UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark one)
__X__ ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended June 30, 1996
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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 or other jurisdiction of incorporation (IRS Employer
or organization) Identification Number)
301_Brushton_Avenue
Pittsburgh, Pennsylvania 15221
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (412)_244-6400
Securities registered pursuant to Section 12 (b) of the Act: NONE
Securities registered pursuant to Section l2 (g) of the Act:
Name of each exchange
Title of class on which registered
COMMON STOCK - PAR VALUE $.01 NATIONAL ASSOCIATION OF
SECURITY DEALERS
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 HAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES___X___ NO________
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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-K or any amendment to
this Form 10-K. ____X____
The aggregate market value of the voting stock held by non-affiliates of the
registrant, based upon the closing price of the Common Stock on September 8,
1996, was approximately $4,374,718. Shares of Common Stock held by each
officer and director and by each person who owns 5% or more of the outstanding
Common Stock have been excluded in that such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes. The number of outstanding shares
of the registrant's Common Stock on September 8, 1996 was 1,958,512.
<PAGE>
PART I
Item 1. Business
Thermal Industries, Inc., is engaged in the manufacture and distribution
of vinyl-framed, made-to-order windows. These windows include double and
triple-paned replacement windows in a variety of styles, bow or bay window
units, and garden units. The Company has also developed a line of replacement
sliding doors and patio enclosure systems which are currently being marketed.
Vinylium Corporation, a wholly-owned subsidiary, extrudes rigid and dual-
durometer PVC profile extrusions which are used solely in the Company's window
manufacturing operations. A line of vinyl planking and railing extrusions for
use in porch decks and boat docks is also being marketed.
The Company's windows are primarily sold to remodeling or home
improvement contractors for use in residential retrofit remodeling. These
contractors are contacted by 51 sales employees working out of the Company's
headquarters in Pittsburgh, Pennsylvania and 19 warehouse-sales offices
located primarily within the northeast quarter of the United States. Deck and
dock products are sold across the continental United States by existing
Thermal sales people and by three manufacturers' representatives. The Company
also has several distributors in the north-central states and a commercial
sales department for direct sales to rental or commercial property owners.
All manufacturing is done at the Murrysville, Pennsylvania factory and
finished windows are shipped to the Company warehouses and to distributors in
Company-owned or leased trucks and by commercial carrier. There are no sales
outside the United States.
Competition in the window industry is intense and the Company has
numerous competitors who make vinyl and/or aluminum replacement windows. Some
competitors are substantially larger than the Company and some offer broad
building products lines, besides windows. The Company generally does not
compete with prime window manufacturers, who sell primarily to the new
construction market. The Company has a large customer base and no single
customer or group of related customers accounts for as much as five per cent
of sales. Price, quality, service and delivery are the chief competitive
factors involved in this industry. The Company believes that it competes
effectively in all four areas.
The raw materials and fabricated parts required for its manufacturing
operations are purchased by the Company under contract or in the open market.
Generally, such materials are available from a number of sources and supplies
have been adequate. Electricity is used in all manufacturing operations and
it also is in adequate supply.
The Company believes that it presently complies in all material respects
with applicable environmental quality statutes and regulations and anticipates
making no expenditures for environmental control facilities in the foreseeable
future.
The Company holds no material patents, licenses, franchises, or
concessions in its window and door operations. A number of patents have been
applied for in connection with the deck and dock products. Company products
are sold under several registered trademarks. It presently employs an average
of 540 people, none of whom is represented by a union.
I-1
The Company's business is highly seasonal, with 65% of annual sales
occurring from April through October, and 35% from November through March.
Orders are slowest from December through February and represent approximately
13% of annual sales.
The Company has a backlog of firm orders totaling $4.6 million in sales
as of June 30, 1996 as compared to $4.5 million in backlog sales as of June
30, 1995.
Research and development expenditures are charged to operations. Such
activities relate to the design of new window products and improvement of
existing products. Five employees are working in this area and all such
activities have been Company sponsored. Research and development expense for
fiscal years 1996, 1995, and 1994 totaled $564,150, $291,410, and $363,283,
respectively.
Item 2. Properties
Operations are performed at the locations indicated below. In the
opinion of the Company, its plants are in good condition and are satisfactory
for the purpose for which they are designed.
Lease
Location Use Space Expires
301 Brushton Avenue Warehouse and 30,000 sq. ft. 8/31/2002
Pittsburgh, PA Factory leased
300 N. Braddock Avenue Warehouse and 38,000 sq. ft. 8/31/2002
Pittsburgh, PA Factory leased
3700 Haney Drive Warehouse and 165,000 sq. ft.
Murrysville, PA Factory purchased 9/l3/89
400 N. Lexington Avenue Warehouse and 33,788 sq. ft. 12/31/2000
Pittsburgh, PA Factory leased
The Company also owns or leases space in 19 cities for sales and
warehouse facilities.
Item 3. Legal Proceedings
For discussion of legal proceedings, see Note 12 to Consolidated
Financial Statements.
Item 4. Submission of Matters to a Vote of Security Holders
There were no securities voted during the three month period ended June
30, 1996.
I-2
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters
(a) The following tables show the high and low bid prices in the
over-the-counter market as quoted by NASD beginning with the quarter
ended September 30, 1994.
Common Stock
Fiscal Quarter Ended High Bid Low Bid
September 30, 1994 7 3/4 7 1/4
December 31, 1994 9 1/4 8 3/4
March 31, 1995 9 3/4 9
June 30, 1995 9 1/2 9 1/2
September 30, 1995 9 1/2 9 1/2
December 31, 1995 9 1/2 9
March 31, 1996 9 1/2 8
June 30, 1996 9 1/2 8 1/4
(b) The number of holders on record of Thermal Industries, Inc.
common stock as of September 8, 1996 was 257.
DIVIDENDS
Dividends paid during the fiscal year ended June 30, 1996 were as follows:
Month of Per
Payment Amount Share
January $194,720 $.10
Dividends paid for the fiscal years ended June 30, 1995 and 1994,
were $115,727 and $77,003 respectively ($.06 and $.04 per share).
