TAYLOR DEVICES INC - Quarter Report: 2010 November (Form 10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

  (Mark One)

  For the quarterly period ended November 30, 2010

OR

  For the transition period from                      to                     

  Commission File Number 0-3498

TAYLOR DEVICES, INC.

(Exact name of registrant as specified in its charter)

 

716-694-0800

(Registrant's telephone number, including area code)

 

(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) of 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 [    ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).                                                                             Yes [    ]     No [    ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. 

 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).                                                                                                                            Yes [    ]      No [ X ]

As of January 14, 2011, there were outstanding 3,229,159 shares of the registrant's common stock, par value $.025 per share.

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TAYLOR DEVICES, INC.

Index to Form 10-Q

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TAYLOR DEVICES, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets		(Unaudited)
		November 30,       2010	May 31, 2010
Assets
Current assets:
	Cash and cash equivalents	$   2,172,593	$        197,587
	Accounts receivable, net	1,535,212	5,033,395
	Inventory	6,169,118	6,474,148
	Costs and estimated earnings in excess of billings	2,307,695	1,051,354
	Other current assets	1,490,708	1,485,015
	Total current assets	13,675,326	14,241,499
Maintenance and other inventory, net		835,437	718,749
Property and equipment, net		3,396,042	3,497,800
Other assets		145,320	142,355
		$  18,052,125	$  18,600,403
Liabilities and Stockholders' Equity
Current liabilities:
	Short-term borrowings and current portion of long-term debt	$            5,485	$           5,485
	Accounts payable	964,661	1,096,289
	Accrued commissions	254,047	380,448
	Billings in excess of costs and estimated earnings	340,238	367,764
	Other current liabilities	951,453	1,548,655
	Total current liabilities	2,515,884	3,398,641
Long-term liabilities		310,884	313,626
Stockholders' Equity:
	Common stock and additional paid-in capital	6,649,554	6,611,906
	Retained earnings	10,815,127	10,507,514
		17,464,681	17,119,420
	Treasury stock - at cost	(2,239,324)	(2,231,284)
	Total stockholders' equity	15,225,357	14,888,136
		$  18,052,125	$  18,600,403

See notes to condensed consolidated financial statements.

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TAYLOR DEVICES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income		(Unaudited)		(Unaudited)
		For the three months ended  November 30,		For the six months ended  November 30,
		2010	2009	2010	2009
Sales, net		$ 4,525,002	$  3,488,797	$ 8,801,825	$ 8,502,470
Cost of goods sold		3,487,175	2,073,929	6,623,261	5,355,756
	Gross profit	1,037,827	1,414,868	2,178,564	3,146,714
Selling, general and administrative expenses		877,872	1,132,084	1,756,808	2,312,422
	Operating income	159,955	282,784	421,756	834,292
Other income, net		32,520	7,107	60,857	2,396
	Income before provision for income taxes	192,475	289,891	482,613	836,688
Provision for income taxes (benefit)		69,500	(212,000)	175,000	14,000
	Net income	$     122,975	$    501,891	$    307,613	$   822,688
	Basic and diluted earnings per common share	$      0.04	$    0.16	$      0.10	$     0.26

 

See notes to condensed consolidated financial statements.

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TAYLOR DEVICES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
					(Unaudited)
					November 30,	November 30,
For the six months ended					2010	2009
Operating activities:
	Net income				$   307,613	$     822,688
	Adjustments to reconcile net income to net cash flows from
	operating activities:
		Depreciation and amortization			233,854	225,363
		Stock options issued for services			30,463	19,851
		Changes in other assets and liabilities:
			Accounts receivable		3,498,183	1,450,197
			Inventory		188,342	(359,899)
			Costs and estimated earnings in excess of billings		(1,256,341)	(1,828,764)
			Other current assets		(5,693)	(2,663)
			Accounts payable		(131,628)	(141,119)
			Accrued commissions		(126,401)	64,523
			Billings in excess of costs and estimated earnings		(27,526)	92,801
			Other current liabilities		(597,202)	483,971
				Net operating activities	2,113,664	826,949
Investing activities:
	Acquisition of property and equipment				(132,096)	(129,059)
	Other investing activities				(2,965)	34,971
				Net investing activities	(135,061)	(94,088)
Financing activities:
	Net short-term borrowings and repayments on long-term debt				(2,742)	(725,742)
	Proceeds from issuance of common stock, net				7,185	7,050
	Acquisition of treasury stock				(8,040)	(62)
				Net financing activities	(3,597)	(718,754)
				Net change in cash and cash equivalents	1,975,006	14,107
Cash and cash equivalents - beginning					197,587	45,297
				Cash and cash equivalents - ending	$ 2,172,593	$        59,404

See notes to condensed consolidated financial statements.

