-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, poQq7pc9ZoXe0FLOyqYPokBGYbUcwtjJ2rjyH9Dx24cvqv8L7RGGUcTaJjRqtxXn wD2YM8+HhSI65cyIuot+ow== 0000950123-94-001799.txt : 19941122 0000950123-94-001799.hdr.sgml : 19941122 ACCESSION NUMBER: 0000950123-94-001799 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19940925 FILED AS OF DATE: 19941109 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANSTECHNOLOGY CORP CENTRAL INDEX KEY: 0000099359 STANDARD INDUSTRIAL CLASSIFICATION: 3577 IRS NUMBER: 954062211 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07872 FILM NUMBER: 94558286 BUSINESS ADDRESS: STREET 1: 700 LIBERTY AVENUE CITY: UNION STATE: NJ ZIP: 07083 BUSINESS PHONE: 908-964-5666 MAIL ADDRESS: STREET 1: 700 LIBERTY AVENUE CITY: UNION STATE: NJ ZIP: 07083 FORMER COMPANY: FORMER CONFORMED NAME: SPACE ORDNANCE SYSTEMS INC DATE OF NAME CHANGE: 19740717 10-Q 1 TRANSTECHNOLOGY CORPORATION -- FORM 10-Q 1 FORM 10-Q ------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) / X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 25, 1994 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------ ------------ Commission file number 1-7872 --------------------- TRANSTECHNOLOGY CORPORATION (Exact name of registrant as specified in its charter) Delaware 95-4062211 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 700 Liberty Avenue 07083 Union, New Jersey (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (908) 964-5666 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 ----- ----- As of October 31, 1994, the total number of outstanding shares of registrant's one class of common stock was 5,290,065 2 TRANSTECHNOLOGY CORPORATION INDEX PART I. Financial Information Page No. --------------------- -------- Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ------- Statements of Consolidated Operations-- Three and Six Month Periods Ended September 25, 1994 and September 26, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Consolidated Balance Sheets-- September 25, 1994 and March 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . 4 Statements of Consolidated Cash Flow-- Six Months Ended September 25, 1994 and September 26, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Statements of Consolidated Stockholders' Equity-- Six Months Ended September 25, 1994 . . . . . . . . . . . . . . . . . . . . . . . . 6 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . 7-9 Item 2. Management's Discussion and Analysis of Results ------- of Operations and Financial Condition . . . . . . . . . . . . . . . . . . . . . . 10-16 PART II. Other Information ----------------- Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ------- SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 EXHIBIT 10.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-20 EXHIBIT 10.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-26 EXHIBIT 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 EXHIBIT 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
1 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The following unaudited Statements of Consolidated Operations, Consolidated Balance Sheets and Statements of Consolidated Cash Flow and Statements of Consolidated Stockholders' Equity are of TransTechnology Corporation and its consolidated subsidiaries. These reports reflect all adjustments of a normal recurring nature, which are, in the opinion of management, necessary to a fair presentation of the results of operations for the interim periods reflected therein. The results reflected in the unaudited Statements of Consolidated Operations for the period ended September 25, 1994 are not necessarily indicative of the results to be expected for the entire year. The following unaudited Consolidated Financial Statements should be read in conjunction with the notes thereto, and Management's Discussion and Analysis set forth in Item 2 of Part I of this report, as well as the audited financial statements and related notes thereto contained in the Form 10-K filed for the fiscal year ended March 31, 1994. [THIS SPACE INTENTIONALLY LEFT BLANK] 2 4 STATEMENTS OF CONSOLIDATED OPERATIONS UNAUDITED (In Thousands of Dollars Except Share Data)
THREE MONTHS ENDED SIX MONTHS ENDED ------------------------------ ----------------------------------- 9/25/94 9/26/93 9/25/94 9/26/93 ------------ -------------- --------------- -------------- Total Revenue $ 28,143 $ 27,160 $ 55,966 $ 48,617 Cost of Sales 20,218 19,388 40,680 34,270 ------------ -------------- --------------- -------------- Gross Profit 7,925 7,772 15,286 14,347 ------------ -------------- --------------- -------------- General, Administrative and Selling Expenses 6,165 5,306 10,664 8,990 Interest Expense 677 115 1,196 465 ------------ -------------- --------------- -------------- Total General, Administrative, Selling and Interest Expenses 6,842 5,421 11,860 9,455 ------------ -------------- --------------- -------------- Income from Continuing Operations before Income Taxes 1,083 2,351 3,426 4,892 Income Taxes 335 941 1,197 1,894 ------------ -------------- --------------- -------------- Income from Continuing Operations 748 1,410 2,229 2,998 Discontinued Operations: Loss from Operations (net of applicable tax benefits of $309,000 and $610,000 for the quarter and six months ended 9/25/94, respectively, and $123,000 and $168,000 for the quarter and six months ended 9/26/93, respectively) (400) (179) (852) (253) Loss from Disposal (net of applicable tax benefits of $107,000 and $78,000 for the quarter and six months ended 9/25/94, respectively) (151) -- (108) -- ------------ -------------- --------------- -------------- Net Income $ 197 $ 1,231 $ 1,269 $ 2,745 ============ ============== =============== ============== Earnings (Loss) per Share: (Note 1) Income from Continuing Operations $ 0.15 $ 0.27 $ 0.43 $ 0.58 Loss from Discontinued Operations (0.11) (0.03) (0.19) (0.05) ------------ -------------- --------------- -------------- Net Income $ 0.04 $ 0.24 $ 0.25 (a) $ 0.54 (a) ============ ============== =============== ============== Number of Shares Used in Computation of Per Share Information 5,121,000 5,134,000 5,152,000 5,128,000
(a) Per share amounts do not always add because the figures are required to be independently calculated. See accompanying notes to unaudited consolidated financial statements. 3 5 CONSOLIDATED BALANCE SHEETS (In Thousands of Dollars Except Share Data)
