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Previous: FRENCH FRAGRANCES INC, 4, 2001-01-11 |
Next: TECHNICAL COMMUNICATIONS CORP, DEF 14A, 2001-01-11 |
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 |
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, 2000 | |
| Common Stock
(2-1/2 cents par value) |
2,773,535 |
| PART I - | FINANCIAL INFORMATION |
PAGE NO. | ||
| Item 1. | Financial Statements | |||
| Consolidated Condensed Balance Sheets November 30, 2000, and
May 31, 2000 |
3 | |||
| Consolidated Condensed Statements of Income for six months ended November 30, 2000 and November 30, 1999, and three months ended November 30, 2000 and November 30, 1999 | 4 | |||
| Consolidated Condensed Statement of Cash Flows for six months ended November 30, 2000 and November 30, 1999 | 5 | |||
| Notes to Consolidated Condensed Financial Statements | 6 | |||
| Item 2. | Management's Discussion and Analysis of the Financial Condition and Results of Operations | 7 | ||
| 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 | ||
| ACCOUNTANTS' REVIEW REPORT | 11 | |||
| SIGNATURES | 12 | |||
| ASSETS | 11/30/00 | 5/31/00 | ||
| Current | ||||
| Cash | $ 694,069 | $ 552,804 | ||
| Funds Held By Trustee | 37,500 | 113,438 | ||
| Trade Accounts Receivable | 2,042,156 | 2,120,486 | ||
| Inventories | 3,606,266 | 3,099,460 | ||
| Deferred Income Taxes | 218,200 | 218,200 | ||
| Prepaid Expenses | 38,398 | 80,406 | ||
| Costs and Estimated Earning in Excess of Billings | 1,207,898 | 1,554,309 | ||
| Total Current Assets | 7,844,487 | 7,739,103 | ||
| Investments - Affiliate, at equity | 302,841 | 296,980 | ||
| Property and Equipment - Net | 2,704,555 | 2,679,016 | ||
| Other Assets | ||||
| Other | 356,091 | 365,922 | ||
| Total Other Assets | 356,091 | 365,922 | ||
| TOTAL ASSETS | $11,207,974 | $11,081,021 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
| Current | ||||
| Current Portion of Long Term Debt | $ 1,017,034 | $ 328,347 | ||
| Payables - Trade | 519,464 | 688,908 | ||
| Affiliate-Current | 228,065 | 331,713 | ||
| Accrued Income Tax | (121,298) | 163,935 | ||
| Accrued Expenses | 896,171 | 815,424 | ||
| Advanced Payments - Customers | 330,259 | 383,828 | ||
| Billings in Excess of Costs and Estimated Earnings | 170,931 | 249,698 | ||
| Total Current Liabilities | 3,040,626 | 2,961,853 | ||
| Non Current | ||||
| Long Term Debt | 1,069,806 | 1,301,752 | ||
| Deferred Income Tax | 79,300 | 79,300 | ||
| Total Non Current Liabilities | 1,149,106 | 1,381,052 | ||
| Minority Stockholders' Interest | 334,850 | 323,804 | ||
| STOCKHOLDERS' EQUITY | ||||
| Common Stock, par value $.025 share, authorized 8,000,000 shares, issued 2,903,382 and 2,882,425 shares | 72,585 | 72,061 | ||
| Paid - In Capital | 2,860,788 | 2,800,465 | ||
| Retained Earnings | 4,114,861 | 3,840,223 | ||
| 7,048,234 | 6,712,749 | |||
| Treasury Stock - 129,847 shares and 107,165 shares respectively | (364,842) | (298,437) | ||
| TOTAL STOCKHOLDERS' EQUITY | 6,683,392 | 6,414,312 | ||
| TOTAL LIABILITIES & STOCKHOLDERS' EQUITY | $11,207,974 | $11,081,021 | ||
See notes to consolidated condensed financial statements.