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TAYLOR DEVICES, INC.

Notes to Condensed Consolidated Financial Statements

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Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements.  Information in this Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this 10-Q that does not consist of historical facts, are "forward-looking statements."  Statements accompanied or qualified by, or containing, words such as "may," "will," "should," "believes," "expects," "intends," "plans," "projects," "estimates," "predicts," "potential," "outlook," "forecast," "anticipates," "presume," and "assume" constitute forward-looking statements and, as such, are not a guarantee of future performance.  The statements involve factors, risks and uncertainties, the impact or occurrence of which can cause actual results to differ materially from the expected results described in such statements.  Risks and uncertainties can include, among others, uncertainty regarding how long the worldwide economic recession will continue and whether the recession will deepen; reductions in capital budgets by our customers and potential customers; changing product demand and industry capacity; increased competition and pricing pressures; advances in technology that can reduce the demand for the Company's products; and other factors, many or all of which are beyond the Company's control.  Consequently, investors should not place undue reliance on forward-looking statements as predictive of future results.  The Company disclaims any obligation to release publicly any updates or revisions to the forward-looking statements herein to reflect any change in the Company's expectations with regard thereto, or any changes in events, conditions or circumstances on which any such statement is based.

Results of Operations

A summary of the period to period changes in the principal items included in the condensed consolidated statements of income is shown below:

Sales under certain fixed-price contracts, requiring substantial performance over several periods prior to commencement of deliveries, are accounted for under the percentage-of-completion method of accounting whereby revenues are recognized based on estimates of completion prepared on a ratio of cost to total estimated cost basis.  Costs include all material and direct and indirect charges related to specific contracts.

Adjustments to cost estimates are made periodically and any losses expected to be incurred on contracts in progress are charged to operations in the period such losses are determined.  However, any profits expected on contracts in progress are recognized over the life of the contract.

For financial statement presentation purposes, the Company nets progress billings against the total costs incurred on uncompleted contracts.  The asset, "costs and estimated earnings in excess of billings," represents revenues recognized in excess of amounts billed.  The liability, "billings in excess of costs and estimated earnings," represents billings in excess of revenues recognized.

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For the six months ended November 30, 2010  (All figures discussed are for the six months ended November 30, 2010 as compared to the six months ended November 30, 2009.)

	Six months ended		Change
	November 30, 2010	November 30, 2009	Increase / (Decrease)	Percent Change
Net Revenue	$  8,802,000	$ 8,503,000	$   299,000	4%
Cost of sales	6,623,000	5,356,000	1,267,000	24%
Gross profit	$  2,179,000	$ 3,147,000	$  (968,000)	-31%
...as a percentage of net revenues	25%	37%

The Company's consolidated results of operations showed a 4% increase in net revenues and a decrease in net income of 63%.  Revenues recorded in the current period for long-term construction projects ("Project(s)") were 5% lower than the level recorded in the prior year.  Revenues recorded in the current period for other-than long-term construction projects (non-projects) were higher by 17% from the level recorded in the prior year.  The gross profit as a percentage of net revenues for the current and prior year periods was 25% and 37%.  This fluctuation is attributable primarily to a.) three large export Projects in the prior year period had higher than average margins, b.) three large Projects in the prior year with aerospace / defense customers that had higher margins than average Projects for construction customers, and c.) in the current period, there were more Projects sold directly to representatives in two different Asian countries, net of their normal commission.  This resulted in lower sales, gross margins and commission expense.

