-----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, Ezh9sxAqCm5yQ2pLfPis6IiqkDD30RRA2dDWQd+QtSWe6RAL6dn5tUW+zxFt+0P4 y8qDUQ9wu2JI2dCy3D5sMA== 0000079225-03-000004.txt : 20030411 0000079225-03-000004.hdr.sgml : 20030411 20030411144530 ACCESSION NUMBER: 0000079225-03-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030228 FILED AS OF DATE: 20030411 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLYMOUTH RUBBER CO INC CENTRAL INDEX KEY: 0000079225 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED RUBBER PRODUCTS, NEC [3060] IRS NUMBER: 041733970 STATE OF INCORPORATION: MA FISCAL YEAR END: 1127 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05197 FILM NUMBER: 03646958 BUSINESS ADDRESS: STREET 1: 104 REVERE ST CITY: CANTON STATE: MA ZIP: 02021 BUSINESS PHONE: 6178280220 MAIL ADDRESS: STREET 1: PLYMOUTH RUBBER CO INC STREET 2: 104 REVERE ST CITY: CANTON STATE: MA ZIP: 02021 10-Q 1 form10q.txt FORM 10-Q 02/28/03 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended February 28, 2003 Commission File Number 1-5197 Plymouth Rubber Company, Inc. (Exact name of registrant as specified in its charter) Massachusetts 04-1733970 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 104 Revere Street, Massachusetts 02021 (Address of principal executive offices) (Zip Code) (781) 828-0220 Registrant's telephone number, including area code Not Applicable (Former name, former address, and former fiscal year, if changed since last report) Indicate by checkmark 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 receding 12 months (or for such 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 A common stock, par value $1 - 810,586 Class B common stock, par value $1 - 1,248,390 PLYMOUTH RUBBER COMPANY, INC. PART I. FINANCIAL INFORMATION Item 1. Condensed Financial Statements: Page No. Condensed Consolidated Statement of Operations and Retained Earnings (Deficit). . . . . . . . . . . . . . . . . . 2 Condensed Consolidated Statement of Comprehensive Income (Loss). 3 Condensed Consolidated Balance Sheet . . . . . . . . . . . . . . 4 Condensed Consolidated Statement of Cash Flows . . . . . . . . . 5 Notes to Condensed Consolidated Financial Statements . . . . . . 6-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . 10-15 Item 3. Quantitative and Qualitative Disclosure about Market Risks 16 Item 4. Controls and Procedures . . . . . . . . . . . . . . . . . 16 PART II. OTHER INFORMATION Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 17 Item 2. Changes In Securities . . . . . . . . . . . . . . . . . . 17 Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . 17 Item 4. Submission of Matters to a Vote of Security Holders . . . 17 Item 5. Other Information . . . . . . . . . . . . . . . . . . . . 17 Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 17 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 1 PART I. FINANCIAL INFORMATION Item 1. Financial Statements PLYMOUTH RUBBER COMPANY, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT) (In Thousands except Share and Per Share Amounts) (Unaudited) First Quarter Ended ------------------------ Feb. 28, March 1, 2003 2002 ---------- ---------- Net Sales . . . . . . . . . . . . . . $ 13,543 $ 13,941 ---------- ---------- Costs and Expenses: Cost of products sold . . . . . . . 11,771 10,854 Selling, general and administrative. . . . . . . . . . 2,766 2,815 ---------- ---------- 14,537 13,669 ---------- ---------- Operating income (loss) . . . . . . . (994) 272 Interest expense. . . . . . . . . . . (417) (495) Other income. . . . . . . . . . . . . 41 119 ---------- ---------- Loss before taxes . . . . . . . . . . (1,370) (104) Benefit (provision) for income taxes. (10) (23) ---------- ---------- Net loss. . . . . . . . . . . . . . . (1,380) (127) Retained earnings (deficit) at beginning of period . . . . . . . . (4,227) (4,328) ---------- ---------- Retained earnings (deficit) at end of period . . . . . . . . . . . $ (5,607) $ (4,455) ========== ========== Per Share Data: Basic Earnings (Loss) Per Share: Net loss. . . . . . . . . . . . . . . $ (0.67) $ (0.06) ========== ========== Weighted average number of shares outstanding. . . . . . . . . . 2,058,976 2,058,976 ========== ========== Diluted Earnings (Loss) Per Share: Net loss. . . . . . . . . . . . . . . $ (0.67) $ (0.06) ========== ========== Weighted average number of shares outstanding. . . . . . . . . . 2,058,976 2,058,976 ========== ========== See Accompanying Notes to Condensed Consolidated Financial Statements 2 PLYMOUTH RUBBER COMPANY, INC. CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (In Thousands) (Unaudited) First Quarter Ended ------------------------ Feb. 28, March 1, 2003 2002 ---------- ---------- Net loss. . . . . . . . . . . . . . . $ (1,380) $ (127) Other comprehensive income (loss), net of tax: Foreign currency translation adjustment. . . . . . . . . . . . 87 (15) ---------- ---------- Other comprehensive income (loss) . . 87 (15) ---------- ---------- Comprehensive loss. . . . . . . . . . $ (1,293) $ (142) ========== ========== See Accompanying Notes to Condensed Consolidated Financial Statements 3 PLYMOUTH RUBBER COMPANY, INC. CONDENSED CONSOLIDATED BALANCE SHEET (In Thousands) Feb. 28, Nov. 29, 2003 2002 ---------- ---------- Assets (Unaudited) Current Assets: Cash . . . . . . . . . . . . . . . . $ 3 $ 37 Accounts receivable, less allowance for doubtful accounts of $356 and $397 at February 28, 2003 and November 29, 2002. . . . . 10,544 11,366 Inventories: Raw materials . . . . . . . . . . . 4,052 3,481 Work in process . . . . . . . . . . 2,336 1,799 Finished goods. . . . . . . . . . . 6,536 6,361 ---------- ---------- 12,924 11,641 ---------- ---------- Prepaid expenses and other current assets. . . . . . . . . . . 825 984 ---------- ---------- Total current assets. . . . . . . 24,296 24,028 ---------- ---------- Plant Assets: Plant assets . . . . . . . . . . . . 48,022 47,627 Less: Accumulated depreciation . . . (27,043) (26,199) ---------- ---------- Total plant assets, net . . . . . 20,979 21,428 ---------- ---------- Other long-term assets. . . . . . . . 821 790 ---------- ---------- $ 46,096 $ 46,246 ========== ========== Liabilities and Stockholders' Equity Current Liabilities: Short-term debt. . . . . . . . . . . $ 13,513 $ 13,314 Accounts payable . . . . . . . . . . 8,881 7,035 Accrued expenses . . . . . . . . . . 3,712 4,482 Current portion of long-term obligations. . . . . . . . . . . . 1,790 1,536 ---------- ---------- Total current liabilities. . . . . 27,896 26,367 ---------- ---------- Long-Term Liabilities: Borrowings. . . . . . . . . . . . . 8,504 8,972 Pension obligation. . . . . . . . . 5,232 5,115 Deferred tax liability. . . . . . . 129 119 Other . . . . . . . . . . . . . . . 