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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended September 30, 2002 Commission File Number 33-87024C
- --------------------------------------- --------------------------------
TAYLOR INVESTMENT CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 41-1373372
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation organization)
43 Main Street SE, Suite 506
Minneapolis, MN 55414
(Address of principal executive offices)
Issuer's telephone number, including area code: (612) 331-6929
Not applicable
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
----------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) or the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, $.01 Par Value - 485,588 shares as of November 11, 2002
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1 of 18
TAYLOR INVESTMENT CORPORATION
INDEX
PART I. FINANCIAL INFORMATION Page No.
--------
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
September 30, 2002 (unaudited) and December 31, 2001...............3
Condensed Consolidated Statements of Income
Three and nine months ended September 30, 2002 and 2001
(unaudited)........................................................4
Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 2002 and 2001 (unaudited)..........5
Notes to Condensed Consolidated Financial Statements
(unaudited)........................................................6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition......................7
Item 3. Quantitative and Qualitative Disclosures
About Market Risk.................................................11
Item 4. Controls and Procedures...........................................11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................12
Item 2. Changes in Securities.............................................12
Item 3. Defaults Upon Senior Securities...................................12
Item 4. Submission of Matters To a Vote of Security Holders...............12
Item 5. Other Information.................................................12
Item 6. Exhibits and Reports on Form 8-K..................................12
Signatures........................................................13
Certifications....................................................14
Exhibit 12.1-Computation of ratios - Ratios of earnings
to fixed charges..................................................16
Exhibit 99.1-Certification pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002........................................17
Exhibit 99.2-Certification pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002........................................18
2 of 18
TAYLOR INVESTMENT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
================================================================================
(Unaudited)
SEPTEMBER 30, DECEMBER 31,
2002 2001
ASSETS
INVENTORY - Principally land held for sale $24,227,884 $19,462,763
CONTRACTS AND MORTGAGES RECEIVABLE 9,252,452 12,113,780
INVESTMENT IN JOINT VENTURES 612,090 529,048
OTHER ASSETS:
Cash (including restricted cash of $42,556 and $27,607, respecitively) 98,593 730,554
Tax increment financing receivable 487,571 556,909
Receivable from joint ventures 541,498 556,889
Other receivables 205,382 203,245
Prepaid expenses and earnest money deposits 496,984 325,530
Funds held by trustee 85,000 44,500
Land, buildings, and equipment, less accumulated
depreciation of $1,245,060 and $1,113,821, respectively 474,045 431,484
Loan acquisition costs and debt issuance costs, less accumulated
amortization of $544,287 and $487,969, respectively 258,305 189,521
----------- -----------
Total other assets 2,647,378 3,038,632
----------- -----------
$36,739,804 $35,144,223
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LINES OF CREDIT $ 7,815,822 $ 7,037,999
NOTES PAYABLE 11,088,291 9,274,646
CONTRACTS AND MORTGAGES PAYABLE 627,967 874,243
SENIOR SUBORDINATED DEBT 1,983,000 2,672,000
OTHER LIABILITIES:
Accounts payable 589,520 3,195,037
Accrued liabilities 1,289,615 1,081,978
Deposits on land sales and purchase agreements 42,556 27,607
----------- -----------
Total other liabilities 1,921,691 4,304,622
DEFERRED INCOME TAXES 42,541 51,041
MINORITY INTEREST 198,787 0
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 10,000,000 shares authorized;
485,588 and 484,129 shares issued and outstanding, respectively 4,856 4,841
Additional paid-in capital 781,280 740,136
Retained earnings 12,275,569 10,184,695
----------- -----------
Total stockholders' equity 13,061,705 10,929,672
----------- -----------
$36,739,804 $35,144,223
=========== ===========
See notes to condensed consolidated financial statements (unaudited).
3 of 18
TAYLOR INVESTMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
================================================================================
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2002 2001
REVENUES:
Sales $ 9,831,325 $ 9,106,809 $ 26,028,012 $ 23,700,215
Interest income on contracts receivable 215,199 253,855 647,488 727,965
Equity in (losses) earnings of joint ventures (42,511) 577 (83,958) (149,839)
Other revenue 368,911 39,178 453,817 296,126
------------ ------------ ------------ ------------
Total revenue 10,372,924 9,400,419 27,045,359 24,574,467
COSTS AND EXPENSES:
Cost of sales 5,081,747 5,137,845 15,215,892 13,007,711
Selling, general, and administrative 3,115,145 2,886,977 8,154,917 7,874,126
Interest 188,088 270,433 567,433 957,416
------------ ------------ ------------ ------------
Total costs and expenses 8,384,980 8,295,255 23,938,242 21,839,253
------------ ------------ ------------ ------------
INCOME BEFORE MINORITY INTEREST 1,987,944 1,105,164 3,107,117 2,735,214
Minority interest in earnings of subsidiary (102,006) -- (98,787) --
------------ ------------ ------------ ------------
NET INCOME $ 1,885,938 $ 1,105,164 $ 3,008,330 $ 2,735,214
============ ============ ============ ============
NET INCOME PER COMMON SHARE
OUTSTANDING $ 3.88 $ 2.28 $ 6.20 $ 5.65
============ ============ ============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 485,588 484,129 484,941 484,129
============ ============ ============ ============
See notes to condensed consolidated financial statements (unaudited).
