SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
_________________________________________________________________
(X) Quarterly Report Pursuant To Section 13 or 15 (d) of the
Securities Exchange Act of 1934For quarterly period ended April
30, 1999
OR
( ) Transition Report Pursuant to Section 13 or 15 (d) of the
Securities
Exchange Act of 1934
For the transition period from to
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)
Issuer'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.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common equity as of the latest practicable date.
Outstanding at April 30, 1999 Class
984,646 Shares Common Stock, no par value
Transitional Small Business Format (check one): Yes No X
PART I -- FINANCIAL STATEMENTS
<TABLE>
THERMWOOD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
April 30 April 30
1999 1998 1999 1998
Sales
<S> <C> <C> <C> <C>
Machine sales $4,858,279 $5,170,143 $14,428,158 $14,637,831
Technical sales 1,211,351 1,671,128 3,771,990 3,530,726
---------- ---------- ----------- -----------
6,069,630 6,841,271 18,200,148 18,168,557
Less commissions 786,705 739,626 2,254,372 2,208,706
---------- ---------- ----------- -----------
Net Sales 5,282,925 6,101,645 15,945,776 15,959,851
Cost of Sales
Machine sales 2,681,027 2,781,647 7,851,740 7,676,162
Technical sales 640,934 740,217 1,817,093 1,810,972
---------- ---------- ------------ ------------
Total Cost of Sales 3,321,961 3,521,864 9,668,833 9,487,134
---------- ---------- ------------ ------------
Gross Profit 1,960,964 2,579,781 6,276,943 6,472,717
Research and development,
marketing, administrative
and general expenses 1,671,070 1,682,931 5,315,277 4,546,551
---------- ---------- ----------- -----------
Operating income 289,894 896,850 961,666 1,926,166
Other income (expense):
Interest expense (76,600) (72,810) (205,102) (160,069)
Other 23,917 12,243 42,769 13,481
---------- ---------- ----------- -----------
Other expense, net (52,683) (60,567) (162,333) (146,588)
Earnings before income taxes 237,211 836,283 799,333 1,779,578
Income tax expense 72,943 344,329 381,389 718,696
---------- ---------- ----------- -----------
Net earnings $164,268 $491,954 $417,944 $1,060,882
========== ========== =========== ===========
Net earnings applicable to
common shareholders:
Earnings per share:
Basic $0.13 $0.35 $0.30 $0.72
Diluted 0.12 0.33 0.30 0.68
Weighted average number of shares
Basic 1,291,355 1,421,087 1,392,346 1,421,087
Diluted 1,324,082 1,523,650 1,403,074 1,523,650
See notes to consolidated financial statements.
</TABLE>
<TABLE>
THERMWOOD CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
April 30 July 31
1999 1998
---------------- -------------
ASSETS
Current Assets
<S> <C> <C>
Cash $ 119,659 $ 115,937
Accounts receivable 1,527,004 1,673,826
Inventories 5,540,304 5,359,182
Deferred income taxes 694,000 694,000
Prepaid expenses 419,834 491,209
---------------- ------------
Total Current Assets 8,300,801 8,334,154
---------------- ------------
Property and Equipment (net of
accumulated depreciation) 2,635,707 2,647,490
Other Assets
Patents, trademarks and other 125,384 139,933
Bond issuance costs (net of
accumulated amortization) 361,524 4,089
Deferred income taxes 199,000 199,000
--------------- ------------
Total Other Assets 685,908 343,022
--------------- ------------
Total Assets 11,622,415 11,324,666
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable 1,416,702 1,136,896
Accrued compensation and payroll taxes 292,038 498,224
Customer deposits 653,392 816,315
Other accrued liabilities 525,923 552,066
Current portion of capital lease obligations 1,175 6,195
--------------- ------------
Total Current Liabilities 2,889,230 3,009,696
--------------- ------------
Long-term Liabilities - less current portion
Note payable to bank 2,196,320 2,196,320
Bonds payable, net of unamortized discount 2,960,381 170,550
--------------- ------------
Total Long-term Liabilities 5,156,701 2,366,870
--------------- ------------
Shareholders' Equity
Common stock, no par value, 4,000,000
shares authorized, 984,646 and 1,431,109
shares issued and outstanding at April 30,
1999 and July 31, 1998, respectively 7,952,719 10,742,636
Accumulated deficit (4,340,610) (4,758,911)
-------------- ------------
3,612,110 5,983,725
Less subscriptions receivable 35,625 35,625
-------------- ------------
Total Shareholders' Equity 3,576,485 5,948,100
-------------- ------------
Total Liabilities and Shareholders' Equity $11,622,416 $11,324,666
============== ============
See notes to consolidated financial statements.
