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 30, 2001
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 February 7, 2002, the total number of outstanding shares of
registrant's one class of common stock was 6,187,634.
TRANSTECHNOLOGY CORPORATION
INDEX
Page No.
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PART I. Financial Information
Item 1. Financial Statements ......................................... 2
Statements of Consolidated Operations--
Three and Nine Month Periods Ended December 30, 2001
and December 31, 2000 ........................................ 3
Consolidated Balance Sheets--
December 30, 2001 and March 31, 2001 ......................... 4
Statements of Consolidated Cash Flows--
Nine Month Periods Ended December 30, 2001 and
December 31, 2000 ............................................ 5
Notes to Consolidated Financial Statements ................... 6-13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .......................... 14-20
Item 3. Quantitative and Qualitative Disclosures about Market Risk ... 21
PART II. Other Information
Item 1. Legal Proceedings ............................................ 22
Item 6. Exhibits and Reports on Form 8-K ............................. 22
SIGNATURES .............................................................. 22
EXHIBIT 2.5 ............................................................. 23-109
EXHIBIT 10.47 ........................................................... 110-125
EXHIBIT 10.48 ........................................................... 126-137
1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited Statements of Consolidated Operations, Consolidated
Balance Sheets, and 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 30,
2001, 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, 2001.
Information provided herein as of March 31, 2001 and for the three and nine
month periods ended December 31, 2000 has been restated to give effect to the
reporting of the Company's Specialty Fasteners Business Segment as discontinued
operations as discussed in Note 4 to the Financial Statements.
[THIS PAGE INTENTIONALLY LEFT BLANK]
2
STATEMENTS OF CONSOLIDATED OPERATIONS
UNAUDITED
(In Thousands of Dollars, Except Share Data)
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------- -----------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 30, DECEMBER 31,
2001 2000 2001 2000
----------- ----------- ----------- -----------
(Restated) (Restated)
Net sales $ 21,357 $ 21,222 $ 62,403 $ 57,059
Cost of sales 12,883 13,488 39,355 36,930
----------- ----------- ----------- -----------
Gross profit 8,474 7,734 23,048 20,129
----------- ----------- ----------- -----------
General, administrative
and selling expenses 5,147 6,064 15,632 17,923
Interest expense 2,437 2,003 6,422 5,484
Interest income (8) (8) (53) (82)
Other income - net (64) (1,451) (114) (1,769)
Forbearance fees 473 -- 2,635 --
Corporate office restructuring charge 400 1,629 --
----------- ----------- ----------- -----------
Income (loss) from continuing operations
before income taxes 89 1,126 (3,103) (1,427)
Provision for income taxes (benefit) 32 428 (1,126) (542)
----------- ----------- ----------- -----------
Income (loss) from continuing operations 57 698 (1,977) (885)
Discontinued operations:
Income from sale of businesses and (loss)
from operations of discontinued Fasteners
Segment (less applicable income taxes
(benefits) of ($1,194) for the three month
period ended December 31, 2000 and $8,012
and ($1,760) for the nine month periods
ended December 30, 2001 and December 31,
2000, respectively) -- (1,948) 16,414 (2,872)
Loss on disposal of discontinued Fasteners
Segment, including provision of $5,620 and
$5,716 for operating losses during phase
out periods (less applicable income tax
benefits of ($2,321) and ($39,121) for the
three and nine month periods ended
December 30, 2001) (6,272) -- (74,452) --
----------- ----------- ----------- -----------
Net loss $ (6,215) $ (1,250) $ (60,015) $ (3,757)
=========== =========== =========== ===========
Basic earnings (loss) per share:
Income (loss) from continuing operations $ 0.01 $ 0.11 $ (0.32) $ (0.14)
Loss from discontinued operations (1.01) (0.31) (9.39) (0.47)
----------- ----------- ----------- -----------
Net loss $ (1.00) $ (0.20) $ (9.71) $ (0.61)
=========== =========== =========== ===========
Diluted earnings (loss) per share:
Income (loss) from continuing operations $ 0.01 $ 0.11 $ (0.32) $ (0.14)
Loss from discontinued operations (1.00) (0.31) (9.39) (0.47)
----------- ----------- ----------- -----------
Net loss $ (0.99) $ (0.20) $ (9.71) $ (0.61)
=========== =========== =========== ===========
Numbers of shares used in computation
of per share information: (Note 1)
Basic 6,184,000 6,171,000 6,179,000 6,165,000
Diluted 6,250,000 6,171,000 6,179,000 6,165,000
See accompanying notes to unaudited consolidated financial statements.
3
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, Except Share Data)
(UNAUDITED)
DECEMBER 30, MARCH 31,
2001 2001
----------- -----------
(Restated)
ASSETS
Current assets:
Cash and cash equivalents $ 443 $ 2,048
Accounts receivable (net of allowance for
doubtful accounts of $288 at December
30, 2001 and $20 at March 31, 2001) 15,110 20,309
Inventories 21,503 21,778
Prepaid expenses and other current assets 1,183 951
Deferred income taxes 1,518 1,512
Assets held for sale 38,925 263,771
----------- -----------
Total current assets 78,682 310,369
----------- -----------
Property, plant and equipment 25,336 25,128
Less accumulated depreciation and amortization 13,397 12,625
----------- -----------
Property, plant and equipment - net 11,939 12,503
----------- -----------
Other assets:
Notes receivable 57 61
Costs in excess of net assets of acquired
businesses (net of accumulated amortization:
December 30, 2001, $1,105; March 31, 2001, $953) 10,670 10,805
Patents and trademarks (net of accumulated
amortization: December 30, 2001, $52;
March 31, 2001, $38) 177 191
Deferred income taxes 44,368 11,360
Other 7,907 11,342
----------- -----------
Total other assets 63,179 33,759
----------- -----------
Total $ 153,800 $ 356,631
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Callable long-term debt $ 129,318 $ 271,307
Current portion of long-term debt -- 88
Accounts payable - trade 5,349 6,707
Accrued compensation 2,630 3,859
Accrued income taxes 3,335 3,193
Other current liabilities 7,620 9,028
----------- -----------
Total current liabilities 148,252 294,182
----------- -----------
Long-term debt payable to banks and others 283 1,055
----------- -----------
Deferred income taxes 5,314 5,298
----------- -----------
Other long-term liabilities 5,487 4,221
----------- -----------
Stockholders' equity:
Preferred stock - authorized, 300,000
shares; none issued -- --
Common stock - authorized, 14,700,000
shares of $.01 par value; issued
6,734,241 at December 30, 2001, and
6,718,614 at March 31, 2001 67 67
Additional paid-in capital 78,241 78,091
Notes receivable from officers (123) (191)
Accumulated deficit (70,461) (10,446)
Accumulated other comprehensive loss (3,914) (6,323)
Unearned compensation (272) (253)
----------- -----------
3,538 60,945
Less treasury stock, at cost - 546,940
shares at December 30, 2001 and
546,428 shares at March 31, 2001) (9,074) (9,070)
----------- -----------
Total stockholders' equity (5,536) 51,875
----------- -----------
Total $ 153,800 $ 356,631
=========== ===========
See accompanying notes to unaudited consolidated financial statements.
