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 November 30, 1995
Commission File Number 0-3498
TAYLOR DEVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 16-0797789
(State or other Jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
90 TAYLOR DRIVE, NORTH TONAWANDA, NEW YORK 14120-0748
Address of principal executive offices Zip Code
Registrant's telephone number, including area code 716-694-0800
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 November 30, 1995
Common Stock (2-1/2 cents par value) 2,665,550
FORM 10-QSB
TAYLOR DEVICES, INC. - INDEX
PART I - FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
November 30, 1995, and May 31, 1995
Consolidated Condensed Statements of Income
for six months ended November 30, 1995 and
November 30, 1994, and three months ended
November 30, 1995 and November 30, 1994.
Consolidated Condensed Statement of
Cash Flows - six months ended November 30, 1995
and November 30, 1994
Notes to Consolidated Condensed Financial
Statements
Item 2. Management's Discussion and Analysis of the
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Report on Form 8-K
SIGNATURES
FORM 10-QSB
TAYLOR DEVICES, INC. - CONSOLIDATED BALANCE SHEET
ASSETS 11/30/95 5/31/95
Current
Cash $ 275,732 $ 915,294
Funds Held By Trustee 277,784 627,591
Trade Accounts Receivable 1,491,184 793,046
Inventories 2,286,916 2,113,555
Prepaid and Refundable Income Taxes (31,546) 152,377
Prepaid Expenses 98,012 147,515
Total Current Assets $ 4,398,082 $ 4,749,378
Investments - Affiliate, at equity 150,747 141,643
Property and Equipment - Net 2,225,093 1,957,422
Other Assets
Other 547,055 391,134
Total Other Assets $ 547,055 $ 391,134
TOTAL ASSETS $7,320,977 $7,239,577
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Current Portion of Long Term Debt $ 286,624 $ 277,396
Payables - Trade 1,039,578 758,162
Affiliate-Current 50,187 56,334
Construction-in-Progress 126,500 303,898
Accrued Income Tax 53,568 63,816
Accrued Expenses 228,744 142,563
Advanced Payments - Customers 278,925 570,469
Total Current Liabilities $2,064,126 $2,172,638
Non Current
Long Term Debt 1,903,936 2,012,092
Deferred Income Tax 13,927 - 0 -
Total Non Current Liabilities $1,917,863 $2,012,092
Minority Stockholders' Interest $ 215,396 $ 215,396
STOCKHOLDERS' EQUITY
Common Stock, par value $.025 a
share, authorized 8,000,000 shares $ 66,639 $ 66,344
Paid - In Capital 2,211,164 2,161,732
Retained Earnings 891,614 657,200
Less: Cost of Treasury Stock: 21,990 shares 45,825 45,825
TOTAL STOCKHOLDERS' EQUITY $3,123,592 $2,839,451
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY $7,320,977 $7,239,577
FORM 10-QSB
TAYLOR DEVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
SIX MONTHS THREE MONTHS
ENDED NOVEMBER 30 ENDED NOVEMBER 30
1995 1994 1995 1994
NET SALES $4,235,660 $3,011,771 $1,761,879 $1,650,219
COST OF PRODUCT SOLD 2,793,639 2,034,485 1,173,828 1,143,932
Gross Profit 1,442,021 977,286 588,051 506,287
EXPENSES
Selling
and Administrative 1,092,554 810,481 469,484 407,968
Profit (loss)
from Operations 349,467 166,805 118,567 98,319
OTHER INCOME/(EXPENSE)
Rental - Affiliates 6,834 16,002 2,497 8,001
Miscellaneous 7,100 145,371 1,322 94,869
Interest (78,351) (54,621) (39,005) (28,360)
NET OTHER (64,417) 106,752 (35,186) 74,510
NET INCOME BEFORE
PROVISION FOR TAXES 285,050 273,557 83,381 172,829
Provision for Income Taxes 59,740 23,406 9,800 12,819
INCOME BEFORE EQUITY IN
EARNINGS OF AFFILIATES 225,310 250,151 73,581 160,010
EQUITY IN EARNINGS OF
AFFILIATES 9,104 8,442 4,129 4,532
NET INCOME BEFORE MINORITY
STOCKHOLDERS' INTEREST 234,414 258,593 77,710 164,542
Minority Stockholders Interest - 0 - - 0 - - 0 - - 0 -
NET INCOME $234,414 $258,593 $77,710 $164,542
Earnings Per Share (cents) 9 10 3 6
FORM 10-QSB
TAYLOR DEVICES, INC.
