-----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, PM5roaBx9qvVeEM2VLVJ+GCJTPgxBA4ZG6SWKVjzuluit4FirTF+pvj9xHFlyp8G BMByvtlHRxyHi6vn8GkRAw== 0000950123-94-001290.txt : 19940817 0000950123-94-001290.hdr.sgml : 19940817 ACCESSION NUMBER: 0000950123-94-001290 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940626 FILED AS OF DATE: 19940809 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: 94542513 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 CORP. 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 June 26, 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 August 1, 1994, the total number of outstanding shares of registrant's one class of common stock was 5,217,127 2 TRANSTECHNOLOGY CORPORATION INDEX
PART I. Financial Information Page No. --------------------- -------- Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ------- Statements of Consolidated Operations-- Three Month Periods Ended June 26, 1994 and June 27, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Consolidated Balance Sheets-- June 26, 1994 and March 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Statements of Consolidated Cash Flow-- Three Months Ended June 26, 1994 and June 27, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Statements of Consolidated Stockholders' Equity-- Three Months Ended June 26, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . 7 Item 2. Management's Discussion and Analysis of Results ------- of Operations and Financial Condition . . . . . . . . . . . . . . . . . . . . . . 8-12 PART II. Other Information ----------------- Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . 13 ------- SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 EXHIBIT 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-19 EXHIBIT 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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 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 June 26, 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 ----------------------------------------- 6/26/94 6/27/93 ----------------- ---------------- Total Revenue . . . . . . . . . . . . . . . . . . . . . $ 29,325 $ 24,006 Cost of Sales . . . . . . . . . . . . . . . . . . . . . . 22,031 16,727 ----------------- ---------------- Gross Profit . . . . . . . . . . . . . . . . . . . . . . 7,294 7,279 ----------------- ---------------- General, Administrative and Selling Expenses . . . . . . . . . . . . . . . . . . . . . . . 5,141 4,475 Interest Expense . . . . . . . . . . . . . . . . . . . . 563 162 ----------------- ---------------- Total General, Administrative, Selling and Interest Expenses . . . . . . . . . . . . . . . . . 5,704 4,637 ----------------- ---------------- Income from Continuing Operations before Income Taxes . . . . . . . . . . . . . . . . . . 1,590 2,642 Income Taxes . . . . . . . . . . . . . . . . . . . . . . 561 989 ----------------- ---------------- Income from Continuing Operations . . . . . . . . . . . . 1,029 1,653 Discontinued Operations: Loss from Operations (net of applicable tax benefits of $80,000 for the quarter ended 6/27/93) . . . . . . . . -- (139) Gain from Disposal (includes a tax provision of $29,000 for the quarter ended 6/26/94) . . . . . . . . . . . 43 -- ----------------- ---------------- Net Income . . . . . . . . . . . . . . . . . . . . . . . $ 1,072 $ 1,514 ================= ================ Earnings per Share: (Note 1) Income from Continuing Operations . . . . . . . . . . . $ 0.20 $ 0.32 Income (Loss) from Discontinued Operations . . . . . . 0.01 (0.03) ----------------- ---------------- Net Income . . . . . . . . . . . . . . . . . . . . . . . $ 0.21 $ 0.30 (a) ================= ================ Number of Shares Used in Computation of Per Share Information . . . . . . . . . . . . . . . 5,186,000 5,122,000
(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 6/26/94 3/31/94 ----------- ----------- ASSETS Current assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,656 $ 3,027 Accounts receivable: United States Government . . . . . . . . . . . . . . . . . . . . . . . . . . 2,686 2,815 Commercial (net of allowance for doubtful accounts of $263 at 6/26/94 and $271 at 3/31/94) . . . . . . . . . . . . . . . . . . . . . . . . . 18,300 19,500 Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,814 2,814 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,584 35,786 Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . 2,638 2,932 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,253 4,253 Net assets of discontinued businesses . . . . . . . . . . . . . . . . . . . 4,320 4,309 ----------- ----------- Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,251 75,436 Property: Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,223 5,223 Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,650 15,657 Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,564 32,611 Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,081 4,050 Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . 671 671 ----------- ----------- Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,189 58,212 Less accumulated depreciation and amortization . . . . . . . . . . . . . . . . 22,931 22,204 ----------- ----------- Property-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,258 36,008 Other assets: Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,912 4,061 Costs in excess of net assets of acquired businesses (net of accumulated amortization: June 26, 1994, $2,488; March 31, 1994, $2,423) . . . . . . . 3,052 3,117 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,140 7,235 ----------- ----------- Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,104 14,413 ----------- ----------- Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 123,613 $ 125,857 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . $ 1,480 $ 1,479 Accounts payable-trade . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,100 7,489 Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,608 4,570 Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,273 943 Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 5,524 7,109 ----------- ----------- Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 18,985 21,590 ----------- ----------- Long-term debt payable to banks and others . . . . . . . . . . . . . . . . . . 33,158 33,168 ----------- ----------- Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 5,551 5,146 ----------- ----------- Stockholders' equity: Preferred stock-authorized, 300,000 shares; none issued . . . . . . . . . . . -- -- Common stock-authorized, 14,700,000 shares of $.01 par value; issued, 5,134,104 at June 26, 1994, and 5,189,104 at March 31, 1994 . . . . . . . . 51 52 Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . 45,283 45,283 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,947 22,186 Other stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . (2,362) (1,568) ----------- ----------- Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . 65,919 65,953 ----------- ----------- Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 123,613 $ 125,857 =========== ===========
See accompanying notes to unaudited consolidated financial statements. 4 6 STATEMENTS OF CONSOLIDATED CASH FLOWS UNAUDITED (In Thousands of Dollars)
THREE MONTHS ENDED ----------------------------------- 6/26/94 6/27/93 -------------- ------------- Cash Flows from Operating Activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,072 $ 1,514 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . . . . . . . . 1,311 1,025 Provision for losses on accounts receivable . . . . . . . . . . . 15 18 Loss (gain) on sale or disposal of fixed assets . . . . . . . . 8 (3) Change in assets and liabilities (net of the effect of purchases of businesses): Decrease in accounts receivable . . . . . . . . . . . . . . . . 1,314 1,295 Decrease (increase) in inventories . . . . . . . . . . . . . . . 202 (1,119) Increase in net assets of discontinued operations . . . . . . . (11) (724) Increase in prepaid and other assets . . . . . . . . . . . . . . (800) (474) Decrease in accounts payable . . . . . . . . . . . . . . . . . . (389) (849) Decrease in accrued compensation . . . . . . . . . . . . . . . . (962) (955) Decrease in other liabilities . . . . . . . . . . . . . . . . . (1,180) (1,559) Increase in accrued income taxes . . . . . . . . . . . . . . . 330 680 -------------- ------------- Net cash provided by (used in) operations . . . . . . . . . . . 910 (1,151) -------------- ------------- Cash Flows from Investing Activities: Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . (1,371) (972) Proceeds from the sale of fixed assets . . . . . . . . . . . . . . -- 3 Decrease (increase) in notes receivable . . . . . . . . . . . . . . 149 (138) -------------- ------------- Net cash used in investing activities . . . . . . . . . . . . . . (1,222) (1,107) -------------- ------------- Cash Flows from Financing Activities: Payments to acquire treasury stock . . . . . . . . . . . . . . . . (739) -- Payments on long-term debt . . . . . . . . . . . . . . . . . . . . (9) (3,306) Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . -- 4,600 Proceeds from issuance of stock under stock option plan . . . . . . -- 3 Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . (311) (307) -------------- ------------- Net cash (used in) provided by financing activities . . . . . . . (1,059) 990 -------------- ------------- Net Decrease in Cash and Cash Equivalents . . . . . . . . . . . . . (1,371) (1,268) Cash and Cash Equivalents at Beginning of Year . . . . . . . . . . 3,027 1,505 -------------- ------------- Cash and Cash Equivalents at End of Period . . . . . . . . . . . . $ 1,656 $ 237 ============== ============= Supplemental Information: Interest payments . . . . . . . . . . . . . . . . . . . . . . . . . $ 633 $ 158 Income tax payments . . . . . . . . . . . . . . . . . . . . . . . . $ 59 $ 340