UNAUDITED 9/25/94 3/31/94 -------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 711 $ 3,027 Accounts receivable: United States Government 1,705 2,815 Commercial (net of allowance for doubtful accounts of $288 at 9/25/94 and $271 at 3/31/94) 18,567 19,500 Notes receivable 2,844 2,814 Inventories 38,342 35,786 Prepaid expenses and other current assets 2,259 2,932 Deferred income taxes 4,252 4,253 Net assets of discontinued businesses 13,566 4,309 -------------- ------------- Total current assets 82,246 75,436 Property: Land 3,989 5,223 Buildings 12,767 15,657 Machinery and equipment 28,802 32,611 Furniture and fixtures 3,923 4,050 Leasehold improvements 990 671 -------------- ------------- Total 50,471 58,212 Less accumulated depreciation and amortization 18,428 22,204 -------------- ------------- Property-net 32,043 36,008 Other assets: Notes receivable 3,729 4,061 Costs in excess of net assets of acquired businesses (net of accumulated amortization: September 25, 1994, $2,553; March 31, 1994, $2,423) 12,546 3,117 Other 7,481 7,235 -------------- ------------- Total other assets 23,756 14,413 -------------- ------------- Total $ 138,045 $ 125,857 ============== ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 1,480 $ 1,479 Accounts payable-trade 7,417 7,489 Accrued compensation 2,604 4,570 Accrued income taxes 119 943 Other current liabilities 4,384 7,109 -------------- ------------- Total current liabilities 16,004 21,590 -------------- ------------- Long-term debt payable to banks and others 50,486 33,168 -------------- ------------- Other long-term liabilities 7,139 5,146 -------------- ------------- Stockholders' equity: Preferred stock-authorized, 300,000 shares; none issued -- -- Common stock-authorized, 14,700,000 shares of $.01 par value; issued 5,085,867 at September 25, 1994, and 5,189,104 at March 31, 1994 53 52 Additional paid-in capital 45,779 45,283 Retained earnings 22,809 22,186 Other stockholders' equity (2,360) (1,568) -------------- ------------- 66,281 65,953 Less treasury stock, at cost (152,000 shares at 9/25/94) (1,865) -- -------------- ------------- Total stockholders' equity 64,416 65,953 -------------- ------------- Total $ 138,045 $ 125,857 ============== =============
See accompanying notes to unaudited consolidated financial statements. 4 6 STATEMENTS OF CONSOLIDATED CASH FLOW UNAUDITED (In Thousands of Dollars)
SIX MONTHS ENDED -------------------------------- 9/25/94 9/26/93 ----------- ------------ Cash Flows From Operating Activities: Net income $ 1,269 $ 2,745 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,926 2,116 Provision for losses on accounts receivable 36 (4) Loss (gain) on sale or disposal of fixed assets -- (1) Change in assets and liabilities (net of the effect of purchases of businesses) : Decrease (increase) in accounts receivable 2,843 (90) Decrease (increase) in inventories 427 (719) Increase in net assets of discontinued operations (2,965) (800) Decrease (increase) in prepaid and other assets 1,536 (506) Decrease in accounts payable (133) (313) Decrease in accrued compensation (2,047) (746) Decrease in accrued income taxes (824) (385) Decrease in other liabilities (2,573) (1,507) ----------- ------------ Net cash used in operations (505) (210) ----------- ------------ Cash Flow from Investing Activities: Purchase of businesses (15,320) (22,430) Capital expenditures (1,973) (2,127) Proceeds from the sale of fixed assets 40 1 Decrease (increase) in notes receivables 302 (304) ----------- ------------ Net cash used in investing activities (16,951) (24,860) ----------- ------------ Cash Flow from Financing Activities: Payments to acquire treasury stock (1,865) - Payments on long-term debt (4,701) (6,607) Proceeds from long-term debt 22,021 29,987 Proceeds from short-term debt -- 1,201 Proceeds from issuance of stock under stock option plan 331 233 Dividends paid (646) (616) ----------- ------------ Net cash provided by financing activities 15,140 24,198 ----------- ------------ Net Decrease in Cash and Cash Equivalents (2,316) (872) Cash and Cash Equivalents at Beginning of Year 3,027 1,505 ----------- ------------ Cash and Cash Equivalents at End of Period $ 711 $ 633 =========== ============ Supplemental Information: Interest payments $ 1,341 $ 479 Income tax payments $ 1,184 $ 2,092
See accompanying notes to consolidated financial statements. 5 7 STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY (In Thousands of Dollars Except Share Data)
ADDITIONAL OTHER FOR THE SIX MONTHS COMMON STOCK TREASURY STOCK PAID-IN RETAINED STOCKHOLDERS' ENDED SEPTEMBER 25, 1994 SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS EQUITY TOTAL - - ------------------------- --------- ------- -------- ---------- ---------- --------- --------- --------- Balance, March 31, 1994 5,189,104 $ 52 -- $ -- $ 45,283 $ 22,186 $ (1,568) $ 65,953 Net Income -- -- -- -- -- 1,269 -- 1,269 Cash dividends ($.125 per share) -- -- -- -- -- (646) -- (646) Unrealized investment holding losses -- -- -- -- -- -- (648) (648) Purchase of treasury stock -- -- (152,500) (1,865) -- -- -- (1,865) Issuance of stock under stock option plan 17,877 1 -- -- 205 -- -- 206 Issuance of stock under incentive bonus plan 31,386 -- -- -- 291 -- (166) 125 Foreign translation adjustments -- -- -- -- -- -- 22 22 - - ------------------------- --------- ------- -------- ---------- ---------- --------- --------- --------- Balance, September 25, 1994 5,238,367 $ 53 (152,500) $ (1,865) $ 45,779 $ 22,809 $ (2,360) $ 64,416 ========= ======= ======== ========== ========== ========= ========= =========
See accompanying notes to consolidated financial statements. 6 8 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands of Dollars) NOTE 1. Earnings Per Share: Earnings per share are based on the weighted average number of common shares and common stock equivalents (stock options) outstanding during each period. In computing earnings per share, common stock equivalents were either anti-dilutive because of the market value of the stock or not material, and, therefore, have been excluded from the calculation. NOTE 2. Inventories: Inventories are summarized as follows:
9/25/94 3/31/94 ------- ------- Finished goods $ 6,723 $ 5,057 Work-in-process 5,877 7,589 Purchased and manufactured parts 25,742 23,140 --------- ---------- Total inventories $ 38,342 $ 35,786 ========= ==========
