Transcat, Inc. 8-K

Table of Contents

Table of Contents

On June 21, 2004, Transcat, Inc. (the “Company”) issued a press release regarding its financial results for the fourth quarter and twelve months ended March 27, 2004. 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.


	TRANSCAT, INC.
Dated: June 23, 2004	By:	/s/ Charles P. Hadeed
		Charles P. Hadeed
		Vice President of Finance and Chief Financial Officer

Reports Net Income for the Fourth Quarter and the Year in line with Strategic Plan;

ROCHESTER, NY – June 21, 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 fiscal year and fourth quarter ended March 27, 2004.

•		Fiscal year 2004 fourth quarter net sales increased 10.1%, from $13.9 million to $15.3 million.

•		Net income for the 2004 fiscal year was $0.05 per diluted share compared with a net loss of $0.76 per diluted share in fiscal year 2003.

•		Distribution Products – Net sales increased 15.6% from $9.0 million to $10.4 million in the fiscal year 2004 fourth quarter on increased order rate; backlog increases to $1.7 million.

•		Calibration Services – Gross profit increased 11.4 points from fiscal year 2003 to fiscal year 2004.

•		Operating expenses remain flat as operational efficiencies improve, offset by investments made to expand our presence in additional market segments.

Commenting on the fiscal year 2004 fourth quarter and fiscal year results, Carl E. Sassano, Chairman of the Board, President and Chief Executive Officer, stated: “After two years of strategic investments and efforts on the part of the entire Transcat team in a challenging economic environment, I am pleased to report positive results for fiscal year 2004.

“The implementation of our strategy to create a sustainable and profitable business model has placed our company on a stronger financial and business platform to pursue growth and to create value for our shareholders in fiscal year 2005 and beyond. In particular, we are encouraged by our increase in net sales for distribution products and the increase in gross profit for calibration services for the quarter.

“We have always been focused on offering the best and most current test, calibration, and measurement equipment and application assistance to our customers. This focus, our prospecting to add new catalog customers, targeting our calibration customers, coupled with a stronger year-over-year economy, has resulted in a 15.6% increase in distribution products net sales in the fiscal year 2004 fourth quarter. We continued to experience both a stronger order rate and increased backlog during the quarter, and continued to make investments in expanding our presence in additional market segments and market share in the process calibrator market. These investments in targeting new channels of distribution and promotional activities with our existing customer base resulted in an expected decline of 3 points in our distributed products gross profit ratio for the year.

“Our calibration services results for fiscal 2004 and the fiscal 2004 fourth quarter have improved considerably over the prior year. We view calibration services as a strategic core competency of our company that will contribute significantly to shareholder value over time. To increase the core base of calibration services customers, many of whom are repeat customers, we have focused our

marketing efforts on targeting companies that value quality (e.g., ISO, 17025, others), metrology and quality calibration expertise as essential components of their core manufacturing competencies, and also our equipment customers whom we attract to our calibration services through proactive cross-selling and other marketing programs. As a result of these efforts to build a larger customer base for our calibration services, revenue remained nearly flat in fiscal year 2004, despite the loss of two large customers a year ago. Importantly, we have increased and sustained a significantly higher gross profit ratio of approximately 11 points from fiscal year 2003 to fiscal year 2004 in our calibration business, which will provide increased profit leverage on anticipated calibration revenue increases.”

Mr. Sassano continued: “We believe that the improvements that we made during fiscal year 2004 have positioned our company for long-term, sustainable profitability and growth. While we expect to continue to make improvements during fiscal year 2005, we expect to deliver profitable results for our shareholders.

“We believe our progress is on track. We have emerged from financial and organizational restructuring and established a profitable business model and process to manage it. Our strategy in fiscal year 2005 is to focus on gaining business and market share in companies who value quality systems and operate in regulated environments.

“We expect to increase revenues over last year in both the distribution products and calibration services businesses. For the year, we are expecting growth overall in the low to mid single digits and overall gross margin improvements of 1-3 points. Distribution products should have higher growth in the first half of the year due to weaker prior year comparisons. Calibration services revenue can be significantly affected by the timing of new customer business and previous year comparisons in any quarter could vary widely. Our focus in calibration will be on adding customers to increase total revenue for the year.

“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 year 2005.”

For the fiscal year 2004 fourth quarter, net sales were $15.3 million, an increase of $1.4 million, or 10.1%, compared with net sales of $13.9 million during the fiscal year 2003 fourth quarter. Net income for the fiscal year 2004 fourth quarter was $0.04 million, or $0.01 per diluted share, as compared with net income of $0.06 million for the fiscal year 2003 fourth quarter, or $0.01 per diluted share.

