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Previous: CLASSICS INTERNATIONAL ENTERTAINMENT INC, DEF 14C, 2000-02-09 |
Next: VALUESTAR CORP, 10QSB, 2000-02-09 |
For quarter ended December 31, 1999
Commission File Number 2-15966
TAYCO DEVELOPMENTS, INC.
| NEW YORK | 16-0835557 | |
| (State or other Jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
| 100 TAYLOR DRIVE, NORTH TONAWANDA, NEW YORK | 14120-0748 | |
| Address of Principal Executive Offices | Zip Code |
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 December 31, 9999 | |
| Common Stock (5 cents par value) | 990,213 |
| PART I | FINANCIAL INFORMATION | PAGE | ||
| Item 1. | Financial Statements | |||
| Balance Sheets, December 31,1999 and June 30, 1999 |
3 | |||
| Statements of Income for three months and six months ended December 31, 1999 and December 31, 1998 |
4 | |||
| Statement of Cash Flows for six months ended December 31, 1999 and December 31, 1998 |
5 | |||
| Notes to Consolidated Condensed Financial Statements |
6 | |||
| Item 2. | Management's Discussion and Analysis of the Financial Condition and Results of Operations |
7 | ||
| PART II | OTHER INFORMATION | |||
| Item 1. | Legal Proceedings |
11 | ||
| Item 2. | Changes in Securities | 11 | ||
| Item 3. | Defaults Upon Senior Securities | 11 | ||
| Item 4. | Submission of Matters to Vote of Security Holders | 11 | ||
| Item 5. | Other Information | 11 | ||
| Item 6. | Exhibits | 11 | ||
| SIGNATURES | 12 | |||
| 12/31/99 | 6/30/99 | |
| Current | ||
| Cash | $ 35,056 | $ 40,884 |
| Receivables - Affiliates, Current | 240,682 | 176,440 |
| Prepaid Other Expenses | 7,961 | 5,810 |
| Total Current Assets | $ 283,699 | $ 223,134 |
| Investments - Affiliate, at Equity | 1,777,228 | 1,712,828 |
| Furniture and Equipment - At Cost | 73,390 | 73,389 |
| Less: Accumulated Depreciation | 67,474 | 65,674 |
| 1,783,144 | 1,729,543 | |
| Other Assets | ||
| Patent, Net | 134,156 | 126,503 |
| Receivables - Affiliates, Long-term | - 0 - | - 0 - |
| Cash Value - Life Insurance, Net | 66,098 | 66,098 |
| Total Other Assets | 200,254 | 192,601 |
| TOTAL ASSETS | $2,267,097 | $2,136,278 |
| Current | ||
| Payables - Trade | - 0 - | - 0 - |
| Payables - Affiliate | - 0 - | - 0 - |
| Current Portion of Long Term Debt | - 0 - | 14,411 |
| Accrued Income Tax | 13,442 | 22,896 |
| Accrued Expenses | 40,311 | 6,768 |
| Total Current Liabilities | $ 53,753 | $ 44,075 |
| Long Term Debt | - 0 - | - 0 - |
| Deferred Income Tax | 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 | 1,496,272 | 1,375,131 |
| $2,216,573 | $2,095,432 | |
| Less: Cost of Treasury Stock 3,709 Shares at Cost | 5,629 | 5,629 |
| Total Stockholders' Equity | $2,210,944 | $2,089,803 |
| TOTAL LIABILITIES & STOCKHOLDERS' EQUITY | $2,267,097 | $2,136,278 |
| NET SALES | ||||
| Royalties | $117,939 | $ 74,801 | $ 65,046 | $ 37,175 |
| Research & Development | 145,120 | 133,618 | 77,780 | 67,716 |
| Total Revenues | $263,059 | $208,419 | $142,826 | $104,891 |
| EXPENSES | ||||
| Research & Development | $ 81,410 | $ 73,764 | $ 39,435 | $ 36,777 |
| Selling, General Administrative | 76,277 | 75,288 | 39,379 | 41,626 |
| Amortization - Patents | 8,400 | 7,800 | 4,200 | 3,900 |
| Total Expenses | $166,087 | $156,852 | $83,014 | $82,303 |
| Operating Income | $96,972 | $51,567 | $59,812 | $22,588 |
| OTHER INCOME/(EXPENSE) | (631) | 2,259 | 685 | 1,433 |
| Income Before Provision for Income Taxes and Equity in Net Income of Affiliates | 96,341 | 53,826 | 60,497 | 24,021 |
| Provisions for Income Taxes | 39,600 | 16,200 | 27,000 | 7,200 |
| Net Income before Equity in Net Income of Affiliates | 56,741 | 37,626 | 33,497 | 16,821 |