2,566 2,611 ---------- ---------- Total long-term liabilities. . . . 16,431 16,817 ---------- ---------- Stockholders' Equity: Preferred stock, $10 par value, 500,000 shares authorized; no shares issued and outstanding. . . -- -- Class A voting common stock, $1 par value, 1,500,000 shares authorized, 810,586 shares issued and outstanding. . . . . . . . . . . . 810 810 Class B non-voting common stock., $1 par value, 3,500,000 shares authorized, 1,281,304 shares issued and 1,248,390 shares outstanding. . 1,281 1,281 Paid in capital . . . . . . . . . . . 9,084 9,084 Retained earnings (deficit) . . . . . (5,607) (4,227) Accumulated other comprehensive loss. (3,614) (3,701) ---------- ---------- 1,954 3,247 Less: Treasury stock at cost (32,914 shares) . . . . . . . . . . (185) (185) ---------- ---------- Total stockholders' equity . . . . . . 1,769 3,062 ---------- ---------- $ 46,096 $ 46,246 ========== ========== See Accompanying Notes to Condensed Consolidated Financial Statements 4 PLYMOUTH RUBBER COMPANY, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (In Thousands) (Unaudited) Three Months Ended ------------------------ Feb. 28, March 1, 2003 2002 ---------- ---------- Cash flows relating to operating activities: Net loss . . . . . . . . . . . . . . $ (1,380) $ (127) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization . . 685 722 Gain on disposal of plant assets. -- (131) Changes in assets and liabilities: Accounts receivable . . . . . . . 988 2,428 Inventory . . . . . . . . . . . . (1,152) (941) Prepaid expenses and other current assets. . . . . . . . . 160 148 Other assets. . . . . . . . . . . 8 (74) Accounts payable. . . . . . . . . 1,744 (1,127) Accrued expenses. . . . . . . . . (787) (227) Pension obligation. . . . . . . . 117 36 Other liabilities . . . . . . . . (56) (114) ---------- ---------- Net cash provided by operating activities . . . . . . . . . . . . 327 593 ---------- ---------- Cash flows relating to investing activities: Capital expenditures . . . . . . . . (99) (64) Sale/lease back of plant assets. . . -- 46 Proceeds from sales of plant assets. -- 131 ---------- ---------- Net cash provided by (used in) investing activities . . . . . . . (99) 113 ---------- ---------- Cash flows relating to financing activities: Net increase (decrease) in short-term debt. . . . . . . . . . 230 (574) Payments on term debt. . . . . . . . (375) (109) Payments on capital leases . . . . . (68) (39) ---------- ---------- Net cash used in financing activities. (213) (722) ---------- ---------- Effect of exchange rates on cash . . . (49) 9 ---------- ---------- Net change in cash . . . . . . . . . . (34) (7) Cash at the beginning of the period. . 37 7 ---------- ---------- Cash at the end of the period. . . . . $ 3 $ -- ========== ========== Supplemental Disclosure of Cash Flow Information Cash paid for interest . . . . . . . . $ 500 $ 459 ========== ========== Cash paid for income taxes . . . . . . $ -- $ -- ========== ========== See Accompanying Notes to Condensed Consolidated Financial Statement 5 PLYMOUTH RUBBER COMPANY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) The Company, in its opinion, has included all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods. The interim financial information is not necessarily indicative of the results that will occur for the full year. The condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto for the years ended November 29, 2002, November 30, 2001, and December 1, 2000, included in the Company's 2002 Annual Report filed with the Securities and Exchange Commission on Form 10-K. (2) The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The negative working capital position of $3,600,000, the funding requirement for the defined benefit plan of $1,262,000 for the plan year ending November 30, 2002, the lack of sales growth, and the overall risks associated with the fiscal 2003 plan may indicate that the Company will be unable to continue as a going concern for a reasonable period of time. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management's belief that cash flows generated from operations and available incremental borrowings will be sufficient to meet the Company's liquidity needs during fiscal 2003. Management has also identified a number of additional expense reductions possible in 2003, including the deferral of certain planned personnel replacements or additions, the deferral of certain planned marketing expenses, reduced product costs through materials substitutions, and decreased usage of certain operating supplies. Although management expects to be able to accomplish its business and financing plans, there is no assurance that it will be able to do so. The Company's plans depend upon many factors. Failure to accomplish these plans could have an adverse impact on the Company's liquidity, financial position, and ability to continue operations. (3) Environmental The Company has been named as a Potentially Responsible Party by the United States Environmental Protection Agency in two ongoing claims under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"). The Company has also received Notices of Responsibility under Massachusetts General Laws Chapter 21E on two sites in Massachusetts. The Company has accrued $746,000 as of February 28, 2003 to cover future environmental expenditures related to these claims, which is net of $499,000 payments made to date. The accrual represents the Company's estimate of the remaining remediation costs based upon the best information currently available. Actual future costs may be different from the amount accrued for as of February 28, 2003 and may be affected by various factors, including future testing, the remediation alternatives taken at the sites, and actual cleanup costs. The final remediation costs could also be subject to adjustment because of the long term nature of the cases, legislative changes, insurance coverage, joint and several liability provisions of CERCLA, and the Company's ability to successfully negotiate an outcome similar to its previous experience in these matters. The Company has also received Notices of Responsibility under Massachusetts General Laws Chapter 21E on three sites at the Company's facilities in Canton, Massachusetts. In all of these cases, the Company has taken a variety of actions towards the ultimate cleanup, depending upon the status of each of the sites. These activities include the retention of an independent Licensed Site Professional, investigation, assessment, 6 PLYMOUTH RUBBER COMPANY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) containment, and remediation. The Company has accrued $298,000 as of February 28, 2003 to cover estimated future environmental cleanup expenditures, which is net of $940,000 payments made to date. Actual