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 February 29, 1996
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 February 29, 1996
Common Stock 2,668,986
(2-1/2 cents par value)
FORM 10-QSB
TAYLOR DEVICES, INC. - INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
February 29, 1996, and May 31, 1995.
Consolidated Condensed Statements of Income
for nine months ended February 29, 1996 and
February 28, 1995, and three months ended
February 29, 1996 and February 28, 1995.
Consolidated Condensed Statement of
Cash Flows - nine months ended February 29, 1996
and February 28, 1995.
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 2/29/96 5/31/95
Current
Cash $ 175,598 $ 915,294
Funds Held By Trustee - 0 - 627,591
Trade Accounts Receivable 1,681,033 793,046
Inventories 2,297,296 2,113,555
Prepaid and Refundable Income Taxes (31,546) 152,377
Prepaid Expenses 163,458 147,515
Total Current Assets $4,285,839 $4,749,378
Investments - Affiliate, at equity 157,724 141,643
Property and Equipment - Net 2,300,485 1,957,422
Other Assets
Other 667,490 391,134
Total Other Assets $ 667,490 $ 391,134
TOTAL ASSETS $7,411,538 $7,239,577
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Current Portion of Long Term Debt $ 284,872 $ 277,396
Payables - Trade 933,106 758,162
Affiliate-Current 70,795 56,334
Construction-in-Progress - 0 - 303,898
Accrued Income Tax 103,313 63,816
Accrued Expenses 314,901 142,563
Advanced Payments - Customers 308,740 570,469
Total Current Liabilities $2,015,727 $2,172,638
Non Current
Long Term Debt 1,831,219 2,012,092
Deferred Income Tax - 0 - - 0 -
Total Non Current Liabilities $1,831,219 $2,012,092
Minority Stockholders' Interest $ 215,396 $ 215,396
STOCKHOLDERS' EQUITY
Common Stock, par value $.025 a
share, authorized 8,000,000 shares $ 66,725 $ 66,344
Paid - In Capital 2,226,953 2,161,732
Retained Earnings 1,101,343 657,200
Less: Cost of Treasury Stock:
21,990 shares 45,825 45,825
TOTAL STOCKHOLDERS' EQUITY $3,349,196 $2,839,451
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY $7,411,538 $7,239,577
FORM 10-QSB
TAYLOR DEVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
NINE MONTHS THREE MONTHS
ENDED FEBRUARY 29/28 ENDED FEBRUARY 29/28
1996 1995 1996 1995
NET SALES $6,561,047 $5,152,081 $2,325,387 $2,140,310
COST OF PRODUCT SOLD 4,261,244 3,462,926 1,467,605 1,408,117
Gross Profit 2,299,803 1,689,155 857,782 732,193
EXPENSES
Selling and
Administrative 1,678,299 1,340,298 585,745 550,141
Profit (loss) from
Operations 621,504 348,857 272,037 182,052
OTHER INCOME/(EXPENSE)
Rental - Affiliates 9,347 24,003 2,513 8,001
Miscellaneous 31,281 153,385 24,181 8,014
Interest (115,970) (97,067) (37,619) (42,446)
NET OTHER (75,342) 80,321 (10,925) 26,431
NET INCOME BEFORE
PROVISION FOR TAXES 546,162 429,178 261,112 155,621
Provision for
Income Taxes 118,100 47,206 58,360 23,800
INCOME BEFORE EQUITY IN
EARNINGS OF AFFILIATES 428,062 381,972 202,752 131,821
EQUITY IN EARNINGS OF
AFFILIATES 16,081 13,846 6,977 5,404
NET INCOME BEFORE MINORITY
STOCKHOLDERS' INTEREST 444,143 395,818 209,729 137,225
Minority Stockholders'
Interest - 0 - - 0 - - 0 - - 0 -
NET INCOME $ 444,143 $ 395,818 $ 209,729 $ 137,225
Earnings Per Share $.17 $.15 $.08 $.05
FORM 10-QSB
TAYLOR DEVICES, INC.
STATEMENT OF CHANGES IN FINANCIAL POSITION
NINE MONTHS ENDED FEBRUARY 29/28
1996 1995
FUNDS PROVIDED
From Operations $ 444,143 $201,095
Depreciation and Amort. 136,800 83,258
Fixed Assets - 0 - - 0 -
Sales of Stock 65,602 20,583
Minority Shareholders' Interest - 0 - 61,861
Decrease Other Assets - 0 - - 0 -
Increase Other Liabilities - 0 - 252,065
Increase Long Term Debt - 0 - - 0 -
Total Funds Provided $ 646,545 $ 618,862
FUNDS APPLIED
Loss on Operations $ - 0 - $ - 0 -
Fixed Assets 479,863 14,785
Decrease Other Liabilities 164,387 - 0 -
Increase Other Assets 552,513 207,706
Minority Shareholders' Interest - 0 - - 0 -
Investments - Affiliates 16,081 6,843
Decrease Long Term Debt 173,397 128,562
Total Funds Applied $1,386,241 $357,896
INCREASE (DECREASE) IN CASH ($ 739,696) $260,966
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 February 29, 1996 and May 31, 1995 and the
results of operations for the three months and nine months
ended February 29, 1996 and February 28, 1995 and changes in
financial position for the nine 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 nine month period ended February 29, 1996, the
profit was divided by 2,668,986 to calculate the earnings
per share. For the nine month period ended February 28,
1995, the profit was divided by 2,650,537 to calculate the
earnings per share.
