10-Q 1 y05504e10vq.txt TRANSTECHNOLOGY CORPORATION 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 December 26, 2004 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) 688-2440 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes No X --- ---- As of February 4, 2005, the total number of outstanding shares of registrant's one class of common stock was 6,700,560. INDEX
Page No. -------- PART I. Financial Information Item 1. Financial Statements........................................ 3 Statements of Consolidated Operations Three and Nine Month Periods Ended December 26, 2004 and December 28, 2003....................................... 4 Consolidated Balance Sheets December 26, 2004 and March 31, 2004........................ 5 Statements of Consolidated Cash Flows Nine Month Periods Ended December 26, 2004 and December 28, 2003........................................... 6 Notes to Consolidated Financial Statements.................. 7-12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................... 12-21 Item 3. Quantitative and Qualitative Disclosures about Market Risk.. 21 Item 4. Controls and Procedures..................................... 21 PART II. Other Information Item 1. Legal Proceedings........................................... 21 Item 6. Exhibits.................................................... 22 SIGNATURES.............................................................. 23 EXHIBIT 10.29........................................................... 24-31 EXHIBIT 31.1............................................................ 32 EXHIBIT 31.2............................................................ 33 EXHIBIT 32.............................................................. 34
2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The following unaudited Statements of Consolidated Operations, Consolidated Balance Sheets, and Statements of Consolidated Cash Flows are of TransTechnology Corporation and its consolidated subsidiaries (collectively, the "Company"). These reports reflect all adjustments of a normal recurring nature, which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods reflected therein. The results reflected in the unaudited Statement of Consolidated Operations for the period ended December 26, 2004, 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 of Financial Condition and Results of Operations 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 Company's Annual Report on Form 10-K filed for the fiscal year ended March 31, 2004. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 3 TRANSTECHNOLOGY CORPORATION STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED) (In Thousands of Dollars, Except Share Data)
THREE MONTHS ENDED NINE MONTHS ENDED ------------------------------------- ------------------------------------- DECEMBER 26, 2004 DECEMBER 28, 2003 DECEMBER 26, 2004 DECEMBER 28, 2003 ----------------- ----------------- ----------------- ----------------- Net sales $ 17,267 $ 16,679 $ 47,064 $ 49,131 Cost of sales 10,049 9,682 27,810 28,029 ----------- ----------- ----------- ----------- Gross profit 7,218 6,997 19,254 21,102 General, administrative and selling expenses 4,411 4,397 12,635 11,699 Interest expense 2,462 2,640 8,143 7,711 Interest income and other expense (income)-net 85 (1,112) 16 (1,318) Loss on extinguishment of debt 2,185 -- 2,185 -- ----------- ----------- ----------- ----------- (Loss) income before income taxes (1,925) 1,072 (3,725) 3,010 (Benefit) provision for income taxes (657) 408 (1,341) 1,144 ----------- ----------- ----------- ----------- Net (loss) income $ (1,268) $ 664 $ (2,384) $ 1,866 =========== =========== =========== =========== Basic (loss) earnings per share: Net (loss) income $ (0.19) $ 0.10 $ (0.36) $ 0.28 =========== =========== =========== =========== Diluted (loss) earnings per share: Net (loss) income $ (0.19) $ 0.10 $ (0.36) $ 0.28 =========== =========== =========== =========== Number of shares used in computation of per share information: (Note 1) Basic 6,701,000 6,669,000 6,684,000 6,655,000 Diluted 6,701,000 6,691,000 6,684,000 6,672,000
See accompanying notes to unaudited consolidated financial statements. 4 TRANSTECHNOLOGY CORPORATION CONSOLIDATED BALANCE SHEETS (In Thousands of Dollars, Except Share Data)
(UNAUDITED) DECEMBER 26, 2004 MARCH 31, 2004 ----------------- -------------- Assets Current assets: Cash and cash equivalents $ 153 $ 960 Accounts receivable (net of allowance for doubtful accounts of $20 at December 26, 2004 and $10 at March 31, 2004) 10,852 8,720 Inventories-net 15,748 20,449 Prepaid expenses and other current assets 689 842 Income tax receivable 376 395 Deferred income taxes 3,334 3,334 Real estate held for sale - 1,432 -------- -------- Total current assets 31,152 36,132 -------- -------- Property, plant and equipment 14,857 13,222 Less accumulated depreciation (11,139) (10,794) -------- -------- Property, plant and equipment - net 3,718 2,428 -------- -------- Other assets: Deferred income taxes 28,227 27,035 Other 11,978 11,614 -------- -------- Total other assets 40,205 38,649 -------- -------- Total $ 75,075 $ 77,209 ======== ======== LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Current portion of long-term debt and short term borrowings $ 3,301 $ 79 Accounts payable-trade 3,956 5,224 Accrued compensation 1,629 2,890 Accrued income taxes 1,077 1,566 Accrued interest 624 1,813 Other current liabilities 1,657 2,387 -------- -------- Total current liabilities 12,244 13,959 -------- -------- Long-term debt payable to banks and others 58,450 56,472 -------- -------- Other long-term liabilities 10,385 10,565 -------- -------- Stockholders' deficit: Preferred stock - authorized, 300,000 shares; none issued - - Common stock - authorized, 14,700,000 shares of $.01 par value; issued 7,090,695 and 7,059,107 at December 26, 2004 and March 31, 2004, respectively 71 71 Additional paid-in capital 75,659 76,728 Accumulated deficit (73,633) (71,249) Unearned compensation (181) (97) -------- -------- 1,916 5,453 Less treasury stock, at cost - 390,135 shares at December 26, 2004 and 560,964 at March 31, 2004 (7,920) (9,240) -------- -------- Total stockholders' deficit (6,004) (3,787) -------- -------- Total $ 75,075 $ 77,209 ======== ========
See accompanying notes to unaudited consolidated financial statements. 5 TRANSTECHNOLOGY CORPORATION STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED) (In Thousands of Dollars)