For the fiscal year ended March 27, 2004, net sales were $53.3 million compared with net sales of $57.2 million for the fiscal year ended March 31, 2003. Net income for the fiscal year ended March 27, 2004 was $0.4 million, or $0.05 per diluted share, as compared with a net loss of $4.7 million, or $0.76 per diluted share for the fiscal year ended March 31, 2003. The $4.7 million net loss in fiscal year 2003 included a net pre-tax gain of $1.6 million resulting from the extinguishment of debt; and a non-cash charge of $6.5 million reflecting the cumulative effect of adopting Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”.

The Company also announced that its Consolidated Balance Sheet has been restated to reflect the application of Emerging Issues Task Force Issue No. 95-22, consensus reached in 1998. This issue relates to the treatment of revolving lines of credit that incorporate certain lock-box cash sweep provisions and a subjective acceleration clause, which allows a lender to call a loan should certain adverse situations occur. As a result, the Company has reclassified its revolving line of credit from a

long term liability to a current liability. While now reported as a current liability, the Company’s operational cash flow planning views its revolving line of credit as a long term source of funds. The restated balance sheets for fiscal year 2003 and at the first three quarters of fiscal year 2004 appear in the Company’s fiscal 2003 10-K/A and 10-Q/A filings with the Securities and Exchange Commission.

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 12,000 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 9,000 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.

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


	(Unaudited)
	Fourth Quarter Ended						Twelve Months Ended
	March			March			March			March
	27, 2004			31, 2003			27, 2004			31, 2003
Product Sales	$	10,448		$	8,991		$	35,423		$	38,359
Service Sales		4,827			4,924			17,894			18,813

Net Sales		15,275			13,915			53,317			57,172


Cost of Products Sold		8,215			6,461			26,948			28,033
Cost of Services Sold		3,427			4,011			12,971			15,820

Total Cost of Products and Services Sold		11,642			10,472			39,919			43,853


Gross Profit		3,633			3,443			13,398			13,319


Selling, Marketing, and Warehouse Expenses		2,345			2,157			8,540			8,311
Administrative Expenses		1,206			1,176			4,551			4,539

Total Operating Expenses		3,551			3,333			13,091			12,850


Operating Income		82			110			307			469


Interest Expense		215			146			434			657
Other (Income) Expense		(131	)		63			(288	)		(1,537	)

Total Other Expense (Income)		84			209			146			(880	)


(Loss) Income Before Income Taxes and Cumulative Effect of a Change in Accounting Principle		(2	)		(99	)		161			1,349
Benefit for Income Taxes		(45	)		(162	)		(192	)		(408	)


Income Before Cumulative Effect of a Change in Accounting Principle		43			63			353			1,757
Cumulative Effect of a Change in Accounting Principle		-			-			-			(6,472	)


Net Income (Loss)	$	43		$	63		$	353		$	(4,715	)


Basic Earnings (Loss) Per Share:
Before Cumulative Effect of a Change in Accounting Principle	$	0.01		$	0.01		$	0.06		$	0.29
From Cumulative Effect of a Change in Accounting Principle		-			-			-			(1.05	)

Total Basic Earnings (Loss) Per Share	$	0.01		$	0.01		$	0.06		$	(0.76	)

Average Shares Outstanding (in thousands)		6,289			6,176			6,252			6,147

Diluted Earnings (Loss) Per Share:
Before Cumulative Effect of a Change in Accounting Principle	$	0.01		$	0.01		$	0.05		$	0.29
From Cumulative Effect of a Change in Accounting Principle		-			-			-			(1.05	)

Total Diluted Earnings (Loss) Per Share	$	0.01		$	0.01		$	0.05		$	(0.76	)

Average Shares Outstanding (in thousands)		6,917			6,423			6,808			6,147

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

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


				(Restated)
	March			March
	27, 2004			31, 2003
ASSETS
Current Assets:
Cash	$	547		$	114
Accounts Receivable, less allowance for doubtful accounts of $51 and $114 as of March 27, 2004 and March 31, 2003, respectively		8,044			6,879
Other Receivables		64			159
Finished Goods Inventory, net		3,736			2,842
Income Taxes Receivable		144			799
Prepaid Expenses and Deferred Charges		756			454

