K for the year ended June 30, 2005
File No. 0-5214   Form 10-Q for the quarter ended December 31, 2005
FORM 10-K FOR THE YEAR ENDED JUNE 30, 2005
Results of Operations — Segments
4.   Please tell us more about the correction associated with control deficiencies. Specifically, please address the following:
  •   Tell us the nature of the corrections including the periods impacted, the line items on your financial statements that were impacted, and the amount of the corrections for each annual and quarterly period in the last three years ended June 30, 2005; and
 
  •   It appears that you recorded a cumulative catch-up adjustments in the quarter ended December 31, 2004. Show us the analysis you performed in determining prior periods did not need to be restated. Refer to SAB Topics 1:M and 5:F.
RESPONSE: The “control deficiency” related to two areas. The first area involved incomplete supporting documentation (customer purchase orders) for our backlog. The correction of this “control deficiency” required procedural changes and did not have any impact to our financial statements.
The second area of “control deficiency” was related to the estimate to complete (total costs to complete) certain projects being accounted for using percentage of completion. In some cases the estimated final cost to complete was too low, while in other cases the estimated final cost was too high. The correction associated with this control deficiency required procedural changes and impacted the revenue and gross profit line items in our financial statements. A “catch-up” adjustment was recorded in the quarter ended December 31, 2004 when the “control deficiency” was identified.
As requested, the tables on the following two pages (page # 6 of 15 and page # 7 of 15) display the impact of the “control deficiency” and the subsequent correction by quarter and fiscal year for the last three years.
In evaluating the impact, the corrections were determined not to be material either to past-presented financial information, trends in earnings or to the most current projected results for the current fiscal year. Nor was the impact of the corrections material to the reported revenues or gross profits, or computed compliance with the Company’s loan covenants.
The evaluation of whether the impact of the corrections would have a material affect on the perceptions of shareholders/analyst required judgment and the application of the “reasonable person” threshold principle. In evaluating the impact of the corrections at the largest point (fiscal year ended 6/30/04), it was reasonable to believe that irrespective of whether the Company had reported net earnings from continuing operations of $2,342,000 ($.77 per diluted share) versus $2,402,000 ($.79 per diluted share) – the basic perceptions with respect to the Company’s operating performance would be the same, especially when viewed in relation to the Company’s trend from FY 2003 (net earnings from continuing operations of $911,000, or $.30 per diluted share.

Page 5 of 15

 

Peerless Mfg. Co.
Form 10-K selected data for the fiscal year ended June 30, 2005
Revenues, Gross Profit, Net Earnings (loss), and Diluted EPS from Continuing Operations ($000)
                         
    Twelve months ended  
    6/30/2005     6/30/2004     6/30/2003  
AS REPORTED
                        
Revenues
   $ 51,063     $ 59,761     $ 64,854  
Gross profit
     13,707       18,802       17,012  
Net earnings (loss)
     (526 )     2,402       911  
Diluted EPS
   $ (0.17 )   $ 0.79     $ 0.30  
 
    Twelve months ended  
    6/30/2005     6/30/2004     6/30/2003  
ADJUSTED FOR IMPACT
                        
Revenues
   $ 51,524     $ 59,300     $ 64,854  
Gross profit
     13,799       18,710       17,012  
Net earnings (loss)
     (466 )     2,342       911  
Diluted EPS
   $ (0.15 )   $ 0.77     $ 0.30  
 
    Twelve months ended  
    6/30/2005     6/30/2004     6/30/2003  
IMPACT
                        
Revenues
   $ 461     $ (461 )   $ —  
Gross profit
     92       (92 )     —  
Net earnings (loss)
     60       (60 )     —  
Diluted EPS
   $ 0.02     $ (0.02 )   $ —  

Page 6 of 15

 

Peerless Mfg. Co.
Form 10-Q selected data for the quarters ended September 30, 2002 through June 30, 2005
Revenues, Gross Profit, Net Earnings (loss), and Diluted EPS from Continuing Operations ($000)
                                                 
    AS REPORTED     ADJUSTED FOR IMPACT     IMPACT  
    Three months ended     Three months ended     Three months ended  
    9/30/2003     9/30/2002     9/30/2003     9/30/2002     9/30/2003     9/30/2002  
             
Revenues
   $ 16,807     $ 13,276     $ 16,807     $ 13,276     $ —     $ —  
Gross profit
     4,806       3,273       4,806       3,273       —       —  
Net earnings (loss)
     740       (1,055 )     740       (1,055 )     —       —  
Diluted EPS
   $ 0.24     $ (0.35 )   $ 0.24     $ (0.35 )   $ 0.00     $ 0.00  
                                                 
