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 September 30, 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 September 30, 1998
Common Stock 990,213
($.05 par value)
<PAGE>
FORM 10-QSB
TAYCO DEVELOPMENTS, INC. - INDEX
PART I - FINANCIAL INFORMATION
PAGE NO.
Item 1. Financial Statements
Balance Sheets 3
September 30, 1998, and June 30, 1998
Statement of Income for three months 4
ended September 30, 1998 and
September 30, 1997
Statement of Cash Flows for three months 5
ended September 30, 1998 and
September 30, 1997
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of 7
the Financial Condition and Results of
Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to Vote of Security 10
Holders
Item 5. Other Information 10
Item 6. Exhibits 10
SIGNATURES 11
<PAGE>
FORM 10-QSB
TAYCO DEVELOPMENTS, INC. - BALANCE SHEET
ASSETS 9/30/98 6/30/98
Current
Cash $ 37,409 $ 25,063
Receivables - Affiliates, Current 122,892 123,745
Prepaid Other Expenses 8,585 4,422
Total Current Assets 168,886 153,230
Investments - Affiliate, at Equity 1,549,776 1,517,311
Furniture and Equipment - at Cost 73,389 73,389
Less: Accumulated Depreciation 63,008 62,108
1,560,157 1,528,592
Other Assets
Patents, Net 129,539 131,089
Receivables - Affiliates, Long-term - 0 - - 0 -
Cash Value - Life Insurance, Net 56,780 56,780
Total Other Assets 186,319 187,869
TOTAL ASSETS $ 1,915,362 $ 1,869,691
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Payables - Trade $ - 0 - $ - 0 -
Payables - Affiliate - 0 - - 0 -
Current Portion of Long Term Debt 33,437 33,437
Accrued Income Taxes 8,840 4,543
Accrued Expenses 10,655 17,375
Total Current Liabilities 52,932 55,355
Long-term Debt 9,235 14,411
Deferred Income Taxes 3,100 3,100
Stockholders' Equity
Common Stock, par value $.05
per share, 1,000,000 shares
authorized, 990,213 issued 49,696 49,696
Paid - In Capital 670,605 670,605
Retained Earnings 1,135,423 1,082,153
1,855,724 1,802,454
Less: Cost of Treasury Stock
3,709 shares at Cost 5,629 5,629
Total Stockholders' Equity 1,850,095 1,796,825
$ 1,915,362 $ 1,869,691
<PAGE>
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
THREE MONTHS ENDED SEPTEMBER 30
1998 1997
NET SALES
Royalties $ 37,626 $ 32,714
Research and Development 65,902 75,612
Total Revenues 103,528 108,326
EXPENSES
Research and Development 36,987 35,602
Selling, General Administrative 33,662 33,030
Amortization - Patents 3,900 3,750
Total Expenses 74,549 72,382
Operating Income 28,979 35,944
OTHER INCOME/(EXPENSE) 826 800
Income Before Provision for Income
Taxes and Equity in Net Income
of Affiliates 29,805 36,744
Provision for Income Taxes 9,000 11,000
Net Income before Equity in
Net Income of Affiliates 20,805 25,744
Equity in Net Income of Affiliates 32,465 24,410
Net Income $ 53,270 $ 50,154
Net Income per Share $ .05 $ .05
<PAGE>
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
STATEMENT OF CASH FLOW
THREE MONTHS ENDED SEPTEMBER 30
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 53,270 $ 50,154
Adjustments to Reconcile
Net Income/to Net
Net Cash Provided by Operating
Activities:
Amortization - Patents 3,000 3,750
Equity in Net Income of (32,465) (24,410)
Affiliates
Changes in:
Receivables - Affiliates 853 (8,215)
Prepaid Expenses (4,163) 9,038
Payables - Trade - 0 - - 0 -
- Affiliates - 0 - - 0 -
Accrued Income Taxes 4,297 (2,071)
Accrued Expenses (6,720) 1,804
Amounts due to Stockholder (5,176) (7,628)
Net Property, Plant & Equipment 900 1,200
Net Cash Provided by Operating
Activities 13,796 23,622
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Patents (1,450) (12,094)
Net Increase in Cash 12,346 11,528
Cash Balance, Beginning of Period 25,063 24,006
Cash Balance, End of Period $ 37,409 $ 35,534
<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 September 30, 1998 and the results of operations for the
three months 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 month period ended September 30, 1998 to
calculate the earnings per share, the profit was divided by
990,213 shares outstanding less Treasury Shares of 3,709.