Total Current Assets		13,291			11,247
Property, Plant and Equipment, net		2,025			2,556
Capital Leases, net		181			-
Goodwill		2,524			2,524
Deferred Charges		111			197
Other Assets		253			234

Total Assets	$	18,385		$	16,758


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	4,139		$	3,738
Accrued Payrolls, Commissions and Other		1,620			1,862
Income Taxes Payable		100			100
Deposits		57			64
Current Portion of Term Loan		668			666
Current Portion of Capital Lease Obligations		49			-
Revolving Line of Credit (Restated)		6,441			5,248

Total Current Liabilities		13,074			11,678
Term Loan, less current portion		-			668
Capital Lease Obligations, less current portion		134			-
Deferred Compensation		205			170
Deferred Gain on TPG Divestiture		1,544			1,544

Total Liabilities		14,957			14,060


Stockholders’ Equity:
Common Stock, par value $0.50 per share, 30,000,000 shares authorized; 6,352,968 and 6,296,000 shares issued as of March 27, 2004 and March 31, 2003, respectively; 6,233,610 and 6,176,642 shares outstanding as of March 27, 2004 and March 31, 2003, respectively		3,176			3,148
Capital in Excess of Par Value		3,235			3,031
Warrants		518			518
Unearned Compensation		(23	)		-
Accumulated Other Comprehensive Loss		(67	)		(235	)
Retained Deficit		(2,958	)		(3,311	)
Less: Treasury Stock, at cost, 119,358 shares		(453	)		(453	)

Total Stockholders’ Equity		3,428			2,698

Total Liabilities and Stockholders’ Equity	$	18,385		$	16,758

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


	Twelve Months Ended
	March			March
	27, 2004			31, 2003
Cash Flows from Operating Activities:
Net Income (Loss)	$	353		$	(4,715	)
Cumulative Effect of a Change in Accounting Principle		-			6,472

Net Income Before Cumulative Effect of a Change in Accounting Principle		353			1,757
Adjustments to Reconcile Net Income Before Cumulative Effect of a Change in Accounting Principle to Net Cash Provided by Operating Activities: Loss on Disposal of Assets					63
Gain on Extinguishment of Debt		-			(1,593	)
Depreciation and Amortization		1,299			2,047
Provision for Doubtful Accounts Receivable and Returns		(143	)		(210	)
Provision for Slow Moving or Obsolete Inventory		20			-
Deferred Revenue — MAC		-			(179	)
Common Stock Expense		110			40
Amortization of Unearned Compensation		99			-
Other		(19	)		(10	)
Changes in Assets and Liabilities:
Accounts Receivable and Other Receivables		(927	)		1,320
MAC Escrow and Holdback		-			225
Inventories		(914	)		1,027
Income Taxes Receivable / Payable		655			(91	)
Prepaid Expenses, Deferred Charges, and Other		(512	)		(225	)
Accounts Payable		401			(2,602	)
Accrued Payrolls, Commissions, and Other		(242	)		(186	)
Deposits		(7	)		(384	)
Deferred Compensation		35			(62	)

Net Cash Provided by Operating Activities		208			937


Cash Flows from Investing Activities:
Purchase of Property, Plant and Equipment		(459	)		(291	)

Net Cash Used in Investing Activities		(459	)		(291	)


Cash Flows from Financing Activities:
Revolving Line of Credit, net		1,193			89
Payments on Term Loan		(666	)		(8,333	)
Proceeds from Term Loan		-			7,113

Payments on Capital Lease Obligations		(11	)		-
Net Cash Provided by (Used in) Financing Activities		516			(1,131	)


Effect of Exchange Rate Changes on Cash		168			91


Net Increase (Decrease) in Cash		433			(394	)
Cash at Beginning of Period		114			508

Cash at End of Period	$	547		$	114


Supplemental Disclosure of Non-Cash Financing Activity
Issuance of Warrants for Debt Retirement	$	-		$	518
Capital Lease Obligations	$	194		$	-

Certain reclassifications of prior year and prior quarter financial information have been made to conform to current quarter and twelve 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)


	Item 7. Financial Statements and Exhibits.
	Item 12. Results of Operations and Financial Condition.
SIGNATURES
INDEX TO EXHIBITS
EX-99.1 Press Release

Additional Exhibits

Exhibit 99.1

Transcat, Inc. Press Release dated June 21, 2004


Date of Report (Date of earliest event reported)		June 21, 2004


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


(c)		Exhibit 99.1 – Transcat, Inc. Press Release dated June 21, 2004