STATEMENT OF CHANGES IN FINANCIAL POSITION
SIX MONTHS ENDED NOVEMBER 30
1995 1994
FUNDS PROVIDED
From Operations $ 234,414 $ 258,593
Depreciation and Amort. 91,200 75,000
Fixed Assets - 0 - - 0 -
Sales of Stock 49,727 17,791
Minority Shareholders' Interest - 0 - - 0 -
Decrease Other Assets - 0 - - 0 -
Increase Other Liabilities - 0 - 182,117
Increase Long Term Debt - 0 - 390,455
Total Funds Provided $375,341 $928,778
FUNDS APPLIED
Loss on Operations $ - 0 - $ - 0 -
Fixed Assets 358,871 639,613
Decrease Other Liabilities 103,813 - 0 -
Increase Other Assets 444,187 37,173
Minority Shareholders' Interest - 0 - - 0 -
Investments - Affiliates 9,104 9,012
Decrease Long Term Debt 98,928 - 0 -
Total Funds Applied $1,014,903 $685,798
INCREASE (DECREASE) IN CASH ($ 639,562) $242,980
FORM 10-QSB
TAYLOR DEVICES, 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 November 30, 1995 and May 31, 1995 and the
results of operations for the three months and six months
ended November 30, 1995 and November 30, 1994 and changes in
financial position for the 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 six month period ended November 30, 1995, the profit
was divided by 2,665,550 to calculate the earnings per
share. For the six month period ended November 30, 1994,
the profit was divided by 2,647,522 to calculate the
earnings per share.
4. The results of operations for the six month period ended
November 30, 1995 are not necessarily indicative of the
results to be expected for the full year.
FORM 10-QSB
TAYLOR DEVICES, 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.
A summary of the period to period changes in the principal
items included in the consolidated statements of income is shown
below:
Comparisons of six months ended
November 30, 1995 - November 30, 1994
Increase (decrease)
Net Sales $1,223,889
Cost of Sales 759,154
Selling, General and Administrative Expenses 282,073
Other Expenses - 0 -
Other Income (147,439)
Interest Expense 23,730
Net Profit Before Tax and Minority Shareholders' Interest 11,493
Provision for Income Tax 36,334
Net Profit Before Equity in Earnings of Affiliates (24,841)
Equity in Earnings of Affiliates 662
Minority Stockholders' Interest -0-
Net Income ($24,179)
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION (CON'T)
For the three and six month periods ended November 30, 1995,
Taylor Devices, Inc. (the Company) experienced improved results
in Net Sales and Operating Income performance. However, two
significant factors which favorably impacted the comparable
periods in Fiscal Year 1995 (FY95) - interest income from tax
refunds and full use of a Net Operating Loss Carryforward (NOL)
to reduce the effective tax rate - were not present in Fiscal
Year 1996 (FY96).
SIX MONTH PERFORMANCE
For the six months ended November 30, 1995, Net Sales were
$4,235,660, approximately $1,224,000 and 40% higher than FY95's
figure. Much of the incremental revenue was generated from
progress billings against a large seismic products order. FY96's
Gross Margin was $1,442,021 (34.0%, representing improvements of
about $465,000 and 1.6 percentage points compared to FY95.