NINE MONTHS ENDED -------------------------------------- December 26, 2004 December 28, 2003 ----------------- ----------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (2,384) $ 1,866 Adjustments to reconcile net (loss) income to net cash used in operating activities: Loss on extinguishment of debt 2,185 -- Depreciation and amortization 1,162 1,696 Noncash interest expense 2,510 2,367 Increase in provision for bad debt 12 10 Changes in assets and liabilities: Increase in accounts receivable and other receivables (2,125) (922) Decrease in inventories 4,701 716 (Increase) decrease in deferred taxes net (1,192) 1,024 (Increase) decrease in other assets (174) 214 Decrease in accounts payable (1,268) (1,193) Decrease in accrued compensation (1,261) (868) Decrease in income taxes payable (489) (1,979) Decrease in other liabilities (2,238) (8,869) -------- -------- Net cash used in operating activities (561) (5,938) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (1,636) (350) Proceeds from sale of real estate 1,331 -- Decrease in notes receivable 25 1,000 -------- -------- Net cash (used in) provided by investing activities (280) 650 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of debt and other short term borrowings (66,216) -- Proceeds from debt and other short term borrowings 69,046 -- Payment of debt issue costs (2,070) -- Payment of debt prepayment penalties (747) -- Exercise of stock options 21 39 -------- -------- Net cash provided by financing activities 34 39 -------- -------- Decrease in cash and cash equivalents (807) (5,249) Cash and cash equivalents at beginning of period 960 7,104 -------- -------- Cash and cash equivalents at end of period $ 153 $ 1,855 ========= ======== Supplemental information: Interest payments 6,109 5,271 Income tax payments 341 2,099 Increase in senior subordinated note and term loans for paid-in-kind interest expense 2,370 2,230 Increase in additional paid-in-capital from warrant put expiration -- 2,184
See accompanying notes to unaudited consolidated financial statements. 6 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands) NOTE 1. Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares outstanding. Diluted earnings (loss) per share is computed by dividing net income (loss) by the sum of the weighted-average number of shares outstanding plus the dilutive effect of shares issuable through the exercise of stock options and warrants. The components of the denominator for basic earnings (loss) per common share and diluted earnings (loss) per common share are reconciled as follows:
Three Months Ended Nine Months Ended ----------------------------- ----------------------------- December 26, December 28, December 26, December 28, 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Basic Earnings (Loss) per Common Share: Weighted-average common stock out- standing for basic earnings (loss) per share calculation 6,701 6,669 6,684 6,655 ============= ============= ============= ============= Diluted Earnings (Loss) per Common Share: Weighted-average common shares outstanding 6,701 6,669 6,684 6,655 Stock options and warrants* - 22 - 17 ------------- ------------- ------------- ------------- Weighted-average common stock outstanding for diluted earnings (loss) per share calculation 6,701 6,691 6,684 6,672 ============= ============= ============= =============
* Not including anti-dilutive stock options totaling 144 and 148 for the three and nine month periods ended December 26, 2004 respectively, and 158 and 255 for the three and nine month periods ended December 28, 2003, respectively. 7 NOTE 2. Stock-Based Compensation Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation", encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to continue to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations. Accordingly, the Company records expense in an amount equal to the excess, if any, of the quoted market price on the grant date over the option price. The following table includes as reported and proforma information required by Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure". Proforma information is based on the fair value method under SFAS No. 123.
Three Months Ended Nine Months Ended --------------------------------- ------------------------------- December 26, December 28, December 26, December 28, 2004 2004 2004 2003 ------------ ------------ ------------ ------------- Net (loss) income as reported $ (1,268) $ 664 $ (2,384) $ 1,866 Deduct: Total stock-based compensation expense determined under fair value based method for all awards, net of related tax effects (43) (47) (106) (132) ----------- --------- --------- -------- Proforma net (loss) income $ (1,311) $ 617 $ (2,490) $ 1,734 ========== ======== ========= ======== Basic earnings (loss) per share: As reported $ (0.19) $ 0.10 $ (0.36) $ 0.28 Proforma $ (0.20) $ 0.09 $ (0.37) $ 0.26 Diluted earnings (loss) per share: As reported $ (0.19) $ 0.10 $ (0.36) $ 0.28 Proforma $ (0.20) $ 0.09 $ (0.37) $ 0.26
8 NOTE 3. Inventories Inventories, net of valuation allowances, are summarized as follows:
December 26, 2004 March 31, 2004 ----------------- -------------- Finished goods $ -- $ 1 Work in process 4,275 7,037 Purchased and manufactured parts 11,473 13,411 ----------------- -------------- Total $15,748 $20,449 ================= ==============
NOTE 4. Long-term Debt Payable to Banks and Others Long-term debt payable to banks and others consisted of the following:
December 26, 2004 March 31, 2004 ----------------- -------------- Revolving Credit Facility 6.75% $ 222 $ - Term Loans 8.25-21.25% 61,371 - Senior Subordinated Notes 19% - 56,393 Other 158 158 ----------- ----------- 61,751 56,551 Less current maturities 3,301 79 ----------- ----------- Total long-term debt $ 58,450 $ 56,472 =========== ===========
Senior Credit Facility - On November 10, 2004, the Company refinanced and repaid in full the Former Senior Credit Facility (see below) and the Notes (see below) with a $71.5 million, forty-two month, senior credit facility (the "Senior Credit Facility"). The Senior Credit Facility consists of a $10.0 million asset-based Revolving Credit Facility, and three tranches of Term Loans totaling $61.5 million. At December 26, 2004, the Senior Credit Facility has an effective weighted interest rate of approximately 13.7% which is tied to the prime rate. The Term Loans require monthly principal payments of $250,000 over the term of the loan with the balance due at the end of the term. Accordingly, the balance sheet reflects $3.0 million of current maturities due under the Senior Credit Facility. The Senior Credit Facility also contains certain mandatory prepayment provisions which are linked to cash flow and customary financial covenants and events of default. The Senior Credit Facility is secured by all of the Company's assets. The Company recorded a pre-tax charge of $2.2 million relating to the write-off of unamortized debt issue costs and the payment of pre-payment premiums in the quarter ended December 26, 2004. Costs associated with establishing the Senior Credit Facility were $2.2 million and will be amortized over the forty-two month term of the new facility. 