II-1
Item 6. Selected Financial Data
Fiscal Years Ended June 30
1996 1995 1994 1993 1992
Net sales and
other income $41,783,972 $38,529,845 $33,205,519 $29,823,135 $28,865,032
Net income 1,980,281 2,050,393 1,755,728 1,240,104 1,575,326
Earnings per
share 1.01 1.05 .90 .64 .81
Total assets 23,963,867 21,671,631 20,099,862 17,923,199 16,976,483
Long-term Debt 2,059,717 2,232,169 2,402,482 2,364,998 2,545,817
Shareholders'
Equity 19,005,495 17,200,784 15,243,343 13,562,018 12,395,786
Book Value
Per Share 9.70 8.81 7.85 6.99 6.39
Cash dividends
per share $ .10 $ .06 $ .04 $ .04 $ .04
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Year Ended June 30, 1996 Compared With
Year Ended June 30, 1995
Net sales for fiscal 1996 were $41.4 million, up approximately 8.6% over
1995 sales of $38 million. The primary sources for the increase were a $2
million increase in sales of windows and doors and $1 million in sales of
vinyl porch deck and boat dock materials. Unit sales increased
approximately 7.6% over the previous year.
Sales in the final quarter of the current year were $12.3 million, compared
to $10.2 million for last year's fourth quarter. The Company anticipates a
substantial increase in sales for the first quarter of fiscal 1997 over last
year's first quarter volume of $10.5 million. Incoming orders for July and
August of fiscal 1997 are 16% higher than those of last year.
Manufacturing costs as a percentage of sales, 58.2%, were identical for both
fiscal years. Material costs decreased from 28% of sales in fiscal 1995 to
26.8% of sales for fiscal 1996. Manufacturing labor as a percentage of
sales rose slightly from 18.1% to 18.5% for the current year.
Overhead costs increased from 12.1% of sales in fiscal 1995 to 12.9% of
sales in fiscal 1996. Production line costs decreased slightly from 5.1% of
sales to 4.8% and factory depreciation rose from 2.2% to 3.3% of sales for
the comparative years.
Selling and administrative expenses increased $1.5 million to $14.4 million
from $12.9 million and increased as a percentage of sales to 34.9% from 34%
a year ago. Payroll and payroll taxes increased from $6.3 million to $6.7
million but as a percentage of sales decreased from 16.4% to 16.2%. Sales
and marketing payroll increased approximately $360,000 due to introduction
of new products, mainly vinyl decks and docks, on a nationwide basis.
Profit sharing expense increased approximately $175,000 as the result of an
increase in qualified participants as well as the Company's matching
contributions to the newly implemented 401(k) plan.
II-2
Insurance costs rose from $1.2 million to $1.4 million primarily due to
increased sales and payroll. Rent and utilities increase approximately
$205,000 due to additional space for warehousing, fabrication and
distribution.
Investment income, comprised of interest, dividends and gains or losses from
the sales of marketable securities, was $414,233 and $451,751 respectively
for the comparative fiscal years.
The Company's effective tax rate for fiscal 1996 was 37.9% compared to 38.7%
for the prior fiscal year, due primarily to reductions in state income taxes
resulting from favorable rates and allocations in various states. Temporary
differences which require a deferred tax calculation are immaterial.
Net earnings for fiscal 1996 were $1.98 million or $1.01 per share compared
to $2.05 million or $1.05 per share for fiscal 1995.
The Company has introduced new products into the market during the last five
years such as patio enclosures, solid vinyl windows with natural wood
interior facing, vinyl porch decks and boat docks. This has resulted in an
increase in volume as well as increased selling and administrtive expenses
and capital expenditures. The Company's operating results and capital
spending may be subject to considerable fluctuations due to volume, product
mix, and general economic conditions.
Year Ended June 30, 1995 Compared With
Year Ended June 30, 1994
Net sales for fiscal 1995 were $38 million, up approximately 15.6% over 1994
sales of $32.9 million. Unit sales increased approximately 6.2% over the
previous year and there was a 4% price increase in October 1994.
Sales in the final quarter of the current year were $10.2 million, compared
to $9.3 million for last year's fourth quarter sales. The Company
anticipates a minimal increase in sales for the first quarter of fiscal 1996
over last year's first quarter volume of $10.5 million. Incoming orders for
July and August 1995 are approximately equal to those of last year.
Manufacturing costs as a percentage of sales were 58.2% for fiscal 1995
compared to 55.2% for fiscal 1994. Material costs increased slightly from
27.4% of sales in fiscal 1994 to 28.0% of sales in fiscal 1995.
Manufacturing labor as a percentage of sales rose from 17.8% to 18.1% for
the current year.
Overhead costs increased from 10% of sales in fiscal 1994 to 12.1% of sales
in fiscal 1995. Production line costs rose from 4.1% of sales to 5.1% of
sales and factory depreciation increased from 1.3% of sales to 2.2% of sales
for the comparative years.
Selling and administrative expenses increased $895,000 to $12.9 million from
$12 million, but decreased as a percentage of sales to 34% from 36.6% a year
ago. Payroll and payroll taxes increased from $5.8 million to $6.3 million,
but as a percentage of sales decreased from 17.6% to 16.4%. Primarily as
the result of a self-insured workmens' compensation plan, total insurance
costs decreased approximately $97,000.
Advertising and dealer promotion costs increased approximately $151,000,
which helped fuel sales volume and profit growth.
Bad debt expense of $108,343 increased approximately $176,000 as the result
of a negative bad debt amount of $67,334 in the previous year stemming from
an adjustment in charge-offs in fiscal 1993. Without this adjustment bad
debt expense for fiscal 1994 would have been $83,000.
Investment income, comprised of interest, dividends and gains or losses from
the sale of marketable securities, was $451,751 and $297,266 respectively
for the comparative fiscal years. Interest from municipal bonds increased
approximately $122,000 over last year.
