-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Sn+TAPyxdTxMTBaxBE0m3EVhv98HgpOF4cg0RwuwoAXok4ED25LoouY/hRhMiDSu Fvq+QUkf8ws7HWTFi41tFw== 0000950123-97-009407.txt : 19971114 0000950123-97-009407.hdr.sgml : 19971114 ACCESSION NUMBER: 0000950123-97-009407 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970928 FILED AS OF DATE: 19971112 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANSTECHNOLOGY CORP CENTRAL INDEX KEY: 0000099359 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 954062211 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07872 FILM NUMBER: 97713993 BUSINESS ADDRESS: STREET 1: 150 ALLEN RD CITY: LIBERTY CORNER STATE: NJ ZIP: 07938 BUSINESS PHONE: 9089031600 MAIL ADDRESS: STREET 1: 150 ALLEN RD CITY: LIBERTY CORNER STATE: NJ ZIP: 07938 FORMER COMPANY: FORMER CONFORMED NAME: SPACE ORDNANCE SYSTEMS INC DATE OF NAME CHANGE: 19740717 10-Q 1 TRANSTECHNOLOGY CORPORATION 1 FORM 10-Q --------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (MARK ONE) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 28, 1997 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.) 150 Allen Road 07938 Liberty Corner, New Jersey (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (908) 903-1600 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 November 5, 1997, the total number of outstanding shares of registrant's one class of common stock was 5,099,759. 2 TRANSTECHNOLOGY CORPORATION INDEX
PART I. Financial Information Page No. --------------------- -------- Item 1. Financial Statements........................................ 2 Statements of Consolidated Operations-- Three and Six Month Periods Ended September 28, 1997 and September 29, 1996...................................... 3 Consolidated Balance Sheets-- September 28, 1997 and March 31, 1997....................... 4 Statements of Consolidated Cash Flows-- Six Months Ended September 28, 1997 and September 29, 1996.......................................... 5 Statements of Consolidated Stockholders' Equity-- Six Months Ended September 28, 1997......................... 6 Notes to Consolidated Financial Statements.................. 7-11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ........................12-18 PART II. Other Information Item 4. Submission of Matters to a Vote of Security Holders......... 19 Item 6. Exhibits and Reports on Form 8-K............................ 19 SIGNATURES................................................................. 20 EXHIBIT 11................................................................. 21 EXHIBIT 27................................................................. 22
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 Flows are of TransTechnology Corporation and its consolidated subsidiaries. These reports reflect all adjustments of a normal recurring nature, which are, in the opinion of management, necessary to a fair presentation of the results of operations for the interim periods reflected therein. The results reflected in the unaudited Statements of Consolidated Operations for the period ended September 28, 1997 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 Conditions 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 Form 10-K filed for the fiscal year ended March 31, 1997. [THIS SPACE INTENTIONALLY LEFT BLANK] 2 4 STATEMENTS OF CONSOLIDATED OPERATIONS UNAUDITED (In Thousands of Dollars Except Share Data)
THREE MONTHS ENDED SIX MONTHS ENDED ----------------------------------------- ----------------------------------------- SEPTEMBER 28, 1997 SEPTEMBER 29, 1996 SEPTEMBER 28, 1997 SEPTEMBER 29, 1996 ------------------ ------------------ ------------------ ------------------ Net sales $ 50,013 $ 43,580 $ 99,936 $ 88,220 Cost of sales 34,080 31,084 68,655 62,023 ------------------ ------------------ ------------------ ------------------ Gross profit 15,933 12,496 31,281 26,197 ------------------ ------------------ ------------------ ------------------ General, administrative and selling expenses 10,278 8,106 19,849 16,667 Interest expense 2,184 1,814 4,160 3,624 Interest income (323) (283) (566) (552) Other income (217) (204) (220) (221) ------------------ ------------------ ------------------ ------------------ Income from continuing operations before income taxes 4,011 3,063 8,058 6,679 Income taxes 1,624 1,336 3,304 2,855 ------------------ ------------------ ------------------ ------------------ Income from continuing operations 