SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarter ended March 31, 1997
Commission File Number 2-15966
TAYCO DEVELOPMENTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 16-0835557
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
100 TAYLOR DRIVE, NORTH TONAWANDA, NEW YORK 14120-0748
Address of principal executive offices Zip Code
Registrant's telephone number, including area code - 716-694-0877
Indicate by check mark whether the registrant (1) has filed all
annual, quarterly, and other reports required to be filed with all
the Commission and (2) has been subject to the filing requirements
for at least the past 90 days.
Yes X No
Indicate the number of shares outstanding, of each of the Issuer's
classes of common stock as of the close of the period covered by
this report.
CLASS Outstanding at March 31, 1997
Common Stock ($.05 par value) 990,213
FORM 10-QSB
TAYCO DEVELOPMENTS, INC. - INDEX
PART I - FINANCIAL INFORMATION
PAGE NO.
Item 1. Financial Statements
Balance Sheets 3
March 31, 1997, and June 30, 1996
Statement of Income for three months and 4
nine months ended March 31, 1997 and
March 31, 1996
Statement of Cash Flows for nine months 5
ended March 31, 1997 and March 31, 1996
Notes to Consolidated Condensed Financial 6
Statements
Item 2. Management's Discussion and Analysis of the 7
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Submission of Matters to Vote of Security 10
Holders
Item 4. Other Information 10
Item 5. Exhibits 10
SIGNATURES 11
FORM 10-QSB
TAYCO DEVELOPMENTS, INC. - BALANCE SHEET
ASSETS 3/31/97 6/30/96
Current
Cash $ 26,487 $ 23,473
Receivables - Affiliates, Current 66,647 83,606
Prepaid Other Expenses 9,356 3,231
Total Current Assets 102,490 110,310
Investments - Affiliate, at Equity 1,333,732 1,242,524
Furniture and Equipment - at Cost 71,770 61,821
Less: Accumulated Depreciation 55,050 54,150
1,350,452 1,250,195
Other Assets
Patents, Net 116,551 97,927
Receivables - Affiliates, Long-term -0- -0-
Cash Value - Life Insurance, Net 43,777 43,777
Total Other Assets 160,328 141,704
TOTAL ASSETS $1,613,270 $1,502,209
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Payables - Trade $ - 0 - $ - 0 -
Payables - Affiliate - 0 - - 0 -
Current Portion of Long Term Debt 27,803 27,803
Accrued Income Taxes (3,544) 18,747
Accrued Expenses 19,773 25,116
Total Current Liabilities 44,032 71,666
Long-term Debt 57,754 82,314
Stockholders' Equity
Common Stock, par value $.05 per
share, 1,000,000 shares authorized,
990,213 issued and outstanding 49,696 49,696
Paid - In Capital 670,605 670,605
Retained Earnings 796,812 633,557
1,517,113 1,353,858
Less: Cost of Treasury Stock
3,709 shares at Cost 5,629 5,629
Total Stockholders' Equity 1,511,484 1,348,229
Total Liabilities and
Stockholders' Equity $1,613,270 $1,502,209
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
Nine Months Three Months
Ended 3/31 Ended 3/31
1997 1996 1997 1996
NET SALES
Royalties $130,007 $87,825 $40,114 $38,530
Research and Development 175,880 191,464 57,050 55,874
Total Revenues 305,887 279,289 97,164 94,404
EXPENSES
Research and Development 91,208 78,365 28,858 28,554
Selling, General
Administrative 104,252 91,661 37,440 25,307
Amortization - Patents 6,750 6,750 2,250 2,250
Total Expenses 202,210 176,776 68,548 56,111
Operating Income 103,677 102,513 28,616 38,293
OTHER INCOME/(EXPENSE) (1,030) 1,430 (530) (1,140)
Income Before Provision for
Income Taxes and Equity in
Net Income of Affiliates 102,647 103,943 28,086 37,153
Provision for Income Taxes 30,600 34,000 4,300 13,000
Net Income before Equity in
Net Income of Affiliates 72,047 69,943 23,786 24,153
Equity in Net Income of
Affiliates 91,208 131,942 35,879 43,462
Net Income $163,255 $201,885 $59,665 $67,615
Net Income per Share $ .165 $ .204 $ .06 $ .068
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
STATEMENT OF CHANGES IN FINANCIAL POSITION
NINE MONTHS ENDED MARCH 31
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 163,255 $ 201,885
Adjustments to Reconcile
Net Income to Net Cash
Provided by Operating
Activities:
Amortization - Patents 6,750 6,750
Equity in Net Income of Affiliates (91,208) (131,942)
Changes in:
Receivables - Affiliates 16,959 (15,376)
Prepaid Expenses (6,125) (5,150)
Payables - Trade - 0 - 2,133
- Affiliates - 0 - - 0 -
Accrued Income Taxes (22,291) (2,933)
Accrued Expenses (5,343) (18,050)
Amounts due to Stockholder (24,560) (22,835)
Net Cash Provided by Operating
Activities 37,437 14,482
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Patents/PPE (34,423) (13,129)
Net Increase in Cash 3,014 1,353
Cash Balance, Beginning of Period 23,473 24,981
Cash Balance, End of Period $ 26,487 $ 26,334
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENT
1. In opinion of the Company, the accompanying unaudited
consolidated condensed financial statements contain all
adjustments necessary to present fairly the financial position
as of March 31, 1997 and March 31, 1996 and the results of
operations for the three months and nine months then ended.
