ITEM 1: BUSINESS
The Company's primary product shipped in the United States is Aluminum Aerosol pressurized cans. The market size is an estimated 3.0 billion units. Major product groups include personal products, household products, and automotive and industrials, paints and finishes, insect sprays, and food products. Aluminum containers, as opposed to time plate, historically comprise 10% of the aerosol market with personal products and hair sprays comprising the largest segments.
The "tube" industry is comprised of plastic, laminate, and metal products. The major markets are pharmaceutical, dentifrice, cosmetic, and personal care. It is estimated the annual tube volume is 2.95 billion units. The metal tube market, which represents the Company's segment of the market, has become a small part of the Company's overall sales mix.
The Company does not fill any containers that it manufactures. The other product lines mentioned previously are of relatively minor importance, are in a highly competitive market, and are sold to a small number of specialty customers.
The industry in which the Company competes is extremely price competitive. The Company continues to offer a high quality product, meet customer demands, and at the same time remain price competitive. However, the Company sustained operating losses during fiscal year, 1997, that required a restructuring of parts of its debt with the Company's secured lender.
SALES 1995 - 1997
DESCRIPTION 1997 1996 1995 - ---------------------------------------------------------------- Seamless aerosol cans $15,152,000 $17,921,000 $19,627,000 Collapsible metal tubes 844,000 5,175,000 9,739,000 Miscellaneous 292,000 520,000 427,000 - ---------------------------------------------------------------- Total $16,288,000 $23,616,000 $29,793,000 - ----------------------------------------------------------------
The Company supplies approximately 100 customers. However, the Company focuses on approximately 15 - 20 major accounts. In 1997 two customers accounted for 61% (27% and 34%) of the Company's sales. The change in sales mix in 1997 reflects the decision by the Company not to actively compete in the Collapsible metal tube market. In 1996, sales to three customers accounted for 55% ( 22%, 21%, and 12%) of the Company's consolidated sales. In 1995, sales to four customers accounted for 68% (24%, 16%, 15%, and 13%) of the Company's sales.
Excess capacity in the industry has had an adverse effect on the Company. However steps are currently being taken to implement operational changes and reduce costs in order to offset the loss in volume
PEERLESS Tube Company 1997 Annual Report Form 10-K
The current sales backlog of production orders and inventory on hand is approximately $2.4 million which is less than last year. The Company's production is against firm orders and subject of firm and final pricing.
THE MANUFACTURING PROCESS
While production lines for aluminum aerosols and tubes can be dissimilar, automatic production machinery and equipment perform each of the following steps in a continuous process:
Extruding the can or tube:
1. Trimming the can or tube to is proper length. 2. Heating and cleaning the can or tube shell. 3. Coating or lining the interior and/or exterior of the shell. 4. Decorating and over lacquering the container. 5. Necking or forming the orifice or shoulders of the can or tube. 6. Packaging the product.
Solid aluminum slugs are first fed through a hopper into an impact extrusion press 250-400 tons pressure at impact point. Then the containers, now recognizable as such, are fed by conveyors, during which time a micrometer and other tests are made periodically to check wall and bottom thickness, into a trimmer that shears the side wall to correct lengths. After the container shells have been trimmed, the containers are conveyed through one or more ovens and washing tanks. Then they are fed back onto a production line where they are spun on spindles or other transfer devices, and sprayed with coats of the desired internal resin liner. To "set" these resins for maximum resistance to certain product corrosivity, the containers are preheated and baked in an oven at very high temperatures (over 500 degrees F). A vinyl or epoxy-type base coat of the desired color is then sprayed on the outside of the container. After going through another drying oven, the containers are positioned for lithography (of up to six colors) on an offset press and then dried. If specifications call for a high degree of protection of the container finish against possible marring by product spray or drip, the containers are then given a coating with an external clear lacquer, usually of the epoxy type. After final drying, a "rolling" machining turns the neck inward or outward, so that the lip touches the inside of the neck to form a continuous interior circumerential bead leaving the mounth circular. In addition to product compatibility discussed below, this neck process, plus the seamless construction and the exceptionally high bursting strength, gives the aerosol its chief sellign appeal from a technical standpoint; while the seamless construction combined with the printing capability provides the aesthetic appeal and marketability. The finished products, at a rate of 150 per minute, are packed for shipment to the customer.