NOTE 3. Long-term Debt Payable to Banks and Others In connection with the Industrial Retaining Ring Company acquisition, on September 9, 1994, the Company obtained a $15 million term loan with the same lender as the revolving credit line andsecured by the same collateral. This term loan is due and payable in equal quarterly installments of $937,500 commencing on December 31, 1995. Interest accrues at the lending bank's prime rate and is payable monthly. NOTE 4. Discontinued Operations: In March 1994, the Company completed the sale of its Federal Laboratories division. Pursuant to such sale, the Company recorded an after-tax disposal gain of $71 thousand for the six month period ended September 25, 1994. This gain was offset by $121 thousand of after-tax disposal costs, recorded for the six months ended September 25, 1994, related to other previously discontinued businesses. For the three month period ended September 25, 1994, the Company recorded $88 thousand of after-tax disposal costs related to other previously discontinued businesses. The gain and losses consisted primarily of disposal costs different from previous estimates associated primarily with legal and related matters. 7 9 The three and six month periods ended September 26, 1993 have been restated to reflect Federal Laboratories as a discontinued operation. In September 1994, the Company discontinued its chaff and related products division. At September 25, 1994, this division was classified for financial reporting purposes as a discontinued operation. Accordingly, the results of consolidated operations at September 26, 1993, have been restated. The loss from disposal for the three and six months ended September 25, 1994 include a $58 thousand after-tax charge consisting primarily of estimated legal and selling costs related to disposal of the chaff product operation. Operating results of the discontinued business were as follows:
Three Months Ended Six Months Ended --------------------- ---------------------- 9/25/94 9/26/93 9/25/94 9/26/93 ------- ------- ------- ------- Total Revenues $ 1,613 $ 3,703 $ 3,115 $ 7,002 Loss before income taxes $ (709) $ (302) $ (1,462) $ (421) Income tax benefit (309) (123) (610) (168) ------- ------- -------- ------- Loss from operations $ (400) $ (179) $ (852) $ (253) ======= ======= ======== =======
The loss from operations includes interest expense of $45 thousand and $89 thousand for the three months ended 9/25/94 and 9/26/93, respectively, and $75 thousand and $146 thousand for the six months ended 9/25/94 and 9/26/93, respectively. 8 10 Net assets of the discontinued businesses at September 25, 1994 and March 31, 1994 were as follows:
9/25/94 3/31/94 ------- ------- Accounts Receivable $ 1,351 $ 25 Inventory 1,767 186 Property 9,495 3,203 Other Assets 2,137 1,198 Liabilities (1,184) (303) -------- ------- Net Assets of Discontinued Businesses $ 13,566 $ 4,309 ======== =======
NOTE 5. Acquisitions Effective August 31, 1994, the Company acquired Industrial Retaining Ring Company and its affiliatedcompanies for a total purchase price of $15.3 million in cash and the assumption of $219 thousand of liabilities. Industrial Retaining Ring Company manufactures retaining rings used in heavy equipment and industrial machinery. The following summarizes TransTechnology Corporation's combined Proforma Revenue, Net Income and Earnings per Share information as if the acquisition of Industrial Retaining Ring Company and itsaffiliated companies had occurred at the beginning of the period presented.
Six Months Ended --------------------------------- 9/25/94 9/26/93 ------- ------- Revenue $59,858 $52,751 ======= ======= Net Income $ 2,271 $ 3,623 ======= ======= Earnings per share $ 0.44 $ 0.71 ====== ======
9 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS All references to three month and six month periods in this Management's Discussion refer to the three and six month periods ended September 25, 1994 for fiscal year 1995 and the three and six month periods ended September 26, 1993 for fiscal year 1994. Also when referred to herein, operating profit means net sales less operating expenses, without deduction for general corporate expenses, interest and income taxes. The Consolidated Statement of Operations has been restated with respect to discontinued operations to provide a consistent basis for comparing the performance of the Company's continuing operations for the periods presented. Revenue from continuing operations for the six month period in 1995 was $56.0 million, an increase of $7.3 million or 13% from the comparable period in 1994. For the three month period in 1995 total revenue was $28.1 million, an increase of $1.0 million or 4% from the comparable period of 1994. The increases occurred primarily in the Industrial Products segment for both periods. Gross profit for the six month period in 1995 increased $0.9 million or 7% from the comparable period in 1994. For the three month period in 1995, gross profit increased $0.2 million or 2% from the comparable period of 1994. Operating profit from continuing operations for the six month period in 1995 was $5.7 million, a decrease of $1.5 million or 21% from the comparable period in 1994. For the three month period in 1995 operating profit from continuing operations was $2.8 million, a decrease of $1.0 million or 27% from the comparable period in 1994. Changes in sales, operating profit and new orders from continuing operations are discussed below by segment. Net income, including discontinued operations, for the six month period in 1995 was $1.3 million or $.25 per share, compared to $2.7 million or $.54 per share, for the comparable period in 1994. The three month period in 1995 experienced net income of $0.2 million or $.04 per share compared to $1.2 million or $.24 per share for the year earlier period. Discontinued operations, which are discussed in more detail below, accounted for losses of $1.0 million and $0.6 million in the 1995 six month and three month periods, respectively, and $0.3 million and 0.2 million for the comparable six month and three month periods in 1994. Interest expense increased $0.6 million for the three month period in 1995, and $0.7 million for the six month period, primarily as a result of increased bank borrowings used for the acquisition of the Palnut fastener business and the Electrical Specialties wiring harness business in the second quarter of the 1994 fiscal year, and the Industrial Retaining Ring business in the second quarter of the 1995 fiscal year. 10 12 New orders received during the six month period in 1995 totaled $52.6 million, an increase of $2.7 million or 6% from 1994's comparable period. For the three month period, new orders totaled $27.6 million, an increase of $2.9 million or 12% from last year's comparable period. At September 25, 1994, total backlog of unfilled orders was $45 million. compared to $37.4 million at September 26, 1993. ACQUISITIONS Effective August 31, 1994, the Company acquired