<PAGE>
FORM 10-QSB QUARTERLY REPORTS
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1998.
---------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 02-24012
ALLIED DEVICES CORPORATION
---------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada
---------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
13-3087510
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(I.R.S. Employer Identification No.)
2365 MILBURN AVENUE, BALDWIN, N.Y. 11510
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(Address of principal executive offices - Zip code)
Registrant's telephone number, including area code: 516 - 223 - 9100
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
----- -----
Common Stock, Par Value $.001 4,679,942
(CLASS) (SHARES OUTSTANDING AT JULY 31, 1998)
------------------------------------- -------------------------------------
<PAGE>
PART I
ALLIED DEVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
ALLIED DEVICES CORPORATION
CONSOLIDATED BALANCE SHEETS
=======================================================================================================
JUNE 30, September 30,
1998 1997
- -------------------------------------------------------------------------------------------------------
ASSETS (UNAUDITED)
<S> <C> <C>
CURRENT:
Cash $ 190,323 $ 162,094
Accounts receivable 2,318,317 2,326,179
Inventories 7,200,885 6,402,688
Prepaid and other 514,024 67,606
Deferred income taxes 41,000 41,000
- -------------------------------------------------------------------------------------------------------
TOTAL CURRENT 10,264,549 8,999,567
PROPERTY, PLANT AND EQUIPMENT, NET 2,477,039 1,837,225
GOODWILL 81,128 88,664
OTHER 50,605 51,527
- -------------------------------------------------------------------------------------------------------
Total assets 12,873,321 $10,976,983
=======================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT:
Accounts payable 1,173,801 $ 1,186,291
Taxes payable 76,133 145,263
Accrued expenses 138,321 241,781
Current portion of long term debt and capital lease obligations 307,973 118,481
- -------------------------------------------------------------------------------------------------------
TOTAL CURRENT 1,696,228 1,691,816
LONG TERM DEBT AND CAPITAL LEASE OBLIGATIONS 3,120,276 2,084,239
DEFERRED TAXES 175,000 175,000
- -------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 4,991,504 3,951,055
STOCKHOLDERS' EQUITY:
Capital stock 4,698 4,610
Paid-in capital 2,636,471 2,565,559
Retained earnings 5,240,648 4,455,759
- -------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 7,881,817 7,025,928
- -------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 12,873,321 $10,976,983
=======================================================================================================
See accompanying notes to financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
ALLIED DEVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
=================================================================================================================================
QUARTER ENDED Nine Months Ended
JUNE 30, June 30,
-------------------------------------- -------------------------------------
1998 1997 1998 1997
-------------------------------------- -------------------------------------
(UNAUDITED) (Unaudited) (UNAUDITED) (Unaudited)
<S> <C> <C> <C> <C>
NET SALES $4,226,230 $4,327,567 $13,165,992 $11,959,365
COST OF SALES 2,896,717 2,792,558 8,795,877 7,711,439
- ---------------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 1,329,513 1,535,009 4,370,115 4,247,926
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 881,905 1,042,962 2,989,821 3,006,921
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 447,608 492,047 1,380,294 1,241,005
INTEREST EXPENSE (NET) 64,119 56,940 150,061 161,282
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE TAXES ON INCOME 383,489 435,107 1,230,233 1,079,723
TAXES ON INCOME 139,844 161,860 445,344 401,657
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCOME $243,645 $273,247 $784,889 $678,066
=================================================================================================================================
BASIC EARNINGS PER SHARE 0.05 0.06 0.17 0.15
=================================================================================================================================
BASIC WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK OUTSTANDING 4,669,525 4,416,015 4,634,850 4,416,015
=================================================================================================================================
DILUTED EARNINGS PER SHARE $0.05 $0.06 $0.17 $0.14
=================================================================================================================================
DILUTED WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK OUTSTANDING 4,741,435 4,747,966 4,697,550 4,692,025
=================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
