<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-KSB
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
----- EXCHANGE ACT OF 1934
----- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 1996 Commission File Number 0-2331
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GLASSMASTER COMPANY
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(Exact name of small business issuer as specified in its charter)
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<S> <C>
South Carolina 57-0283724
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(State of incorporation) (IRS Employer ID No.)
PO Box 788, Lexington SC 29071
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(Address of principal executive offices) (Zip Code)
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Issuer's telephone number, including area code: 803-359-2594
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Securities registered pursuant to Section 12(b) of the Exchange Act: None
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Securities registered pursuant to Section 12 (g) of the Exchange Act:
COMMON STOCK, PAR VALUE $.03 PER SHARE
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(Title of Class)
Indicate by an "X" whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days. YES X NO
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Indicate by an "X" if disclosure of delinquent filers in response to Item 405
of regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. X
State issuer's revenues for its most recent fiscal year. $22,323,467 .
-----------------
The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $655,089 as of October 31, 1996, based on the
average high and low sales price of $1.00 per share.
The number of shares outstanding of the registrant's common stock, as of
October 31, 1996 was 1,617,096 shares.
DOCUMENTS INCORPORATED BY REFERENCE
The information set forth under items 9, 10, 11, and 12 of Part III of this
report is incorporated by reference from the issuer's definitive proxy
statement for the 1997 annual meeting of stockholders that will be filed no
later than December 31, 1996.
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PART I
Item 1. Business
(a) General Development of Business
The Company was founded in 1946 as the Koolvent Metal Awning Company
and incorporated under the laws of the State of South Carolina. During 1958
the Glassmaster line of fiberglass pleasure boats was introduced. In 1959 the
metal awning division was sold to concentrate efforts on the pleasure boat
business, the corporate name was changed to Glassmaster Plastics Company, and
the Company became a publicly held corporation and presently has approximately
1,300 stockholders.
In 1982, the corporate name was changed to Glassmaster Company (the
"Company") and, as a result of the cyclical nature of the pleasure boat
business, the Company began to diversify into industrial related manufacturing.
During 1982 and 1983 the Company developed from within manufacturing facilities
to produce extruded monofilament and fiberglass antennas. The ensuing five
years saw these operations experience steady growth and by the end of the 1988
fiscal year were the dominant business segment of the Company.
On September 1, 1988, the Company purchased the NYBRAD product line
and related manufacturing assets from Allied-Signal, Inc. NYBRAD is a brush
material of abrasive monofilament used in surface finishing and deburring. On
November 1, 1988, the Company announced the purchase of the industrial control
product line and related manufacturing assets from Speareflex Corporation of
Kalamazoo, Michigan. This business consists primarily of flexible steel wire
controls and plastic control panels for use in industrial and automotive
applications. The acquisition of these two product lines has allowed the
Company to further diversify and expand its line of industrial related
products.
On November 17, 1989, the Company announced its decision to
discontinue the manufacture and sale of fiberglass boats.
In June, 1994, the Company completed the purchase of a 95,000
square-foot manufacturing plant in Kalamazoo, Michigan, and relocated its
wholly-owned subsidiary, Glassmaster Controls Co., Inc. from a leased facility
in Otsego, Michigan to the new plant during the first quarter of the 1995
fiscal year.
On August 16, 1994 a tornado completely destroyed a 25,000
square-foot warehouse in Lexington, SC. During the 1995 fiscal year,
construction was completed on a 35,000 square-foot addition to the Monofilament
plant in Lexington, SC. This addition effectively replaces the warehouse
destroyed by the tornado and gives the Monofilament Division additional
manufacturing space.
There have been no bankruptcy, receivership, or similar proceedings
to the registrant since its inception. During the last three years there has
been no material acquisition or disposition of any significant amount of assets
other than that described above or in the ordinary course of business.
(b) Narrative Description of Business
The Company is a manufacturer of thermoplastic and thermoset plastic
materials that result in a variety of products within a single industry segment
and are categorized by product line as follows: extruded (thermoplastic)
synthetic monofilament, pultruded (thermoset) fiberglass and composites, and
flexible steel wire controls.
<PAGE> 3
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Item 1. Business (Cont'd)
The Company's Monofilament Division extrudes monofilaments from
nylon, polyester, polyolefins and other engineering resins for use in a wide
array of markets and applications including textiles (sewing thread), lawn and
garden care (trimmer line), recreational products (fish line), and industrial
weaving and industrial filtration. Monofilament, as produced by the Company,
begins with a thermoplastic resin which is processed through a melting device
(extruder) and subsequently oriented to form single strand fibers of various
diameters, tensile strengths and moduli. Specialized monofilaments for
industrial applications are manufactured for use in other major industries
including paper machine clothing for the paper industry, and with the
acquisition of the NYBRAD product line from Allied-Signal, Inc., abrasive
bristles for brushes used in metal and wood finishing. The Company markets its
monofilament products primarily on a private brand basis, which are sold by
company salesmen to original equipment manufacturers and distributors
throughout North America and, to a lesser degree, Europe, South America, and
the Pacific Rim.
The Company's Composites Division (formerly known as Industrial
Products and Fiberglass) manufactures a line of fiberglass marine and CB
antennas for use in pleasure craft and commercial fishing vessels. This
division also manufactures pultruded fiberglass rod stock used in a number of
specialty products. Antennas and reinforced plastic products are sold through
in-house salesmen and regional manufacturers' sales representatives and
distributed throughout the United States, Canada, and, to a lesser degree,
Europe.
The Company manufactures and assembles a wide range of flexible steel
wire controls and molded plastic control panels through its wholly-owned
subsidiary, Glassmaster Controls Co., Inc., located in Kalamazoo, Michigan.
These products are used primarily in medium and large capacity trucks and to a
lesser degree in automobiles, farm equipment and recreational boats, and are
sold through manufacturers' representatives or directly to original equipment
manufacturers throughout North America.
The names "Glassmaster", "CompCore", and "NYBRAD" are registered
trademarks of the Company.
The Company believes it is a significant competitor in the United
States market for specialty monofilament products and marine CB antennas.