4 of 18
TAYLOR INVESTMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
================================================================================
2002 2001
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,008,330 $ 2,735,214
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 174,258 222,015
Loss on disposal of assets -- 28,732
Deferred income taxes (8,500) (127,533)
Equity in losses of joint ventures 83,958 149,839
Contracts and mortgages receivable funded (6,447,822) (4,939,762)
Payments on contracts and mortgages receivable 9,309,150 6,602,249
Minority interest in earnings of subsidiary 98,787 --
Changes in assets and liabilities
Inventory - land held for sale (4,080,321) (2,938,851)
Other receivables 67,201 138,332
Prepaid expenses and earnest money deposits (171,454) (275,969)
Accounts payable (2,605,517) 464,445
Accrued liabilities 207,637 (253,698)
Deposits on land sales on purchase agreements 14,949 50,593
------------ ------------
Net cash (used in) provided by operating activities (349,344) 1,855,606
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of land, buildings and equipment (173,800) (175,311)
Proceeds from sale of equipment 1,000 9,000
Investment in joint ventures (167,000) (333,000)
Proceeds from distributions of joint ventures -- 8,250
Advances to joint ventures 15,391 415,092
(Increase) decrease in funds held by trustee (40,500) 544,000
------------ ------------
Net cash (used in) provided by investing activities (364,909) 468,031
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) on lines of credit 777,823 (1,841,551)
Repayment of notes, contracts, and mortgage payables (10,618,459) (10,083,078)
Proceeds from notes, contracts, and mortgage payables 11,501,028 10,282,199
Loan and debt acquisition costs (112,803) (16,478)
Proceeds from sale of stock 41,159 --
Distributions to shareholders (917,456) (72,972)
Repayment of subordinated debt (689,000) (728,000)
Contribution from minority interest investor in subsidiary 100,000 --
------------ ------------
Net cash provided by (used in) financing activities 82,292 (2,459,880)
------------ ------------
DECREASE IN CASH (631,961) (136,243)
CASH AT BEGINNING OF PERIOD 730,554 690,467
------------ ------------
CASH AT END OF PERIOD $ 98,593 $ 554,224
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 539,954 $ 1,254,890
============ ============
Income taxes $ 8,500 $ 127,533
============ ============
Noncash financing activity - inventory and equipment
purchased with notes, contracts and mortgages payable $ 684,800 $ 3,946,873
============ ============
============
Noncash financing activity - inventory transferred to joint venture $ -- $ 2,658,693
============ ============
Noncash financing activity - note payable transferred to joint venture $ -- $ 1,700,000
============ ============
See notes to condensed consolidated financial statements (unaudited).
5 of 18
TAYLOR INVESTMENT CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
1. BASIS OF PRESENTATION
The accompanying condensed consolidated balance sheet for December 31, 2001
was derived from the audited consolidated balance sheet as of that date.
The condensed consolidated balance sheet as of September 30, 2002 and the
condensed consolidated statements of income for the three and nine months
ended September 30, 2002 and 2001 and the condensed consolidated statements
of cash flows for the nine months ended September 30, 2002 and 2001 have
been prepared by the management of Taylor Investment Corporation (the
Company) without audit. In the opinion of management, these condensed
consolidated financial statements reflect all adjustments (consisting of
normal, recurring adjustments) necessary to present fairly the financial
position of the Company at September 30, 2002 and the results of operations
and cash flows for all periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. Therefore, these statements
should be read in conjunction with the Company's consolidated financial
statements and notes thereto included in the Company's 2001 Form 10-K.
The results of operations for the interim periods are not necessarily
indicative of results, which will be realized for the full year.
2. INVESTMENTS IN JOINT VENTURES
In May 2002, the Company formed a joint venture to acquire, develop, and
sell a specific parcel of land in Northern Minnesota. The Company made an
initial investment of $200,000, and has also guaranteed the note payable of
this joint venture in the amount of $524,000 as of September 30, 2002. The
Company has a 67% interest in and consolidates all operations of the joint
venture. Accordingly, the proportionate year-to-date income of $98,787 has
been allocated to the other partner of the joint venture as a minority
interest. All intercompany accounts and transactions have been eliminated
in consolidation.
