8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 14, 2008

Transcat, Inc.

(Exact name of registrant as specified in its charter)

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)

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

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.01 Completion of Acquisition or Disposition of Assets.
	Item 9.01 Financial Statements and Exhibits.
SIGNATURE
INDEX TO EXHIBIT
EX-23.1
EX-99.1
EX-99.2

Item 2.01 Completion of Acquisition or Disposition of Assets.

On August 14, 2008, Transcat, Inc. (“Transcat”) acquired Westcon, Inc. (“Westcon”) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) with Westcon and its sole shareholder, David Goodhead.

Under the terms of the Merger Agreement, Transcat agreed to pay a working capital adjustment to the purchase price in an amount, if any, by which the closing date net working capital exceeded zero. The parties have determined that the closing date net working capital is $1.0 million, which amount will be paid by Transcat to David Goodhead in November 2008.

Transcat hereby amends its Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 18, 2008, to update its report of the transaction and to include the financial statements and pro forma financial information required under Item 9.01of Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

     Independent Auditors’ Report

     Statement of Operations for the Year Ended June 30, 2008

     Balance Sheet as of June 30, 3008

     Statement of Cash Flows for the Year Ended June 30, 2008

     Statement of Stockholders Equity for the Year Ended June 30, 2008

     Notes to Financial Statements

(b) Pro forma Financial Information.

     Unaudited Pro Forma Combined Balance Sheet as of June 28, 2008

     Unaudited Pro Forma Combined Statement of Operations for the Fiscal Year Ended March 29, 2008

     Unaudited Pro Forma Combined Statement of Operations for the Three Months Ended June 28, 2008

     Notes to Unaudited Pro Forma Combined Financial Statements

(c) Exhibits.

     See Index to Exhibits.

2

SIGNATURE

     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.
Date: October 30, 2008	By:	/s/ John J. Zimmer
		Vice President of Finance and Chief Financial Officer

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INDEX TO EXHIBIT

Exhibit No.	Description
23.1	Consent of Independent Auditors
99.1	Audited financial statements of Westcon, Inc. as of and for the year ended June 30, 2008
99.2	Unaudited pro forma combined financial information of the Registrant

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EX-23.1

Exhibit 23.1

Consent of Independent Auditors

Transcat, Inc.
Rochester, NY

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Registration Nos. 333-152392) and Form S-8 (Registration Nos. 33-61665 and 333-109985) of Transcat, Inc. of our report dated October 28, 2008, relating to the financial statements of Westcon, Inc., which appear in this Form 8-K/A.

/s/ BDO Seidman, LLP 

BDO Seidman, LLP 

New York, New York
October 28, 2008

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EX-99.1

Exhibit 99.1

Westcon, Inc.
Index to Financial Statements

TABLE OF CONTENTS

	Page Number
Independent Auditors’ Report		7
Financial Statements
Statement of Operations for the Year Ended June 30, 2008		8
Balance Sheet as of June 30, 2008		9
Statement of Cash Flows for the Year Ended June 30, 2008		10
Statement of Stockholder’s Equity for the Year Ended June 30, 2008		11
Notes to Financial Statements		12-15

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INDEPENDENT AUDITORS’ REPORT

Board of Directors
Westcon, Inc.
Portland, Oregon

We have audited the accompanying balance sheet of Westcon, Inc. as of June 30, 2008 and the related statements of operations, stockholder’s equity and cash flows for the year ended June 30, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Westcon, Inc. at June 30, 2008, and the results of its operations and its cash flows for the year ended June 30, 2008, in conformity with accounting principles generally accepted in the United States.

/s/ BDO Seidman, LLP  

BDO Seidman, LLP 

New York, New York
October 28, 2008

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WESTCON, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2008
(In Thousands, Except Share and Per Share Amounts)

Product Sales	$	7,906
Service Revenue		1,697
Net Revenue		9,603
Cost of Products Sold		6,086
Cost of Services Sold		1,207
Total Cost of Products and Services Sold		7,293
Gross Profit		2,310
Selling, Marketing and Warehouse Expenses		709
Administrative Expenses		913
Total Operating Expenses		1,622
Operating Income		688
Interest Expense		32
Other Income, net		(3	)
Total Other Expense		29
Income Before Income Taxes		659
Provision for Income Taxes		264
Net Income	$	395

See accompanying notes to financial statements.

