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 August 31, 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
incorporation or organization) Identification 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 August 31, 1996
Common Stock 2,687,424
(2-1/2 cents par value)
FORM 10-QSB
TAYLOR DEVICES, INC. - INDEX
PART I - FINANCIAL INFORMATION
PAGE NO.
Item 1. Financial Statements
Consolidated Condensed Balance Sheets 3
August 31, 1996, and May 31, 1996
Consolidated Condensed Statements of Income 4
for three months ended August 31, 1996 and
August 31, 1995
Consolidated Condensed Statement of 4
Cash Flows - three months ended
August 31, 1996 and August 31, 1995
Notes to Consolidated Condensed Financial 6
Statements
Item 2. Management's Discussion and Analysis of the 7
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
Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Report on Form 8-K 10
SIGNATURES 11
FORM 10-QSB
TAYLOR DEVICES, INC. - CONSOLIDATED BALANCE SHEET
ASSETS 8/31/96 5/31/96
Current
Cash $ 752,618 $ 913,284
Funds Held By Trustee - 0 - 106,639
Trade Accounts Receivable 944,576 1,210,435
Inventories 2,370,132 2,408,763
Prepaid and Refundable Income Taxes (52,364) 63,312
Prepaid Expenses 44,738 130,843
Total Current Assets $4,059,700 $4,833,276
Investments - Affiliate, at equity 173,606 168,451
Property and Equipment - Net 2,390,170 2,403,480
Other Assets
Other 560,827 370,370
Total Other Assets $ 560,827 $ 370,370
TOTAL ASSETS $7,184,303 $7,775,577
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Current Portion of Long Term Debt $ 366,003 $ 366,003
Payables - Trade 807,394 961,010
Affiliate-Current 86,725 67,740
Construction-in-Progress - 0 - - 0 -
Accrued Income Tax (27,957) 62,582
Accrued Expenses 217,215 340,337
Advanced Payments - Customers 229,511 455,991
Total Current Liabilities $1,678,891 $2,253,663
Non Current
Long Term Debt $1,620,204 $1,750,583
Deferred Income Tax - 0 - - 0 -
Total Non Current Liabilities $1,620,204 $1,750,583
Minority Stockholders' Interest $ 230,553 $ 224,505
STOCKHOLDERS' EQUITY
Common Stock, par value $.025 a
share, authorized 8,000,000 shares $ 67,303 $ 66,924
Paid - In Capital 2,295,556 2,258,725
Retained Earnings 1,340,140 1,269,521
Less: Cost of Treasury Stock:
22,607 shares 48,344 48,344
TOTAL STOCKHOLDERS' EQUITY $3,654,653 $3,546,826
TOTAL LIABILITIES & STOCKHOLDERS' $7,184,303 $7,775,577
EQUITY
FORM 10-QSB
TAYLOR DEVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
THREE MONTHS ENDED AUGUST 31
1996 1995
NET SALES $ 2,083,419 $ 2,473,781
COST OF PRODUCT SOLD 1,395,243 1,619,811
Gross Profit $ 688,176 $ 853,970
EXPENSES
Selling and Administrative 554,026 623,070
Profit (loss) from Operations $ 134,150 $ 230,900
OTHER INCOME/(EXPENSE)
Rental - Affiliates $ 2,500 $ 4,337
Miscellaneous 12,382 5,778
Interest (38,120) (39,346)
NET OTHER $ (23,238) $ (29,231)
NET INCOME BEFORE
PROVISION FOR TAXES $ 110,912 $ 201,669
Provision for Income Taxes 39,400 49,940
INCOME BEFORE EQUITY IN EARNINGS
OF AFFILIATES 71,512 151,729
EQUITY IN EARNINGS OF AFFILIATES 5,155 4,975
NET INCOME BEFORE MINORITY
STOCKHOLDERS' INTEREST $ 76,667 $ 156,704
Minority Stockholders' Interest 6,048 ---
NET INCOME $ 70,619 $ 156,704
Earnings Per Share $ .02 $ .06
FORM 10-QSB
TAYLOR DEVICES, INC.
STATEMENT OF CHANGES IN FINANCIAL POSITION
THREE MONTHS ENDED AUGUST 31
1996 1995
FUNDS PROVIDED
From Operations $ 70,619 $ 156,704
Depreciation and Amort. 46,311 46,724
Fixed Assets - 0 - - 0 -
Sales of Stock 37,210 13,575
Minority Shareholders' Interest 6,048 - 0 -
Decrease Other Assets 422,453 - 0 -
Increase Other Liabilities - 0 - 171,048
Increase Long Term Debt - 0 - 16,615
Total Funds Provided $ 582,641 $ 404,666
FUNDS APPLIED
Loss on Operations $ - 0 - $ - 0 -
Fixed Assets 33,001 480,166
Decrease Other Liabilities 574,772 - 0 -
Increase Other Assets - 0 - 42,031
Minority Shareholders' Interest - 0 - - 0 -
Investments - Affiliates 5,155 4,975
Decrease Long Term Debt 130,379 - 0 -
Total Funds Applied $ 743,307 $ 527,172
INCREASE (DECREASE) IN CASH $(160,666) $(122,506)
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 August 31, 1996 and May 31, 1996 and the results of
operations for the three months ended August 31, 1996 and
August 31, 1995 and changes in financial position for the
three 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 month period ended August 31, 1996, the profit
was divided by 2,687,424 to calculate the earnings per share.