4
STATEMENTS OF CONSOLIDATED CASH FLOWS
UNAUDITED
(In Thousands of Dollars)
NINE MONTHS ENDED
-----------------------------
DECEMBER 30, DECEMBER 31,
2001 2000
----------- -----------
(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (60,015) $ (3,757)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Gain on sale of marketable securities -- (13)
Depreciation and amortization 2,594 4,177
Non-cash interest expense 1,890 889
Provision for losses on accounts receivable 235 (47)
Change in assets and liabilities:
Decrease (increase) in accounts and
other receivables 5,027 (2,568)
Decrease in inventories 275 460
Increase in deferred taxes (33,013) (28)
Decrease in other assets 1,749 2,494
Decrease in net assets of discontinued
businesses 87,839 10,899
Decrease in accounts payable (1,357) (334)
(Decrease) increase in accrued compensation (1,229) 442
Increase (decrease) in income tax payable 142 (4,434)
Decrease in other liabilities (287) (864)
----------- -----------
Net cash provided by operating activities
in continuing operations 3,850 7,316
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (208) (516)
Proceeds from sales of business 139,325 --
Proceeds from sale of marketable securities -- 56
Decrease in notes and other receivables, net 8 223
----------- -----------
Net cash provided by (used in) investing
activities in continuing operations 139,125 (237)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Reduction) increase in revolving credit, net (144,612) 5,733
Repayments on term loan -- (5,625)
Repayments on other debt -- (61)
Proceeds from subordinated debt -- 75,000
Repayment on bridge loan -- (75,000)
Debt issue costs -- (5,613)
Exercise of stock options and other 32 --
Dividends paid -- (1,198)
----------- -----------
Net cash used in financing activities in
continuing operations (144,580) (6,764)
----------- -----------
(Decrease) increase in cash and cash equivalents (1,605) 315
Cash and cash equivalents at beginning of period 2,048 773
----------- -----------
Cash and cash equivalents at end of period $ 443 $ 1,088
=========== ===========
Supplemental Information:
Interest payments $ 18,923 $ 10,309
Income tax payments $ 637 $ 1,418
Increase in senior subordinated notes for
paid-in-kind interest expense $ 1,730 $ 775
See accompanying notes to unaudited consolidated financial statements.
5
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands)
NOTE 1. Earnings (loss) Per Share
Basic earnings (loss) per share are computed by dividing net loss by the
weighted-average number of shares outstanding. Diluted earnings per share
is computed by dividing net income by the sum of the weighted-average
number of shares outstanding plus the dilutive effect of shares issuable
through the exercise of stock options.
The components of the denominator for basic loss per common share and
diluted loss per common share are reconciled as follows:
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
December 30, December 31, December 30, December 31,
2001 2000 2001 2000
----------- ----------- ----------- -----------
Basic Earnings (Loss) per
Common Share:
Weighted-average common
stock outstanding for basic
loss per share calculation 6,184 6,171 6,179 6,165
=========== =========== =========== ===========
Diluted Earnings (Loss) per
Common Share:
Weighted-average common
shares outstanding 6,184 6,171 6,179 6,165
Stock options* 66 -- -- --
----------- ----------- ----------- -----------
Weighted-average common
stock outstanding for diluted
loss per share calculation 6,250 6,171 6,179 6,165
=========== =========== =========== ===========
* Not including anti-dilutive stock options totaling 337 for the three
and nine month periods ended December 30, 2001, and 524 and 485 for
the three and nine month periods ended December 31, 2000,
respectively. Also excludes anti-dilutive warrants totaling 428 for
the three and nine month periods ended December 31, 2000.
6
NOTE 2. Comprehensive Loss
Comprehensive loss for the three and nine month periods ended December 30,
2001 and December 31, 2000 is summarized below.
Three Months Ended Nine Months Ended
------------------------------ ------------------------------
December 30, December 31, December 30, December 31,
2001 2000 2001 2000
----------- ----------- ----------- -----------
Net loss $ (6,215) $ (1,250) $ (60,015) $ (3,757)
Other comprehensive (loss)
income, net of tax:
Foreign currency
translation adjustment
arising during period (328) (213) (1,288) (1,699)
Less: reclassification ad-
justment for sale of invest-
ment in foreign entity 1,258 -- 2,542 --
Reclassification adjustment
for minimum pension-
liability due to sale
of business 1,155 -- 1,155 --
Unrealized investment
holding loss arising
during period -- -- -- (6)
Reclassification adjustment
for gains included in net
income -- 10 -- 10
----------- ----------- ----------- -----------
Total comprehensive loss $ (4,130) $ (1,453) $ (57,606) $ (5,452)
=========== =========== =========== ===========
NOTE 3. Inventories
Inventories are summarized as follows:
December 30, March 31,
2001 2001
----------- -----------
Finished goods $ 734 $ 683
Work in process 6,949 6,664
Purchased and
manufactured parts 13,820 14,431
----------- -----------
Total $ 21,503 $ 21,778
=========== ===========
7
NOTE 4. Discontinued Operations/Restructuring Activities
On January 19, 2001, the Company announced its intention to restructure
and divest its cold-headed products (TCR), retaining ring (Seeger-Orbis,
TransTechnology (GB), TT Brasil, and TransTechnology Engineered Rings
USA), hose clamp (Breeze Industrial and Pebra) and aerospace rivet
(Aerospace Rivet Manufacturers Corp.) operations. In addition, on April
12, 2001, the Company announced that it would divest TransTechnology
Engineered Components (TTEC), a manufacturer of spring steel engineered
fasteners and headlight adjusters. For business segment reporting
purposes, these above-mentioned business units have been previously
classified as the segment "Specialty Fasteners." The Company has
reclassified these remaining business units as discontinued operations
with the exception of Aerospace Rivet Manufacturing Corporation.