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WESTCON, INC.
BALANCE SHEET
AS OF JUNE 30, 2008
(In Thousands, Except Share Amounts)

ASSETS
Current Assets:
Cash	$	55
Accounts Receivable, less allowance for doubtful accounts of $10		1,015
Inventory, net		570
Prepaid Expenses and Other Current Assets		13
Deferred Tax Asset		57
Total Current Assets		1,710
Property and Equipment, net		280
Other Assets		4
Total Assets	$	1,994
LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities:
Short Term Borrowings	$	131
Accounts Payable		593
Accrued Compensation and Other Liabilities		121
Income Taxes Payable		137
Current Portion of Long Term Debt		39
Total Current Liabilities		1,021
Long Term Debt		164
Deferred Tax Liability		68
Total Liabilities		1,253
Stockholder’s Equity:
Common Stock, no par value, 1,000 shares authorized; 525 shares issued and outstanding		5
Retained Earnings		736
Total Stockholder’s Equity		741
Total Liabilities and Stockholder’s Equity	$	1,994

See accompanying notes to financial statements.

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WESTCON, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2008
(In Thousands)

Cash Flows from Operating Activities:
Net Income	$	395
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Loss on Disposal of Assets		7
Deferred Income Taxes		24
Depreciation and Amortization		61
Provision for Accounts Receivable and Inventory Reserves		(13	)
Changes in Assets and Liabilities:
Accounts Receivable		(99	)
Inventory		282
Prepaid Expenses and Other Assets		(11	)
Accounts Payable		(470	)
Accrued Compensation and Other Liabilities		(71	)
Income Taxes Payable		86
Net Cash Provided by Operating Activities		191
Cash Flows from Investing Activities:
Purchase of Property and Equipment		(110	)
Net Cash Used in Investing Activities		(110	)
Cash Flows from Financing Activities:
Short Term Borrowings, net		(40	)
Payments of Long Term Debt		(16	)
Proceeds from Long Term Debt		30
Net Cash Used in Financing Activities		(49	)
Net Increase in Cash		55
Cash at Beginning of Period		–
Cash at End of Period	$	55
Supplemental Disclosures of Cash Flow Activity:
Cash paid during the period for:
Interest	$	31
Income Taxes, net	$	88
Supplemental Disclosure of Non-Cash Financing Activity:
Capital Lease Obligation	$	23

See accompanying notes to financial statements.

10

WESTCON, INC.
STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE YEAR ENDED JUNE 30, 2008
(In Thousands, Except Share Amounts)

	Common Stock
	Issued
	No Par Value				Retained
	Shares		Amount		Earnings		Total
Balance as of June 30, 2007		525	$	5	$	341	$	346
Net Income		–		–		395		395
Balance as of June 30, 2008		525	$	5	$	736	$	741

See accompanying notes to financial statements.

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WESTCON, INC.
NOTES TO FINANCIAL STATEMENTS
(In Thousands, Except Per Share Amounts)

NOTE 1 – GENERAL

Description of Business: Westcon, Inc. (“Westcon” or “the Company”) is a distributor of professional grade test and measurement instruments and a provider of calibration and repair services to customers located primarily in the western region of the United States.

Use of Estimates: The preparation of Westcon’s Financial Statements in accordance with accounting principles generally accepted in the United States requires that the Company make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are used for, but not limited to, allowance for doubtful accounts and returns, inventory reserves and depreciable lives of fixed assets. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the Financial Statements will change as new events occur, as more experience is acquired, as additional information is obtained, and as the operating environment changes. Actual results could differ from those estimates. Such changes and refinements in estimation methodologies are reflected in reported results of operations in the period in which the changes are made and, if material, their effects are disclosed in the Notes to Financial Statements.

