SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
____________________________________________________
Quarterly Report Pursuant To Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For quarter ended April 30, 1996 Commission file number 0-12195
THERMWOOD CORPORATION
______________________________________________________
(Exact name of Registrant as specified in its charter)
INDIANA 35-1169185
_______________ __________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 436, Dale, Indiana 47523
_______________________________ ___________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 812-937-4476
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days. YesX No
Common Stock, no par value, 6,406,546 shares outstanding as of April 30, 1996
<TABLE>
THERMWOOD CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Item 1.
Three Months Ended Nine Months Ended
April 30 April 30
1996 1995 1996 1995
------ ------ ------ -----
<S> <C> <C> <C> <C>
SALES $3,342,859 $3,586,361 $10,419,670 $9,987,304
Less commissions and discounts 400,990 394,963 1,261,277 1,115,561
---------- ---------- ----------- ----------
NET SALES 2,941,869 3,191,398 9,158,393 8,871,743
COST OF SALES 1,759,542 1,919,245 5,617,177 5,417,245
---------- ---------- ----------- ----------
GROSS PROFIT 1,182,327 1,272,153 3,541,216 3,454,498
RESEARCH AND DEVELOPMENT,
MARKETING, ADMINISTRATIVE
AND GENERAL EXPENSES 834,767 903,228 2,612,574 2,416,840
---------- --------- ----------- ----------
OPERATING PROFIT 347,560 368,925 928,642 1,037,658
Interest expense - related party 0 (1,717) (889) (6,570)
Interest expense - other (39,577) (71,619) (144,421) (215,867)
Other income (expense) (6,053) (8,446) 1,931 14,391
----------- ---------- ----------- ----------
Net other income (expense) (45,630) (81,782) (143,379) (208,046)
EARNINGS BEFORE INCOME TAXES 301,930 287,143 785,263 829,612
Income taxes 9,000 9,900 9,000 14,900
----------- ---------- ----------- ----------
NET EARNINGS $ 292,930 $ 277,243 $ 776,263 $ 814,712
=========== ========== =========== =========
Earnings per common and common equivalent share:
Primary $ 0.03 $ 0.04 $ 0.08 $ 0.10
Assuming full dilution 0.03 0.03 0.08 0.09
Average number of common shares outstanding
Primary 6,286,501 5,160,879 6,046,368 5,153,324
Assuming full dilution 7,177,501 7,230,879 6,286,501 7,223,324
See notes to condensed financial statements.
</TABLE>
<TABLE>
THERMWOOD CORPORATION
CONDENSED BALANCE SHEETS
(Unaudited)
Item 1. (Continued)
April 30 July 31
1996 1995
------------- ------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 43,336 $ 10,544
Accounts receivable 886,030 1,181,599
Inventories--Note B 3,346,903 3,008,947
Deferred income taxes 454,000 454,000
Prepaid expenses 219,347 375,165
----------- -----------
Total Current Assets 4,949,617 5,030,255
Property and Equipment
(Net of Accumulated Depreciation) 1,488,848 1,502,977
Other Assets
Patents, trademarks and other 145,187 211,861
Deferred income taxes 782,000 782,000
----------- -----------
Total Other Assets 927,187 993,861
----------- -----------
Total Assets $7,365,651 $7,527,093
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 656,538 $ 792,544
Accrued liabilities 648,147 752,688
Customer deposits 468,878 642,359
Current portion of long-term liabilities 2,865 31,598
----------- -----------
Total Current Liabilities 1,776,429 2,219,189
Long-term Liabilities - less current portion
Capital lease obligations 20,307 21,738
Bonds payable, net of unamortized discount 794,247 1,848,684
----------- -----------
Total Long-term Liabilities 814,554 1,870,422
----------- -----------
Shareholders' Equity
Preferred Stock, no par value,
2,000,000 shares authorized
930,600 and 1,000,000 shares
issued and outstanding 3,201,160 3,437,120
Common stock, no par value,
20,000,000 shares authorized
6,406,546 and 5,149,546 shares
issued and outstanding 10,082,543 8,988,897
Less subscriptions receivable (45,875) ---
Accumulated deficit (8,463,159) (8,988,535)
------------ ------------
Total Shareholders' Equity 4,774,668 3,437,482
------------ ------------
Total Liabilities and Shareholders' Equity
$ 7,365,651 $ 7,527,093
============ ===========
See notes to condensed financial statements.