</TABLE>
<TABLE>
THERMWOOD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended April 30
1999 1998
-------------- --------------
Cash Flows From Operating
Activities:
<S> <C> <C>
Net earnings $ 417,944 $ 1,060,882
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 301,781 278,612
Changes in operating assets and liabilities:
Accounts receivable 146,822 (1,268,666)
Inventories (181,122) (1,357,489)
Prepaid expenses and other assets 71,375 117,525
Accounts payable and other accrued expenses 47,477 379,886
Customer deposits (162,922) 828,614
------------- --------------
Net cash provided by operating activities 641,355 39,364
------------- --------------
Cash Flows From Investing Activities:
Purchases of patents, property and equipment (273,295) (378,706)
------------- --------------
Net cash used by investing activities (273,295) (378,706)
------------- --------------
Cash Flows from Financing Activities:
Principal payments on lease obligations (5,020) (101,234)
Note payable to bank 0 2,546,320
Redemption of preferred stock 0 (2,546,320)
Proceeds from subscriptions receivable 0 21,550
Bond issuance costs (359,318) 0
Payment of dividends on preferred stock 0 (43,256)
------------- --------------
Net cash used by financing activities (364,338) (122,940)
------------- --------------
Increase (decrease) in cash 3,722 (462,282)
Cash at beginning of period 115,937 512,480
------------- --------------
Cash at end of period $119,659 $50,198
============= ==============
ADDITIONAL INFORMATION:
Interest paid $149,431 $146,083
============= ==============
Conversion of bonds payable, net of unamortized
discount to common stock $ 65,417 $120,000
============= ==============
Exchange of 460,262 shares of common
stock for bonds payable,
net of unamortized discount $ 2,855,334 $ 0
============= ==============
Subscriptions receivable for
common stock issued $ 0 $ 33,200
============= ==============
See notes to consolidated financial statements.
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:
Note A - Basis of Presentation
_______________________________
The unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB 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
management, all adjustments (consisting of normal recurring
adjustments) necessary to present fairly the consolidated
financial position, results of operations and cash flows for the
periods presented. These financial statements should be read in
conjunction with the Company's consolidated financial statements
included on Form 10-K for the year ended July 31, 1998 and Form
10-Q for the quarter ended April 30, 1998 and Form 10-QSB for the
quarter ended January 31, 1999.
Operating results for the interim periods are not necessarily
indicative of the results that may be expected for the year ended
July 31, 1999.
Certain amounts presented in prior years' financial statements
have been reclassified to conform to the current year
presentation.
Note B - Inventories
____________________
Inventories are priced at the lower of cost (first-in, first-out
method) or market.
<TABLE>
April 30 July 31
Components of inventories: 1999 1998
---------- ----------
<S> <C> <C>
Raw material $3,104,313 $3,166,526
Work in process 1,901,568 1,541,258
Finished goods 534,423 651,398
---------- ----------
Total $5,540,304 $5,359,182
========== ==========
</TABLE>
Note C - Earnings per Share
____________________________
Earnings per share for the three-month and nine-month periods
ended April 30, 1999 and 1998 were determined as follows:
<TABLE>
Three Months Ended April 30
1999 1998
----------------------------------------------
Basic Diluted Basic Diluted
--------- ---------- --------- ---------
Earnings:
<S> <C> <C> <C> <C>
Net earnings $164,268 $164,268 $491,954 $491,954
Add interest expense on
convertible bonds payable 0 0 0 6,045
Add amortization of bond
discount and issuance costs 0 0 0 1,155
Income tax effects of
earnings adjustments 0 0 0 (2,664)
---------- --------- ---------- ----------
Total earnings $164,268 $164,268 $491,954 $496,490
========== ========= ========== ==========
Weighted average shares
outstanding 1,291,355 1,313,354 1,421,087 1,421,087
Incremental shares from
assumed:
Exercise of dilutive
stock options 0 10,728 0 66,363
Conversion of bonds to
common stock 0 0 0 36,200
---------- ---------- ---------- ---------
Total weighted average shares 1,291,355 1,324,082 1,421,087 1,523,650
========== ========== ========== =========
Earnings per share $0.13 $0.12 $0.35 $0.33
</TABLE>
<TABLE>
Nine Months Ended April 30
1999 1998
------------------------------------------------
Basic Diluted Basic Diluted
---------- ---------- ---------- ---------
Earnings:
<S> <C> <C> <C> <C>
Net earnings $417,944 $417,944 $1,060,882 $1,060,882
Less preferred stock dividend 0 0 43,256 43,256