Accounts Receivable: Accounts receivable represent receivables from customers in the ordinary course of business. These amounts are recorded net of the allowance for doubtful accounts and returns in the Balance Sheet. The allowance for doubtful accounts is based upon the expected collectability of accounts receivable. The Company applies a specific formula to its accounts receivable aging, which may be adjusted on a specific account basis where the formula may not appropriately reserve for loss exposure. After all attempts to collect a receivable have failed, the receivable is written-off against the allowance for doubtful accounts. The returns reserve is calculated based upon the historical rate of returns applied to revenues over a specific timeframe. The returns reserve will increase or decrease as a result of changes in the level of revenues and/or the historical rate of returns.

Inventory: Inventory consists primarily of finished products purchased for resale and is valued at the lower of cost or market. Costs are determined using the average cost method of inventory valuation. Inventory is reduced by a reserve for items not saleable at or above cost by applying a specific loss factor, based on historical experience, to specific categories of inventory. The Company evaluates the adequacy of the reserve on an annual basis.

Property and Equipment, Depreciation and Amortization: Property and equipment are stated at cost. Depreciation and amortization are computed primarily under the straight-line method over the following estimated useful lives:

	Years
Machinery, Equipment and Software		3 – 10
Furniture and Fixtures		5 – 10
Leasehold Improvements		4
Vehicles		3 – 7

Property and equipment determined to have no value are written off at their then remaining net book value. Leasehold improvements are amortized under the straight-line method over the estimated useful life or the lease term, whichever is shorter. Maintenance and repairs are expensed as incurred. See Note 2 for further information on property and equipment.

Fair Value of Financial Instruments: The carrying amount of debt on the Balance Sheet approximates fair value due to variable interest rate pricing and the carrying amounts for cash, accounts receivable and accounts payable approximate fair value, due to their short-term nature.

Revenue Recognition: Product sales are recorded when a product’s title and risk of loss transfers to the customer. The Company recognizes the majority of its service revenue based upon when the calibration or repair activity is performed and then shipped and/or delivered to the customer. The Company generally invoices its customers for

12

shipping and freight charges. Provisions for customer returns are provided for in the period the related revenue is recorded based upon historical data.

Freight and Shipping Costs: Freight expense and direct shipping costs are included in cost of products and services sold. These costs were approximately $0.1 million for the fiscal year ended June 30, 2008 (“fiscal year 2008”).

Income Taxes. Income taxes are provided in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 109, Accounting for Income Taxes (“SFAS 109”), which requires a company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in a company’s financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent that it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Recently Issued Accounting Pronouncements: In July 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109 (“FIN 48”), which seeks to reduce the significant diversity in practice associated with certain aspects of measurement and recognition threshold and measurement attribute for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return, and also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions for FIN 48 are effective for fiscal years beginning after December 15, 2007, the Company’s fiscal year ending June 30, 2009. Upon adoption, the cumulative effect of any changes in net assets resulting from the application of FIN 48 will be recorded as an adjustment to retained earnings. The Company does not expect the adoption of FIN 48 to have a material impact on its financial position or results of operations.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”), which defines fair value, establishes guidelines for measuring fair value and expands disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007, the Company’s fiscal year ending June 30, 2009. In February 2008, the FASB issued Financial Statement of Position No. 157-2, Partial Deferral of the Effective Date of Statement 157 (“FSP 157-2”). FSP 157-2 delays the effective date of SFAS 157, for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008. The Company is currently evaluating the impact of SFAS 157, but does not expect the adoption of SFAS 157 to have a material impact on its Financial Statements.

In October 2008, the FASB issued Staff Position No. FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active (“FSP 157-3”). FSP 157-3 applies to financial assets within the scope of accounting pronouncements that require or permit fair value measurements in accordance with SFAS 157. FSP 157-3 clarifies the application of SFAS 157 in determining the fair values of assets or liabilities in a market that is not active. FSP 157-3 is effective upon issuance, including prior periods for which financial statements have not been issued. The adoption of FSP 157-3 did not have a material impact on the Company’s financial statements.