all of the outstanding capital stock of Industrial Retaining Ring Company and its affiliated companies for a total purchase price of $14.8 million in cash and the assumption of liabilities. Additionally, the Company purchased the life insurance contracts existing on the former officers of Industrial Retaining Ring Company for approximately $0.5 million in cash. Industrial Retaining Ring Company manufactures retaining rings used in heavy equipment and industrial machinery. DISCONTINUED OPERATIONS In March 1994, the Company completed the sale of its Federal Laboratories division. Pursuant to such sale, the Company recorded an after-tax disposal gain of $71 thousand for the six month period ended September 25, 1994. This gain was offset by $121 thousand of after-tax disposal costs, recorded for the six months ended September 25, 1994, related to other previously discontinued businesses. For the three month period ended September 25, 1994, the Company recorded $88 thousand of after- tax disposal costs related to other previously discontinued businesses. The gain and losses consisted primarily of disposal costs different from previous estimates associated primarily with legal and related matters. The three and six month periods ended September 26, 1993 have been restated to reflect Federal Laboratories as a discontinued operation. In September 1994, the Company discontinued its chaff and related products division. At September 25, 1994, this division was classified for financial reporting purposes as a discontinued operation. Accordingly, the results of consolidated operations at September 26, 1993, have been restated. The loss from disposal for the three and six months ended September 25, 1994 include a $58 thousand after-tax charge consisting primarily of estimated legal and selling costs related to disposal of the chaff product operation. 11 13 FINANCIAL SUMMARY BY PRODUCT SEGMENT (In Thousands of Dollars)
SIX MONTHS ENDED NET CHANGE --------------------- ---------------------- 9/25/94 9/26/93 $ % ------- ------- ------- ------- Operating Revenue: Industrial Products $37,061 $25,594 $11,467 44.8 Aerospace Products 17,678 22,538 (4,860) (21.6) ------- ------- ------- Total $54,739 $48,132 $ 6,607 13.7 ======= ======= ======= Operating Profit: Industrial Products $ 4,996 $ 4,191 $ 805 19.2 Aerospace Products 748 3,055 (2,307) (75.5) ------- ------- ------- Total $ 5,744 $ 7,246 $(1,502) (20.7) Corporate Expense (1,122)(a) (1,889)(b) 767 40.6 Interest Expense (1,196) (465) (731) (157.2) ------- ------- ------- Income from Continuing Operations before Income Taxes $ 3,426 $ 4,892 $(1,466) (30.0) ======= ======= =======
a) The corporate expense for the six months ended September 25, 1994 has been reduced by $740 thousand from a favorable insurance settlement. b) The corporate expense for the six months ended September 25, 1994 and the six months ended September 26, 1993 has been reduced by $310 thousand and $437 thousand, respectively, to reflect an allocation made to discontinued operations. 12 14 FINANCIAL SUMMARY BY PRODUCT SEGMENT (In Thousands of Dollars)
THREE MONTHS ENDED NET CHANGE --------------------- --------------------- 9/25/94 9/26/93 $ % ------- ------- ------- ------- Operating Revenue: Industrial Products $18,469 $16,063 $ 2,406 15.0 Aerospace Products 8,696 10,815 (2,119) (19.6) ------- ------- ------- Total $27,165 $26,878 $ 287 1.1 ======= ======= ======= Operating Profit: Industrial Products $ 2,392 $ 2,362 $ 30 1.3 Aerospace Products 392 1,425 (1,033) (72.5) ------- ------- ------- Total $ 2,784 $ 3,787 $(1,003) (26.5) Corporate Expense (1,024)(a) (1,321)(b) 297 22.5 Interest Expense (677) (115) (562) (488.7) ------- ------- ------- Income from Continuing Operations before Income Taxes $ 1,083 $ 2,351 $(1,268) (53.9) ======= ======= =======
a) The corporate expense for the three months ended September 25, 1994 has been reduced by $165 thousand from a favorable insurance settlement. b) The corporate expense for the three months ended September 25, 1994 and the three months ended September 26, 1993 has been reduced by $155 thousand and $219 thousand, respectively, to reflect an allocation made to discontinued operations. 13 15 INDUSTRIAL PRODUCTS SEGMENT Sales for the industrial products segment were $37.1 million for the six month period in 1995, an increase of $11.5 million or 45% from the comparable period in 1994. Sales for the three month period in 1995 were $18.5 million, up $2.4 million or 15% from the comparable period in 1994. The increase for the six month period was primarily due to the inclusion of six months of operations of the Palnut fastener business and Electrical Specialties Company industrial wiring harness business in the 1995 period compared to only two months of operations in the comparable 1994 period. Additionally, the six and three month periods in 1995 included one month of Industrial Retaining Ring Company fastener operations. In the six and three month periods in 1995, specialty fastener sales other than Palnut and Industrial Retaining Ring were up slightly over the comparable six month and three month periods in 1994. Offsetting these increases, TransTechnology Systems & Services maintenance contract sales decreased 28% and 24% in the six and three month periods in 1995 from the comparable periods in 1994. These decreases are largely due to reduced domestic and foreign third party maintenance contract demand. Operating profit for the segment was $5.0 million for the six month period in 1995, an increase of $0.8 million or 19% from the comparable period in 1994. The three month period showed an operating profit of $2.4 million, which is unchanged from the comparable period in 1994. Primary factors contributing to the segment's increased operating profit for the six month period was the inclusion of six months of Palnut fastener operations in the 1995 six month period versus two months of operations in the 1994 six month period, the inclusion of one month of operations of the Industrial Retaining Ring Company and increased shipment volume and higher product margin mix of other specialty fasteners. These increases were largely offset in the six and three month periods by losses incurred due to the start-up of the Electrical Connector and Assemblies Company, low margin sales of electrical wiring harness product and reduced third party maintenance contract sales. New orders increased by 20% for the six month period in 1995, primarily due to the acquisitions mentioned above. New orders for the three month period in 1995 were down 16% primarily due to customer timing