II-3
The Company's effective tax rate for fiscal 1995 was 38.7% compared to 38.9%
for the prior fiscal year, due primarily to non-taxable municipal bond
interest. Temporary differences which require a deferred tax calculation
are immaterial.
Net earnings for fiscal 1995 were $2.1 million, or $1.05 per share compared
to $1.8 million or $.90 per share for fiscal 1994.
Liquidity and Capital Resources
This discussion and analysis of the Company's liquidity and capital
resources should be read together with the consolidated balance sheets and
statements of cash flows.
During the current year, cash and cash equivalents increased from $1.9
million to $2.1 million. Net cash from operating activities increased from
$2.2 million to $2.3 million. The primary factors contributing to this
increase were increases in depreciation and accounts payable offset by
increases to accounts receivable and inventories.
During fiscal 1996, the Company used $1.7 million for investing activities.
Investments in property, plant and equipment approximated $2 million
compared to $2.6 million in the previous year.
The Company continues its modernization and upgrading of production
equipment. New computerized manufacturing systems have been installed to
improve the manufacturing process. With the introduction of new products
into the market, new extrusion equipment in the vinyl production department
has been set up for the manufacture of PVC planking
for porch decks and boat docks.
The Company expects to continue its equipment modernization program and is
currently planning expansion of its Murrysville plant for anticipated
increase in volume.
Investing activities also include a net increase from the sale of temporary
investments over the purchase of securities netting $350,902. Temporary
investments consist mostly of short-term municipal bonds, some of which were
used to collateralize self-funding of workmen's compensation insurance as
required by the Pennsylvania insurance department.
Financing activities produced a net decrease in cash of $346,000. This
resulted from reduction in notes payable of $170,000 plus cash dividends
paid out in the amount of $195,000 offset by proceeds of $19,000 from the
sale of treasury stock for stock options exercised by employees.
The Company's current ratio (comparison of current assets with current
liabilities) was 5.9 at June 30, 1996 compared to 6.8 at June 30, 1995.
Shareholders' equity totalled $19 million or $9.70 per share at June 30,
1996 compared to $17.2 million or $8.81 per share at June 30, 1995.
The Company's financial position continues to remain strong, enabling it to
meet cash requirements for operations, capital expansion programs and
dividends to shareholders.
II-4
Item 8. Financial Statements and Supplementary Data
The following consolidated financial statements of the Registrant and
its subsidiaries required to be included in item 8 are listed below:
Page
Consolidated Financial Statements:
Report of Independent Accountant II-6
Balance Sheets as of June 30, 1996 and 1995 II-7-8
Statements of Income for the years
ended June 30, 1996, 1995, and 1994 II-9
Statements of Changes in Shareholders' Equity
for the years ended June 30, 1996, 1995, and 1994 II-10
Statements of Cash Flows for the years
ended June 30, 1996, 1995, and 1994 II-11
Notes to Financial Statements II-12-16
Quarterly Financial Information (Unaudited) II-17
Financial Statement Schedules:
All other schedules are omitted because they are not required, are
not applicable, or the information is included in the financial
statements or notes thereto.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
There were no disagreements on accounting and financial
disclosures during the year.
II-5
REPORT OF INDEPENDENT ACCOUNTANT
Board of Directors and Shareholders
Thermal Industries, Inc.
301 Brushton Avenue
Pittsburgh, PA 15221
I have audited the accompanying consolidated balance sheets of Thermal
Industries, Inc., and subsidiaries as of June 30, 1996 and 1995, and the
related consolidated statements of income, changes in shareholders' equity
and cash flows for each of the three fiscal years in the period ended June
30, 1996. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I 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. I believe that my audits provide a
reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Thermal Industries, Inc., and subsidiaries at June 30, 1996 and
1995, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended June 30, 1996, in conformity
with generally accepted accounting principles.
Sydney Heisler
Certified Public Accountant
Pittsburgh, Pennsylvania
August 30, 1996
II-6
THERMAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND 1995
ASSETS
1996 1995
CURRENT ASSETS
Cash and cash equivalents $ 2,083,260 $ 1,873,405
Temporary investments (Note 2) - cost
approximates market value 5,153,783 5,489,920
Accounts receivable - trade (net of
allowances for doubtful accounts at
June 30, 1996 - $172,631; 1995 - $117,202) 4,252,434 3,167,191
Inventories (Notes 2 and 6) 5,083,556 4,451,615
Prepaid expenses 333,791 132,481
Prepaid taxes 64,955
Other receivables - Officers and employees 59,357 55,787
TOTAL CURRENT ASSETS 17,031,136 15,170,399
PROPERTY AND EQUIPMENT (Note 2)
Land 334,403 334,403
Buildings 2,488,276 2,484,440
Machinery, equipment and autos 10,596,471 8,731,205
Leasehold improvements 459,594 416,045
13,878,744 11,966,093
Less accumulated depreciation 7,891,308 6,319,405
NET PROPERTY AND EQUIPMENT 5,987,436 5,646,688
OTHER ASSETS
Accounts receivable - long term (Note 4) 862,931 762,297
Loan acquisition fees, net of amortization
at June 30, 1996 - $65,356; 1995 - $55,472 82,364 92,247
TOTAL OTHER ASSETS 945,295 854,544
TOTAL ASSETS $23,963,867 $21,671,631
See notes to consolidated financial statements.
II-7
THERMAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND 1995
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
CURRENT LIABILITIES
Current portion of long term debt (Note 3) $ 172,452 $ 170,313
Accounts payable - trade 993,344 365,603
Accrued payroll and commissions 567,236 659,366
Accrued profit sharing contributions (Note 5) 614,800 443,060
Accrued and withheld payroll and sales taxes 260,844 275,505
Customer's deposits (Note 2) 285,222 275,364
Corporate taxes payable 40,579
Other current liabilities 4,757 8,888
TOTAL CURRENT LIABILITIES 2,898,655 2,238,678
LONG TERM DEBT (Note 3) 2,059,717 2,232,169
CONTINGENT LIABILITIES (Note 12)
SHAREHOLDERS' EQUITY
Common stock - authorized 5,000,000 shares
at $.01 par value; issued 2,011,088 shares 41,205 41,205
Capital paid in excess of par value 420,509 403,691
Retained earnings 18,566,747 16,781,186
Treasury stock - (at cost) 1996 - 52,576 shares;
1995 - 57,876 shares (22,966) (25,298)
TOTAL SHAREHOLDERS' EQUITY 19,005,495 17,200,784
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $23,963,867 $21,671,631
See notes to consolidated financial statements.
