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, 1998
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, 1998
Common Stock ($.05 par value) 990,213
<PAGE>
FORM 10-QSB
TAYCO DEVELOPMENTS, INC. - INDEX
PART I - FINANCIAL INFORMATION
PAGE NO.
Item 1. Financial Statements
Balance Sheets 3
March 31, 1998, and June 30, 1997
Statement of Income for three months and 4
nine months ended March 31, 1998 and
March 31, 1997
Statement of Cash Flows for nine months 5
ended March 31, 1998 and March 31, 1997
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 3/31/98 6/30/97
Current
Cash $ 28,232 $ 24,006
Receivables - Affiliates, Current 115,678 63,303
Prepaid Other Expenses 6,039 20,108
Total Current Assets 149,949 107,417
Investments - Affiliate, at Equity 1,483,088 1,389,971
Furniture and Equipment - at Cost 73,390 71,771
Less: Accumulated Depreciation 62,239 58,639
1,494,239 1,403,103
Other Assets
Patents, Net 136,659 114,400
Receivables - Affiliates, Long-term - 0 - - 0 -
Cash Value - Life Insurance, Net 49,104 49,104
Total Other Assets 185,763 163,504
TOTAL ASSETS $1,829,951 $1,674,024
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Payables - Trade $ - 0 - $ - 0 -
Payables - Affiliate - 0 - - 0 -
Current Portion of Long Term Debt 29,163 29,163
Accrued Income Taxes 12,006 3,350
Accrued Expenses 10,015 11,069
Total Current Liabilities 51,184 43,582
Long-term Debt 27,705 50,563
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 1,036,390 865,207
1,756,691 1,585,508
Less: Cost of Treasury Stock
3,709 shares at Cost 5,629 5,629
Total Stockholders' Equity 1,751,062 1,579,879
Total Liabilities and
Stockholders' Equity $1,829,951 $1,674,024
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
Nine Months Three Months
Ended 3/31 Ended 3/31
1998 1997 1998 1997
NET SALES
Royalties $104,028 $130,007 $41,365 $40,114
Research and Development 227,105 175,880 75,319 57,050
Total Revenues 331,133 305,887 116,684 97,164
EXPENSES
Research and Development 106,872 91,208 36,708 28,858
Selling, General
Administrative 103,585 104,252 32,852 37,440
Amortization - Patents 11,250 6,750 3,750 2,250
Total Expenses 221,707 202,210 73,310 68,548
Operating Income 109,426 103,677 43,374 28,616
OTHER INCOME/(EXPENSE) 1,640 (1,030) 1,040 (530)
Income Before Provision for
Income Taxes and Equity in
Net Income of Affiliates 111,066 102,647 44,414 28,086
Provision for Income Taxes 33,000 30,600 13,000 4,300
Net Income before Equity in
Net Income of Affiliates 78,066 72,047 31,414 23,786
Equity in Net Income of
Affiliates 93,117 91,208 37,227 35,879
Net Income $171,183 $163,255 $68,641 $59,665
Net Income per Share $ .173 $ .165 $ .070 $ .060
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
STATEMENT OF CHANGES IN FINANCIAL POSITION
NINE MONTHS ENDED MARCH 31
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 171,183 $ 163,255
Adjustments to Reconcile
Net Income to Net Cash
Provided by Operating
Activities:
Amortization - Patents 7,650 6,750
Equity in Net Income of Affiliates (93,117) (91,208)
Changes in:
Receivables - Affiliates (52,375) 16,959
Prepaid Expenses 14,069 (6,125)
Payables - Trade - 0 - - 0 -
- Affiliates - 0 - - 0 -
Accrued Income Taxes 8,656 (22,291)
Accrued Expenses (1,054) (5,343)
Amounts due to Stockholder (22,858) (24,560)
Net Cash Provided by Operating
Activities 32,154 37,437
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Patents/PPE (27,928) (34,423)
Net Increase in Cash 4,226 3,014
Cash Balance, Beginning of Period 24,006 23,473
Cash Balance, End of Period $ 28,232 $ 26,487
<PAGE>
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, 1998 and March 31, 1997 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, 1998
and March 31, 1997, the profit was divided by 990,213.
4. The results of operations for the three and nine month periods
ended March 31, 1998, are not necessarily indicative of the
results to be expected for the full year.
<PAGE>
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, which are
not historical facts, are forward-looking statements. As such,
these statements involve risks and uncertainties including, but not
limited to, economic conditions, product demand and industry
capacity, competition, pricing pressures, the need for the Company
to keep pace with customer needs and technological developments,
and other factors.
