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, 2000
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
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 |
| 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.
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, 2000 |
| Common Stock
(5 cents par value) |
|
990,213 |
=== END OF PAGE 1 ===
FORM 10-QSB
TAYCO DEVELOPMENTS, INC. - INDEX
| PART I |
FINANCIAL INFORMATION |
|
PAGE |
|
Item 1. |
Financial Statements |
|
|
|
|
|
Balance Sheets, March 31, 2000 and June 30,
1999 |
3 |
|
|
|
|
|
Statements of Income for three months and
nine months ended March 31, 2000 and March
31, 1999 |
4 |
|
|
|
|
|
Statement of Cash Flows for nine months
ended March 31, 2000 and March 31, 1999 |
5 |
|
|
|
|
|
Notes to 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 |
| ACCOUNTANTS' REVIEW REPORT |
12 |
| SIGNATURES |
|
13 |
====END OF PAGE 2====
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
CONDENSED BALANCE SHEET
| ASSETS
|
03/31/00 |
6/30/99 |
| Current |
|
|
| Cash |
$ 29,479 |
$ 40,884 |
| Receivables - Affiliates, Current |
328,293 |
176,440 |
| Prepaid Other Expenses |
9,247 |
5,810 |
| Total Current Assets |
$ 367,019 |
$ 223,134 |
|
|
|
| Investments - Affiliate, at Equity |
1,834,660 |
1,721,828 |
| Furniture and Equipment - At Cost |
73,389 |
73,389 |
| Less: Accumulated Depreciation |
68,373 |
65,674 |
|
1,839,676 |
1,729,543 |
|
|
|
| Other Assets |
|
|
| Patent, Net |
134,473 |
126,503 |
| Receivables - Affiliates, Long-term |
- 0 - |
- 0 - |
| Cash Value - Life Insurance, Net |
66,098 |
66,098 |
| Total Other Assets |
200,571 |
192,601 |
| TOTAL ASSETS |
$2,407,266 |
$2,136,278 |
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
| Current |
|
|
| Payables - Trade |
- 0 - |
- 0 - |
| Payables - Affiliate |
- 0 - |
- 0 - |
| Current Portion of Long Term Debt |
- 0 - |
14,411 |
| Accrued Income Tax |
30,402 |
22,896 |
| Accrued Expenses |
48,257 |
6,768 |
| Total Current Liabilities |
$ 78,659 |
$ 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 |
1,611,535 |
1,375,131 |
|
$2,331,836 |
$2,095,432 |
|
|
|
| Less: Cost of Treasury Stock 3,709 Shares
at Cost |
5,629 |
5,629 |
| Total Stockholders' Equity |
$2,326,207 |
$2,089,803 |
| TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY |
$2,407,266 |
$2,136,278 |
=== END OF PAGE 3 ===
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
CONDENSED STATEMENT OF INCOME
|
NINE MONTHSENDED MARCH 31
|
THREE MONTHS
ENDED MARCH 31
|
|
2000
|
1999
|
2000
|
1999
|
| NET SALES |
|
|
|
|
| Royalties |
$184,065 |
$ 128,507 |
$ 66,126 |
$ 53,706 |
| Research & Development |
242,636 |
179,005 |
97,516 |
45,387 |
| Total Revenues |
$426,701 |
$307,512 |
$163,642 |
$99,093 |
|
|
|
|
|
| EXPENSES |
|
|
|
|
| Research & Development |
$118,933 |
$ 106,376 |
$ 37,523 |
$ 32,612 |
| Selling, General
Administrative |
116,719 |
101,390 |
40,442 |
26,102 |
| Amortization - Patents |
12,600 |
11,700 |
4,200 |
3,900 |
| Total Expenses |
$248,252 |
$219,466 |
$82,165 |
$62,614 |
|
|
|
|
|
| Operating Income |
$178,449 |
$88,046 |
$81,477 |
$36,479 |
|
|
|
|
|
| OTHER INCOME/(EXPENSE) |
(277) |
2,471 |
354 |
212 |
| Income Before Provision
for Income Taxes and
Equity in Net Income of
Affiliates |
178,172 |
90,517 |
81,831 |
36,691 |
| Provisions for Income
Taxes |
63,600 |
27,000 |
24,000 |
10,800 |
| Net Income before
Equity in Net Income of
Affiliates |
114,572 |
63,517 |
57,831 |
25,891 |
| Equity in Net Income of
Affiliates |
121,832 |
106,915 |
57,432 |
38,265 |
|
|
|
|
|
| NET INCOME |
$236,404 |
$170,432 |
$115,263 |
$ 64,156 |
|
|
|
|
|
| NET INCOME PER SHARE |
$ .239 |
$ .172 |
$ .116 |
$ .065 |
=== END OF PAGE 4 ===
FORM 10-QSB
TAYCO DEVELOPMENTS, INC. CONDENSED STATEMENTS OF CASH FLOWS
|
NINE MONTHS ENDED
MARCH 31 |
|
2000
|
1999
|
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
| Net Income |
$236,404 |
$170,432 |
| Adjustments to reconcile Net Income to Net
Cash provided by Operating Activities: |
|
|
| Amortization - Patents |
12,600 |
9,000 |
| Equity in Net Income of Affiliate |
(121,832) |
(106,915) |
|
|
|
| Changes in: |
|
|
| Receivables - Affiliates |
(151,853) |