ALLIED DEVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
================================================================================================
NINE MONTHS ENDED JUNE 30,
-------------------------------
1998 1997
- ------------------------------------------------------------------------------------------------
(UNAUDITED) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 784,889 $ 678,066
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 359,094 361,253
Provision for bad debts 0 65
Reserve for notes 3,750 0
Gain on equipment sale (5,825) (13,970)
Decrease (increase) in:
Accounts receivable 99,569 (201,840)
Inventories (404,511) (91,967)
Prepaid expenses and other current assets (368,579) (40,325)
Other assets (13,306) 17,837
Increase (decrease) in:
Accounts payable (93,871) (58,365)
Taxes payable (69,130) (18,131)
Accrued expenses and other current liabilities (103,460) (141,449)
- ------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 188,620 491,174
- ------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (381,920) (261,902)
Proceeds from sale of equipment 7,000 19,750
Acquisition of Kay Pneumatic Valves (850,000) 0
- ------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (1,224,920) (242,152)
- ------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in bank borrowings 175,000 (116,338)
Increase in term debt 1,000,000 0
Payments of principal and accrued interest on long-term debt
and capital lease obligations (181,471) (87,441)
Proceeds from sale of common stock 71,000 88,081
- ------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,064,529 (115,698)
- ------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 28,229 133,324
- ------------------------------------------------------------------------------------------------
CASH, AT BEGINNING OF PERIOD 162,094 54,919
- ------------------------------------------------------------------------------------------------
CASH, AT END OF PERIOD 190,323 188,243
================================================================================================
See accompanying notes to financial statements.
</TABLE>
6
<PAGE>
ALLIED DEVICES CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR JUNE 30, 1998 IS UNAUDITED)
================================================================================
1. BUSINESS Allied Devices Corporation and subsidiary (the
"Company") are engaged primarily in the
manufacture and distribution of standard
precision mechanical components and a line of
screw machine products throughout the United
States.
2. SUMMARY OF (a) BASIS OF PRESENTATION/PRINCIPLES AND
SIGNIFICANT CONSOLIDATION
ACCOUNTING POLICIES
The accompanying consolidated financial
statements include the accounts of Allied
Devices Corporation and its wholly-owned
subsidiary. All significant intercompany
accounts and transactions have been eliminated
in consolidation.
The consolidated financial statements and
related notes thereto as of June 30, 1998 and
1997, and for the three and nine months then
ended, are unaudited and have been prepared on
a basis consistent with the Company's annual
financial statements. Such unaudited financial
statements include all adjustments (consisting
of normal recurring adjustments) that the
Company considers necessary for a fair
presentation of such data. Results for the
three and nine month periods ended June 30,
1998 are not necessarily indicative of the
results that may be expected for the entire
year ending September 30, 1998.
For further information, refer to the
consolidated financial statements and
footnotes thereto included in the Company's
Annual Report on Form 10-KSB for the year
ended September 30, 1997.
(b) INVENTORIES
Inventories are valued at the lower of cost
(last-in, first-out (LIFO) method) or market.
For the three and nine months ended June 30,
1998 and 1997, inventory was determined by
applying a gross profit method, as opposed to
the year ended September 30, 1997, when
inventory was determined by a physical count.
7
<PAGE>
ALLIED DEVICES CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR JUNE 30, 1998 IS UNAUDITED)
================================================================================
2. SUMMARY OF SIGNIFICANT (c) DEPRECIATION AND AMORTIZATION
ACCOUNTING POLICIES
(CONTINUED) Property, plant and equipment is stated at
cost. Depreciation and amortization of
property, plant and equipment is computed
using the straight-line method over the
estimated useful lives of the assets. The
estimated useful lives are as follows:
Buildings and improvements 30 years
Machinery and equipment 10 years
Furniture, fixtures and
office equipment 5 - 7 years
Tools, molds and dies 8 years
Leasehold improvements Lease term
(d) INCOME TAXES
The Company and its subsidiary file a
consolidated federal income tax return and
separate state income tax returns. The Company
follows the liability method of accounting for
income taxes.
(e) EARNINGS PER SHARE
In 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting
Standards No. 128 EARNINGS PER SHARE.