See accompanying notes to unaudited consolidated financial statements. 5 7 STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY (In Thousands of Dollars Except Share Data)
ADDITIONAL OTHER PAID-IN RETAINED STOCKHOLDERS' FOR THE QUARTER ENDED JUNE 26, 1994 SHARES AMOUNT CAPITAL EARNINGS EQUITY TOTAL - - ----------------------------------- --------- -------- ------------ ------------ ------------- ----------- Balance, March 31, 1994 . . . . . . 5,189,104 $ 52 $ 45,283 $ 22,186 $ (1,568) $ 65,953 Net Income . . . . . . . . . . . . -- -- -- 1,072 -- 1,072 Cash dividends ($.06 per share) . . -- -- -- (311) -- (311) Unrealized investment holding losses . . . . . . . . . . . . . -- -- -- -- (58) (58) Purchase of treasury stock . . . . (55,000) (1) -- -- (738) (739) Foreign translation adjustments . . -- -- -- -- 2 2 --------- -------- ------------ ------------ ------------ ----------- Balance, June 26, 1994 . . . . . . 5,134,104 $ 51 $ 45,283 $ 22,947 $ (2,362) $ 65,919 ========= ======== ============ ============ ============ ===========
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:
June 26, March 31, 1994 1994 ---------------- --------------- Finished goods $ 5,068 $ 5,057 Work-in-process 7,965 7,589 Purchased and manufactured parts 22,551 23,140 ---------------- --------------- Total inventories $ 35,584 $ 35,786 ================ ===============
NOTE 3. Discontinued Operations: In March 1994, the Company completed the sale of its Federal Laboratories division. Pursuant to such sale, in June 1994 the Company recorded an after-tax disposal gain of $76 thousand. This gain was partially offset by $33 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 matters. The three-month period ended June 27, 1993 has been restated to reflect Federal Laboratories as a discontinued operation. Federal Laboratories' operating results for the period ended June 27, 1993 were as follows: Total revenue $ 750 =========== Loss before income taxes $ (219) Income tax benefit (80) ----------- Loss from operations $ (139) ===========
7 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS All references to three-month periods in this Management's Discussion refer to the three-month period ended June 26, 1994 for fiscal year 1995 and the three-month period ended June 27, 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 three-month period in 1995 was $29.3 million, a $5.3 million or 22% increase from the $24 million reported in the comparable period in 1994. Gross profit was $7.3 million for the three-month period in 1995, unchanged from the comparable period in 1994. Operating profit from continuing operations for the three-month period in 1995 was $2.7 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 three-month period in 1995 was $1.1 million or $0.21 per share, compared to $1.5 million or $0.30 per share for the comparable period of 1994. As further discussed below, the decreased earnings performance in 1995 resulted primarily from reduced chaff and related product sales, lower sales and margins in hoists, winches and related spare parts, lower margins on cargo hook sales, losses attendant to the start-up of Electrical Connections and Assemblies, Inc.'s business and shipments of low margin contracts by the newly acquired electrical harness product line. These earnings decreases were partially offset by the inclusion of the Palnut Fastener business and the recording of pre-tax income of $0.6 million from a favorable insurance settlement. Interest expense increased $0.4 million for the three-month period in 1995, from $0.2 million in the comparable 1994 period, primarily as a result of increased bank borrowings used for the acquisition of the Palnut Fastener business and the Electrical Specialties harness business in the second quarter of the 1994 fiscal year. New orders received during the 1995 period totaled $34 million, an increase of $2.2 million or 7% from 1994's comparable period. At June 26, 1994, total backlog of unfilled orders was $47.8 million compared to $48.6 million at June 27, 1993. DISCONTINUED OPERATIONS In March 1994, the Company completed the sale of its Federal Laboratories division. Pursuant to such sale, in June 1994 the Company recorded an after-tax disposal gain of $76 thousand. This gain was partially offset by $33 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 matters. 8 10 FINANCIAL SUMMARY BY PRODUCT SEGMENT (In Thousands of Dollars)