    Three months ended     Three months ended     Three months ended  
    12/31/2003     12/31/2002     12/31/2003     12/31/2002     12/31/2003     12/31/2002  
             
Revenues
   $ 16,429     $ 20,011     $ 16,429     $ 20,011     $ —     $ —  
Gross profit
     4,545       4,476       4,545       4,476       —       —  
Net earnings (loss)
     609       468       609       468       —       —  
Diluted EPS
   $ 0.20     $ 0.15     $ 0.20     $ 0.15     $ 0.00     $ 0.00  
                                                 
    Three months ended     Three months ended     Three months ended  
    3/31/2004     3/31/2003     3/31/2004     3/31/2003     3/31/2004     3/31/2003  
             
Revenues
   $ 13,491     $ 12,822     $ 13,246     $ 12,822     $ (245 )   $ —  
Gross profit
     4,812       3,637       4,810       3,637       (2 )     —  
Net earnings (loss)
     555       (56 )     554       (56 )     (1 )     —  
Diluted EPS
   $ 0.18     $ (0.02 )   $ 0.18     $ (0.02 )   $ (0.00 )   $ 0.00  
                                                 
    Three months ended     Three months ended     Three months ended  
    6/30/2004     6/30/2003     6/30/2004     6/30/2003     6/30/2004     6/30/2003  
             
Revenues
   $ 13,034     $ 18,475     $ 12,818     $ 18,475     $ (216 )   $ —  
Gross profit
     4,639       5,626       4,549       5,626       (90 )     —  
Net earnings (loss)
     498       1,554       439       1,554       (59 )     —  
Diluted EPS
   $ 0.16     $ 0.51     $ 0.14     $ 0.51     $ (0.02 )   $ 0.00  
                                                 
    Three months ended     Three months ended     Three months ended  
    9/30/2004     9/30/2003     9/30/2004     9/30/2003     9/30/2004     9/30/2003  
             
Revenues
   $ 11,218     $ 16,807     $ 11,203     $ 16,807     $ (15 )   $ —  
Gross profit
     3,215       4,806       3,203       4,806       (12 )     —  
Net earnings (loss)
     (109 )     740       (117 )     740       (8 )     —  
Diluted EPS
   $ (0.04 )   $ 0.24     $ (0.04 )   $ 0.24     $ (0.00 )   $ 0.00  
                                                 
    Three months ended     Three months ended     Three months ended  
    12/31/2004     12/31/2003     12/31/2004     12/31/2003     12/31/2004     12/31/2003  
             
Revenues
   $ 10,844     $ 16,429     $ 11,320     $ 16,429     $ 476     $ —  
Gross profit
     2,939       4,545       3,043       4,545       104       —  
Net earnings (loss)
     (464 )     609       (396 )     609       68       —  
Diluted EPS
   $ (0.15 )   $ 0.20     $ (0.13 )   $ 0.20     $ 0.02     $ 0.00  
                                                 
    Three months ended     Three months ended     Three months ended  
    3/31/2005     3/31/2004     3/31/2005     3/31/2004     3/31/2005     3/31/2004  
             
Revenues
   $ 12,999     $ 13,491     $ 12,999     $ 13,246     $ —     $ (245 )
Gross profit
     3,844       4,812       3,844       4,810       —       (2 )
Net earnings (loss)
     205       555       205       554       —       (1 )
Diluted EPS
   $ 0.07     $ 0.18     $ 0.07     $ 0.18     $ 0.00     $ (0.00 )
                                                 
    Three months ended     Three months ended     Three months ended  
    6/30/2005     6/30/2004     6/30/2005     6/30/2004     6/30/2005     6/30/2004  
             
Revenues
   $ 16,002     $ 13,034     $ 16,002     $ 12,818     $ —     $ (216 )
Gross profit
     3,709       4,639       3,709       4,549       —       (90 )
Net earnings (loss)
     (158 )     498       (158 )     439       —       (59 )
Diluted EPS
   $ (0.05 )   $ 0.16     $ (0.05 )   $ 0.14     $ 0.00     $ (0.02 )

Page 7 of 15

 

Peerless Mfg. Co.   Form 10-K for the year ended June 30, 2005
File No. 0-5214   Form 10-Q for the quarter ended December 31, 2005
FORM 10-K FOR THE YEAR ENDED JUNE 30, 2005
Segment Profit, page 16
5.   In your tables of profit by reportable segment, it is not clear why you have presented total segment profit. Please revise your presentation to remove the subtotal called total segment profit as it represents a non-GAAP measure when presented outside of the segment footnote. For additional guidance, refer to Questions 21 of our Frequently Asked Questions Regarding the Use of Non-GAAP Financial Measures, which was released on June 13, 2003.
RESPONSE: We will delete the presentation of the Non-GAAP financial measure for segment profit in future filings.