Add interest expense on
convertible bonds payable 0 0 0 14,020
Add amortization of bond
discount and issuance costs 0 0 0 1,227
Income tax effects of
earnings adjustments 0 0 0 (5,641)
--------- --------- ----------- -----------
Total earnings $417,944 $417,944 $1,017,626 $1,027,232
========= ========= =========== ===========
Weighted average shares
outstanding 1,392,346 1,392,346 1,421,087 1,421,087
Incremental shares from assumed:
Exercise of dilutive
stock options 0 10,728 0 66,363
Conversion of bonds to
common stock 0 0 0 36,200
---------- ---------- ---------- ----------
Total weighted average
shares 1,392,346 1,403,074 1,421,087 1,523,650
========== ========== ========== ==========
Earnings per share $0.30 $0.30 $0.72 $0.68
</TABLE>
For the three month and nine month periods ended April 30, 1999,
the convertible bonds were anti-dilutive and were not included in
the determination of earnings per share.
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In this section, we explain the financial condition and
results of operations of Thermwood and its subsidiaries for the
three-month and nine-month periods ended April 30, 1999 and 1998.
Forward-Looking Statements
This Quarterly Report on Form 10-QSB contains certain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including, without
limitation, statements containing the words "believes,"
"anticipates," "expects," and words of similar import. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual
results, financial condition, performance or achievements of the
Company and its subsidiaries to be materially different from any
future results, performance or achievements expressed or implied
by such forward-looking statements. Certain of these factors are
discussed in more detail elsewhere herein and in the Company's
Annual Report on form 10-K, including, without limitation, the
sections: "Description of Business" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
Given these uncertainties, readers are cautioned not to place
undue reliance on such forward-looking statements. The Company
disclaims any obligation to update any such forward-looking
statements to reflect future events or developments.
Results of Operations
In this section, we discuss our earnings for the periods
indicated and the factors affecting them that resulted in changes
from one period to the other.
Quarter ended April 30, 1999 compared to quarters ended January
31, 1999 and April 30, 1998
Sales
Net sales for the quarter ended April 30, 1999 were
$5,282,925, a decrease of approximately $819,000 compared to
third quarter net sales in fiscal 1998 and an increase of
approximately $245,000, or approximately 5% from the second
quarter of fiscal year 1999. The decrease for the quarter was
due primarily to decreased orders and shipments of product during
the early part of the fiscal year. The increase over the second
quarter occurred because of orders and backlog increasing after
the end of the second fiscal quarter. Gross profit for the
quarter ended April 30, 1999 was $1,960,964, a decrease of 24%
from the quarter ended April 30, 1998 and an increase of
approximately 2% over the second quarter of fiscal year, 1999.
During the quarter ended April 30, 1999, cost of sales as a
percentage of net sales was 62.9%, compared to 57.7% at the
quarter ended April 30, 1998 and 61.8% for the quarter ended
January 31, 1999. The lower cost of sales percentage in the
second quarter and the third quarter of fiscal 1998 was due to
the sale during those prior quarters of a larger percentage of
machines that have individual higher margins.
Research and Development, Marketing, Administrative and General
Expenses
Research and development, marketing, administrative and
general expenses were $1,671,070 during the quarter ended April
30, 1999 compared with $1,682,931 for the quarter ended April 30,
1998 and $1,716,108 during the second quarter of the current
fiscal year. These expenses along with lower sales were the
primary reason for the reduced operating profit of $289,894
compared to $896,850 for the same period in fiscal year 1998 and
the slight increase over $210,483 in the second quarter of fiscal
1999. Research and development, marketing, general and
administrative expenses were 32% of net sales for the quarter
ended April 30, 1999 compared to 28% for the quarter ended April
30, 1998 and 34% for the quarter ended January 31, 1999. The
primary reason for the increase in expenses as a percentage of
net sales was a decrease in sales along with an increased
spending level in marketing and R & D in an effort to increase
sales and orders. Non-recurring expenses related to the attempt
to repurchase the stock of the Company also contributed to the
increase in expenses, but not as much as in the second quarter of
fiscal 1999.