The accompanying financial statements have been restated to conform to
discontinued operations treatment for all historical periods presented. A
portion of the Company's interest expense has been allocated to
discontinued operations based upon the net asset balances attributable to
those operations. Interest expense allocated to discontinued operations
was $3.2 million and $14.3 million for the three and nine month periods
ended December 30, 2001, respectively, and $6.2 million and $20.5 million
for the three and nine month periods ended December 31, 2000,
respectively. Income taxes have been allocated to discontinued operations
based on the estimated tax attributes of the income and assets of the
underlying discontinued businesses.
On July 10, 2001, the Company sold its Breeze Industrial and Pebra hose
clamp businesses to Industrial Growth Partners and members of Breeze
Industrial's management for $46.2 million, which was paid in cash.
Proceeds from the sale were used to repay borrowings outstanding under the
Credit Facility (Note 5).
On December 5, 2001, the Company sold its TransTechnology Engineered
Components ("TTEC") businesses to a company formed by affiliates of
Kohlberg & Company, L.L.C. for $98.5 million, of which $96 million was
cash and the balance the assumption of certain liabilities related to the
purchased businesses. $93.1 million in cash was received at closing and
$2.9 million was received on January 17, 2002. The cash proceeds of the
sale were used to repay borrowings outstanding under the Credit Facility.
In the fiscal quarter ended September 30, 2001, as part of its
restructuring program, the Company reported a pre-tax asset impairment
charge for TTEC in the amount of $85.8 million to reduce the carrying
value of these businesses to estimated fair market value. This non-cash
charge was specifically related to the write-down of goodwill. The sale
proceeds of TTEC approximated its adjusted carrying value.
On January 31, 2002, the Company announced that it had signed a definitive
agreement to sell substantially all of the manufacturing assets of its
German retaining ring business, Seeger-Orbis GmbH & Co. OHG to Barnes
Group Inc. for cash consideration of $20 million. The sale is expected to
close in the Company's fiscal fourth quarter.
8
Net sales and losses from the discontinued operations were as follows:
Three Months Ended Nine Months Ended
------------------------------ ------------------------------
December 30, December 31, December 30, December 31,
2001 2000 2001 2000
----------- ----------- ----------- -----------
Net sales $ 32,851 $ 57,075 $ 133,114 $ 184,739
=========== =========== =========== ===========
Pre-tax (loss) from
discontinued operations (8,593) (3,142) (113,848) (4,632)
Pre-tax gain on disposal
of Breeze Industrial/Pebra -- -- 24,701 --
Income tax benefit 2,321 1,194 31,109 1,760
----------- ----------- ----------- -----------
Net loss from
discontinued operations $ (6,272) $ (1,948) $ (58,038) $ (2,872)
=========== =========== =========== ===========
The pre-tax loss of $8.6 million for the three month period ended December 30,
2001, includes a non-cash goodwill impairment charge related to TCR of $4.0
million, additional non-cash property, plant and equipment impairment charges
associated with the Rings businesses of $1.1 million, and additional net phase
out costs of $3.5 million.
The pre-tax loss from discontinued operations of $113.8 million for the nine
month period ended December 30, 2001, includes non-cash goodwill impairment of
TTEC of $85.8 million, non-cash impairment of the Rings property, plant and
equipment of $9.7 million, the accrual of swapped interest costs of $5.7
million, the non-cash write-off of capitalized loan fees of $2.7 million,
non-cash impairment of TCR goodwill of $4.0 million and net operating losses of
$5.9 million.
Pre-tax losses for the three and nine month periods ended December 31, 2000,
include operating income/losses and allocated interest expense related to these
periods.
Assets and liabilities of the discontinued businesses were as follows:
December 30, March 31,
2001 2001
----------- -----------
Current assets $ 38,778 $ 84,247
Property, plant and equipment 15,819 68,751
Other assets 9,265 147,390
Current liabilities 20,297 27,502
Long-term liabilities 4,640 9,115
----------- -----------
Net assets of discontinued operations $ 38,925 $ 263,771
=========== ===========
Net assets associated with discontinued operations have been classified as
"assets held for sale" in the Consolidated Balance Sheets.
9
NOTE 5. Long-term Debt Payable to Banks and Others
Long-term debt payable to banks and others, including current maturities,
consisted of the following:
December 30, March 31,
2001 2001
----------- -----------
Credit agreement -- 7.25% $ 3,945 $ --
Credit agreement -- 6.87% 47,354
Credit agreement -- 10.50% -- 2,900
Credit agreement -- 9.95% -- 153,368
Term loan -- 9.06% -- 38,750
Senior Subordinated Notes -- 16.00% 78,078 76,332
Other -- 5.00% 397 1,289
----------- -----------
129,774 272,639
Less current maturities and
amounts callable by lenders 129,318 271,395
Less unamortized discount 173 189
----------- -----------
Total long-term debt $ 283 $ 1,055
=========== ===========
CREDIT FACILITIES - Effective December 31, 2000, the Company was not able to
meet certain financial ratio requirements of the senior credit facility (the
"Credit Facility") as amended. Pursuant to discussions with the senior debt
lenders (the "Lenders"), the Company and the Lenders agreed to an amendment to
the Credit Facility to include a forbearance agreement as well as certain other
fees and conditions, including the suspension of dividend payments. During the
forbearance period the Lenders agree not to exercise certain of their rights and
remedies under the Credit Facility. The Company has, accordingly, classified its
bank debt as "current" to reflect the fact that the forbearance period is less
than one year. The term of the forbearance period, initially scheduled to expire
on January 31, 2001, was subsequently extended by an additional amendment to
March 29, 2001. This additional amendment also reduced the Revolver from $200
million to $175 million with an additional sub-limit on usage at $162 million.