| 2000 | 1999 | 2000 | 1999 | ||
| NET SALES | $5,290,273 | $4,858,664 | $2,676,857 | $2,297,319 | |
| COST OF PRODUCT SOLD | 3,159,685 | 3,070,402 | 1,613,795 | 1,464,120 | |
| Gross Profit | 2,130,588 | 1,788,262 | 1,063,062 | 833,199 | |
| EXPENSES | |||||
| Selling and Administrative | 1,625,106 | 1,367,429 | 822,884 | 660,394 | |
| Profit (loss) from Operations | 505,482 | 420,833 | 240,178 | 172,805 | |
| OTHER INCOME/(EXPENSE) | |||||
| Rental - Affiliates | 5,833 | 5,000 | 2,166 | 2,500 | |
| Miscellaneous | 6,267 | 7,457 | (2,430) | 6,008 | |
| Interest | (85,459) | (71,014) | (50,818) | (36,194) | |
| NET OTHER | (73,359) | (58,557) | (51,082) | (27,686) | |
| NET INCOME BEFORE
PROVISION FOR TAXES |
432,123 | 362,276 | 189,096 | 145,119 | |
| Provision for Income Taxes | 152,300 | 118,500 | 70,300 | 42,900 | |
| INCOME BEFORE EQUITY IN
EARNINGS OF AFFILIATES |
279,823 | 243,776 | 118,796 | 102,219 | |
| EQUITY IN EARNINGS OF
AFFILIATES |
5,861 | 13,005 | 1,761 | 8,105 | |
| NET INCOME BEFORE MINORITY STOCKHOLDERS' INTEREST | 285,684 | 256,781 | 120,557 | 110,324 | |
| Minority Stockholders' Interest | 11,046 | 15,114 | 4,305 | 9,214 | |
| NET INCOME | $ 274,638 | $ 241,667 | $ 116,252 | $ 101,110 | |
| Earnings Per Share | $ .099 | $ .087 | $ .042 | $ .037 | |
See notes to consolidated condensed financial statements.
| SIX MONTHS ENDED NOVEMBER 30 | ||||
|
2000 |
||||
| Cash Flows From Operating Activities | ||||
| Net Income | $ 274,638 | $ 241,667 | ||
| Adjustments to reconcile Net Income to Net Cash provided by
Operating Activities: |
||||
| Depreciation and Amortization | 135,534 | 162,630 | ||
| Equity in Net Income of Affiliate | (5,861) | (13,005) | ||
| Increase in cash value - Life Insurance | - 0 - | - 0 - | ||
| Deferred Income Taxes | - 0 - | - 0 - | ||
| Minority Stockholder's Interest | 11,046 | 15,114 | ||
| Interest Income - funds held by trustee | - 0 - | - 0 - | ||
| Changes in: | ||||
| Receivables | 78,330 | (414,498) | ||
| Inventories | (506,806) | (82,662) | ||
| Prepaid expenses | 42,008 | 51,479 | ||
| Costs and Estimated Earnings in Excess of Billings | 267,644 | - 0 - | ||
| Payables - Trade | (169,444) | 166,230 | ||
| Payables - Affiliates | (103,648) | 47,861 | ||
| Advance Payments, Customers | (53,569) | (338,978) | ||
| Accrued Income Taxes | (285,233) | (281,253) | ||
| Accrued Expenses | 80,747 | (45,027) | ||
| Other | 9,831 | - 0 - | ||
| Net cash provided by operating activities | (224,783) | (490,442) | ||
| Cash Flows From Investing Activities | ||||
| Acquisition of property and equipment | (161,073) | (58,653) | ||
| Cash received from trustee | 150,938 | - 0 - | ||
| Cash remitted to trustee | (75,000) | 112,575 | ||
| Net cash provided by investing activities | (85,135) | 53,922 | ||
| Cash Flows From Financing Activities | ||||
| Net proceeds from short-term borrowings | 700,000 | - 0 - | ||
| Repayments - long-term debt | (243,259) | (242,252) | ||
| Proceeds from issuance of common stock | ||||
| - employee stock purchase plan | 60,847 | 60,068 | ||
| - acquisition of treasury stock | (66,405) | (89,447) | ||
| Net cash used for financing activities | 451,183 | (271,631) | ||
| Net increase/(decrease) in cash and cash equivalents | 141,265 | (708,151) | ||
| Cash and Cash Equivalents Balance at Beginning of Year | 552,804 | 1,248,640 | ||
| Cash and Cash Equivalents Balance at End of Period | $ 694,069 | $ 540,489 | ||
See notes to consolidated condensed financial statements.