While firm price competition can be experienced within some lines of the
monofilament and flexible wire control products, overall, the Company produces
products which center on performance, engineering and customer service and it
is these product lines which provide the Company with a stable revenue base.
Sales and profitability growth are dependent to varying degrees upon favorable
economic conditions and penetration into the industrial textile and paper
machine clothing industries, as well as the domestic truck industry.
Unfavorable weather conditions can have an impact on monofilament trimmer line
sales.
Sales of the Company's industrial products are somewhat seasonal with
sales to the lawn and garden care and marine antenna markets concentrated in
the second and third quarters of the fiscal year (December - May). While some
fluctuations in inventory levels will occur from time to time, the Company is
not required to carry significant amounts of inventory to meet delivery
requirements or to carry unusually large amounts of materials and supplies to
insure itself of a continuous allotment of goods from suppliers. The Company
does not provide extended payment terms to its customers in excess of those
normally offered for these industries. The dependence upon any one customer or
small group of customers is not material. The Company currently offers no
product or service requiring government approval and the effect of existing or
probable government regulations on the operations of the Company is considered
to be immaterial.
At August 31, 1996, the order backlog was $1,355,851 compared to
$2,124,686 at August 31, 1995.
The Company has no full-time employees engaged in research and
development activities, however, certain employees spend a portion of their
time in new product development and process improvement. Expenditures for
research and development were approximately $315,000 in 1996 and $357,000 in
1995.
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Item 1. Business (Cont'd)
No material effects have resulted from compliance with federal,
state, and local provisions regulating the discharge of materials into the
environment, or any other regulations protecting the environment. The Company
does not expect to make any material capital expenditures for environmental
control facilities for the current or succeeding fiscal year.
The Company and its subsidiary furnished employment for approximately
201 persons at August 31, 1996 and 223 persons at August 31, 1995.
Item 2. Properties
General corporate offices and the monofilament manufacturing
facilities (Plant I) are located at the intersection of I-20 and South Carolina
Highway #6 in Lexington, South Carolina. The total facility is composed of
125,000 square feet, and is owned by the Company in fee simple. On August 16,
1994 a tornado inflicted structural damage to buildings at this location and
destroyed a 25,000 square foot warehouse. The Company made prompt repairs to
damaged buildings and has replaced the destroyed warehouse space. See Note 9
of the Notes to Financial Statements.
The Company completed construction during the third quarter of the
1989 fiscal year on a 35,000 square foot facility (Plant II) to produce
monofilament line. This building also contains the Monofilament Division
offices and is located on the same property in Lexington, South Carolina and is
owned by the Company in fee simple. During the 1995 fiscal year an additional
35,000 square feet of manufacturing space was added to this facility.
The Company operates its composites manufacturing plant on South
Carolina Highway #121 in Newberry, South Carolina. The total facility is
composed of 31,000 square feet and is owned by the Company in fee simple.
Glassmaster Controls Co., Inc. operates its industrial controls
business at 831 Cobb Ave. in Kalamazoo, Michigan. The total facility is
composed of 95,000 square feet and is owned by the Company in fee simple.
The Company believes that facilities are adequate for the immediate
future, and that the machinery and equipment used in these facilities are well
maintained and in good operating condition. Estimated percentage utilization
capacities during the year ended August 31, 1996 were as follows: Monofilament
Plant - 90%; Composites Plant - 40%; Controls Plant - 30%.
Item 3. Legal Proceedings
There are no material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted during the fourth quarter of the
fiscal year covered by this report to a vote of security holders through the
solicitation of proxies or otherwise.
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PART II
Item 5. Market for Registrants Common Equity and Related Stockholder Matters
(a)(1) The Company's common stock trades on The Nasdaq SmallCap Market tier
of the Nasdaq Stock Market under the symbol GLMA.
(a)(1)(ii)The table below sets forth the high and low sales price per share
during each quarter in the last two years as quoted on the Small Cap Market
tier of the Nasdaq Stock Market.
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<CAPTION>
Quarter Ending High Low
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<S> <C> <C>
August 31, 1994 3.25 2.25
November 30, 1994 3.75 3.00
February 28, 1995 3.50 2.50
May 31, 1995 2.50 2.00
August 31, 1995 2.00 2.00
November 30, 1995 2.06 1.88
February 29, 1996 2.00 1.50
May 31,1996 2.00 1.00
August 31, 1996 1.25 1.00
</TABLE>
(b) There were 1,290 shareholders of record at October 31, 1996.
(c)(1) On October 26, 1995, Directors of the Company declared a cash
dividend of $.03 per common share payable on or about January 30, 1996 to
stockholders of record on January 9, 1996. On January 30, 1995 the Company
paid a cash dividend of $.06 per common share. On January 30, 1994 the Company
paid a cash dividend of $.05 per share.
(c)(2) According to the terms of a financing agreement, the Company is
restricted from paying cash dividends unless approved by the lending
institution.
Item 6. Management's Discussion and Analysis
Review of Operations
Comparison of 1996 to 1995
Net consolidated sales for the fiscal year ended August 31, 1996 were
$22.3 million, a decrease of $1.8 million, or 7.4%, when compared to net sales
of $24.1 million in fiscal year 1995. Each of the company's operating
divisions experienced some decrease in sales in fiscal year 1996 when compared
to the 1995 fiscal year.
The Monofilament Division had net sales of $15.5 million for the 1996
fiscal year, a decrease of 7.1% when compared to sales of $16.6 million last
year. This decrease in sales is due to the loss of a key customer that began
to produce and package its own weed trimmer line in June, 1995, and the loss of
another significant customer in the textile weaving business that filed for
protection from creditors under Chapter 11 of the U.S. Bankruptcy code in
January, 1996. Sales to all other customers of this division increased almost
8%. This increase in adjusted monofilament sales this year versus last year is
primarily the result of an increase in the average selling price of sewing
thread, textile weaving products, and fishing line that took affect in August,
1995. Also contributing to the increase in sales was a 15% year over year
increase in sales of bulk, non-packaged, nylon trimmer line this year compared
to last year.