future costs may be different from the amount accrued for as of February 28, 2003. (4) The following table reflects the factors used in computing earnings (loss) per share and the effect on income (loss) and the weighted average number of shares of potentially dilutive securities. First Quarter Ended February 28, 2003 ------------------------------------------ Loss Shares Per Share (Numerator) (Denominator) Amount -------------- ------------- ----------- Basic EPS Loss available to common stockholders $ (1,380,000) 2,058,976 $ (0.67) ========== Effect of dilutive stock options (A) -- -- -------------- ------------- Diluted EPS Income available to common stockholders and assumed conversions $ (1,380,000) 2,058,976 $ (0.67) ============== ============= ========== First Quarter Ended March 1, 2002 ---------------------------------------- Loss Shares Per Share (Numerator) (Denominator) Amount -------------- ------------- ----------- Basic EPS Loss available to common stockholders $ (127,000) 2,058,976 $ (0.06) ========== Effect of dilutive stock options (A) -- -- -------------- ------------- Diluted EPS Loss available to common stockholders and assumed conversions $ (127,000) 2,058,976 $ (0.06) ============== ============= ========== (A) Options for 324,000 and 477,739 shares of common stock were outstanding at February 28, 2003 and March 1, 2002, respectively, but were not included in computing diluted earnings per share in each of the respective periods because their exercise prices were greater than the average market price of the Company's common stock for the period and their effects were anti-dilutive. In addition, options for 263,300 shares of common stock were outstanding at February 28, 2003 but were not included in computing diluted earnings per share because of the loss. 7 PLYMOUTH RUBBER COMPANY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) (5) Stock Compensation. The Company's stock option plans are accounted for in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25"). The Company uses the disclosure requirements of Statement of Financial Accounting Standard No. 123, "Accounting for Stock-Based Compensation" ("FAS 123"). Under APB No. 25, the Company does not recognize compensation expense on stock options granted to employees, because the exercise price of each option is equal to the market price of the underlying stock on the date of the grant. If the company had elected to recognize compensation cost based on the fair value of the options granted at grant date as prescribed by FAS 123, the Company's net loss and loss per share would have been reduced to the following pro forma amounts: First Quarter Ended ------------------------ Feb. 28, March 1, 2003 2002 ---------- ---------- Net loss, as reported: . . . . . . . . $ (1,380) $ (127) Deduct: Total stock-based employee compensation determined under fair value method for all awards, net of related tax effects . (28) (48) ---------- ---------- Pro forma net loss . . . . . . . . . . $ (1,408) $ (175) ========== ========== Earnings per share: Basic, as reported . . . . . . . . . $ (0.67) $ (0.06) ========== ========== Basic, pro forma . . . . . . . . . . $ (0.68) $ (0.08) ========== ========== Diluted, as reported . . . . . . . . $ (0.67) $ (0.06) ========== ========== Diluted, pro forma . . . . . . . . . $ (0.68) $ (0.08) ========== ========== (6) Plymouth Rubber Company, Inc. and its subsidiaries primarily operate through the following two business segments: Plymouth Tapes and Brite-Line Technologies. Management has determined these to be the Company's business segments based upon its process of reviewing and assessing Company performance and allocating resources. Plymouth Tapes manufactures plastic and rubber products, including automotive, electrical, and industrial tapes. Brite-Line Technologies manufactures and supplies rubber and plastic highway marking and safety products. Management evaluates the performance of its segments and allocates resources to them primarily based upon sales and operating income. Intersegment sales are at cost and are eliminated in consolidation. In addition, certain of the selling, general and administrative expenses recorded in Plymouth Tapes could be considered as incurred for the benefit of Brite- Line, but are currently not allocated to that segment. These expenses include certain management, accounting, personnel and sales services, and a limited amount of travel, insurance, directors fees and other expenses. 8 PLYMOUTH RUBBER COMPANY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) The table below presents information related to Plymouth Rubber's business segments for the first quarter ended February 28, 2003 and March 1, 2002. First Quarter Ended ------------------------ Feb. 28, March 1, 2003 2002 ---------- ---------- Segment sales to unaffiliated, customers: Plymouth Tapes. . . . . . . . . . . $ 13,204 $ 13,639 Brite-Line Technologies . . . . . . 339 302 ---------- ---------- Consolidated net sales. . . . . . . $ 13,543 $ 13,941 ========== ========== Segment operating income (loss): Plymouth Tapes. . . . . . . . . . . $ (558) $ 658 Brite-Line Technologies . . . . . . (436) (386) ---------- ---------- Consolidated segment operating income (loss) . . . . . . . . . . (994) 272 Interest expense. . . . . . . . . . (417) (495) Other income (expense). . . . . . . 41 119 ---------- ---------- Consolidated income (loss),before taxes $ (1,370) $ (104) ========== ========== 9 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations First Quarter, 2003, Compared with First Quarter, 2002 Sales decreased 2.9% to $13,543,000 in 2003 from $13,941,000 in 2002. Sales at Plymouth Tapes decreased 3.2% to $13,204,000 in 2003 from $13,639,000 in 2002. While sales in the automotive markets increased 4.5% from last year, sales in all other markets decreased 14.0% due largely to the economic slowdown in the industrial markets, partially offset by favorable exchange rates on foreign denominated sales. Sales at Brite-Line Technologies increased 12.3% to $339,000 in 2003, from $302,000 in 2002, as sales are normally seasonally low in the first quarter. Gross margin in 2003 decreased $1,315,000, or 42.6%, to $1,772,000 from $3,087,000 in 2002. Gross margin, as a percentage of sales,decreased to 13.1% in 2003 from 22.1% in 2002. Plymouth Tapes' gross margin in 2003 decreased $1,236,000, or 39.4%,to $1,902,000 from $3,138,000 in 2002. Plymouth Tapes' gross margin, as a percentage of sales, decreased to 14.4% in 2003 from 23.0% in 2002. The major factor driving this decrease was increased manufacturing overhead costs as a percentage of sales (4.0% higher), of which approximately $240,000 was due to higher spending for insurance, pension, equipment maintenance, and indirect