and placement of orders. Backlog of unfilled orders at September 25, 1994 was $18 million, while at September 26, 1993 backlog was $13.9 million. AEROSPACE PRODUCTS SEGMENT Sales for the Aerospace Products segment were $17.7 million for the six month period in 1995, a decrease of $4.9 million or 22% from the comparable six month period in 1994. Sales for the three month period in 1995 were $8.7 million, down $2.1 million or 20% from the comparable period in 1994. Hoists and winches and related spare parts, and electrical cable and conduit sales were down 24% and 39%, respectively, for the six month period in 1995, and 19% and 46% for the three month period, respectively, primarily due to delays in the timing of customers placing new orders in the current year periods and reduced overall demand for rescue hoist and winch products. Cargo hook, tie-down and electrical connector sales in the six and three month periods in 1995 were relatively unchanged from the comparable 1994 periods. 14 16 Operating profit for the segment was $0.7 million for the six month period in 1995, a decrease of $2.3 million or 76% from the comparable period in 1994. The three month period had an operating profit of $0.4 million, a decrease of $1.0 million or 73% over the comparable period in 1993. The primary factors contributing to the segment's decrease in operating profit in the current year periods were the lower hoist and winch and related spare parts sales, the lower cable and conduit sales and reduced margins in the hoist and winch and related spare parts and cargo hook lines. The reduced margins were due mainly to shipments of low margin contracts during the current six and three month periods. New orders decreased 12% for the six month period in 1995, and increased 47% for the three month period. New orders in the six month period for hoists and winches and related spare parts decreased 35%, and new orders for electrical cables decreased 14%, primarily due to customer timing and placement of new orders and the general slowdown in the military and aerospace industries. New orders for all other aerospace products lines increased in the six month period and all of the aerospace product lines experienced new order increases in the three month period, primarily due to customer timing and placement of new orders. Backlog of unfilled orders at September 25, 1994 was $26.9 million, while at September 26, 1993 backlog was $29.4 million. Sales related to United States Government contracts, which consist primarily of defense contracts and represented approximately 20% of the Company's total sales in fiscal year 1994, have been declining in recent years. Management remains concerned with the continued trend toward reductions in defense spending by the United States government. However, many of the Company's programs, as well as spare parts requirements for these programs, are expected to continue for several years, and the Company continues to pursue and is currently implementing its strategy of developing its non-defense businesses through acquisitions and refocused foreign and commercial market attention. LIQUIDITY AND CAPITAL RESOURCES The Company's debt-to-capitalization ratio was 45% as of September 25, 1994, compared to 34% as of March 31, 1994. The current ratio at September 25, 1994, stood at 5.14 compared to 3.49 at March 31, 1994. Working Capital was $66.2 million at September 25, 1994, up $12.4 million from March 31, 1994. At September 25, 1994, the Company's debt consisted of $27.2 million of borrowings under a revolving bank credit line, bank term loans of $15 million and $8.8 million, and $1.0 million of other borrowings. In connection with the Industrial Retaining Ring Company acquisition, in September, 1994, the Company obtained a $15 million term loan with the same lenders as the revolving credit line and secured by the same collateral. This term loan is due and payable in equal quarterly installments of $938 thousand commencing on December 31, 1995. Interest accrues at the lending bank's prime rate and is payable monthly. The revolving bank credit line lending commitment is $35 million. This commitment will be available to the Company through September 30, 1995 and is subject to a borrowing base formula. The agreement provides for borrowings and letters of credit based on collateralized accounts receivable and inventory. All fixed assets other than real property with the exception of certain real property located in Mountainside, New Jersey, are also included as collateral. Letters of credit, which are included 15 17 in the borrowing base formula, are limited to $5 million. Letters of credit under the line at September 25, 1994 were $2.1 million. Interest is accrued at the lending bank's prime rate or, at the Company's option, the London Interbank Offered Rate (LIBOR) plus two percentage points, which the Company utilized for $25 million of its outstanding debt. The agreement contains customary operating and financial covenants typical to this form of financing and further provides that the sum of each fiscal year's quarterly dividend payments cannot exceed 25% of the Company's annual net income in that year. The $8.8 million term loan is with the same lenders as the revolving credit line, is secured by the same collateral, and is due and payable on August 31, 1998. Principal payments of $360 thousand are due and payable on the last day of each quarter through June 30, 1998, with a final balloon payment of $3 million due and payable on August 31, 1998. Interest accrues at the lending bank's prime rate and is payable monthly. On May 13, 1994, the Company obtained authorization from its lender to repurchase up to 200,000 shares of the Company's common stock at an aggregate price not to exceed $2.5 million. Through September 25, 1994, the Company had repurchased 152,500 shares. Management believes that the Company's anticipated cash flow from operations, combined with the bank credit described above, will be sufficient to support current and forecasted working capital requirements and dividend payments. Capital expenditures in the six month period in 1995 were $2.0 million as compared with $2.1 million in the comparable period in 1994. The Company's two segments have similar cash flow requirements. 16 18 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10.1 TransTechnology Corporation Amended and Restated 1992 Long Term Incentive Plan. (Incorporated by reference to registrant's Proxy Statement dated August 9, 1994.) 10.2 Director Stock Option Agreement. 10.3 Restricted Stock Award Agreement. 