For the three month period ended August 31, 1995, the profit
was divided by 2,657,427 to calculate the earnings per share.
4. The results of operations for the three month period ended
August 31, 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 three months ended
August 31, 1996 - August 31, 1995
Increase (decrease)
Net Sales $ (390,362)
Cost of Sales (224,568)
Selling, General and
Administrative Expenses (69,044)
Other Expenses - 0 -
Other Income 4,767
Interest Expense (1,226)
Net Profit Before Tax and
Minority Shareholders' Interest (90,757)
Provision for Income Tax (10,540)
Net Profit Before Equity in
Earnings of Affiliates (80,217)
Equity in Earnings of Affiliates 180
Minority Stockholders' Interest 6,048
Net Income $ (86,085)
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION (CON'T)
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. These forward-looking statements
involve risks and uncertainties including, but not limited to,
economic conditions, product demand and industry capacity,
competition and other risks.
In the first quarter of fiscal year 1997 (QI97), the Company posted
the second best Net Sales (for a first quarter) in the Company's
history. This shipment level was achieved in a period which found
the Company's engineering and manufacturing functions focusing not
only on current shipments, but the design and manufacture of
products to fulfill the large influx of orders received in the last
few months.
Shipments for QI97 were $2,083,419 compared to $2,473,781 in QI96.
QI96 shipments included a significant amount of progress billings
for the San Bernardino Medical Center Replacement Project (SBCMC)
order. These progress billings account for the entire difference
in shipments between the two periods. QI97's Gross Margin was
$688,176 representing 33.0% of Net Sales. For QI96, these figures
were $853,970 and 34.5%, respectively. The change in gross margin
percentage is largely attributable to the differing overhead
absorption rates for the two periods being compared. Driven by the
SBCMC order, QI96 experienced somewhat higher labor and material
procurement activity which generated some favorable overhead
figures. Direct costs attributable to shipments were comparable
for the two periods.
Selling, General and Administrative (SGA) costs for QI97 were
$554,026 and 26.6% of Net Sales compared to $623,070 and 25.2%,
respectively, for QI96. Although SGA expenses improved by $69,000,
the percentage change is largely attributable to: higher royalty
expenses generated by defense product shipments; consulting
expenses related to the new EDP system; and a reallocation of
expenses undertaken in conjunction with the implementation of the
new EDP system. Due primarily to the reduced Gross Margin, QI97
Operating Income was $134,150 compared to the QI96 figure of
$230,900.
Net Other expenses improved slightly in QI97, producing a Net
income Before Provision for Taxes of $110,912, down from $201,669
in QI96. Taxes in QI96 were projected to be 25% due to the
existence of some Net Operating Loss carryforward (NOL) credits.
This NOL was fully utilized by end of Fiscal Year 1996 and the
Company is now using an estimated rate of approximately 35% for
projected taxes. Net Income for QI97 was $70,619 as compared to
the QI96 figure of $156,704.
The Company's financial condition remains stable and strong. The
receipt of approximately $3,600,000 of seismic product orders in
the past few months has strengthened the backlog substantially.
These include new orders for viscous dampers to be installed in the
Hayward, California City Hall and the Kaiser Permanente Data Center
in Corona, California. The largest of these recent orders contain
progress payment terms which will help the Company maintain its
favorable cash position. The Company is currently engaging in
Research and Development activity on several fronts. All the units
produced for the Federal Highway Administration's Highway
Innovative Technology Evaluation Center (HITEC) have been shipped
for testing and evaluation. Tests were recently conducted at the
National Center for Earthquake Engineering Research (NCEER) on the
Company's developmental tilting tension/control unit which could
have significant ramifications in the construction and seismic
protection markets.
The Company remains committed to an aggressive marketing and sales
strategy with continued attendance and participation in key
seminars and symposiums. It is currently actively pursuing
significant defense and seismic protection contracts. If the
Company is the successful bidder, these contracts will probably
have only a minimal impact on FY97's results.
The Company's management has analyzed the comparative results for
QI97 and QI96, while also reviewing results for QI94 and QI95.
Bottom line results in the three previous first quarters had each
benefitted from tax refunds, low tax rates due to the NOL, a
favorable adjustment for legal settlements or a disproportionately
high activity level. Since QI97 was impacted by none of these, its
results were inevitably less favorable. Management also reviewed
the likely scenarios for the remainder of FY97. Based on the
shipment schedule derived from the firm order backlog, Management
believes that the results for FY97 will be positive and will
represent another year in which the Company posts good financial
results while strengthening its operating fundamentals.
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 6/1/96 to 8/31/96, the Company's reported
total of outstanding shares increased by 10,456 as
itemized below:
1. Employee Stock Ownership Plan 5,099
2. Director Stock Option Plan 5,357
10,456
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 10/10/96
Douglas P. Taylor
Chairman of the Board of Directors
President
(Principal Executive Officer)
AND
By /s/ Kenneth G. Bernstein Date 10/10/96
Kenneth G. Bernstein
Treasurer &
Chief Accounting Officer
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<PERIOD-END> AUG-31-1996
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