NOTE 2 – PROPERTY AND EQUIPMENT

Property and equipment consist of the following at June 30, 2008:

Machinery, Equipment and Software	$	530
Furniture and Fixtures		99
Leasehold Improvements		48
Vehicles		83
Total Property and Equipment		760
Less: Accumulated Depreciation and Amortization		(480	)
Total Property and Equipment, net	$	280

Total depreciation and amortization expense was less than $0.1 million in fiscal year 2008.

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NOTE 3 – DEBT

Short Term Borrowings. The Company has available a revolving line of credit (“Line of Credit”) with a local bank in the amount of $0.3 million. The Line of Credit, which matures on October 31, 2008, is secured by substantially all assets of the Company and is personally guaranteed by the Company’s President and sole stockholder. Interest is payable monthly on the outstanding balance at a variable rate of 0.5% over the bank’s prime rate. As of June 30, 2008, the bank’s prime rate was 5.0%. The Company’s interest rate for fiscal year 2008 ranged from 5.5% to 9.0%. The balance outstanding as of June 30, 2008 was $0.1 million.

The Line of Credit has certain covenants with which the Company must comply, including tangible net worth, debt to net worth, working capital, current ratio and cash flow to debt covenants. The Company was in compliance with all loan covenants and requirements throughout fiscal year 2008. The Line of Credit was terminated on August 14, 2008 (see Note 8).

Long Term Debt. Long Term Debt consists of the following at June 30, 2008:

Notes payable to the Company’s President and sole stockholder, interest payable monthly with rates ranging from 9.0% to 14.5%, unsecured and subordinated to bank debt, maturing on July 2010	$	102
Notes payable, due in monthly payments ranging from less than $1 to $3 including interest ranging from 8.3% to 9.7%, secured by substantially all assets of the Company, with maturities from August 2010 to July 2012		82
Note payable, due in monthly payments of less than $1 including interest at 3.9%, secured by a vehicle, with a maturity of November 2010		19
		203
Less: Current Portion of Long Term Debt		39
	$	164

Total interest expense for fiscal year 2008 was less than $0.1 million.

NOTE 4 – INCOME TAXES

The net provision for income taxes for fiscal year 2008 is as follows:

Current Tax Provision:
Federal	$	187
State		52
		239
Deferred Tax Provision:
Federal		21
State		4
		25
Provision for Income Taxes	$	264

A reconciliation of the income tax provision computed by applying the statutory United States federal income tax rate and the income tax provision reflected in the Statement of Operations for fiscal year 2008 is as follows:

Federal Income Tax at Statutory Rate	$	224
State Income Taxes, net of Federal benefit		44
Other, net		(4	)
Total	$	264

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The components of the deferred tax assets and liability as of June 30, 2008 are as follows:

Deferred Tax Assets – Current:
Inventory Reserves	$	42
Other		15
Total	$	57
Deferred Tax Liability – Non-current:
Depreciation	$	68

NOTE 5 – EMPLOYEE BENEFIT PLAN

All of Westcon’s employees are eligible to participate in a defined contribution plan (the “Plan”), provided certain qualifications are met. Pursuant to the Plan, participants are entitled to a distribution of their vested account balance upon termination of employment or retirement. Plan participants are fully vested in their contributions while Company contributions vest over a six year period. In addition, participants may receive discretionary contributions from the Company, as determined by the Company, up to an overall maximum allowed by the Internal Revenue Code. During fiscal year 2008, the Company’s contribution to the Plan was less than $0.1 million. The Plan was terminated on August 14, 2008 (see Note 8).

NOTE 6 – SIGNIFICANT CUSTOMERS AND VENDORS

One customer accounted for approximately 30% of the Company’s revenues during fiscal year 2008. The loss or cancellation of business from, or significant changes in the volume of products sold or services provided to this customer or a change in its financial position could have a material adverse effect on the Company’s financial position, results of operations and cash flows.

Approximately 30% of the Company’s product purchases during fiscal year 2008 were from one vendor. As of June 30, 2008, two vendors represented approximately 50% of the Company’s Accounts Payable.