Nine months ended April 30, 1999 compared to nine months ended
April 30, 1998
Sales
Net sales for the first nine months of the current fiscal
year were $15,945,776, a slight decrease of approximately $14,000
from the same period last year. Backlog increased from
approximately $1,910,000 at January 31, 1999 to $2,551,000 at
April 30, 1999 but decreased from $3,029,000 at July 31, 1998.
Cost of sales as a percentage of net sales for the nine months
ended April 30, 1999 was approximately 60.6% compared to 59.4%
for the nine months ended April 30, 1998.
Research and Development, Marketing, Administrative and General
Expenses
Research and development, marketing, administrative and
general expenses for the nine months ended April 30, 1999
increased approximately $769,000, or approximately 17% from the
nine months ended April 30, 1998. This reduced operating profit
for the nine months ended April 30, 1999 to $961,666 compared to
$1,926,166 for the nine months ended April 30, 1998. Lower sales
coupled with the increase in research and development, marketing,
administrative and general expenses resulted in a 54% decrease in
operating profit for the comparative nine months periods.
Research and development, marketing, general and administrative
expenses were 33% of net sales for the nine months ended April
30, 1999 compared to 28% for the nine-month period ended April
30, 1998.
For the nine months ended April 30, 1999, these expenses
increased as a result of the following:
Percentage
of Increase
European Operations 3%
Research and Development 30%
Marketing 43%
General and Administrative 24%
European Operations. Expenses related to European operations
were $668,000 in the nine months ended April 30, 1999 compared to
$646,000 for the nine months ended April 30, 1998. This $22,000
increase was due primarily to increased marketing efforts and the
hiring of additional personnel. However, European expenses began
a decline in the second quarter of fiscal 1999 and decreased
approximately $222,000 from the first quarter because of a cost-
cutting program for the European operations implemented during
that time.
Research and Development Expenses. Research and development
expenses were $447,000 for the nine months ended April 30, 1999
compared to $197,000 in the nine months ended April 30, 1998.
This $250,000 increase was due primarily to increased salaries
and benefits and the purchase of experimental parts and supplies.
Marketing Expenses. Marketing expenses were $2,678,000 for the
nine months ended April 30, 1999 compared to $2,317,000 for the
nine months ended April 30, 1998. This $361,000 increase was due
primarily to trade show expenses and advertising costs.
General and Administrative Expenses. General and Administrative
expenses were $1,522,000 in the nine months ended April 30, 1999
compared to $1,387,000 in the nine months ended April 30, 1998.
This $135,000 increase was due primarily to increased legal and
professional fees related to the stock repurchase.
Interest Expense
Interest expense in the quarter ended April 30, 1999 was
$76,600, an increase of approximately $3,800 from the quarter
ended April 30, 1998. Interest expense for the nine months ended
April 30, 1999 was $205,102 compared with $160,069 for the nine
months ended April 30, 1998. This increase was due to interest
on approximately $2,200,000 of a $3,500,000 line of credit which
began late in the first quarter of fiscal year 1998. Another
smaller portion of the increase is due to interest accruing on
12% debentures due in April 2014 for which interest will be paid
quarterly. See also "Liquidity and Capital Resources".
Operating Income
Earnings from operations before income taxes in the quarter
ended April 30, 1999 were $237,211 compared to $836,283 in the
quarter ended April 30, 1998, a decrease of approximately 81%.
Earnings from operations were $799,333 for the nine months ended
April 30, 1999 compared to $1,779,578 for the nine months ended
April 30, 1998, a decrease of approximately 59%. Federal income
taxes were accrued in the amount of $72,943 and $381,389 for the
quarter ended and the nine months ended, respectively, April 30,
1999. Accrued taxes lowered earnings to a net of $164,268 and
$491,954 for the quarters ended April 30, 1999 and 1998,
respectively and $417,944 compared to $1,060,882 for the nine
months ended April 30, 1999 and 1998, respectively.
Liquidity and Capital Resources
At April 30, 1999, our working capital was $5,895,157 as
compared to $5,591,443 at January 31, 1999 and $5,324,458 at July
31, 1998. The increase in working capital from July 31, 1998
and January 31, 1999 was due to cash generated from operations.