THREE MONTHS ENDED NET CHANGE ------------------------------------- ----------------------------- 6/26/94 6/27/93 $ % ------------ ------------ ---------- ------ Operating Revenue: Industrial Products $ 18,592 $ 9,531 $ 9,061 95.1 Aerospace Products 10,484 14,272 (3,788) (26.5) ------------ ------------ ---------- ------ Total $ 29,076 $ 23,803 $ 5,273 22.2 ============ ============ ========== ====== Operating Profit: Industrial Products $ 2,530 $ 1,828 $ 702 38.4 Aerospace Products 218 1,913 (1,695) (88.6) ------------ ------------ ---------- ------ Total 2,748 3,741 (993) (26.5) Corporate Expense (595) (a) (937) (b) 342 36.5 Interest Expense (563) (162) (401) (247.5) ------------ ------------ ---------- ------ Income from Continuing Operations before Income Taxes $ 1,590 $ 2,642 $ (1,052) (39.8) ============ ============ ========== ======
a) The corporate expense segments for the three months ended June 26, 1994 has been reduced by $575 thousand for a favorable insurance settlement. b) The corporate expense for the three months ended June 27, 1993 has been reduced by $82 thousand to reflect an allocation made to discontinued operations. 9 11 INDUSTRIAL PRODUCTS SEGMENT Sales for the industrial products segment were $18.6 million for the three-month period in 1995, an increase of $9.1 million, or 95% from the same period in 1994. Sales of specialty fasteners and electrical harnesses were up $8.3 million or 114% and $1.5 million or 100%, respectively, from the comparable period in 1994. The increase in specialty fastener sales was primarily due to the inclusion of operations of the Palnut fastener business in the 1995 period, new product market penetration and increased industrial and truck fastener demand, while the increase in electrical wiring harness sales was due to the inclusion of operations of the Electrical Specialties Company product line in the 1995 period. These increases were partially offset by a $0.7 million or 32% decrease in TransTechnology Systems & Services sales in the three-month period in 1995 as compared to the same period in 1994, which is largely due to reduced domestic and foreign third party maintenance contract sales. Operating profit for the three-month period in 1995 was $2.5 million, an increase of $0.7 million or 38% from the comparable period of 1994. The increase was primarily due to the increased sales volume of specialty fasteners and electrical wiring harnesses partially offset by reduced TransTechnology Systems & Services maintenance contract sales, losses attendant to the start-up of Electrical Connections and Assemblies, Inc.'s business, and shipments of low margin contracts from the newly acquired electrical harness product line. New orders for the three-month period in 1995 increased $10.3 million or 97% from the comparable period in 1994, primarily due to the inclusion of operations of Palnut fastener products and the electrical wiring harness product line, new product market penetration and increased industrial and truck fastener demand. These increases were partially offset by reduced TransTechnology Systems & Services maintenance contract orders. Backlog of unfilled orders at June 26, 1994, was $16.8 million compared to $7.8 million at June 27, 1993. AEROSPACE PRODUCTS SEGMENT Sales of the Aerospace Products segment were $10.5 million for the three-month period in 1995, down $3.8 million or 27% from the comparable period in 1994. Sales of hoists and winches and related spare parts, chaff product, and electrical cables, conduit and connectors decreased from the 1994 period to the 1995 period by $1.9 million or 29%, $1.0 million or 41% and $0.8 million or 25%, respectively, primarily due to delays in the timing of customers placing new orders in the 1995 period. Additionally, sales of hoists and winches and related spare parts in the 1995 period were negatively impacted by pricing constraints. Tie-down sales were down $0.2 million or 47% in the 1995 period, as compared to the 1994 period, mainly due to increased competition. Cargo hook sales were relatively unchanged in the 1995 period, compared to the 1994 period. Operating profit for the three-month period in 1995 was $0.2 million, a decrease of $1.7 million or 89% from the comparable period in 1994. The primary factors contributing to the decrease in the segment's operating profit were the reduced sales volume of hoists and winches and related spare parts, chaff product, electrical cables, conduit and connectors and tie-downs accompanied by reduced margins and increased price erosion in hoists and winches and related spare parts, cargo hooks and tie-downs. 10 12 New orders decreased for the three-month period in 1995 by $8.1 million or 38% from the comparable period in 1994. Decreases period to period were experienced by all aerospace product lines with the exception of cargo hooks and electrical conduit which were up $0.1 million or 9% and $0.3 million or 41%, respectively, primarily due to customer timing and placement of new orders. The decreases in all other aerospace product lines reflect a combination of customer timing and placement of new orders coupled with a general slowdown in the military and aerospace industries. Backlog of unfilled orders at June 26, 1994 was $31.1 million compared to $40.8 million at June 27, 1993. 