</TABLE>
<TABLE>
THERMWOOD CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Item 1. (Continued)
Nine Months Ended
April 30
1996 1995
OPERATING ACTIVITIES: ------------- -------------
<S> <C> <C>
Net earnings $ 776,263 $ 814,712
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 211,984 213,984
Amortization of bond discount and issuance costs 19,590 20,555
Gain on sale of property and equipment (15,630) ---
Changes in operating assets and liabilities:
Accounts receivable 295,569 (625,436)
Inventories (337,956) (465,546)
Prepaid expenses 155,818 66,963
Other assets --- (4,865)
Accounts payable (136,006) 32,625
Accrued liabilities (104,541) (48,746)
Customer deposits (173,481) 571,702
----------- ----------
Net cash provided by operating activities 691,610 575,948
INVESTING ACTIVITIES:
Proceeds from sale of property and equipment 40,000 ---
Purchases of property and equipment (216,981) (96,563)
----------- ----------
Net cash used by investing activities (176,981) (96,563)
----------- ----------
FINANCING ACTIVITIES:
Principal payments on notes payable, lease
obligations and long-term debt (30,164) (54,570)
Payment of dividends on preferred stock (250,888) (281,982)
Redemption of preferred stock (235,960) ---
Exercise of qualified stock options 35,175 ---
----------- ----------
Net cash used by financing activities (481,837) (336,552)
Increase in cash 32,792 142,833
Cash, beginning of period 10,544 9,707
----------- ----------
Cash, end of period $ 43,336 $ 152,540
=========== ==========
ADDITIONAL INFORMATION:
Interest paid $ 119,094 $ 200,438
=========== ==========
Conversion of bonds payable, net
of unamortized discount $1,012,596 $ ---
=========== ==========
Subscriptions receivable for common stock issued $ 45,875 $ ---
=========== ==========
Assets acquired under capital lease $ --- $ 31,929
=========== ==========
Income taxes paid $ 9,000 $ 2,500
=========== ==========
See notes to condensed financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS:
Note A - Basis of Presentation
_______________________
The unaudited condensed financial statements have been prepared in
accordance with the instructions to Form l0-Q and,
therefore, do not include all information and footnotes
required by generally accepted accounting principles for
complete financial statements. The statements have not been
examined by independent accountants but include, in the
opinion of the Company, all adjustments (consisting of
normal recurring adjustments) necessary to present fairly
the condensed financial position and the results of
operations for the periods presented. These financial
statements should be read in conjunction with the Company's
financial statements included on Form 10-K for the year
ended July 31, 1995 and Form 10-Q for the quarter ended
April 30, 1995.
Operating results for the interim periods are not necessarily
indicative of the results that may be expected for the year.
Note B - Inventories
________________
Inventories are priced at the lower of cost (first-in, first-out
method) or market.
<TABLE>
April 30 July 31
1996 1995
------------ ------------
Components of inventory:
<S> <C> <C>
Raw material $1,841,462 $1,753,104
Work in process 1,202,401 995,106
Finished goods 303,040 260,737
----------- ------------
Total $3,346,903 $3,008,947
=========== ============
</TABLE>
Note C - Reclassifications
_____________________
Certain amounts presented in the prior year condensed financial
statements have been reclassified to conform to the current
year presentation.
Note D - Earnings per Share
____________________________
Primary earnings per common and common equivalent share is based on
net earnings less preferred stock dividend requirements and
the weighted average number of common shares outstanding
adjusted for the incremental shares attributed to dilutive
stock options and warrants using the treasury stock method.
Earnings per share assuming full dilution is determined by dividing
net earnings attributable to common shareholders plus
interest and amortization expense (net of income taxes)
related to convertible debentures by the sum of the weighted
average number of common shares outstanding and the
incremental shares attributed to dilutive common stock
equivalents and the assumed conversion of the convertible
debentures.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
- ---------------------
Net sales for the quarter ended April 30, 1996 were $2,941,869 a
decrease of 7.8% from the third quarter net sales in fiscal
1995 and an increase of 2.2% over the second quarter of
fiscal year 1996. Net sales for the nine months of the
current fiscal year were $9,158.393, an increase of
$286,650, or 3.2%, from last year's nine-month period.
Gross profit for the current quarter was $1,182,327, a decrease of
7.1% from the third quarter last year and an increase of
7.2% over the second quarter of 1996. Gross profit for the
nine months ended April 30, 1996 was an increase of $86,718,
or 2.5%, over the same period of fiscal year 1995. Gross
profit as a percentage of net sales was 40.2% compared to
38.3% for the second quarter of 1996 and 39.9% during the
third quarter of fiscal year 1995 and decreased from 38.9%
to 38.7% for the nine-month periods ended April 30, 1995 and
1996, respectively.