II-8
THERMAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994
1996 1995 1994
Sales $41,357,061 $38,071,578 $32,941,750
Operating costs and expenses
Manufacturing costs of
products sold 24,065,752 22,141,792 18,193,860
Selling and administrative
expenses 14,440,799 12,933,640 12,041,091
38,506,551 35,075,432 30,234,951
Income from operations 2,850,510 2,996,146 2,706,799
Interest expense (89,853) (112,261) (97,554)
Investment income 414,233 451,751 297,266
Gain (loss) on sale of tangible
property 12,678 6,516 (33,497)
Income before income taxes 3,187,568 3,342,152 2,873,014
Provision for income taxes
Federal 979,808 961,000 843,153
State 227,479 330,759 274,133
1,207,287 1,291,759 1,117,286
Net income $ 1,980,281 $ 2,050,393 $1,755,728
Average number of shares
outstanding 1,956,920 1,946,012 1,940,312
Earnings per share based on average
number of shares outstanding
(Note 9) $ 1.01 $ 1.05 $ .90
See notes to consolidated financial statements.
II-9
<TABLE>
THERMAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994
<CAPTION>
Common Capital
Stock Paid In Total
$.01 Par Excess Retained Treasury Shareholders'
Value of Par Earnings Stock Equity
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1993 $41,205 $384,256 $13,167,795 $(31,238) $13,562,018
Net income 1,755,728 1,755,728
Cash dividends
($.04 per share) (77,003) (77,003)
Stock options exercised 2,072 528 2,600
Balance, June 30, 1994 41,205 386,328 14,846,520 (30,710) 15,243,343
Net income 2,050,393 2,050,393
Cash dividends
($.06 per share) (115,727) (115,727)
Stock options exercised 17,363 5,412 22,775
Balance, June 30, 1995 41,205 403,691 16,781,186 (25,298) 17,200,784
Net income 1,980,281 1,980,281
Cash dividends
($.10 per share) (194,720) (194,720)
Stock options exercised 16,818 2,332 19,150
Balance, June 30, 1996 $41,205 $420,509 $18,566,747 $(22,966) $19,005,495
</TABLE>
Common Shares
In
Issued Treasury Outstanding
Balance, June 30, 1993 2,0ll,088 71,376 1,939,712
Stock options exercised (1,200) 1,200
Balance, June 30, 1994 2,011,088 70,176 1,940,912
Stock options exercised (12,300) 12,300
Balance, June 30, 1995 2,011,088 57,876 1,953,212
Stock options exercised (5,300) 5,300
Balance, June 30, 1996 2,011,088 52,576 1,958,512
See notes to consolidated financial statements.
II-10
<TABLE>
THERMAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1996, 1995, AND 1994
<CAPTION>
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $1,980,281 $2,050,393 $1,755,728
Depreciation and amortization 1,637,781 1,106,217 657,155
Loss (Gain) on disposal of assets (27,443) (7,039) 30,285
CHANGES IN OPERATING ASSETS AND
LIABILITIES - (INCREASE) DECREASE IN:
Accounts receivable (1,085,243) 384,964 (807,860)
Inventory (631,941) (1,114,348) (28,055)
Prepaid and other (269,835) (52,486) 279,627
Increase (Decrease) in accounts
payable and accrued expenses 657,838 (217,433) 470,433
NET CASH PROVIDED BY OPERATING
ACTIVITIES 2,261,438 2,150,268 2,357,313
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in accounts receivable -
long term (100,634) (762,297)
Proceeds from sale of temporary
investments 982,679 555,000 35,047
Proceeds from disposal of tangible
property 12,678 8,050 10,911
Additions to property, plant and
equipment (1,968,646) (2,640,834) (720,428)
Additions to temporary investments (631,777) (960,302) (4,195,053)
NET CASH USED IN INVESTING ACTIVITIES (1,705,700) (3,800,383) (4,869,523)
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of notes payable (170,313) (168,238) (169,829)
Proceeds from sale of treasury
stock 19,150 22,775 2,600
Dividends paid (194,720) (115,727) (77,003)
Proceeds from long term financing 194,734
NET CASH USED IN FINANCING ACTIVITIES (345,883) (261,190) (49,498)
Net increase (decrease) in cash and
cash equivalents 209,855 (1,911,305) (2,561,708)
Cash and cash equivalents at the
beginning of the year 1,873,405 3,784,710 6,346,418
Cash and cash equivalents at the
end of the year $2,083,260 $1,873,405 $3,784,710
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 89,853 $ 112,261 $ 97,554
Income taxes $1,312,821 $1,345,162 $ 726,955
</TABLE>
See notes to consolidated financial statements.
II-11
THERMAL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Organization and Nature of Operations
Thermal Industries, Inc. (the Company) is a Pennsylvania
corporation. The Company is engaged in the manufacture of vinyl-framed,
made-to-order windows,replacement sliding doors, patio enclosures, vinyl
porch decks and boat docks.
The Company's offices as well as its manufacturing facilities are
located in the Pittsburgh area. The products are primarily sold to
remodeling or home improvement contractors for use in residential
remodeling.
The Company markets and distributes its products through 20
warehouse-sales offices located primarily within the northeast quarter of
the United States. Deck and dock products are sold across the continental
United States.
Note 2 - Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of Thermal Industries, Inc. and subsidiaries, all of which are
wholly owned. All material intercompany accounts and transactions have been
eliminated.