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 34% as of June 26, 1994, unchanged from March 31, 1994. The current ratio at June 26, 1994, stood at 3.81 compared to 3.49 at March 31, 1994. Working Capital was $53.3 million at June 26, 1994, down $0.5 million from March 31, 1994. At June 26, 1994, the Company's debt consisted of $25 million of borrowings under a revolving bank credit line, a $9.2 million bank term loan and $0.5 million of other borrowings. 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 in the borrowing base formula, are limited to $5 million. Letters of credit under the line at June 26, 1994 were $1.6 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 quarterly dividend payments cannot exceed 25% of the Company's cumulative net income in each year. The $9.2 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. 11 13 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 August 2, 1994, the Company had repurchased 80,000 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 three-month period in 1995 were $1.4 million as compared with $1.0 million in the comparable period in 1994. The Company's two segments have similar cash flow requirements. 12 14 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10 Fourth Amendment to the Revolving Loan and Security Agreement dated as of January 31, 1994 among the Company, National Canada Finance Corporation and National Bank of Canada. 11 Statement of Computation of Per Share Earnings (b) No reports on Form 8-K were filed during the quarter ended June 26, 1994. 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: August 8, 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. 13 15 EXHIBIT INDEX Exhibit No. Description - - ----------- ----------- 10 Fourth Amendment to the Revolving Loan and Security Agreement dated as of January 31, 1994 among the Company, National Canada Finance Corporation and National Bank of Canada. 11 Statement of Computation of Per Share Earnings EX-10 2 FOURTH AMENDMENT TO THE REV. LOAN AND SEC. AMDMT. 1 EXHIBIT 10 FOURTH AMENDMENT TO THE REVOLVING LOAN AND SECURITY AGREEMENT THIS FOURTH AMENDMENT TO THE REVOLVING LOAN AND SECURITY AGREEMENT (the "Fourth Amendment") is entered into by and among NATIONAL CANADA FINANCE CORP., NATIONAL BANK OF CANADA (New York, New York) (collectively, "Bank"), TRANSTECHNOLOGY CORPORATION, a Delaware corporation ("TT"), and Electronic Connectors & Assemblies, Inc., a Delaware corporation ("ECA, Inc." and, together with TT, sometimes hereinafter referred to collectively in this Fourth Amendment as "Borrowers"). RECITALS A. On June 21, 1991, TT and Bank entered into a certain Revolving Loan and Security Agreement (the "Loan Agreement," all terms defined therein being used in this Fourth Amendment with the same meaning unless otherwise stated) under the terms of which Bank loaned to TT $9,000,000 on a revolving loan basis and $4,000,000 in the form of letters of credit pursuant to the provisions set forth in the Loan Agreement. B. On December 18, 1991, TT and Bank entered into a certain First Amendment To The Revolving Loan And Security Agreement (the "First Amendment") to provide for (1) the elimination of the $4,000,000 sub-limit imposed on TT by Bank with respect to funding of the Letter of Credit Facility, (2) the modification of certain covenants, and (3) the waiver by Bank of TT's compliance with Section 7.1(N) of the Loan Agreement relating to TT's net worth for the period ended September 29, 1991. C. On December 10, 1992, TT and Bank entered into a certain Second Amendment To The Revolving Loan And Security Agreement (the "Second Amendment") to provide for (1) an increase in the maximum principal amount of borrowings under the Revolving Loan from $13,000,000 to $25,000,000 (inclusive of the issuance by Bank to TT of a maximum of $5,000,000 of standby letters of credit), (2) a modification to the rate of interest charged on borrowings under the Revolving Loan to provide for a rate of interest based on the Base Rate or LIBOR (as defined therein), (3) a modification to the Borrowing Base to permit loan advances against the Eligible Inventory of TT, (4) the modification of Bank's Collateral of TT to include machinery and equipment of TT, (5) the modification of certain financial covenants of TT, (6) the payment by TT of certain dividends, and (7) the extension of the Termination Date of the Loan Agreement. 