| Equity in Net Income of Affiliates | 64,400 | 68,650 | 33,350 | 36,185 |
| NET INCOME | $121,141 | $106,276 | $ 66,847 | $ 53,006 |
| NET INCOME PER SHARE | $ .122 | $ .107 | $ .068 | $ .054 |
|
| ||
| 1999 | 1998 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Net Income | $121,141 | $106,276 |
| Adjustments to reconcile Net Income to Net Income to Net Cash provided by Operating Activities: | ||
| Amortization - Patents | 8,400 | 6,000 |
| Equity in Net Income of Affiliate | (64,400) | (68,650) |
| Changes in: | ||
| Receivables - Affiliates | (64,242) | ( 7,813) |
| Prepaid Expenses | ( 2,151) | ( 3,243) |
| Payables - Trade | - 0 - | - 0 - |
| Payables - Affiliates | - 0 - | - 0 - |
| Accrued Income Taxes | ( 9,454) | 1,957 |
| Accrued Expenses | 33,543 | (12,207) |
| Amounts due to Stockholders | (14,411) | (16,128) |
| Net property, Plant & Equipment | 1,799 | 1,800 |
| Net Cash Provided by Operating Activities | 10,225 | 7,992 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Acquisition of Patents | (16,053) | ( 2,070) |
| Net Increase in Cash | ( 5,828) | 5,922 |
| Cash Balance, Beginning of Period | 40,884 | 25,063 |
| Cash Balance, End of Period | $35,056 | $30,985 |
| 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 December 31, 1999 and December 31, 1998 and the results of operations for the three months and six months then ended. |
| 2. | There is no provision nor shall there be any provisions for profit sharing, dividends, or any other benefits of any nature at any time for this fiscal year. |
| 3. | For the three and six month period ended December 31, 1999 and December 31, 1998, the profit was divided by 990,213 to calculate the earnings per share. |
| 4. | The results of operations for the three and six month periods ended December 31, 1999, are not necessarily indicative of the results to be expected for the full year. |
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:
| Increase | (Decrease) | ||
| Royalties | $43,138 | ||
| Research & Development | 11,502 | ||
| R&D Expense | 7,646 | ||
| SG&A | 989 | ||
| Amortization | 600 | ||
| Operating Income | 45,405 | ||
| Other Income (Expense) | 2,890 | ||
| Income Before Taxes & Equity in Affiliates | 42,515 | ||
| Provision for Taxes | 19,115 | ||
| Equity in Affiliates | (4,250) | ||
| Net Income | 14,865 | ||
Six Months Year To Date (all figures being compared are for the first six months of FY2000 vs. the first six months of FY1999).
For the first six months of Fiscal Year 2000 the Company recorded new record high first-half figures (for the period since the 1991 reorganization) in Royalties, R&D Revenues, Total Revenues, Operating Income, Net Income before Equity in Net Income of Affiliates and Net Income. These results were generated by a combination of high utilization of the Company's staff on actual and potential projects of the Company's affiliate, Taylor Devices, and a high proportion of royalty-producing shipments in Devices' shipment mix.
Royalties totaled $117,939, up 57.6% or $43,138 over FY99. R&D income came to $145,120, an 8.6% or $11,501 increase over the prior year's figures. Total Expenses were $166,087, about 5.9% higher than the FY99 figure of $156,852, and reflective of a higher level of activity, including travel expenses. Operating Income for FY00 was $96,972, an improvement of 88.1% or $45,405 over FY99. After the provision for taxes, the FY00 Net Income prior to Equity in Affiliates' Income was $56, 741, 50.8% or $19,115 higher than FY99. After recording the Equity in Net Income of Affiliates, the Net Income for the six months year-to-date at 12/31/99 was $121,141 or $.122 a share compared to $106,276 or $.107 per share for FY99, an improvement of 14%.