4. The results of operations for the nine month period ended
February 29, 1996 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 nine months ended
February 29, 1996 - February 28, 1995
Increase (decrease)
Net Sales $1,408,966
Cost of Sales 798,318
Selling, General and
Administrative Expenses 338,001
Other Expenses - 0 -
Other Income (136,760)
Interest Expense 18,903
Net Profit Before Tax and
Minority Shareholders' Interest 116,984
Provision for Income Tax 70,894
Net Profit Before Equity in
Earnings of Affiliates 46,090
Equity in Earnings of Affiliates 2,235
Minority Stockholders' Interest - 0 -
Net Income $ 48,325
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION (CON'T)
For the three and nine month periods ended February 29,
1996, Taylor Devices, Inc. (the Company) recorded improved
results in Net Sales, Operating Income, and Net Income compared
to the prior year's performance.
NINE MONTH PERFORMANCE
For the nine months ending February 29, 1996, Net Sales were
$6,561,047, approximately $1,409,000 and 27% higher than FY95's
figure. Much of the increased revenue was attributable to the
first sizeable deliveries of product in fulfillment of long-term
defense related orders, and two seismic damper projects. FY96's
Gross Margin was $2,299,803 (35.0%) representing improvements of
about $611,000 and 2.2 percentage points compared to FY95's nine
month results. Selling, General and Administrative (SGA)
expenses increased by about $338,000 from the prior year due
primarily to increased commission, depreciation and EDP expenses.
However, as a percentage of net sales, SGA improved slightly from
FY95's 26.0% to 25.6% in FY96. The improved sales, better gross
margin percent performance and stable SGA generated an Operating
Income of $621,504, a 78% improvement over FY95's nine month
figure of $348,857. The $273,000 improvement in nine month
Operating Income was somewhat offset by a $155,000 decrease in
Other Income. As explained in the previous 10-QSB, this
difference is almost entirely attributable to the substantial
interest income reported in FY95 which was not repeated in FY96.
Increased interest expense generated by the Industrial
Development Agency (IDA) Loan to finance the facility expansion
also impacted the Other Income line. Pretax income for FY96 was
$546,162, about $117,000 higher than FY95's figure. 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 when the
entire NOL was available. Net Income for FY96 was $444,143 ($.17
per share), compared to $395,818 ($.15 per share) in FY95.
THREE MONTH PERFORMANCE
Net Sales improved by about $185,000 and 9% in the third
quarter of FY96 (Q396) compared to the same period in FY95
(Q395). Gross Margin percentage also improved, from 34.2% in
Q395 to 36.9% in Q396. The improvement in Gross Margin percent
in the third quarter is due in part to favorable close-out
adjustments on two contracts whose partial shipments had been
assigned estimated costs in prior periods. Total Gross Margin
for the third quarter was $857,782, about $126,000 better than
FY95's third quarter. SGA expenses increased by about $36,000,
resulting in an Operating Income figure of $272,037, about
$90,000 higher than the previous year. Pretax income for Q396
was $261,112, about $105,000 higher than Q395 due primarily to
improved operating income and slightly lower Other Expenses. Net
Income for Q396 was $209,729 ($.08 per share) compared to $137,225
($.05 per share) in Q396.
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION (CON'T)
OTHER
In the third quarter of FY96, the Company's newly upgraded
Engineering facility was finished, thereby bringing the 18 month
facility expansion/upgrade project to completion. The Backlog of
Sales Orders remains above the $7,000,000 level and bidding
activity on seismic and non seismic opportunities continues at a
strong level. The Company has recently commenced work on a
substantial West Coast seismic project with a relatively short
delivery schedule. However, as mentioned in the previous 10-QSB,
certain other substantial projects originally 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 to
minimize tax payment obligations. The San Bernardino County
Medical Center Replacement Project deliveries were completed in
the third quarter, and the Company has been informed that all
product shipped was acceptable. Final payment should be received
about halfway into the fourth quarter.
Based on current financial results and scheduled shipments
for the final quarter of FY96, Management believes that FY96 will
be a record year in terms of net sales. Net Income should
approach FY95's figure, but due to the uncertainty surrounding
the status of tax credits for R&D, it is not possible at this
time to finalize an estimate.
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
- None
ITEM 5 Other Information
In the period of 6/1/95 to 2/29/96, the Company's reported
total of outstanding shares increased by 15,238, as itemized
below:
1. Employee Stock Ownership Plan 9,886
2. Director Stock Option Plan 5,352
15,238
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: 4/15/96
Douglas P. Taylor
Chairman of the Board of Directors
President
(Principal Executive Officer)
AND
By /S/ Kenneth G. Bernstein Date: 4/15/96
Kenneth G. Bernstein
Chief Accounting Officer
Treasurer
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