NOTE 7 – COMMITMENTS

Westcon leases its facilities and certain vehicles from its President, the Company’s sole stockholder. The vehicles are leased on a month to month basis and the facility lease expires in March 2009. Total rental expense was $0.1 million for fiscal year 2008. The minimum future annual rental payments as of June 30, 2008 are less than $0.1 million.

NOTE 8 – SUBSEQUENT EVENT

On August 14, 2008, Transcat, Inc. (“Transcat”) acquired Westcon pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) with Westcon and its sole stockholder.

Under the terms of the Merger Agreement, Transcat paid an aggregate purchase price of approximately $6.9 million, which was paid in a combination of the issuance of 150,000 shares of Transcat common stock valued at approximately $1.1 million and approximately $5.8 million in cash. An additional contingent payment of up to $1.4 million is subject to holdback restrictions and is intended to secure the obligations of Westcon and the sole stockholder for post-closing adjustments, reimbursement and indemnification under the terms of the Merger Agreement. This contingent payment is expected to be recorded as additional purchase price at the time the payment is certain. A portion of the cash purchase price, aggregating $0.5 million, was distributed to satisfy certain debt obligations of Westcon, with the remainder being paid to the sole stockholder.

In addition, Transcat and the sole stockholder entered into an Earn Out Agreement dated as of the closing of the merger. This agreement provides that the sole stockholder be entitled to certain contingent earn out payments subject to Westcon achieving certain post-closing targets. These potential future payments are expected to be recorded as compensation expense.

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EX-99.2

Exhibit 99.2

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

On August 14, 2008, Transcat, Inc. (“Transcat”) acquired Westcon, Inc. (“Westcon”) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) with Westcon and its sole shareholder.

Under the terms of the Merger Agreement, Transcat paid an aggregate purchase price of approximately $6.9 million, which was paid in a combination of the issuance of 150,000 shares of Transcat common stock valued at approximately $1.1 million and approximately $5.8 million in cash. An additional contingent payment of up to $1.4 million is subject to holdback restrictions and is intended to secure the obligations of Westcon and the sole stockholder for post-closing adjustments, reimbursement and indemnification under the terms of the Merger Agreement. This contingent payment is expected to be recorded as additional purchase price at the time the payment is certain. A portion of the cash purchase price, aggregating $0.5 million, was distributed to satisfy certain debt obligations of Westcon, with the remainder being paid to the sole stockholder.

In addition, Transcat and the sole stockholder entered into an Earn Out Agreement dated as of the closing of the merger. This agreement provides that the sole stockholder be entitled to certain contingent earn out payments subject to Westcon achieving certain post-closing targets. These potential future payments are expected to be recorded as compensation expense.

The following is a summary of the preliminary purchase price allocation (in thousands):

Intangible Asset	$	1,206
Goodwill		4,498
		5,704
Plus: Current Assets, net		1,675
Non-Current Assets		274
Less: Current Liabilities		(639	)
Non-Current Liabilities		(86	)
Total Purchase Price	$	6,928

The unaudited pro forma combined balance sheet as of June 28, 2008 was prepared as if the acquisition had occurred on that date and combines the historical consolidated balance sheets of Transcat as of June 28, 2008 and Westcon as of June 30, 2008. The unaudited pro forma combined statements of operations were prepared as if the acquisition had occurred on April 1, 2007. The unaudited pro forma combined statement of operations for the fiscal year ended March 29, 2008 combines the historical consolidated statement of operations of Transcat for the twelve months ended March 29, 2008 and the historical statement of operations of Westcon for the twelve months ended June 30, 2008. The unaudited pro forma combined statement of operations for the three months ended June 28, 2008 combines the historical consolidated statements of operations of Transcat for the three months ended June 28, 2008 and the historical statement of operations of Westcon for the three months ended June 30, 2008.

