TRANSCAT, INC. FORM 8-K

On January 15, 2004, Transcat, Inc. (the “Company”) issued a press release regarding its financial results for the third quarter ended December 27, 2003. The Company’s press release is furnished as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

The information in this Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

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 hereunto duly authorized.

EX-99.1 3 l05037aexv99w1.htm EXHIBIT 99.1 PRESS RELEASE EXHIBIT 99.1 PRESS RELEASE

ROCHESTER, NY – January 15, 2004 – Transcat, Inc. (Nasdaq: TRNS), a leading global distributor of professional grade test, measurement, and calibration instruments and a provider of calibration and repair services, today announced financial results for its third quarter ended December 27, 2003.

Net sales for the fiscal year 2004 third quarter were $13.6 million compared with net sales of $14.6 million during the fiscal year 2003 third quarter. The net loss for the fiscal year 2004 third quarter was $0.2 million, or $0.03 per share, as compared with a net income of $1.3 million, or $0.21 per share on a fully diluted basis in the prior year fiscal quarter.

Commenting on the fiscal year 2004 third quarter results, Carl E. Sassano, Chairman of the Board, President and Chief Executive Officer, stated: “We believe that our results are in line with our strategy of executing and sustaining a consistent, profitable business model.

“We continued to work the sales and marketing fundamentals of growth and had positive results during the fiscal 2004 third quarter. For example, our master catalog mailing and end-of-year promotions increased our average order size in December. We are pleased to report that we signed two new customers for calibration services in the quarter largely due to our focus on quality; these new revenues will add to our growth going forward.

“Distribution products net sales for the fiscal 2004 third quarter were $9.3 million compared with net sales of $7.6 million in the fiscal 2004 second quarter and $10.0 million in the prior year fiscal third quarter. We experienced both a stronger order rate and increased backlog during the quarter. In keeping with our strategy to increase our market share in the $50 million process calibrator market and to enter additional market segments, we began aggressively targeting new lower margin channels of distribution during the fiscal third quarter. As a result of both targeting these new channels and aggressive promotional activities with our existing customer base, our distributed products gross profit ratio declined 5.4 points from the prior year fiscal quarter.

“Calibration services net sales for the fiscal 2004 third quarter were $4.2 million compared with net sales of $4.3 million in the fiscal 2004 second quarter and $4.5 million in the prior year fiscal third quarter. We are pleased that we have both improved and sustained a higher gross profit ratio in this segment, which increased 10.7 points over the prior year fiscal quarter. The continued improvement resulted from the consolidation in 2003 of our calibration operations into ten strategically located Centers of Excellence.”

In order to effectively analyze the fiscal year 2004 third quarter results, the Company indicated that the following factors should be taken into consideration:

•

Fiscal year 2003 third quarter results include a pre-tax gain of $1.6 million, net of transaction costs, resulting from the restructuring of the Company’s senior debt;

•

Fiscal year 2004 third quarter results include $0.1 million in severance charges resulting from organizational restructuring;

•

Fiscal year 2003 third quarter results include $0.3 million of severance costs resulting from organizational restructuring and calibration laboratory consolidation; and

•

Fiscal year 2004 third quarter results include a $0.2 million charge to settle a lawsuit brought against the Company by the former CFO.

The operating loss for the fiscal year 2004 third quarter was $0.2 million compared with an operating loss of $0.1 million during the fiscal year 2003 third quarter. Excluding the impact of the above-referenced severance and litigation settlement charges, the Company would have had operating earnings of $0.2 million for the fiscal year 2004 third quarter.

“We are disappointed that our operating profit did not offset the $0.2 million charge to settle a lawsuit brought by our former CFO, thus producing a loss for the fiscal 2004 third quarter at the operating and net income lines” commented Mr. Sassano.

For the first nine months of fiscal year 2004, net sales were $38.0 million compared with net sales of $43.3 million for the first nine months of fiscal year 2003.

Distribution products net sales for the first nine months of fiscal year 2004 were $25.0 million compared with net sales of $29.4 million in the first nine months of fiscal year 2003. Calibration services net sales for the first nine months of fiscal year 2004 were $13.1 million compared with net sales of $13.9 million in the first nine months of fiscal year 2003.

Operating income for the first nine months of fiscal year 2004 was $0.2 million compared with an operating income of $0.4 million during the first nine months of fiscal year 2003. Excluding the impact of the above-referenced severance and litigation settlement charges, the Company would have had operating earnings of $0.6 million for the first nine months of fiscal year 2004.

Net income for the first nine months of fiscal year 2004 was $0.3 million, or $0.05 per share, as compared with a net income before cumulative effect of a change in accounting principle of $1.7 million, or $0.28 per share in the first nine months of fiscal year 2003.