Page 8 of 15

 

Peerless Mfg. Co.   Form 10-K for the year ended June 30, 2005
File No. 0-5214   Form 10-Q for the quarter ended December 31, 2005
FORM 10-K FOR THE YEAR ENDED JUNE 30, 2005
tem 9A. controls and Procedures, page 54
6.   You state that your disclosure controls and procedures were effective in ensuring that all material information required to be filed in the Form 10-K was made known to your Chief Executive Officer and Chief Financial Officer in a timely fashion. This is an incomplete definition of disclosure controls and procedures per Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Please revise your definition to also clarify, if true, that your disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in your filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. Please also confirm to us that your disclosures controls and procedures were effective as of June 30, 2005, September 30, 2005, and December 31, 2005 when evaluating based on the complete definition of disclosure controls and procedures.
RESPONSE: The disclosure will be amended to incorporate the complete definition of disclosure controls and procedures. The revised wording in future filings is expected to be as follows:
“The Company’s management has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of these disclosure controls and procedures as of the end of the period covered by this Report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective in ensuring that all information required to be disclosed in this Report has been recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. “
The Company’s controls and procedures were effective as of June 30, 2005, September 30, 2005 and December 31, 2005 when evaluating based on the complete definition of disclosure controls and procedures as set forth above.

Page 9 of 15

 

Peerless Mfg. Co.   Form 10-K for the year ended June 30, 2005
File No. 0-5214   Form 10-Q for the quarter ended December 31, 2005
FORM 10-K FOR THE YEAR ENDED JUNE 30, 2005
Financial Statements
Consolidated Statements of Cash Flows, page 34
7.   We remind you that footnote 10 to SFAS 95 states that separate disclosure of cash flows pertaining to extraordinary items or discontinued operations is not required. Given that you have chosen to present these cash flows, please either separately identify cash flows from discontinued operations with each category of the cash flow statement, or separately identify operating, investing, and financing activities related to discontinued operations within a separate section of the cash flow statement. Please revise your presentation and provide disclosures regarding your change in presentation. Refer to AICPA Center for Public Company Audit Firms Alert # 90 dated February 15, 2006.
RESPONSE: We have referred to the AICPA Center for Public Company Audit Firms Alert # 90 dated February 15, 2006. A disclosure similar to the following will be added into the notes of future financial statements:
“In fiscal 2006 the Company has separately disclosed the operating, investing, and financing portions of cash flows attributable to discontinued operations, which in prior periods were reported on a combined basis as a single amount.”
The following page (page 11 of 15) contains a sample of our revised Consolidated Statements of Cash Flows reflecting the changes in the presentation of cash flows from discontinued operations.

Page 10 of 15

 

Peerless Mfg. Co.   Form 10-K for the year ended June 30, 2005
File No. 0-5214   Form 10-Q for the quarter ended December 31, 2005
PEERLESS MFG. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
                         
    Year ended June 30,  
    2006     2005     2004  
Cash flows from operating activities:
                        
Net earnings (loss)
   $ xxx   $ (592 )   $ 2,038  
Net loss from discontinued operations
      xx     66       364  
 
                  
Net earnings (loss) from continuing operations
     xxx     (526 )     2,402  
Adjustments to reconcile net earnings (loss) from continuing operations to net cash provided by operating activities:
                        
Depreciation and amortization
     xxx     636       754  
Deferred income taxes
     xxx     100       280  
Provision for bad debt
     xxx     318       39  
Provision for warranty expense
     xxx     541       880  
Inventory valuation reserve
     xxx     161       74  
Foreign exchange (gain) loss
     xxx     22       101  
Gain on sales on property and equipment
     xxx     —       —  
Stock option expense
     xxx     69       —  
 
     xxx                
Changes in operating assets and liabilities
     xxx                
Accounts receivable
     xxx     1,661       1,393  
Inventories
     xxx     (359 )     36  
Costs and earnings in excess of billings on uncompleted contracts
     xxx     2,288       (3,705 )
Other current assets
     xxx     (348 )     284  
Other assets
     xxx     138       59  
Accounts payable
     xxx     (1,236 )     (3,971 )
Billings in excess of costs and earnings uncompleted contracts
     xxx     1,682       (1,628 )
Commissions payable
     xxx     (82 )     (197 )
Product warranties
     xxx     (678 )     (744 )
Income taxes payable
     xxx     (557 )     534  
Accrued liabilities and other
     xxx     1,123       (887 )
 