| 1. | The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position, results of operations, and cash flows as of November 30, 2000 and November 30, 1999 and the results of operations for the three and six months then ended. These financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Annual Report to Shareholders for the year ended May 31, 2000. |
| 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, 2000, the profit was divided by 2,773,535, which is net of the Treasury shares, to calculate the earnings per share. For the six month period ended November 30, 1999, the profit was divided by 2,773,931 to calculate the earnings per share, which is net of the Treasury shares. |
| 4. | The results of operations for the six month period ended November 30, 2000 are not necessarily indicative of the results to be expected for the full year. |
Cautionary Statement
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. Words such as "expects," "intends," "believes," "anticipates," "estimates," "assumes," and analogous expressions are intended to identify 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, many or all of which may be beyond the control of the Company. 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:
| Net Sales | 431,609 | ||
| Cost of Sales | 89,283 | ||
| Selling, General and Administrative Expense | 257,677 | ||
| Other Expenses | - 0 - | ||
| Other Income | (2,023) | ||
| Interest Expense | 14,445 | ||
| Net Profit Before Tax and Minority Shareholders' Interest | 69,847 | ||
| Provision for Income Tax | 33,800 | ||
| Net Profit Before Equity in Earnings of Affiliates | 36,047 | ||
| Equity in Earnings of Affiliates | (7,144) | ||
| Minority Stockholders' Interest | (4,068) | ||
| Net Income | 32,971 | ||
In the three and six month periods ending November 30, 2000, the Company's Net Sales and Net Income figures improved over the prior year's comparable periods. A strong influx of orders for seismic protection products has provided the impetus for a major facilities' expansion.
FOR THE SIX MONTHS ENDING NOVEMBER 30, 2000 (all figures being compared are for six months y-t-d FY 2001 vs. six months y-t-d FY 2000)
Shipments for the first six months of Fiscal Year 2001 were $5,290,273, an 8.8% increase over the prior year's figure of $4,858,664. The current period's Gross Margin totaled $2,130,588 (40.3% of sales), improving on the FY00 Gross Margin of $1,788,262 (36.8% of sales). In both periods, the gross margin figure represents the composite of costs calculated for discrete OEM shipments, interim estimates for in-progress projects and final adjustments for completed projects.
Selling, General and Administrative Expenses were $1,625,106 or 30.7% of sales in the current period compared to $1,367,429 or 28.1% in the prior year. The change is attributable to a prior period sales tax adjustment discussed in the prior report, increasing EPP expenses as the Company prepares to upgrade its capabilities, and to increased travel and commission expenses related to overseas markets. Net Other Expense increased to $73,359 from $58,557, due in part to rising interest rates and to an increased usage of the Line of Credit to fund certain projects which do not contain progress payment provisions.
Net Income improved to $274,638 and $.099 earnings per share, a 13.6% increase over last year's figure of $241,667 and $.087 earnings per share.
FOR THE THREE MONTHS ENDING NOVEMBER 30, 2000 (all figures being compared are for three months ending 11/30/00 vs. the three months ending 11/30/99)
Shipments in the current period totaled $2,676,857, a 16.5% increase over the $2,297,319 figure recorded in last year's second quarter. Gross Margin improved to $1,063,062 (39.7% of sales) from $833,199 (36.3% of sales). The increased revenue is attributable primarily to increased progress billings of medium and long term defense and seismic protection projects.
