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, 2000
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 incorporation or organization) |
|
(I.R.S. Employer 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.
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, 2000 |
| Common Stock
(2-1/2 cents par value) |
|
2,772,956 |
=== END OF PAGE 1 ===
FORM 10-QSB
TAYLOR DEVICES, INC. - INDEX
| PART I | FINANCIAL INFORMATION |
|
| Item 1.Financial Statements |
|
|
|
|
|
Consolidated Condensed Balance Sheets February
29, 2000, and May 31, 1999.........................Page 3 |
|
|
|
|
|
Consolidated Condensed Statements of Income for
nine months ended February 29, 2000 and February 28, 1999, and three months ended February 29,2000 and February 28,1999......................................Page 4 |
|
|
|
|
|
Consolidated Condensed Statement of Cash Flows -
nine months ended February 29, 2000 and February
28, 1999......................................................................................................................................Page 5 |
|
|
|
|
|
Notes to Consolidated Condensed Financial
Statements................................................................Page 6 |
|
| Item 2.Management's Discussion and Analysis of the
Financial Condition and Results of Operations |
|
|
|
| PARTII | OTHER INFORMATION |
|
Item 1. |
Legal Proceedings.........................................................................................................................Page 10 |
|
Item 2. |
Changes in Securities.....................................................................................................................Page 10 |
| ..
Item 3. |
Defaults upon Senior Securities......................................................................................................................................Page 10 |
|
Item 4. |
Submission of Matters to Vote of Security Holders........................................................................................................................................Page 10 |
|
Item 5. |
Other Information.........................................................................................................................Page 10 |
|
Item 6. |
Exhibits and Report on Form 8-K.................................................................................................Page 10 |
| SIGNATURES |
....................................................................................................................................................Page 11 |
=== END OF PAGE 2 ===
FORM 10-QSB
TAYLOR DEVICES, INC.
CONSOLIDATED BALANCE SHEET
| ASSETS |
02/29/00 |
5/31/99 |
| Current |
|
|
| Cash |
$403,304 |
$ 1,248,640 |
| Funds Held By Trustee |
- 0 - |
112,575 |
| Trade Accounts Receivable |
3,804,105 |
2,426,780 |
| Inventories |
2,825,877 |
3,041,014 |
| Prepaid and Refundable Income Taxes |
130,300 |
130,300 |
| Prepaid Expenses |
43,657 |
76,185 |
| Total Current Assets |
$ 7,207,243 |
$ 7,035,494 |
| Investments - Affiliate, at equity |
277,854 |
253,584 |
| Property and Equipment - Net |
2,601,586 |
2,705,563 |
| Other Assets |
|
|
| Other |
307,566 |
356,084 |
| Total Other Assets |
$ 307,566 |
$ 356,084 |
| TOTAL ASSETS |
$ 10,394,249 |
$10,350,725 |
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
| Current |
|
|
| Current Portion of Long Term Debt |
$ 320,377 |
$ 336,612 |
| Payables - Trade |
944,862 |
746,900 |
| Affiliate-Current |
275,187 |
183,700 |
| Construction-in-Progress |
- 0 - |
- 0 - |
| Accrued Income Tax |
108,769 |
373,127 |
| Accrued Expenses |
612,417 |
560,226 |
| Advanced Payments - Customers |
217,500 |