labor, and approximately $300,000 was due to unfavorable overhead absorption resulting from the lower sales. Another major factor was higher raw material purchase prices for 2003, primarily for PVC resins, which accounted for approximately $260,000 of unfavorable margin, or 2.0% of sales. At Brite-Line Technologies, gross margin in 2003 decreased $79,000 to $(130,000) from $(51,000) in 2002. Brite- Line Technologies' gross margin, as a percentage of sales, decreased to (38.3)% in 2003 from (16.9)% in 2002. Although gross margin dollars are normally seasonally low during the first quarter, the decrease in 2003 was largely due to lower production levels, which translated into unabsorbed manufacturing costs. Selling, general and administrative expenses in 2003 decreased $49,000, or 1.7%, to $2,766,000 from $2,815,000 in 2002. Selling, general and administrative expenses, as a percentage of sales, increased slightly to 20.4% in 2003 from 20.2% in 2002. At Plymouth Tapes, selling, general and administrative expenses in 2003 decreased $20,000, or 0.8%, to $2,460,000 from $2,480,000 in 2002. Plymouth Tapes' selling, general and administrative expenses, as a percentage of sales, increased slightly to 18.6% in 2003 from 18.2% in 2002. The major increases were a $104,000 increase in professional fees, a $37,000 increase in travel expenses, a $34,000 increase in advertising, and a $26,000 increase in bad debt expense, mostly offset by a $209,000 absence of a freight loss which occurred in 2002, a $27,000 decrease in outside warehouse fees, and a $18,000 decrease in foreign selling costs. At Brite-Line Technologies, selling, general and administrative expenses in 2003 decreased $29,000, or 8.7%,to $306,000 from $335,000 in 2002. Brite-Line Technologies' selling, general and administrative expenses, as a percentage of sales, decreased to 90.3% in 2003 from 110.9% in 2002. The largest factors were a $38,000 decrease in bad debt expense, a $26,000 decrease in freight expense, and a $16,000 reduction in professional fees, partially offset by a $43,000 increase in travel expenses, and a $26,000 increase in salaries and benefits. Interest expense in 2003 decreased 15.8% to $417,000 from $495,000 in 2002, because of a decrease in late fees, as well as lower average balances and lower interest rates on both the revolving line of credit and the real estate loan. Other income was $41,000 in 2003, including $45,000 of foreign exchange gains, compared to $119,000 in 2002, which included a $131,000 gain on the sale of equipment, and $21,000 of miscellaneous income, partially offset by $34,000 of foreign exchange losses. The after-tax loss for 2003 was $1,380,000, compared to an after-tax loss of $127,000 in 2002. In accordance with the Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (FAS109), a full valuation allowance was recorded for any tax benefits generated from the Company's domestic operations in 2003 and 2002, as they could not be carried back to recover taxes paid and may not be offset by the reversal of future taxable differences. The Company's liquidity situation at February 28, 2003 also provides significant negative evidence 10 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations (Continued) regarding its ability to generate sufficient taxable income in the future to realize any deferred tax benefit. Liquidity and Capital Resources Prior to December, 2002, the Company's term debt agreements had contained various covenants specifying certain financial requirements, including minimum tangible net worth, fixed charge and EBITDA coverage ratios, working capital and maximum ratio of total liabilities to net worth. In addition, the revolving working capital credit facility and the real estate term loan contain an acceleration provision, which can be triggered if the lender determines that an event of default has occurred. As of each quarter end from September 1, 2000 through August 30, 2002, the Company had been in violation of certain covenants of its term debt facility and therefore, due to a cross default provision, the Company had not been in compliance with a covenant under its revolving working capital credit facility and real estate term loan. As a result, all of the Company's term loans (except for that of its Spanish subsidiary) had been classified as current liabilities on the Company's Consolidated Balance Sheet at the end of each fiscal quarter end. In addition, during July 2002, the Company received a demand from its primary term debt lender for the payment of their outstanding loan balances in the amount of $8,658,000, which represented the total of all future payments and accumulated late fees, and a demand letter from a smaller equipment lender for approximately $69,000 of payments due. During 2002, the Company negotiated with these lenders and, in November 2002, reached formal agreement to obtain relief from their demands and to restructure existing term debt facilities. Under the new arrangements, the term debt lenders accepted significantly reduced principal payments over the next three years, eliminated financial covenants, waived existing defaults and rescinded demands for accelerated payment, in return for enhanced collateral positions. As of February 28, 2003, the Company had approximately $744,000 of unused borrowing capacity under its revolving line of credit with its primary working capital lender, after consideration of collateral limitations. The Company's working capital position decreased from a negative $2,339,000 at November 29, 2002 to a negative $3,600,000 at February 28, 2003, due to a $1,846,000 increase in accounts payable, a $822,000 decrease in accounts receivable, a $254,000 increase in the current portion of long term borrowings, a $199,000 increase in short term debt, a $159,000 decrease in prepaid and other current assets, and a $34,000 decrease in cash, partially offset by a $1,283,000 increase in inventory, and a $770,000 decrease in accrued expenses. During the second quarter of 2002, the Company received a funding waiver from the Internal Revenue Service for the $855,000 payment due to its defined benefit plan for the year ended November 30, 2001, conditioned on the Company satisfying the minimum funding requirements for the plan years ending November 30, 2002 and November 30, 2003. The Company had notified the Pension Benefit Guarantee Corporation that the Company intended to make the $1,262,000 contribution for the plan year ending November 30, 2002 by the final due date of August 15, 2003, instead of on a quarterly basis. During the first quarter of 2003, the Company requested a partial funding waiver from the Internal Revenue Service for $1,030,000 of the $1,262,000 payment due for the plan year ending November 30, 