Prior to the March 29, 2001 expiration date, the Lenders agreed to extend the
termination date until June 27, 2001, provided that certain performance and debt
reduction requirements occurred in which case the forbearance termination date
could be further extended under similar terms and conditions until September 27,
2001. The debt reduction requirements of the forbearance agreement stipulated
that $50 million was to be repaid prior to June 27, 2001, which was deemed
satisfied by the Lenders, because of the impending sale of the Company's Breeze
Industrial and Pebra divisions in July 2001. Effective as of September 27, 2001,
a further extension to the forbearance termination date was granted until
December 21, 2001, provided that certain performance conditions were met and
certain fees and increased interest charges were paid.
Effective December 5, 2001, the Company sold its Engineered Components division
for $98.5 million including cash of $93.1 million, which was used to retire
senior debt. An additional $2.9 million in cash was received on January 17,
2002. In anticipation of this debt reduction, a further extension to the
forbearance termination date was granted effective December 4, 2001 until March
27, 2002 provided certain conditions were met. Under the terms of this current
forbearance agreement the Company's option to borrow at rates based either on
the prime rate, or the London Interbank Offered Rate
10
("LIBOR") became permitted after having been precluded in the prior forbearance
agreement. The current forbearance agreement retains a provision that $2.5
million of the outstanding revolver bears an interest rate of 25% per annum.
This amount relates to the subordinated debt interest payment made on its
scheduled due date of October 1, 2001. Under the forbearance agreement, the $2.5
million will be the last piece of the revolver paid. The forbearance agreement
also requires the achievement of minimum levels of EBITDA (earnings before
interest, taxes, depreciation, and amortization), and adherence to borrowing
limits as adjusted based on anticipated debt reduction. Other terms of the
forbearance agreement include certain fees and reporting and consulting
requirements. This agreement was further amended on January 31, 2002, to modify
certain provisions with respect to borrowing limits.
The Company has taken action to reduce its debt by selling its
Breeze-Industrial, Pebra, and Engineered Components business as well as taking
action to arrange for the sale of the other businesses in its Specialty
Fasteners Products Segment so as to be in an improved financial position to
negotiate further amendments or borrowing alternatives. The Company has made all
of its scheduled interest and principal payments on a timely basis. Various
factors, including changes in business conditions, anticipated proceeds from the
sale of operations and economic conditions in domestic and international markets
in which the Company competes, will impact the restructuring results and may
affect the ability of the Company to restore compliance with the financial
ratios specified in the existing Credit Facility.
The Company has unused borrowing capacity for both domestic and international
operations of $15.2 million as of December 30, 2001, including letters of
credit. The Credit Facility is secured by the Company's assets. As of December
30, 2001, the Company had total borrowings of $129.6 million, which have a
current weighted-average interest rate of 12.4% excluding the impact of interest
rate swaps. The impact of interest rate swaps as further discussed below was
provided for as a charge to discontinued operations in the three month period
ended September 30, 2001. The interest rate swap contracts provide for a fixed
rate of interest on $125 million notional amount of debt, which currently
exceeds the Company's outstanding variable rate based debt by approximately $74
million.
Borrowings under the Credit Facility as of December 30, 2001, were $51.3
million. Interest on the Revolver is tied to the primary 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
results. As of December 30, 2001, $47.4 million of the Company's outstanding
borrowings utilized LIBOR.
Effective July 10, 2001, the Term Loan of $31.3 million was repaid in full with
the Breeze Industrial and Pebra sale proceeds.
The Credit Facility requires the Company to maintain interest rate protection on
a minimum of 50% of its variable rate debt. The Company has, accordingly,
provided for this protection by means of interest rate swap agreements which
have fixed the rate of interest on $50.0 million of debt at a base rate of 5.48%
through May 4, 2002, and $75.0 million of debt at a base rate of 6.58% through
March 3, 2003. Due to a decline in interest rates since the inception of these
swap agreements, the value of the agreements has become unfavorable to the
Company as discussed under Item 3 - Quantitative and Qualitative Disclosures
about Market Risk. At September 30, 2001, the Company recorded a charge and a
liability in the amount of $5.1 million before tax to recognize the liability
based on the expected retirement of the associated Credit Facility with the
proceeds from the sale of the discontinued business units this fiscal year. The
Company increased this charge by $0.6 million in the third quarter. This pre-tax
charge to terminate these interest rate swap agreements is accordingly included
with the loss on disposal of the discontinued Specialty Fasteners Segment.
Under the Credit Facility agreement, the base interest rate is added to the
applicable interest rate margin to determine the total interest rate in effect.
The Credit Facility restricts annual capital expenditures to $13.0 million in
2002 and $15.0 million thereafter, and contains other customary financial
covenants,
11
including the requirement to maintain certain financial ratios relating to
performance, interest expense and debt levels.
Management is in the process of pursuing a restructuring of the senior
debt to assure sufficient working capital and provide liquidity to the
Company. The items of and the amounts available under such a credit
facility are subject to negotiation with prospective lenders. Management
expects to complete the proposed refinancing before the expiration of the
current forbearance on March 27, 2002.