Though each container has the same physical characteristics, they may differ widely as to "special features". Selection of internal liners, lithographic printing inks, base coat formulations and external lacquers are all conditioned by the chemical characteristics of product and propellant and how each reacts with the other. Also acting to differentiate the containers of one customer from those of another are the form of product dispersal, the type of metal or plastic overcap, and possible corrosive characteristics of the valve components intended for a particular product. The Company obtains samples of all the components after the custom filler or marketer has achieved product and propellant compatibility, and parallel tests are conducted to evolve the right liners and coatings to use so that they fit the particular product. Frequently, the customer changes his source of supply, and seemingly changes his source of supply, and seemingly minor changes may throw out all the formulation specifications.
PEERLESS Tube Company 1997 Annual Report Form 10-K
Some of the external coating problems are ameliorated by the use of aluminum, which has a surface especially suited to receive coatings. Aerosol cans contain 99.4% aluminum (or slightly less than metal tubes to impart greater rigidity), and under a microscope, the aluminum surface looks like a series of raw teeth which readily pick up high quality coatings and inks with good hard adhesive qualities.
SEGMENT DATA
The Company has one segment of business which is the manufacture of containers, either aluminum cans or tubes. All of its major product lines are sold to the same market and/or manufacturing industries for highly similar end uses. All products are fabricated by the extrusion method of forming metal. and many customers are buying all product lines for sale to essentially the same markets. The products are manufactured under the same roof with overlapping labor forces and overhead, and on similar machinery.
RAW MATERIALS
The basic raw materials essential to the operation of the Company are aluminum ingot,. paint, ink, and paper products for packaging and shipping containers. All necessary supplies are readily available. The Company has a supply agreement for aluminum slugs that expires in the year 2000. The Company may terminate this supply agreement upon thirty days written notice to the buyer provided the buyer's selling price to the Company is not competitive with market quotes obtained from at least three other vendors for aluminum.
ENVIRONMENT
The Company is subject to federal, state, and local requirements regulating the discharge of materials into the environment or otherwise relating to protection of the environment. It is the Company's policy to comply with these requirements, and the Company believes that as a general matter its policies, practices and procedures are properly designed to prevent unreasonable risk of environmental damage, and of resulting financial liability, in connection with its business. Some risk of environmental damage is however, inherent in particular operations and products of the Company, as in the case with other companies engaged in similar businesses.
The Company is and has been engaged in handling, manufacture, use or disposal of several substances which are classified as hazardous or toxic by one or more regulatory agencies. The Company believes that its handling, manufacturing, use and disposal of such substances have been in accord with environmental laws and regulations. It is possible, however, that future knowledge or other developments, such as improved capability to detect such substances in the environment, increasingly strict environmental laws and standards and enforcement policies thereunder, could bring into question the Company's handling, manufacturing, use, or disposal of such substances.
EMPLOYEES
The Company presently employs approximately 130-150 persons at its facility located in Bloomfield, New Jersey. The Company is a non union organization and management's relationship with its employees is considered excellent.
PEERLESS Tube Company 1997 Annual Report From 10-K
ITEM 2:
ITEM 2: PROPERTIES
The Company's facility is located in Bloomfield, New Jersey.
The land, building, and equipment are pledged as collateral under various loan agreements with the Company's secured working capital lender, who has a security interest in substantially all the Company's assets.
The executive, administrative, marketing and engineering offices along with the manufacturing and warehouse facilities are contained in three (3) buildings, a total of 261,000 square feet. There is adequate space to expand the operations if required.