9 Former Senior Credit Facility - At the time of the refinancing on November 10, 2004, the Company had a senior credit facility consisting of an $8.0 million asset-based revolving credit facility, which was established in August 2002 (the "Former Senior Credit Facility") to refinance all remaining obligations outstanding under the prior senior credit facility. The Former Senior Credit Facility was amended on August 5, 2003 and was subsequently amended on January 30, 2004 and July 30, 2004, and was repaid in full on November 10, 2004 (see "Senior Credit Facility" above). The maturity date of this facility, as amended, was January 31, 2005, and had an interest rate of 5.75%. The Former Senior Credit Facility was secured by all of the Company's assets. Senior Subordinated Notes - On August 30, 2000, the Company completed a private placement of $75 million of senior subordinated notes (the "Notes") and warrants to purchase shares of the Company's common stock (the "Warrants") to a group of institutional investors (collectively, the "Purchasers"). The Company used the proceeds of the private placement to retire, in full, a $75 million bridge loan held by a group of lenders led by Fleet National Bank. The Notes, as amended in August 2002, were due on August 29, 2005 and bore interest at a rate of 18% per annum consisting of 13% cash interest on principal, payable quarterly, and 5% interest on principal, payable quarterly in "payment-in-kind" ("PIK") promissory notes. The PIK portion of the interest rate increased 0.25% each quarter, commencing December 31, 2002 until the Notes were repaid. Effective October 7, 2004, the Purchasers executed a waiver with respect to our technical compliance with certain financial covenants. At the time of the refinancing on November 10, 2004 described above, the principal balance outstanding on the Notes amounted to $58.7 million, which included the original principal amount plus the PIK notes. As of November 5, 2004, all of the Warrants had been exercised by the Purchasers. NOTE 5. New Accounting Standards In December 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 46R, a revision to Interpretation No. 46, "Consolidation of Variable Interest Entities", which addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means other than voting rights and accordingly should consolidate the entity. Interpretation No. 46R clarifies some of the provisions of Interpretation No. 46 and exempts certain entities from its requirements. Interpretation No. 46R was effective for the Company at the end of the first quarter ended June 27, 2004. The adoption of this statement did not have a material impact on the Company's financial position or results of operations. In November 2004, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 151, Inventory Costs. This statement amends the guidance in Accounting Research Bulletin ("ARB") No. 43, Restatement and Revision of Accounting Research Bulletins, Chapter 4 "Inventory Pricing", to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage). SFAS No. 151 requires that these items be recognized as current-period charges regardless of whether they meet the definition of "so abnormal" in ARB No. 43. In addition, SFAS No. 151 requires that allocation of fixed overheads to the costs of conversion be based on the normal capacity of production facilities. SFAS No. 151 is effective for the Company for its fiscal year ending March 31, 2006. Management does not believe that the adoption of this statement will have a material impact on the results of its operations. In December 2004, the FASB issued SFAS No. 123 (Revised 2004) "Share-Based Payment" ("SFAS No. 123R") that addresses the accounting for share-based payment transactions in which a company 10 receives employee services in exchange for (a) equity instruments of the company or (b) liabilities that are based on the fair value of the company's equity instruments or that may be settled by the issuance of such equity instruments. SFAS No. 123R addresses all forms of share-based payment awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. SFAS No. 123R eliminates the ability to account for share-based compensation transactions using APB Opinion No. 25, "Accounting for Stock Issued to Employees", that was provided in Statement 123 as originally issued. Under SFAS No. 123R companies are required to record compensation expense for all share based payment award transactions measured at fair value. This statement is effective for quarters ending after June 15, 2005. Management has not yet determined the transition approach in adopting this statement. NOTE 6. Contingencies As previously reported, the Company is subject to an investigation being conducted by the Newark, New Jersey office of the United States Attorney with respect to Breeze-Eastern's overhaul and repair operations. The Company has, to date, cooperated fully and will continue to cooperate fully with the government's investigation. In addition, the Board of Directors retained a fact finding and forensic accounting firm, The Bradlau Group of Morristown, New Jersey, to perform an independent review of the overhaul and repair operations of the Company's Breeze-Eastern business. The Board of Directors has shared the preliminary and follow-on reports of the findings of this independent review with the United States Attorney's office. The investigation has had no direct impact, and the Company does not expect a direct impact, on the Company's ability to manufacture and ship products and meet customer delivery schedules. However, the Company has implemented changes in its operating procedures and added new personnel to its overhaul and repair operation which has had the effect of producing higher labor and material costs and lower gross profit and has impeded throughput in that operation. The Company has held initial discussions with the United States Attorney's office relative to the resolution of the issues associated with the investigation. As of this date, the United States Attorney's investigation is continuing and the Company has not been made aware of any specific statutory or regulatory violations resulting from that investigation. The Company sold the assets of its Breeze Industrial Products (BIP) division in July 2001. As part of that transaction, the Company sold the land and building occupied by the BIP operation to the Indiana County (PA) Development Corporation (ICDC) for $2,000,000. The ICDC, in turn, entered into a lease of the facility in September 2001 with BIP as lessee for an initial term of five years and up to four additional five-year terms. The lease contains an option for BIP to purchase the property from ICDC at the end of the first term for $1,500,000 (the appraised value of the property in July 2001). In the event that BIP does not exercise the purchase option or the renewal option at the end of the initial term, ICDC, upon proper notification, can require the Company to repurchase the property for $1,000,000, of which $500,000 is contractually required to be maintained on deposit with banks located in Indiana County, Pennsylvania. The Company considers a decision by BIP to vacate the location in Saltsburg, Pennsylvania to be unlikely as this is a manufacturing facility with sophisticated machinery, an established well-trained work force, dependable suppliers, and excellent distribution access. In the event that the facility is presented for repurchase, management is confident that the repurchase would not have a material effect on the Company's financial position or cash flows and the facility can be resold for at least the repurchase price. 