SENIOR SUBORDINATED NOTES - On August 30, 2000, the Company completed a
private placement of $75 million in senior subordinated notes (the
"Notes") and certain warrants to purchase shares of the Company's common
stock (the "Warrants") to a group of institutional investors
(collectively, the "Purchasers"). The Notes are due on August 29, 2005 and
bear interest at a rate of 16% per annum, consisting of 13% cash interest
on principal, payable quarterly, and 3% interest on principal, payable
quarterly in "payment-in-kind" promissory notes. Prepayment of the Notes
is permitted after August 29, 2001 at a premium initially of 9%, declining
to 5%, 3%, and 1% annually, respectively, thereafter. The Notes contain
customary financial covenants and events of default, including a
cross-default provision to the Company's Credit Facility.
The Warrants entitle the Purchasers to acquire in the aggregate 427,602
shares, or 6.5%, of the common stock of the Company at an exercise price
of $9.93 a share, which represents the average daily closing price of the
Company's common stock on the New York Stock Exchange for the thirty (30)
days preceding the completion of the private placement. The Warrants must
be exercised by August 29, 2010. These Warrants have been valued at an
appraised amount of $0.2 million and have been recorded in paid in
capital. In connection with the transaction, the Company and certain of
its subsidiaries signed a Consent and Amendment Agreement with the Lenders
under the Company's $250 million Credit Facility existing at that time, in
which the Lenders consented to the private placement and amended certain
financial covenants associated with the Credit Facility.
OTHER - As of December 30, 2001, the Company had $.4 million of other
long-term debt consisting of life insurance policies owned by the Company
with a fixed interest rate of 5%.
NOTE 6. Change in Accounting for Derivative Financial Instruments
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities". In June 2000, the FASB
issued SFAS No. 138, which amends certain provisions of SFAS No. 133. The
Company adopted SFAS No. 133 and the corresponding amendments under SFAS
No. 138 on April 1, 2001. The Company reported, within Discontinued
Operations, a pre-tax charge of $5.7 million associated with the
termination of interest rate swap agreements that will no longer be
required when the Company repays its floating rate debt, which is
anticipated with the sale of "discontinued" assets of the Company being
held for sale.
NOTE 7. New Accounting Standards
In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets", which is effective January 1, 2002. SFAS No. 142 requires, among
other things, the discontinuance of goodwill amortization. In addition,
the standard includes provisions for the reclassification of certain
existing recognized intangibles as goodwill, reassessment of the useful
lives of existing recognized intangibles, reclassification of certain
intangibles out of previously reported goodwill and the identification of
reporting units for purposes of assessing potential future impairments of
goodwill. SFAS No. 142 also requires the Company to complete a
transitional goodwill impairment test six months from the date of
12
adoption. The Company is currently assessing but has not yet determined
the impact of SFAS No. 142 on its financial position and results of
operations.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment of Disposal of Long-Lived Assets", which is effective for
fiscal years beginning after December 15, 2001. SFAS No. 144 requires,
among other things, the financial accounting and reporting for the
impairment or disposal of long-lived assets. The Company is currently
assessing, but has not yet determined, the impact of SFAS No. 144 on its
financial position and results of operations.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
All references to three and nine month periods in this Management's Discussion
refer to the three and nine month periods ended December 30, 2001 for fiscal
year 2002 and the three and nine month periods ended December 31, 2001 for
fiscal year 2001. Also, when referred to herein, operating profit means net
sales less operating expenses, without deduction for general corporate expenses,
interest and income taxes.
MANAGEMENT INITIATIVES AND RESTRUCTURING
On January 19, 2001, the Company announced its intention to restructure and
divest its cold-headed products (TCR), retaining ring (Seeger-Orbis,
TransTechnology (GB), TT Brasil, and TransTechnology Engineered Rings USA) and
hose clamp operations (Breeze Industrial and Pebra) and aerospace rivet
(Aerospace Rivet Manufacturers Corp.) operations. The Company also announced
that it had retained an investment banking firm to consider further strategic
and business initiatives following these actions. In association with the
restructuring, the Company stated it would suspend the payment of its quarterly
dividend and recognize a non-recurring charge in the fourth fiscal quarter of
2001 related to anticipated losses on the sale of several of these businesses as
well as the provision for severance and other costs associated with these
divestitures. Proceeds from the sales of the businesses will be used to repay
debt and to refocus the Company's efforts on the design, manufacture and
marketing of specialized aerospace equipment.
On April 12, 2001, the Company announced that it would divest TransTechnology
Engineered Components (TTEC), a manufacturer of spring steel engineered
fasteners and headlight adjusters. For business segment reporting purposes,
these above-mentioned business units have been previously classified as the
segment "Specialty Fasteners." The Company has reclassified these remaining
business units as discontinued operations in the quarter ended September 30,
2001, with the exception of Aerospace Rivet Manufacturers Corp.
The Company reported, on a pre-tax basis, asset impairment charges in the fourth
fiscal quarter of 2001 of $67.9 million related to estimated losses on
businesses to be sold, primarily related to the write-off of intangible assets
and property.
On July 10, consistent with the aforementioned actions, the Company completed
the previously announced sale of its Breeze Industrial and Pebra hose clamp
businesses in the U.S. and Germany, respectively, to Industrial Growth Partners
and the current management team of these divested companies for $46.2 million in
cash. Proceeds were used to repay debt. Breeze Industrial's land and building
was sold in the second fiscal quarter of 2002 for proceeds of $1.1 million (net
of associated debt).
