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FORM 10-Q
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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 29, 1996
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
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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 5, 1997, the total number of
outstanding shares of registrant's one class of
common stock was 5,026,234
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TRANSTECHNOLOGY CORPORATION
INDEX
PART I. Financial Information Page No.
Item 1. Financial Statements............................................. 2
Statements of Consolidated Operations--
Three and Nine Month Periods Ended December 29, 1996
and December 31, 1995............................................ 3
Consolidated Balance Sheets--
December 29, 1996 and March 31, 1996............................. 4
Statements of Consolidated Cash Flow--
Nine Months Ended December 29, 1996 and
December 31, 1995................................................ 5
Statements of Consolidated Stockholders' Equity--
Nine Months Ended December 29, 1996.............................. 6
Notes to Consolidated Financial Statements.......................7-10
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition..........................11-17
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K.................................18
SIGNATURES.................................................................18
EXHIBIT 11.................................................................19
EXHIBIT 27.................................................................20
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited Statements of Consolidated Operations, Consolidated
Balance Sheets and Statements of Consolidated Cash Flow are of TransTechnology
Corporation and its consolidated subsidiaries. These reports reflect all
adjustments of a normal recurring nature, which are, in the opinion of
management, necessary to a fair presentation of the results of operations for
the interim periods reflected therein. The results reflected in the unaudited
Statements of Consolidated Operations for the period ended December 29, 1996 are
not necessarily indicative of the results to be expected for the entire year.
The following unaudited Consolidated Financial Statements should be read in
conjunction with the notes thereto, and Management's Discussion and Analysis set
forth in Item 2 of Part I of this report, as well as the audited financial
statements and related notes thereto contained in the Form 10-K filed for the
fiscal year ended March 31, 1996.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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STATEMENTS OF CONSOLIDATED OPERATIONS
UNAUDITED
(In Thousands of Dollars Except Share Data)
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------- -------------------------------
12/29/96 12/31/95 12/29/96 12/31/95
----------- ----------- ----------- -----------
Net Sales $ 42,851 $ 41,087 $ 131,071 $ 111,155
Cost of sales 28,861 27,269 90,884 77,180
----------- ----------- ----------- -----------
Gross profit 13,990 13,818 40,187 33,975
General, administrative
and selling expenses 8,620 7,644 25,287 20,850
Interest expense 1,794 1,787 5,418 4,552
Interest income (471) (273) (1,024) (612)
Royalty and other income (973) (241) (1,193) (678)
----------- ----------- ----------- -----------
Income from continuing operations
before income taxes 5,020 4,901 11,699 9,863
Income taxes 2,000 2,108 4,855 3,994
----------- ----------- ----------- -----------
Income from continuing operations 3,020 2,793 6,844 5,869
Discontinued operations:
Income (loss) from operations (net of
applicable tax provisions of $6 and $4
for the three and nine months ended
12/29/96, respectively, and net of
applicable tax benefits of $74 and
$368 for the three and nine months
ended 12/31/95, respectively) 5 (121) 3 (601)
Loss from disposal (net of applicable
tax benefits of $140 and $482 for
the three and nine months ended
12/29/96, respectively, and net of
applicable tax benefits of $200 and
$102 for the three and nine months
ended 12/31/95, respectively) (204) (326) (677) (167)
----------- ----------- ----------- -----------
Net income $ 2,821 $ 2,346 $ 6,170 $ 5,101
=========== =========== =========== ===========
Earnings per Share: (Note 1)
Income from continuing operations $ 0.60 $ 0.55 $ 1.35 $ 1.15
Loss from discontinued operations (0.04) (0.09) (0.13) (0.15)
----------- ----------- ----------- -----------
Net income $ 0.56 $ 0.46 $ 1.22 $ 1.00
=========== =========== =========== ===========
Number of shares used in computation
of per share information 5,026,000 5,099,000 5,076,000 5,092,000
See accompanying notes to unaudited consolidated financial statements.
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CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars Except Share Data)
UNAUDITED
12/29/96 3/31/96
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 2,726 $ 2,362
Accounts receivable (net of allowance for doubtful accounts
of $762 at 12/29/96 and $735 at 3/31/96) 25,315 28,368
Notes receivable 812 1,258
Inventories 50,971 50,551
Prepaid expenses and other current assets 1,414 1,726
Deferred income taxes 1,026 1,037
Net assets held for sale 7,270 9,980
--------- ---------
Total current assets 89,534 95,282
--------- ---------
Property, Plant & Equipment 82,664 78,326
Less accumulated depreciation and amortization 22,273 17,749
--------- ---------
Property, Plant & Equipment - net 60,391 60,577
--------- ---------
Other assets:
Notes receivable 12,341 12,824
Costs in excess of net assets of acquired businesses
(net of accumulated amortization:
12/29/96, $3,727; 3/31/96, $3,308) 19,137 16,411
Other 16,007 14,273
--------- ---------
Total other assets 47,485 43,508
--------- ---------
Total $ 197,410 $ 199,367
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 6,199 $ 6,026
Accounts payable-trade 10,034 14,719
Accrued compensation 4,811 6,473
Accrued income taxes 3,398 1,415
Other current liabilities 10,279 9,301
--------- ---------
Total current liabilities 34,721 37,934
--------- ---------
Long-term debt payable to banks and others 69,427 72,565
--------- ---------
Other long-term liabilities 17,878 16,398
--------- ---------
Stockholders' equity:
Preferred stock-authorized, 300,000 shares; none issued -- --
Common stock-authorized, 14,700,000 shares of $.01 par value;
issued 5,303,734 at 12/29/96, and 5,276,463 at 3/31/96 53 53
Additional paid-in capital 46,564 46,188
Retained earnings 34,645 29,467
Other stockholders' equity (2,098) (1,083)
--------- ---------
79,164 74,625
Less treasury stock, at cost - (277,500 shares at 12/29/96
and 177,500 at 3/31/96) (3,780) (2,155)
--------- ---------
Total stockholders' equity 75,384 72,470
--------- ---------
Total $ 197,410 $ 199,367
========= =========
See accompanying notes to unaudited consolidated financial statements.