ITEM 3:
ITEM 3: LEGAL PROCEEDINGS
In January 1998, a jury verdict was rendered against the Company in a lawsuit filed by a former employee alleging age discrimination and breach of contract. The amount of damages and attorney's fees awarded to the employee approximated $638,000. On June 5, 1998, a settlement agreement with the former employee was reached whereby the Company will pay, over a two year period, a total of $700,000 including interest (which has been reflected as a liability in the accompanying consolidated financial statements) paid as follows:
$60,000 payable upon excution of the agreement; $60,000 payable on or before June 1, 1999; $300,000 payable on or before December 1, 1999; and $280,000 payable on or before May 31, 2000.
Under the terms of the agreement, the former employee was granted a lien subordinated in priority to the Company's asset based lender on substantially all of the Company's assets.
There are several other suits arising in the normal course of business. The Company believes these suits are without merit and is vigorously defending its position in each suit. Council for the Company cannot offer an opinion as to the probable outcome of such cases.
ITEM 4:
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Shareholders annual meeting, expected to be held in September, will be asked to elect the Board of Directors and ratify the Company's independent auditors.
PEERLESS Tube Company 1997 Annual Report Form 10-K
NOTES: Not listed is Mr. Christopher C.H. Graber, Vice President, Operations who resigned effective September 10, 1997.
PEERLESS Tube Corporation 1997 Annual Report Form 10-K
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ITEM 5:
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
The Peerless Tube Company Corporation Common Stock is traded over-the-counter. The Company is traded under the symbol PLSU. There has been a relatively small number of trades during 1997.
The range of the high and low common stock sale's prices as reported by the NASD bulletin board over the counter for each of the quarters for the years ended December 31, 1997, 1996, and 1995 are listed as follows:
QUARTER 1997 1996 1995 - ------------------------------------
1 $0.6250 $0.4400 $0.7500 $0.4375 $0.3750 $0.3120 2 $0.3750 $0.4400 $0.6250 $0.3125 $0.4400 $0.1250 3 $0.5000 $0.6250 $1.0310 $0.3125 $0.5000 $0.5000 4 $0.3750 $0.6600 $0.5000 $0.3000 $0.3750 $0.3750 - ------------------------------------
There were no stock or cash dividends declared or paid since 1989. Under the Company's loan agreement, the Company is restricted from the payment of dividends.
The approximate number of record holders of the Company's Common Stock, at December 31, 1997 was 1,200.
ITEM 6:
ITEM 6: SELECTED FINANCIAL DATA
The information is included under the caption "Selected Financial Data Five Years Ended December 31, 1997" at page 12 of the Company's 1997 Annual Report to shareholders.
ITEM 7:
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
"Management's Discussion and Analysis" at pages 4-11, management section, of the Company's 1997 Annual Report to Shareholders is incorporated herein by reference.
ITEM 8:
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's financial statements, together with the reports therein of Goldstein Golub Kessler & Company, P.C. dated March 13, 1998, except for the second paragraph of Note 2, as to which the date is June 5, 1998, appearing on pages 1-14, auditor's section, of the Company's 1997 Annual Report to shareholders.
PEERLESS Tube Company 1997 Annual Report 10-K
ITEM 9:
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
There were no disagreements on any auditing, accounting or financial disclosure in 1997.
PEERLESS Tube Company 1997 Annual Report Form 10-K
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ITEM 10:
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information, relating to the directors of the Registrant, as well as information relating to compliance with section 16(a) of the Securities Exchange Act of 1934 is contained in a definitive Proxy statement primarily involving election of directors and appointment of independent accountants. The Registrant is simultaneously filing this document with the Securities and Exchange pursuant to Regulation 14a, and such information is incorporated by reference. Certain other information relating to the Executive Officers of the Registrant appears on page 8.
ITEM 11:
ITEM 11: EXECUTIVE COMPENSATION
Information relating to executive compensation is also contained in the Proxy statement referred to above in "Item 10: Directors and Executive Officers of the Registrant," and such information is incorporated by reference.
ITEM 12:
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to security ownership of certain beneficial owners and management is also contained in the Proxy statement referred to above in "Item 10: Directors and Executive Officers of the Registrant," and such information is incorporated by reference.