2,387 1,727 4,754 3,824 Discontinued operations: Loss from disposal (net of applicable tax benefits of $93 and $165 for the three and six months ended 9/28/97, respectively, and $157 and $344 for the three and six months ended 9/29/96, respectively) (125) (206) (227) (475) ------------------ ------------------ ------------------ ------------------ Net income $ 2,262 $ 1,521 $ 4,527 $ 3,349 ================== ================== ================== ================== Earnings per Share: (Note 1) Income from continuing operations $ 0.45 $ 0.34 $ 0.91 $ 0.75 Loss from discontinued operations (0.02) (0.04) (0.04) (0.09) ------------------ ------------------ ------------------ ------------------ Net income $ 0.43 $ 0.30 $ 0.87 $ 0.66 ================== ================== ================== ================== Number of shares used in computation of per share information 5,289,000 (a) 5,100,000 5,231,000 (a) 5,102,000
See accompanying notes to unaudited consolidated financial statements. (a) The quarter and six month period ended September 28, 1997, weighted average shares outstanding includes common stock equivalents of approximately 206,000 shares and 183,000 shares, respectively, related to stock options. 3 5 CONSOLIDATED BALANCE SHEETS (In Thousands of Dollars Except Share Data)
UNAUDITED SEPTEMBER 28, 1997 MARCH 31, 1997 ------------------ -------------- ASSETS Current assets: Cash and cash equivalents $ 2,191 $ 3,540 Accounts receivable (net of allowance for doubtful accounts of $725 at September 28, 1997 and $588 at March 31, 1997) 33,105 28,392 Notes receivable 3,631 1,838 Inventories 50,034 50,677 Prepaid expenses and other current assets 1,191 1,028 Deferred income taxes 4,189 4,293 Assets held for sale 7,052 7,617 ------------------ -------------- Total current assets 101,393 97,385 ------------------ -------------- Property, Plant and Equipment 90,695 82,207 Less accumulated depreciation and amortization 26,572 23,594 ------------------ -------------- Property, Plant and Equipment - net 64,123 58,613 ------------------ -------------- Other assets: Notes receivable 8,504 11,125 Costs in excess of net assets of acquired businesses (net of accumulated amortization: September 28, 1997, $4,493; March 31, 1997, $3,869) 45,824 18,878 Other 11,119 13,135 ------------------ -------------- Total other assets 65,447 43,138 ------------------ -------------- Total $ 230,963 $ 199,136 ================== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 10,671 $ 5,907 Accounts payable-trade 12,585 11,050 Accrued compensation 5,666 6,845 Accrued income taxes 1,407 1,632 Other current liabilities 15,571 12,844 ------------------ -------------- Total current liabilities 45,900 38,278 ------------------ -------------- Long-term debt payable to banks and others 86,242 67,516 ------------------ -------------- Other long-term liabilities 17,056 15,898 ------------------ -------------- Stockholders' equity: Preferred stock-authorized, 300,000 shares; none issued -- -- Common stock-authorized, 14,700,000 shares of $.01 par value; issued 5,391,478 at September 28, 1997, and 5,316,971 at March 31, 1997 54 53 Additional paid-in capital 47,634 46,745 Retained earnings 40,806 36,937 Other stockholders' equity (2,741) (2,352) ------------------ -------------- 85,753 81,383 Less treasury stock, at cost - (291,719 shares at September 28, 1997 and 289,237 at March 31, 1997) (3,988) (3,939) ------------------ -------------- Total stockholders' equity 81,765 77,444 ------------------ -------------- Total $ 230,963 $ 199,136 ================== ==============
See accompanying notes to unaudited consolidated financial statements. 4 6 STATEMENTS OF CONSOLIDATED CASH FLOWS UNAUDITED (In Thousands of Dollars)
SIX MONTHS ENDED ---------------------------------------- SEPTEMBER 28, 1997 SEPTEMBER 29, 1996 ------------------ ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 4,527 $ 3,349 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,359 3,834 Provision for losses on notes and accounts receivable 317 53 Loss (gain) on sale or disposal of fixed assets and discontinued businesses 77 (8) Change in assets and liabilities net of acquisitions and dispositions: (Increase) decrease in accounts receivable (837) 2,412 Decrease in inventories 2,369 1,107 Decrease in assets held for sale 565 926 Decrease (increase) in other assets 86 (4,530) Decrease in accounts payable (603) (4,005) Decrease in accrued