2 D. On December 31, 1992, TT and Bank entered into a letter agreement (the "Letter Agreement") to permit TT to pay dividends in accordance with Section 7.2(H) of the Loan Agreement, as amended, commencing with the quarter ending December 31, 1992. E. On August 2, 1993, TT and Bank entered into a certain Third Amendment To The Revolving Loan And Security Agreement (the "Third Amendment") to provide for (1) an increase in the maximum principal amount of borrowings under the Revolving Loan from $25,000,000 to $35,000,000 (inclusive of the issuance by Bank to TT of a maximum of $5,000,000 of standby letters of credit), (2) a term loan facility in the principal amount of $10,000,000 with interest accruing at a rate equal to one-quarter (1/4) percentage points above the Base Rate, (3) the grant to Bank of a mortgage on the Palnut Property (as defined in the Third Amendment), (4) a modification to the Borrowing Base to increase the amount of funds TT may borrow against Eligible Inventory from $13,000,000 to $18,000,000, and (5) the establishment of a termination fee upon the prepayment by TT of the term loan. F. TT has established ECA, Inc., a wholly-owned subsidiary of TT, for the purpose of purchasing and distributing electrical connectors on a worldwide basis. G. Borrowers have requested that Bank make available to ECA, Inc. funds under the Revolving Loan in accordance with the provisions of the Loan Agreement, as amended. H. In consideration for Bank agreeing to loan and re-loan funds to ECA, Inc. under the Revolving Loan in accordance with the provisions of the Loan Agreement, as amended, ECA, Inc. desires to (1) assume as co-obligor all obligations and liabilities of Borrowers due and owing to Bank now or hereafter arising under the Loan Agreement, as amended, and (2) grant to Bank a security interest in and to its Collateral in accordance with the provisions of this Fourth Amendment. I. Borrowers and Bank now desire to amend the Loan Agreement, as amended, to (1) add ECA, Inc. as a co-obligor for the repayment of all loans to Borrowers by Bank and (2) provide for such other amendments and modifications as are set forth in the provisions of this Fourth Amendment. J. Due to the affiliation and financial interdependence of Borrowers, Bank and Borrowers have determined that it would be in their respective best interests for each Borrower to be a joint and several obligor of each other Borrower's obligations to Bank in accordance with the provisions set forth in the Loan Agreement, as amended by the First Amendment, the Second Amendment, the Letter Agreement, the Third Amendment, and this Fourth Amendment. -2- 3 PROVISIONS NOW, THEREFORE, in consideration of the foregoing, the parties agree as follows: SECTION I. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is amended as follows: A. On and after the effective date of this Fourth Amendment, each reference in the Loan Agreement to "this Agreement," "hereunder," and "hereof," or words of like import referring to the Loan Agreement shall mean and refer to the Loan Agreement, as amended by the First Amendment, the Second Amendment, the Letter Agreement, the Third Amendment, and this Fourth Amendment. The Loan Agreement, as amended by the First Amendment, the Second Amendment, the Letter Agreement, the Third Amendment, and this Fourth Amendment, is, and shall continue to be, in full force and effect and hereby is ratified and confirmed in all respects. B. On and after the effective date of this Fourth Amendment, each reference in the Loan Agreement, as amended, to "Borrower" or words of like import referring to Borrower shall mean, refer to, and include ECA, Inc. and shall hereinafter be treated as referring to "Borrowers" on a collective basis and in the aggregate. C. Grant of Security Interest. To secure the prompt payment and performance of the Obligations, ECA, Inc. hereby grants to Bank in accordance with the provisions of Section 4.1 of the Loan Agreement, as amended, a continuing security interest in and to all of the Property of ECA, Inc. described in Section 4.1(A) through (G) of the Loan Agreement, as amended, whether now owned or existing or hereafter acquired or arising and wheresoever located. D. Paragraphs (MM) and (JJJ) of Section 1.1 of the Loan Agreement are amended in their entirety as follows: (MM) Promissory Note. The Promissory Note executed by TT and delivered to Bank, dated June 21, 1991, as amended by (1) the First Amendment To Promissory Note, executed by TT and delivered to Bank, dated December 10, 1992, (2) the Second Amendment To Promissory Note, executed by TT and delivered to Bank, dated August 2, 1993, and (3) the Third Amendment To Promissory Note in the form attached to the Fourth Amendment as Exhibit A (with such changes or modifications, if any, to which Borrowers and National Canada Finance Corp. may agree) evidencing the Revolving Loan made by National Canada Finance Corp. pursuant to Section 2.1(A) of this Agreement, together with all amendments thereto and all notes issued in substitution therefor or replacement thereof. -3- 4 (JJJ) Term Note. The Term Note executed by TT and delivered to Bank, dated August 2, 1993, as amended by the First Amendment To Term Note, in the form attached to the Fourth Amendment as Exhibit B (with such changes or modifications, if any, to which Borrowers and National Canada Finance Corp. may agree) evidencing the Term Loan made by National Canada Finance Corp. pursuant to Section 2.2(A) of this Agreement, together with all amendments thereto and all notes issued in substitution therefor or replacement thereof. SECTION II. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWERS. Each Borrower represents, warrants, and covenants that it has good and marketable title to the Collateral free and clear of all liens, claims, mortgages, security interests, pledges, charges or encumbrances whatsoever (other than Permitted Liens or as have otherwise been permitted by Bank pursuant to the Loan Agreement, as amended), except as have been granted to Bank. A. To the extent such representations, warranties and covenants pertain to or are to be performed by Borrowers, all representations, warranties and covenants in the Loan Agreement, as amended by the First Amendment, the Second Amendment, the Letter Agreement, and the Third Amendment, shall continue and be binding on Borrowers under this Fourth Amendment. SECTION III. CONDITIONS PRECEDENT. Each Borrower acknowledges that the effectiveness of this Fourth Amendment is subject to the receipt by Bank of the following documents on the date of this Agreement, all in form and substance satisfactory to Bank and its counsel: A. A certified copy of resolutions of Members of the Board of Directors of each Borrower approving this Fourth Amendment and all of the matters described in this Fourth Amendment, and authorizing the execution, delivery, and performance by Borrowers of this Fourth Amendment, the Third Amendment To Promissory Note, the First Amendment To Term Note, and every other document required to be delivered pursuant to this Fourth Amendment. B. The Third Amendment to Promissory Note executed by Borrowers and accepted by Bank in substantially the same form as is attached to this Fourth Amendment as Exhibit A. -4- 5 C. The First Amendment To Term Note executed by Borrowers and accepted by Bank in substantially the same form as is attached to this Fourth Amendment as Exhibit B. D. A certificate signed by a duly authorized officer of each Borrower to the effect that: (1) As of the date hereof, no Event of Default has occurred and is continuing, and no event has occurred and is continuing that, with the giving of notice or passage of time or both, would be an Event of Default; and (2) The representations and warranties set forth in Section 6.1 of the Loan Agreement are true as of the date of this Fourth Amendment. E. A certificate of each Borrower's corporate secretary certifying (1) to the incumbency and signatures of the officers of each Borrower signing this Fourth Amendment and every other document to be delivered pursuant to the Fourth Amendment, (2) to the effect that TT's Certificate of Incorporation has not been amended since the execution of the Loan Agreement, (3) to the effect that TT's Bylaws have not been amended since the execution of the Second Amendment, and (4) attached thereto is a true, correct and complete copy of the Certificate of Incorporation and Bylaws of ECA, Inc., and each of Borrower's Certificate of Incorporation and Bylaws are in full force and effect as of the date of such certificate. F. UCC-1 Financing Statements signed by a duly authorized officer of ECA, Inc. G. A good standing certificate for ECA, Inc. from the Secretary of State for each of Delaware and Illinois. H. Such other documents as Bank may reasonably request to implement this Fourth Amendment and the transactions described in this Fourth Amendment. SECTION IV. APPLICABLE LAW. This Fourth Amendment shall be deemed to be a contract under the laws of the State of New Jersey, and for all purposes shall be construed in accordance with the laws of such State. -5- 6 SECTION V. COUNTERPARTS. This Fourth Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any one of the parties hereto may execute this Fourth Amendment by signing any such counterpart. IN WITNESS WHEREOF, the parties have executed this Fourth Amendment by their duly authorized officers this 31 day January, 1994. -6- EX-11 3 PER SHARE EARNINGS 1 EXHIBIT 11 STATEMENT OF THE COMPUTATION OF PER SHARE EARNINGS IN ACCORDANCE WITH INSTRUCTION 4(G)
THREE MONTHS ENDED ----------------------------------------------- 6/26/94 6/27/93 --------------- --------------- Primary earnings per share: Weighted average number of 5,185,791 5,122,004 common shares outstanding Dilutive effect of stock option plan - (a) - (a) --------------- --------------- 5,185,791 5,122,004 =============== =============== Net income $ 1,072,000 $ 1,514,000 =============== =============== Primary earnings per share $ 0.21 $ 0.32 =============== ===============
(a) The inclusion of stock options in the calculation of primary earnings per share were either anti-dilutive or not material as per APB 15. 20 -----END PRIVACY-ENHANCED MESSAGE-----