In the second fiscal quarter of 2002, as part of its restructuring program and
included within the "discontinued operations" component of income, the Company
reported a pre-tax asset impairment charge for its Engineered Components
business of $85.8 million to reduce the carrying value of these businesses to
estimated fair market value. This non-cash charge was specifically related to a
write-down of goodwill. In addition, a pre-tax charge was recorded in the amount
of $8.6 million to reduce the carrying values of its Engineered Rings businesses
to reflect revised estimates of expected net sales
14
proceeds for these businesses. This charge resulted in a non-cash write-down of
property, plant and equipment. Offsetting these charges was a pre-tax gain on
the sale of its hose clamp businesses of $24.7 million. Consistent with
accounting rules for discontinued businesses, the Company accrued future losses
related to discontinued businesses of $4.0 million which include future interest
expense associated with discontinued operations, offset by projected income from
operations from these businesses through the expected disposal dates of the
underlying assets. Also, in the second fiscal quarter, the Company recorded
pre-tax charges of $7.7 million related to writing off capitalized bank loan
origination fees under its Credit Agreement and the cost of closing out interest
rate swap agreements (fair values) that have been required to convert floating
rate debt to fixed rates. The estimated costs of closing out interest rate swap
agreements had been recorded in other comprehensive income through the end of
the first fiscal quarter of 2002. The Company expects to complete the sale of
its discontinued businesses during the second quarter of calendar year 2002.
On December 5, 2001, the Company sold its TransTechnology Engineered Components
("TTEC") businesses to a company formed by affiliates of Kohlberg & Company,
L.L.C. for $98.5 million, of which $93.1 million was paid in cash, $2.9 million
was received on January 17, 2002, and the balance the assumption of certain
liabilities related to the purchased businesses. The cash proceeds of the sale
were used to retire debt. In the fiscal quarter ended September 30, 2001, as
part of its restructuring program, the Company reported a pre-tax asset
impairment charge for TTEC in the amount of $85.8 million to reduce the carrying
value of these businesses to estimated fair market value. This non-cash charge
was specifically related to the write-down of goodwill. The sale proceeds of
TTEC approximated its adjusted carrying value.
In anticipation of this debt reduction, a further extension to the forbearance
termination date was granted effective December 4, 2001 until March 27, 2002
provided certain conditions were met. Under the terms of this current
forbearance agreement the Company's option to borrow at rates based either on
the prime rate, or the London Interbank Offered Rate ("LIBOR") became permitted
after having been precluded in the prior forbearance agreement. The current
forbearance agreement retains a provision that $2.5 million of the outstanding
revolver bears an interest rate of 25% per annum. This amount relates to the
subordinated debt interest payment made on its scheduled due date of October 1,
2001. Under the forbearance agreement, the $2.5 million will be the last piece
of the revolver paid. The forbearance agreement also requires the achievement of
minimum levels of EBITDA (earnings before interest, taxes, depreciation, and
amortization), and adherence to borrowing limits as adjusted based on
anticipated debt reduction. Other terms of the forbearance agreement include
certain fees and reporting and consulting requirements.
The net loss from operations that have been discontinued was $(6.3) million and
$(58.0) million for the three and nine month periods ended December 30, 2001,
respectively. The net loss from operations that have been discontinued was
$(1.9) million and $(2.9) million for the three and nine month periods ended
December 31, 2000, respectively.
A portion of the Company's interest expense was allocated to discontinued
operations based upon the average net assets of continuing and discontinued
operations for the periods presented. Interest expense allocated to discontinued
operations was $3.2 million and $14.3 million for the three and nine month
periods ended December 30, 2001, respectively, and $6.2 million and $20.5
million for the three and nine month periods ended December 31, 2000,
respectively.
Following the divestiture of the remaining discontinued business units, the
Company expects to have retired a substantial portion of its senior bank debt
and expects to reduce its annual corporate overhead
15
expense by more than $4 million from its present $8.7 million level.
Additionally, for tax purposes, the Company expects to have significant
operating loss carry-forwards, which should shelter future earnings from taxes
for several years. The Company expects, when repositioned as an aerospace
products manufacturer with revenues from new equipment sales, maintenance and
service of existing equipment, and spare parts sales, to be significantly more
profitable and less leveraged, with substantial growth opportunities. Management
believes that the Company will present substantially more value to its
shareholders after the restructuring than in its present form.
RESULTS OF CONTINUING OPERATIONS
Effective August 26, 2001, the Company discontinued its Specialty Fasteners
businesses with the exception of its Aerospace Rivet Manufacturers business. The
discontinued businesses are expected to be sold by the second quarter of
calendar year 2002. Continuing operations will be comprised of the Company's
Breeze-Eastern, Norco and Aerospace Rivet Manufacturers (ARM) business units,
formerly referred to as the Aerospace Segment.
Three month period, 2002 versus 2001
Net sales for the third quarter were $21.4 million in 2002 versus $21.2 million
in 2001. Product demand continues to be strong.
Gross margin rates in total rose to 39.7% from 36.4% for the three month periods
ended December 30, 2001 and December 31, 2000, respectively. The improvement in
the gross margins was related to cost controls and a favorable product mix.
General, sales and administrative expenses, as a percentage of sales, dropped
from 28.6% in 2001 to 24.1% in 2002 reflecting higher sales levels and reduced
expenses at all business units.
Interest expense for the period is based on allocations of interest expense to
both continuing and discontinued operations based on underlying net asset
values.
Bookings for the periods were $20.7 million in 2002 versus $19.8 million in
2001. Backlog at December 30, 2001 was $54.4 million.
During the 2002 period, the Company recorded forbearance fees associated with
the Credit Agreement of $0.5 million. In addition, the $0.4 million of
additional estimated costs associated with downsizing the Corporate office were
recorded.
The income from operations before income taxes was $0.1 million for the 2002
period versus $1.1 million in 2001.
Nine month period, 2002 versus 2001
Net sales for the first nine months of 2002 were $62.4 million versus $57.1
million in 2001. The sales increase is due to strong demand and, to a lesser
extent, change in the sales mix of products sold.
Gross margin rates for the three business units rose from 35.3% to 36.9%
resulting from moderate improvements at one of the business units.
16
General, sales and administrative expenses, as a percentage of sales, dropped
from 31.4% in 2001 to 25.1% in 2002 reflecting higher sales levels and flat
expenses at all business units.
Interest expense for the period is based on allocations of interest expense to
both continuing and discontinued operations based on underlying net asset
values.
Bookings for the periods were $71.8 million in 2002 versus $59.7 million in
2001.
During the 2002 period, the Company recorded loan forbearance fees of $2.6
million. In addition, as discussed above, the estimated cost of Corporate
restructuring was recorded in the amount of $1.6 million.