compensation (1,179) (1,293) (Decrease) increase in income tax payable (225) 628 (Decrease) increase in other liabilities (434) 3,154 -------- -------- Net cash provided by operating activities 9,022 5,627 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Business acquisitions net of cash acquired (33,929) (3,219) Capital expenditures (3,247) (2,545) Proceeds from sale of fixed assets and discontinued business 283 2,118 Decrease in notes receivable 828 458 -------- -------- Net cash used in investing activities (36,065) (3,188) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term borrowings 53,033 20,336 Payments on long-term debt (29,543) (20,414) Proceeds from forward exchange rate contracts 2,036 -- Proceeds from issuance of stock under stock option plan 889 311 Stock repurchases -- (1,625) Dividends paid (658) (665) -------- -------- Net cash provided by (used in) financing activities 25,757 (2,057) -------- -------- Effect of exchange rate changes on cash (63) (49) (Decrease) increase in cash and cash equivalents (1,349) 333 Cash and cash equivalents at beginning of period 3,540 2,362 -------- -------- Cash and cash equivalents at end of period $ 2,191 $ 2,695 ======== ======== Supplemental Information: Interest payments $ 3,060 $ 2,498 Income tax payments $ 2,227 $ 1,682
See accompanying notes to unaudited consolidated financial statements. 5 7 STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY UNAUDITED (In Thousands of Dollars Except Share Data)
ADDITIONAL OTHER FOR THE SIX MONTHS COMMON STOCK TREASURY STOCK PAID-IN RETAINED STOCKHOLDERS' ENDED SEPTEMBER 28, 1997 SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS EQUITY TOTAL - ------------------------ ------ ------ ------ ------ ------- -------- ------ ----- Balance, March 31, 1997 5,316,971 $53 (289,237) $(3,939) $46,745 $ 36,937 $(2,352) $ 77,444 Net Income -- -- -- -- -- 4,527 -- 4,527 Cash dividends ($.13 per share) -- -- -- -- -- (658) -- (658) Unrealized investment holding gains -- -- -- -- -- -- 50 50 Effects of stock under incentive bonus plan - net 74,507 1 (2,482) (49) 889 -- (73) 768 Foreign translation adjustments -- -- -- -- -- -- (366) (366) --------- --- -------- ------- ------- -------- ------- -------- Balance, September 28, 1997 5,391,478 $54 (291,719) $(3,988) $47,634 $ 40,806 $(2,741) $ 81,765 ========= === ======== ======= ======= ======== ======= ========
See accompanying notes to unaudited 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 stock and common stock equivalents (stock options) outstanding during each period. Calculation of earnings per share for the quarter and six month periods ended September 28, 1997 includes common stock equivalents of approximately 206,000 shares and 183,000 shares, respectively, relating to stock options. In computing earnings per share for the quarter and six month periods ended September 29, 1996 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:
September 28,1997 March 31, 1997 ------------------- ------------- Finished goods $ 21,366 $ 21,897 Work-in-process 11,241 10,335 Purchased and manufactured parts 17,427 18,445 ---------------- ------------- Total inventories $ 50,034 $ 50,677 ================ =============
7 9 NOTE 3. Long-Term Debt Payable to Banks and Others Long-term debt payable, including current maturities, consisted of the following:
September 28, 1997 March 31, 1997 ------------------ -------------- Credit agreement -- 5.2% $ 1,990 -- Credit agreement -- 7.58% -- $22,825 Credit agreement -- 7.6875% 6,000 -- Credit agreement -- 8.97% 6,068 -- Credit agreement -- 9% 800 -- Term loan -- 6.57% 6,814 -- Term loan -- 7.5% -- 25,289 Term loan -- 7.75% 34,750 -- Term loan -- 7.6875% 9,375 -- Term loan -- 8.97% 5,561 -- Term loan -- 9% 825 -- Term loan -- 9.79% 24,000 24,500 Other 730 809 ------- ------- 96,913 73,423 Less current maturities 10,671 5,907 ------- ------- Total $86,242 $67,516 ======= =======