Sales of the Company's products are made to three general groups of customers: industrial, construction and aerospace / defense.    A breakdown of sales to the three general groups of customers is as follows:

		First Half  Fiscal 2011	First Half Fiscal 2010
	Industrial	9%	8%
	Construction	58%	41%
	Aerospace / Defense	33%	51%

At November 30, 2009, we had 115 open sales orders in our backlog with a total sales value of $11.4 million.  At November 30, 2010, we have 13% fewer open sales orders in our backlog (100 orders) but the total sales value is $13 million or approximately 14% higher than the prior year. 

The Company's revenues and net income fluctuate from period to period.  The fluctuations in comparing the current period to the prior period are not necessarily representative of future results.

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Selling, General and Administrative Expenses

Six months ended

Change

	November 30,  2010	November 30, 2009		Increase / (Decrease)		Percent Change
Outside Commissions	$   284,000	$   475,000		$  (191,000)		-40%
Other SG&A	1,473,000	1,837,000		(364,000)		-20%
Total SG&A	$1,757,000	$2,312,000		$  (555,000)		-24%
...as a percentage of net revenues	20%                          27%

Selling, general and administrative expenses decreased by 24% from the prior year.  Outside commission expense decreased by 40% from last year's level.  This fluctuation was primarily due to a single, high value, non-project, commissionable sales order recorded in the prior year period, as well as three Projects in an Asian country that included higher than average commissions in the prior year period.   Additionally, of the 23 Projects in process during the six months ended November 30, 2010, only seven had related outside commissions recorded.  This compares with 11 of 22 Projects having related outside commissions recorded in the prior year period.  The primary reason for this is, in the current period, there were more Projects sold to representatives in two different Asian countries net of their normal commission.  Other selling, general and administrative expenses decreased 20% from last year to this.  This decrease is primarily due to a.) a decrease in estimated incentive compensation expense in the current period related to the lower level of operating results and lower level of aerospace sales, and b.) a decrease in professional fees in the current period related to the research tax credit study completed last year and the workers' compensation suit discussed, below, in Part II, Item 1.

The above factors resulted in operating income of $422,000 for the six months ended November 30, 2010, down 49% from the $834,000 in the same period of the prior year.

For the three months ended November 30, 2010  (All figures discussed are for the three months ended November 30, 2010 as compared to the three months ended November 30, 2009.)

	Three months ended		Change
	November 30, 2010	November 30, 2009	Increase / (Decrease)	Percent Change
Net Revenue	$  4,525,000	$  3,489,000	$ 1,036,000	30%
Cost of sales	3,487,000	2,074,000	1,413,000	68%
Gross profit	$  1,038,000	$ 1,415,000	$  (377,000)	-27%
...as a percentage of net revenues	23%	41%

The Company's consolidated results of operations showed a 30% increase in net revenues and a decrease in net income of 75%.  Revenues recorded in the current period for long-term construction projects were 39% higher than

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 the level recorded in the prior year.  Revenues recorded in the current period for other-than long-term construction projects (non-projects) were up 18% from the level recorded in the prior year.  The gross profit as a percentage of net revenues for the current and prior year periods was 23% and 41%.  This fluctuation is attributable primarily to a.) two large export Projects in the prior year period had higher than average margins, b.) three large Projects in the prior year with aerospace / defense customers that had higher margins than average Projects for construction customers, and c.) in the current period, there were more Projects sold directly to representatives in two different Asian countries, net of their normal commission.  This resulted in lower sales, gross margins and commission expense.

A breakdown of sales to the three general groups of customers is as follows:

		Second Quarter  Fiscal 2011	Second Quarter  Fiscal 2010
	Industrial	11%	12%
	Construction	66%	42%
	Aerospace / Defense	23%	46%

 

The Company's revenues and net income fluctuate from period to period.  The fluctuations in comparing the current period to the prior period are not necessarily representative of future results.

Selling, General and Administrative Expenses

Three months ended

Change

	November 30,  2010	November 30, 2009		Increase / (Decrease)		Percent Change
Outside Commissions	$   179,000	$   198,000		$    (19,000)		-10%
Other SG&A	699,000	934,000		(235,000)		-25%
Total SG&A	$   878,000	$1,132,000		$  (254,000)		-22%
...as a percentage of net revenues	19%                        32%

Selling, general and administrative expenses decreased by 22% from the prior year.  Outside commission expense decreased by 10% from last year's level despite the 30% increase in Net Revenue.  This fluctuation was primarily due to a.) two Projects in an Asian country last year that included commissions significantly higher than average, and b.) seven Projects in two other Asian countries, in the current year, that had no outside commissions.  Other selling, general and administrative expenses decreased from last year to this for the same reasons as noted above for the six month period.

