FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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______________________0-9790___________________
_____________________Thermal Industries, Inc.________________________
(Exact name of registrant as specified in its charter)
_________Pennsylvania__________________________________25-1145753____
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
______301 Brushton Avenue_________Pittsburgh, Pennsylvania 15221____
(Address of principal executive offices) (Zip Code)
_______________________________(412) 244-6400______________________
(Registrant's telephone number, including area code)
____________________________________N/A_____________________________
(Former name, former address and former fiscal year,
if changed since last report.)
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 (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____________
Number of shares outstanding of issuer's common stock, as of September
30, 1996 was 1,958,512.
<PAGE>
THERMAL INDUSTRIES, INC. AND SUBSIDIARIES
Index
Page
Number
Part I. Financial Information
Condensed Consolidated Balance Sheets -
September 30, 1996 and June 30, 1996 1
Condensed Consolidated Statements of Income -
Three Months Ended September 30, 1996 and 1995 2
Condensed Consolidated Statements of Cash Flows -
Three Months Ended September 30, 1996 and 1995 3
Notes to Condensed Consolidated Financial
Statements 4,5
Management's Discussion and Analysis of
the Financial Condition and Results
of Operations 6,7
Part II. Other Information
Item 1. Legal Proceedings 8
Item 6. Exhibits and Report on Form 8-K 8,9
Signature 10
<PAGE>
PART I - FINANCIAL INFORMATION
THERMAL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, JUNE 30,
1996 1996
(UNAUDITED) (AUDITED)
CURRENT ASSETS
Cash and cash equivalents $ 4,083,627 $ 2,083,260
Temporary investments 5,255,507 5,153,783
Accounts receivable - net 4,421,394 4,252,434
Inventories 4,919,232 5,083,556
Prepaid expenses 497,688 333,791
Prepaid taxes 64,955
Other receivables 62,990 59,357
TOTAL CURRENT ASSETS 19,240,438 17,031,136
PROPERTY AND EQUIPMENT - NET 5,812,536 5,987,436
OTHER ASSETS
Trade accounts receivable -
long term 996,830 862,931
Miscellaneous 79,893 82,364
TOTAL OTHER ASSETS 1,076,723 945,295
TOTAL ASSETS $26,129,697 $23,963,867
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long term debt 172,997 172,452
Accounts payable 869,593 993,344
Accrued wages 740,030 567,236
Accrued profit sharing contribution 764,800 614,800
Accrued payroll and sales taxes 207,647 260,844
Customers' deposits 263,645 285,222
Accrued income taxes 761,182
Other payables 4,662 4,757
TOTAL CURRENT LIABILITIES 3,784,556 2,898,655
LONG TERM DEBT 2,041,262 2,059,717
SHAREHOLDERS' EQUITY
Common stock - par value $.01 per share 41,205 41,205
Paid in capital 420,509 420,509
Retained earnings 19,842,165 18,543,781
TOTAL SHAREHOLDERS' EQUITY 20,303,879 19,005,495
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $26,129,697 $23,963,867
See notes to condensed consolidated financial statements.
-1-<PAGE>
THERMAL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30,
1996 1995
SALES $13,476,929 $10,509,632
COSTS AND EXPENSES
Manufacturing costs of product sold 7,612,710 5,907,042
Selling and administrative expenses 3,413,641 3,257,561
Depreciation and amortization 383,130 294,640
Interest expense 21,648 24,473
TOTAL COSTS AND EXPENSES 11,431,129 9,483,716
2,045,800 1,025,916
OTHER INCOME
Investment income 111,407 111,677
Gain on disposal of assets 877 3,935
112,284 115,612
Income before income taxes 2,158,084 1,141,528
Provision for income taxes 859,700 451,500
NET INCOME $ 1,298,384 $ 690,028
Average number of shares outstanding 1,958,512 1,954,512
Earnings per share of common stock $ .66 $ .35
See notes to condensed consolidated financial statements.