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Item 6. Management's Discussion and Analysis (Cont'd)
Sales by the company's Composites Division (formerly referred to as
Industrial Products and Fiberglass Division) totalled $1.7 million in fiscal
year 1996, a decrease of approximately 13% when compared to last year's $2.0
million. The decrease in sales is primarily due to this division replacing
their entire line of marine antennas during the first quarter of the 1996
fiscal year with the introduction of a new line of commercial and recreational
marine antennas. Orders and shipments of the new antennas were restrained
during the first half of the 1996 fiscal year due to delays by authorized
dealers in ordering the redesigned antennas pending the sale of their existing
retail inventories. During the second half of the 1996 fiscal year, sales and
shipments of the new antennas began to improve and the company expects the 1997
fiscal year will see a significant improvement in sales generated by the new
products of the Composites Division.
Glassmaster Controls Company ("Controls") reported 1996 fiscal year
sales of $4.8 million, a decrease of 5.0% when compared to sales of $5.1
million during the prior year. The decrease in sales is attributable to a
slowdown in the medium and heavy duty truck manufacturing business. Shipments
of steel wire controls and control panels to the truck industry currently
represents approximately 75% of this division's sales. The truck industry has
forecasted production levels for 1996 will be 20% to 25% below those for 1995.
The industry slowdown is expected to continue into 1997. However, the company
expects recent efforts to develop new products and broaden the customer base
within the farm equipment and marine industries will allow the Controls
division to realize an overall increase in sales during the 1997 fiscal year.
Gross profit margins improved to 16.8% of sales during the 1996
fiscal year compared with 15.9% of sales during the prior year. The increase
in profit margins can be attributed to the effects of selling price adjustments
and cost cutting at Composites, and better manufacturing efficiencies realized
at Controls subsequent to the relocation of operations into a new facility
during the second quarter of the 1995 fiscal year. New process equipment at
Controls also contributed to the improvement in gross profit margins. Raw
material purchase price increases at Monofilament were generally passed along
to customers in the way of selling price adjustments and gross profit margins
at Monofilament were relatively unchanged from the prior fiscal year at
approximately 17.2% of sales.
Selling, general and administrative, and other expenses decreased by
8.7% to $2.9 million during 1996 and as a percentage of sales were relatively
unchanged from the prior year at 13% of sales. The decrease is primarily due
to reduced costs associated with employee benefit plans.
The Provision for Doubtful Accounts was $107,980 for the 1996 fiscal
year compared with $52,149 last year. Approximately $103,000 was charged to
the reserve in 1996 to write down the amount receivable from a single customer
of the Monofilament Division that declared bankruptcy in January, 1996 (See
Note 2 of the Notes to Financial Statements).
Interest expense for all of 1996 increased 19.7% over the prior year
to $651,730. The increase in interest is primarily due to higher average debt
levels associated with the term debt financing of monofilament extrusion
equipment acquired in August, 1995 and May, 1996.
The Provision for Income Taxes for 1996 was $70,260, an effective tax
rate of 34.8% of pre-tax income. Last year's Provision for Income Taxes was
$49,120 for an effective tax rate of 43.3%. The prior year tax rate is higher
due to state income taxes. No provision for state income taxes is included in
the current year amount because there is no taxable income for state tax
purposes.
Net Income for the 1996 fiscal year was $131,433, compared with
$351,362 during the prior year. The prior year net income includes an
Extraordinary Gain of $287,061 (net of related income taxes of $170,772)(See
Note 9 of the Notes to Financial Statements). Excluding the Extraordinary
Gain, net income for the prior year was $64,301.
<PAGE> 7
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Item 6. Management's Discussion and Analysis (Cont'd)
Comparison of 1995 to 1994
Sales of the company on a consolidated basis totaled $24.1 million
for the fiscal year ended August 31, 1995, an increase of 6.7% when compared to
prior fiscal year sales of $22.6 million. Monofilament Division sales
increased 5.6% compared to last year despite having first quarter production
and shipments interrupted by the effects of the August, 1994 tornado damage.
Improved sales of polyester weaving filaments, polyethylene and polypropylene
products, and NYBRAD abrasive monofilament more than offset a 13% decline in
sales of bulk and packaged trimmer line. Price competition, inherent in the
trimmer line business, has become more intense during the last two years and,
combined with the seasonal nature of these products, has contributed to the
shift in the mix of products sold toward more technically oriented
monofilaments. Industrial Products Division sales decreased by 10% this year,
compared to the prior year as lower average selling prices on their standard
line of fiberglass marine antennas failed to stimulate sufficient additional
demand. New products were introduced and selling prices increased on existing
products late in the fiscal year to generate additional sales revenue.
Glassmaster Controls Company reported sales higher by 25% this year versus the
prior year period. Manufacturers of heavy trucks and farm equipment continue
to operate at high levels and require the company's cable controls and control
panels in their assembly operations. First and second quarter production and
sales were hindered during the relocation of their business from a leased
facility in Otsego, Michigan to a 95,000 square-foot manufacturing plant in
Kalamazoo, Michigan, that was purchased by the company in June, 1994. This
relocation effectively doubled the manufacturing floor space available and with
the addition of equipment and tooling during the year and the introduction of
new OEM customer specific products, sales during the third and fourth quarters
of the 1995 fiscal year were 30% higher than prior year amounts.
Gross profit margins decreased to 15.9% of sales this year compared
to last year's 21.8%. Profit margins at Monofilament were adversely impacted
by production inefficiencies resulting from the effects of the August, 1994
tornado and at Controls by the disruptions and additional costs caused by the
relocation of the business. At Industrial Products, gross profit margins
deteriorated when what appeared to be an improving sales trend during the last
half of the 1994 fiscal year did not continue and selling prices on antennas
were lowered early in the fiscal year in an attempt to stimulate unit sales.
In addition, higher raw material costs impacted margins along all product
lines, particularly at Monofilament during the third and fourth quarters.
Selling prices were increased later in the fourth quarter at Industrial
Products and Monofilament.
Selling expenses increased by 8.9% this year compared to last year
due primarily to higher costs of product delivery and increased commission
sales. Interest expense increased by $120,000 or 28% this year compared to
last year due to higher overall debt levels and an increase in average interest
rates. General and Administrative, Corporate, and Other expenses were
relatively unchanged in total from the prior year.
