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 1934
For the quarterly period ended October 31, 2000
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 small business issuer 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)
Issuer's telephone number, including area code: (812) 937-4476
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes X No
Indicate the number of shares outstanding of each of
the issuer's classes of common equity as of the latest
practicable date.
Class Outstanding at October 31, 2000
Common Stock, no par value 985,045 Shares
Transitional Small Business Format (check one); Yes No X
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
THERMWOOD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended
October 31
2000 1999
---------------- -----------------
Sales
<S> <C> <C>
Machine sales $4,477,296 $5,639,238
Technical sales 2,008,171 1,427,603
---------------- -----------------
6,485,467 7,066,841
Less commissions 621,109 816,727
---------------- -----------------
Net sales 5,864,358 6,250,114
Cost of sales
Machine sales 2,727,006 2,984,458
Technical sales 1,042,010 604,676
---------------- -----------------
Total cost of sales 3,769,016 3,589,134
Gross profit 2,095,342 2,660,980
Research and development, marketing,
administrative and general expenses 1,666,149 1,925,146
---------------- -----------------
Operating income 429,193 735,834
Other expense:
Interest expense (261,502) (190,103)
Other expense (47,363) (16,830)
---------------- ----------------
Other expense (308,865) (206,933)
Earnings before income taxes and
extraordinary loss 120,328 528,901
Income tax expense 92,000 210,000
--------------- -----------------
Earnings before extraordinary loss 28,328 318,901
Extraordinary loss on repurchase of
bonds, net of income tax benefit --- (30,728)
--------------- -----------------
Net earnings $28,328 $288,173
=============== =================
Earnings per share:
Basic $0.03 $0.29
Diluted $0.03 $0.29
Weighted average number of shares:
Basic 985,045 985,045
Diluted 1,007,045 1,007,553
See notes to condensed consolidated financial statements.
</TABLE>
<TABLE>
THERMWOOD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
October 31 July 31
2000 2000
------------- -------------
Assets
Current assets
<S> <C> <C>
Cash $ --- $ ---
Accounts receivable 1,981,496 2,128,826
Inventories 6,250,688 6,592,461
Deferred income taxes 542,000 542,000
Prepaid expenses 383,857 458,506
-------------- -------------
Total current assets 9,158,041 9,721,793
-------------- -------------
Property and equipment (net of
accumulated depreciation 2,909,991 2,771,300
Other assets
Patents, trademarks and other 148,141 152,191
Bond issuance costs net of
accumulated amortization 417,839 429,080
Deferred income taxes 274,000 274,000
-------------- -------------
Total other assets 839,980 855,271
-------------- -------------
Total assets $12,908,012 $13,348,364
============== =============
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 1,299,305 $ 1,232,491
Checks issued in excess of bank
balance 65,817 104,752
Accrued liabilities 860,672 1,127,483
Customer deposits 807,467 580,978
Current portion of long-term
liabilities 36,858 36,858
Note payable to bank 2,472,317 2,987,654
-------------- -------------
Total current liabilities 5,542,436 6,070,216
-------------- -------------
Long-term liabilities - less current portion
Capital lease obligations 24,604 33,618
Debentures payable net of
unamortized discount 2,971,132 2,936,362
-------------- -------------
Total long-term liabilities 2,995,736 2,969,980
-------------- -------------
Shareholders' equity
Common stock, no par value,
4,000,000 shares authorized
985,045 shares issued and
outstanding at October 31, 2000
and July 31, 2000 7,953,077 7,953,077
Accumulated deficit (3,684,720) (3,713,048)
Foreign currency translation 101,483 68,139
-------------- -------------
Total shareholders' equity 4,369,840 4,308,168
-------------- -------------
Total liabilities and
shareholders' equity $12,908,012 $13,348,364
============== =============
See notes to condensed consolidated financial statements.
</TABLE>
<TABLE>
THERMWOOD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended October 31
2000 1999
------------- ---------------
Cash Flows From Operating Activities:
<S> <C> <C>
Net earnings $ 28,328 $288,173
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depreciation and amortization 223,695 189,590
Extraordinary loss on repurchase of bonds --- 30,728
Changes in operating assets and liabilities:
Accounts receivable 147,330 (801,673)
Inventories 341,773 (578,802)
Prepaid expenses and other assets 74,249 122,313
Accounts payable and other accrued expenses (199,997) 901,989
Customer deposits 226,489 553,747
Other 33,344 0
---------- -----------
Net cash provided by operating activities 875,211 706,065
---------- -----------
Cash Flows From Investing Activities:
Purchases of property and equipment (311,925) (102,461)
---------- -----------
Net cash used by investing activities (311,925) (102,461)
---------- -----------
Cash Flows From Financing Activities:
Principal payments on notes payable,
lease obligations and long-term debt (524,351) (505,567)
Checks issued in excess of bank balance (38,935) ---
Redemption of debentures --- (129,890)
---------- -----------
Net cash used by financing activities (563,286) 635,457)
---------- -----------
Increase (decrease) in cash --- (31,853)
Cash, beginning of period --- 80,941
---------- -----------
Cash, end of period $ --- $ 49,088
========== ===========
ADDITIONAL INFORMATION:
Interest paid $ 272,732 $ 206,835
========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS:
Note A - Basis of Presentation
_________________________
The unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form l0-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 condensed financial position and the results of operations
for the periods presented. These financial statements should be read
in conjunction with the Company's consolidated financial statements
included on Form 10-KSB for the year ended July 31, 2000 and Form 10
QSB for the quarter ended October 31, 1999. Operating results for the
interim periods are not necessarily indicative of the results that may
be expected for the year ending July 31, 2001.