Statement 128 replaced the previously reported
primary and fully diluted earnings per share
with basic and diluted earnings per share.
Unlike primary earnings per share, basic
earnings per share excludes any dilutive
effects of options, warrants and convertible
securities. Diluted earnings per share is very
similar to the previously reported fully
diluted earnings per share. All earnings per
share amounts for all periods have been
presented, and where necessary, restated to
conform to the Statement 128 requirements.
8
<PAGE>
ALLIED DEVICES CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR JUNE 30, 1998 IS UNAUDITED)
================================================================================
2. SUMMARY OF SIGNIFICANT (f) INTANGIBLE ASSETS
ACCOUNTING POLICIES
(CONTINUED) The excess of cost over fair value of net assets
acquired is being amortized over a period of
20 years.
(g) REVENUE RECOGNITION
Sales are recognized upon shipment of products.
(h) STATEMENT OF CASH FLOWS
For purposes of the statements of cash flows,
the Company considers all highly liquid debt
instruments purchased with a maturity of three
months or less to be cash equivalents.
3. INVENTORIES Inventories are summarized as follows:
JUNE 30, September 30,
1998 1997
----------------------------------------------------
Raw materials $ 386,720 $ 310,260
Work-in-process 537,158 514,437
Finished goods 7,627,928 6,888,412
----------------------------------------------------
8,551,806 7,713,109
Less: adjustment to LIFO (1,350,921) (1,310,421)
----------------------------------------------------
$ 7,200,885 $ 6,402,688
====================================================
9
<PAGE>
ALLIED DEVICES CORPORATION
AND SUBSIDIARIES
RESULTS OF OPERATIONS: NINE MONTHS ENDED JUNE 30, 1998
COMPARED WITH NINE MONTHS ENDED JUNE 30, 1997
================================================================================
ITEM 2 - RESULTS OF OPERATIONS: NINE MONTHS ENDED JUNE 30, 1998 COMPARED
WITH NINE MONTHS ENDED JUNE 30, 1997:
All statements contained herein that are not historical facts,
including, but not limited to, statements regarding the
Company's current business strategy, the Company's projected
sources and uses of cash, and the Company's plans for future
development and operations, are based upon current
expectations. These statements are forward-looking in nature
and involve a number of risks and uncertainties. Actual
results may differ materially. Among the factors that could
cause actual results to differ materially are the following:
the availability of sufficient capital to finance the Company's
business plans on terms satisfactory to the Company;
competitive factors; changes in labor, equipment and capital
costs; changes in regulations affecting the Company's business;
future acquisitions or strategic partnerships; general business
and economic conditions; and factors described from time to
time in the Company's reports filed with the Securities and
Exchange Commission. The Company wishes to caution readers not
to place undue reliance on any such forward-looking statements,
which statements are made pursuant to the Private Litigation
Reform Act of 1995 and, as a result, are pertinent only as of
the date made.
Net sales for the quarter and nine months ended June 30, 1998,
were $4,226,200 and $13,166,000, respectively, as compared to
$4,328,000 and $11,959,000 in the comparable periods of the
prior year, a decrease of 2.3% for the quarter and an increase
of 10.0% for the nine month period. Management attributes these
increases principally to the following factors:
During the first three quarters of fiscal 1997, there was
a sharp slowdown in the semiconductor equipment sector of
the U.S. economy. Sales to this industry in fiscal 1996
were estimated at 20% of the Company's volume, dropping to
approximately 3% of overall shipments in fiscal 1997.
Solid recovery was evident in the Company's shipments in
the fourth quarter of fiscal year 1997, continuing into
the first six months of fiscal 1998 and flattening in the
third quarter as economic events in Asia began to impact
capital goods manufacturers in the United States. In June,
1998, most of the Company's customers in the semiconductor
equipment industry rescheduled deliveries to delay
shipments by as much as nine months.