Income Before Taxes and Extraordinary Gain was $113,421 this year
compared with $1,409,423 last year. The Provision for Income Taxes totaled
$49,120 this year and was $495,475 last year. The company recognized an
Extraordinary Gain of $287,061 (net of related income taxes of $170,772) during
the 1995 fiscal year and represents the excess of insurance proceeds received
over the net book value of buildings and equipment destroyed by the tornado in
August, 1994. Net Income for the year was $351,362 and was $913,948 last year.
Liquidity and Capital Resources
The working capital of the company as of August 31, 1996 was $1.5
million, an increase of approximately $200,000, or 15.5%, during the 1996
fiscal year. Current year Net Income of $131,433 plus non-cash Depreciation
and Amortization ($710,488) provided the company with the funds necessary to
invest in additional Plant and Equipment ($895,633), reduce outstanding
borrowings ($82,157) and pay a stockholder dividend of $.03 per share
($48,332). Of the total new investment in fixed assets, $360,000 was spent by
the Monofilament Division to purchase two extrusion lines and a lab development
extrusion line that were previously being rented by the company through a
seven-year operating lease provided by General Electric Capital Corp. The
company has now purchased all equipment previously acquired through operating
leases and no material off balance sheet commitments remain.
<PAGE> 8
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Item 6. Management's Discussion and Analysis (Cont'd)
The net operating assets and liabilities of the Company decreased by
$165,253 due primarily to a decrease in accounts receivable of $700,593. The
funds generated by the reduction in accounts receivable were used to reduce
borrowings under short-term revolving credit facilities secured by receivables
and inventories. In South Carolina, the financing agreement provides for a
revolving credit line of up to $4.0 million. As of August 31, 1996, borrowings
outstanding under this credit line were approximately $1.7 million (See Note 4
of the Notes to Financial Statements). In Michigan, a similar loan agreement
has been established that is secured by accounts receivable with a credit line
of up to $500,000. As of August 31, 1996, borrowings outstanding against this
line of credit totalled $225,000. This credit agreement expires on December
19, 1996, and the company expects to negotiate terms to extend the agreement
for an additional two-year period.
During the last three fiscal years, the company has invested more
than $4.3 million to expand and upgrade its manufacturing plant and equipment.
The capital expansion projects were undertaken to meet current and future
demand for manufacturing resources. A significant portion of these capital
additions were financed with bank mortgage and term-loan financing. As such,
the company would be considered to have a highly leveraged capital structure
with a debt to equity ratio of approximately 2.5 to 1.0 as of August 31, 1996.
This ratio stood at 2.7 to 1.0 as of August 31, 1995, and the company expects
to make further improvements to this key financial ratio during the next two
fiscal years as there are currently no plans or commitments for any material
capital additions and principal payments against long-term debt total $1.1
million during the 1997 fiscal year and $700,000 for the 1998 fiscal year. The
company believes its manufacturing assets are adequate and that its capital
structure, while highly leveraged, is well balanced between long-term and
revolving debt, and these combined resources will allow the company to take
advantage of future opportunities in the markets that it serves. The company
expects that its cash requirements during the next fiscal year will be provided
by operating activities and from existing credit facilities.
Item 7. Financial Statements
Financial Statements of Glassmaster Company and the Notes to
Financial Statements for the fiscal years ended August 31, 1996 and 1995 appear
on pages 11 through 20, the Index to the Exhibits and Exhibits appear on pages
22 through 24, and the Report of Independent Auditors appears on pages 21 of
this report.
Item 8. Changes in Disagreements with Accountants on Accounting and Financial
Disclosure
There have been no changes in or disagreements with accountants on
accounting financial disclosures.
PART III
Items 9, 10, 11, and 12. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16 (a) of the Exchange Act; Executive
Compensation; Security Ownership of Certain Beneficial Owners and Management;
and Certain Relationships and Related Transactions.
Information for items 9-12 of this report appears in the Proxy
Statement for the 1997 Annual Meeting of Shareholders to be held on January 24,
1997 and is incorporated herein by reference.
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PART IV
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-B)
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Exhibit No. Exhibit
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3.1 Amended and Restated Certificate of Incorporation of the Company, filed as
Exhibit 3.1 to Form 10-K for the year ended August 31, 1991 and incorporated
herein by reference.
3.2 Amended and Restated Bylaws of the Company, filed as exhibit 3.2 to Form 10-K
for the year ended August 31, 1991 and incorporated herein by reference.
10 Amended and restated Glassmaster Company 1992 Incentive Stock Option Plan,
filed as exhibit 10 to Form 10-KSB for the year ended August 31, 1993 and
incorporated herein by reference.
11 Statement re Computation of Per Share Earnings
21 Subsidiaries of the Registrant
27 Financial Data Schedule (SEC use only)
(b) Reports on Form 8-K
</TABLE>
No reports on Form 8-K were filed during the fourth quarter of the
fiscal year ended August 31, 1996.
<PAGE> 10
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Signatures
Pursuant to 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
on its behalf by the undersigned, thereunto duly authorized.
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<S> <C> <C>
GLASSMASTER COMPANY
By /s/ Raymond M. Trewhella By /s/ Steven R. Menchinger
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Raymond M. Trewhella, President Steven R. Menchinger, Corporate
(Principal Executive Officer) Controller and Treasurer
(Principal Financial Officer)
(Principal Accounting Officer)
Date November 22, 1996 Date November 22, 1996
-------------------------------- --------------------------------
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant, and in the capacities, and on the dates indicated.
<TABLE>
<S> <C>
By /s/ Stephen W. Trewhella By /s/ Raymond M. Trewhella
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Stephen W. Trewhella, Director Raymond M. Trewhella, Director
Date November 22, 1996 Date November 22, 1996
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By /s/ H. D. Harrelson By /s/ Melvin L. Chavis
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H. D. Harrelson, Director Melvin L. Chavis, Director
Date November 22, 1996 Date November 22, 1996
-------------------------------- -------------------------------
By /s/ James F. Kane By /s/ John S. Hammond
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James F. Kane, Director John S. Hammond, Director
Date November 22, 1996 Date November 22, 1996
-------------------------------- -------------------------------
By /s/ John Taylor By /s/ Norman A. Cotner
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John Taylor, Director Norman A. Cotner, M.D.