6 of 18
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
FORWARD-LOOKING STATEMENTS:
Various forms filed by the Company with the Securities and Exchange Commission,
including the Company's Form 10-K and Form 10-Q, and other written documents and
oral statements released by the Company, may contain forward-looking statements.
Forward-looking statements generally use words such as "expect," "anticipate,"
"believe," "project," "should," "estimate," and similar expressions, and reflect
the Company's expectations concerning the future. Such statements are based upon
currently available information, but various risks and uncertainties may cause
the Company's actual results to differ materially from those expressed in these
statements. Among the factors which management believes could affect the
Company's operating results are the following:
* Changing economic conditions, including economic downturns or recessions
and rising interest rates;
* The ability of the Company to maintain and enhance its market position
relative to its competitors, to realize productivity, and to continue to
control expenses;
* The availability of suitable tracts of undeveloped land in proximity to the
marketplace;
* Changes in zoning and subdivision regulations;
* The availability and cost of financing;
* Continuity of management.
CRITICAL ACCOUNTING POLICIES
The Company's significant accounting policies are described in Note 1 to the
Consolidated Financial Statements included in the 2001 Annual Report on Form
10-K. The accounting policies used in preparing the interim 2002 condensed
consolidated financial statements are the same as those described in the annual
report.
In preparing the financial statements, the Company follows accounting principles
generally accepted in the United States of America, which in many cases requires
assumptions, estimates and judgments that affect the amounts reported. Many of
these policies are relatively straightforward. There are, however, certain
policies that are critical because they are important in determining the
financial condition and results of operations and they can be difficult to
apply. The most critical accounting policies include those related to:
* accounting for contingencies, under which the Company accrues an
expense when it is probable that a liability has been incurred and the
amount can be reasonably estimated;
* accounting for tax increment financing receivables because of the
importance of management judgment in making the estimates necessary to
assess collectibility;
* the collectibility of contracts and mortgages receivable; and
* the valuation of inventories, including adjustments to reduce
inventory to the lower of cost or market.
7 of 18
RESULTS OF OPERATIONS
COMPARISON OF THE THREE-MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001.
Sales of $9,831,325 for the quarter ended September 30, 2002 increased by
$724,516, or 8.0%, from the same period in 2001. This increase is primarily the
result of higher available inventory levels in the Midwest offices.
Additionally, sales increased in the Company's newer markets in the third
quarter of 2002, primarily due to higher consumer demand in these areas.
Gross profit was $4,749,578, or 48.3% of sales, for the quarter ended September
30, 2002 compared to $3,968,964, or 43.6% of sales for the same period in 2001.
The increase in gross profit margin over 2001, as a percentage of sales, is a
result of a improving the underwriting procedures of acquisitions in Wisconsin
as well as fewer sales of aged inventory.
Due to a lower average balance of contracts and mortgages receivable, interest
income decreased 15.2% from the same period in 2001. This decrease in interest
income is due to the company offering lower interest financing programs to
compete with the lower interest rates being offered in the market.
For the quarter ended September 30, 2002, the Company had equity in losses of
joint ventures of $42,511, compared to equity in earnings of joint ventures of
$577 for the same period in 2001. The gains or losses reflect the Company's
one-third share of net losses incurred by two limited liability companies
established in the first quarters of 2001 and 2000 to acquire and develop
specific parcels of land. The change is related to a decline in margins in both
of the Company's joint ventures in the quarter ended September 30, 2002 compared
to the same period in 2001. This was caused by the softening economic
environment in the two markets in which they operate.
Other revenue for the quarter ended September 30, 2002 was $368,911, compared to
$39,178 for the same period in 2001. Included in other revenue is interest
income on the average outstanding balance of receivables from joint ventures,
which are subject to a monthly interest charge of prime plus 2%. The significant
increase over 2001 is due primarily to $272,000 of commissions collected on
sales of property owned by an unaffiliated company.
The Company's selling, general and administrative expenses consist primarily of
sales commissions, advertising expenses, office operating expenses and
administrative overhead. Selling, general and administrative expenses of
$3,115,145 were 31.7% of sales for the quarter ended September 30, 2002 compared
to $2,886,977, or 31.7%, for the same period in 2001. The increase in these
expenses is attributable to the increase in sales, as well as a slight increase
in advertising expenses to generate these sales.