Estimates
Preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires the use of
management's estimates primarily related to collectibility of receivables
and depreciable lives of property and equipment. Accordingly, actual
results could differ from those estimates.
Cash and cash equivalents
The Company considers all highly liquid investments with a maturity
of 90 days or less when purchased to be cash and cash equivalents. Cash
equivalents consist primarily of money market accounts issued by large
commercial banks and are readily convertible to cash. They are stated at
cost which approximates market value.
Temporary investments
Temporary investments, consisting principally of municipal bonds
with maturities of less than one year and variable rate municipals with
seven-day put options which are guaranteed by bank letters of credit,
preferred stock and Government bond funds are stated at cost, which
approximates market value. Investments approximating $1,000,000 were used to
collateralize self-funding of workmen's compensation insurance.
Effective July l, 1994, the Company adopted FAS #115, "Accounting
for Certain Investments in Debt and Equity Securities". The Company's
investments are considered to be "available for sale" securities with
maturities generally less than one year. The adoption of FAS #115 had no
effect on the Company's financial position or results of operations.
Concentrations of Credit Risk
Two unsecured trade accounts (see Note 4) representing 21.9% of the
outstanding accounts receivables as of June 30, 1996 are considered by the
Company to be of minimum credit risk. Concentrations of credit risk with
respect to other accounts receivable are limited due to the large number of
customers, generally short payment terms and their dispersion across
geographic areas. The Company performs ongoing credit evaluations of its
customers' financial condition and manages its exposure to losses from bad
debts by limiting the amount of credit extended whenever deemed necessary
and generally does not require collateral. The Company places its temporary
cash investments with high credit quality financial institutions. At times
such investments may be in excess of the FDIC insurance limit.
II-12
Note 2 - Continued
Inventories
Inventories are stated at cost which is lower than market; cost is
determined substantially by the first-in, first-out method of inventory
valuation.
Property and depreciation
Property and equipment are recorded at cost. Depreciation is
provided using the modified accelerated cost recovery method or straight-
line where required, over the estimated useful lives of the assets.
Depreciation on buildings and leasehold improvements is computed on
a straight line method using lives from 10 to 31 1/2 years. Depreciation on
machinery and equipment is computed under accelerated methods using lives
ranging from 3 to 7 years. Total depreciation expense for the fiscal years
ended June 30, 1996, 1995 and 1994, were $1,637,781, $1,106,217, and
$657,155, respectively.
Major additions and betterments are capitalized while expenditure
for maintenance, repairs and minor renewals are expensed when incurred.
Research and Development
Research and development costs are expensed when incurred. Such
costs for the fiscal years ended June 30, 1996, 1995 and 1994, were
$564,150, $291,410, and $363,283, respectively.
Customers' Deposits
The Company manufactures and provides installation of windows for
its customers under sales contracts which require cash deposits.
Recognition of income on these advances is deferred until the jobs are
completed, which usually ccurs within four to eight weeks.
<TABLE>
Note 3 - Long Term Debt
Long term debt consisted of:
<CAPTION>
June 30, 1996 June 30, 1995
<S> <C> <C>
1989 Pennsylvania Economic Development Financing
Authority (PEDFA) bonds, variable interest rate
(recent interest rates ranging from 3.45 to 3.95
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 $1,500,000
Pennsylvania Industrial Development Authority (PIDA)
mortgage note, payable in monthly installments of
$8,035.50, including interest at 3% through July 832,169 902,482
2006
2,232,169 2,402,482
Less current portion 172,452 170,313
$2,059,717 $2,232,169
</TABLE>
Approximate maturities of long term debt following June 30, 1996
are as follows:
Fiscal year ending June 30, 1997 $ 172,452
Fiscal year ending June 30, 1998 174,655
Fiscal year ending June 30, 1999 176,926
Fiscal year ending June 30, 2000 179,266
Fiscal year ending June 30, 2001 181,677
Thereafter 1,347,193
TOTAL $2,232,169
II-13
Note 3 - The Company's manufacturing and office facilities collateralize
the various debt agreements. The Company is required to meet certain
financial covenants in connection with the above obligations, including
those related to current ratio, ratio of total liabilities to tangible net
worth, minimum tangible net worth and net income. At June 30, 1996, the
Company was in compliance with all such covenants.
Note 4 - Accounts receivable - long term
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 June 30, 1996 is
$1,148,019, of which $862,931 is long term.
Note 5 - Profit Sharing and 401(k) Plans
The Company has a qualified noncontributory profit sharing plan
for eligible employees of the Company and participating subsidiaries. The
Company's contribution to the plan, as determined by the Board of Directors,
is discretionary, but may not exceed 15% of the annual aggregate ompensation
paid to all participating employees. For the current and each of the two
preceding years, the Company made provisions for contributions of 5% of the
qualifying wages of its participating employees. On July 1, 1995, the
Company adopted an IRC 401(k) plan covering substantially all eligible
employees. Under the provisions of the plan, eligible employees may defer
up to 15% of their compensation. The plan provides for matching Company
contributions of not more than 25% of the first 8% of employee
contributions. Employees must complete 12 months of service and attain age
21 before they are eligible to participate. Participants may enter the plan
on January 1 or July 1 immediately following the completion of the age and
service requirements.
Total Company contributions to all plans were $618,506, $443,060,
and $433,760, respectively, for the fiscal years ended June 30, 1996, 1995
and 1994.
Note 6 - Inventories
Inventories at June 30, 1996 and 1995, were as follows:
1996 1995
Finished Goods $2,398,771 $1,093,739
Work in Process 51,976 22,544
Raw Materials and Supplies 2,632,809 3,335,332
$5,083,556 $4,451,615
Note 7 - Income Taxes
Following is a reconciliation between the statutory federal income
tax expense and the accounting income tax expense for the years ended June
30, 1996, 1995 and 1994. The Company has no deferred tax expense or
liability since timing differences which require a deferred tax calculation
are immaterial.