2002. The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The negative working capital position of $3,600,000, the funding requirement for the defined benefit plan of $1,262,000 for the plan year ending November 30, 2002, the lack of sales growth, and the overall risks associated with the fiscal 2003 plan may indicate that the Company will be unable to continue as a going concern for a reasonable period of time. The consolidated 11 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations (Continued) financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management's belief that cash flows generated from operations and available incremental borrowings will be sufficient to meet the Company's liquidity needs during fiscal 2003. Management has also identified and implemented a number of additional expense reductions possible in 2003, including the deferral of certain planned personnel replacements or additions, the deferral of certain planned marketing expenses, and reduced product costs through materials substitutions. Although management expects to be able to accomplish its business and financing plans, there is no assurance that it will be able to do so. The Company's plans depend upon many factors. Failure to accomplish these plans could have an adverse impact on the Company's liquidity, financial position, and ability to continue operations. Cash provided by operating activities was $327,000 in 2003, as compared to $593,000 in 2002. The major factors contributing to cash provided by operating activities were by an increase in accounts payable of $1,744,000, a decrease in accounts receivable of $988,000, depreciation and amortization of $685,000, a decrease in prepaid expenses of $160,000, a $117,000 increase in pension obligation, and an $8,000 decrease in other assets, partially offset by a net loss of $1,380,000, an increase in inventory of $1,152,000, a decrease in accrued expenses of $787,000, and a $56,000 decrease in other liabilities. This operating cash flow and additional short-term borrowings of $230,000 were used to pay off term debt and capital leases of $443,000, and for capital expenditures of $99,000. During the first quarter of 2001 and the third quarter of 2002, the Company was contacted by the American Stock Exchange (AMEX) regarding minimum listing requirements on the number of public Class A common stockholders (200), and the aggregate market value of the publicly held Class A common stock ($1,000,000). In 2001 the Company met with AMEX representatives and believes that it meets the minimum number of public Class A stockholders. The Company is reviewing various options regarding the aggregate market value of the publicly held Class A common stock. A summary of the Company's cash requirements related to its outstanding long term debt and future minimum lease payments is as follows: Fiscal Year: Operating Long Term Lease Fiscal Year: Debt Commitments Total ------------ ----------- ------------ 2003. . . . . . . . . . $ 1,093,000 $ 417,000 $ 1,510,000 2004. . . . . . . . . . 1,630,000 535,000 2,165,000 2005. . . . . . . . . . 5,771,000 296,000 6,067,000 2006. . . . . . . . . . 606,000 95,000 701,000 2007. . . . . . . . . . 663,000 -- 663,000 Thereafter. . . . . . . 302,000 -- 302,000 ------------ ----------- ------------ Total . . . . . . . . . $ 10,065,000 $ 1,343,000 $ 11,408,000 ============ =========== ============ Critical Accounting Policies The Company's significant accounting policies are discussed in Note 1 to the Consolidated Financial Statements on the Company's 2002 Annual Report filed with the Securities and Exchange Commission on Form 10-K. Certain accounting policies are important to the portrayal of the Company's financial condition and results of operations, and require management's subjective judgments. These policies relate to the deferred tax asset valuation allowance, inventory reserves, provision for doubtful accounts receivable and impairment of long lived assets. 12 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations (Continued) Recognition of a deferred tax asset is dependent on generating sufficient future taxable income prior to the expiration of the tax loss or credit carryforward. The Company has taken a full valuation allowance for this tax benefit in accordance with the Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes". Should the Company's liquidity situation improve, the amount of the deferred tax asset considered realizable could be increased and could result in a credit to income tax expense in the period such determination was made. The Company writes down its inventory for estimated obsolescence or unmarketable inventory based upon the difference between the cost of the inventory and the estimated net realizable value, based upon assumptions about future demand and market pricing. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. The Company periodically reviews the aging of accounts receivable to identify potentially uncollectible accounts and establishes a reserve based on experience and discussion with customers. Actual write-offs could differ from bad debt reserves. The Company reviews long-lived assets annually or whenever events of circumstances indicate that the carrying amounts of the asset may not be recoverable in accordance with SFAS No. 144. Impaired assets are written down to their estimated fair value based on the best information available to the Company. Impact of New Accounting Pronouncements In April 2002, the Financial Accounting Standards Board ("FASB") issued Statement No. 145 (FAS 145), Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. FAS 145 rescinds FAS 4, Reporting Gains and Losses from Extinguishment of Debt, FAS 44, accounting for Intangible Assets of Motor Carriers, and FAS 64 (an amendment of FAS 4), Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. FAS 145 eliminates the requirement that gains and losses from the extinguishment of debt be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect. However, an entity would not be prohibited from classifying such gains and losses as extraordinary items so long as they are both unusual in nature and infrequent in occurrence. This provision will be effective for fiscal years beginning after December 15, 2002. FAS 145 also amends FAS 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale- leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale- leaseback transactions. The amendment to FAS 13 and other technical amendments will be effective for all transactions occurring and financial statements issued after May 15, 2002. The Company is in the process of assessing the impact of the adoption of FAS 145. In June 2002, the FASB issued Statement No. 146 (FAS 146), Accounting for Costs Associated with Exit or Disposal Activities, which