4. The results of operations for the three month period ended
September 30, 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 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 three months ended
September 30, 1998 vs. September 30, 1997
Increase (Decrease)
Royalties $ 4,912
Research and Development Revenue (9,710)
R&D Expense 1,385
SG&A 632
Amortization 150
Operating Income (6,965)
Other Income (Expense) 26
Income Before Taxes and Equity in Affiliates (6,939)
Provision for Taxes (2,000)
Equity in Affiliates 8,055
Net Income 3,116
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
MANAGEMENT'S DISCUSSION (CONT'D)
Improved Royalty and Income from Affiliates offset reduced R&D
revenue, as Net Income improved by 6% in the first quarter of
Fiscal Year 1999.
In the first quarter of Fiscal Year 1999 (QI99), total
revenues were $103,528, compared to $108,326 in the first quarter
of Fiscal Year 1998 (QI98). An increase in Royalty Revenues was
more than offset by a decrease in R&D income as the Company's
engineers spent proportionately more time on internal developmental
and analytical projects. The nature of certain of these projects
is discussed later in this section.
Total expenses changed from $72,382 in QI98 to $74,549 in QI99
due almost entirely to personnel related expenses and an increased
amortization accrual rate. Operating income for QI99 was $28,979
versus $35,944 for QI98 due primarily to the lowered R&D income
figure.
Equity in the Net Income of Affiliates improved from $24,410
in QI98 to $32,465 in QI99 as the Company's affiliate, Taylor
Devices, reported higher earnings based on improved gross margins.
Net Income for QI99 was $53,270 and $.054 per share, an improvement
of 6.2% over the QI98 figures of $50,154 and $.051 per share.
The Company's balance sheet reflects the continuing stability
of the operations with the only item of note being the steadily
declining amount due as long-term debt, which now has about 16
months to go until it is paid off in full.
As mentioned above, the Company's engineers spent
proportionately more time on developmental projects in QI99 than in
most past quarters. Most of the efforts were for the
aerospace/defense market. There were continuing efforts on the
flat damper project which is in the modeling and procurement
stages. This unit has the potential to become a component in
military cabinets being built under COTS (Commercial Off-the-Shelf)
directives with the possibility of a requirement for substantial
quantities over an extended period of time. Another developmental
effort was the generation of software code to optimize the
placement of the current generation of tension/compression dampers
in military cabinetry. Two additional separate efforts focused on
potential use of company technology in submarines: semi-active
dampers for deck isolation and tension/compression units for shock
isolation of critical steering/guidance components. The final
aerospace/defense developmental effort revolved around the design
parameters for tension/compression dampers for a new generation of
larger sea-to-air defensive missiles.
Based partly on the good results of QI99, Management believes that
Fiscal Year 1999 will produce good financial results consistent
with those of the past few years. The single largest unknown
variable, the Equity Income from the Company's affiliates, appears
at this time to be on track for these anticipated stable results.
In the coming months, Management will continue to keep the
Company's efforts balanced between projects offering short-term and
long-term benefits to the Company.<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 11/10/98
Douglas P. Taylor
Chairman of the Board of Directors
President
(Principal Executive Officer)
AND
By /S/ Kenneth G. Bernstein Date 11/10/98
Kenneth G. Bernstein
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1998
<CASH> 37,409
<SECURITIES> 0
<RECEIVABLES> 122,892
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 168,886
<PP&E> 73,389
<DEPRECIATION> 63,008
<TOTAL-ASSETS> 1,915,362
<CURRENT-LIABILITIES> 52,932
<BONDS> 0
0
0
<COMMON> 49,696
<OTHER-SE> 1,800,399
<TOTAL-LIABILITY-AND-EQUITY> 1,915,632
<SALES> 65,902
<TOTAL-REVENUES> 103,528
<CGS> 40,887
<TOTAL-COSTS> 73,049
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,500
<INCOME-PRETAX> 29,805
<INCOME-TAX> 9,000
<INCOME-CONTINUING> 20,805
<DISCONTINUED> 0
<EXTRAORDINARY> 32,465
<CHANGES> 0
<NET-INCOME> 53,270
<EPS-PRIMARY> .054
<EPS-DILUTED> .054
</TABLE>