Note B - Inventories
_________________
Inventories are priced at the lower of cost (first-in, first-out
method) or market.
<TABLE>
October 31 July 31
2000 2000
------------ ------------
Components of inventory:
<S> <C> <C>
Finished goods $ 843,906 $ 713,197
Work in process 693,083 892,375
Raw materials 4,713,699 4,986,889
----------- -------------
Total $6,250,688 $6,592,461
=========== =============
</TABLE>
Note C - Reclassifications
________________________
Certain amounts presented in the prior year condensed consolidated
financial statements have been reclassified to conform to the current
year presentation.
Note D - Earnings per Share
______________________________
Earnings per share for each of the three-month periods ended October 31
were determined as follows:
<TABLE>
2000 1999
Basic Diluted Basic Diluted
-------- ------- -------- -------
Earnings:
<S> <C> <C> <C> <C>
Earnings before extraordinary loss $28,328 $28,328 $318,901 $318,901
Add interest expense on
convertible debentures --- 3,300 --- 3,300
Add amortization of discount
on debentures and issuance costs --- 619 --- 619
Income tax effects of earnings
adjustments --- (1,568) --- (1,568)
------- --------- --------- ---------
Earnings available to common
shareholders $28,328 $30,679 $318,901 $321,252
Extraordinary loss, net of tax --- --- (30,728) (30,728)
------- ------- ----------- ---------
Net earnings available to
common shareholders $28,328 $30,679 $288,173 $290,524
======= ======== ========== =========
Shares:
Outstanding 985,045 985,045 985,045 985,045
Incremental shares related to
dilutive stock options --- --- --- 508
Incremental shares related to
convertible bonds --- 22,000 --- 22,000
------- --------- -------- ----------
Total weighted-average shares 985,045 1,007,045 985,045 1,007,553
======= ========= ======== ==========
Earnings per share
Income before extraordinary earnings $0.03 $0.03 $0.32 $0.32
Extraordinary loss, net of tax (.00) (.00) (.03) (.03)
------- -------- -------- -----------
Net earnings $0.03 $0.03 $0.29 $0.29
======= ======== ======== ===========
</TABLE>
Item 2. Management's Discussion and Analysis
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
Thermwood Corporation 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 our Annual Report
on form 10-KSB, 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. Thermwood disclaims any obligation to
update any such forward-looking statements to reflect future events or
developments.
Results of Operations
---------------------
Net sales for the quarter ended October 31, 2000 were $5,864,358, a
decrease of 6% from the same quarter of the previous year. Gross
profit for the current quarter was $2,095,342, a decrease of 21% from
the first quarter last year. Cost of sales as a percentage of net sales
was 64.3% compared to 57.4% for the first quarter of last year. Sales
were lower because of fewer shipments of machines in the U.S. and Europe.
The increased cost of sales was due to the discounted sale of two machines
to educational institutions and to technical services warranty costs. Lower
sales and higher cost of sales resulted in the lower gross profit for the
current quarter.
Research and development, marketing, administrative and general
expenses were $1,666,149 compared with $1,925,146 for the first quarter
of fiscal 2000 due to a decrease in the accruals for bonuses which are
based on operating profit. Operating profit was $429,193 compared to
$735,834 for the same period in fiscal year 2000. The 42% decrease in
operating profit was a result of lower margins.
Interest expense in the first quarter of fiscal year 2001 was $261,502,
an increase of approximately $71,000 from fiscal year 2000. This higher
level is due to increased borrowings on the bank line of credit to pay
other debts during a period of slower sales. Earnings before income
taxes in the first quarter of fiscal year 2001were $120,32 compared to
$528,901 in the first quarter of fiscal year 2000, or a decrease of
approximately 77%. Federal income taxes were accrued in the amount of
$92,000, lowering earnings to a net of $28,328 compared to $318,901 in
the first quarter of fiscal 2000.
Income in the first quarter of fiscal 2000 was further reduced by an
extraordinary loss of $30,728, net of taxes. This was due to the
repurchase of debentures with a face value of $165,000 at a cost of
$118,800. There were no repurchases of debentures in the first quarter
of fiscal 2001.
Liquidity and Capital Resources
-------------------------------
Thermwood's liquidity requirements result from capital investments,
working capital requirements, interest expense and principal payments
on our indebtedness. Thermwood has met these requirements from cash
provided by operating activities and borrowings from the bank and other
financing sources. We believe these sources will provide adequate funds
to meet current and projected operating requirements.
At October 31, 2000, Thermwood's working capital was $3,615,605
compared to $3,651,577 at July 31, 2000. This decrease was due to cash
used in investing and financing activities. Current backlog is approxi-
mately $2,100,000, which is virtually unchanged from July 31, 2000.
Shipments during the quarter approximated new orders during this period.
Shareholders' equity increased from $4,308,168 at July 31, 2000 to
$4,369,840 in the three-month period ended October 31, 2000 due to net
earnings and foreign currency translation adjustments.
Recent Accounting Pronouncements
--------------------------------
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
(SAB 101). SAB 101 must be implemented no later than the fourth quarter of
fiscal years beginning after December 15, 1999. Thermwood will implement
the requirements of SAB 101 during fiscal 2001 and does not believe the
implementation will have a material impact on our financial position or
results of operations.
THERMWOOD CORPORATION
FORM 10-QSB
October 31, 2000
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
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
None.
Item 6. Exhibits and Reports on Form 8-K
None.
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 November 30, 2000 By__/s/ Kenneth J. Susnjara
________________________
Kenneth J. Susnjara
President (Principal Executive Officer)
Date November 30, 2000 By___/s/ Rebecca F. Fuller
_____________________
Rebecca F. Fuller
Treasurer (Principal Financial Officer)