The higher gross profit for the third quarter of fiscal 1996 and
reduced interest costs resulted in earnings before income
taxes of $301,930, an improvement of $14,787 over a profit
of $287,143 for the same period in fiscal year 1995. The
cost of sales decrease of 8.9% from the third quarter of
fiscal year 1995 was due primarily to proportionately lower
net sales for the same period.
Research and development, marketing and administrative and general
expenses for the third quarter of fiscal year 1996 decreased
approximately 8% from the third quarter of fiscal year 1995
and increased approximately 8% for the nine-month period
ended April 30, 1996, compared to the same period in fiscal
year 1995. The year-to-date increase is due primarily to
increased research and development and marketing expenses
for new products which occurred during the first quarter of
fiscal 1996.
Interest expense in the third quarter of fiscal year 1996 was
$39,577, a decrease of 46% from $73,336 for the same quarter
last year and a decrease of approximately 3% over the second
quarter of fiscal year 1996. For the nine-month period
ended 1996, interest expense was $145,310 compared to
$222,437 for the same period of fiscal year 1995, a decrease
of approximately 35%. This lower level of interest is due
primarily to a reduction of approximately $1.2 million in
long-term 12% debentures which were voluntarily converted to
common stock. The remaining balance of debentures is
approximately $794,000, net of unamortized discount, at
April 30, 1996.
The net earnings in the third quarter of fiscal year 1996 were
$292,930, an increase of 5.7% over the third quarter of
fiscal year 1995. For the nine-month period ended April 30,
1996, net earnings decreased by $38,449 from the net
earnings of $814,712 for the first nine months in fiscal
year 1995.
Liquidity and Capital Resources
- -------------------------------
At April 30, 1996, the Company's working capital was $3,173,188
compared to $2,811,066 at July 31, 1995. This increase was
primarily due to cash generated by operations. Inventory
levels were increased to support the backlog covering the
shorter production period and faster turnaround of low-cost
standard machines now focused upon by the Company.
Backlog increased during the third fiscal quarter ended April 30,
1996 to $1,400,000 compared to $900,000 at the end of the
preceding quarter. This increase, along with an increase in
accounts receivable from the previous quarter, is due to a
return to more normal levels of sales and orders compared to
the sales and order levels of the first two quarters of
fiscal year 1996. The Company now produces many components
previously purchased already machined, increasing work-in-
process and raw material inventories.
THERMWOOD CORPORATION
FORM 10Q
4/30/96
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
None.
ITEM 2. CHANGES IN SECURITIES:
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES:
a. None.
b. Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
a. An annual meeting of shareholders was held in Dale,
Indiana on December 14, 1995.
b. All nominees for directors as listed on the Company's
proxy statement dated November 22, 1995 were elected.
c. Matters voted on by shareholders:
<TABLE>
(1.) Election of directors:
Votes Votes
For Against Abstain
-------- ------- -------
<S> <C> <C> <C>
Kenneth J. Susnjara 5,473,326 6,420 0
Linda S. Susnjara 5,473,326 6,420 0
Edgar Mulzer 5,473,326 6,420 0
Peter N. Lalos 5,473,326 6,420 0
Lee Ray Olinger 5,473,326 6,420 0
</TABLE>
(2.) Ratification of KPMG Peat Marwick LLP as the Company's independent
auditors:
Votes for 5,461,526; Votes against 2,500; Abstain 15,720.
ITEM 5. OTHER INFORMATION:
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
a. Exhibits. None.
b. Reports on Form 8-K. None were filed during the quarter.
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 thereunto duly authorized.
THERMWOOD CORPORATION
__________________________
(Registrant)
Date May 30, 1996 By /s/ Kenneth J. Susnjara___________________
President (Principal Executive Officer)
Date May 30, 1996 By /s/ Rebecca F. Fuller_____________________
Treasurer (Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> APR-30-1996
<CASH> 43336
<SECURITIES> 0
<RECEIVABLES> 911030
<ALLOWANCES> 25000
<INVENTORY> 3346903
<CURRENT-ASSETS> 4949617
<PP&E> 3577842
<DEPRECIATION> 2088994
<TOTAL-ASSETS> 7365651
<CURRENT-LIABILITIES> 1776429
<BONDS> 794247
3201160
3201160
<COMMON> 10082543
<OTHER-SE> 45875
<TOTAL-LIABILITY-AND-EQUITY> 7365651
<SALES> 3861871
<TOTAL-REVENUES> 2941869
<CGS> 1759542
<TOTAL-COSTS> 1759542
<OTHER-EXPENSES> 834767
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39577
<INCOME-PRETAX> 301930
<INCOME-TAX> 9000
<INCOME-CONTINUING> 292930
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 292930
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