Interest expense for the quarter ended September 30, 2002 was $188,088, compared
to $270,433 for the same period in 2001. Significantly lower interest rates and
higher levels of interest capitalization due to the growth in inventory under
development contributed to the 30.4% decrease.
8 of 18
COMPARISON OF THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001.
Sales for the nine months ended September 30, 2002 were $26,028,012, an increase
of $2,327,797, or 9.8% over the same period in 2001. Sales increased due to the
increase in inventory available in the Southeast and certain Midwest offices
combined with strong consumer demand in those markets.
Gross profit for the first nine months of 2002 was $10,812,120 or 41.5%,
compared to $10,692,504 or 45.1% for the same period in 2001. The decrease in
gross profit, as a percentage of sales, is primarily due to the Company's focus
on the sale of aged inventory by selling lots at reduced prices and a softening
economy in certain markets during the first nine months of 2002.
Due to a decrease in the average balance of contracts and mortgages receivable,
interest income of $647,488 for the first nine months of 2002 decreased $80,477,
or 11.1%, from the same period in 2001. This decrease in interest income is due
to the company offering lower interest financing programs to compete with the
lower interest rates being offered in the market.
For the nine months ended September 30, 2002 and 2001, the Company had equity in
losses of joint ventures of $83,958 and $149,839, respectively. The losses
reflect the Company's one-third share of net losses incurred by two limited
liability companies established in the first quarters of 2001 and 2000 to
acquire and develop specific parcels of land. The change is related to the
increased level of sales and lower operating costs in two of the Company's joint
ventures in the nine months ended September 30, 2002 compared to the same period
in 2001.
Other revenue was $453,817 for the first nine months of 2002 compared to
$296,126 for the same period in 2001. This 53.3% increase was primarily the
result of $272,000 of commissions collected on sales of property owned by an
unaffiliated company, partially offset by a project fee collected from one of
the Company's joint ventures in the first quarter of 2001.
For the first nine months of 2002, selling, general and administrative expenses
were $8,154,917, or 31.3% of sales, compared to $7,874,126, or 33.2% of sales in
2001. The decrease in these expenses as a percent of sales is primarily
attributable to cost reduction efforts on office expenses in the Company's newer
markets.
Interest expense for the first nine months of 2002 was $567,433, compared to
$957,416 for the same period in 2001. Significantly lower interest rates and
higher levels of interest capitalization due to the growth in inventory under
development contributed to the 40.7% decrease.
9 of 18
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital resources are provided from both internal and external
sources. The Company's primary capital resources from internal operations are:
(i) cash sales, (ii) down payments on sales which are financed, (iii) principal
and interest payments on contracts and mortgages receivable, and (iv) borrowings
collateralized by contracts and mortgages receivable. External sources of
liquidity include borrowings under the Company's Credit Agreement, notes and
mortgages payable to finance inventory acquisitions and development, and the
issuance of debt securities. The Company's capital resources are used to support
the Company's operations, including (i) acquiring and developing inventory, (ii)
providing financing for customer purchases, (iii) meeting operating expenses,
(iv) shareholder distributions, and (v) satisfying the Company's debt and other
obligations. The Company anticipates that it will continue to require external
sources of liquidity to support its operations, satisfy its debt and other
obligations and to provide funds for future strategic inventory acquisitions and
growth.
The following table sets forth the Company's net cash flows for operations,
investing and financing activities for the nine months ended September 30, 2002
and 2001.
Nine months ended Nine months ended
September 30, 2002 September 30, 2001
------------------ ------------------
Net cash (used in) provided by:
Operating activities $ (349,344) $ 1,855,606
Investing activities (364,909) 468,031
Financing activities 82,292 (2,459,880)
--------------------------------------------
Net decrease in cash $ (631,961) $ (136,243)
============================================
OPERATING ACTIVITIES:
Operating activities used $349,344 in the first nine months of 2002, compared
with cash provided by operations of $1,855,606 for the same period in 2001,
which reflects a year-over-year change of approximately $2.2 million. This
variance is largely due to the $1.6 million of a 2001 declared shareholder
distribution being paid in 2002. In addition, net cash paid for purchases of
inventory was approximately $4.1 million for the nine months ended September 30,
2002 as compared to $2.9 million for the same period in 2001 which resulted in a
net increase of approximately $1.1 million. Due to the timing of when
development costs were paid, the net decrease in A/P, net of the shareholder
distribution, decreased by $1.5 million in the nine months ended September 30,
2002 as compared to the same period in 2001.
