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, 1997
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, 1997
Common Stock 2,749,667
(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, 1997, and May 31, 1997
Consolidated Condensed Statements of Income 4
for three months ended August 31, 1997 and
August 31, 1996
Consolidated Statement of 5
Cash Flows - three months ended
August 31, 1997 and August 31, 1996
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 8/31/97 5/31/97
Current
Cash $ 608,891 $1,096,456
Funds Held By Trustee - 0 - 108,041
Trade Accounts Receivable 1,933,722 1,423,829
Inventories 2,339,608 2,412,265
Prepaid and Refundable Income Taxes (79,804) 57,630
Prepaid Expenses 104,551 130,258
Total Current Assets $4,906,968 $5,228,479
Investments - Affiliate, at equity 202,512 194,922
Property and Equipment - Net 2,536,029 2,564,613
Other Assets
Other 469,345 353,070
Total Other Assets $ 469,345 $ 353,070
TOTAL ASSETS $8,114,854 $8,341,084
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Current Portion of Long Term Debt $ 346,237 $ 352,685
Payables - Trade 928,236 989,077
Affiliate-Current 71,557 69,487
Construction-in-Progress - 0 - - 0 -
Accrued Income Tax (21,814) 99,462
Accrued Expenses 265,449 438,745
Advanced Payments - Customers 399,421 419,901
Total Current Liabilities $1,989,086 $2,369,357
Non Current
Long Term Debt $1,487,278 $1,457,714
Deferred Income Tax - 0 - - 0 -
Total Non Current Liabilities $1,487,278 $1,457,714
Minority Stockholders' Interest $ 250,293 $ 255,585
STOCKHOLDERS' EQUITY
Common Stock, par value $.025 a
share, authorized 8,000,000 shares $ 68,742 $ 68,536
Paid - In Capital 2,511,120 2,468,888
Retained Earnings 1,891,488 1,801,096
Less: Cost of Treasury Stock:
28,442 & 22,607 shares respectively 83,153 80,092
TOTAL STOCKHOLDERS' EQUITY $4,388,197 $4,258,428
TOTAL LIABILITIES & STOCKHOLDERS' $8,114,854 $8,341,084
EQUITY
FORM 10-QSB
TAYLOR DEVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
THREE MONTHS ENDED AUGUST 31
1997 1996
NET SALES $2,497,912 $2,083,419
COST OF PRODUCT SOLD 1,746,589 1,395,243
Gross Profit $ 751,323 $ 688,176
EXPENSES
Selling and Administrative 579,362 554,026
Profit (loss) from Operations $ 171,961 $ 134,150
OTHER INCOME/(EXPENSE)
Rental - Affiliates $ 2,500 $ 2,500
Miscellaneous 1,367 12,382
Interest (33,309) (38,120)
NET OTHER $ (29,442) $ (23,238)
NET INCOME BEFORE
PROVISION FOR TAXES $ 142,519 $ 110,912
Provision for Income Taxes 54,425 39,400
INCOME BEFORE EQUITY IN EARNINGS
OF AFFILIATES 88,094 71,512
EQUITY IN EARNINGS OF AFFILIATES 7,590 5,155
NET INCOME BEFORE MINORITY
STOCKHOLDERS' INTEREST $ 95,684 $ 76,677
Minority Stockholders' Interest 5,292 6,048
NET INCOME $ 90,392 $ 70,619
Earnings Per Share $ .03 $ .02
FORM 10-QSB
TAYLOR DEVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED AUGUST 31
1997 1996
Cash Flows From Operating Activities $ 90,392 $ 70,619
Net income
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 65,280 46,311
Equity in net income of affiliate (20,190) (20,437)
Increase in cash value - life insurance -0- -0-
Deferred income taxes -0- -0-
Tax benefit - stock option plan -0- -0-
Minority stockholder's interest 5,292 6,048
Common stock issued, charged to
compensation expense, net -0- -0-
Interest income - funds held by trustee
Changes in:
Receivables (405,063) (318,941)
Inventories 140,157 5,071
Prepaid expenses (1,251) (3,328)
Payables - trade (262,387) (135,941)
Payables - affiliates 33,304 29,250
Advance payments, customer 20,479 229,511
Accrued income taxes (65,992) 34,400
Accrued expenses (11,677) (29,939)
Net cash provided by operating
activities (411,656) (87,376)
Cash Flows From Investing Activities
Acquisition of property and equipment (32,445) (33,001)
Proceeds from sale of tax free money fund
held by trustee -0- -0-
Cash received from trustee -0- -0-
Cash remitted to trustee (30,000) (35,000)
Net cash used for investing activities (62,445) (68,001)
Cash Flows From Financing Activities
Financing costs paid -0- -0-
Borrowings - bank demand notes -0- -0-
Repayments - bank demand notes -0- -0-
- long-term debt (52,842) (42,499)
Proceeds from issuance of common stock
- employee stock purchase plan 18,191 23,144
- exercise of stock options 21,187 14,066
Net cash used for financing activities (13,464) (5,289)
Net increase/(decrease) in cash and
cash equivalents (487,565) (160,666)
Cash and Cash Equivalents Balance at
Beginning of Year 1,096,456 913,284
Cash and Cash Equivalents Balance at
End of Period 608,891 752,618
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, 1997 and May 31, 1997 and the results of
operations for the three months ended August 31, 1997 and
August 31, 1996 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, 1997, the profit
was divided by 2,749,667 to calculate the earnings per share.