The above factors resulted in operating income of $160,000 for the three months ended November 30, 2010, down 43% from the $283,000 in the same period of the prior year.

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Stock Options

The Company has a stock option plan which provides for the granting of nonqualified or incentive stock options to officers, key employees and non-employee directors.  Options granted under the plan are exercisable over a ten year term.  Options not exercised at the end of the term expire. 

The Company expenses stock options using the fair value recognition provisions of the ASC.  The Company recognized $30,000 and $20,000 of compensation cost for the six month periods ended November 30, 2010 and November 30, 2009.

The fair value of each stock option grant has been determined using the Black-Scholes model.  The model considers assumptions related to exercise price, expected volatility, risk-free interest rate, and the weighted average expected term of the stock option grants.  Expected volatility assumptions used in the model were based on volatility of the Company's stock price for the thirty month period ending on the date of grant.  The risk-free interest rate is derived from the U.S. treasury yield.  The Company used a weighted average expected term.  The following assumptions were used in the Black-Scholes model in estimating the fair market value of the Company's stock option grants:

                                                                                                                2010                            2009   
                                                         Risk-free interest rate:               2.75%                        4.875%
                                               Expected life of the options:            2.5 years                    2.5 years
                                          Expected share price volatility:              60.27%                       57.57%
                                                            Expected dividends:                zero                             zero

These assumptions resulted in:
                Estimated fair-market value per stock option:                 $2.00                           $1.37 

The ultimate value of the options will depend on the future price of the Company's common stock, which cannot be forecast with reasonable accuracy. 

A summary of changes in the stock options outstanding during the six month period ended November 30, 2010 is presented below:

                                                                                                                                                               Weighted-
                                                                                                                               Number of               Average
                                                                                                                                 Options             Exercise Price
                         Options outstanding and exercisable at May 31, 2010:           193,750                      $ 5.11
                                                                                          Options granted:             15,250                      $ 5.15                                                           
               Options outstanding and exercisable at November 30, 2010:           209,000                      $ 5.11

              Closing value per share on NASDAQ at November 30, 2010:                                              $ 4.60

Capital Resources, Line of Credit and Long-Term Debt

The Company's primary liquidity is dependent upon the working capital needs.  These are mainly inventory, accounts receivable, costs and estimated earnings in excess of billings, accounts payable, accrued commissions, billings in excess of costs and estimated earnings, and debt service.  The Company's primary sources of liquidity have been operations and bank financing. 

Capital expenditures for the six months ended November 30, 2010 were $132,000 compared to $129,000 in the same period of the prior year.  As of November 30, 2010, the Company has no commitments for capital expenditures during the next twelve months.

Effective August 7, 2009, the Company replaced its bank credit facility with a $6,000,000 bank demand line of credit, with interest payable at the Company's option of 30, 60, 90 or 180 day LIBOR rate plus 2.5%, or the bank's prime rate less .25%.  There is an interest rate floor of 3.5%.  The line is secured by accounts receivable, equipment, inventory, and general intangibles, and a negative pledge of the Company's real property.  This line of credit is subject to the usual terms and conditions applied by the bank, is subject to renewal annually, and is not subject to an

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express requirement on the bank's part to lend.  There is no balance outstanding as of November 30, 2010 or as of May 31, 2010.  The outstanding balance on the line of credit fluctuates as the Company's various long-term projects progress.  The Company is in compliance with restrictive covenants under the line of credit.  In these covenants, the Company agrees to maintain the following minimum levels of the stated item:

                           Covenant                                   Minimum per Covenant          Current Actual   When Measured
            Minimum level working capital                         $3,000,000                         $11,159,000              Quarterly
            Minimum debt service coverage ratio                  1.5:1                                     n/a               Fiscal Year-end

All of the $6,000,000 unused portion of our line of credit is available without violating any of our debt covenants.