452,340 |
| Billings in Excess of Costs and Estimated Earnings |
145,000 |
139,166 |
| Total Current Liabilities |
$ 2,624,112 |
$ 2,792,071 |
| Non Current |
|
|
| Long Term Debt |
$ 1,391,371 |
$ 1,629,022 |
| Deferred Income Tax |
53,700 |
53,700 |
| Total Non Current Liabilities |
$ 1,445,071 |
$ 1,682,722 |
| Minority Stockholders' Interest |
$ 308,837 |
$ 292,404 |
|
|
|
| STOCKHOLDERS' EQUITY |
|
|
| Common Stock, par value $.025 a share, authorized 8,000,000 shares |
$ 71,738 |
$ 70,922 |
| Paid - In Capital |
2,768,066 |
2,678,017 |
| Retained Earnings |
3,452,270 |
2,974,991 |
|
6,292,074 |
5,723,930 |
| Treasury Stock - 96,535 shares and 52,203
shares at cost |
(275,845) |
(140,402) |
| TOTAL STOCKHOLDERS' EQUITY |
$ 6,016,229 |
$ 5,583,528 |
| TOTAL LIABILITIES & STOCKHOLDERS' EQUITY |
$ 10,394,249 |
$10,350,725 |
=== END OF PAGE 3 ===
FORM 10-QSB
TAYLOR DEVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
|
NINE MONTHS
ENDED FEBRUARY 29 |
THREE MONTHS
ENDED FEBRUARY 29
|
|
2000
|
1999
|
2000
|
1999
|
| NET SALE |
$8,275,632 |
$8,115,916 |
$3,416,968 |
$2,764,142 |
| COST OF PRODUCT SOLD |
5,195,925 |
5,138,419 |
2,125,523 |
1,677,447 |
| Gross Profit |
3,079,707 |
2,977,497 |
1,291,445 |
1,086,695 |
|
|
|
|
|
| EXPENSES |
|
|
|
|
| Selling and
Administrative |
2,281,838 |
2,155,859 |
914,409 |
786,775 |
| Profit (loss) from
Operations |
797,869 |
821,638 |
377,036 |
299,920 |
|
|
|
|
|
| OTHER INCOME/(EXPENSE) |
|
|
|
|
| Rental - Affiliates |
7,500 |
7,500 |
2,500 |
2,500 |
| Miscellaneous |
15,719 |
14,173 |
8,262 |
579 |
| Interest |
(104,646) |
(141,270) |
(33,632) |
(39,546) |
| NET OTHER |
(81,427) |
(119,597) |
(22,870) |
(36,467) |
|
|
|
|
|
| NET INCOME BEFORE
PROVISION FOR TAXES |
716,442 |
702,041 |
354,166 |
263,453 |
| Provision for Income
Taxes |
247,000 |
240,284 |
128,500 |
85,389 |
|
|
|
|
|
| INCOME BEFORE EQUITY IN
EARNINGS OF AFFILIATES |
469,442 |
461,757 |
225,666 |
178,064 |
|
|
|
|
|
| EQUITY IN EARNINGS OF
AFFILIATES |
24,270 |
16,300 |
11,265 |
6,300 |
|
|
|
|
|
| NET INCOME BEFORE
MINORITY
STOCKHOLDERS' INTEREST |
493,712 |
478,058 |
236,931 |
184,364 |
| Minority Stockholders'
Interest |
16,433 |
18,060 |
1,319 |
7,476 |
| NET INCOME |
$ 477,279 |
$ 459,997 |
$ 235,612 |
$ 176,888 |
| Earnings Per Share |
$ .172 |
$ .165 |
$ .085 |
$ .063 |
====END OF PAGE 4====
FORM 10-QSB
TAYLOR DEVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
NINE MONTHS ENDED
FEBRUARY 29/28 |
|
2000 |
1999 |
| Cash Flows From Operating Activities |
|
|
| Net Income |
$477,279 |
$459,997 |
| Adjustments to reconcile Net Income to Net
Cash provided by Operating Activities: |
|
|
| Depreciation and Amortization |
248,436 |
230,640 |
| Equity in Net Income of Affiliate |
(24,270) |
(16,300) |
| Increase in cash value - Life Insurance |
- 0 - |
- 0 - |
| Deferred Income Taxes |
- 0 - |
(39,673) |
| Tax Benefit - Stock Option Plan |
- 0 - |
- 0 - |
| Minority Stockholder's Interest |
16,433 |
10,584 |
| Common Stock issued, charged to Compensation Expense, Net |
- 0 - |
- 0 - |
| Interest Income - funds held by trustee |
- 0 - |
- 0 - |
| Changes in: |
|
|
| Receivables |
(1,377,325) |
(572,396) |
| Inventories |
215,137 |
(63,308) |
| Prepaid expenses |
81,047 |
88,641 |
| Payables - Trade |
197,962 |
(369,876) |
| Payables - Affiliates |
91,487 |
40,652 |
| Advance Payments, Customers |
(229,006) |
(701,978) |
| Accrued Income Taxes |
(264,358) |
18,187 |
| Accrued Expenses |
52,191 |
142,452 |
| Net cash provided by operating activities |
(514,987) |
(772,378) |
| Cash Flows From Investing Activities |
|
|
| Acquisition of property and equipment |
(144,455) |