Credit Agreement On September 28, 1997 the Company's debt consisted of $8.3 million of borrowings under a revolving credit line ("the Revolver"), $8.1 million of borrowings under international lines of credit ("the International Lines of Credit"), a $55.8 million term loan ("Term Loan A"), a $24 million term loan ("Term Loan B") and $0.7 million of other borrowings. The Revolver commitment of $30 million will be available to the Company through December 31, 2000 and is subject to a borrowing base formula. The Company's credit agreement with a group of commercial banks provides for borrowings and letters of credit based on collateralized accounts receivable and inventory. In addition, all of the remaining assets of the Company and its subsidiaries are 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 September 28, 1997 were $0.1 million. The total commitment under the International Lines of Credit is $10 million and is subject to the same availability and collateral as the revolver, but is not subject to a borrowing base formula. Interest on the Revolver and the International Lines of Credit is tied to the primary lending bank's prime rate, or at the Company's option, the London Interbank Offered Rate ("LIBOR"), plus a margin that varies depending upon the Company's achievement of certain operating and financial goals. On March 31,1997, the Company amended its Term Loan A bank debt to increase the availability by $20 million, giving the company a total of $35 million available for acquisitions. On April 17, 1997, $32.6 million of this amount was used by the Company to acquire TCR Corporation. 8 10 The $55.8 million and $24 million term loans are with the same lenders as the revolving and international lines of credit, are secured by the same collateral, and are due and payable on March 31, and June 30, 2002, respectively. Quarterly principal payments on Term Loan A are $2.2 million, with escalations to $3 million, $3.2 million and $4 million in June, 1998, 1999 and 2000, respectively. Interest on Term Loan A is tied to the primary lending banks prime rate, or LIBOR, plus a margin that varies depending upon the Company's achievement of certain operating and financial goals. Annual principal payments on Term Loan B of $0.5 million are due through June 30, 2000, with final balloon payments of $7.5 million and $15 million due on June 30, 2001 and June 30, 2002, respectively. Interest on Term Loan B accrues at the primary lending bank's prime rate plus two percentage points. The agreement also gives the Company the option of using LIBOR plus three and one-quarter percentage points. At September 28, 1997, $73.5 million of the Company's outstanding borrowings utilized LIBOR. Additionally, the credit facility limits capital expenditures to $9 million annually and contains other customary financial covenants including a limit on the Company's ability to pay dividends to 25% of net income. Other Other long-term debt is comprised principally of an obligation due under a collateralized borrowing arrangement with a fixed interest rate of 3% due December 2004 and loans on life insurance policies owned by the Company with a fixed interest rate of 5%. Debt Maturities
September 28, ------------- 1998 (current) $ 10,671 1999 12,844 2000 14,818 2001 36,716 2002 21,864 -------- Total $ 96,913 ========
NOTE 4. Discontinued Operations Through September 1997, the Company recorded an additional $0.2 million after-tax disposal loss related to previously discontinued businesses. This loss consisted primarily of disposal costs different from previous estimates associated primarily with environmental and legal matters. 9 11 Assets held for sale consisted of the following:
September 28, 1997 March 31, 1997 ------------------- -------------- Inventory $ 305 $ 429 Property 6,611 6,577 Other assets 136 611 ------------- -------------- Assets held for sale $ 7,052 $ 7,617 ============= ==============
NOTE 5. Acquisitions On June 18, 1996 the Company acquired the Pebra hose clamp business from Pebra GmbH Paul Braun i.K. for approximately $3 million in cash plus direct acquisition costs. Pebra is located in Frittlingen, Germany, and manufactures heavy duty hose clamps primarily for use in the manufacture of heavy trucks in Europe. On April 17, 1997 the Company acquired all of the outstanding stock of TCR Corporation for $32.6 million in cash plus direct acquisition costs and other contingent consideration. TCR Corporation, located in Minneapolis, Minnesota, produces externally threaded fasteners and related products for the automotive, heavy vehicle, marine and industrial markets. The following summarizes TransTechnology Corporation's combined Proforma Revenue, Net Income and Earnings per Share information as if the acquisition of TCR Corporation had occurred at the beginning of the period presented. The Proforma results give effect to the amortization of goodwill and the effects on interest expense and taxes.
