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, 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 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, 1997
Common Stock 2,754,700
(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, 1997, and May 31, 1997
Consolidated Condensed Statements of Income 4
for six months ended November 30, 1997 and
November 30, 1996, and three months ended
November 30, 1997 and November 30, 1996
Consolidated Condensed Statement of 5
Cash Flows - six months ended November 30,
1997 and November 30, 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 11/30/97 5/31/97
Current
Cash $ 502,623 $1,096,456
Funds Held By Trustee - 0 - 108,041
Trade Accounts Receivable 2,255,599 1,423,829
Inventories 2,255,631 2,412,265
Prepaid and Refundable Income Taxes (77,481) 57,630
Prepaid Expenses 128,706 130,258
Total Current Assets $5,065,078 $5,228,479
Investments - Affiliate, at equity 205,302 194,922
Property and Equipment - Net 2,848,661 2,564,613
Other Assets
Other 415,640 353,070
Total Other Assets $ 415,640 $ 353,070
TOTAL ASSETS $8,534,681 $8,341,084
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Current Portion of Long Term Debt $ 642,886 $ 352,685
Payables - Trade 1,175,814 989,077
Affiliate-Current 79,782 69,487
Construction-in-Progress - 0 - - 0 -
Accrued Income Tax (50,380) 99,462
Accrued Expenses 271,060 449,329
Advanced Payments - Customers 349,405 419,901
Total Current Liabilities $2,468,567 $2,379,941
Non Current
Long Term Debt $1,301,025 $1,457,714
Deferred Income Tax - 0 - - 0 -
Total Non Current Liabilities $1,301,025 $1,457,714
Minority Stockholders' Interest $ 255,585 $ 245,001
STOCKHOLDERS' EQUITY
Common Stock, par value $.025 a
share, authorized 8,000,000 shares $ 68,868 $ 68,536
Paid - In Capital 2,516,000 2,468,888
Retained Earnings 2,007,789 1,801,096
Less: Cost of Treasury Stock:
28,432 & 28,442 shares respectively 83,153 80,092
TOTAL STOCKHOLDERS' EQUITY $4,509,504 $4,258,428
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY $8,534,681 $8,341,084
FORM 10-QSB
TAYLOR DEVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
SIX MONTHS THREE MONTHS
ENDED NOVEMBER 30 ENDED NOVEMBER 30
1997 1996 1997 1996
NET SALES $5,173,477 $4,609,602 $2,675,565 $2,526,183
COST OF PRODUCT SOLD 3,560,205 3,031,474 1,813,616 1,636,231
Gross Profit 1,613,272 1,578,128 861,949 889,952
EXPENSES
Selling and
Administrative 1,237,066 1,276,956 657,704 722,930
Profit (loss) from
Operations 376,206 301,172 204,245 167,022
OTHER INCOME/(EXPENSE)
Rental - Affiliates 5,000 5,000 2,500 2,500
Miscellaneous 3,607 17,759 2,240 5,377
Interest (67,216) (72,575) (33,907) (34,455)
NET OTHER (58,609) (49,816) (29,167) (26,578)
NET INCOME BEFORE
PROVISION FOR TAXES 317,597 251,356 175,078 140,444
Provision for Income
Taxes 110,700 79,000 56,275 39,600
INCOME BEFORE EQUITY IN
EARNINGS OF AFFILIATES 206,897 172,356 118,803 100,844
EQUITY IN EARNINGS OF
AFFILIATES 10,380 10,155 2,790 5,000
NET INCOME BEFORE MINORITY
STOCKHOLDERS' INTEREST 217,277 182,511 121,593 105,844
Minority Stockholders'
Interest 10,584 10,416 5,292 4,368
NET INCOME $206,693 $172,095 $116,301 $101,476
Earnings Per Share $ .07 $ .06 $ .04 $ .03
FORM 10-QSB
TAYLOR DEVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED NOVEMBER 30
1998 1997
Cash Flows From Operating Activities
Net income $206,693 $172,095
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 130,560 112,292
Equity in net income of affiliate (25,200) (10,155)
Increase in cash value - life insurance -0- -0-
Deferred income taxes -0- -0-
Tax benefit - stock option plan -0- -0-
Minority stockholder's interest 10,584 10,416
Common stock issued, charged to
compensation expense, net -0- -0-
Interest income - funds held by trustee -0- -0-
Changes in:
Receivables (920,348) 142,986
Inventories 219,759 128,055
Prepaid expenses 136,663 58,596
Payables - trade 124,386 10,896
Payables - affiliates 10,295 (11,191)
Advance payments, customers 70,496 99,213
Accrued income taxes (149,842) (38,469)
Accrued expenses (178,269) (186,592)
Net cash provided by operating
activities (364,223) 488,142
Cash Flows From Investing Activities
Acquisition of property and equipment (409,607) (113,668)
Proceeds from sale of tax free money fund
held by trustee -0- -0-
Cash received from trustee -0- -0-
Cash remitted to trustee (66,250) (65,000)
Net cash used for investing
activities (475,857) (178,668)
Cash Flows From Financing Activities
Financing costs paid -0- -0-
Borrowings - bank demand notes 300,000 -0-
Repayments - bank demand notes -0- -0-
- long-term debt (101,197) (116,141)
Proceeds from issuance of common stock
- employee stock purchase plan 10,796 37,311
- exercise of stock options 36,648 44,384
Net cash used for financing
activities 246,247 (34,446)
Net increase/(decrease) in cash and
cash equivalents (593,833) 275,028
Cash and Cash Equivalents Balance at
Beginning of Year 1,096,456 913,284
Cash and Cash Equivalents Balance at
End of Period 502,623 1,188,312
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, 1997 and May 31, 1997 and the results of
operations for the three months and six months ended November
30, 1997 and November 30, 1996 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, 1997, the profit
was divided by 2,754,700 to calculate the earnings per share.