ITEM 13:
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information relating to certain relationships and related transactions can be found in Note 15 to the consolidated financial statements on page 13, management section, of the Company's 1997 Annual Report to stockholders and incorporated herein by reference.
PEERLESS Tube Company 1997 Annual Report Form 10-K
ITEM 14:
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following documents are filed as part of this report:
Annual Report to Description Shareholder Page - ------------------------------------------------------------------------------ (1) Consolidated Financial Statements* a) Report of Independent Auditors 1 Balance Sheet as of December 31, 1997 2 And 1996 Statement of Operations and Accumulated Deficit 3 For the Years Ended December 31, 1997, 1996 and 1995. Statement of Cash Flows for the Years Ended 4 December 31, 1997, 1996 and 1994 Notes to the Financial Statements (2) Financial Statement Schedules: 5-14 None Required b) No reports on Form 8-K were filed during the last quarter covered by this report. c) All other documents have been filed and are incorporated by reference. - ------------------------------------------------------------------------------
*The financial statement schedules should be read in conjunction with the Financial Statements incorporated by reference in Item 8 of the Form 10-K Annual Report. Schedules other than those listed above have been omitted because of the absence of the conditions under which they are required or because information required is shown in the financial statements or the notes thereto.
PEERLESS Tube Company 1997 Annual Report Form 10-K
*FOR THE YEAR ENDED DECEMBER 31, 1996, THE NET INCOME INCLUDED A RECOGNIZED GAIN OF $1,555,000, NET OF PUERTO RICO CAPITAL GAINS TAX, IN CONNECTION WITH THE TERMINATION OF THE SALE LEASEBACK OF THE PUERTO RICO FACILITY.
PEERLESS TUBE COMPANY 1997 ANNUAL REPORT
SIGNATURES - ----------
Pursuant ot the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed in its behalf by the undersigned thereunto duly authorized.
PEERLESS TUBE COMANY Registrant By:
Frederic Remington, Jr. Chairman of the Baord and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on behalf of the Registrant and in the capacities and on the dates indicated below.
- ------------------------- ------------------------- Frederic Remington, Jr Richard W. Potts Chairman of the Board and Chief Executive President and Director Officer
- ------------------------- ------------------------- S. Jervis Brinton, Jr Frank Leo Director Director
- ------------------------- ------------------------- Frank McDermott Leonard Felzenberg Director Director
- ------------------------- John Remington Director
MANAGEMENT DISCUSSION AND ANALYSIS - ----------------------------------
BUSINESS AND FINANCIAL RESTRUCTURE - ----------------------------------
In 1997, the Company's operation was impacted by the closing of its Puerto Rico facility in November 1996. This resulted in a decrease in aluminum tube sales of $4,331,000. This decrease was a result of managements decision not to pursue or invest substantial capital into the contracting aluminum tube market. Also impacting the Company's business was the excess capacity in the aerosol industry. As a result, sales volume in aerosols also decreased $2,769,000.
The Company has been focusing on how to maximize revenues, profits, and manage it operating cost in general.
To assist in preforming the above an experienced outside management consulting firm has been retained to work with the company. The goal of the company and the management consulting firm is to reduce production costs, improve inventory management, and preserve cash and increase liquidity.
With the anticipated co-operation of the Company's secured lender, the consolidation of plant assets, and an expected increase in sales volume will help minimize the financial losses and enable the company to continue to function as a going concern.
Continuing improvement in operating efficiencies from better management and process procedures would create additional capacity and profitability, but the Company also needs new equipment to meet both the current and future customer demands. However, the Company's ability to purchase such equipment at this time is highly speculative
PEERLESS TUBE COMPANY 1997 ANNUAL REPORT
SALES AND RESULTS OF OPERATIONS 1997 COMPARED TO 1996 - -----------------------------------------------------
SALES
Net sales for the year ended december 31, 1997 decreased $7,328,000 or 31% on sales of $16,288,000 when compared to 1996 net sales of $23,616,000. Aerosol volume for 1997 was $15,152,000 as compared with sales for 1996 of 17,921,000 or a decrease of 15%. Aluminum tube sales for 1997 was $844,000 as compared with 1996 Tube sales of $5,175,000 or a decrease of 84%. Miscellaneous sales for 1997 totaled $292,000 as compared to $520,000. The decrease in 1997 vs 1996 in the Aerosol and Tube product liness was a result of excess capacity in the aerosol markets and the Company's decision not to activity persue the Aluminumn Tube market.