Principal maturities of long-term debt for the remainder of the current fiscal year and the subsequent years are as follows: 2011 - $3,000; 2012 - $5,000; and 2013 - $4,000.

Inventory and Maintenance Inventory

November 30, 2010

May 31, 2010

Increase / (Decrease)

NOTE: Inventory turnover is annualized for the six month period ended November 30, 2010.

Inventory, at $6,169,000 as of November 30, 2010, is $305,000 or five percent lower than the prior year-end level of $6,474,000.  Of this, approximately 79% is work in process, 12% is finished goods, and 9% is raw materials. 

Maintenance and other inventory represent stock that is estimated to have a product life cycle in excess of twelve months. This stock represents certain items the Company is required to maintain for service of products sold and items that are generally subject to spontaneous ordering.  This inventory is particularly sensitive to technological obsolescence in the near term due to its use in industries characterized by the continuous introduction of new product lines, rapid technological advances and product obsolescence.  The maintenance inventory increased 16% since May 31, 2010.  Management of the Company has recorded an allowance for potential inventory obsolescence. The provision for potential inventory obsolescence was $90,000 for each of the six month periods ended November 30, 2010 and November 30, 2009.  The Company continues to rework slow-moving inventory, where applicable, to convert it to product to be used on customer orders.

Accounts Receivable, Costs and Estimated Earnings in Excess of Billings ("CIEB"),
	and Billings in Excess of Costs and Estimated Earnings ("BIEC")

	November 30,  2010		May 31,   2010		Increase /(Decrease)
Accounts receivable	$  1,535,000		$  5,033,000		$  (3,498,000	)	- 69%
CIEB	2,307,000		1,051,000		1,256,000		120%
Less: BIEC	340,000		368,000		(28,000	)	-8%
Net	$  3,502,000		$  5,716,000		$  (2,214,000	)	-39%

Number of an average day's sales  outstanding in accounts receivable

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99

The Company combines the totals of accounts receivable, the current asset CIEB, and the current liability, BIEC, to determine how much cash the Company will eventually realize from revenue recorded to date.  As the accounts receivable figure rises in relation to the other two figures, the Company can anticipate increased cash receipts within the ensuing 30-60 days.   

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Accounts receivable of $1,535,000 as of November 30, 2010 includes approximately $145,000 of amounts retained by customers on Projects.  It also includes $42,000 of an allowance for doubtful accounts ("Allowance").   The accounts receivable balance as of May 31, 2010 of $5,033,000 included an Allowance of $42,000.  The number of an average day's sales outstanding in accounts receivable ("DSO") decreased from 99 days at May 31, 2010 to 31 at November 30, 2010.  The DSO is a function of 1.) the level of sales for an average day (for example, total sales for the past three months divided by 90 days) and 2.) the level of accounts receivable at the balance sheet date.  The level of sales for an average day in the second quarter of the current year is only slightly lower than in the fourth quarter of the prior year.   The level of accounts receivable at the end of the current fiscal quarter is 69% lower than at the end of the prior year.  The combination of these two factors caused the DSO to decrease from last year end to this.  78% of the high level of accounts receivable at the end of last year was due from five customers and was collected subsequent to year-end.  The Company expects to collect the net accounts receivable balance, including the retainage, during the next twelve months.

As noted above, CIEB represents revenues recognized in excess of amounts billed.  Whenever possible, the Company negotiates a provision in sales contracts to allow the Company to bill, and collect from the customer, payments in advance of shipments.  Unfortunately, provisions such as this are often not possible.  The $2,307,000 balance in this account at November 30, 2010 is 120% more than the prior year-end.  The Company expects to bill the entire amount during the next twelve months.  20% of the CIEB balance as of the end of the last fiscal quarter, August 31, 2010, was billed to those customers in the current fiscal quarter ended November 30, 2010.  The remainder will be billed as the Projects progress, in accordance with the terms specified in the various contracts.

The balances in this account are comprised of the following components:

	November 30, 2010		May 31, 2010
Costs	$ 2,894,000		$    984,000
Estimated earnings	395,000		223,000
Less: Billings to customers	982,000		156,000
CIEB	$ 2,307,000		$ 1,051,000
Number of Projects in progress	13		7

As noted above, BIEC represents billings to customers in excess of revenues recognized.  The $340,000 balance in this account at November 30, 2010 is down slightly from the $368,000 balance at the end of the prior year.  The balance in this account fluctuates in the same manner and for the same reasons as the account "costs and estimated earnings in excess of billings", discussed above.   Final delivery of product under these contracts is expected to occur during the next twelve months.