Six Months Ended September 29, 1996 ------------------ Net Sales $ 99.9 ====== Income from Continuing Operations $ 4.1 ====== Net Income $ 3.7 ====== Earnings per share $ 0.72 ======
The above Proforma information does not purport to be indicative of the financial results which actually would have occurred had the acquisition been made at the beginning of the period presented or subsequent to that date. 10 12 NOTE 6. New Accounting Standards In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 128 "Earnings Per Share". SFAS No. 128 establishes standards for computing and presenting earnings per share and is effective for fiscal 1998. The Company believes that the effect of implementing this standard will not effect results differently than currently reported. In June 1997, the FASB issued SFAS 131, "Disclosures about Segments of an Enterprise and Related Information", which will be effective for the Company beginning in the fiscal year ending March 31, 1999. SFAS No. 131 redefines how operating segments are determined and requires expanded quantitative and qualitative disclosures relating to a company's operating segments. The Company has not yet completed its analysis of which operating segments, if any, it will disclose differently than previously reported. NOTE 7. Reclassifications Certain reclassifications have been made to the prior year to conform to the 1998 presentation. NOTE 8. Subsequent Event On October 8, 1997, the Company filed a Registration Statement with respect to an underwritten public offering of 1.0 million new shares of its Common Stock, with an option granted to the underwriters to purchase an additional 165,000 shares. On November 6, 1997, the Company announced that the Registration Statement had been declared effective and that the offering was priced at $27.625 per share. The net proceeds to the Company from the offering will be used to repay indebtedness under the Company's credit facility. 11 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS All references to three and six month periods in this Management's Discussion refer to the three and six month periods ended September 28, 1997 for fiscal year 1998 and the three and six month periods ended September 29, 1996 for fiscal year 1997. Also when referred to herein, operating profit means net sales less operating expenses, without deduction for general corporate expenses, interest and income taxes. Sales from continuing operations for the six month period in 1998 were $99.9 million, an increase of $11.7 million or 13% from the comparable period in 1997. For the three month period in 1998 sales were $50 million, a $6.4 million or 15% increase from the comparable period in 1997. As further discussed below, the increased sales performance for the six and three month periods in 1998 resulted primarily from the acquisition of TCR Corporation on April 17, 1997. Gross profit for the six month period in 1998 increased $5.1 million or 19% from the comparable period in 1997. For the three month period in 1998, gross profit increased $3.4 million or 28%. Operating profit from continuing operations for the six month period in 1998 was $16.2 million, an increase of $2.1 million or 15% from the comparable period in 1997. For the three month period in 1998 operating profit from continuing operations was $8.1 million, an increase of $1.6 million or 26% from the comparable period in 1997. Changes in sales, operating profit and new orders from continuing operations are discussed below by segment. Net income, including discontinued operations, for the six month period in 1998 was $4.5 million or $0.87 per share, compared to $3.3 million or $0.66 per share, for the comparable period of 1997. The three month period in 1998 experienced net income of $2.3 million or $0.43 per share compared to $1.5 million or $0.30 per share for the year earlier period. As further discussed below, the increased earnings performance in 1998 resulted primarily from the inclusion of TCR Corporation operations in the six and three month periods, increased domestic fastener volume, and to a lesser extent, the Pebra acquisition in the six month period. Interest expense increased $0.5 million and $0.4 million for the six month and three month periods in 1998, respectively. The increases were primarily the result of increased bank borrowings used for the acquisition of TCR Corporation. New orders received during the six month period in 1998 totaled $101.2 million, an increase of $7.9 million or 8% from 1997's comparable period. For the three month period, new orders totaled $49.4 million, an increase of $0.9 million or 2% from last year's comparable period. At September 28, 1997, total backlog of unfilled orders was $73.2 million compared to $65.9 million at September 29, 1996. 