In 1997, the Company's sales to two customers accounted for 61%(27% and 34%) of the company's total sales. In 1996. Three customers accounted for 55% (22%, 21%, and 12%) of the Company's sales.
The Company's sales of aluminum aerosols are approximately 93% of the 1997 sales as compared to 76% in 1996. The mix change is a result of the closing of the Puerto Rico facility in 1996. The Puerto Rico facility produced solely Aluminum Tube Product.
GROSS MARGIN TRENDS AND DISCUSSION
The gross profit for the year ended December 31, 1997 and December 31, 1996 was $228,000 or 1% of sales and $2,115,000 or 9% of sales respectively. The decrease in gross margin is primarily due to current excess capacity which the Company has available. A large part of the Company's costs are "fixed" rather than variable and the decreased demand for product in 1997 had a sufficient impact on the companies ability to absorb the high amount of fixed costs. While the Company has been successful in reducing costs, it must increase its machine hour leverage and "value added" hours, in order to be profitable. The Company must increase its sales level inorder to accomplish the above.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the year ended December 31, 1997 were $2,778,000 or 17% of sales as compared to $2,528,000 or 11% for the year ended December 1996. The increase in SG&A in relation to net sales is a result of the decrease in sales volume.
INTEREST EXPENSE, AND OTHER INCOME, NET
Interest expense for the year ended December 31, 1997 was $278,000 as compared to $607,000
PEERLESS TUBE COMPANY 1997 ANNUAL REPORT
in 1996. The decrease of $329,000 was a result of the termination of the sales/leaseback agreement with the Block Drug Company.
Other income for the year ended December 31 1997 was $89,000 as compared to $1,786,000 for the year ended December 31, 1996. The decrease is largely attributed to the Sale/Leaseback of Puerto Rico being terminated in November 1996. (See note 10, of notes to the Financial Statements).
Liquidity and Capital Resources
The Company has a negative working capital of ($153,000) at December 31, 1997. This was approximately a $72,000 increase from the working capital of ($225,000) at December 31, 1996.
Net cash at December 31, 1997 was $190,000 or a decrease of $37,000 when compared to the same period in 1996. The Company in order to meet cash requirements during 1997 was required to increase its equipment loan in order to minimize the drain in working capital and help in the net repayment of debt. The increase to the equipment loan was $552,000.
The debt-equity-ratio at December 31, 1997 was 4:1 as compared to 1.5:1 at December 31, 1996.
The Company has a working capital loan secured by the Company's accounts receivable and inventories.
Management must monitor its cash resources very closely. Operational improvements, aggressive marketing, and favorable aluminum pricing will be required in order to improve cash availability and management.
PEERLESS TUBE COMPANY 1997 ANNUAL REPORT
DESCRIPTION OF BUSINESS - -------------------------
PEERLESS TUBE COMPANY, a publicly owned corporation, manufactures collapsible metal tubes and seamless extruded aerosol containers for the pharmaceutical, drug, cosmetic, toiletries, and house hold product industries. The manufacturing facility is located in Bloomfield, New Jersey.
FINANCIAL HIGHLIGHTS YEAR ENDED DECEMBER 31, 1997
1997 1996 1995 ------------ ----------- ------------ Net Sales $ 16,288,000 $23,616,000 $ 29,793,000
Net Income (Loss) ($2,739,000) $ 766,000 ($1,775,000)
Weighted Average shares outstanding 2,462,973 2,462,973 2,462,973 Net (loss) income per share ($1.11) $ 0.31 ($0.72) Cash/stock dividends None None None Working Capital (Defict) ($153,000) ($225,000) $ 31,000 Book value per outstanding share of $ 0.52 $ 1.63 $ 1.32 common stock
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PEERLESS TUBE COMPANY 1997 ANNUAL REPORT
We will be one of the leaders in the OUR VISION packaging industry, successful in everything we do. - --------------------------------------------------------------------------------
We will achieve our Vision by being OUR a Total Quality Company, COMMITMENT continuously improving our internal and external customers.