(168,060) |
| Proceeds from sale of tax free money fund held by trustee |
- 0 - |
- 0 - |
| Cash received from trustee |
- 0 - |
- 0 - |
| Cash remitted to trustee |
112,575 |
113,193 |
| Net cash used for investing activities |
(31,884) |
(54,867) |
| Cash Flows From Financing Activities |
|
|
| Financing costs paid |
- 0 - |
- 0 - |
| Borrowings - bank demand notes |
300,000 |
300,000 |
| Repayments - bank demand notes |
(300,000) |
(300,000) |
| - long-term debt |
(253,886) |
(234,174) |
| Proceeds from issuance of common stock |
|
|
| - employee stock purchase plan |
90,864 |
71,522 |
| - acquisition of treasury stock |
(135,443) |
19,750 |
| Net cash used for financing activities |
(298,465) |
(142,902) |
| Net increase/(decrease) in cash and cash
equivalents |
(845,336) |
(970,147) |
| Cash and Cash Equivalents Balance at
Beginning of Year |
1,248,640 |
1,696,506 |
| Cash and Cash Equivalents Balance at End of
Period |
403,304 |
726,359 |
====END OF PAGE 5====
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, 2000 and May 31, 1999 and the results of
operations for the three months and nine months ended February
29, 2000 and February 28, 1999 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, 2000, the profit
was divided by 2,772,956, which is net of the Treasury shares,
to calculate the earnings per share. For the nine month period
ended February 28, 1999, the profit was divided by 2,789,595 to
calculate the earnings per share, which is net of the Treasury
shares. |
|
|
| 4. |
The results of operations for the nine month period ended
February 29, 2000 are not necessarily indicative of the results
to be expected for the full year. |
=== END OF PAGE 6 ===
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 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 Nine Months Ended
February 29, 2000 - February 28, 1999
|
|
Increase (Decrease)
|
Net Sales |
|
159,716 |
|
| Cost of Sales |
|
57,506 |
|
| Selling, General and
Administrative Expenses |
|
125,979 |
|
| Other Expenses |
|
- 0 - |
|
| Other Income |
|
1,546 |
|
| Interest Expense |
|
(36,624) |
|
| Net Profit Before Tax and
Minority Shareholders'
Interest |
|
14,401 |
|
| Provision for Income Tax |
|
6,716 |
|
| Net Profit Before Equity in
Earnings of Affiliates |
|
7,685 |
|
| Equity in Earnings of
Affiliates |
|
7,970 |
|
| Minority Stockholders'
Interest |
|
(1,627) |
|
| Net Income |
|
17,282 |
|
====END OF PAGE 7====
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION (CON'T)
For the three and nine month periods ending February 29, 2000, the
Company reported record Net Sales figures and Net Income figures,
produced in part by the results of its long term efforts to expand
its product lines and geographic markets. Sales of a new product
application and foreign orders impacted the year-to-date financial
results - in shipments, gross margin and administrative expenses.
NINE MONTH PERIOD (all figures compared are nine months y-t-d FY2000
vs. nine months y-t-d FY1999)
For the first nine months of Fiscal Year 2000, Net Sales were
$8,275,632 compared to $8,115,916 in FY99, an improvement of
approximately 2%. The FY00 product mix contained more seismic
product than FY99, which helped contribute to an improved Gross
Margin performance - 37.2% in FY00 versus 36.7% in FY99. SG&A
expense for FY2000 was $2,281,838 and 27.6% of Net Sales compared to
$2,155,859 and 27.6% of Net Sales in FY00. This change is largely
attributable to higher royalty, commission, travel, and promotional
expenses related to the higher proportion of foreign and new product
sales in the product mix and intensified marketing efforts.