The unaudited pro forma combined financial statements have been prepared for informational purposes only, to show the effect of the combination of Transcat and Westcon on a historical basis. These financial statements do not purport to be indicative of the financial position or results of operations that would have actually occurred had the business combination been in effect at those dates, nor do they project the results of operations or financial position for any future period or date. The unaudited pro forma combined financial statements do not reflect any adjustments for non-recurring items or anticipated synergies resulting from the acquisition.

These statements and accompanying notes should be read in conjunction with, and are qualified by, the consolidated financial statements of Transcat contained in the Transcat Annual Report on Form 10-K and Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission on June 26, 2008 and August 11, 2008, respectively, and the financial statements of Westcon included herein.

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UNAUDITED PRO FORMA COMBINED BALANCE SHEET
JUNE 28, 2008
(Amounts in thousands)

	Historical			Historical		Pro Forma					Pro Forma
	Transcat			Westcon		Adjustments					Combined
ASSETS
Current Assets:
Cash	$	130		$	55	$					$	185
Accounts Receivable, net		7,501			1,015							8,516
Other Receivables		535			–							535
Inventory, net		6,557			570							7,127
Prepaid Expenses & Other		824			13							837
Deferred Tax Asset		299			57							356
Total Current Assets		15,846			1,710		–					17,556
Property and Equipment, net		3,154			280							3,434
Goodwill		2,967			–		4,498		(A	)		7,465
Intangible Asset		–			–		1,206		(A	)		1,206
Deferred Tax Asset		1,386			–							1,386
Other Assets		343			4							347
Total Assets	$	23,696		$	1,994	$	5,704				$	31,394
LIABILITIES & EQUITY
Current Liabilities
Short Term Borrowings	$	–		$	131	$	(131	)	(A	)	$	–
Accounts Payable		6,085			593							6,678
Accrued Compensation and Other Liabilities		1,410			121		1,133		(A	)		2,664
Income Taxes Payable		144			137							281
Current Portion of Long Term Debt		–			39		(39	)	(A	)		–
Total Current Liabilities		7,639			1,021		963					9,623
Long Term Debt		–			164		4,369		(A	)		4,533
Deferred Tax Liability		–			68							68
Other Liabilities		471			–							471
Total Liabilities		8,110			1,253		5,332					14,695
Shareholder’s Equity:
Common Stock		3,730			5		70		(A)/	(B)		3,805
Capital in Excess of Par Value		6,875			–		1,038		(A	)		7,913
Accumulated Other Comprehensive Income		444										444
Retained Earnings (Deficit)		5,525			736		(736	)	(B	)		5,525
Less: Treasury Stock, at cost		(988	)									(988	)
Total Shareholder’s Equity		15,586			741		372					16,699
Total Liabilities and Shareholder’s Equity	$	23,696		$	1,994	$	5,704				$	31,394

See accompanying notes to unaudited pro forma combined financial statements.

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UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED MARCH 29, 2008
(Amounts in thousands, except per share amounts)

	Historical		Historical			Pro Forma					Pro Forma
	Transcat		Westcon			Adjustments					Combined
Product Sales	$	47,539	$	7,906		$	(169	)	(A	)	$	55,276
Service Revenue		22,914		1,697								24,611
Net Revenue		70,453		9,603			(169	)				79,887
Cost of Products Sold		34,334		6,086			(144	)	(A	)		40,276
Cost of Services Sold		17,578		1,207								18,785
Total Cost of Products and Services Sold		51,912		7,293			(144	)				59,061
Gross Profit		18,541		2,310			(25	)				20,826
Selling, Marketing and Warehouse Expenses		9,056		709								9,765
Administrative Expenses		6,202		913			184		(B	)		7,299
Total Operating Expenses		15,258		1,622			184					17,064
Operating Income		3,283		688			(209	)				3,762
Interest Expense		101		32			333		(C	)		466
Other Expense, net		437		(3	)							434
Total Other Expense		538		29			333					900
Income Before Income Taxes		2,745		659			(542	)				2,862
Provision for Income Taxes		382		264			(150	)	(D	)		496
Net Income	$	2,363	$	395		$	(392	)			$	2,366
Basic Earnings Per Share	$	0.33									$	0.32
Average Shares Outstanding		7,132					150		(E	)		7,282
Diluted Earnings Per Share	$	0.32									$	0.32
Average Shares Outstanding		7,272					150		(E	)		7,422

See accompanying notes to unaudited pro forma combined financial statements.