11 The Company is also engaged in various other legal proceedings incidental to its business. Management is of the opinion that, after taking into consideration information furnished by our counsel, the above matters will have no material effect on the consolidated financial position or the results of our operations in future periods. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL This Quarterly Report on Form 10-Q may contain forward-looking statements. See "Forward Looking Statements" on page 19 hereof for further information of the risks and uncertainties associated with forward-looking statements. We design, develop, and manufacture sophisticated lifting equipment for specialty aerospace and defense applications. With over 50% of the global market, we have long been recognized as the world's largest designer and leading supplier of performance-critical rescue hoists and cargo-hook systems. We also manufacture weapons-handling systems, cargo winches, tie-down equipment, and tow-hook assemblies. Marketed under the trade name "Breeze-Eastern", our products are designed to be efficient and reliable in extreme operating conditions. Our equipment is used to complete rescue operations and military insertion/extraction operations, move and transport cargo, and load weapons onto aircraft and ground-based launching systems. All references to fiscal 2005 and beyond in this Management's Discussion and Analysis of Financial Condition and Results of Operations refer to the fiscal year ending March 31, 2005 and beyond, and all references to all other fiscal years refer to the fiscal years ended March 31. RESULTS OF OPERATIONS THREE MONTHS ENDED DECEMBER 26, 2004 COMPARED WITH THREE MONTHS ENDED DECEMBER 28, 2003. Net sales. Our sales increased to $17.3 million for the third quarter of fiscal 2005, from sales of $16.7 million for the third quarter of fiscal 2004. This 4% increase in sales for the third quarter of fiscal 2005 was primarily due to higher spare parts and overhaul and repair sales. Sales of cargo hook and weapon handling spares were up $2.4 million from the prior year's third quarter primarily due to shipments on the MLRS and HIMARS programs. Sales in the overhaul and repair portion of our business increased 29% from the same period last year (See discussion of Gross profit below). Sales of new equipment were down $ 2.0 million from the prior year's third quarter primarily due to the completion of shipments of the HLU-196 Bomb Hoist program. Gross profit. Gross profit increased 3% to $7.2 million for the third quarter of fiscal 2005 from $7.0 million for the third quarter of fiscal 2004. Generally, repair and overhaul services and spare parts sales have higher gross margins than sales of new equipment or engineering services. We have implemented changes in our operating procedures and added new personnel to our overhaul and repair operation, all of which has had an impact on the results for the quarter. These changes were made as a result of the process and procedures review of that operation over the past twelve months. We have instituted additional levels of verification and have increased personnel training. This situation produced higher labor and material costs than we had planned. As a result, our overhaul and repair throughput was impeded resulting in reduced gross margins in the third quarter. 12 Notwithstanding an increase in overhaul and repair sales, the inefficiencies experienced as we implement improvements in our overhaul and repair operation caused the gross profit to decrease by approximately $0.1 million. Gross profit from new products experienced a decrease of approximately $0.7 million. These decreases were offset by approximately $0.8 million related to higher sales of spares, and approximately $0.2 million related to better profitability of engineering sales. General, administrative and selling expenses. Fiscal year third quarter selling, general and administrative expenses were approximately equal to the comparable period last year, however, we had anticipated a reduction of almost $0.3 million. The higher costs were largely attributed to the Company's appeal of the New York Stock Exchange's delisting decision, additional costs associated with the United States Attorney's investigation, and legal and accounting costs associated with business units that had been sold in prior fiscal years. Interest expense. Interest expense decreased $0.2 million to $2.5 million in the third quarter of fiscal 2005 as compared to $2.6 million in the third quarter of fiscal 2004 primarily from the decreased aggregate interest rate resulting from our refinancing in November 2004. Other income. Interest income and other expense [income] for the third quarter of fiscal 2004 includes a gain of $0.9 million relating to the sale of our remaining 19% interest in Cirteq Limited and the collection of an intercompany note from Cirteq Limited. Net income. We incurred a net loss of $1.3 million in the third quarter of fiscal 2005, versus net income of $0.7 million in the third quarter of fiscal 2004, which primarily resulted from the reasons discussed above. New orders. New orders received in the third quarter of fiscal 2005 totaled $12.6 million, which represents a 10% decrease from new orders of $14.0 million in the third quarter of fiscal 2004. The rescue hoist and cargo winch product line was particularly strong in the third quarter of fiscal 2004 and accounted for virtually all of the decrease in the third quarter of fiscal 2005. Increases in orders for tiedowns and weapons handling were offset by a decrease in cargo hook orders. Generally, new equipment sales are the subject of high-value, long-term contracts, while repair, overhaul and spare parts sales have much shorter lead times and a less predictable order pattern. Backlog. Backlog at December 26, 2004 was $32.9 million, down $8.1 million from $41.0 million at March 31, 2004. The reduction in the backlog is due to the order pattern in the first nine months of fiscal 2005 as well as completion of the HLU-196 Bomb Hoist program. We measure backlog by the amount of products or services that our customers have committed by contract to purchase from us as of a given date. Our book to bill ratio for the third quarter of fiscal 2005 was .73, compared to .84 for the third quarter of fiscal 2004. The decrease in the book to bill ratio was directly related to the increased shipments in the third quarter of fiscal 2005 and lower order intake during the third quarter of fiscal 2005. Cancellations of purchase orders or reductions of product quantities in existing contracts, although seldom occurring, could substantially and materially reduce our backlog. Therefore, our backlog may not represent the actual amount of shipments or sales for any future period. NINE MONTHS ENDED DECEMBER 26, 2004 COMPARED WITH NINE MONTHS ENDED DECEMBER 28, 2003. Net sales. Our sales decreased to $47.1 million for the first nine months of fiscal 2005, a 4% decrease from sales of $49.1 million for the first nine months of fiscal 2004. This decrease in sales