The loss from operations before income tax benefits was $3.1 million in 2002
versus $1.4 million in 2001.
LIQUIDITY AND CAPITAL RESOURCES
The Company's credit facilities are classified as short term and reflect the
terms of the forbearance agreement with its lenders (the "Lenders"). The Company
reduced debt by $46 million with the proceeds from the sale of its Breeze
Industrial and Pebra hose clamp businesses on July 10, 2001, and by $96 million
with the proceeds from its sale of its Engineered Components business on
December 5, 2001. The Company plans to sell its remaining Specialty Fasteners
businesses in order to further reduce its debt during fiscal year 2002, and,
accordingly, has classified the Specialty Fasteners business as Discontinued
Operations in the Statement of Consolidated Operations and as Assets Held for
Sale in the Consolidated Balance Sheets. The terms of sale of each business unit
are subject to the approval of the Lenders. The Company's debt-to-capitalization
ratio was 105% as of December 30, 2001, which is 21% higher than March 31, 2001.
The higher ratio is mainly due to the reduction of equity resulting from the
projected loss on disposal of the discontinued Specialty Fasteners Segment.
The current ratio as of December 30, 2001 was 0.53 compared to 1.05 as of March
31, 2001. Working capital was ($69.6) million at December 30, 2001, compared to
$16.2 million from March 31, 2001. The change in working capital for the nine
months ended December 30, 2001, was mainly due to the debt reduction made
possible by the sale of the Breeze Industrial and Pebra businesses on July 10,
2001, and the sale of the Engineered Components business for $96 million on
December 6, 2001 and an additional non-cash impairment charge of the Engineered
Components, Rings and TCR businesses. Cash proceeds were $139.3 million from the
sale of Breeze Industrial, Pebra and the Engineered Components businesses. Total
debt as of December 30, 2001 was $129.6 million or $142.8 million less than the
March 31, 2001 amount.
Effective December 31, 2000, the Company was not able to meet certain financial
ratio requirements of the senior credit facility (the "Credit Facility") as
amended. Pursuant to discussions with the senior debt lenders (the "Lenders"),
the Company and the Lenders agreed to an amendment to the Credit Facility to
include a forbearance agreement as well as certain other fees and conditions,
including the suspension of dividend payments. During the forbearance period the
Lenders agreed not to exercise certain of their rights and remedies under the
Credit Facility. The Company has, accordingly, classified its bank debt as
"current" to reflect the fact that the forbearance period is less than one year.
The term of the forbearance period, initially scheduled to expire on January 31,
2001, was subsequently extended by an additional amendment to March 29, 2001.
This additional amendment also reduced the Revolver from $200 million to $175
million with an additional sub-limit on usage
17
at $162 million. Prior to the March 29, 2001 expiration date, the Lenders agreed
to extend the termination date until June 27, 2001, provided that certain
performance and debt reduction requirements occurred in which case the
forbearance termination date could be further extended under similar terms and
conditions until September 27, 2001. The debt reduction requirements of the
forbearance agreement stipulated that $50 million was to be repaid prior to June
27, 2001, which was deemed satisfied by the Lenders, because of the impending
sale of the Company's Breeze Industrial and Pebra divisions completed in July
2001. Effective July 10, 2001, the Term Loan of $31.3 million was repaid in full
with the Breeze Industrial and Pebra sale proceeds. Effective as of September
27, 2001, a further extension to the forbearance termination date was granted
until December 21, 2001, provided that certain performance conditions were met
and certain fees and increased interest charges were paid.
In anticipation of additional plans for asset dispositions and debt reduction, a
further extension to the forbearance termination date was granted effective
December 4, 2001, until March 27, 2002, provided certain conditions were met.
Under the terms of this current forbearance agreement, the Company's option to
borrow at rates based either on the prime rate, or the London Interbank Offered
Rate ("LIBOR"), became permitted after having been precluded in the prior
forbearance agreement. The current forbearance agreement contains a provision
that $2.5 million of the outstanding revolver bear an interest rate of 25% per
annum. This provision relates to the subordinated debt interest payment made
when due on October 1, 2001. Under the forbearance agreement, the $2.5 million
will be the last piece of the revolver paid. The forbearance agreement also
requires the achievement of minimum levels of EBITDA (earnings before interest,
taxes, depreciation, and amortization), and adherence to borrowing limits as
adjusted based on anticipated debt reduction. The forbearance agreement was
further amended on January 31, 2002, to modify certain provisions with respect
to borrowing limits. Other terms of the forbearance agreement include fees and
reporting and consulting requirements.
The Company has taken action to reduce its debt by selling its
Breeze-Industrial, Pebra, and Engineered Components business. The Company is
actively marketing for sale the other businesses in its Specialty Fasteners
Products Segment which should result in an improved financial position to
negotiate further amendments or borrowing alternatives. The Company has made all
of its scheduled interest and principal payments on a timely basis. Various
factors, including changes in business conditions, anticipated proceeds from the
sale of operations and economic conditions in domestic and international markets
in which the Company competes, will impact the restructuring results and may
affect the ability of the Company to restore compliance with the financial
ratios specified in the existing Credit Facility.
On January 31, 2002, the Company announced that it had signed a definitive
agreement to sell substantially all of the manufacturing assets of its German
retaining ring business, Seeger-Orbis GmbH & Co. OHG to Barnes Group Inc. for
cash consideration of $20 million. The sale is expected to close in the
Company's fiscal fourth quarter.
Under the Credit Facility, the Company has unused borrowing capacity for both
domestic and international operations of $15.2 million as of December 30, 2001,
including letters of credit. The Credit Facility is secured by the Company's
assets. As of December 30, 2001, the Company had total borrowings of $129.6
million which have a current weighted-average interest rate of 12.4%, excluding
the impact of interest rate swaps. The impact of interest rate swaps as further
discussed below was provided for as a charge to discontinued operations in the
three month period ended September 30, 2001. The interest rate swap contracts
provide for a fixed rate of interest on $125 million notional amount of debt,
which currently exceeds the Company's outstanding variable rate based debt by
approximately $74 million.