Selling, General and Administrative (SGA) expenses increased by
about $282,000 from the prior year due primarily to increased
commission, depreciation, and EDP expenses. However, as a
percentage of Net Sales, SGA improved from FY95's 26.9% to 25.8%
in FY96. The improved sales, better gross margin % performance
and stable SGA generated an Operating Income of $349,467, more
than double FY95's figure of $166,805. The $183,000 improvement
in Operating Income was offset by a $171,000 decrease in Other
Income as FY96's figures did not contain anything comparable to
the large one-time interest income reported in FY96. Increased
interest expense generated from the Industrial Development Agency
(IDA) Loan to finance the facilities expansion also impacted the
Other Income line. Pretax income for FY96 was $285,050, about
$11,000 higher than FY95's. The estimated tax rate used in FY96
continues to be relatively favorable due to the remaining portion
of the NOL, although not quite as favorable as the estimated rate
used in FY95. Net Income for FY96 was $234,414 ($.09 per share),
compared to $258,593 ($.10 per share) in FY95.
THREE MONTH PERFORMANCE
Net Sales improved by about $112,000 and 7% in the second
quarter of FY96 (QII96) compared to the same period in FY95
(QII95). Gross Margin percentage also improved due primarily to
the impact of manufacturing efficiencies experienced on the final
units of a large seismic product order, producing $588,051 in
Gross Margin, about $82,000 higher than QII95. SGA expenses
increased by about $62,000, resulting in an Operating Income
figure of $118,567, about $20,000 higher than the previous year.
As explained in the previous section, Other Income reversed
itself substantially, from income of about $75,000 in QII95 to an
expense of $35,186 in QII96. Pretax income for QII96 was
$83,381, about $89,000 lower than QII95, due primarily to the
absence of the tax refunds received in QII95. Net Income for
QII96 was $77,710 ($.03 per share) compared to $164,542 ($.06 per
share) in QII96.
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION (CON'T)
OTHER
The Company has essentially completed the IDA funded portion
of its facilities expansion and is nearing completion of the
self-funded expansion/upgrade of the Engineering Department's
offices. The Backlog of Sales Orders remains near the $9,000,000
level and bidding activity on seismic and non seismic
opportunities continues at a strong level. However, certain
substantial projects tentatively scheduled to be awarded in time
to favorably impact the Company's FY96 results (had the Company
been the successful bidder) have been postponed for a number of
reasons including funding and budgetary review at all levels of
government. Management continues to be optimistic about the
ultimate disposition of these projects but believes the major
impact will be felt in FY97 and later.
The Current Ratio remains strong at 2.1, and for the
remainder of FY96 the Company's cash flow will benefit from use
of the remaining NOL and the FY95 inventory adjustment. The
Company has accumulated substantial R&D credits for initial use
in FY97, but must, like all other U.S. firms, await finalization
of the federal government's budget and tax rulings in order to
determine their full impact.
Based on current financial results and scheduled shipments
for the second half of FY96, Management believes that FY96 will
be a good year - probably among the stronger ones in the
Company's history.
FORM 10-QSB
TAYLOR DEVICES, 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
1. At the Annual Meeting of Shareholders on November 10,
1995, Management's proposed slate of Directors was
approved by the following vote totals:
Total Votes Votes Votes
Counted Withheld For
Douglas P. Taylor 2,351,533 32,402 2,319,131
Richard G. Hill 2,351,533 23,778 2,327,755
Joseph P. Gastel 2,351,533 32,902 2,318,631
O. Eugene Hilger 2,351,533 25,549 2,325,984
Donald B. Hofmar 2,351,533 24,929 2,326,604
ITEM 5 Other Information
In the period of 6/1/95 to 11//30/95, the Company's reported
total of outstanding shares increased by 11,802, as itemized
below:
1. Employee Stock Ownership Plan 6,450
2. Director Stock Option Plan 5,352
11,802
ITEM 6 Exhibits and Reports of Form 8-K - None
FORM 10-QSB
TAYLOR DEVICES, 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.
TAYLOR DEVICES, INC.
(Registrant)
By /s/Douglas P. Taylor
Date 1/15/96
___________________________
Douglas P. Taylor
Chairman of the Board of Directors
President
(Principal Executive Officer)
AND
By /s/Kenneth G. Bernstein
Date 1/15/96
___________________________
Kenneth G. Bernstein
Chief Accounting Officer
Treasurer
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<PERIOD-END> NOV-30-1995
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<OTHER-SE> 3,056,953
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