11 Statement of Computation of Per Share Earnings 27 Financial Data Schedule (b) A report on Form 8-K was filed on September 12, 1994, as amended by Form 8-CIA filed on November 4, 1994, reporting the Company's acquisition of all of the outstanding stock of Industrial Retaining Ring Company and of Retainers, Inc. and substantially all of the assets of Industrial Advertising. Industrial Retaining Ring Company manufactures retaining rings used in heavy equipment and industrial machinery. 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. TRANSTECHNOLOGY CORPORATION (Registrant) Dated: November 9, 1994 By: /s/ Chandler J. Moisen -------------------------------- CHANDLER J. MOISEN, Senior Vice President and Chief Financial Officer* * On behalf of the Registrant and as Principal Financial Officer. 17 19 EXHIBIT INDEX ------------- Exhibit No. Description - - ----------- ----------- 10.1 TransTechnology Corporation Amended and Restated 1992 Long Term Incentive Plan. (Incorporated by reference to registrant's Proxy Statement dated August 9, 1994.) 10.2 Director Stock Option Agreement. 10.3 Restricted Stock Award Agreement. 11 Statement of Computation of Per Share Earnings. 27 Financial Data Schedule. EX-10.2 2 DIRECTOR STOCK OPTION AGREEMENT 1 EXHIBIT 10.2 TRANSTECHNOLOGY CORPORATION DIRECTOR STOCK OPTION AGREEMENT Agreement dated as of September 15, 1994 between TransTechnology Corporation, a Delaware corporation (the "Company"), and __________________ ("Optionee"), residing at ______________________________________________. Whereas, pursuant to the TransTechnology Corporation Amended and Restated 1992 Long Term Incentive Plan of the Company (the "Plan"), the Board of Directors and shareholders have authorized the granting to Optionee of an incentive stock option to purchase shares of common stock of the Company upon the terms and conditions hereinafter stated. NOW THEREFORE, in consideration of the covenants herein set forth, the; parties agree as follows: 1 . Shares & Price. The Company grants to Optionee the right to purchase, upon and subject to the terms and conditions herein stated and the terms and conditions of the Plan, all or any part of _____ shares of common stock ($.01 par value) of the Company (the "Shares"), for cash at the price of $_____ per share. 2. Term of Option. This option shall expire on September 15, 1999. 3. Installments. Subject to the provisions hereof, this option shall become exercisable on September 15, 1995. 4. Exercise. This option may only be exercised by delivery to the Company of (i) a written notice of exercise, in form acceptable to the Company, stating the number of Shares then being purchased hereunder, and (ii) a check, or cash, in the amount of the purchase price of such shares (or, at the discretion of the Board of Directors, with Shares of Company with a market value equal to the purchase price at date of exercise). 5. Termination of Service as a Director. If Optionee ceases to be a director of the Company for any reason other than his death or disability, either Optionee or the person entitled to succeed to his rights hereunder shall have the right, at any time within ninety day after such termination and, prior to the expiration. of this option pursuant to Paragraph 2 hereof, to exercise this option to the extent, but only to the extent, that this option was exercisable and had not 18 2 previously been exercised at the date of such termination of employment; provided, however, that all rights under this option shall expire in any event on the day specified in Paragraph 2 hereof or ninety days after Optionee terminates service as a Director, whichever first occurs. 6. Death of Optionee & No Assignment. The option shall not be assignable or transferable except by will or by the laws of descent and distribution and shall be exercisable during his lifetime only by the Optionee, If Optionee shall become disabled or die while in the employ of the Company, the Optionee or the person entitled to succeed to his rights hereunder may exercise this option until the first to occur of (i) the date one year from the date of the Optionee's disability or death, or (ii) the date such option expires pursuant to Paragraph 2 hereof to the extent that Optionee was entitled to exercise this Option at the date of his disability or death. 7. Service of Optionee. In consideration of the granting of this Option by the Company, the Optionee agrees to render faithful and efficient services to the Company as a director for a period of at least one year from the date this Option is granted. 8. No Rights as Stockholders. Optionee shall have no rights as a stockholder with respect to the Shares covered by the Option until the date of the issuance of stock certificates to him. No adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificates are issued pursuant to the exercise of options granted hereunder. 9. Modification and Termination. The rights of Optionee are subject to modification and termination in certain events as provided in the Plan. 10. Shares Purchased for Investment. Optionee represents and agrees that if he exercises this option in whole or in part, he shall acquire the shares upon such exercise for the purpose of investment and not with a view to their resale or distribution. The Company reserves the right to include a legend of each certificate representing shares subject to this option, stating in effect that such shares have not been registered under the Securities Act of 1933 as amended. 11. This Agreement Subject to Plan. This agreement is made pursuant to all of the provisions of the Plan, and is intended, and shall be interpreted in a manner, to comply therewith. Any provision hereof inconsistent with the Plan shall be superseded and governed by the Plan. 19 3 12. Gender. Unless the context otherwise requires, the masculine gender includes the feminine. 