is the 13 result of lower shipments of our weapons handling equipment primarily due to the completion of the HLU-196 Bomb Hoist program. Gross profit. Gross profit decreased 9% to $19.3 million for the first nine months of fiscal 2005 from $21.1 million for the first nine months of fiscal 2004. Generally, repair and overhaul services and spare parts sales have higher gross margins than sales of new equipment or engineering services. We have implemented changes in our operating procedures and added new personnel to our overhaul and repair operation, all of which has had an impact on the results for the first nine months of fiscal 2005. These changes were made as a result of the process and procedures review of that operation over the past twelve months. We have instituted additional levels of verification and have increased personnel training. This situation produced higher labor and material costs than we had planned. As a result, our overhaul and repair throughput was impeded resulting in reduced gross margins in the first nine months of fiscal 2005. The inefficiencies experienced as we implement improvements in our overhaul and repair operation accounted for approximately $1.3 million of the decrease in gross profit with the remaining $0.5 million being related to a lower volume of new equipment products than in the same period last year. These inefficiencies are expected to continue through the remainder of fiscal 2005. General, administrative and selling expenses. General, administrative and selling expenses increased 8% to $12.6 million in the first nine months of fiscal 2005 from $11.7 million in the first nine months of fiscal 2004. The increase was due to approximately $0.5 million of legal and other costs associated with the ongoing investigation by the Newark, New Jersey office of the United States Attorney of our overhaul and repair operation. There was also an increase in business insurance expense of $0.4 million, product support, engineering and marketing costs of approximately $0.4 million and an increase of $0.3 million in information technology costs associated with the installation of the new enterprise resource planning system. This increase was offset by a reduction in our corporate office expense of $0.7 million which was principally the result of the recognition of a settlement charge of $0.4 million in the first quarter of fiscal 2004 and approximately $0.3 million of cost reductions primarily due to lower amortization of fees related to issuance of debt. Interest expense. Interest expense increased $0.4 million to $8.1 million in the first nine months of fiscal 2005 from $7.7 million in the first nine months of fiscal 2004 primarily as the result of the increased interest rate on our former subordinated debt and the increased debt level due to payment-in-kind interest. Other income. Interest income and other expense [income] for the nine months of fiscal 2004 includes a gain of $0.9 million relating to the sales of our remaining 19% interest in Cirteq Limited and the collection of an intercompany note from Cirteq Limited. Net income. We incurred a net loss of $2.4 million in the first nine months of fiscal 2005, versus net income of $1.9 million in the first nine months of fiscal 2004, which primarily resulted from the reasons discussed above. New orders. New orders received in the first nine months of fiscal 2005 totaled $39.0 million, which represents an 11% decrease from new orders received of $44.1 million in the first nine months of fiscal 2004. An order for the HLU-196 Bomb Hoist program was received in the first nine months of fiscal 2004, with no new orders being received in the first nine months of fiscal 2005. Backlog. Backlog at December 26, 2004 was $32.9 million, down $8.1 million from $41.0 million at March 31, 2004. The reduction in the backlog is due to the order pattern mentioned above as well as 14 completion of the HLU-196 Bomb Hoist program. We measure backlog by the amount of products or services that our customers have committed by contract to purchase from us as of a given date. Our book to bill ratio for the first nine months of fiscal 2005 was .83, compared to .98 for the first nine months of fiscal 2004. An order for the HLU-196 bomb hoist program in fiscal 2004 that was not repeated in fiscal 2005 resulted in the lower book to bill ratio in fiscal 2005. Cancellations of purchase orders or reductions of product quantities in existing contracts, although seldom occurring, could substantially and materially reduce our backlog. Therefore, our backlog may not represent the actual amount of shipments or sales for any future period. LIQUIDITY AND CAPITAL RESOURCES As previously reported, the New York Stock Exchange (NYSE) notified us on or about April 7, 2003, that we had fallen below the NYSE continued listing standards requiring total market capitalization of not less than $50 million over a 30-day trading period and total stockholders' equity of not less than $50 million. We submitted to the NYSE an 18-month plan to comply with the listing standards, which was accepted by the NYSE on July 7, 2003. The conclusion of the plan implementation period was October 7, 2004. We received a letter from the NYSE dated October 8, 2004, informing us of the determination of the NYSE to delist our common stock from the NYSE. We filed a notice of appeal with the NYSE and on January 5, 2005 had a hearing before the NYSE Board's Regulation, Enforcement and Listing Standards Committee with respect to the review of the delisting. On January 14, 2005 we announced that we had been informed by the NYSE that it had reaffirmed the determination to delist our stock as set forth in the October 8, 2004 letter. At the close of trading on January 20, 2005, the NYSE suspended trading in our stock. On January 21, 2005 our stock began trading in the Over-the-Counter market, but not on the Over-the-Counter Bulletin Board. On January 26, 2005, we reported that the NASD OTC Compliance Unit has requested supplemental information relative to the previously disclosed investigation by the Newark, New Jersey office of the United States Attorney with respect to the overhaul and repair operations of the our Breeze-Eastern Division, that we are in the process of responding to the market maker to whom the request for the supplemental information was made and that until the market maker resolves the issue with the NASD, our stock will not be traded on the Over-the-Counter Bulletin Board. WORKING CAPITAL Our working capital at December 26, 2004, was $18.9 million, compared to $22.2 million at March 31, 2004. The ratio of current assets to current liabilities was 2.5 to 1.0 and 2.6 to 1.0 at December 26, 2004, and March 31, 2004 respectively. Changes in working capital during the first nine months of fiscal 2005 resulted from a decrease in cash of $0.8 million, an increase in accounts receivable of $2.1 million, a decrease in inventories of $4.7 million, a decrease in prepaid and other current assets of $0.2 million, a decrease in real estate held for sale of $1.4 million, a decrease in