10
<PAGE>
ALLIED DEVICES CORPORATION
AND SUBSIDIARIES
RESULTS OF OPERATIONS: NINE MONTHS ENDED JUNE 30, 1998
COMPARED WITH NINE MONTHS ENDED JUNE 30, 1997
================================================================================
During the first three quarters of fiscal 1998, the
Company continued to experience growth in sales to other
industries, most notably aerospace instrumentation,
medical equipment, robotics and scientific
instrumentation. Trends in the early part of the fourth
quarter of fiscal 1998 indicate a general economic
slowdown, and management is projecting that fourth quarter
shipments will be approximately equal to fourth quarter
shipments in fiscal 1997.
In January, 1998, the Company acquired Kay Pneumatic
Valves, Inc. ("Kay"), a small manufacturer of directional
control valves. This business was relocated and integrated
into the Company's Astro Instrument division, with modest
impact on shipping rates during the transition in
ownership. Sales for this operation during the five months
since its acquisition have amounted to approximately
$421,000, reflecting a modest improvement over shipping
rates prior to its acquisition despite the disruptions
inherent in moving, training of a new work force, and
start-up of a new product line for the Company.
On the night of April 8, 1998, a fire broke out at the
Company's headquarters in Baldwin, New York, destroying
all of the Company's central computer and data
communications equipment, ravaging its accounting and
administrative offices, and destroying most of its hard
copy sales, purchasing and accounting records. At the time
of the fire, the Company was in the process of
transferring to a new computer system, with shop floor
work order records and general accounting being the only
parts of the system that had been fully transferred.
Effectively, all of the Company's records of sales orders,
inventory, cost history, scheduling and production
control, material usage, purchase orders, and details of
accounts receivable and cash collections were contained in
back up tapes for the old system. The provider of the
hardware operating software package for the old system no
longer supports the products, and (until recently) the
Company had been unable to find a software provider with
the capability to read the back up tapes for the old
system. The Company thus had to reconstruct from the few
remaining hard-copy records all of what was lost. The
result, during April, May, and part of June, was a
substantial number of late deliveries and low rate of
responsiveness to new business while records were being
reconstructed and data was being built into the new system.
11
<PAGE>
ALLIED DEVICES CORPORATION
AND SUBSIDIARIES
RESULTS OF OPERATIONS: NINE MONTHS ENDED JUNE 30, 1998
COMPARED WITH NINE MONTHS ENDED JUNE 30, 1997
================================================================================
While it is impossible to determine the exact impact of
the fire, management estimates that between $300,000 and
$500,000 of business was lost during the recovery period.
While many of the Company's customers were patient and
tolerated the recovery process, the Company still faces
the challenge of winning back other customers who switched
to competitors during this period.
Reported gross margins for the third quarter and nine months of
fiscal 1998 were 31.46% and 33.19%, respectively, as compared to
35.47% and 35.52% for the comparable periods in the prior year.
Materials expense (as a component of cost of goods sold) increased
to approximately 33.6% and 33.5% of net sales during the third
quarter and nine months, respectively, of fiscal 1998, from
approximately 32.5% in each of the comparable periods of fiscal
1997. Spending on factory payroll and overhead during the quarter
and nine months increased from 31.4% and 32.0%, respectively, in
fiscal 1997 to 34.9% and 33.3% in the comparable periods of fiscal
1998. Management attributes the increases in labor and overhead
expenses during the third quarter of fiscal 1998 primarily to the
absence of information reporting systems following the destruction
of the Company's data processing system. Prices of the Company's
catalog products were increased modestly during the first quarter
of fiscal 1998, the net effect of which is estimated to have
increased revenues and profits for the nine months by $68,000.
LIFO reserves were increased by $40,500 during the nine months of
fiscal 1998.
Selling, general and administrative expenses as a percentage of
net sales were 20.87% and 22.71%, respectively, in the third
quarter and nine months of fiscal 1998, as compared to 24.10% and
25.14% in the comparable periods of fiscal 1997. Exclusive of an
accrual for proceeds from insurance, expenditures during the
third quarter and nine months of fiscal 1998 increased modestly when
compared to fiscal 1997, yet expressed as a percentage of sales
they decreased. The increase in actual expenses was a product of
several factors: (1) higher spending on sales and marketing; (2)
costs attendant to the acquisition of Kay; and (3) payroll and
miscellaneous expenditures associated with the recovery from the
fire. Such increases were more than offset by the accrual for
insurance reimbursement of losses and expenses incurred as a
result of the fire.