eliminates Emerging Issues Task Force (EITF) Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). FAS 146 applies to costs associated with an exit activity including: (a) termination benefits provided to current employees that are involuntarily terminated under the terms of a benefit arrangement that is not an ongoing benefit arrangement or an individual deferred compensation contract (one-time termination benefit); (b) costs to terminate a contract that is not a capital lease; and (c) costs to consolidate facilities or relocate employees. FAS 146 requires that these liabilities be recognized and measured initially at fair value in the period in which the liability is incurred. If fair value cannot be reasonably estimated, the liability shall be recognized initially in the period in which fair value can be reasonably estimated. The provisions on FAS 146 are effective for the Company for exit or disposal activities initiated after December 31, 2002. The Company does not believe that the adoption of this pronouncement will have a material effect on its financial results. 13 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations (Continued) In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (an interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34). FIN 45 clarifies the requirements of the FASB Statement No. 5 (FAS 5), Accounting for Contingencies, relating to a guarantor's accounting for, and disclosure of, the issuance of certain types of guarantees. FIN 45 requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligation it assumes under that guarantee. Many guarantees are embedded in purchase or sales agreements, service contracts, joint venture agreements, or other commercial agreements and the guarantor in many of those arrangements does not receive separately identifiable up- front payment (e.g., a premium) for issuing the guarantee. Prior to FIN 45, many guarantors did not recognize an initial liability for such embedded guarantees. Now, however, they are required to recognize a liability at fair value upon issuance of the guarantees, regardless of whether they receive a separate premium for doing so. The Interpretation is intended to improve the comparability of financial reporting by requiring identical accounting for guarantees issued with a separately identified premium and guarantees issued without a separately identified premium. For guarantees issued or modified after December 31, 2002, significant new disclosure requirements are effective beginning with 2002 calendar year-end financial statements, including a requirement to disclose the maximum amount of future payments that an entity might need to make under a guarantee and a reconciliation of during the period in their product warranty liabilities. The Company is in the process of assessing the impact of the adoption of FIN 45. On December 31, 2002, the FASB issued Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation -- Transition and Disclosure -- an amendment of FAS 123 (FAS 148). As the title of the standard implies, it is fairly limited in its scope, however it will have implications for all entities that issue stock- based compensation to their employees. This Statement amends FASB Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock- based employee compensation and the effect of the method used on reported results. This Statement permits two additional transition methods for entities that adopt the preferable method of accounting for stock-based employee compensation. Both of those methods avoid the ramp-up effect arising from prospective application of the fair value based method. In addition, to address concerns raised by some constituents about the lack of comparability caused by multiple transition methods, this Statement does not permit the use of the original Statement 123 prospective method of transition for changes to the fair value based method made in fiscal years beginning after December 15, 2003. During the first quarter of fiscal 2003 the Company adopted the provisions of FAS 148. In January 2003, the FASB issued FASB Interpretation No. (FIN) 46, Consolidation of Variable Interest Entities. This interpretation of Accounting Research Bulletin No. 51, Consolidated Financial Statements, addresses consolidation by business enterprises of variable interest entities, which possess certain characteristics. The Interpretation requires that if a business enterprise has a controlling financial interest in a variable interest entity, the assets, liabilities, and results of the activities of the variable interest entity must be included in the consolidated financial statements with those of the business enterprise. This Interpretation applies immediately to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. The Company does not have any ownership in any variable interest entities as of February 28, 2003. The Company will apply the consolidation requirement of FIN 46 in future periods if it should own any interest in any variable interest entity. 14 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations (Continued) Safe Harbor Statement Certain statements in this report, in the Company's press releases and in oral statements made by or with the approval of an authorized executive officer of the Company may constitute "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995. These may include statements projecting, forecasting or estimating Company performance and industry trends. The achievement of the projections, forecasts or estimates is subject to certain risks and uncertainties. Actual results may differ materially from those projected, forecast or estimated. The applicable risks and uncertainties include general economic and industry conditions that affect all international businesses, as well as matters that are specific to the Company and the markets it serves. General risks that may impact the achievement of such forecast include: compliance with new laws and regulations, significant raw material price fluctuations, changes in interest rates, currency exchange rate fluctuations, limits on the repatriation of funds and political uncertainty. Specific risks to the Company include: risk of recession in the economies and /or markets in which its products are sold, risk of the Company's working capital lender and real estate lender demanding payment of outstanding balances, risk of not receiving waiver from the government on the required contribution into the pension plan, the concentration of a substantial percentage of the Company's sales with a few major automotive customers, cost of raw materials, and pricing pressures from competitors and customers. 