13. Notices. Any notices or other communication required or permitted hereunder shall be sufficiently given if delivered personally or sent by registered or certified mail, postage prepaid, to the Company at its corporate headquarters, and to the Optionee at the address above, or to such other address as shall be furnished in writing by either party to the other party, and shall be deemed to have been given as of the date so delivered or deposited in the United States mail, as the case may be. IN WITNESS WHEREOF, the parties hereto have executed this agreement. TRANSTECHNOLOGY CORPORATION ("Company") -------------------------- Michael J. Berthelot Chairman President and CEO ("Optionee") -------------------------- Optionee Name Grant Number: 00 ---- VD:2033 20 EX-10.3 3 RESTRICTED STOCK AWARD AGREEMENT 1 EXHIBIT 10.3 Participant: No. of Shares: TRANSTECHNOLOGY CORPORATION Restricted Stock Award Agreement This Agreement is entered into as of this 15th day of September, 1994, by and between TransTechnology Corporation, a Delaware corporation (the "Company"), and the undersigned participant in the Company's 1992 Long Term Incentive Plan (the "Participant"). RECITALS A. Pursuant to the Company's Amended and Restated 1992 Long Term Incentive Plan (the "Plan"), the Board of Directors and the shareholders have authorized an award to Participant of shares of the Company's Common Stock, par value $.01 per share (the "Restricted Stock") as remuneration for services as a director. B. Pursuant to the Plan, the Restricted Stock to be so awarded shall be issued subject to certain conditions and restrictions, which conditions and restrictions are set forth in this Agreement. THEREFORE, in consideration of the covenants herein set forth, the parties agree as follows: 1. Award; Acceptance of Award. Subject to the terms and conditions contained herein, the Company shall issue to Participant, as an award pursuant to the Plan and without payment by Participant of any consideration therefor, _______ shares of Restricted Stock, and Participant hereby accepts such award. 2. Forfeiture of Restricted Stock Upon Termination of Employment. In the event that Participant ceases to be a director of the Company or any corporation a majority of the voting stock of which is owned by the Company (a "Subsidiary") for any reason whatsoever (including without limitation by reason of the termination of such service by the Company or a Subsidiary with or without cause, by reason of disability, death or retirement or by reason of Participant resigning voluntarily) on or before September 14, 1995, then the shares of Restricted Stock awarded pursuant to this Agreement shall thereupon automatically, and without further notice, demand, period of 21 2 time or legal or administrative proceeding, be forfeited and cancelled, and all right, title and interests therein of Participant shall terminate and expire, without payment by the Company or any Subsidiary of any consideration therefor and without any liability on the part of the Company or any Subsidiary. Notwithstanding the foregoing, the Participant may elect to extend the period during which shares of Restricted Stock are subject to forfeiture and cancellation (the "Restriction Period") as follows. If the Participant desires to extend the Restriction Period, the Participant shall deliver to the Company a written request that the Restriction Period be extended for a specified period or until a specified event. Such election shall be subject in each case to the Board of Directors' approval and to such terms as are determined by the Board, all in its sole discretion. The Board shall notify the Participant of its approval and such terms as have been determined by the Board, or of its disapproval (as the case may be), within 60 days of its receipt of the Participant's written request to extend the Restriction Period. 3. Forfeiture Procedures. If, pursuant to Sections 2 or 7 of this Agreement, any shares of Restricted Stock are forfeited and cancelled, such forfeiture and cancellation shall be documented pursuant to the appropriate one of the following procedures: (a) If a certificate or certificates representing the number of shares of Restricted Stock so forfeited and cancelled are in the possession of the Company pursuant to Section 4 hereof, then the officer of the Company having custody of such certificate shall, forthwith upon the occurrence of the event resulting in such forfeiture and cancellation, transmit such certificates to the Company's transfer agent and registrar (or, if the Company has no such transfer agent or registrar, then to the appropriate officer of the Company) with information as to the number of shares so forfeited and cancelled and, if the certificates evidence a number of shares greater than the amount to be so cancelled, with instructions that a certificate representing the shares not so cancelled be issued in the name of the Participant; and (b) If, pursuant to the provisions of Sections 2 or 7 of this Agreement, any shares of Restricted Stock are forfeited and cancelled and the Company does not have in its possession a certificate or certificates representing the shares so forfeited and cancelled, then the Participant shall, upon written demand from the Company, furnish to the Company a certificate duly endorsed and assigned to the 22 3 Company representing the number of shares of Restricted Stock so forfeited and cancelled and, upon its receipt thereof, the Company shall follow the procedures indicated in the preceding paragraph. The Participant agrees to provide the Company, upon its request therefor, with one or more stock assignments separate from certificate, executed by the Participant without completing the information as to share amount transferred or name of transferee, and with such other and further instruments of assignment or other documents which may be reasonably required in order to implement the forfeiture and cancellation provisions of Sections 2 and 7 of this Agreement. 4. Issuance of Restricted Stock; Retention of Certificate by Company. Within a reasonable time after the execution of this Agreement by the Company and the Participant, the Company shall issue, in the name of the Participant as the registered holder thereof, certificates representing, the number of shares of Restricted Stock awarded pursuant to Section 1 hereof. At the time of such issuance and at all times thereafter, the Company shall deliver to Participant, upon the Participant's request, one or more certificates (in such denominations as the Participant may direct) representing in the aggregate a number of shares of Common Stock which does not at any time exceed the number of shares not subject to forfeiture and cancellation under Section 2 hereof. 