SGA expenses were recorded as $822,884 and 30.7% of sales as compared to $660,394 and 28.8% of sales, with the changes from period to period generated by the factors discussed in the section above. Net Other Expense in this period was $51, 082, up from the prior period's figure of $27,686, due primarily, as mentioned above, to increased Line of Credit usage and higher interest rates.
Net Income for the period was $116,252 and $.042 earnings per share, representing a 15% improvement over the FY00 results of $101,110 and $.037 per share.
As mentioned in the opening paragraph, an influx of orders in November and December of 2000 took the Company's backlog to approximately $14,000,000 and provided strong impetus for another expansion/improvement of the Company's physical plant. As of the writing of this report, the Company's reception area is undergoing an expansion/upgrade scheduled for completion in February 2001. By the early summer of 2001, the Company expects that its current 9,000 square foot test/assembly area will have been doubled/upgraded and an additional 4,000 square feet of manufacturing area will have been added to an existing facility. The Company has undertaken this expansion effort not only to meet the increased demand for product, but also to address customers' requirements for shorter turn-around times and for larger finished products. At this time, the Company believes it will not require any additional sources of funding to finance this expansion or to finance its normal operations.
In the second quarter of FY2001, the Company completed its first shipment of seismic protection product to Japan and also booked its second major order from a Japanese customer. Second quarter bookings also contained a significant order from Taiwan and the first phase of a potentially large order from Europe. The Company is also presently pursuing, in addition to its normal domestic activity, significant opportunities in Eastern Europe and Japan. While there are no guarantees that the Company will be awarded contracts for any of the projects it is currently pursuing, Management believes that it has begun to significantly expand the geographic boundaries of the markets in which it can compete. This expansion has, and hopefully will continue to lead to increased opportunities for the Company.
At the mid-way point of Fiscal Year 2001, Management believes that the Company is positioned to perform well in two primary areas - the continuing achievement of steady growth in market strength and production capabilities while posting good financial results. Based on the six month results and the composition of the backlog at 11/30/00, Management believes financial results for FY 2001 have the potential to match the record results of FY 2000.
| 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. | The Annual Meeting of Shareholders was held on November 10, 2000. Results are as follows: | |||
| A. | Class 2 Directors of the Company were elected to serve a three year term expiring in 2003 as follows: | |||
| Donald B. Hofmar - 2,147,041 shares voted for and 10,000 shares were withheld. | ||||
| Richard G. Hill - 2,138,771 shares voted for and 18,270 shares were withheld. | ||||
| ITEM 5 | Other Information | |||
| For the period 9/1/00 to 11/30/00, changes in the Company's outstanding shares are as follows: | ||||
| A. | An increase of 10,538 shares, for purchases of Company stock by employee's from the Employee's Stock Purchase Plan. | |||
| B. | An increase in Treasury shares of 22,172, which were returned to the treasury from open market purchases by the Company. Treasury shares at 11/30/00 are 129,847. | |||
| ITEM 6 | Exhibits and Reports of Form 8-K - None | |||
We have reviewed the condensed consolidated balance sheet of Taylor Devices, Inc. as of November 30, 2000, and the related condensed consolidated statements of income and cash flows for the three and six months ended November 30, 2000. These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of May 31, 2000, and the related consolidated statements of income, retained earnings, and cash flows for the year then ended (not presented herein); and in our report dated August 4, 2000, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of May 31, 2000 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. We have not reviewed or compiled the related condensed consolidated statements of income and cash flows for the three and six months ended November 30, 1999 and, accordingly, do not express an opinion or any other form of assurance on them.
Lumsden & McCormick, LLPPursuant 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 11, 2001 | |
| Douglas P. Taylor
Chairman of the Board of Directors President (Principal Executive Officer) |
|
AND |
| By | /s/Kenneth G. Bernstein | Date | January 11, 2001 | |
| Kenneth G. Bernstein
Chief Accounting Officer Treasurer |
|
|