18
Borrowings under the Credit Facility as of December 30, 2001, were $51.3
million. Interest on the Revolver is tied to the primary 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
results. As of December 30, 2001, $47.4 million of the Company's outstanding
borrowings utilized LIBOR.
Management is in the process of pursuing a restructuring of the senior debt to
assure sufficient working capital and provide liquidity to the Company. The
items of and the amounts available under such a credit facility are subject to
negotiation with prospective lenders. Management expects to complete the
proposed refinancing before the expiration of the current forbearance on March
27, 2002.
Management believes that the Company's plan to divest its Specialty Fasteners
Segment businesses in order to reduce debt, along with the anticipated cash flow
from its retained business operations, will be sufficient to support working
capital, capital expenditure, and debt service costs. The amount and timing of
proceeds from such sales are subject to market and other conditions which the
Company cannot control. Capital expenditures, including those related to
discontinued operations, were $2.1 million for the nine month period and $0.4
million in the three month period ended December 30, 2001, compared to $4.5
million and $1.0 million in the periods ended December 31, 2000. The Company
expects capital expenditures in 2002 to be substantially lower than the 2001
amount due to its planned lower capital spending levels and planned business
unit dispositions.
EURO CURRENCY
Effective January 1, 1999, eleven countries comprising the European Union
established fixed foreign currency exchange rates and adopted a common currency
unit designated as the "Euro." The Euro has since become publicly traded and is
currently used in commerce during the present transition period which ended
January 1, 2002, at which time a Euro denominated currency was issued and
replaced those currencies of the eleven member countries. The transition to the
Euro has not resulted in problems for the Company to date, and is not expected
to have any material adverse impact on the Company's future operations.
INFORMATION ABOUT FORWARD-LOOKING STATEMENTS
Certain statements in this document 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 document 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.
Any number of factors could affect future operations and results, including,
without limitation, the Company's ability to dispose of some or all of the
business operations proposed for divestiture for the consideration currently
estimated to be received by the Company or within the timeframe anticipated by
the Company; the Company's ability to arrive at a mutually satisfactory
amendment of its credit facilities with its lenders, if required; in the event
of divestiture, the Company's ability to be profitable
19
with a smaller and less diverse base of operations that will generate less
revenue; the value of replacement operations, if any; general industry and
economic conditions; 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/or to provide adequate
financing for parties interested in purchasing operations identified for
divestiture; and those specific risks that are discussed in the Company's
previously filed Annual Report on Form 10-K for the fiscal year ended March 31,
2001.
The Company undertakes no obligation to update publicly any forward-looking
statements, whether as a result of new information or future events.
IMPACT OF INFLATION
The Company's primary costs, inventory and labor, increase with inflation.
Recovery of the costs has to come from improved operating efficiencies and, to
the extent permitted by our competition, through improved gross profit margins.
20
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to various market risks, including changes in foreign
currency exchange rates and interest rates. Market risk is the potential loss
arising from adverse changes in market rates and prices, such as foreign
currency exchange and interest rates. The Company does not enter into
derivatives or other financial instruments for trading or speculative purposes.
The Company periodically enters into financial instruments to manage and reduce
the impact of changes in foreign currency exchange rates and interest rates. The
counter parties are major financial institutions.
The Company has used forward exchange contracts to hedge the currency
fluctuations in transactions denominated in foreign currencies, thereby limiting
the Company's risk that would otherwise result from changes in exchange rates.
The principal transactions hedged have been intercompany loans, intercompany
purchases and trade flows. Gains and losses on forward foreign exchange
contracts and the offsetting gains and losses on hedged transactions are
reflected in the Statement of Consolidated Operations. As of December 30, 2001,
the Company has no outstanding forward currency contracts.
The Company has entered into interest rate swap agreements to manage its
exposure to interest rate changes. The swaps involve the exchange of fixed and
variable interest rate payments without exchanging the notional principal
amount. Payments or receipts on the swap agreements are recorded as adjustments
to interest expense. At December 30, 2001, the Company had entered into interest
rate swap agreements to convert $125.0 million of floating interest rate debt to
fixed rate. At December 30, 2001, the fair value of these swap agreements was
approximately ($4.7) million. The Company has reported the impact of these swaps
as a component of its reported loss on discontinued operations. It is assumed
that a major portion of floating rate debt will be repaid at the conclusion of
the disposition of its net assets of discontinued operations.
21
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is engaged in various legal proceedings incidental to its
business. It is the opinion of management that, after taking into
consideration information furnished by its counsel, these matters will not
have a material effect on the Company's consolidated financial position or
the results of the Company's operations in future periods.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2.5 Purchase Agreement regarding Real Property and Moveable Assets dated
as of January 31,2002 among Seeger-Orbis GmbH & Co. OHG, TransTechnology
Corporation, TransTechnology GB Ltd., Barnes Group GmbH & Co. OHG and
Barnes Group, Inc.
10.47 Consent, Amendment Agreement No. 4 to Credit Agreement and Amendment
No. 3 to Forbearance Agreement dated as of December 4, 2001 among the
Company, its Senior Lenders and Fleet National Bank, as Administrative
Agent.
10.48 Consent, Amendment Agreement No. 5 to Credit Agreement and Amendment
No. 4 to Forbearance Agreement dated as of January 31, 2002 among the
Company, its Senior Lenders and Fleet National Bank, as Administrative
Agent.
(b) A report on Form 8-K dated December 6, 2001, was filed on December 21,
2001, to report the December 5, 2001 sale by the Company of its subsidiary
TransTechnology Engineered Components, LLC to a company formed by
affiliates of Kohlberg & Company, L.L.C.
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 11, 2002 By: /s/Joseph F. Spanier
--------------------
JOSEPH F. SPANIER, Vice President
Treasurer and Chief Financial Officer*
* On behalf of the Registrant and as Principal Financial and Accounting
Officer.
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