Three Months Ended 12/31/99 (all figures being compared are for the second quarter of FY00 vs. the second quarter of FY99).
In the second quarter of FY00, the Company recorded its best second quarter (in the period since the 1991 reorganization) and the highest Royalties, Total Revenues, Operating Income and Pre-tax Income of any quarter.
Royalties for FY00 were $65,046 ( a record for any quarter), up substantially from $37,175 or FY99. As was the case in the previous section, this increase is attributable to Device's shipment mix. R&D revenues were $77,780, up 14.8% from the prior year. Operating Expenses stayed essentially stable, totaling $83,014 in FY00 vs. $82,303 in FY99. Total Expenses were, likewise, stable between the two periods. The FY00 Operating Income Figure of $59,812 and Income Before Provision for Taxes and Equity in Affiliates of $60,497 were the highest recorded of any quarter. After the Provision for Taxes, Net Income before Equity in the Net Income of Affiliates rose by 99.1%, from $16,821 in FY99 to $33,497 in FY00. With the Equity from Affiliates changing only slightly, Net Income for the second quarter of FY00 was $66,847 or $.068 per share, improving by 26.1% over $53,006 for FY99 or $.054 per share.
The Company remains in a stable condition financially with no significant changes on its balance sheet. The long-term loan was paid off in the second quarter of FY2000 and the Company does not anticipate that it will require any outside financing in the foreseeable future. The Company experienced no Y2K related disruptions.
As mentioned earlier in this report, the Company's technical staff is maintaining a high level of activity on projects of its primary affiliate, Devices. These efforts are directed both towards projects from Devices' firm backlog of orders and also on Devices' proposals in both the defense and civilian markets. Projects nearing the end of their development phases include modifications of the Commercial Off The Shelf cabinet dampers, noise reduction on the struts/dampers used in navigation systems, and a recoil shock used on a prototype grenade launcher. More recently, Developments' engineers have turned their efforts to shock mitigation of oil rig personnel transportation equipment, seismic/wind protection of antennae located in extreme climatic conditions and shock/vibration damping on a powerful military laser system. These efforts are co-mingled with the continuing input into proposals covering an ever-increasing variety of uses for Devices' seismic dampers in the civil engineering sector.
At the halfway mark of FY2000, Management believes that there will continue to be a steady demand for its services from its affiliate, Devices, to assist Devices' response to bid proposals and prototype requests. In addition, anticipated Royalty Income from Devices' forthcoming shipments should continue to be substantial, subject to changes in actual shipments directed by customer preference or production schedules. Management believes these factors will combine to produce favorable operating financial results for FY2000. If Equity Income in FY2000 is similar to that recorded in FY1999, overall results for FY2000 should approximate the record results enjoyed in FY1999.
Year 2000
Certain statements included in this discussion regarding the Company's Year 2000 (Y2K) compliance are forward looking statements. 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 has been 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, has been considered 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 should function in Y2K environment.
Management believes the Company is Y2K compliant with respect to its general operations and should there be a failure, the Company believes that all areas could temporarily function by manual methods of 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 | |||
| 1. | The Annual Meeting of Shareholders was held on October 22, 1999, and the Company had 990,213 shares outstanding at the record date of September 22, 1999. A total of 890,054 proxies were cast. Management's proposed slate of Directors received the following voting results: | |||
| Votes Withheld/Against | Votes For | |
| Douglas P. Taylor | 1,857 | 888,197 |
| David A. Lee | 1,857 | 888,197 |
| Joseph P. Gastel | 30,247 | 859,807 |
| Paul L. Tuttobene | 1,857 | 888,197 |
| Janice M. Nicely | 1,857 | 888,197 |
| ITEM 5 | Other Information - None | |
| ITEM 6 | Exhibits - None |
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: | February 14, 2000 | |
| Douglas P. Taylor
Chairman of the Board of Directors President (Principal Executive Officer) |
AND
| By: | /s/Kenneth G. Bernstein | Date: | February 14, 2000 | |
| Kenneth G. Bernstein
Chief Accounting Officer |
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