For the six month period ended November 30, 1996, the profit
was divided by 2,691,521 to calculate the earnings per share.
4. The results of operations for the six month period ended
November 30, 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 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, 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.
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, 1997 - November 30, 1996
Increase (decrease)
Net Sales $ 563,875
Cost of Sales 528,731
Selling, General and
Administrative Expenses (39,890)
Other Expenses - 0 -
Other Income (14,152)
Interest Expense (5,359)
Net Profit Before Tax and
Minority Shareholders' Interest 66,241
Provision for Income Tax 31,700
Net Profit Before Equity in
Earnings of Affiliates 34,541
Equity in Earnings of Affiliates 225
Minority Stockholders' Interest 168
Net Income 34,598
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION (CON'T)
For the six month period ending November 30, 1997, the Company
posted a record-high Net Sales figure of $5,173,477. Profits
increased proportionately over the previous period, with reduced
Selling, General and Administrative (SGA) expenses making a
significant contribution.
SIX MONTH PERIOD
For the six months ending 11/30/97 (98YTD), Net Sales were
$5,173,477, a new six month high for the Company and approximately
12% higher than the same period in Fiscal Year 1997 (97YTD). Gross
Margin was $1,613,272 and 31.2% of sales, compared to $3,031,474
and 34.2% in 97YTD. Management believes this change in gross
margin percentage is largely attributable to the high proportion of
progress billings in the product mix, on which the Company
estimates a relatively conservative gross margin. Another
significant factor is plant efficiency at higher sales volume
levels. Management has addressed this by means of an 8,500 square
foot addition which will be primarily dedicated to the assembly and
testing of large seismic dampers.
Selling, General and Administrative expenses for 98YTD were
$1,237,066 and 23.9% of sales compared to $1,276,956 and 27.7% for
97YTD. This improvement in dollars and percentage is due primarily
to reduced usage of outside services for EDP consulting and lowered
sales commission and royalty expenses generated by shifts in the
product mix. Operating Income for 98YTD was $317,597 and 6.1% of
sales compared to $251,356 and 5.4% of sales for 97YTD.
There were no significant changes in the tax rate, Earnings
from Affiliates or Minority Shareholders' Interest between the two
periods. Net Income for 98YTD was $206,693 and 4.0% of Net Sales
compared to $172,095 and 3.7% for 97YTD. Earnings Per Share were
$.075 for 98YTD versus $.064 for 97TYD.
SECOND QUARTER
For the three months ending 11/30/97(Q298), Net Sales were
$2,675,565 compared to $2,526,183 for Q297, an improvement of
approximately 6%. The Gross Margin in Q298 was $861,949 and 32.2%
of Net Sales compared to $889,952 and 35.2% in Q297. The change in
the Gross Margin percentage was due largely to the factors
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION (CON'T)
discussed in the previous section. SGA expenses were $657,704 or
24.6% of Net Sales in Q298 compared to $722,930 and 28.6% in Q297.
The factors contributing to the improved SGA figures are, likewise,
discussed in the section above.
There were no significant changes in the tax rate, Earnings
from Affiliates or Minority Shareholders' Interest between the two
periods. Net Income for Q298 was $116,301 and 4.3% of Net Sales
compared to $101,476 and 4.0% for Q297. Earnings Per Share were
$.042 for Q298 versus $.038 for Q297.
The Company's Balance Sheet is reflecting the two most
significant events of the Fiscal Year to date. These are the plant
expansion referenced earlier and the Los Angeles City Hall order,
taken without progress payments. The bulk of the expenses for this
order have been incurred with shipments scheduled through the month
of February 1998 and payment due shortly thereafter.
The Company's backlog, $9,098,000 remains strong as does the
potential market for sizeable seismic and defense orders. The
timing of the placement of actual orders continues to remain a
significant unknown factor over which the Company has minimal
control.
At the halfway point of Fiscal Year 1998, Management continues
to anticipate the sales and profits for the full Fiscal Year will
be similar to and possibly improved over those reported for Fiscal
Year 1997. The timing of the receipt of certain significant orders
and the delivery schedule for those orders may have an impact on
the Company's performance in the short term.
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 October 30,
1997, Management's proposed slate of Directors was
approved by the following vote totals:
Votes Votes
Withheld For
Douglas P. Taylor 16,466 2,395,077
Richard G. Hill 18,176 2,395,905
Joseph P. Gastel 28,630 2,382,913
Donald B. Hofmar 26,066 2,384,857
Randall L. Clark 18,232 2,392,691
ITEM 5 Other Information
In the period of 6/1/97 to 11//30/97, the Company's reported
total of outstanding shares increased by 13,255, as itemized
below:
1. Employee Stock Ownership Plan 9,580
2. Director Stock Option Plan 3,675
13,255
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 January 12, 1998
Douglas P. Taylor
Chairman of the Board of Directors
President
(Principal Executive Officer)
AND
By /s/Kenneth G. Bernstein Date January 12, 1998
Kenneth G. Bernstein
Chief Accounting Officer
Treasurer
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-END> NOV-30-1997
<CASH> 502,603
<SECURITIES> 0
<RECEIVABLES> 2,255,599
<ALLOWANCES> 24,000
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68,868
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<COMMON> 0
<OTHER-SE> 4,440,636
<TOTAL-LIABILITY-AND-EQUITY> 8,534,681
<SALES> 5,173,477
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