Date November 22, 1996 Date November 22, 1996
-------------------------------- -------------------------------
</TABLE>
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GLASSMASTER COMPANY
LEXINGTON, SC
FINANCIAL STATEMENTS
FISCAL YEARS ENDED AUGUST 31, 1996 AND 1995
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Page No.
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Balance Sheet ................................. 12
Statement of Stockholders Equity .............. 13
Income Statement .............................. 14
Statement of Cash Flows ....................... 15
Notes to Financial Statements ................. 16 - 20
Independent Auditor's Report .................. 21
</TABLE>
<PAGE> 12
GLASSMASTER COMPANY
LEXINGTON SC
BALANCE SHEET
AUGUST 31, 1996 AND 1995
<TABLE>
<CAPTION>
AUGUST 31, 1996 August 31, 1995
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<S> <C> <C> <C> <C>
ASSETS
Cash $ 129,342 $ 161,809
Accounts Receivable - Trade $2,780,193 $3,648,625
Less: Allowance for Doubtful Accts 55,288 2,724,905 68,417 3,580,208
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Accounts Receivable - Other 176,399 21,689
Inventories 2,900,288 2,749,741
Prepaid Expenses 60,479 48,462
Prepaid Income Taxes -0- 68,108
Deferred Income Taxes 20,408 25,305
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Current Assets 6,011,821 6,655,322
Fixed Assets (Net of Depreciation)
Manufacturing Property 5,876,317 5,678,963
Other Assets 338,757 252,594
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TOTAL ASSETS $12,226,895 $12,586,879
=========== ===========
LIABILITIES
Accounts Payable 1,268,443 1,655,728
Accrued Expenses 194,871 250,356
Accrued Income Taxes 1,886 -0-
Notes, Mortgages, & Debentures Payable - Current 3,049,697 3,453,165
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Current Liabilities 4,514,897 5,359,249
Other Liabilities
Notes and Mortgages Payable - Long Term 3,668,318 3,347,008
Deferred Income Taxes 514,482 4,182,800 452,964 3,799,972
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Total Liabilities 8,697,697 9,159,221
STOCKHOLDERS' EQUITY
Capital Stock (Authorized 5,000,000 Shares
$.03 Par - 1,617,096 (1996), 1,601,737 (1995)
Shares Issued and Outstanding) 48,513 48,052
Paid-In Capital 1,341,148 1,323,170
Donated Capital 124,210 124,210
Retained Earnings 2,015,327 3,529,198 1,932,226 3,427,658
--------- ----------- ---------- -----------
TOTAL LIABILITIES AND EQUITY $12,226,895 $12,586,879
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE> 13
GLASSMASTER COMPANY
LEXINGTON SC
STATEMENT OF STOCKHOLDERS EQUITY
FISCAL YEARS ENDED AUGUST 31, 1996 AND 1995
<TABLE>
<CAPTION>
August 31, 1996 August 31, 1995
--------------- ---------------
<S> <C> <C>
Capital Stock:
Balance - September 1 $ 48,052 $ 47,470
Proceeds from Sale of Shares
Under Stock Option Plan 461 232
Conversion of Debentures --- 350
----------- -----------
Balance - August 31 48,513 48,052
----------- -----------
Additional Paid In Capital:
Balance - September 1 1,323,170 1,263,791
Proceeds from Sale of Shares
Under Stock Option Plan 17,978 13,029
Conversion of Debentures --- 46,350
----------- -----------
Balance - August 31 1,341,148 1,323,170
----------- -----------
Donated Capital: 124,210 124,210
----------- -----------
Retained Earnings:
Balance - September 1 1,932,226 1,676,967
Net Income (Loss) 131,433 351,362
Common Stock Dividends Paid (48,332) (96,103)
----------- -----------
Balance - August 31 2,015,327 1,932,226
----------- -----------
Total Stockholders Equity $3,529,198 $3,427,658
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE> 14
GLASSMASTER COMPANY
LEXINGTON SC
INCOME STATEMENT
FISCAL YEARS ENDED AUGUST 31, 1996 AND 1995
<TABLE>
<CAPTION>
AUGUST 31, 1996 August 31, 1995
--------------- ---------------
<S> <C> <C>
Sales $22,323,467 $24,087,606
Cost of Sales 18,569,514 20,252,166
------------ ------------
Gross Profit on Sales 3,753,953 3,835,440
------------ ------------
Selling Expense 1,105,110 1,163,139
General and Administrative and Other Expense 1,688,440 1,962,958
Provision for Doubtful Accounts 107,980 52,149
------------ ------------
Total Expenses 2,901,530 3,178,246
------------ ------------
Income from Operations Before Interest and Income Taxes 852,423 657,194
Interest Expense 650,730 543,773
------------ ------------
Income Before Income Taxes and Extraordinary Item 201,693 113,421
Provision for Income Taxes
Current 32,480 82,311
Deferred 37,780 (33,191)
------------ ------------
Total - Provision for Income Taxes 70,260 49,120
------------ ------------
Income Before Extraordinary Item 131,433 64,301
Extraordinary Gain (Net of Income Taxes of $170,772) 287,061
------------ ------------
Net Income $ 131,433 $ 351,362
============ ============
Net Income Per Common Share (Primary and Fully Diluted)
Income Before Extraordinary Item $ .08 $ .04
Extraordinary Gain .18
------------ ------------
Net Income Per Share $ .08 $ .22
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE> 15
GLASSMASTER COMPANY
LEXINGTON SC
STATEMENT OF CASH FLOWS
FISCAL YEARS ENDED AUGUST 31, 1996 AND 1995
<TABLE>
<CAPTION>
August 31, 1996 August 31, 1995
--------------- ---------------
<S> <C> <C>
Cash Flows From Operating Activities
Net Income $ 131,433 $ 351,362
Adjustments to Reconcile Net Income to Net Cash Provided
(Used) by Operating Activities:
Depreciation & Amortization 710,488 759,836
(Gain) Loss on Disposal of Property 60,219
Increase in Deferred Income Taxes 37,780 137,581
Extraordinary Gain (457,833)
Changes in Operating Assets and Liabilities:
Accounts Receivable Decrease (Increase) 700,593 (658,617)
Insurance Claim Receivable Decrease (Increase) 330,958
Inventories Decrease (Increase) (150,547) (767,290)