( 29,324) |
| Prepaid Expenses |
( 3,437) |
( 3,110) |
| Payables - Trade |
- 0 - |
- 0 - |
| Payables - Affiliates |
- 0 - |
- 0 - |
| Accrued Income Taxes |
7,506 |
2,079 |
| Accrued Expenses |
41,489 |
(4,682) |
| Amounts due to Stockholders |
(14,411) |
(24,192) |
| Net property, Plant & Equipment |
2,699 |
2,700 |
| Net Cash Provided by Operating Activities |
9,165 |
15,988 |
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
| Acquisition of Patents |
(20,570) |
( 6,984) |
| Net Increase in Cash |
(11,405) |
9,004 |
| Cash Balance, Beginning of Period |
40,884 |
25,063 |
| Cash Balance, End of Period |
$29,479 |
$34,067 |
=== END OF PAGE 5 ===
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENT
| 1. |
The accompanying unaudited condensed financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-QSB and Regulation S-B. Accordingly,
they do not include all of the information and footnotes
required by generally accepted accounting principles for
complete financial statements. In opinion of the Company, the
accompanying unaudited condensed financial statements contain
all adjustments (consisting of only normal recurring accruals)
necessary to present fairly the financial position, results of
operations, and cash flows as of March 31, 2000 and March 31,
1999 and the results of operations for the three months and
nine months then ended. These financial statements should be
read in conjunction with the audited financial statements and
notes thereto contained in the Company's Annual Report to
Shareholders for the year ended June 30, 1999. |
|
|
| 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. |
To calculate the earnings per share for the three and nine
month periods ended March 31, 2000 and March 31, 1999, the
profit was divided by the outstanding shares of 990,213. |
|
|
| 4. |
The results of operations for the three and nine month periods
ended March 31, 2000, are not necessarily indicative of the
results to be expected for the full year. |
|
|
| 5. |
Significant Equity Investee: The Company owns a 23% equity
investment in Taylor Devices, Inc. For the 10 months ended
3/31/00, Taylor Devices, Inc. had sales of $9,552,311, gross
profit of $3,563,813, and net income of $442,501. |
=== END OF PAGE 6 ===
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 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 condensed statements of income is shown below:
|
Comparisons of Nine Months Ended
03/31/00 vs. 03/31/99
|
|
Increase |
|
(Decrease) |
| Royalties |
|
$55,558 |
|
| Research & Development |
|
63,631 |
|
| R&D Expense |
|
12,557 |
|
| SG&A |
|
15,329 |
|
| Amortization |
|
900 |
|
| Operating Income |
|
90,403 |
|
| Other Income (Expense) |
|
2,748 |
|
| Income Before Taxes & Equity in
Affiliates |
|
87,655 |
|
| Provision for Taxes |
|
36,600 |
|
| Equity in Affiliates |
|
14,917 |
|
| Net Income |
|
65,972 |
|
=== END OF PAGE 7 ===
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
MANAGEMENT'S DISCUSSION (CON'T)
Disclaimer
For the third quarter of Fiscal Year 2000 and for the nine month
period ending March 31, 2000, the Company received strong
performances from its three key input streams - Royalties, R & D
Revenues, and Affiliates' Income - to post record nine month figures
and its second strongest quarter in its existence. Record-high
figures were posted in practically every key category for both
periods under review.
Nine Months Year-To-Date (all figures being compared are for the
first nine months of FY2000 vs. the first nine months of FY1999).
For the nine months ending 3/31/00, the Company received Royalties of
$184,065 from its affiliate, Taylor Devices, Inc. This figure
represents a 43% improvement over last year's $128,507 and is the
best ever for a nine month reporting period, reflecting a shift in
the product mix of Devices' continuing strong shipments. Research
and Development revenues also achieved a record high figure -
$242,636 - in FY2000 as the Company's technical staff was heavily
engaged in a high-priority effort on the development portion of a
major defense contract. Overall, Total Revenues improved to $426,701
from $307,512, a 38% increase.