-2-<PAGE>
THERMAL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30,
1996 1995
NET CASH PROVIDED
______BY OPERATING ACTIVITIES $2,458,782 $ 603,168
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant
and equipment (205,759) (123,078)
Proceeds from sale of temporary
investments 460,000 505,432
Additions to temporary investments (561,724)
(Increase) Decrease in accounts
receivable - long term (133,899) 29,953
Other 877 3,935
NET CASH PROVIDED (USED) IN
INVESTING ACTIVITIES (440,505) 416,242
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in notes payable (17,910) (17,381)
Proceeds from sale of treasury stock __________ 17,950
NET CASH PROVIDED (USED) IN
FINANCING ACTIVITIES (17,910) 569
Net increase in cash and cash equivalents 2,000,367 1,019,979
Cash and cash equivalents at beginning
of period 2,083,260 1,873,405
Cash and cash equivalents at end
of period $4,083,627 $2,893,384
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 21,648 $ 24,473
Income taxes $ 60,114 $ 129,347
See notes to condensed consolidated financial statements.
-3-<PAGE>
THERMAL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - In the opinion of management, all adjustments, consisting
only of normal recurring adjustments necessary for a fair
presentation of (a) the condensed consolidated results
of operations for the three months ended September 30,
1996 and 1995, (b) the condensed consolidated financial
position at September 30, 1996 and June 30, l996, and
(c) the condensed consolidated statements of cash flows
for the three months ended September 30, 1996 and 1995,
have been made. For further information, refer to the
consolidated financial statements and notes thereto
included in the Company's Annual Report and its report on
Form 10-K for the year ended June 30, 1996. The results
for the three months ended September 30, 1996 are not
necessarily indicative of the results that may be expected
for the year ended June 30, 1997.
Note 2 - Inventories consisted of the following:
September 30, June 30,
_____1996____ __1996__
Finished Goods $2,295,261 $2,398,771
Work in Process 46,842 51,976
Raw Materials and Supplies 2,577,129 2,632,809
$4,919,232 $5,083,556
Inventories are stated at actual cost which is lower than
market. Cost is determined substantially by the first-in,
first-out method of inventory valuation.
Note 3 - Accounts receivable - long term
Trade accounts receivable - long term consists of two
unsecured trade accounts, receivable in monthly installments
of $15,000 and $20,000 respectively, which includes interest
at 8%, commencing January 1995 and July 1996 respectively.
Total account balance as of September 30, 1996 is $1,284,421,
of which $996,830 is long term.
-4-<PAGE>
Note 4 - Long Term Debt
Long term debt consists of:
1989 Pennsylvania Economic Development Financing
Authority (PEDFA) bonds, variable interest rate
(recent interest rates ranging from 3.60 to 4.0
percent), principal payable $100,000 per year
plus interest for fifteen years beginning in
November 1990 and a balloon payment of $500,000
at the end of the fifteen year term $1,400,000
Pennsylvania Industrial Development Authority
(PIDA) mortgage note, payable in monthly
installments of $8,035.50, including interest
at 3% through July 2006. 814,259
2,214,259
Less current portion 172,997
$2,041,262
Note 5 - The calculation of earnings per share is based upon the
average number of shares outstanding during the period.
-5-<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Three months ended September 30, 1996 versus
Three months ended September 30, 1995
Sales for the first quarter of fiscal 1997 were $13.5 million, a
28% increase over the $10.5 million reported in the first quarter
of fiscal 1996. Billings for windows and doors represented approximately
2/3 of the increase with other products contributing the rest. Incoming
unit orders were up 12% for the quarter. This trend is continuing into
the second quarter with both incoming unit orders
and billings up approximately 20% for the month of October, 1996 as
compared to October, 1995.
Manufacturing costs which include depreciation and interest were
58.9% of sales, compared to 58.7% of sales for the corresponding year
period. Material costs increased from 27.7% to 29.7% of sales.
Manufacturing labor as a percentage of sales decreased from 18.7% to
17.4%. Overhead costs also decreased from 12.3% to 11.9% of sales for
the comparative first quarters. Material costs increased primarily due
to price increases and changes in product mix. Labor and overhead
increased in dollar amounts but decreased as a percentage of sales due to
higher sales volume.