Prepaid Expenses Decrease (Increase) (12,017) (40,485)
Prepaid Income Taxes Decrease (Increase) 68,108 (68,108)
Accounts Payable Increase (Decrease) (387,285) 231,989
Accrued Expenses Increase (Decrease) (62,567) (148,031)
Interest Payable Increase (Decrease) 7,082 (40,140)
Income Taxes Payable Increase (Decrease) 1,886 (224,127)
------------ ------------
Net Cash Provided (Used) by Operating Activities 1,044,954 (532,686)
------------ ------------
Cash Flows From Investing Activities
Cash Payments for the Purchase of Fixed Assets (895,633) (2,129,996)
Cash Surrender Value - Life Insurance (59,275) (35,932)
Cash Proceeds from Insurance on Property 478,866
Cash Proceeds from the Sale of Fixed Assets 26,290
------------ ------------
Net Cash Provided (Used) by Investing Activities (954,908) (1,660,772)
------------ ------------
Cash Flows From Financing Activities
Proceeds From Issuance of Common Stock 18,439 13,261
Proceeds From Issuance of Long-Term Debt 2,747,108 1,627,892
Principal Payments on Long-Term Debt (2,409,257) (947,851)
Dividends Paid (48,332) (96,103)
Net Increase (Decrease) in Line of Credit (420,008) 1,678,081
Cash Payments for Loan Closing Costs (10,463) (10,715)
------------ ------------
Net Cash Provided (Used) by Financing Activities (122,513) 2,264,565
------------ ------------
Net Increase (Decrease) in Cash (32,467) 71,107
Cash at Beginning of Year 161,809 90,702
------------ ------------
Cash at End of Year $ 129,342 $ 161,809
============ ============
Supplemental Disclosures of Cash Flow Information
Cash Paid For:
Interest (Net of Amount Capitalized) $ 643,648 $ 583,913
Income Taxes Paid 100,000 374,546
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996 AND 1995
Note 1. Summary of Significant Accounting Policies
Description of Business
Glassmaster Company is a manufacturer of extruded (thermoplastic)
synthetic monofilament, pultruded (thermoset) fiberglass composites,
and flexible steel wire controls. The company markets its
monofilament products primarily on a private brand basis, which are
sold by company salesmen to original equipment manufacturers and
distributors throughout North America, and to a lesser degree, Europe,
South America, and the Pacific Rim. The Company's fiberglass products
and composites are sold through in-house salesmen and regional
manufacturers' sales representatives and are distributed throughout
the United States and Canada. Flexible steel wire controls are sold
through manufacturers' representatives or directly to original
equipment manufacturers throughout North America.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those
estimates.
Principles of Consolidation
The consolidated financial statements for the year ended August
31, 1996 and 1995 include the accounts of Glassmaster Company and its
wholly-owned subsidiary, Glassmaster Controls Company, Inc., which was
organized and incorporated under the laws of the State of Michigan, on
October 28, 1988. All material inter-company transactions have been
eliminated.
Cash and Cash Equivalents
For the purpose of the statement of cash flows, the company
considers all short-term debt securities purchased with a maturity of
three months or less to be cash equivalents.
Accounts Receivable, net
The company provides an allowance for losses on trade receivables
based on a review of its past collection history. Accounts
receivables have been reduced by an allowance for doubtful accounts in
the amount of $55,288 and $68,417 for the years ended August 31, 1996
and 1995 respectively.
Inventories
The method of determining the amount of inventories is lower of
cost or market on a first-in, first-out basis. Inventories as shown
on the Balance Sheet are classified below:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Materials & Supplies $ 1,617,020 $ 1,642,504
Work In Process 651,635 489,469
Finished Products 631,633 617,768
----------- -----------
Total $ 2,900,288 $ 2,749,741
=========== ===========
</TABLE>
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996 AND 1995
Note 1. Summary of Significant Accounting Policies (Cont'd)
Fixed Assets
The basis for determining the values of fixed assets is cost.
Included in land is property valued at $100,374 which was donated to
the Company by Lexington County, South Carolina.
The provision for depreciation charged against income for the
fiscal years ended August 31, 1996, and 1995, totaled $698,279, and
$752,297 respectively. The company computes depreciation using the
straight-line method over the estimated useful lives of the assets as
indicated below. The company uses applicable accelerated methods for
tax purposes.
<TABLE>
<CAPTION>
Estimated
Asset Classification 1996 1995 Useful Life
-------------------- ------------ ------------ -----------
<S> <C> <C> <C>
Land $ 190,274 $ 190,274 N/A
Buildings 3,670,180 3,591,291 30-40 Years
Furniture & Fixtures 338,320 296,849 5-7 Years
Automotive Equipment 288,114 277,091 3-5 Years
Plant Equipment 5,315,428 4,704,147 7-10 Years
Tooling and Dies 630,829 516,234 3-5 Years
Less: Accumulated Depreciation (4,556,828) (3,896,923)
------------ ------------
Net $ 5,876,317 $ 5,678,963
--- ============ ============
</TABLE>
Income Taxes
Effective September 1, 1992, the company adopted FASB Statement
No. 109, Accounting for Income Taxes, which requires an asset and
liability approach to financial accounting and reporting for income
taxes. Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and tax bases
of assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates applicable
to the periods in which differences are expected to affect taxable
income. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax
assets and liabilities.