Total Expenses, driven in part by the increased activity level,
increased by about 14%, from $219,466 to $248,252. Based on
significantly improved revenues and only moderately increased
expenses, Operating Income for FY2000 was slightly more than doubled,
reaching a record-high $178,449, compared to last year's $88,046.
Due to the higher level of income, the projected tax rate was
adjusted to approximately 35%, up from last year's 30%. Net Income
before Affiliates' Income was $114,572, up $51,055 and 80% from the
previous year's result of $63,517.
The Company's share of the Net Income of its two affiliates, Devices
and Tayco Realty, reached $121,832, a 14% improvement over last
year's $106,915. For the nine month period, the Company recorded a
record-high Net Income of $236,404 and $.239 a share, up 38% from the
prior year's $170,432 and $.172 figures.
Three Months Ending March 31, 2000 (all figures being compared are
for the three months ending 3/31/00 versus the 3 months ending
3/31/99).
The same factors producing the record performance in the nine-month
period discussed above were, likewise, relevant to the third quarter,
which saw record-high figures for Royalties, R & D, and Operating
Income. Royalties were $66,126, up 23% from the prior year, while R
& D , at $97,516, was a 114% improvement over the $45,387 recorded
last year. As mentioned above, the high staff utilization rate and
Devices' strong shipment performance were the significant factors in
generating the record Total Revenue of $163,642, a 65% increase.
As was the case with the nine-month period, expenses rose in response
to activity, reaching $82,165, up from $62,614 in the prior year.
With Other Expenses and the tax rate remaining stable, Net Income
before Affiliates' Income was $57,831, $31,940 and 123% higher than
last year's $25,891. Income from the Affiliates improved also - to
$57,432 from $38, 265. Net Income for the quarter was $115,263 and
$.116 per share, up sharply from last year's figures of $64,156 and
$.065.
=== END OF PAGE 8 ===
The Company remains in a strong and stable financial condition and
experienced no significant changes in its balance sheet in the third
quarter. The Company does not anticipate that it will require any
outside financing in the foreseeable future.
The Company's staff has maintained its high utilization rate on a
variety of efforts. Predominant in the third quarter was a
development effort, on a sub-contract basis for Devices, for a major
aerospace contractor's airborne early-warning/defense system.
Reflecting Devices' increasing presence in foreign markets, the
Company's staff is currently assisting in the preparation of quotes
for a foreign aerospace project and several foreign seismic isolation
projects. Domestically, the third quarter saw some intensified
efforts with respect to shock and vibration isolation of shipboard
missiles and their containers. One effort is directed to the
simultaneous protection of multiple canisters while another is
focused on placement of a damping unit on the missile itself.
Based on the current and foreseeable workload for its staff and the
continued good performance of the Company's affiliates, Management
anticipates that FY2000's results will compare favorably to last
year's record results.
=== END OF PAGE 9 ===
Year 2000
The computer systems of the Company have functioned properly since
the first of the year and Management believes that future operations
will be unaffected by these matters. The Company did not experience
significant costs with regard to computer system repairs or
replacement for the Year 2000 project.
The conclusions in this description of the Year 2000 issue contain
forward-looking statements and are based on Management's estimates of
future events.
=== END OF PAGE 10 ===
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
|
|
|
|
|
ITEM 5 |
Other Information - None |
|
|
|
|
ITEM 6 |
Exhibits - None |
=== END OF PAGE 11 ===
FORM 10-QSB
TAYCO DEVELOPMENTS, INC.
ACCOUNTANTS' REVIEW REPORT
We have reviewed the condensed balance sheet of Tayco Developments,
Inc. as of March 31, 2000, and the related condensed statements of
income and cash flows for the nine months ended March 31, 2000.
These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the condensed financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet as of June 30, 1999, and the
related statements of income, retained earnings, and cash flows for
the year then ended (not presented herein); and in our report dated
July 20, 1999, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the
accompanying condensed balance sheet as of June 30, 1999 is fairly
stated, in all material respects, in relation to the balance sheet
from which it has been derived. We have not reviewed or compiled the
related condensed statements of income and cash flows for the three
and nine months ended March 31, 1999 and, accordingly, do not express
an opinion or any other form of assurance on them.
Lumsden & McCormick, LLP
Buffalo, New York
May 2, 2000
=== END OF PAGE 12 ===
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 |
May 11, 2000 |
|
Douglas P. Taylor
Chairman of the Board of Directors
President
(Principal Executive Officer) |
|
|
|
AND
| By |
/s/Kenneth G. Bernstein |
|
Date |
May 11, 2000 |
|
Kenneth G. Bernstein
Chief Accounting Officer |
|
|
|
=== END OF PAGE 13 ===