12 14 DISCONTINUED OPERATIONS Through September, 1997, the Company recorded an additional $0.2 million after-tax disposal loss related to other previously discontinued businesses. This loss consisted primarily of disposal costs different from previous estimates associated primarily with environmental and legal matters. ACQUISITIONS On April 17, 1997 the Company acquired all of the outstanding stock of TCR Corporation for $32.6 million in cash plus other contingent consideration. TCR Corporation, located in Minneapolis, Minnesota, produces externally threaded fasteners and related products for the automotive, heavy vehicle, marine and industrial markets. NEW ACCOUNTING STANDARDS In February 1997, the Financial accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS') No. 128 "Earnings Per Share." SFAS No. 128 establishes standards for computing and presenting earnings per share and is effective for fiscal 1998. The Company believes that the effect of implementing this standard will not effect results differently than currently reported. In June 1997, the FASB issued SFAS 131, "Disclosures about Segments of an Enterprise and Related Information," which will be effective for the Company beginning in the fiscal year ending March 31, 1999. SFAS No. 131 redefines how operating segments are determined and requires expanded quantitative and qualitative disclosures relating to a company's operating segments. The Company has not yet completed its analysis of which operating segments, if any, it will disclose differently than previously reported. 13 15 FINANCIAL SUMMARY BY PRODUCT SEGMENT (In Thousands of Dollars)
SIX MONTHS ENDED NET CHANGE --------------------------------------- ---------------------------- SEPTEMBER 28, 1997 SEPTEMBER 29, 1996 $ % ------------------ ------------------ ---------- ---------- Sales: Specialty fastener products $ 82,698 $ 71,106 $ 11,592 16 Rescue hoist and cargo hook products 17,238 17,114 124 1 -------- -------- -------- Total $ 99,936 $ 88,220 $ 11,716 13 ======== ======== ======== Operating profit: Specialty fastener products $ 12,425 $ 10,772 $ 1,653 15 Rescue hoist and cargo hook products 3,745 3,305 440 13 -------- -------- -------- Total $ 16,170 $ 14,077 $ 2,093 15 Corporate expense (4,596) (4,263) (333) (8) Corporate interest and other income 644 489 155 32 Interest expense (4,160) (3,624) (536) (15) -------- -------- -------- Income from continuing operations before income taxes $ 8,058 $ 6,679 $ 1,379 21 ======== ======== ========
14 16 FINANCIAL SUMMARY BY PRODUCT SEGMENT (In Thousands of Dollars)
THREE MONTHS ENDED NET CHANGE --------------------------------------- ------------------------- SEPTEMBER 28, 1997 SEPTEMBER 29, 1996 $ % ------------------ ------------------ ---------- ---------- Sales: Specialty fastener products $ 41,543 $ 35,607 $ 5,936 17 Rescue hoist and cargo hook products 8,470 7,973 497 6 -------- -------- -------- Total $ 50,013 $ 43,580 $ 6,433 15 ======== ======== ======== Operating profit: Specialty fastener products $ 6,333 $ 5,070 $ 1,263 25 Rescue hoist and cargo hook products 1,766 1,382 384 28 -------- -------- -------- Total $ 8,099 $ 6,452 $ 1,647 26 Corporate expense (2,341) (1,824) (517) (28) Corporate interest and other income 437 249 188 76 Interest expense (2,184) (1,814) (370) (20) -------- -------- -------- Income from continuing operations before income taxes $ 4,011 $ 3,063 $ 948 31 ======== ======== ========
15 17 SPECIALTY FASTENER PRODUCTS SEGMENT Sales for the specialty fastener products segment were $82.7 million for the six month period in 1998, an increase of $11.6 million or 16% from the comparable period in 1997. Sales for the three month period in 1998 were up $5.9 million or 17% from the same period in 1997. The six and three month increases were primarily due to the inclusion of TCR Corporation operations in the current year periods. Additionally, the net increase in specialty fastener sales were impacted to a lesser extent by increased gear-driven fastener demand to the heavy-duty truck market and the inclusion of Pebra operations (in the six month period only), offset by lower domestic and European retaining ring sales in the current year periods. Domestic retaining ring sales were lower primarily due to customer service disruptions to the production work flow and slow production mix rationalization as consolidation of the Company's two domestic manufacturing facilities continues. European retaining ring sales were down primarily because of the stronger dollar versus Deutsche Mark as compared to last years comparable periods. Fiscal 1998 European retaining ring sales (as