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UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 28, 2008
(In thousands, except per share amounts)

	Historical			Historical			Pro Forma					Pro Forma
	Transcat			Westcon			Adjustments					Combined
Product Sales	$	12,311		$	1,654		$	(44	)	(A	)	$	13,921
Service Revenue		5,542			436								5,978
Net Revenue		17,853			2,090			(44	)				19,899
Cost of Products Sold		8,949			1,389			(38	)	(A	)		10,300
Cost of Services Sold		4,379			307								4,686
Total Cost of Products and Services Sold		13,328			1,696			(38	)				14,986
Gross Profit		4,525			394			(6	)				4,913
Selling, Marketing and Warehouse Expenses		2,595			152								2,747
Administrative Expenses		1,542			317			51		(B	)		1,910
Total Operating Expenses		4,137			469			51					4,657
Operating Income		388			(75	)		(57	)				256
Interest Expense		(1	)		4			54		(C	)		57
Other Expense, net		8			(1	)							7
Total Other Expense		7			3			54					64
Income Before Income Taxes		381			(78	)		(111	)				192
Provision for (Benefit from) Income Taxes		153			(31	)		(23	)	(D	)		99
Net Income (Loss)	$	228		$	(47	)	$	(88	)			$	93
Basic Earnings Per Share	$	0.03										$	0.01
Average Shares Outstanding		7,186						150		(E	)		7,336
Diluted Earnings Per Share	$	0.03										$	0.01
Average Shares Outstanding		7,399						150		(E	)		7,549

See accompanying notes to unaudited pro forma combined financial statements.

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NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

Pro Forma Adjustments:

The following pro forma adjustments are included in the unaudited pro forma combined balance sheet:

(A) To reflect activity related to the acquisition and the allocation of purchase price:

• Goodwill and definite lived intangibles, namely customer base, of $4.5 million and $1.2 million, respectively.

• Repayment of Westcon debt by Transcat of $0.3 million, based on balances outstanding at June 30, 2008. Actual Westcon debt paid at closing on August 14, 2008 totaled $0.5 million.

• Additional purchase price and acquisition costs related to the merger of $1.0 million and $0.1 million, respectively, and are included in accrued compensation and other liabilities. Payment of the additional purchase price is to be made in November 2008.

• Proceeds from borrowings by Transcat of $4.5 million, based on balance sheet amounts outstanding at June 30, 2008. Actual borrowings at closing on August 14, 2008 totaled $4.7 million.

• The issuance of 150,000 shares of Transcat common stock valued at approximately $1.1 million based on the closing price per share of Transcat common stock of $7.42 on August 13, 2008.

(B) To record the elimination of the historical stockholders’ equity of Westcon.

The following pro forma adjustments are included in the unaudited pro forma combined statement of operations:

(A)	To eliminate product sales and the cost of products sold by Transcat to Westcon.
(B)	To reflect amortization of definite lived intangible assets acquired over the estimated useful life of 10 years.
(C)	To reflect interest expense based on Transcat’s indebtedness incurred to finance the acquisition at annual interest rates ranging from 4.6% to 4.8% for the three month period ended June 28, 2008 and 4.8% to 7.8% for the fiscal year ended March 29, 2008. These rates are based on the prime rate during the respective period, adjusted by Transcat’s current commitment adjustment of the prime rate less .45%. Transcat believes the future interest rate on this indebtedness will be significantly lower than the pro forma amounts based on the current interest rate environment.
(D)	To record the estimated tax impact of the pro forma adjustments at the blended statutory rates in effect for the respective period reported, adjusted for the reduction in a deferred tax valuation allowance during the fiscal year ended March 29, 2008 and permanent differences in the periods reported.
(E)	To reflect the issuance of 150,000 shares of Transcat common stock at closing.

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