12
<PAGE>
ALLIED DEVICES CORPORATION
AND SUBSIDIARIES
RESULTS OF OPERATIONS: NINE MONTHS ENDED JUNE 30, 1998
COMPARED WITH NINE MONTHS ENDED JUNE 30, 1997
================================================================================
Interest expense during the third quarter and nine months of
fiscal 1998 was $64,000 and $150,000, respectively, as compared to
$57,000 and $161,000 in the comparable periods of fiscal 1997.
While interest expense during the first six months of fiscal 1998
was some 18% lower than in fiscal 1997, the added borrowings
associated with acquiring Kay increased interest expense during
the third quarter of fiscal 1998 to a level 12% higher than in
fiscal 1997.
Provision for income taxes is estimated at 36.2% of pre-tax income
for the fiscal 1998 period, as a combination of federal and state
taxes.
LIQUIDITY AND FINANCIAL RESOURCES
During the first nine months of fiscal 1998, the Company's
financial condition remained solid. Operations generated cash of
$188,000, and financing activities generated cash of $1,065,000.
Capital expenditures (net of proceeds from sale of equipment) used
$375,000, acquisition activities used $850,000 and cash on hand
increased by $28,000. Working capital increased by $1,261,000 to
$8,568,000 during the nine months, principally as a result of the
following changes in current assets and current liabilities:
Accounts receivable decreased by $8,000, principally as the
result of two factors: (1) the average collection period was
about 48 days, as it was at the end of fiscal 1997, but
decreased volume of shipments during the third quarter
lowered receivables by $99,000; and (2) the acquisition of
Kay added $91,000 to receivables.
Inventories increased by $798,000 during the nine month
period. Of this amount, $394,000 was acquired with Kay. The
remaining $404,000 represents a 6.3% increase in inventory
of catalog products on a 10% increase in shipping volume.
Turns on inventory were 1.6 times during the nine months,
unchanged from fiscal 1997.
Prepaid and other current assets increased by $446,000 as
the Company recorded (and accrued for) certain annual
administrative expenses ($123,000) and accrued for
reimbursable losses associated with recovery from the fire
($323,000).
Current liabilities, exclusive of current portions of
long-term debt and capital lease obligations, decreased
$185,000 as accounts payable and accrued expenses decreased
$116,000 and taxes payable decreased $69,000.
13
<PAGE>
ALLIED DEVICES CORPORATION
AND SUBSIDIARIES
RESULTS OF OPERATIONS: NINE MONTHS ENDED JUNE 30, 1998
COMPARED WITH NINE MONTHS ENDED JUNE 30, 1997
================================================================================
Current portions of long-term debt and capital lease
obligations increased by $189,000.
Cash balances increased by $28,000.
Net capital expenditures in the nine month period were $375,000 as
management continued to add to capacity and modernize and automate
its manufacturing processes. The Company, in the aftermath of the
fire, is installing a new computer system and completing the
installation of an information management system, which will
involve the expenditure of approximately $150,000 in fiscal 1998
and is scheduled for completion by the end of the fiscal year.
Management's capital spending plans for the remaining quarter of
fiscal 1998 include additional expenditures of approximately
$100,000 for additions to productive equipment and approximately
$50,000 (beyond costs covered by insurance) for refurbishment and
expansion of the office space destroyed by the fire. Management
expects to fund such spending plans out of working capital.
During the second quarter, the Company acquired Kay Pneumatic
Valves, Inc. for $850,000 in cash. Additional expenditures
attendant to this acquisition amounted to approximately $110,000,
including legal fees, moving expenses, space preparation,
additions to tooling and inventories, training costs, and certain
marketing expenses. The acquisition price was funded through new
term debt of $1,000,000, provided by the Company's bank and
secured by the fixed assets of the Company.