Years ended June 30 1996 1995 1994
Federal statutory income
tax expense $1,083,977 $1,136,332 $976,825
Increase (decrease)
State income taxes (77,548) (112,150) (95,605)
Dividends received deduction (12,984) (14,470) (14,428)
Municipal bond interest (61,057) (64,169) (22,752)
Other - includes non-deductible
officers' life insurance, meals
and entertainment, capital loss
deductions, miscellaneous 47,420 15,457 (887)
Accounting income tax expense $ 979,808 $ 961,000 $843,153
II-14
Note 8 - Stock Option Plans
In October 1984, the Company adopted an incentive stock option
plan for its key employees. The option plan provides for the sale of 50,000
shares of common stock (adjusted to 100,000 shares after 2 for 1 stock split
May 1, 1986). The option price was the fair market value on the date of the
grant with certain modifications for persons owning more than 10% of the
voting power of the Corporation's stock. In the case of options granted to
any person owning more than 10% of the voting power of the Corporation's
stock, the purchase price per share of the stock subject to option was not
less than 110% of the fair market value of the stock on the date of grant of
the option, and in no event was any option exercisable after the expiration
of ten years from the date of the grant.
Ten years from the date the Plan was adopted, it terminated and no
options were granted thereafter. However, all rights created under options
issued and outstanding on June 30, 1996 shall continue until they are
exercised or, by their terms, expire. In no case shall the options extend
beyond ten years from their issue date.
A summary of activity of the Incentive Stock Option Plan is as
follows:
SHARES PRICE PER
RESERVED OUTSTANDING SHARE
Balance, June 30, 1993 81,600 35,300
Exercised (400) (400) $3.00
Exercised (800) (800) $1.75
Canceled NONE NONE
Balance, June 30, 1994 80,400 34,100
Exercised (1,000) (1,000) $3.00
Exercised (11,300) (11,300) $1.75
Cancelled NONE NONE
Balance, June 30, 1995 68,100 21,800
Exercised (800) (800) $6.125
Exercised (2,000) (2,000) $3.00
Exercised (2,500) (2,500) $3.30
Cancelled (1,800) (1,800)
Balance, June 30, 1996 61,000 14,700
On January 31, 1996 the Board of Directors authorized a grant of
nonstatutory stock options for 10,000 shares to each of the two non-employee
directors who were elected in October 1995. The exercise price is $8.75 per
share, which corresponds to the market price on January 31, 1996. Vesting
is one third of the grant on the date of election to the Board and one third
on each of the next two anniversary dates of such election. Therefore, as
of June 30, 1996, a total of 6,666 of these optioned shares are vested and
13,334 are not vested. None of these shares have been purchased by the
option grantees.
Note 9 - Earnings Per Share
Computations of earnings per common share are based on the
weighted average number of such shares outstanding during the year.
Note 10 - Segments
The Company operates principally in one industry, the manufacture
of vinyl windows and other vinyl building products and has no other
segments.
II-15
Note 11 - Lease Arrangements and Related Party Transactions
In addition to the owned property in Murrysville, Pennsylvania,
the Company leases facilities in Pittsburgh, Pennsylvania for extrusion and
administrative offices from two of the principal stockholders of the
company. No amounts were owed to related parties as of June 30, 1996.
Other sales and warehouse facilities are leased from unrelated
parties in various locations. All of the leases are operating leases.
The following is a schedule of minimum lease commitments
outstanding at June 30, 1996 that have initial or remaining lese terms in
excess of one year.
Fiscal Year
Ended June 30
1997 $ 793,913
1998 632,017
1999 454,578
2000 417,622
2001 296,126
After 2001 197,190
Total minimum lease payments $2,791,446
Rental expenses for all operating leases totalled $812,385,
$694,836, and $603,291 for fiscal years ended June 30, 1996, 1995, and 1994,
respectively, of which $132,150, $126,600, and $125,400, respectively, were
paid to principal stockholders.
Note 12 - Contingent Liabilities
Legal matters, various claims, and complaints arising in the
ordinary course of business are, in the opinion of management, adequately
covered by insurance, or if not so covered, are without merit or are of such
kind, or involve such amounts that unfavorable disposition would not have a
material effect on the financial position of the Company.
<TABLE>
Note 13 - Allowance for Doubtful Accounts
The allowance for doubtful accounts and related bad debt expense
were as follows for the years ended June 30, 1996, 1995, and 1994:
<CAPTION>
Additions or Deductions
Balance (Subtractions) From
at Charged or Reserves Balance
Beginning (Credited) to (Uncollectible at
of Cost and Accounts End of
Classification Period__ Expenses___ Written Off) Period
<S> <C> <C> <C> <C>
Year ended June 30, 1996:
Allowance for doubtful accounts $117,202 $112,192 ($ 56,763) $172,631
Year ended June 30, 1995:
Allowance for doubtful accounts $112,432 $122,827 ($118,057) $117,202
Year ended June 30, 1994:
Allowance for doubtful accounts $240,569 $(54,203) ($ 73,934) $112,432
</TABLE>
II-16
<TABLE>
THERMAL INDUSTRIES, INC. AND SUBSIDIARIES
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The table below summarizes the Company's results of operations by quarter for
fiscal 1996, 1995 and 1994.