- ------------------------------------------------------------------------------- CUSTOMERS - Our first priority is to OUR VALUES satisfy our customers. PEOPLE - We help our employees improve their skills, encourage them to take risks, treat them fairly, and recognize their accomplishments, asking them to approach their jobs with passion and commitment. TEAMWORK - We build trust and teamwork with open, candid com- munciations. We work together and share technologies and best prac- tices with our supplies and custom- ers. INNOVATION - We accept change as the rule, not the exception, and drive it by encouraging creativity. PERFORMANCE - We encourage the highest expectations, set ambitious goals, and quite simply strive to be the best. - -------------------------------------------------------------------------------
CHAIRMAN'S LETTER - -----------------
In 1997, the Company's sales decreased as a result of excess capacity in the aerosol industry and the Company's decision to not actively pursue the aluminum tube market. The Company's decision was based on the high cost of capital equipment and the lack of payback on invested capital in a shrinking aluminum tube market
1997 was a difficult year. Net sales totaled $16,288,000, a decrease of $7,328,000 or 31% when compared with Net Sales of $23,616,000 for 1996. The Company was able to react to the excess industry capacity and adjust its operating levels. However, being faced with high fixed cost there are no quick solutions. We must first achieve our short term goals. Once this has been accomplished we can pursue the Company's long term goals..
During the last quarter of 1997, Peerless introduced its new Slim-Top can. This can is slim, stylish, and sophisticated. It is eye-catching with substantial shelf appeal. We at Peerless are most excited about this elegant new can and we expect to win consumer appeal.
Looking ahead, 1998 should be a much better year. Peerless is entering the new year with the nation's economy up and aerosol market indicators, acceptance of the Slim-Top can, are such that we should have an improvement is sales this coming year.
The Peerless Tube Company, despite its losses, continues to emphasize the importance of a quality product, satisfied customers, and loyal and hard working employees. After all, the heart of our Company continues to be its operating strength and a unified effort to succeed.
Sincerely,
Frederic Remington, Jr. Chairman and Chief Executive Officer
PEERLESS TUBE COMPANY 1997 ANNUAL REPORT
*FOR THE YEAR ENDED DECEMBER 31, 1996, THE NET INCOME INCLUDED A RECOGNIZED GAIN OF $1,555,000, NET OF PUERTO RICO CAPITAL GAINS TAZ, IN CONNECTION WITH THE TERMINATION OF THE SALE LEASEBACK OF THE PUERTO RICO FACILITY.
PEERLESS TUBE COMPANY 1997 ANNUAL REPORT
PEERLESS TUBE COMPANY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
PEERLESS TUBE COMPANY
CONTENTS DECEMBER 31, 1997 - --------------------------------------------------------------------------------
Independent Auditor's Report 1
CONSOLIDATED FINANCIAL STATEMENTS:
Balance Sheet 2 Statement of Operations and Accumulated Deficit 3 Statement of Cash Flows 4 Notes to Consolidated Financial Statements 5 - 14
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders Peerless Tube Company
We have audited the accompanying consolidated balance sheets of Peerless Tube Company as of December 31, 1997 and 1996, and the related consolidated statements of operations and accumulated deficit, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Peerless Tube Company as of December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 of the notes to consolidated financial statements, the Company has suffered recurring losses from operations and negative cash flows. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
GOLDSTEIN GOLUB KESSLER & COMPANY, P.C. New York, New York
March 13, 1998, except for the second paragraph of Note 2, as to which the date is June 5, 1998
The accompanying notes and indepenent auditor's report should be read in conjunction with the consolidated financial statements
The accompanying notes and indepenent auditor's report should be read in conjunction with the consolidated financial statements
The accompanying notes and independent auditor's report should be read in conjuction with the consolidated financial statements