Components of the provision for income taxes on continuing
operations are shown below:
<TABLE>
<CAPTION>
1996 1995
---- ----
Current Deferred Current Deferred
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Federal $ 32,480 $ 30,778 $ 72,270 ($23,202)
State 7,002 10,041 (9,989)
Foreign -0- -0- -0- -0-
-------- -------- -------- ---------
$ 32,480 $ 37,780 $ 82,311 ($33,191)
</TABLE>
The principal elements accounting for the difference between the
statutory federal income tax rate and the effective rates are:
<TABLE>
<CAPTION>
1996 1995
---- ----
(Percent) (Percent)
<S> <C> <C>
Statutory federal income tax rate 34.0 34.0
Effect of tax loss carryovers - federal -0-
State income tax effect 8.8
Other .8 .5
---- ----
Effective corporate income tax rate 34.8 43.3
</TABLE>
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996 AND 1995
Note 1. Summary of Significant Accounting Policies (Cont'd)
Net Operating Loss Carry-forward
For South Carolina tax purposes a net operating loss
carry-forward of $65,667 is available for future periods. The
carry-forward will expire in the year ended August 31, 2011.
Advertising
The company follows the policy of charging the costs of
advertising to expense as incurred. Advertising expense was $79,566
and $71,047 for the years ended August 31, 1996 and 1995,
respectively.
Note 2. Other Receivables
Other receivables consists mainly of management's estimate of the
amount it will recover from a customer currently in bankruptcy
proceedings. As of August 31, 1996 the customer owed the company
$258,308. Based on the bankruptcy court proceedings to date, the
company charged 40% of the balance owed at August 31, 1996 against
their allowance for doubtful accounts. The remaining 60%, or
$154,985, has been recorded in other receivables.
Note 3. Other Assets
Other assets are composed of the following:
<TABLE>
<S> <C> <C>
CSV Life Insurance $ 250,255 $ 190,980
Deferred Tax Asset 28,635 -0-
Loan fees, net of Amortization 29,867 31,614
Other 30,000 30,000
--------- ---------
Total $ 338,757 $ 252,594
========= =========
</TABLE>
Note 4. Notes and Mortgages Payable
Substantially all property, plant and equipment and a portion of
CSV Life Insurance are pledged as collateral for the scheduled
borrowings. In addition, inventories and customer receivables are
pledged as collateral to provide the Company with a revolving line of
credit for working capital requirements. The amount available for
borrowings under this line of credit varies with fluctuations in the
amount of inventories on hand and customer receivables outstanding
with a maximum available credit line of $4.0 million. The balance as
of August 31, 1996 was $1,709,268 and at August 31, 1995 was
$2,309,277. This credit agreement is subject to renegotiation and
renewal every three-year period. The current contract will expire
March 31, 1998.
Special provisions of the loan agreements restrict payment of
cash dividends without the consent of the lender as well as providing
for minimum working capital requirements and maximum debt to net worth
requirements in addition to providing for other minimum financial
ratio requirements. The company was not in violation of any of these
loan covenants as of August 31, 1996.
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996 AND 1995
Note 4. Notes and Mortgages Payable (Cont'd)
The following table sets forth the Company's indebtedness at the
end of fiscal years 1996 and 1995.
<TABLE>
<CAPTION>
1996 1995
---- ----
Current Long-Term Current Long-Term
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Financial Institutions
Mortgages, interest ranging from 8.882% fixed
to Prime + .875%, maturities to 2005 $ 218,414 $2,088,542 $ 194,329 $2,087,119
Notes, interest ranging from Prime + .5% to
Prime + 1.25%, maturities within 12 months 1,934,268 --- 2,454,277 ---
Installment Notes, interest range from
1.9% to Prime + 1.25%, maturities to 2001 888,655 1,401,254 796,999 1,072,986
Local Government 2nd Mortgage, interest at 3%
fixed, maturity November 9, 2004 8,360 178,522 7,560 186,903
----- ------- ----- -------
Totals $3,049,697 $3,668,318 $3,453,165 $3,347,008
========== ========== ========== ==========
</TABLE>
At August 31, 1996, long-term debt was due in aggregate annual
installments of $1,115,429, $694,674, $882,260, $650,503, and
$1,370,672 in each of the five years ending August 31, 2001. The
Prime interest rate was 8.25% and 8.75% respectively, for years ended
August 31, 1996 and 1995.
Note 5. Stock Options
Effective October 7, 1982, the Company adopted an incentive stock
option plan and reserved 160,000 shares of common stock for issuance
to key employees. On October 28, 1988, the number of shares reserved
was increased to 260,000. Options granted under the plan became
exercisable at varying percentages from date of grant through
expiration, either at termination of employment or ten years after
date of grant.
As of August 31, 1996 and 1995, options to purchase 254,500
shares had been granted, and 50,200 shares and 61,834 shares
respectively, were exercisable. Most options granted will be vested
at 20% per year with the total being vested by the end of the fifth
year, and the options will expire at 20% per year beginning in the
sixth year and will terminate at the end of the tenth year at a price
of $1.00 per share for 165,000 shares granted, $1.25 per share for
15,000 shares granted, $2.25 per share for 30,000 shares granted,
$3.00 per share for 10,000 shares granted, and $4.00 per share for the
remaining 34,500 shares granted. The exercise price as stated above
approximates the fair market value of the underlying common stock at
the date granted.
Options to purchase 15,734 and 7,733 shares of common stock,
respectively were exercised during the fiscal years ended August 31,
1996 and August 31, 1995 at prices ranging from $1 to $2.25 per share.
A total of 49,200 options have been forfeited due to the expiration of
time or termination of employment.
Note 6. Donated Capital
Donated capital of $124,210 represents the fair market value of
23.4 acres of land, grading, and paving, donated to the Company in fee
simple by Lexington County, South Carolina, in 1965. Approximately
4.5 acres of this land was sold during the fiscal years 1981, 1982,
and 1983.
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996 AND 1995
Note 7. Earnings Per Share
Primary earnings per share amounts are computed based on the
weighted average number of shares actually outstanding plus the shares
that would be outstanding assuming exercise of dilutive stock options.
The number of shares that would be issued from the exercise of stock
options has been reduced by the average market price of the company's
stock. The number of shares used in the computations were 1,616,020
in 1996 and 1,596,785 in 1995.
Note 8. Defined Contribution Plan
The Company established a qualified 401(K) defined contribution
plan effective January 1, 1990. The plan year ends on December 31.