For the three month period ended August 31, 1996, the profit
was divided by 2,687,424 to calculate the earnings per share.
4. The results of operations for the three month period ended
August 31, 1997 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 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, which are
not historical facts, 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.
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, 1997 - August 31, 1996
Increase (decrease)
Net Sales $ 414,493
Cost of Sales 351,346
Selling, General and
Administrative Expenses 25,336
Other Expenses - 0 -
Other Income (11,015)
Interest Expense (4,811)
Net Profit Before Tax and
Minority Shareholders' Interest 31,607
Provision for Income Tax 15,025
Net Profit Before Equity in
Earnings of Affiliates 16,582
Equity in Earnings of Affiliates 2,435
Minority Stockholders' Interest (756)
Net Income $ 19,773
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION (CON'T)
The Company posted record first quarter revenues of $2,497,912 in
the three months ending 8/31/97 (QI98). This figure, along with a
reduced Selling, General and Administrative (SGA) expense
percentage, helped produce a 28% increase in net income. A
substantial influx of orders for seismic damping products, both
foreign and domestic, has taken the backlog to approximately
$10,000,000.
Shipments for QI98 were $2,497,912, a 19.8% increase over the
figure of $2,083,419 for FY98. The QI98 figure included
significant progress billings against large seismic projects due
for completion prior to the end of the fiscal year. QI98 shipments
produced a gross margin of $731,323 and 30.1% compared to $688,176
and 33.0% in QI97. Although some of the gross margin percentage
difference is attributable to shifts in the standard product mix,
most is attributable to the conservative estimated gross margins
taken by the Company on progress billings.
SGA expenses were $579,362 and 23.2% of net sales in QI98 versus
$554,026 and 26.6% in QI97. This improvement stems primarily from
reduced consulting expenses related to the Company's Management
Information System (MIS), reduced royalty expenses as a function of
the product mix, and lowered internal and external commission
expenses.
Operating Income for QI98 was $171,961, 6.9% of net sales, compared
to the QI97 figure of $134,150 or 6.4% of net sales. This
improvement, in dollars and percent is attributable to the improved
sales volume and lowered percentage of SGA expenses.
Net Other expenses increased slightly, the result of improved
interest expense and lowered miscellaneous income as the bad debt
recovery of QI97 was not repeated in QI98. Net Income before taxes
was $142,519 or 5.7% of net sales in QI98, compared to $110,912 and
5.3% in QI97. Equity earnings and Minority Shareholder expense
remained stable from year to year, resulting in QI98 Net Income of
$90,392 which is 3.6% of net sales, and $.033 earnings per share.
In QI97, these figures were $70,619 or 3.4%, and $.0263 earnings
per share.
As projected in the 10-KSB at 5/31/97, the Company's cash balance
has declined as progress is made on fulfilling a large seismic
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION (CON'T)
order. Payment for the project is due in the third quarter of FY98
and should restore the cash balance to the levels experienced over
the past two fiscal years. This same project has elevated the
Trade Accounts Receivable figure to a level somewhat higher than
generally experienced, but this figure, too, should return to more
normal levels late in the third quarter of FY98. All other areas
of the balance sheet remained at normal levels at 8/31/97.
The ensuing months of FY98 will see the Company undertaking its
second large facilities expansion in three years. A stand-alone
building of approximately 8,500 square feet will be erected
adjacent to the Company's main manufacturing plant. This new
facility will be primarily dedicated to the assembling and testing
of large units manufactured for seismic protection orders. The
cost of the new facility is expected to approach $500,000 which the
Company plans to fund conventionally. This facility is being built
in response to the delivery and testing requirements that the
Company's sales force is observing in the seismic protection
market.
At this point in FY98, Company Management anticipates FY98 results
will approach, and likely exceed, the FY97 Company record figures
in Net Sales and Operating Income. Net Income and earnings per
share should, likewise, approach or exceed the FY97 figures but may
not, due to a full tax burden, exceed the Company record figures
established in (tax-sheltered) FY96.
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 6/1/97 to 8/31/97, the Company's reported
total of outstanding shares increased by 8,222 as
itemized below:
1. Employee Stock Ownership Plan 4,547
2. Director Stock Option Plan 3,675
8,222
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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-END> AUG-31-1997
<CASH> 608,891
<SECURITIES> 0
<RECEIVABLES> 1,945,722
<ALLOWANCES> 12,000
<INVENTORY> 2,339,608
<CURRENT-ASSETS> 4,906,968
<PP&E> 5,508,851
<DEPRECIATION> 2,927,822
<TOTAL-ASSETS> 8,117,854
<CURRENT-LIABILITIES> 1,989,086
<BONDS> 1,097,778
68,742
0
<COMMON> 0
<OTHER-SE> 4,319,455
<TOTAL-LIABILITY-AND-EQUITY> 8,114,854
<SALES> 2,497,912
<TOTAL-REVENUES> 2,497,912
<CGS> 1,746,589
<TOTAL-COSTS> 2,325,951
<OTHER-EXPENSES> (3,867)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,309
<INCOME-PRETAX> 142,519
<INCOME-TAX> 54,425
<INCOME-CONTINUING> 88,094
<DISCONTINUED> 0
<EXTRAORDINARY> 2,298
<CHANGES> 0
<NET-INCOME> 95,684
<EPS-PRIMARY> .033
<EPS-DILUTED> .032
</TABLE>