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
1996
<S> <C> <C> <C> <C> <C>
Sales $10,509,632 $11,637,165 $6,945,518 $12,264,746 41,357,061
Gross Margin 4,368,510 4,897,125 2,985,965 5,039,709 17,291,309
Income (Loss)
from operations 1,025,916 1,783,455 (890,095) 931,234 2,850,510
Net income (loss) 690,028 1,148,893 (452,489) 593,849 1,980,281
Cash dividends 194,720 194,720
Market Price:
High Bid 9 1/2 9 1/2 9 1/2 9 1/2
Low Bid 9 1/2 9 8 8 1/4
1995
Sales $10,497,298 $10,479,773 $6,883,146 $10,211,361 $38,071,578
Gross Margin 4,865,774 4,705,223 2,452,525 3,906,624 15,929,786
Income (Loss)
from operations 1,748,120 1,497,838 (883,531) 633,719 2,996,146
Net income (loss) 1,102,803 957,673 (426,488) 416,405 2,050,393
Cash dividends 115,727 115,727
Market Price
High Bid 7 3/4 9 1/4 9 3/4 9 1/2
Low Bid 7 1/4 8 3/4 9 9 1/2
1994
Sales $ 8,872,136 $ 9,553,168 $5,227,751 $ 9,288,695 $32,941,750
Gross Margin 4,353,593 4,752,624 1,975,296 3,666,377 14,747,890
Income (Loss)
from operations 1,327,023 1,442,827 (1,074,484) 1,011,433 2,706,799
Net income (loss) 831,533 863,385 (609,081) 669,891 1,755,728
Cash dividends 77,003 77,003
Market Price
High Bid 6 1/2 6 3/4 8 1/4 7 3/4
Low Bid 6 6 6 1/8 7 1/4
</TABLE>
II-17
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DAVID H. WEIS, age 65, is Chief Executive Officer and has been
Chairman of the Board of the Registrant since 1964. Mr. Weis, who is a
graduate of the University of Pittsburgh, with a degree in Business
Administration, founded the Company in 1960.
DAVID RASCOE, age 36, President and a director, has been employed
by the Company in various capacities since 1978. He is a graduate of
Indiana University of Pennsylvania, with a degree in Marketing. His father,
Eric Rascoe, is Secretary-Treasurer of the Company.
ERIC RASCOE, age 64, is and has been Secretary-Treasurer and a
director of the Registrant since 1964. He is a graduate of the
University of Pittsburgh, with a degree in Business Administration
and is a Certified Public Accountant in the State of Pennsylvania.
ARTHUR POLAND, age 52, is and has been Vice-President of the
Registrant since 1976. Prior to joining the Company, Mr. Poland was
assistant director of consumer affairs for Allegheny County, Pennsylvania,
specializing in home improvements.
THOMAS ANDRES, age 58, Vice-President of Manufacturing, has been
employed by the Company in various capacities since 1973.
TODD RASCOE, age 35, Executive Vice-President, has been employed
by the Company since January 1, 1995. He is a graduate of Carnegie
Mellon University with degrees in Applied Mathematics and Computer Science.
Prior to joining the Company he was employed overseas for ten years, most
recently as Technical Director, Central Europe for a computer consulting
firm. His father, Eric Rascoe, is Secretary-Treasurer of the Company.
CARL COHEN, age 43, has been a shareholder in the law firm of
Buchanan Ingersoll Professional Corporation, a regional law firm based in
Pittsburgh, Pennsylvania, since 1985. Mr. Cohen is a graduate of the
University of Pennsylvania's Wharton School with a Bachelor of Science
degree in Economics. He also has a Juris Doctorate degree from the
University of Pittsburgh School of Law. Mr. Cohen practices principally in
the area of corporate law.
TIMOTHY SLEVIN, age 36, has been employed as an officer of
Parker/Hunter Incorporated, a regional brokerage and investment banking
company since 1990, most recently as Senior Vice-President. Mr. Slevin
provides investment banking services to public and private corporations. He
is a graduate of Duke University with a Bachelor of Science degree in
computer science and also holds a Master of Science in Industrial
Administration degree from the Carnegie Carnegie Mellon University Graduate
School of Industrial Administration.
All directors' terms expire at the annual meeting to be held in
October 1996.
There have been no events under any bankruptcy act, no criminal
proceedings and no judgments or injunctions material to the evaluation of
the ability and integrity of any director or executive officer during the
past five years.
III-1
Item ll. Management Remuneration and Transactions
(a) The following information is furnished with respect to
direct remuneration paid by the Registrant to each of the four most highly
compensated executive officers or directors of the Registrant whose
aggregate remunerations exceeded $60,000 for the fiscal year ended June 30,
1996 and to all directors and officers as a group during the same period:
<TABLE>
(A) (B) (C) (D)
<CAPTION>
Cash and cash equivalent
forms of remuneration
(C1) (C2)
Securities
or property,
Salaries, insurance
directors' benefits Aggregate
Name of fees, or reim- of
Individual Capacities commissions, bursement, contingent
or persons in which and personal forms of
in group served bonuses benefits remuneration (a)<F1>
<S> <C> <C> <S> <C>
David H. Weis Chief Executive $214,063 NONE $ 9,624
Officer
David Rascoe President $122,769 NONE $ 7,526
Eric Rascoe Secretary- $142,863 NONE $ 8,829
Treasurer
Arthur Poland Vice-President $114,170 NONE $ 5,727
All officers and
directors as a
group (6 in
number) $763,915 NONE $40,414
<FN>
<F1>
(a) Contingent forms of remuneration include matching Company contributions under the
40l(k) plan and amounts set aside under the Registrant's Profit Sharing Plan during
the last fiscal year for all officers listed separately above and to all officers as
a group. Under the profit sharing plan, a portion of the profits are paid into the
fund at the discretion of the Board of Directors. Such payment is then allocated
to each participant in the proportion which their annual earnings (as limited by IRS
regulation) bear to the total annual earnings of all participants under the Plan.
</TABLE>
III-2
(b) Under the Company's incentive stock option plan, with respect to
the individuals and the group named in the cash remuneration table, the
aggregate number of shares of common stock granted and the per share option
exercise price thereof, are as follows:
Date Number of Exercise
Granted Shares Price
Arthur Poland October 1, 1990 1,000 $3.00
Thomas Andres October 1, 1990 1,000 $3.00
David Rascoe October 1, 1990 1,000 $3.00
(c) There is no proposed remuneration to be made in the future for
any officers or directors of the Registrant.
(d) The employee directors of the Registrant receive no additional
remuneration for their services. Other directors of the Registrant receive
an annual retainer of $10,000.
(e) As of September 8, 1996, Thermal Industries, Inc. held demand
notes totalling $9,930 from David H. Weis, President of the Company. No
interest is due or payable on these obligations. The highest amount of
indebtedness from Mr. Weis during the year amounted to $9,930.