2. There is no provision nor shall there be any provision for
profit sharing, dividends, or any other benefits of any nature
at any time for this fiscal year.
3. For the three and nine month periods ended March 31, 1997 and
March 31, 1996, the profit was divided by 990,213.
4. The results of operations for the three and nine month periods
ended March 31, 1997, are not necessarily indicative of the
results to be expected for the full year.
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is Management's discussion and analysis of
certain significant factors which have affected the Company's
earnings during the periods included in the accompanying
consolidated condensed statements of income.
The Private Securities Litigation Reform Act of 1995 provides
a "safe harbor" for forward-looking statements. Certain matters
discussed in this section and elsewhere in this report are forward-looking
statements. These forward-looking statements involve risks
and uncertainties including, but not limited to, economic
conditions, product demand and industry capacity, competition, and
other risks.
A summary of the period to period changes in the principal
items included in the consolidated statements of income is shown
below:
Comparisons of nine months ended
March 31, 1997 vs. March 31, 1996
Increase (Decrease)
Royalties $ 42,182
Research and Development Revenue (15,584)
R&D Expense 12,843
SG&A 12,591
Amortization - 0 -
Operating Income 1,164
Other Income (Expense) (2,460)
Income Before Taxes and Equity in Affiliates (1,296)
Provision for Taxes (3,400)
Equity in Affiliates (40,734)
Net Income $(38,630)
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
MANAGEMENT'S DISCUSSION (CONT'D)
For the nine months ending March 31, 1997, the Company's
Operating Income showed a solid improvement over the same period
for the prior fiscal year. A substantial reduction in the amount
of equity income booked resulted in a decrease in Net Income for
the comparative periods.
NINE MONTH RESULTS
Total Revenues, led by an increase in Royalty Income,
increased to $305,887 for the three quarters ending March 31, 1997
(YTD97), an improvement of $26,598 and approximately 9.5% over the
same period in FY96 (YTD96) Expenses increased by $25,434 in the
period resulting in a net improvement of $1,164 of Operating
Income. A key factor in the increased expenses was the revised
internal royalty calculation method referenced in earlier reports.
Net Income before Equity in the Net Income of Affiliates was
$72,047 for YTD97, $2,104 higher than YTD96. Equity Income from
the Company's affiliate, Taylor Devices, was $91,208 for YTD97,
$40,734 lower than YTD96's figure. Based on the stable Operating
Income and the reduced Equity Income, the Net Income for YTD97 was
$163,255 and $.165 per share compared to $201,885 and $.204 per
share for YTD96.
THREE MONTH RESULTS
For the three months ending March 31, 1997 (Q397) Total
Revenues of $97,164 exceeded those of Q396 by $2,760. Expenses
increased by $12,437 resulting in Operating Income of $28,616 in
Q397 versus $38,923 for Q396. After adjustments for Other Income
and Taxes, the Net Income for the two periods is about equal -
$23,786 for Q397 and $24,153 for Q396. Equity Income from Devices
was $35,879 in Q397, $7,583 lower than Q396's figure. Net Income
for Q397 was $59,665 and $.06 per share compared to $67,615 and
$.068 per share for Q396.
REMAINDER OF FY96
Although total Fiscal Year 1997 financial results have not
been at the record levels of Fiscal Year 1996, FY97 is, by basic
measures, the second best year since the Company was restructured
shortly before FY92. In terms of operating income, it is the best.