15 PLYMOUTH RUBBER COMPANY, INC. Item 3. Quantitative and Qualitative Disclosure about Market Risks At February 28, 2003, the carrying value of Company's debt totaled $23.8 million, which approximated its fair value. This debt includes amounts at both fixed and variable interest rates. For fixed rate debt, interest rate changes affect the fair market value but do not impact earnings or cash flows. Conversely, for floating rate debt, interest rate changes generally do not affect the fair market value but do impact earnings and cash flows, assuming other factors are held constant. At February 28, 2003, the Company had fixed rate debt of $9.6 million and variable rate debt of $14.2 million. Holding other variables constant (such as foreign exchange rates and debt levels) a one- percentage point decrease in interest rates would increase the unrealized fair market value of fixed rate debt by approximately $204,000. The earnings and cash flows impact for the next year resulting from a one percentage point increase in interest rates would be approximately $142,000, holding other variables constant. Item 4. Controls and Procedures (a) Disclosure controls and procedures. Within 90 days before filing this report, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Our disclosure controls and procedures are the controls and other procedures that we designed to ensure that we record, process, summarize and report in a timely manner the information we must disclose in reports that we file with or submit to the SEC. Our disclosure controls and procedures include our internal controls. Maurice J. Hamilburg, President and Co-Chief Executive Officer, Joseph D. Hamilburg, Chairman and Co-Chief Executive Officer, and Joseph J. Berns, Vice President of Finance and Chief Financial Officer supervised and participated in this evaluation. Based on this evaluation, Maurice J. Hamilburg, Joseph D. Hamilburg, and Joseph J. Berns, concluded that, as of the date of their evaluation, our disclosure controls and procedures were effective. (b) Internal controls. Since the date of the evaluation described above, there have not been any significant changes in our internal controls or in other factors that could significantly affect those controls. 16 PLYMOUTH RUBBER COMPANY, INC. PART II. OTHER INFORMATION Item 1. Legal Proceedings Reference is made to the information contained in Item 3 of the Company's Annual Report on Form 10-K for its fiscal year ended November 29, 2002, and in Note 11 of the Notes To Consolidated Financial Statements contained in said report. Item 2. Changes in Securities None Item 3. Defaults upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information Certification Under Sarbanes-Oxley Act Our co-chief executive officers and chief financial officer have furnished to the SEC the certification with respect to this Report that is required by Section 906 of the Sarbanes- Oxley Act of 2002. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: See Index to Exhibits (b) Not Applicable 17 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. Plymouth Rubber Company, Inc. ------------------------------ (Registrant) /S/ Joseph J. Berns ------------------------------ Joseph J. Berns Vice President - Finance Date: April 11, 2003 18 SECTION 302 CERTIFICATIONS I, Maurice J. Hamilburg, President and Co-Chief Executive Officer of Plymouth Rubber Company, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Plymouth Rubber Company, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 11, 2003 /S/ Maurice J Hamilburg ------------------------- Maurice J. Hamilburg President and Co-Chief Executive Office 19 SECTION 302 CERTIFICATIONS - Continued I, Joseph D. Hamilburg, Chairman and Co-Chief Executive Officer of Plymouth Rubber Company, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Plymouth Rubber Company, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 11, 2003 /S/ Joseph D. Hamilburg ------------------------- Joseph D. Hamilburg Chairman and Co-Chief Executive Office 20 SECTION 302 CERTIFICATIONS - Continued I, Joseph J. Berns, Vice President-Finance and Chief Financial Officer of Plymouth Rubber Company, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Plymouth Rubber Company, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 11, 2003 /S/ Joseph J. Berns ------------------------------ Joseph Berns, Vice President- Finance and Chief Financial Officer 21 PLYMOUTH RUBBER COMPANY, INC. INDEX TO EXHIBITS Exhibit No. Description 2 Not Applicable. 3.1 Restated Articles of Organization -- incorporated by reference to Exhibit 3.1 of the Company's Annual Report on Form 10-K for the year ended December 2, 1994. 3.2 By Laws, as amended -- incorporated by reference to Exhibit 3.2 of the Company's Annual Report on Form 10-K for the year ended November 26, 1993. 4.1 Promissory Note between Plymouth Rubber Company, Inc. and General Electric Capital Corporation dated December 29, 1995 -- incorporated by reference to Exhibit 4.8 to the Quarterly Report on Form 10-Q for the Quarter ended March 1, 1996. 4.2 Master Security Agreement between Plymouth Rubber Company, Inc. and General Electric Capital Corporation dated December 29, 1995 -- incorporated by reference to Exhibit 4.8 to the Quarterly Report on Form 10-Q for the quarter ended March 1, 1996. 4.3 Demand Note between Plymouth Rubber Company, Inc. and LaSalle National Bank dated June 6, 1996 -- incorporated by reference to Exhibit 2.1 to the report on Form 8-K with cover page dated June 6, 1996. 4.4 Loan and Security Agreement between Plymouth Rubber Company, Inc. and LaSalle National Bank dated June 6, 1996 -- incorporated by reference to Exhibit 2.2 to the report on Form 8-K with cover page dated June 6, 1996. 4.5 Amendment to Master Security Agreement between Plymouth Rubber Company, Inc. and General Electric Capital Corporation dated February 19, 1997 -- incorporated by reference to Exhibit 4.10 to the Quarterly Report on Form 10-Q for the quarter ended February 25, 1997. 4.6 Master Security Agreement between Plymouth Rubber Company, Inc. and General Electric Capital Corporation dated January 29, 1997 -- incorporated by reference to Exhibit 4.12 to the Company's Quarterly Report on Form 10-Q for the quarter ended February 25, 1997. 4.7 Demand Note between Brite-Line Technologies, Inc. and LaSalle National Bank dated February 28, 1997 -- incorporated by reference to Exhibit 4.13 to the Company's Quarterly Report on Form 10-Q for the quarter ended May 30, 1997. 4.8 Loan and Security Agreement between Brite-Line Technologies, Inc. and LaSalle National Bank dated February 25, 1997 -- incorporated by reference to Exhibit 4.14 to the Company's Quarterly Report on Form 10-Q for the quarter ended May 30, 1997. 4.9 Continuing Unconditional Guaranty between Brite-Line Technologies, Inc. LaSalle National Bank dated February 25, 1997 -- incorporated by reference to Exhibit 4.15 to the Company's Quarterly Report on Form 10-Q for the quarter ended May 30, 1997. 