(f) The Registrant, Mr. David Weis and Mr. Eric Rascoe are also
parties in a lease for the Company's main extrusion facility. Effective
September 1, 1984, the aforementioned parties entered into an eighteen year
lease at a base annual rental of $44,400, plus increases based upon the cost
of living index. The terms of the lease provide for additional rentals
due to increased real estate taxes and insurance.
In December 1986, the Registrant entered into a 12 year lease with the
above named officers for 38,000 square feet of warehouse and factory
facilities. The lease provides for annual rentals of $60,000 for the first
two years, with periodic increments to $78,000 annually. This lease was
extended to the year 2002 at annual rentals of $78,000. These amounts are
exclusive of payments for taxes, insurance, and other escalation clauses
required under the lease agreement.
In the opinion of management, the terms of the leases are as favorable
to the Registrant as would have been the case had Mr. Weis and Mr. Rascoe
not been connected in any way with the Registrant.
III-3
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) The following tabulation presents information with respect to
voting securities of the Registrant owned of record by such person who is
known to Registrant to own more than 5% of Registrant's securities as of
September 8, 1996.
<TABLE>
<CAPTION>
Shares Deemed
Name and address Shares by SEC to be
of Beneficially Beneficially Percent
Title of class Beneficial Owner Owned Owned (l)<F3> Total of class
<S> <C> <C> <S> <C> <C>
Common Stock David H. Weis 1,133,500 NONE 1,133,500 57.3%
$.01 par value 144 Thornberry Dr shares shares
Pittsburgh, PA 15235
Common Stock Eric Rascoe 129,000 NONE 129,000 6.5%
$.01 par value 524 Sandrae Dr shares shares
Pittsburgh, PA 15243
Common Stock Quest Advisory Corp (A)<F2> 173,686 NONE 173,686 8.8%
$.01 par value 1414 Avenue of America shares shares
New York, NY 10019
Common Stock Quest Management Co (A)<F2> 12,400 NONE 12,400 .6%
$.01 par value A General Partnership shares shares
1414 Avenue of Americas
New York, NY 10019
<FN>
<F2>
(A) The above entities have elected to file as a Group pursuant to Rules 13d-1(b)
or 13d-2(b) of the Securities and Exchange Act of l934. Each claims sole voting power
and sole dispositive power of the number of shares listed above.
<F3>
(1) The amounts shown represent shares issuable upon the exercise of stock options
granted to officers under the Company's incentive stock option plan.
</TABLE>
(b) The following tabulation presents as to each class of equity
securities of Registrant the number of shares owned directly by all
directors and officers of the Registrant as a group as of September 8, 1996.
Shares Deemed
Shares by SEC to be
Beneficially Beneficially Percent
Title of class Owned____ Owned_____ Total of Class
Common stock 1,279,500 9,666 1,289,166 65.1%
$.01 par value shares shares shares
(c) There are no present arrangements, the operation of which may
be at a subsequent date result in a change of control of the Registrant.
III-4
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) (1) Financial statements
See Item 8 of Part II hereof.
(a) (2) Financial statement schedules
The schedules specified under Regulation S-X are either
not applicable or immaterial to the Company's consolidated
financial statements for each of the three years in the
period ended June 30, 1996.
(b) No reports on Form 8-K were filed during the three months
ended June 30, 1996.
(c) Exhibits
(3) Articles of Incorporation and By-Laws are contained in
Form 10 filed by the Registrant on June 22, 1981 and are
incorporated herein by reference.
(11) Computation of Earnings Per Share for the five years
ended June 30, 1996.
(22) Subsidiaries of the Registrant
IV-1
Exhibit 11
<TABLE>
THERMAL INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
Fiscal Years Ended June 30
<CAPTION>
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net income $1,980,281 $2,050,393 $1,755,728 $1,240,104 $1,575,326
Average number of shares
of common stock
outstanding 1,956,920 1,946,012 1,940,312 1,939,112 1,936,362
Net earnings per share -
based on weighted
average number of
shares of common
stock outstanding $ 1.01 $ 1.05 $ .90 $ .64 $ .81
</TABLE>
IV-2
EXHIBIT 22
THERMAL INDUSTRIES, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
The following is a list of the subsidiaries of the Company, their state of
incorporation, and the percentage of voting securities owned by the Registrant.
All of the Company's subsidiaries are included in its consolidated financial
statements.
PERCENTAGE OF
VOTING SECURITIES
STATE OF OWNED BY
SUBSIDIARIES INCORPORATION REGISTRANT___
Thermal Industries, Inc. Maryland 100%
Maryland
Vinylium Corporation Pennsylvania 100%
Thermal Industries of Ohio 100%
Ohio, Inc.
IV-3
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, on
September 27, 1996.
THERMAL INDUSTRIES, INC.
(Registrant)
BY_________________________ Eric Rascoe
Secretary-Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and in the capacities
indicated, on September 27, 1996.
Signature Capacity
___________________________________ Director and Chief Executive Officer
David H. Weis
___________________________________ Director and Secretary-Treasurer
Eric Rascoe (Principal Financial and Accounting
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE YEAR END
10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-K.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,083,260
<SECURITIES> 5,153,783
<RECEIVABLES> 4,252,434
<ALLOWANCES> 0
<INVENTORY> 5,083,556
<CURRENT-ASSETS> 17,031,136
<PP&E> 13,878,744
<DEPRECIATION> 7,891,308
<TOTAL-ASSETS> 23,963,867
<CURRENT-LIABILITIES> 2,898,655
<BONDS> 0
0
0
<COMMON> 41,205
<OTHER-SE> 18,964,290
<TOTAL-LIABILITY-AND-EQUITY> 23,963,867
<SALES> 41,357,061
<TOTAL-REVENUES> 41,783,972
<CGS> 24,065,752
<TOTAL-COSTS> 38,506,551
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 89,853
<INCOME-PRETAX> 3,187,568
<INCOME-TAX> 1,207,287
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,980,281
<EPS-PRIMARY> 1.01
<EPS-DILUTED> .98
</TABLE>