Mr. Sassano continued: “We believe our progress is on track. Our strategy is to focus on gaining business and market share in companies who value quality systems and operate in regulated environments. Our goals, going forward, are to achieve product growth in the low single digits and achieve calibration service growth of 10% to 15%. We will focus on reducing the rate of operating expense growth relative to increase sales growth and on achieving continued reductions in long-term debt.

“Importantly, Transcat will strive to continue to improve performance, provide quality service to our customers, and increase shareholder value. We believe we are well positioned to achieve these goals in fiscal years 2004 and 2005.”

Transcat, Inc. is a leading global distributor of professional grade test, measurement and calibration instruments and an accredited provider of calibration and repair services primarily to the process, life science and manufacturing industries.

Through the Company’s distribution products segment, Transcat markets and distributes national and proprietary brand instruments to approximately 10,000 global customers. Transcat’s Master Catalog offers easy access to more than 25,000 instruments, such as: calibrators, deadweight testers, temperature devices, multimeters, oscilloscopes, pressure pumps, testers, recorders, and related accessories, from nearly 250 of the industry’s leading manufacturers including Fluke,

Hart Scientific, Agilent, Ametek, and GE-Druck. In addition, Transcat is the exclusive worldwide distributor for Altek and Transmation products. The majority of this instrumentation requires expert calibration service to ensure that it maintains the most exacting measurements.

Through the Company’s calibration services segment, Transcat offers precise, reliable, fast calibration services through ten Calibration Centers of Excellence strategically located across the United States and Canada to approximately 8,000 customers. To support the Company’s customers calibration service needs, Transcat delivers the industry’s highest quality calibration services and repairs. Each of the calibration laboratories is ISO-9000: 2000 registered with Underwriter’s Laboratories, Inc. and the scope of accreditation to ISO/IEC 17025 is the widest in the industry.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements, which are subject to various risks and uncertainties. The Company’s actual results could differ from those anticipated in such forward-looking statements as a result of numerous factors that may be beyond the Company’s control.

Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)


	(Unaudited)						(Unaudited)
	Third Quarter Ended						Nine Months Ended
	December			December			December			December
	27, 2003			31, 2002			27, 2003			31, 2002
Product Sales	$	9,343		$	10,037		$	24,975		$	29,368
Service Sales		4,208			4,541			13,067			13,889

Net Sales		13,551			14,578			38,042			43,257

Cost of Products Sold		7,344			7,351			18,733			21,572
Cost of Services Sold		3,124			3,855			9,544			11,809

Total Cost of Products and Services Sold		10,468			11,206			28,277			33,381

Gross Profit		3,083			3,372			9,765			9,876

Selling, Marketing, and Warehouse Expenses		2,041			2,120			6,195			6,154
Administrative Expenses		1,223			1,387			3,345			3,363

Total Operating Expenses		3,264			3,507			9,540			9,517

Operating (Loss) Income		(181	)		(135	)		225			359

Interest Expense		76			128			219			511
Other Income		(52	)		(1,593	)		(157	)		(1,600	)

Total Other Expense (Income)		24			(1,465	)		62			(1,089	)

(Loss) Income Before Income Taxes and Cumulative Effect of a Change in Accounting Principle		(205	)		1,330			163			1,448
Provision (Benefit) for Income Taxes		15			-			(147	)		(246	)

(Loss) Income Before Cumulative Effect of a Change in Accounting Principle		(220	)		1,330			310			1,694
Cumulative Effect of a Change in Accounting Principle		-			-			-			(6,472	)

Net (Loss) Income	$	(220	)	$	1,330		$	310		$	(4,778	)

Basic (Loss) Earnings Per Share:
Before Cumulative Effect of a Change in Accounting Principle	$	(0.03	)	$	0.22		$	0.05		$	0.28
From Cumulative Effect of a Change in Accounting Principle		-			-			-			(1.06	)

Total Basic (Loss) Earnings Per Share	$	(0.03	)	$	0.22		$	0.05		$	(0.78	)

Average Shares Outstanding (in thousands)		6,295			6,149			6,262			6,138
Diluted (Loss) Earnings Per Share:
Before Cumulative Effect of a Change in Accounting Principle	$	(0.03	)	$	0.21		$	0.05		$	0.28
From Cumulative Effect of a Change in Accounting Principle		-			-			-			(1.06	)

Total Diluted (Loss) Earnings Per Share	$	(0.03	)	$	0.21		$	0.05		$	(0.78	)

Average Shares Outstanding (in thousands)		7,036			6,372			6,837			6,138

Certain reclassifications of prior year and prior quarter financial information have been made to conform to current quarter and nine month presentation.

Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Amounts)


	(Unaudited)
	December			March
	27, 2003			31, 2003
ASSETS
Current Assets:
Cash	$	341		$	114
Accounts Receivable, less allowance for doubtful accounts of $70 and $114 as of December 27, 2003 and March 31, 2003, respectively		6,529			6,879
Other Receivables		208			159
Finished Goods Inventory, net		4,930			2,842
Income Taxes Receivable		484			799
Prepaid Expenses and Deferred Charges		879			454

Total Current Assets		13,371			11,247
Property, Plant and Equipment, net		2,113			2,556
Goodwill		2,524			2,524
Deferred Charges		168			197
Other Assets		244			234

Total Assets	$	18,420		$	16,758

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current Portion of Long-Term Debt	$	585		$	666
Accounts Payable		4,708			3,738
Accrued Payrolls, Commissions and Other		1,140			1,812
Income Taxes Payable		100			100
Deposits		62			64

Total Current Liabilities		6,595			6,380
Long-Term Debt, less current portion		6,849			5,916
Deferred Compensation		228			220
Deferred Gain on TPG Divestiture		1,544			1,544

Total Liabilities		15,216			14,060

Stockholders’ Equity:
Common Stock, par value $0.50 per share, 30,000,000 shares authorized; 6,307,974 and 6,296,000 shares issued as of December 27, 2003 and March 31, 2003, respectively; 6,188,616 and 6,176,642 shares outstanding as of December 27, 2003 and March 31, 2003, respectively		3,154			3,148
Capital in Excess of Par Value		3,102			3,031
Warrants		518			518
Accumulated Other Comprehensive Loss		(116	)		(235	)
Retained Deficit		(3,001	)		(3,311	)
Less: Treasury Stock, at cost, 119,358 shares		(453	)		(453	)

Total Stockholders’ Equity		3,204			2,698

Total Liabilities and Stockholders’ Equity	$	18,420		$	16,758

Certain reclassifications of prior year and prior quarter financial information have been made to conform to current quarter and nine month presentation.


	(Unaudited)
	Nine Months Ended
	December			December
	27, 2003			31, 2002
Cash Flows from Operating Activities:
Net Income (Loss)	$	310		$	(4,778	)
Cumulative Effect of a Change in Accounting Principle		-			6,472

Net Income Before Cumulative Effect of a Change in Accounting Principle		310			1,694
Adjustments to Reconcile Net Income Before Cumulative Effect of a Change in Accounting Principle to Net Cash Provided by Operating Activities:
Gain on Extinguishment of Debt		-			(1,593	)
Depreciation and Amortization		1,160			1,550
Provision for Doubtful Accounts Receivable and Returns		(122	)		-
Common Stock Expense		77			36
Deferred Revenue — MAC		-			(161	)
Other		-			(10	)
Changes in Assets and Liabilities:
Accounts Receivable and Other Receivables		423			1,863
MAC Escrow and Holdback		-			218
Inventories		(2,088	)		(441	)
Income Taxes Receivable / Payable		315			(163	)
Prepaid Expenses, Deferred Charges, and Other		(854	)		(453	)
Accounts Payable		970			(705	)
Accrued Payrolls, Commissions, and Other		(687	)		(751	)
Deposits		(2	)		(376	)
Deferred Compensation		8			(42	)

Net Cash (Used in) Provided by Operating Activities		(490	)		666

Cash Flows from Investing Activities:
Purchase of Property, Plant and Equipment		(254	)		(249	)

Net Cash Used in Investing Activities		(254	)		(249	)

Cash Flows from Financing Activities:
Revolving Line of Credit, net		1,352			408
Payments on Long-Term Borrowings		(500	)		(8,207	)
Proceeds from Long-Term Borrowings		-			7,113

Net Cash Provided by (Used in) Financing Activities		852			(686	)

Effect of Exchange Rate Changes on Cash		119			(9	)

Net Increase (Decrease) in Cash		227			(278	)
Cash at Beginning of Period		114			508

Cash at End of Period	$	341		$	230

Supplemental Disclosure of Non-Cash Financing Activity
Issuance of Warrants for Debt Retirement	$	-		$	518

Certain reclassifications of prior year and prior quarter financial information have been made to conform to current quarter and nine month presentation.


Ohio	000-03905	16-0874418

(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)


35 Vantage Point Drive, Rochester, New York		14624

(Address of principal executive offices)		(Zip Code)


		TRANSCAT, INC.
Dated: January 21, 2004	By:	/s/ Charles P. Hadeed Charles P. Hadeed Vice President - Finance


Date of Report (Date of earliest event reported)		January 15, 2004


Transcat, Inc.

(Exact name of registrant as specified in charter)


Registrant’s telephone number, including area code		585-352-7777




(Former name or former address, if changed since last report)