4.10 Amendment to Loan and Security Agreement between Plymouth Rubber Company, Inc. and LaSalle National Bank dated May 7, 1997 -- incorporated by reference to Exhibit 4.11 to the Company's Quarterly Report on Form 10-Q for the quarter ended May 30, 1997. 22 PLYMOUTH RUBBER COMPANY, INC. INDEX TO EXHIBITS Exhibit No. Description 4.11 Continuing Unconditional Guaranty between Plymouth Rubber Company, Inc. and LaSalle National Bank dated March 20, 1997 -- incorporated by reference to Exhibit 4.12 to the Company's Quarterly Report on Form 10-Q or the quarter ended May 30, 1997. 4.12 Public Deed which contains the loan guaranteed by mortgage and granted between Plymouth Rubber Europa, S.A. and Caja de Ahorros Municipal de Vigo, Banco de Bilbao, and Vizcaya y Banco de Comercio dated April 11, 1997 -- incorporated by reference to Exhibit 4.13 to the Company's Quarterly Report on Form 10-Q for the quarter ended May 30, 1997. 4.13 Corporate Guaranty between Plymouth Rubber Company, Inc. and Caja de Ahorros Municipal de Vigo, Banco de Bilbao, and Vizcaya y Banco de Comercio dated April 11, 1997 -- incorporated by reference to Exhibit 4.14 to the Company's Quarterly Report on Form 10-Q for the quarter ended May 30, 1997. 4.14 Promissory Note between Plymouth Rubber Company, Inc. and General Electric Capital Corporation dated December 3, 1997 -- incorporated by reference to Exhibit 4.14 to the Company's Annual Report on Form 10-K for the year ended November 27, 1998. 4.15 Promissory Note between Plymouth Rubber Company, Inc. and General Electric Capital Corporation dated April 13, 1998 -- incorporated by reference to Exhibit 4.15 to the Company's Annual Report on Form 10-K for the year ended November 27, 1998. 4.16 Promissory Note between Plymouth Rubber Company, Inc. and General Electric Capital Corporation dated November 12, 1998 -- incorporated by reference to Exhibit 4.16 to the Company's report on Form 10-K for the year ended November 27, 1998. 4.17 Promissory Note between Plymouth Rubber Company, Inc. and General Electric Capital Corporation dated November 25, 1998 -- incorporated by reference to Exhibit 4.17 to the Company's report on Form 10-K for the year ended November 27, 1998. 4.18 Amendments to Loan and Security Agreement between Plymouth Rubber Company, Inc., and LaSalle National Bank dated July 15, 1998 and February 18, 1999 -- incorporated by reference to Exhibit 4.18 to the Company's report on Form 10-Q for the quarter ended February 26, 1999. 4.19 Amendment to Loan and Security Agreement between Brite-Line Technologies, Inc., and LaSalle National Bank dated February 18, 1999 -- incorporated by reference to Exhibit 4.19 to the Company's report on Form 10-Q for the quarter ended February 26, 1999. 4.20 Promissory Note between Plymouth Rubber Company, Inc. and General Electric Capital Corporation dated June 29, 1999 - incorporated by reference to Exhibit 4.20 to the Company's report on Form 10- Q for the quarter ended August 26, 1999. 4.21 First Amended and Restated Schedule A -- Special Provisions to Loan and Security Agreement between Plymouth Rubber Company, Inc., and LaSalle National Bank dated June 16, 1999 - incorporated by reference to Exhibit 4.21 to the Company's report on Form 10-Q for the quarter ended March 3, 2000. 23 PLYMOUTH RUBBER COMPANY, INC. INDEX TO EXHIBITS Exhibit No. Description 4.22 Promissory Note between Plymouth Rubber Company, Inc. and General Electric Capital Corporation dated December 29, 1999 - incorporated by reference to Exhibit 4.22 to the Company's report on Form 10-Q for the quarter ended March 3, 2000. 10.1 1982 Employee Incentive Stock Option Plan -- incorporated by reference to Exhibit 10.1 of the Company's Annual Report on Form 10-K for the year ended November 26, 1993. 10.2 General Form of Deferred Compensation Agreement entered into between the Company and certain officers -- incorporated by reference to Exhibit 10.2 of the Company's Annual Report on Form 10-K for the year ended November 26, 1993. 10.3 1992 Employee Incentive Stock Option Plan -- incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended November 26, 1993. 10.4 1995 Non-Employee Director Stock Option Plan -- incorporated by reference to Exhibit (4.3) of the Company's Registration Statement on Form S-8 dated May 4, 1995. 10.5 1995 Employee Incentive Stock Option Plan -- incorporated by reference to Exhibit (4.4) of the Company's Registration Statement on Form S-8 dated May 4, 1995. 10.6 Second Modification Agreement between Plymouth Rubber Company, Inc. and General Electric Capital Corporation --incorporated by reference to Exhibit 99.2 of the Company's Current Report on Form 8-K dated December 16, 2003 10.8 Security Agreement by and between Plymouth Rubber Company, Inc., General Electric Capital Corporation, The CIT Group/Equipment Financing, Inc. and Banknorth, N.A. Corporation --incorporated by reference to Exhibit 99.3 of the Company's Current Report on Form 8-K dated December 16, 2003. 10.9 Patent Security Agreement by and between Plymouth Rubber Company, Inc., General Electric Capital Corporation, The CIT Group/Equipment Financing, Inc. and Banknorth, N.A. -- incorporated by reference to Exhibit 99.4 of the Company's Current Report on Form 8-K dated December 16, 2003. 10.10 Trademark Security Agreement by and between Plymouth Rubber Company, Inc., General Electric Capital Corporation, The CIT Group/Equipment Financing, Inc. and Banknorth, N.A. -- incorporated by reference to Exhibit 99.5 of the Company's Current Report on Form 8-K dated December 16, 2003. 10.11 Modification Agreement between Plymouth Rubber Company, Inc. and Banknorth Leasing Corporation --incorporated by reference to Exhibit 99.6 of the Company's Current Report on Form 8-K dated December 16, 2003. 10.12 Mortgage and Assignment of Leases and Rents by Plymouth Rubber Company, Inc. to and for the benefit of General Electric Capital Corporation, The CIT Group/Equipment Financing, Inc. and Banknorth, N.A. --incorporated by reference to Exhibit 99.7 of the Company's Current Report on Form 8-K dated December 16, 2003. 24 PLYMOUTH RUBBER COMPANY, INC. INDEX TO EXHIBITS Exhibit No. Description 10.13 First Modification to Mortgage and Assignments of Leases and Rents to and for the benefit of General Electric Capital Corporation, The CIT Group/Equipment Financing, Inc. and Banknorth, N.A. --incorporated by reference to Exhibit 99.8 of the Company's Current Report on Form 8-K dated December 16, 2003 11 Not Applicable. 15 Not Applicable 18 Not Applicable. 19 Not Applicable. 22 Not Applicable. 23 Not Applicable. 24 Not Applicable. 27 Not Applicable. 25 -----END PRIVACY-ENHANCED MESSAGE-----