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, 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 November 30, 1996
Common Stock 2,691,521
(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
November 30, 1996, and May 31, 1996
Consolidated Condensed Statements of Income 4
for six months ended November 30, 1996 and
November 30, 1995, and three months ended
November 30, 1996 and November 30, 1995.
Consolidated Condensed Statement of 5
Cash Flows - six months ended November 30, 1996
and November 30, 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 11/30/96 5/31/96
Current
Cash $1,188,312 $ 913,284
Funds Held By Trustee - 0 - 106,639
Trade Accounts Receivable 1,037,449 1,210,435
Inventories 2,240,128 2,408,763
Prepaid and Refundable Income Taxes 19,717 63,312
Prepaid Expenses 72,247 130,843
Total Current Assets $4,557,853 $4,833,276
Investments - Affiliate, at equity 178,606 168,451
Property and Equipment - Net 2,404,856 2,403,480
Other Assets
Other 439,519 370,370
Total Other Assets $ 439,519 $ 370,370
TOTAL ASSETS $7,580,834 $7,775,577
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Current Portion of Long Term Debt $ 401,219 $ 366,003
Payables - Trade 971,906 961,010
Affiliate-Current 56,549 67,740
Construction-in-Progress - 0 - - 0 -
Accrued Income Tax 24,113 62,582
Accrued Expenses 203,745 340,337
Advanced Payments - Customers 356,778 455,991
Total Current Liabilities $2,014,310 $2,253,663
Non Current
Long Term Debt $1,575,371 $1,750,583
Deferred Income Tax - 0 - - 0 -
Total Non Current Liabilities $1,575,371 $1,750,583
Minority Stockholders' Interest $ 234,921 $ 224,505
STOCKHOLDERS' EQUITY
Common Stock, par value $.025 a
share, authorized 8,000,000 shares $ 67,404 $ 66,924
Paid - In Capital 2,295,556 2,258,725
Retained Earnings 1,441,616 1,269,521
Less: Cost of Treasury Stock:
21,990 shares 48,344 48,344
TOTAL STOCKHOLDERS' EQUITY $3,756,232 $3,546,826
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY $7,580,834 $7,775,577
FORM 10-QSB
TAYLOR DEVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
SIX MONTHS THREE MONTHS
ENDED NOVEMBER 30 ENDED NOVEMBER 30
1996 1995 1996 1995
NET SALES $4,609,602 $4,235,660 $2,526,183 $1,761,879
COST OF PRODUCT SOLD 3,031,474 2,793,639 1,636,231 1,173,828
Gross Profit 1,578,128 1,442,021 889,952 588,051
EXPENSES
Selling and Administrative 1,276,956 1,092,554 722,930 469,484
Profit (loss) from Operations 301,172 349,467 167,022 118,567
OTHER INCOME/(EXPENSE)
Rental - Affiliates 5,000 6,834 2,500 2,497
Miscellaneous 17,759 7,100 5,377 1,322
Interest (72,575) (78,351) (34,455) (39,005)
NET OTHER (49,816) (64,417) (26,578) 35,186
NET INCOME BEFORE
PROVISION FOR TAXES 251,356 285,050 140,444 83,381
Provision for Income Taxes 79,000 59,740 39,600 9,800
INCOME BEFORE EQUITY IN
EARNINGS OF AFFILIATES 172,356 225,310 100,844 73,581
EQUITY IN EARNINGS OF
AFFILIATES 10,155 9,104 5,000 4,129
NET INCOME BEFORE MINORITY
STOCKHOLDERS' INTEREST 182,511 234,414 105,844 77,710
Minority Stockholders' Interest 10,416 - 0 - 4,368 - 0 -
NET INCOME $172,095 $234,414 $101,476 $77,710
Earnings Per Share $ .06 $ .09 $ .03 $ .03
FORM 10-QSB
TAYLOR DEVICES, INC.
STATEMENT OF CHANGES IN FINANCIAL POSITION
SIX MONTHS ENDED NOVEMBER 30
1996 1995
FUNDS PROVIDED
From Operations $ 172,095 $234,414
Depreciation and Amort. 112,292 91,200
Fixed Assets - 0 - - 0 -
Sales of Stock 37,311 49,727
Minority Shareholders' Interest 10,416 - 0 -
Decrease Other Assets 481,302 - 0 -
Increase Other Liabilities - 0 - - 0 -
Increase Long Term Debt - 0 - - 0 -
Total Funds Provided $ 813,416 $ 375,341
FUNDS APPLIED
Loss on Operations $ - 0 - $ - 0 -
Fixed Assets 113,668 358,871
Decrease Other Liabilities 274,569 103,813
Increase Other Assets - 0 - 444,187
Minority Shareholders' Interest - 0 - - 0 -
Investments - Affiliates 10,155 9,104
Decrease Long Term Debt 139,996 98,928
Total Funds Applied $ 538,388 $1,014,903
INCREASE (DECREASE) IN CASH $ 275,028 ($ 639,562)
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, 1996 and May 31, 1996 and the results of
operations for the three months and six months ended November
30, 1996 and November 30, 1995 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, 1996, the profit
was divided by 2,691,521 to calculate the earnings per share.
For the six month period ended November 30, 1995, the profit
was divided by 2,665,550 to calculate the earnings per share.
4. The results of operations for the six month period ended
November 30, 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.
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.