Participation in the plan is voluntary and employees may contribute
from 1% to 15% of eligible compensation on a tax-deferred basis.
The amount to be contributed by the Company will be determined
each year prior to December 1. The proposed match for the plan year
(1996) is $.25 for each $1.00 of employee contributions up to a
maximum 6% of eligible compensation.
The plan provides for the Company to make a discretionary
contribution on behalf of all eligible employees (those with one full
year of active service) regardless of whether they have elected to
voluntarily participate in the plan. This discretionary contribution
will be allocated based on a ratio of the employees' total W-2
earnings to the total W-2 earnings of all eligible employees. Any
discretionary contribution will be dependent upon the overall
profitability of the corporation and will be made with the approval of
the Board of Directors.
The amount of expense charged to operations was $60,314 for the
year ended August 31, 1996 and $66,782 for 1995.
Note 9. Storm Damage/Insurance Receivable
On August 16, 1994 a tornado inflicted damage to company property
located in Lexington, S.C. The damage included structural damage to
buildings, loss of inventory and loss of approximately 20% of
production capacity for a two-month period. The company had
accumulated reimbursable costs of $153,597 and had recorded $427,361
as a receivable for the lost inventory as of August 31, 1994. These
amounts were offset by a $250,000 advance payment received from the
insurance company prior to year end resulting in a net receivable of
$330,958 as of August 31, 1994. The Company and its insurance company
reached a full and satisfactory settlement during the year ended
August 31, 1995. Amounts received for excess costs incurred from the
storm were charged directly against those expenses. Amounts received
for damaged inventory and business interruption were charged to
operating income during the current period. Amounts received for
destroyed and damaged property were treated as if the property was
sold and has been recorded as an extraordinary gain of $457,833 net of
income tax effects of $170,772 on the income statement.
Note 10. Non-Cash Transaction - Conversion of Debentures
On December 4, 1994, debentures in the amount of $46,700 were
converted into 11,675 shares of common stock at $4.00 per share. The
remaining debentures were paid in cash during the fiscal year ended
August 31, 1995.
Note 11. Reclassification of Financial Statement Presentation
Certain reclassifications have been made to the August 31, 1995
financial statements to conform with the 1996 financial statement
presentation. Such reclassifications had no effect on net income as
previously reported.
<PAGE> 21
GLASSMASTER COMPANY
LEXINGTON, S.C.
OCTOBER 31, 1996
We have audited the consolidated balance sheets of Glassmaster Company
and subsidiary as of August 31, 1996 and 1995, and the related statements of
income, stockholders' equity, and cash flows, for the two-year period ended
August 31, 1996. 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. These 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 consolidated financial position of
Glassmaster Company and subsidiary as of August 31, 1996 and 1995, and the
respective results of its operations and its cash flows for the two-year period
ended August 31, 1996, in conformity with generally accepted accounting
principles.
Brittingham, Dial & Jeffcoat
Certified Public Accountants
501 State Street
PO Box 5949
West Columbia, SC 29171
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Sequential Page No.
- ----------- ------- -------------------
<S> <C> <C>
3.1 Amended and Restated Certificate of Incorporation of the Company, filed as
Exhibit 3.1 to Form 10-K for the year ended August 31, 1991 and incorporated
herein by reference. ---
3.2 Amended and Restated Bylaws of the company, filed as Exhibit 3.2 to Form 10-K
for the year ended August 31, 1991 and incorporated herein by reference. ---
10 Amended and restated Glassmaster Company 1992 Incentive Stock Option Plan,
filed as exhibit 10 to Form 10-KSB for the year ended August 31, 1993 and
incorporated herein by reference. ---
11 Computation of Earnings Per Share for two years ended August 31, 1996 and 1995. 23
21 Subsidiaries of the Company. 24
27 Financial Data Schedule (SEC use only). ---
</TABLE>
<PAGE> 1
EXHIBIT 11
GLASSMASTER COMPANY
COMPUTATION OF EARNINGS PER SHARE
FOR THE TWO YEARS ENDED AUGUST 31, 1996
(THOUSANDS EXCEPT FOR PER SHARE FIGURES)
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Primary:
Average Shares Outstanding 1,616 1,597
Net effect of dilutive stock options under treasury
stock method using average market price 0 0
-------- --------
Total Average Shares Outstanding 1,616 1,597
Net Income $ 131 $ 351
======== ========
Primary Earnings Per Share $ .08 $ .22
Fully Diluted:
Average Shares Outstanding 1,616 1,597
Net effect of dilutive stock options under treasury stock
method using year end market value if higher than average 0 0
-------- --------
Total Average Shares Outstanding 1,616 1,574
Fully Diluted Earnings Per Share $ .08 $ .22
</TABLE>
Note: If average market price is higher than ending market price, primary and
fully diluted EPS is the same.
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF GLASSMASTER COMPANY
1) Glassmaster Controls Company, Inc. is a wholly-owned subsidiary of the
Company, organized and incorporated under the laws of the State of
Michigan on October 28, 1988.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED AUGUST 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> AUG-31-1996
<CASH> 129,342
<SECURITIES> 0
<RECEIVABLES> 2,780,193
<ALLOWANCES> 55,288
<INVENTORY> 2,900,288
<CURRENT-ASSETS> 6,011,821
<PP&E> 10,433,145
<DEPRECIATION> 4,556,828
<TOTAL-ASSETS> 12,226,895
<CURRENT-LIABILITIES> 4,514,897
<BONDS> 3,668,318
0
0
<COMMON> 48,513
<OTHER-SE> 3,480,685
<TOTAL-LIABILITY-AND-EQUITY> 12,226,895
<SALES> 22,323,467
<TOTAL-REVENUES> 22,323,467
<CGS> 18,569,514
<TOTAL-COSTS> 18,569,514
<OTHER-EXPENSES> 2,793,550
<LOSS-PROVISION> 107,980
<INTEREST-EXPENSE> 650,730
<INCOME-PRETAX> 201,693
<INCOME-TAX> 70,260
<INCOME-CONTINUING> 131,433
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 131,433
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