accounts payable of $ 1.3 million, a decrease in accrued compensation of $1.2 million, a decrease in accrued interest and other current liabilities of $1.2 million and $0.7 million respectively and a decrease in income tax payable of $0.5 million. In addition, the current portion of long-term debt and short-term borrowings increased by $3.2 million due to the refinancing as described in Note 4. The increase in accounts receivable was due to strong sales at the end of the third quarter fiscal 2005 and the decrease in accrued compensation was due to the payment of bonuses earned in fiscal 2004. The decrease in inventory was largely due to increased sales, and the decrease in prepaid and other current assets was mainly due to fees 15 associated with the lower prepayment of insurance premiums. The decrease in real estate held for sale was due to the sale of land and building retained from a previous divestiture. The decrease in accounts payable was mainly due to the payments coming due for purchases made in the fourth quarter of fiscal 2004. Interest payments on our senior credit facility are due on a monthly basis, instead of quarterly, thus accounting for the decrease in accrued interest. The decrease in other current liabilities is the result of the final shipments on the HLU-196 Bomb Hoist program and payment of liabilities which were accrued in fiscal year 2004. The decrease in income tax payable is the result of a tax installment related to a previous divestiture and a lower effective tax benefit. The number of days that sales were in accounts receivable increased to 40.6 days at December 26, 2004 from 35.2 days at March 31, 2004. The increase in days was attributable to December sales representing 34% of fiscal 2005 third quarter sales due to specific scheduling requirements. Inventory turnover increased to 2.6 turns for the third quarter of fiscal 2005 versus 1.79 turns for fiscal 2004. The increase in inventory turns is reflective of normal inventory and production patterns. CAPITAL EXPENDITURES Our additions to property, plant and equipment were $1.6 million for the nine months of fiscal 2005, compared to $350 thousand for the first nine months of fiscal 2004. Projects budgeted in fiscal 2005, are expected to be in a range of $2.6-$3.3 million and include the installation of a new enterprise resource planning (ERP) system. SENIOR CREDIT FACILITY On November 10, 2004, we refinanced and repaid in full the Former Senior Credit Facility and the Notes with a $71.5 million, forty-two month, senior credit facility (the "Senior Credit Facility"). The Senior Credit Facility consists of a $10.0 million asset-based Revolving Credit Facility, and three tranches of Term Loans totaling $61.5 million. At December 26, 2004, the Senior Credit Facility has an effective weighted interest rate of approximately 13.7% which is tied to the prime rate. The Term Loans require monthly principal payments of $250,000 over the term of the loan with the balance due at the end of the term. Accordingly, the balance sheet reflects $3.0 million of current maturities due under the Senior Credit Facility. The Senior Credit Facility also contains certain mandatory prepayment provisions which are linked to cash flow and customary financial covenants and events of default. The Senior Credit Facility is secured by all of the Company's assets. The Company recorded a pre-tax charge of $2.2 million relating to the write-off of unamortized fees from prior financings and the payment of pre-payment premiums in the quarter ended December 26, 2004. Costs associated with establishing the Senior Credit Facility were $2.2 million and will be amortized over the forty-two month term of the new facility. As mentioned above, we have lowered our current effective interest rate to 13.7% from the 19.5% in effect at the time of the refinancing. Measured against the annual effective interest rate at the time of the refinancing, the Senior Credit Facility is expected to result in an annual interest expense savings of approximately $3.4 million, subject to future changes in the Prime Rate. The Senior Credit Facility also contains provisions that would allow the rate to decline further if we achieve certain operating targets. TAX BENEFITS FROM NET OPERATING LOSSES At December 26, 2004, we had federal and state net operating loss carryforwards ("NOLs"), of approximately $59.7 million and $79.6 million, respectively, which are due to expire in fiscal 2006 through fiscal 2024. These NOLs may be used to offset future taxable income through their 16 respective expiration dates and thereby reduce or eliminate our federal and state income taxes otherwise payable. The Internal Revenue Code of 1986, as amended (the "Code") imposes significant limitations on the utilization of NOLs in the event of an "ownership change" as defined under section 382 of the Code (the "Section 382 Limitation"). The Section 382 Limitation is an annual limitation on the amount of pre-ownership NOLs that a corporation may use to offset its post-ownership change income. The Section 382 Limitation is calculated by multiplying the value of a corporation's stock immediately before an ownership change by the long-term tax-exempt rate (as published by the Internal Revenue Service). Generally, an ownership change occurs with respect to a corporation if the aggregate increase in the percentage of stock ownership by value of that corporation by one or more 5% shareholders (including specified groups of shareholders who in the aggregate own at least 5% of that corporation's stock) exceeds 50 percentage points over a three-year testing period. We believe that we have not gone through an ownership change that would cause our NOLs to be subject to the Section 382 Limitation. SUMMARY DISCLOSURE ABOUT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS The following table reflects a summary of our contractual cash obligations for the next several fiscal years: (DOLLARS IN THOUSANDS)
2005 2006 2007 2008 2009 TOTAL ------------------------------------------------------ Long-term debt $ 1,051 $ 3,079 $ 3,000 $ 3,000 $51,621 $ 61,751 Operating leases 72 277 174 65 -- 588 ------------------------------------------------------ Total $ 1,123 $ 3,356 $ 3,174 $ 3,065 $51,621 $ 62,339 ======================================================