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, 1996 - November 30, 1995
Increase (decrease)
Net Sales $ 373,942
Cost of Sales 237,835
Selling, General and
Administrative Expenses 184,402
Other Expenses - 0 -
Other Income 8,825
Interest Expense (5,776)
Net Profit Before Tax and
Minority Shareholders' Interest (33,694)
Provision for Income Tax 19,260
Net Profit Before Equity in
Earnings of Affiliates (52,954)
Equity in Earnings of Affiliates 1,051
Minority Stockholders' Interest 10,416
Net Income ($62,319)
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION (CON'T)
Shipments and profits for the second quarter of fiscal year
1997 (QII97) exceeded those of the same period in the prior fiscal
year (QII96). For both the quarter and six months year to date,
the shipment figures represent the highest total in the Company's
existence.
RESULTS FOR THE SECOND QUARTER
For QII97, shipments were $2,526,183, which were $764,000 and
43% better than QII96 figures. The product mix contained
substantial amounts of defense billings against long term contracts
and progress billings towards seismic product projects. Gross
margin was $889,952 and 35.2% of sales compared to $588,051 and
33.4% in the previous year. The gross margin figures for the
period are reflective of the product mix and the continuing
productivity improvements from the Company's recently upgraded
facility and equipment. SGA expenses reflected the product mix
(which generates somewhat higher commission and royalty expenses),
start-up costs on the EDP system and increased marketing expenses
related to new products. SGA was $722,930 and 28.6% of sales
compared to $469,484 and 26.7% in the previous year. Net Income
Before Provision for Taxes was $140,444 and 5.5% of sales in QII97
compared to $83,381 and 4.7% in QII96. After provisions for taxes,
affiliate earnings, and minority interests, the net income for the
second quarter was $101,476 compared to $77,710 in the second
quarter of the previous year.
RESULTS FOR THE SIX MONTHS YEAR TO DATE
Shipments for the period (97YTD) totaled $4,609,602, about
$374,000 and 8.8% better than the same period in the previous year
(96YTD). The increase was attributable primarily to higher levels
of defense and seismic shipments. The gross margin for 97YTD was
$1,578,128 and 34.2% of sales compared to $1,442,021 and 34.0%.
For 97YTD, SGA amounted to $1,276,956 and 27.7% versus $1,092,554
and 25.8% for 96YTD. The Company's SGA expense continues to show
the effects of EDP start-up expenses, increased royalty expenses
generated by the defense sales and travel/promotional expenses
related primarily to expanding the seismic products market. Net
Income Before Provision for Taxes was $251,356 compared to $285,050
in the previous year.
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION (CON'T)
The Company remains in a strong and stable financial
condition. The cash balance of $1,188,312 reflects the continuing
willingness of large customers to provide advance and progress
payments. The value of the physical inventory continues to be
level and the current ratio of 2.26 reflects the positive short-term position
of the Company.
At the current time, the Company is awaiting results from
tests conducted by HITEC (Highway Innovative Technology Evaluation
Center) on units submitted earlier in the fiscal year, as well as
the tilting tension/control units delivered to NCEER (National
Center for Earthquake Engineering Research. R&D efforts on COTS
(Commercial Off the Shelf) hardware for a major defense contractor
concluded successfully in the recent fiscal quarter. The Company's
engineers adapted a current production unit for use in a different
range of activity as specified by the contractor. The Company has
now submitted a bid on a substantial number of the new units.
In the quarter just ended, delivery was completed on two of
the seismic projects received earlier in the current fiscal year.
With these deliveries, the Company has now provided seismic
protection to eleven buildings while it continues to work on six
more. Two new seismic orders were recently received. One is for
the California State University Administration Building in Los
Angeles and the other is for the First Avenue Bridge in Seattle.
Both orders represent "repeat" orders for similar projects awarded
to the Company in the past two years. Management believes these
orders are a strong indication of the construction industry's
acceptance of the Company and its products. At the halfway point
of FY 1997, Management believes that it will meet or exceed the
record shipments level of FY 1996. As mentioned in the most
recent 10-KSB and 10-QSB filings, the Company has fully used all
the tax credits it enjoyed in fiscal year 1995 and 1996 and is
expecting to be subject to normal tax rates this year. This
factor, more than any other, will affect the net income line.
Nevertheless, Management believes FY 1997 will be a year of good
sales, good profits and increasing presence in the right markets
for the future.
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 8,
1996, Management's proposed slate of Directors was
approved by the following vote totals:
Votes Votes
Withheld For
Douglas P. Taylor 39,334 2,308,116
Richard G. Hill 30,710 2,316,740
Joseph P. Gastel 39,922 2,307,528
Donald B. Hofmar 31,298 2,316,152
Randall L. Clark 31,587 2,315,404
2. A Ratification of Amendment to By-laws was approved by the
shareholders with a vote of 2,214,654 FOR; 37,094 AGAINST; and
19,275 ABSTAINED.
3. The shareholders voted to approve the Ratification of
Indemnity Agreements and any Amendments by a vote of 2,214,866
FOR; 39,538 AGAINST; and 16,619 ABSTAINED.
ITEM 5 Other Information
In the period of 6/1/96 to 11//30/96, the Company's reported
total of outstanding shares increased by 14,553, as itemized
below:
1. Employee Stock Ownership Plan 9,196
2. Director Stock Option Plan 5,352
14,553
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 1/10/97
Douglas P. Taylor
Chairman of the Board of Directors
President
(Principal Executive Officer)
AND
By /s/Kenneth G. Bernstein Date 1/10/97
Kenneth G. Bernstein
Chief Accounting Officer
Treasurer
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<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> NOV-30-1996
<CASH> 1,188,312
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<RECEIVABLES> 1,065,349
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