reported in local currencies) posted increases versus the prior year comparable periods. Operating profit for the segment was $12.4 million for the six month period in 1998, an increase of $1.7 million or 15% from the comparable period in 1997. The three month period in 1998 showed an operating profit of $6.3 million, an increase of $1.3 million or 25% from the comparable period in 1997. The primary reason for these increases were the same as those noted in the paragraph above relative to the net increase in sales. New orders increased by $10.3 million or 14% for the six month period in 1998. New orders for the three month period in 1998 increased $3.9 million or 10% from the comparable period in 1997. The primary reason for these increases were the same as those noted in the paragraph above relative to the net increase in sales. Backlog of unfilled orders at September 28, 1997 was $41.5 million compared to $33.3 million at September 29, 1996. RESCUE HOIST AND CARGO HOOK PRODUCTS SEGMENT Sales for the rescue hoist and cargo hook products segment were $17.2 million for the six month period in 1998, an increase of $0.1 million or 1% from the comparable period in 1997. Sales for the three month period in 1998 were $8.5 million, up $0.5 million or 6% from the comparable period in 1997. The slight increases were primarily due to the timing of customers placing new orders. Operating profit for the six month period in 1998 was $3.7 million, an increase of $0.4 million or 13% from the comparable period in 1997. The three month period had an operating profit of $1.8 million, an increase of $0.4 million or 28% from the comparable period in 1997. The primary factors contributing to these increases were the same as those noted in the paragraph above relative to the increase in sales, the product sales mix and a slight decrease in engineering expense during the current year. 16 18 New orders for the six month period in 1998 decreased $2.4 million or 13% from the comparable period in 1997. New orders for the three month period in 1997 decreased $3 million or 29% from the comparable period in 1997. The decreases in both 1998 periods were primarily due to customer timing and placement of new orders. Backlog of unfilled orders at September 28, 1997 was $31.8 million compared to $32.7 million at September 29, 1996. LIQUIDITY AND CAPITAL RESOURCES The Company's debt-to-capitalization ratio was 54% as of September 28, 1997, compared to 49% as of March 31, 1997. The current ratio at September 28, 1997, stood at 2.21 compared to 2.54 at March 31, 1997. Working Capital was $55.5 million at September 28, 1997, down $3.6 million from March 31, 1997. On September 28, 1997 the Company's debt consisted of $8.3 million of borrowings under a revolving credit line ("the Revolver"), $8.1 million of borrowings under international lines of credit ("the International Lines of Credit"), a $55.8 million term loan ("Term Loan A"), a $24 million term loan ("Term Loan B") and $0.7 million of other borrowings. The Revolver commitment of $30 million will be available to the Company through December 31, 2000 and is subject to a borrowing base formula. The Company's credit agreement with a group of commercial banks provides for borrowings and letters of credit based on collateralized accounts receivable and inventory. In addition, all of the remaining assets of the Company and its subsidiaries are 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 September 28, 1997 were $0.1 million. The total commitment under the International Lines of Credit is $10 million and is subject to the same availability and collateral as the revolver, but is not subject to a borrowing base formula. Interest on the Revolver and the International Lines of Credit is tied to the primary lending bank's prime rate, or at the Company's option, the London Interbank Offered Rate ("LIBOR"), plus a margin that varies depending upon the Company's achievement of certain operating and financial goals. On March 31,1997, the Company amended its Term Loan A bank debt to increase the availability by $20 million, giving the company a total of $35 million available for acquisitions. On April 17, 1997, $32.6 million of this amount was used by the Company to acquire TCR Corporation. The $55.8 million and $24 million term loans are with the same lenders as the revolving and international lines of credit, are secured by the same collateral, and are due and payable on March 31, and June 30, 2002, respectively. Quarterly principal payments on Term Loan A are $2.2 million, with escalations to $3 million, $3.2 million and $4 million in June, 1998, 1999 and 2000, respectively. Interest on Term Loan A is tied to the primary lending