                  
 
     xxx     5,479       (6,698 )
 
                  
Net cash provided by (used in) operating activities of continuing operations
     xxx     4,953       (4,296 )
 
                        
Cash flow from investing activities:
                        
Net proceeds from short-term investments
     xxx     —       309  
Net purchases of property and equipment
     xxx     (897 )     (407 )
 
                  
Net cash provided by (used in) investing activities of continuing operations
     xxx     (897 )     (98 )
 
                        
Cash flows from financing activities:
                        
Proceeds from sale of common stock
     xxx     140       98  
 
                  
Net cash provided by financing activities of continuing operations
     xxx     140       98  
Cash flows from discontinued operations — restated:
                        
Net cash provided by (used in) operating activities of discontinued operations
     xxx     xxx       xxx  
Net cash provided by (used in) investing activities of discontinued operations
     xxx     xxx       xxx  
Net cash provided by (used in) financing activities of discontinued operations
     xxx     xxx       xxx  
 
                  
Net cash provided by (used in) discontinued operations
     xxx     (41 )     1,755  
 
                        
Effect of exchange rate changes on cash and cash equivalents
     xxx     3       (20 )
 
                  
Net increase (decrease) in cash and cash equivalents
     xxx     4,158       (2,561 )
Cash and cash equivalents at beginning of period
     xxx     4,119       6,680  
 
                  
Cash and cash equivalents at end of period
     xxx   $ 8,277     $ 4,119  
 
                  
See accompanying notes to consolidated financial statements.

Page 11 of 15

 

Peerless Mfg. Co.   Form 10-K for the year ended June 30, 2005
File No. 0-5214   Form 10-Q for the quarter ended December 31, 2005
FORM 10-K FOR THE YEAR ENDED JUNE 30, 2005
Notes to Financial Statements
Note A. Nature of Operations and Summary of Significant Accounting Policies
Revenue Recognition, page 36
8.   In Note I you state that you warrant your products will be free defects in materials and workmanship and will conform to agreed upon specifications at the time of delivery and typically for a period of 12 to 18 months from date of customer acceptance. Please disclose what consideration is given to customer acceptance terms in determining when it is appropriate to recognize revenue.
RESPONSE: The term “customer acceptance” is used to define when our customer places the product in service. Because the Company recognizes revenues under the provisions of SOP 81-1, revenue is recognized based on the completion of the manufacturing requirements of the sales contract by applying the percentage of completion method of accounting, and is not contractually contingent on further “customer acceptance”. The product warranty period, per the sales contract, will generally be for a period of 18 months from shipment or 12 months from “customer acceptance”, whichever is less.

Page 12 of 15

 

Peerless Mfg. Co.   Form 10-K for the year ended June 30, 2005
File No. 0-5214   Form 10-Q for the quarter ended December 31, 2005
FORM 10-K FOR THE YEAR ENDED JUNE 30, 2005
Notes to Financial Statements
Note A. Nature of Operations and Summary of Significant Accounting Policies
Revenue Recognition, page 36
9.   Please disclose how you account for unapproved change orders, including whether you assume a profit component prior to the change orders being approved by your customer.
RESPONSE: We do not assume any profit component for change orders prior to being approved by our customers. We account for change orders upon receipt of a mutually agreed upon / legally binding document from our customer. Our disclosure will be amended to include our accounting for change orders.

Page 13 of 15

 

Peerless Mfg. Co.   Form 10-K for the year ended June 30, 2005
File No. 0-5214   Form 10-Q for the quarter ended December 31, 2005
FORM 10-K FOR THE YEAR ENDED JUNE 30, 2005
Exhibit 31
10.   Please confirm that the inclusion of your CEO and CFO’s title was not intended to limit the capacity in which such individual provided the certifications. Please remove the reference to the CEO and CFO’s titles in the introductory paragraph of the certifications to confirm to the format provided in Item 601(b)(31) of Regulation S-K.
RESPONSE: The inclusion of our CEO and CFO’s title was not intended to limit the capacity in which such individual provided the certifications. The reference to the CEO and CFO titles in the introductory paragraph will be removed from future certifications.

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Peerless Mfg. Co.   Form 10-K for the year ended June 30, 2005
File No. 0-5214   Form 10-Q for the quarter ended December 31, 2005
FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2005
General
11.   Please address the above comments in your interim filings as well
RESPONSE: For all of the above comments where revisions or additional disclosures are required, the revisions and additional disclosures will be included in our future interim filings.

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