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, 1999
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, 1999
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, 1999, and June 30, 1999
Statement of Income for three months 4
ended September 30, 1999 and
September 30, 1998
Statement of Cash Flows for three months 5
ended September 30, 1999 and
September 30, 1998
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
FORM 10-QSB
TAYCO DEVELOPMENTS, INC. - BALANCE SHEET
ASSETS 9/30/99 6/30/99
Current
Cash $ 29,230 $ 40,884
Receivables - Affiliates, Current 197,672 176,440
Prepaid Other Expenses 10,398 5,810
Total Current Assets 237,300 223,134
Investments - Affiliate, at Equity 1,743,878 1,712,828
Furniture and Equipment - at Cost 73,389 73,389
Less: Accumulated Depreciation 66,574 65,674
1,750,693 1,720,543
Other Assets
Patents, Net 132,091 126,503
Receivables - Affiliates, Long-term - 0 - - 0 -
Cash Value - Life Insurance, Net 66,098 66,098
Total Other Assets 198,189 192,601
TOTAL ASSETS $ 2,186,182 $ 2,136,278
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Payables - Trade $ - 0 - $ - 0 -
Payables - Affiliate - 0 - - 0 -
Current Portion of Long Term Debt 5,897 14,411
Accrued Income Taxes 8,047 22,896
Accrued Expenses 25,741 6,768
Total Current Liabilities 39,685 44,075
Long-term Debt -0- -0-
Deferred Income Taxes 2,400 2,400
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 1,429,425 1,375,131
2,149,726 2,095,432
Less: Cost of Treasury Stock
3,709 shares at Cost 5,629 5,629
Total Stockholders' Equity 2,144,097 2,089,803
$ 2,186,182 $ 2,136,278
<PAGE>
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
THREE MONTHS ENDED SEPTEMBER 30
1999 1998
NET SALES
Royalties $ 52,893 $ 37,626
Research and Development 67,340 65,902
Total Revenues 120,233 103,528
EXPENSES
Research and Development 41,975 36,987
Selling, General Administrative 36,898 33,662
Amortization - Patents 4,200 3,900
Total Expenses 83,073 74,549
Operating Income 37,160 28,979
OTHER INCOME/(EXPENSE) (1,316) 826
Income Before Provision for Income 35,844 29,805
Taxes and Equity in Net Income
of Affiliates
Provision for Income Taxes 12,600 9,000
Net Income before Equity in 23,244 20,805
Net Income of Affiliates
Equity in Net Income of Affiliates 31,050 32,465
Net Income $ 54,294 $ 53,270
Net Income per Share $ .05 $ .05
<PAGE>
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
STATEMENT OF CASH FLOW
THREE MONTHS ENDED SEPTEMBER 30
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 54,294 $ 53,270
Adjustments to Reconcile -0- -0-
Net Income/to Net
Net Cash Provided by Operating
Activities:
Amortization - Patents 3,300 3,000
Equity in Net Income of
Affiliates (31,050) (32,465)
Changes in:
Receivables - Affiliates (21,232) 853
Prepaid Expenses (4,588) (4,163)
Payables - Trade -0- -0-
- Affiliates -0- -0-
Accrued Income Taxes (14,849) 4,297
Accrued Expenses 18,973 (6,720)
Amounts due to Stockholder (8,514) (5,176)
Net Property, Plant & Equipment 900 900
Net Cash Provided by Operating
Activities (2,766) 13,796
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Patents (8,888) (1,450)
Net Increase in Cash (11,654) 12,346
Cash Balance, Beginning of Period 40,884 25,063
Cash Balance, End of Period $ 29,230 $ 37,409
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, 1999 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, 1999 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, 1999, 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, 1999 vs. September 30, 1998
Increase (Decrease)
Royalties $ 15,267
Research and Development Revenue 1,438
R&D Expense 4,988
SG&A 3,236
Amortization 300
Operating Income 8,181
Other Income (Expense) 2,142
Income Before Taxes and Equity in Affiliates 6,039
Provision for Taxes 3,600
Equity in Affiliates (1,415)
Net Income 1,024
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
MANAGEMENT'S DISCUSSION (CONT'D)
Royalty Income helped the Company record another strong fiscal
quarter for the three months ending September 30, 1999.
For the first quarter of Fiscal Year 2000, total Revenues
increased by $16,705 to a total of $120,233, a 16.1% improvement
over the first quarter of Fiscal Year 1999. The increase was
driven primarily by Royalties, which accounted for $15,267 of the
change. Total expenses also rose from $74,549 in the first quarter
of FY99 to $83,073 for the first quarter of FY00 as the Company
continued to increase its commitment of resources, both technical
and administrative, to expanding its patent base. Increased travel
expense was a key component of the rise in Total Expenses,
reflecting numerous visits to customer facilities and test sites.