Net Other Expense improved by about $38,170, from $119,597 in FY99 to
$81,427 in FY00 primarily reflecting lowered interest expense. For
the first nine months of Fiscal Year 2000, Net Income before
Provision for Taxes was $716,442 compared to $702,041 for the first
nine months of FY99. After the application of a tax provision and
the impact of the affiliate and minority shareholder interest
figures, Net Income for the period was a new Company high for a nine
month period, $477, 279 and $.172 per share compared to $459,997 and
$.165 for the previous year's period.
THREE MONTH PERIOD (all figures being compared are for the third
quarter of FY2000 vs. the third quarter of FY1999)
Shipments for the current period were $3,416,968, (a new Company
record for any quarter) compared to $2,764,142 for FY99. The quarter
contained increasing proportions of progress billings against seismic
orders. Gross Margin was $2,125,523 and 37.8% of Net Sales compared
to $1,677,447 and 39.3% in the previous year as the Company estimated
conservative gross margins on these progress billings. SG&A expense
for the current period was $914,409 and 26.8% of Net Sales versus
$786,775 and 28.5% in the previous period. As previously discussed,
a substantial portion of the change in SG&A was attributable to
increased sales promotion activity, both domestic and foreign, and
increased royalty and commission expenses related to the product mix.
====END OF PAGE 8====
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION (CON'T)
Net Other Expense improved from $36,467 in FY99 to $22,870 in FY00 as
a result of improving interest expense and a one-time refund of a
prior expense. The net contribution from the affiliates' income and
minority shareholder interest likewise improved, from ($1,176) in
FY99 to $9,946 in FY00. Net Income for the quarter was $235,612 and
$.085 per share versus $176,888 and $.063 in the prior year.
The Company's Balance Sheet continues to reflect the Company's
transition from an OEM supplier and defense contractor. The Accounts
Receivable balance reflects the high proportion of progress billings
which traditionally carry a longer payment turnaround period.
Certain larger contracts had no progress payment provisions but
several are scheduled for shipment relatively early in the fourth
quarter. Management anticipates collecting these funds by the end of
the fiscal year. All other balance sheet items remained relatively
stable. The Company continues to meet its funding requirements
through the generation of profits and existing lines of credit and
does not anticipate having to seek additional sources of funds in the
current fiscal year or the near future.
At the nine month mark of FY2000, Management is pursuing what it
believes are favorable sales opportunities in the seismic and
aerospace/defense sectors. It is continuing its intensive efforts to
expand its product lines and geographic base to maintain a strong
backlog position. Based on the current shipment schedule for the
final quarter of the year, results for FY2000 are expected to
approximate those of FY1999.
YEAR 2000
Transition into Year 2000 for the information systems of the Company
was without problems that were globally anticipated. The Company
experienced no inconveniences with its vendors nor other third
parties through the Year 2000 transition nor does the Company
anticipate major risks with these systems in the future.
====END OF PAGE 9====
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 |
|
|
For the period 12/1/99 to 2/29/00, changes in the
Company's outstanding shares are as follows: |
|
|
A. |
An increase of 11,406 shares, for purchases of
Company stock by employee's from the Employee's
Stock Purchase Plan. |
|
|
B. |
An increase in Treasury shares of 12,381, which
were returned to the treasury from open market
purchases by the Company for the period of
12/1/99 to 2/29/00. Treasury shares at 2/29/99
are 96,535. |
|
|
|
|
|
ITEM 6 |
Exhibits and Reports of Form 8-K:
Current Report on Form 8-K dated and filed
December 29, 1999 announced the Registrant's plan
to continue to purchase Registrant's common stock
from selling shareholders through open market
purchases. |
====END OF PAGE 10====
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 April 12, 2000 |
|
Douglas P. Taylor
Chairman of the Board of Directors
President
(Principal Executive Officer) |
|
|
|
AND
| By |
/s/Kenneth G. Bernstein |
|
Date April 12, 2000 |
|
Kenneth G. Bernstein
Chief Accounting Officer
Treasurer |
|
|
|
====END OF PAGE 11====
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