At April 30, 1999, inventories increased approximately
$181,000 as compared to July 31, 1998. No increased in-house
processing of components was planned during the first six months
of this period because of the slowdown of orders. However,
during the last quarter, inventories increased approximately
$150,000 because of an increase in backlog and orders. Accounts
receivable decreased approximately $147,000 from July 31, 1998
primarily because of lower sales in the first nine months of
fiscal 1999.
During the first nine months of 1999, the Company had a
positive cash flow from operations of $282,037. Net earnings of
$342,944 plus depreciation and amortization of $299,627
contributed to the positive cash flow for the nine months. Cash
used by operating activities during this nine months was
approximately $181,000 for increased inventories. A decrease in
customer deposits of approximately $163,000 also occurred because
of the slowdown in orders from July 31, 1998.
Expenditures for fixed assets during the third quarter of
fiscal 1999 consisted of normal replacements and purchases of
labor saving equipment for production. We anticipate that
expenditures for the remainder of the 1999 fiscal year will be
consistent with expenditures during the first nine months of
fiscal 1999.
Shareholders' equity decreased from $5,948,100 at July 31,
1998 to $3,576,485 at April 30, 1999. The primary reason for
this decrease was the Company's acquisition in April 1999 of an
aggregate of 460,262 shares of its common stock from Company
shareholders in exchange for 12% subordinated debentures payable
in 2014 in the aggregate principal amount of $5,062,882. The
debentures were discounted using an effective interest rate of
22% resulting in a net increase in bonds payable and a decrease
in common stock of $2,855,334.
In addition, a total of 14,200 shares of common stock at a
price of $5.00 per share were issued upon the conversion of the
12% convertible debentures during the three months ended April
30, 1999 for an increase to shareholders' equity in the amount of
$65,417, net of discount and issuance costs. During the first
nine months of fiscal 1998, a total of 24,000 shares of common
stock were issued upon conversion of the 12% convertible
debentures for an increase to shareholders' equity in the amount
of $106,926 net of discount and issuance costs.
We have a $3,500,000 revolving secured line of credit with
DuBois County Bank that expires on January 1, 2000. We entered
into this line of credit in October 1997 and used proceeds from
this line to redeem our preferred stock from a director. The
outstanding balance on this credit line bears interest at a
variable rate equal to the money market prime index. Interest is
payable monthly. Principal and all unpaid and accrued interest
is due and payable on January 1, 2000. We anticipate, but cannot
assure, that, at the end of the term, we will enter into a new
credit line with the bank and transfer any outstanding loan
balance to the new credit line. The credit line is secured by
our assets. In the event of a default, as defined in the credit
line, the bank has the right to accelerate payments under the
credit line and take possession and sell the collateral. As of
April 30, 1999, our outstanding principal balance under the
credit line was $2,196,320.
Year 2000 Issues.
Our failure to adequately prepare our computers and software
to be year 2000 compliant could disrupt our business and
materially and adversely affect our operations. Many currently
installed computer systems and software products use two digits
rather than four to define the applicable year. In other words,
date-sensitive software may recognize a date using "00" as the
year 1900 rather than the year 2000. This could result in system
failures or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to track
inventory, issue purchase orders, write checks or engage in
similar normal business activities.
During the fiscal year ended July 31, 1998, we began a risk
evaluation of potential Year 2000 issues and formed a Year 2000
Committee which consists of the Chief Executive Officer, Vice-
President of Engineering, Information Systems Manager and two
other employees. The Committee's purpose is to assess all risks,
analyze current systems, including all information technology and
non-information technology systems, coordinate upgrades and
replacements and report the current and projected status of all
known Year 2000 compliance issues.
During the assessment phase, we identified computer-related
systems and software vendors with potential Year 2000 problems.
In the first quarter of fiscal 1999, we began corresponding with
the vendors that had not supplied Year 2000 statements,
requesting the Year 2000 compliance status of their products.
Responses received to date from vendors have not indicated any
Year 2000 problems. We have identified alternative vendors
should our current vendors fail to perform due to Year 2000
problems; however, use of some of these vendors would be
inconvenient and could be costly. Moreover, we have not
contacted these alternate vendors to determine whether they are
Year 2000 compliant.