The net of the increased Total Revenues and increased Total
Expenses was an $8,181 increase in Operating Income, representing
a 28.2% improvement for FY00 compared to FY99.
A small change in Other Income and an increase in the
Provision for Income Taxes left Net Income Before Equity in the Net
Income of Affiliates at $23,244 for FY00, an improvement of 11.1%
and $2,439 over FY99. The Company's Equity in the Net Income of
Affiliates declined slightly from $32,465 in FY99 to $31,050 in
FY00, resulting in a Net Income of $54,294 for the first quarter of
FY00, up $1,024 and 1.9% from the Net Income figure of $53,270
recorded for the first quarter of FY99.
The Balance Sheet figures remained fairly stable for the two
periods being compared. The one item of interest is the relatively
small amount, $5,897 of Long Term Debt remaining. This amount will
be paid off by the end of calendar year 1999 at which point the
Company will be free of all debts and loan guarantee obligations
for the first time since the 1991 restructuring.
The Company's technical staff is currently focusing on several
projects at differing levels of progress. A study to determine the
viability of vibration damping units on the experiments to be
conducted in the International Space Station is now in the
feasibility stage. The Company's affiliate, Devices, has submitted
proposals to supply dampers and shock transmission units for two
sizeable seismic isolation projects to be undertaken in Korea.
Another product, used for vibration and shock isolation in newer,
smaller navigational units, has passed U.S. Navy tests and received
all required clearances for use.
<PAGE>
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
MANAGEMENT'S DISCUSSION, (CONT'D)
Management believes that the good financial results for the
first quarter and continued favorable prospects for Devices
receiving orders using the Company's patented products are strong
indicators that the Company will show positive results for Fiscal
Year 2000.
Year 2000
Certain statements included in this discussion regarding the
Company's Year 2000 (Y2K) compliance are forward looking
statements. These include management's best estimates for
completion dates for certain priorities. Specific factors that
might cause material differences include, but are not limited to,
the ability to locate and correct, if needed, any relevant software
and embedded components or the compliance of third parties. The
Company's assessments of the effects of Y2K on the Company are
based, in part, upon the information received from third parties
and the Company's reliance on such information. Consequently, the
risk that inaccurate information has been supplied by a third party
upon which the Company may rely, must be considered as a risk
factor that could affect the Company's Y2K efforts.
The Company's primary software is an off-the-shelf, widely
used product, designed to accommodate the Y2K. Should a failure
occur, it could result in some unknown level of inconvenience until
the software is modified or replaced. The Company's computers have
been tested for functionality after January 1, 2000, and
modifications were made where required.
The Company has been notified by Devices, our transfer agent
and SEC filing agent, that the shareholder program previously
reported as not being Y2K compliant has been replaced. Devices,
has successfully installed a Y2K compliant shareholder program and
completed a successful testing at the end of the second quarter of
calendar 1999.
Management believes the Company is substantially Y2K compliant
with respect to its general operations. However, there can be no
guarantee that the systems of other companies on which the
Company's systems may rely on will be converted on a timely basis
or that a failure to convert by another company, or a conversion
that is incompatible with the Company systems would not have a
material impact on the Company. The Company believes that all
areas could temporarily function by manual methods of operation.
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
MANAGEMENT'S DISCUSSION (CONT'D)
At this time, management is unaware of any Y2K problems other than
a universal disruption of power, communications, transportation,
banking, etc. that could have a significant impact on the Company's
operation.
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
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 10/25/99
Douglas P. Taylor
Chairman of the Board of Directors
President
(Principal Executive Officer)
AND
By Kenneth G. Bernstein Date 10/25/99
Kenneth G. Bernstein
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 29,230
<SECURITIES> 0
<RECEIVABLES> 197,672
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 237,300
<PP&E> 73,389
<DEPRECIATION> 66,574
<TOTAL-ASSETS> 2,186,182
<CURRENT-LIABILITIES> 39,685
<BONDS> 0
0
0
<COMMON> 49,696
<OTHER-SE> 2,094,401
<TOTAL-LIABILITY-AND-EQUITY> 2,186,182
<SALES> 67,340
<TOTAL-REVENUES> 120,233
<CGS> 46,175
<TOTAL-COSTS> 36,898
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,316
<INCOME-PRETAX> 35,844
<INCOME-TAX> 12,600
<INCOME-CONTINUING> 23,244
<DISCONTINUED> 0
<EXTRAORDINARY> 31,050
<CHANGES> 0
<NET-INCOME> 54,294
<EPS-BASIC> .055
<EPS-DILUTED> .055
</TABLE>