The year-end balances in this account are comprised of the following components:

	November 30, 2010		May 31, 2010
Billings to customers	$  1,815,000		$ 1,085,000
Less:  Costs	1,026,000		673,000
Less: Estimated earnings	449,000		44,000
BIEC	$     340,000		$    368,000
Number of Projects in progress	2		3

Summary of factors affecting the balances in CIEB and BIEC:

	November 30, 2010		May 31, 2010
Number of Projects in progress	15		10
Aggregate percent complete	50%		37%
Average total sales value of Projects in progress	$649,000		$507,000
Percentage of total value invoiced to customer	29%		24%

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The Company's backlog of sales orders at November 30, 2010 is $13 million, as it was at the end of the prior year.  $5 million of the current backlog is on Projects already in progress. 

Other Balance Sheet Items

Accounts payable, at $965,000 as of November 30, 2010, is 12% less than the prior year-end.  There is no specific reason for this fluctuation other than the normal payment cycle of vendor invoices.  Commission expense on applicable sales orders is recognized at the time revenue is recognized.  The commission is paid following receipt of payment from the customers.  Accrued commissions as of November 30, 2010 are $254,000, down 33% from the $380,000 accrued at the prior year-end.  This decrease is primarily due to the collection of accounts receivables (see 69% decrease in accounts receivable balance discussed above) and subsequent payment of the related commissions.  The Company expects the current accrued amount to be paid during the next twelve months.  Other current liabilities decreased 39% from the prior year-end, to $951,000 primarily due to accrued employee compensation at the prior year-end that was paid in the current period.  Payments on these liabilities will take place as scheduled within the next twelve months.

Management believes the Company's cash flows from operations and borrowing capacity under the bank line of credit is sufficient to fund ongoing operations, capital improvements and share repurchases for the next twelve months. 

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Smaller reporting companies are not required to provide the information called for by this item.

Item 4.  Controls and Procedures

            (a)           Evaluation of disclosure controls and procedures. 

The Company's principal executive officer and principal financial officer have evaluated the Company's disclosure controls and procedures as of November 30, 2010 and have concluded that as of the evaluation date, the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms and that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer to allow timely decisions regarding required disclosure.

            (b)           Changes in internal control over financial reporting.               

There have been no changes in the Company's internal controls over financial reporting that occurred during the fiscal quarter ended November 30, 2010 that have materially affected, or are reasonably likely to materially affect, the Company's control over financial reporting.

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Part II - Other Information

Period	(a) Total   Number of Shares Purchased	(b) Average Price Paid Per Share	(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares   that May Yet Be Purchased Under the Plans or Programs
September 1, 2010 -   September 30, 2010	-	-	-	.
October 1, 2010 -   October 31, 2010	-	-	-	.
November 1, 2010 -   November 30, 2010	1,700	$4.73	1,700	.
Total	1,700	$4.73	1,700	$492,000 (1)
(1) On November 5, 2010, the Board of Directors voted unanimously to enter into a share repurchase agreement through open market purchases. The initial amount allocable to the program is $500,000.  To date, a total of 1,700 shares have been purchased at an average price per share of $4.73.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Taylor Devices, Inc.

We have reviewed the accompanying condensed consolidated balance sheet of Taylor Devices, Inc. and Subsidiary as of November 30, 2010, the related condensed consolidated statements of income for the three and six months ended November 30, 2010 and November 30, 2009 and cash flows for the six months ended November 30, 2010 and November 30, 2009.  These interim financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with standards of the Public Company Accounting Oversight Board (United States).  A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters.  It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board, 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 reviews, we are not aware of any material modifications that should be made to the accompanying interim condensed consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of May 31, 2010, and the related consolidated statements of income, changes in stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated August 7, 2010, 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, 2010 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

Lumsden & McCormick, LLP
Buffalo, New York
January 14, 2011

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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)

 

 

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