Selling and administrative expenses as a percentage of sales
decreased from 31.6% to 25.9% of sales. Contributing primarily to
this decrease were payroll and related costs (payroll taxes and
insurance), which decreased from 19.3% to 15.8% of sales for the
respective first quarters.
Investment income, comprised of interest, dividends, and gains
from sales of marketable securities were the same for the corresponding
first quarters.
Net income after taxes for the current year's first quarter was
$1.3 million, an increase of 88% over last year's net income of $690,000.
Liquidity and Capital Resources
Net cash flow showed approximately a $2 million increase for the
Company's first quarter, an increase of $980,000 over last year. Cash
provided by operating activities was primarily due to a positive cash
flow generated from earnings, decreases in inventories and increases in
accrued income taxes which were partially offset by increases in accounts
receivable and prepaid expenses.
Investing activities used cash in the amount of $440,505 primarily
from acquisition of property and equipment in the amount of
$205,759 and an increase in long term trade accounts receivable of
$133,899. Capital expenditures for the current quarter were $205,759
compared to $123,078 for last year's first quarter. Total expenditures
for equipment are expected to be approximately $2 million
for fiscal 1997.
-6-<PAGE>
The Company believes that the cash flows provided from operating
and investing activities will be sufficient to meet all of its
anticipated fiscal 1997 needs for capital expenditures, debt retirement
and operating activities.
-7-<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Item 3 of Form 10-K for the year ended
June 30, 1996.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - Report on Review by Independent
Certified Public Accountant
(b) Report on Form 8-K - There were no reports
on Form 8-K filed for three
months ended September 30, 1996.
-8-<PAGE>
Item 6(a). Report on Review by Independent Certified Public
Accountant
Board of Directors and Shareholders
Thermal Industries, Inc.
I have made a review of the condensed consolidated balance sheet of
Thermal Industries, Inc. as of September 30, 1996 and the related
condensed consolidated statements of income and cash flows for the three
months ended September 30, 1996 and 1995, in accordance with Statements
on Standards for Accounting and Review Services issued by the American
Institute of Certified Public Accountants. I previously audited and
expressed my unqualified opinion in my report dated August 30, 1996 on
the consolidated financial statements as of June 30, 1996 from which the
condensed consolidated balance sheet of that date is derived.
A review of interim financial information consists principally of
obtaining an understanding of the system for the preparation of interim
financial information, applying analytical review procedures to financial
data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an
examination in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, I do not express
such an opinion.
Based on my review, I am not aware of any material modifications
that should be made to the condensed consolidated balance sheet as of
September 30, 1996 or to the condensed consolidated statements of income
and cash flows for the three months ended September 30, 1996 and 1995,
for them to be in conformity with generally accepted accounting
principles.
___________________________
Sydney Heisler
Certified Public Accountant
Pittsburgh, Pennsylvania
November 11, 1996
-9-<PAGE>
SIGNATURE
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.
THERMAL INDUSTRIES, INC.
(REGISTRANT)
DATE:________________________ ___________________________
David H. Weis
Chief Executive Officer
DATE:________________________ ___________________________
Eric Rascoe
Secretary-Treasurer
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 4083627
<SECURITIES> 5255507
<RECEIVABLES> 4616931
<ALLOWANCES> 195537
<INVENTORY> 4919232
<CURRENT-ASSETS> 19240438
<PP&E> 14084503
<DEPRECIATION> 8271967
<TOTAL-ASSETS> 26129697
<CURRENT-LIABILITIES> 3784556
<BONDS> 0
0
0
<COMMON> 41205
<OTHER-SE> 20262674
<TOTAL-LIABILITY-AND-EQUITY> 26129697
<SALES> 13476929
<TOTAL-REVENUES> 13476929
<CGS> 7922688
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3486793
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21648
<INCOME-PRETAX> 2158084
<INCOME-TAX> 0
<INCOME-CONTINUING> 1298384
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1298384
<EPS-PRIMARY> .66
<EPS-DILUTED> .66
</TABLE>