5. Stock Splits, Stock Dividends, Mergers and Reorganizations. If, at any time or from time to time when there are shares of Restricted Stock subject to forfeiture and cancellation under Section 2 hereof: (a) There is any stock dividend or liquidating dividend of cash and/or property, stock split or other change in the character or amount of any of the outstanding securities of the Company; or (b) There is any consolidation, merger or sale of all, or substantially all, of the assets of the Company; then, in such event, any and all new, substituted or additional securities or other property to which the Participant is entitled by reason of his or her ownership of the shares of Restricted Stock which are so subject to forfeiture and cancellation shall be immediately and similarly subject to such forfeiture and shall be included in the words and treated as "Restricted Stock" for all 23 4 purposes of such forfeiture provisions and all other terms and conditions hereof with the same force and effect as the original shares of Restricted Stock subject to such forfeiture provisions. Notwithstanding the above, upon the dissolution or liquidation of the Company or upon any reorganization, merger or consolidation in which the Company does not survive, the forfeiture and cancellation provisions of Section 2 shall terminate as to any shares of Restricted Stock not previously forfeited and cancelled pursuant to such provisions. 6. Indemnification of Company. The Participant hereby agrees to indemnify the Company and to hold the Company harmless from and against any loss, liability, cost or expense, including attorneys' fees and expenses, which the Company may incur or to which the Company may be subject by any reason of or based upon the fact that the Company has custody of any certificates representing Restricted Stock retained in accordance with Section 4 hereof and that such stock, or any right, title or interest therein, may become involved in any legal, administrative or arbitration proceeding. 7. Transfer or Hypothecation of Stock. The Participant agrees that he or she will not transfer, sell, pledge, assign or in any other way hypothecate, alienate or dispose of any shares of Restricted Stock awarded under this Agreement so long as such shares are subject to forfeiture and cancellation under Section 2 hereof. It is agreed that if the Participant does, or attempts to do, or suffers any of such prohibited acts or events specified in the immediately preceding sentence, then forthwith upon the occurrence of such act or event such shares shall be automatically forfeited and cancelled, without payment by the Company of any consideration therefor and without any notice, demand, period of time or legal or administrative proceeding. 8. Ownership Rights. Subject only to the provisions of this Agreement, the Participant shall have all of the rights, powers and privileges of an owner of shares of Common Stock, including without limitation the right to vote such shares and to receive non-liquidating cash dividends and non-liquidating distributions thereon, with respect to shares of Restricted Stock awarded hereunder notwithstanding that certificates representing any or all of such shares are retained by the Company pursuant to Section 4 hereof; provided, however, that all such rights shall terminate automatically with respect to any shares forfeited and cancelled pursuant to Sections 2 or 7 of this Agreement. 24 5 9. Endorsement on Share Certificates. The Participant agrees that the certificates representing any Restricted Stock subject to the forfeiture and cancellation provisions of Section 2 may have endorsed upon them in a conspicuous manner a legend in substantially the following form: "THE VOLUNTARY OR INVOLUNTARY TRANSFER OR ENCUMBRANCE OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY, AND SUCH SHARES ARE SUBJECT TO, THE PROVISIONS OF A CERTAIN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER HEREOF (WHICH AGREEMENT, AMONG OTHER THINGS, SUBJECTS SUCH SHARES TO POSSIBLE FORFEITURE AND CANCELLATION), A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED TO THE HOLDER OF THIS CERTIFICATE UPON REQUEST WITHOUT CHARGE." When the forfeiture and cancellation provisions of Section 2 hereof expire or terminate as to any of such shares, the Company shall, upon the Participant's request and at no charge to the Participant, exchange the certificates representing the shares that contain the endorsement provided for herein for new certificates representing those of the shares as to which such rights have expired or terminated containing no such endorsement and certificates containing such endorsement representing the balance of the shares as to which such rights have not expired or terminated. 10. Governing Law. This Agreement and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the internal substantive laws of the State of Delaware. 11. Notices. Any notice or other communication required or permitted hereunder shall be sufficiently given only if delivered personally or sent by registered or certified mail, postage prepaid, to the Company at its principal place of business, or to the Participant at the address below or any address of Participant appearing on the Company's stock records, or to such other address or addresses as shall be furnished in writing in the foregoing manner by either party to the other party, and shall be deemed to have been 25 6 given as of the date so personally delivered or two days after the date deposited in the United States mail, as the case may be. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. TRANSTECHNOLOGY CORPORATION By: Valentina Doss ------------------------ [Signature] Its: Vice President, General Counsel and Secretary PARTICIPANT Name: ------------------------ [Signature] Address: VD:1855 26 EX-11 4 STATEMENT OF COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 STATEMENT OF THE COMPUTATION OF PER SHARE EARNINGS IN ACCORDANCE WITH INSTRUCTION 4(g)
THREE MONTHS ENDED SIX MONTHS ENDED --------------------------- ------------------------------ 9/25/94 9/26/93 9/25/94 9/26/93 --------- --------- --------- --------- Primary earnings per share: Weighted average number of common shares outstanding 5,120,710 5,134,194 5,151,699 5,128,147 Dilutive effect of stock option plan - (a) - (a) - (a) - (a) --------- --------- --------- --------- 5,120,710 5,134,194 5,151,699 5,128,147 ========= ========= ========= ========= Net income $ 197,000 $1,231,000 $1,269,000 $2,745,000 ========== ========== ========== ========== Primary earnings per share $ 0.04 $ 0.24 $ 0.25 $ 0.54 ========== ========== ========== ==========
(a) The inclusion of stock options in the calculation of primary earnings per share was either anti-dilutive or not material as per APB 15. 27 EX-27 5 FINANCIAL DATA SCHEDULE
5 TRANSTECHNOLOGY CORPORATION COMMERCIAL & INDUSTRIAL COMPANIES FINANCIAL DATA SCHEDULE 1,000 6-MOS MAR-31-1994 SEP-25-1994 711 0 26,845 288 38,342 82,246 50,471 18,428 138,045 16,004 51,966 53 0 0 4,225 138,045 54,621 55,966 40,680 11,860 0 36 1,198 3,426 1,197 2,229 (960) 0 0 1,269 0.25 0.25
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