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, 1998 vs. March 31, 1997
Increase (Decrease)
Royalties $ (25,979)
Research and Development Revenue 51,225
R&D Expense 15,664
SG&A (667)
Amortization 4,500
Operating Income 5,749
Other Income (Expense) 2,670
Income Before Taxes and Equity in Affiliates 8,419
Provision for Taxes 2,400
Equity in Affiliates 1,909
Net Income $7,928
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
MANAGEMENT'S DISCUSSION (CONT'D)
For the nine months ending March 31, 1998, financial results
reflect continued strong Research and Development revenues and
improving Royalties.
NINE MONTH RESULTS
In the nine month period ending March 31, 1998 ("98YTD"), the
Company established a record Total Revenues figure of $331,133,
approximately 8.2% higher than the previous record figure of
$305,887 recorded at March 31, 1997 ("97YTD"). (Note: these
comparisons apply only to the period subsequent to the 1991
restructuring of the Company.) Total expenses increased by
approximately 9.6%, from $202,210 in 97YTD to $221,707 in 98YTD as
the Company continued its program of obtaining materiel and patents
required to support increased activity.
Operating Income and Net Income before Equity in the Net
Income of Affiliates were both approximately $6,000 higher in 98YTD
than 97YTD. Equity in the Net Income of the Company's affiliate,
Taylor Devices, Inc. ("Devices") increased from $91,208 in 97YTD to
$93,117 in 98YTD as Devices reported steady results. Net Income
for 98YTD was $171,183, approximately $8,000 and 4.8% higher than
results for 97YTD. Earnings per share increased from $.165 for
97YTD to $.173 for 98YTD.
THREE MONTH RESULTS
For the three months ending March 31, 1998 ("98Q3"), Total
Revenues were up by $19,530 and 20% over results for the similar
period in Fiscal Year 1997 ("97Q3") as R&D revenues continued at a
high rate and Royalties returned to more favorable levels. Total
expenses increased by approximately $5,000 and 7% for reasons
referenced in the above paragraphs. Net Income before Equity in
the Net Income of Affiliates increased by approximately $7,600 and
32% from year-to-year. The Equity Income from Devices improved
from $35,879 in 97Q3 to $37,227 in 98Q3, contributing to an
increase of approximately $9,000 in Net Income between the two
periods being reviewed. Reported Net Income for 98Q3 was $68,641
and $.07 per share compared to $59,665 and $.06 per share for 97Q3.
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
MANAGEMENT'S DISCUSSION (CONT'D)
REMAINDER OF FY98
Year-to-date, the Company is combining improved financial
performance with continuing progress in development projects.
Currently, the Company is awaiting the scheduled THAADs launch in
June 1998 to see whether its next level of participation is further
development or a small production run. Work continues on a new
generation of struts for commercial/military gyroscopes/navigators
being developed by a long-time customer. Activity has also
increased on some new approaches for bumpers on aircraft simulators
and virtual reality rides. The Company's equipment will also
participate in another June 1998 aerospace event - a Shuttle
mission featuring a new boom damper. Just getting underway is the
development of a conversion program which will allow the Company's
engineers to recommend tangible physical solutions to structural
damping problems based on the theoretical spectral results provided
by potential customers. Near the end of the quarter, the Company
also began work on a combined development/licensing agreement with
a well-known national manufacturer of recreational equipment. The
arrangement is based upon use of a patent granted to the Company in
1993.
At the nine month benchmark point in Fiscal Year 1998, the
Company's Management believes that FY98 will be a good year in
terms of financial results and continued development of future
revenue streams from existing patents, new patents, and new
techniques.
<PAGE>
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
None<PAGE>
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 5/12/98
Douglas P. Taylor
Chairman of the Board of Directors
President
(Principal Executive Officer)
AND
By /s/Kenneth G. Bernstein Date 5/12/98
Kenneth G. Bernstein
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 28,232
<SECURITIES> 0
<RECEIVABLES> 115,678
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 149,949
<PP&E> 73,390
<DEPRECIATION> 62,239
<TOTAL-ASSETS> 1,829,951
<CURRENT-LIABILITIES> 51,184
<BONDS> 0
0
0
<COMMON> 49,696
<OTHER-SE> 1,701,336
<TOTAL-LIABILITY-AND-EQUITY> 1,829,951
<SALES> 227,105
<TOTAL-REVENUES> 331,133
<CGS> 221,707
<TOTAL-COSTS> 221,707
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,640)
<INCOME-PRETAX> 111,066
<INCOME-TAX> 33,000
<INCOME-CONTINUING> 78,066
<DISCONTINUED> 0
<EXTRAORDINARY> 93,117
<CHANGES> 0
<NET-INCOME> 171,183
<EPS-PRIMARY> .173
<EPS-DILUTED> .173
</TABLE>