The fire at the Company's headquarters on April 8, 1998, caused
extensive damage to the Company's sales and administrative offices
and records and disrupted the orderly flow of business for all of
the third quarter. The Company's insurance policies provide for
reimbursement of all costs associated with replacement or repair
of damaged assets and records and for recovery of 80% of gross
margin lost as a result of business interruption. Refurbishment of
office facilities is underway and scheduled for completion in
early September, 1998. The majority of data and record recovery
projects were completed in July, 1998, although several longer
term projects are on-going and should be finished by fiscal
year-end.
14
<PAGE>
ALLIED DEVICES CORPORATION
AND SUBSIDIARIES
RESULTS OF OPERATIONS: NINE MONTHS ENDED JUNE 30, 1998
COMPARED WITH NINE MONTHS ENDED JUNE 30, 1997
================================================================================
On July 8, 1998, the Company acquired the assets and business of
Atlantic Precision Products, Inc.,(APPI) a manufacturer of high
precision, machined components for original equipment
manufacturers with advanced engineering requirements. The price of
net assets (including assumption of specified liabilities) was
made up of cash, stock and performance consideration. The tangible
consideration was $7,237,500 in cash and 250,000 shares of the
Company's common stock. The performance consideration is a
negotiated percentage of earnings for APPI for each of the first
three years of operation as a division of Allied. To finance this
acquisition, the Company entered into a new credit agreement with
its bank consisting of three parts: (1) a $10 million revolving
credit line with a three year term; (2) a $6.25 million note with
a sixty-six month term; and (3) a $3.2 million equipment lease
line, with each lease under the line having a sixty month term.
Management believes that the Company's working capital as now
constituted will be adequate for the needs of the on-going core
business. Management further believes that, in light of the
Company's expansion objectives, the Company's current financial
resources will not be adequate to provide for all of the on-going
cash needs of the business. In particular, management expects to
require additional financing to carry out its acquisition
objectives. Success in this part of the Company's growth plan will
rely, in large measure, upon success in raising additional debt
and/or equity capital. Management believes that it has several
sources for such capital and expects that the combination of
capital raised and acquisitions completed will produce
anti-dilutive results for the Company's existing stockholders.
While this is management's intention, there is no guarantee that
they will be able to achieve this objective. The Company is not
relying on the receipt of any new capital for its existing
operations. It is important to note that, absent new capital, the
Company will not be in a position to undertake some of the most
promising elements of management's plan for expansion. In the
event that new capital is raised, management intends to implement
its plans and will do so in keeping with its judgment at that time
as to how best to deploy such added capital.
16
<PAGE>
ALLIED DEVICES CORPORATION
AND SUBSIDIARIES
RESULTS OF OPERATIONS: NINE MONTHS ENDED JUNE 30, 1998
COMPARED WITH NINE MONTHS ENDED JUNE 30, 1997
================================================================================
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.
DATE: AUGUST 11, 1998 ALLIED DEVICES CORPORATION
--------------------------
(Registrant)
By:
-----------------------------
M. Hopkinson
Chairman
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000869495
<NAME> ALLIED DEVICES CORP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 190,323
<SECURITIES> 0
<RECEIVABLES> 2,363,154
<ALLOWANCES> 44,837
<INVENTORY> 7,200,885
<CURRENT-ASSETS> 10,264,549
<PP&E> 7,731,710
<DEPRECIATION> 5,254,671
<TOTAL-ASSETS> 12,873,321
<CURRENT-LIABILITIES> 1,696,228
<BONDS> 0
0
0
<COMMON> 4,698
<OTHER-SE> 7,877,119
<TOTAL-LIABILITY-AND-EQUITY> 12,873,321
<SALES> 4,226,230
<TOTAL-REVENUES> 4,226,230
<CGS> 2,896,717
<TOTAL-COSTS> 2,896,717
<OTHER-EXPENSES> 881,905
<LOSS-PROVISION> 44,837
<INTEREST-EXPENSE> 64,119
<INCOME-PRETAX> 383,489
<INCOME-TAX> 139,844
<INCOME-CONTINUING> 243,645
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 243,645
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