As a precaution, we plan to stock additional inventory from
our non-U.S. vendors prior to the beginning of the year 2000.
We know of one mission-critical system, the inventory shop
floor control software, that is not Year 2000 compliant. This
software tracks incoming orders, inventory levels, material
requirements planning, shop floor control, labor tracking,
shipping and administrative and financial tracking functions.
Although this system has a Year 2000 certified replacement
product, implementation of this replacement product would require
us to re-input all current data. As a result, we have decided to
purchase a different system that is Year 2000 compliant and, in
our judgment, superior to the current system we are using. We
anticipate that the new system will be installed during the
fourth quarter of fiscal 1999, at which time we will begin to
input current data. We are currently installing upgrades to the
non-mission critical systems and should complete the upgrades by
the beginning of July 1999.
We estimate that the replacement or remedial costs for our
Year 2000 compliance issues will be less than $150,000 and will
consist of software and hardware upgrades that include new
features which are combined with Year 2000 corrections. These
costs will be expensed as incurred or capitalized and
depreciated, as appropriate.
We have tested the machine control systems and related
computer software which we sell and we believe that such
equipment is Year 2000 compliant.
We estimate that the worst case Year 2000 issue scenario would
occur if the new inventory shop floor control software is not
Year 2000 compliant. At that point, we would look to alternative
vendors. We believe that there are a number of alternate vendors
that claim to have year 2000 compliant software. In the event
that we are unable to integrate year 2000 compliant software from
any of these vendors, we would be forced to hire additional staff
and return to manual methods of tracking inventory and purchasing
raw materials. We believe that we could implement this
contingency plan within a short period of time. However, until
such time as this contingency plan took effect, our ability to
manufacture could be materially disrupted. In addition, during
the time that we were required to operate under this plan, our
results of operations would be adversely affected primarily due
to the resulting increased administrative expense, and higher raw
materials inventory levels that would be needed to assure that we
would have sufficient raw materials to avoid disruption of
production.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
On January 21, 1999, one of the Company's shareholders filed
a class action lawsuit against the Company and its directors in
the Circuit Court for Spencer County, Indiana. The suit sought
to enjoin the consummation of an exchange offer of subordinated
debentures made by the Company to certain of its shareholders for
their shares of common stock (the "Exchange Offer") or,
alternatively, in the event the Exchange Offer was consummated,
to recover compensatory damages. The complaint alleged that the
Exchange Offer and the Corporations plan to delist (which
delisting plan has since been abandoned) was unfair to the
shareholders and that the directors of the Company have violated
their fiduciary duty in the course of pursuing those
transactions. On May 24, 1999, this lawsuit was dismissed with
prejudice.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS:
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES:
a. None.
b. Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None.
ITEM 5. OTHER INFORMATION:
The Company's tender offer, which commenced on March 18,
1999, terminated as scheduled on April 21, 1999 at 5:00
p.m. New York time. The Company accepted tenders for an
aggregate of 460,262 shares of its common stock and issued 12%
subordinated debentures due 2014 in the aggregate principal
amount of $5,062,882 to the holders of the tendered shares.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
a. Exhibits. None.
b. Form 8-K was filed with the Securities and Exchange
Commission on February 1, 1999.
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_June 3, 1999 _By_/s/ Kenneth J. Susnjara
President (Principal Executive Officer)
Date_June 3, 1999 -By_/s/ Rebecca F. Fuller
Treasurer (Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> APR-30-1999
<CASH> 119,659
<SECURITIES> 0
<RECEIVABLES> 1,550,383
<ALLOWANCES> 23,379
<INVENTORY> 5,540,304
<CURRENT-ASSETS> 8,300,801
<PP&E> 5,421,065
<DEPRECIATION> 2,785,358
<TOTAL-ASSETS> 11,622,415
<CURRENT-LIABILITIES> 2,889,230
<BONDS> 2,960,381
0
0
<COMMON> 7,952,719
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,622,416
<SALES> 6,069,630
<TOTAL-REVENUES> 5,282,925
<CGS> 3,321,961
<TOTAL-COSTS> 1,671,070
<OTHER-EXPENSES> 52,683
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 76,600
<INCOME-PRETAX> 237,211
<INCOME-TAX> 72,943
<INCOME-CONTINUING> 164,268
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 164,268
<EPS-BASIC> .13
<EPS-DILUTED> .12
</TABLE>