The $72,047 of net operating income in FY97 is the highest of the
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
MANAGEMENT'S DISCUSSION (CONT'D)
six years and the third quarter net operating income of $23,786 was
within $400 of the best third quarter figure. The Company's
management has taken steps to have these strong operating figures
continue. Funding has been received recently for research and
development in two distinctly different areas - commercial
elevators and commercial helicopters. Simultaneously, the Company
is participating in a Small Business Administration Program
involving new concepts in building frames.
The Company remains in a strong and stable financial position and
is entering the final three (3) months of its obligations for the
loans of its former affiliate, Tayco Technology. At this point in
the fiscal year, Management believes that the nine month results of
March 31, 1997 will carry forward to the year end, making FY97 one
of the strongest years since the restructuring in terms of
operating results and overall results.
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
PART II - OTHER INFORMATION
ITEM 1 Legal Proceedings
The Company is not currently engaged in any
litigation.
ITEM 2 Changes in Securities - None
ITEM 3 Defaults Upon Senior Securities - None
ITEM 4 Submission of Matters to Vote of Securities Holders -
None
ITEM 5 Other Information - None
ITEM 6 Exhibits
At a meeting of the Registrants' Board of Directors
held following the Annual Meeting of Shareholders on
November 8, 1996, the Board amended the Company's
By-laws to allow for telephonic communication and to
allow the Board from time-to-time to establish
compensation to the Directors.
The Resolutions are attached to this 10-QSB report
as Exhibit (3)(vi).
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
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.
TAYCO DEVELOPMENTS, INC.
(Registrant)
By /s/Douglas P. Taylor Date
Douglas P. Taylor
Chairman of the Board of Directors
President
(Principal Executive Officer)
AND
By /s/Kenneth G. Bernstein Date
Kenneth G. Bernstein
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 26,487
<SECURITIES> 0
<RECEIVABLES> 66,647
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 102,490
<PP&E> 71,770
<DEPRECIATION> 55,050
<TOTAL-ASSETS> 1,613,270
<CURRENT-LIABILITIES> 44,032
<BONDS> 0
0
0
<COMMON> 49,696
<OTHER-SE> 1,423,158
<TOTAL-LIABILITY-AND-EQUITY> 1,613,270
<SALES> 175,880
<TOTAL-REVENUES> 305,887
<CGS> 202,210
<TOTAL-COSTS> 202,210
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,450
<INCOME-PRETAX> 102,647
<INCOME-TAX> 30,600
<INCOME-CONTINUING> 72,047
<DISCONTINUED> 0
<EXTRAORDINARY> 91,208
<CHANGES> 0
<NET-INCOME> 163,255
<EPS-PRIMARY> .165
<EPS-DILUTED> .165
</TABLE>
Exhibit (3)(vi) to 10-QSB 3/97
TAYCO DEVELOPMENTS, INC.
(The "Company")
EXTRACT OF MINUTES OF MEETING OF
BOARD OF DIRECTORS OF
November 8, 1996
WHEREAS, the Board of Directors has determined that it is
in the best interests of the Company to amend the By-laws, so
as to allow for greater participation by Directors in
management of the Company, and to make such other changes as
are appropriate (the "Amendments").
Therefore, upon motion duly made by Douglas P. Taylor,
seconded by Janice M. Nicely, it was unanimously
RESOLVED, that pursuant to Article V, the By-laws are
amended as follows:
(1) A new Section 4(d) shall be added to Article II,
Directors, which shall read as follows:
(d) Any one or more members of the Board of Directors or
any committee thereof may participate in a meeting of such
Board or committee by means of a
conference telephone or similar
equipment, which allows all persons
participating in the meeting to hear
each other at the same time.
Participation by such persons shall
constitute presence in person at such
meeting.
(2) Section 5 of Article II shall be deleted in its entirety,
and the following substituted in its place and stead:
Section 5. Each member of the Board of Directors shall
be compensated for his attendance at meetings of the
Board of Directors, or of any committee thereof, in the
manner and to the extent determined from time to time by
action of the Board.
And it was further,
RESOLVED, that the Secretary be, and hereby is, directed
to place a copy of the Amendments with the By-laws in the
Minute Book of the Company, and to file a copy of the
Amendments with the Securities and Exchange Commission at the
earliest opportunity.