Obligations for long-term debt do not reflect any change that may occur due to any future change in the Prime Rate of interest. In addition, we have divested ten businesses since March 31, 2001. Under the terms of the agreements associated with the sales of those businesses, we have agreed to indemnify the purchasers for certain damages that might arise in the event that a representation we made with respect to the divested business is found to have contained a material misstatement, subject in each case to a customary cap on the indemnification amount and customary limitations on the survivability of the representations made. As of the date of this report, we have no unresolved claims for indemnification with respect to these divested businesses. Additionally, the terms of these divestiture agreements generally require the calculation of purchase price adjustments based upon the amount of working capital or net assets transferred at the closing date. In the case of each divestiture completed as of the filing date, purchase price adjustments have been agreed and paid. INFLATION While neither inflation nor deflation has had, and we do not expect it to have, a material impact upon operating results, we cannot assure you that our business will not be affected by inflation or deflation in the future. 17 ENVIRONMENTAL MATTERS We evaluate our exposure to environmental liabilities using a financial risk assessment methodology, including a system of internal environmental audits and tests and outside consultants. This risk assessment includes the identification of risk events/issues, including potential environmental contamination at Company and off-site facilities; characterizes risk issues in terms of likelihood, consequences and costs, including the year(s) when these costs could be incurred; analyses risks using statistical techniques; and, constructs risk cost profiles for each site. Remediation cost estimates are prepared from this analysis and are taken into consideration in developing project budgets from third party contractors. Although we take great care in the development of these risk assessments and future cost estimates, the actual amount of the remediation costs may be different from those estimated as a result of a number of factors including, changes to government regulations or laws; changes in local construction costs and the availability of personnel and materials; unforeseen remediation requirements that are not apparent until the work actually commences; and other similar uncertainties. We do not include any unasserted claims we might have against others in determining our liability for such costs, and, except as noted with regard to specific cost sharing arrangements, have no such arrangements, nor have we taken into consideration any future claims against insurance carriers we might have in determining our environmental liabilities. In those situations where we are considered a de minimus participant in a remediation claim, the failure of the larger participants to meet their obligations could result in an increase in our liability with regard to such a site. We continue to participate in environmental assessments and remediation work at eleven locations, including our former facilities. Due to the nature of environmental remediation and monitoring work, such activities can extend for up to thirty years, depending upon the nature of the work, the substances involved, and the regulatory requirements associated with each site. In calculating the net present value (where appropriate) of those costs expected to be incurred in the future, we use a discount rate of 7.5%. Based on the above, we estimate the current range of undiscounted cost for remediation and monitoring to be between $7.1 million and $9.7 million with an undiscounted amount of $8.0 million to be most probable. Current estimates for expenditures for each of the five succeeding fiscal years are $1.1 million, $0.8 million, $0.3 million, $0.3 million, and $0.3 million respectively, with $5.2 million payable thereafter. Of the total undiscounted costs, we estimate that approximately 30% will relate to remediation activities and that 70% will be associated with monitoring activities. We estimate that our potential cost for implementing corrective action at nine of these sites will not exceed $0.5 million in the aggregate, payable over the next several years, and have provided for the estimated costs, without discounting for present value, in our accrual for environmental liabilities. In the first quarter of fiscal 2003, we entered into a consent order for a former facility in New York, which is currently subject to a contract for sale, pursuant to which we are developing a remediation plan for review and approval by the New York Department of Environmental Conservation. Based upon the characterization work performed to date, we have accrued estimated costs of approximately $2.4 million. The amounts and timing of such payments are subject to an approved remediation plan. The environmental cleanup plan we presented during the fourth quarter of fiscal 2000 for a portion of a site in Pennsylvania which continues to be owned although the related business has been sold was approved during the third quarter of fiscal 2004. This plan was submitted 18 pursuant to the Consent Order and Agreement with the Pennsylvania Department of Environmental Protection ("PaDEP") concluded in fiscal 1999. Pursuant to the Consent Order, upon its execution we paid $0.2 million for past costs, future oversight expenses and in full settlement of claims made by PaDEP related to the environmental remediation of the site with an additional $0.2 million paid in fiscal 2001. A second Consent Order was concluded with PaDEP in the third quarter of fiscal 2001 for another portion of the site, and a third Consent Order for the remainder of the site was concluded in the third quarter of fiscal 2003. An environmental cleanup plan for the portion of the site covered by the 2003 Consent Order was presented during the second quarter of fiscal 2004. We are also administering an agreed settlement with the Federal government under which the government pays 50% of the direct and indirect environmental response costs associated with a portion of the site. We have also reached an agreement in principle with the Federal government and are in the process of finalizing the necessary documentation under which the Federal government will pay 45% of the direct and indirect environmental response costs associated with another portion of the site. At December 26, 2004, our cleanup reserve was $1.9 million based on the net present value of future expected cleanup and monitoring costs. We expect that remediation at this site, which is subject to the oversight of the Pennsylvania authorities, will not be completed for several years, and that monitoring costs could extend for up to thirty years. In addition, we have been named as a potentially responsible party in five environmental proceedings pending in several states in which it is alleged that we were a generator of waste that was sent to landfills and other treatment facilities and, as to one site, it is alleged that we were an owner or operator. Such properties generally relate to businesses which have been sold or discontinued. We estimate that our expected future costs, and our estimated proportional share of remedial work to be performed, associated with these proceedings will not exceed $0.2 million and have provided for these estimated costs in our accrual for environmental liabilities. LITIGATION We are also engaged in various other legal proceedings incidental to our business. It is our opinion that, after taking into consideration information furnished by our counsel, the above matters will have no material effect on our consolidated financial position or the results