Offsetting these three variances was approximately $273,000 increase in net
income for the nine months ended September 30, 2002 over the same period in
2001. In addition, the net increase in payoffs on contracts and mortgages
receivable contributed $1.2 million more than in the previous comparable period
in 2001. This was due to the lower interest rates available in the market
resulting in a large amount of payoffs on these contracts during the first nine
months of 2002 over 2001. Finally, there was an approximately $461,000
year-over-year change in the fluctuation of accrued liabilities.
INVESTING ACTIVITIES:
Cash from investing activities decreased approximately $833,000 in the first
nine months of 2002 compared to the same period in 2001. The decrease was
primarily related to an increase in funds held by trustee of $41,000 in 2002,
whereas in 2001, there was a $544,000 decrease in funds held by trustee. Funds
held by trustee represent cash paid to the Company's trustee for the purpose of
paying scheduled maturities on senior subordinated debt. In addition, there were
net repayments of $15,000 from joint ventures in 2002 compared to $415,000
during the same period in 2001.
10 of 18
FINANCING ACTIVITIES:
At September 30, 2002 and December 31, 2001, the Company had total outstanding
debt of approximately $21.5 million and $19.9 million, respectively. Sources of
financing as of September 30, 2002 and December 31, 2001 are as follows:
SOURCES OF FINANCING
September 30, 2002 December 31, 2001
------------------ -----------------
Lines of credit $ 7,815,822 $ 7,037,999
Notes payable(1) 11,088,291 9,274,646
Contracts and mortgages payable 627,967 874,243
Senior subordinated debt 1,983,000 2,672,000
-------------------------------------------
$ 21,515,080 $ 19,858,888
===========================================
Notes payable increased approximately $1.8 million due primarily to new notes
associated with the acquisition and development of inventory. In addition, a
$600,000 subordinated debt payment was made during the first quarter of 2002.
At September 30, 2002 and December 31, 2001 the Company had approximately $2.9
million and $3.0 million available under the Company's mortgage and contracts
and interim financing credit facilities for operating needs and approximately
$6.4 million available under its real estate loan facilities. Additionally, in
May 2002, the Company's Credit Agreement was increased from $17,500,000 to
$21,000,000 and its maturity was extended to April 30, 2004.
The Company believes that cash generated from operations, inventory management
and the above financing sources available will provide adequate short-term and
long-term liquidity.
ITEM 3. QUANTITIVATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the Company's market risk during the
quarter ended September 30, 2002. For additional information, refer to Item 7A
of the Company's 2001 Annual Report on Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
The Company's President and Chief Executive Officer and the Company's Controller
have concluded, based on an evaluation within 90 days of the filing date of this
report, that the Company's disclosure controls and procedures are effective for
gathering, analyzing and disclosing information required to be disclosed in the
Company's reports filed under the Securities Exchange Act of 1934. There have
been no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
the foregoing evaluation.
11 of 18
- ----------------------------------
(1) Notes payable include the real estate line of credit in the amounts of
$5,538,330 and $3,266,101 as of September 30, 2002 and December 31, 2001,
respectively.
Part II. Other Information
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of business, the Company from time to time
becomes subject to claims or proceedings related to the purchase,
subdivision, sale and/or financing of real estate. Additionally, from
time to time, the Company becomes involved in disputes with existing or
former employees. The Company believes that the above matters are
incidental to its business.
ITEM 2. CHANGES IN SECURITIES
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
12.1 Computation of ratios - Ratio of earnings to fixed charges.
99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter covered by
this report.
12 of 18
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 Investment Corporation
-------------------------------------------------
(Registrant)
Dated: November 11, 2002 /S/ Philip C. Taylor
-------------------------------------------------
Philip C. Taylor
President, Chief Executive Officer and Director
(principal executive officer)
Dated: November 11, 2002 /S/ Steven C. VanHandel
-------------------------------------------------
Steven C. VanHandel
Controller
(principal accounting and finance officer)
13 of 18
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
SECURITIES EXCHANGE ACT RULES 13a-14 AND 15d-14
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Philip C. Taylor, Chief Executive Officer of Taylor Investment Corporation,
certify that:
1. I have reviewed this quarterly report on Form 10-Q of Taylor Investment
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during this period in which the quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors and material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
/s/ Philip C. Taylor
Philip C. Taylor
Chief Executive Officer
November 11, 2002
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CERTIFICATION OF CONTROLLER
SECURITIES EXCHANGE ACT RULES 13a-14 AND 15d-14
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Steven C. VanHandel, Controller of Taylor Investment Corporation, certify
that:
1. I have reviewed this quarterly report on Form 10-Q of Taylor Investment
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during this period in which the quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors and material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
/s/ Steven C. VanHandel
Steven C. VanHandel
Controller
November 11, 2002
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