banks prime rate, or LIBOR, plus a margin that varies depending the Company's achievement of certain operating and financial goals. Annual principal payments on Term Loan B of $0.5 million are due through June 30, 2000, with final balloon payments of $7.5 million and $15 million due on June 30, 2001 and June 30, 2002, respectively. Interest on Term Loan B accrues at the primary lending bank's prime rate plus two percentage points. The agreement also gives the Company the option of using 17 19 LIBOR plus three and one-quarter percentage points. At September 28, 1997, $73.5 million of the Company's outstanding borrowings utilized LIBOR. Additionally, the credit facility limits capital expenditures to $9 million annually and contains other customary financial covenants including a limit on the Company's ability to pay dividends to 25% of net income. Management believes that the Company's anticipated cash flow from operations, combined with the bank credit described above, will be sufficient to support working capital requirements, capital expenditures and dividend payments at their current or expected levels. Capital expenditures in the six month period in 1998 were $3.2 million as compared with $2.5 million in the comparable period in 1997. On October 8, 1997, the Company filed a Registration Statement with respect to an underwritten public offering of 1.0 million new shares of its Common Stock, with an option granted to the underwriters to purchase an additional 165,000 shares. On November 6, 1997, the Company announced that the Registration Statement had been declared effective and that the offering was priced at $27.625 per share. The net proceeds to the Company from the offering will be used to repay indebtedness under the Company's credit facility. 18 20 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the annual meeting of the Registrant, held on July 24, 1997, all of the directors of the Company were re-elected for a term of one year, and shareholders ratified and approved an amendment to the Amended and Restated 1992 Long Term Incentive Plan. The results of the voting on the election of directors were as follows:
VOTES VOTES FOR WITHHELD --- -------- Gideon Argov 3,148,198 1,547,691 Walter Belleville 3,145,411 1,550,478 Michael J. Berthelot 3,146,091 1,549,798 Patrick K. Bolger 3,144,414 1,551,475 Thomas V. Chema 3,145,389 1,550,500 Michael Glouchevitch 3,145,917 1,549,972 James A. Lawrence 3,145,726 1,550,163
The results of the voting on the proposal to amend the Amended and Restated 1992 Long Term Incentive Plan were as follows: FOR - 2,729,456; AGAINST - 1,938,269; ABSTAIN - 28,164 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 11 Statement of Computation of Per Share Earnings 27 Financial Data Schedule (b) No reports on Form 8-K were filed during the quarter ended September 28, 1997. 19 21 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRANSTECHNOLOGY CORPORATION (Registrant) Dated: November 10, 1997 By: /s/ Joseph F. Spanier ---------------------------------------- JOSEPH F. SPANIER, Vice President and Chief Financial Officer* * On behalf of the Registrant and as Principal Financial Officer. 20 22 EXHIBIT INDEX ------------- Exhibit No. Description - ----------- ----------- 11 Statement of Computation of Per Share Earnings 27 Financial Data Schedule EX-11 2 STATEMENT OF COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 STATEMENT OF THE COMPUTATION OF PER SHARE EARNINGS IN ACCORDANCE WITH INSTRUCTION 4(g)
THREE MONTHS ENDED SIX MONTHS ENDED ----------------------------------------- ---------------------------------------- SEPTEMBER 28, 1997 SEPTEMBER 29, 1996 SEPTEMBER 28, 1997 SEPTEMBER 29, 1996 ------------------ ------------------ ------------------ ------------------ Primary earnings per share: Weighted average number of common shares outstanding 5,082,807 5,099,618 5,048,208 5,101,626 Dilutive effect of stock option plan 206,000 - (a) 183,000 - (a) ----------- ---------- --------- --------- 5,288,807 5,099,618 5,231,208 5,101,626 =========== ========== ========= ========= Net income $ 2,262,000 1,521,000 4,527,000 3,349,000 =========== ========== ========= ========= Primary earnings per share $ 0.43 0.30 0.87 0.66 =========== ========== ========= =========
(a) The inclusion of stock options in the calculation of primary earnings per share was either anti-dilutive or not material as per APB 15. 21 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS MAR-31-1997 SEP-28-1997 2,191 0 33,105 725 50,034 101,393 90,695 26,572 230,963 45,900 96,913 0 0 54 (6,729) 230,963 99,936 100,722 68,655 24,009 0 317 4,160 8,058 3,304 4,754 (227) 0 0 4,527 0.87 0.87
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