of our operations in future periods. FORWARD LOOKING STATEMENTS Certain statements in this Quarterly Report constitute "forward-looking statements" within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the "Acts"). Any statements contained herein that are not statements of historical fact are deemed to be forward-looking statements. The forward-looking statements in this Quarterly Report are based on current beliefs, estimates and assumptions concerning the operations, future results, and prospects of the Company. As actual operations and results may materially differ from those assumed in forward-looking statements, there is no assurance that forward-looking statements will prove to be accurate. Forward-looking statements are subject to the safe harbors created in the Acts. 19 Any number of factors could affect future operations and results, including, without limitation, the results of audits and inquiries into the Company's business practices; the Company's ability to provide a trading venue for its shares; determination by the Company to dispose of or acquire additional assets; general industry and economic conditions; events impacting the U.S. and world financial markets and economies; interest rate trends; capital requirements; competition from other companies; changes in applicable laws, rules and regulations affecting the Company in the locations in which it conducts its business; the availability of equity and/or debt financing in the amounts and on the terms necessary to support the Company's future business; and those specific risks that are discussed in this Quarterly Report. Additional information concerning factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements is available in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2004, and subsequent filings with the United States Securities and Exchange Commission (SEC). Copies of these filings are available at no cost on the SEC's website at www.sec.gov or on the Company's website at www.transtechnology.com. Management may elect to update forward-looking statements at some future point; however, it specifically disclaims any obligation to do so. RECENTLY ISSUED ACCOUNTING STANDARDS In December 2003, the FASB issued Interpretation No. 46R, a revision to Interpretation No. 46, "Consolidation of Variable Interest Entities", which addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means other than voting rights and accordingly should consolidate the entity. Interpretation No. 46R clarifies some of the provisions of Interpretation No. 46 and exempts certain entities from its requirements. Interpretation No. 46R was effective at the end of the first quarter ended June 27, 2004. The adoption of this statement did not have a material impact on our financial position or results of operations. In November 2004, the Financial Accounting Standards Board issues Statement of Financial Accounting Standards ("SFAS") No. 151, Inventory Costs. This statement amends the guidance in Accounting Research Bulletin ("ARB") No. 43, Restatement and Revision of Accounting Research Bulletins, Chapter 4 "Inventory Pricing", to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage). SFAS No. 151 requires that these items be recognized as current-period charges regardless of whether they meet the definition of "so abnormal" in ARB No. 43. In addition, SFAS No. 151 requires that allocation of fixed overheads to the costs of conversion be based on the normal capacity of production facilities. SFAS No. 151 is effective for our fiscal year ending March 31, 2006. Management has not yet determined that the adoption of this statement will have on the results of our operations. In December 2004, the FASB issued SFAS No. 123 (Revised 2004) "Share-Based Payment" ("SFAS No. 123R") that addresses the accounting for share-based payment transactions in which a company receives employee services in exchange for (a) equity instruments of the company or (b) liabilities that are based on the fair value of our equity instruments or that may be settled by the issuance of such equity instruments. SFAS No. 123R addresses all forms of share-based payment awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. SFAS No. 123R eliminates the ability to account for share-based compensation transactions using APB Opinion No. 25, "Accounting for Stock Issued to Employees", that was provided in Statement 123 as originally issued. Under SFAS No. 123R companies are required to record compensation expense for all share based payment award transactions measured at 20 fair value. This statement is effective for quarters ending after June 15, 2005. We have not yet determined the transition approach in adopting this statement. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We have been and are exposed to various market risks, primarily changes in interest rates associated with the Senior Credit Facility under which there were borrowings of $61.6 million at December 26, 2004. Based on current debt levels, each quarter point increase in the Prime Rate will increase our annual interest expense by approximately $0.2 million. ITEM 4. CONTROLS AND PROCEDURES The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Within 90 days prior to the date of this report, the Company carried out an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on the forgoing, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Company completed its evaluation. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We are engaged in various legal proceedings incidental to our business. It is the opinion of management that, after taking into consideration information furnished by our counsel, these matters will not have a material effect on our consolidated financial position or the results of our operations in future periods. 21 ITEM 6. EXHIBITS (a) Exhibits 10.29 Waiver dated October 1, 2004 of certain financial covenants of the Securities Purchase Agreement between the Company and the Purchasers named therein, dated as of August 29, 2000, as amended. 31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Form 8-K On October 12, 2004 the Registrant filed an 8-K which furnished the October 8, 2004 press releases TT Receives Commitment for New Financing and TransTechnology to appeal NYSE Delisting Determination On October 14, 2004 the Registrant filed an 8-K which furnished the October 13, 2004 press release TransTechnology Reports Fiscal 2005 Second Quarter Results On November 9, 2004 the Registrant filed an 8-K which furnished the November 8, 2004 press release TransTechnology Reports Revised EBITDA Target and Refinancing Terms On November 15, 2004 the Registrant filed an 8-K which furnished the November 10, 2004 Credit Agreement and press release TransTechnology Announces Completion of Refinancing 22 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: February 7, 2005 By: /s/ Joseph F. Spanier --------------------------------------- Joseph F. Spanier, Vice President, Chief Financial Officer and Treasurer * *On behalf of the Registrant and as Principal Financial and Accounting Officer. 23