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STATEMENTS OF CONSOLIDATED CASH FLOW
UNAUDITED
(In Thousands of Dollars)
NINE MONTHS ENDED
---------------------------
12/29/96 12/31/95
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,170 $ 5,101
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 5,624 3,620
Provision for losses on accounts receivable 129 182
Gain on sale or disposal of fixed assets and discontinued
businesses (51) (70)
Change in assets and liabilities net of acquisitions and dispositions:
Decrease in accounts receivable 2,924 9,663
Decrease (increase) in inventories 605 (900)
Decrease (increase) in net assets of discontinued businesses 311 (277)
(Increase) decrease in other assets (4,995) 380
Decrease in accounts payable (4,685) (5,815)
Decrease in accrued compensation (1,662) (215)
Increase (decrease) in other liabilities 2,458 (9,563)
Increase in accrued income taxes 1,983 1,977
--------- ---------
Net cash provided by operating activities 8,811 4,083
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Business acquisitions (3,219) (42,094)
Capital expenditures (3,619) (4,106)
Proceeds from sale of fixed assets and discontinued business 2,694 14,273
Decrease (increase) in notes receivable 929 (10,241)
--------- ---------
Net cash used in investing activities (3,215) (42,168)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 32,304 100,820
Payments on long-term debt (35,268) (60,178)
Proceeds from issuance of stock under stock option plan 409 400
Stock repurchases and other (1,625) (559)
Dividends paid (992) (993)
--------- ---------
Net cash (used in) provided by financing activities (5,172) 39,490
--------- ---------
Effect of exchange rate changes on cash (60) (82)
--------- ---------
Net increase in cash and cash equivalents 364 1,323
Cash and cash equivalents at beginning of period 2,362 1,544
--------- ---------
Cash and cash equivalents at end of period $ 2,726 $ 2,867
========= =========
Supplemental Information:
Interest payments $ 3,761 $ 3,722
Income tax payments $ 2,229 $ 1,751
See accompanying notes to unaudited consolidated financial statements.
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STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
UNAUDITED
(In Thousands of Dollars Except Share Data)
COMMON STOCK TREASURY STOCK ADDITIONAL OTHER
FOR THE NINE MONTHS ---------------------- --------------------- PAID-IN RETAINED STOCKHOLDERS'
ENDED DECEMBER 29, 1996 SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS EQUITY TOTAL
- ------------------------ --------- ---------- -------- ---------- ---------- ---------- ---------- ----------
Balance, March 31, 1996 5,276,463 $ 53 (177,500) $ (2,155) $ 46,188 $ 29,467 $ (1,083) $ 72,470
Net Income -- -- -- -- -- 6,170 -- 6,170
Cash dividends
($.195 per share) -- -- -- -- -- (992) -- (992)
Purchase of Treasury Stock -- -- (100,000) (1,625) -- -- -- (1,625)
Unrealized investment
holding losses -- -- -- -- -- -- (287) (287)
Issuance of stock under
stock option plan 28,881 -- -- -- 344 -- -- 344
Effects of stock under
incentive bonus plan - net (1,610) -- -- -- 32 -- 33 65
Foreign translation
adjustments -- -- -- -- -- -- (761) (761)
--------- ---------- -------- ---------- ---------- ---------- ---------- ----------
Balance, December 29, 1996 5,303,734 $ 53 (277,500) $ (3,780) $ 46,564 $ 34,645 $ (2,098) $ 75,384
========= ========== ======== ========== ========== ========== ========== ==========
See accompanying notes to unaudited consolidated financial statements.
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars)
NOTE 1. Earnings Per Share:
Earnings per share are based on the weighted average number of common
shares and common stock equivalents (stock options) outstanding during
each period. In computing earnings per share, common stock equivalents
were either anti-dilutive because of the market value of the stock or
not material, and, therefore, have been excluded from the calculation.
NOTE 2. Inventories:
Inventories are summarized as follows:
12/29/96 3/31/96
----------- -----------
Finished goods $ 22,721 $ 22,645
Work-in-process 8,956 9,326
Purchased and
manufactured parts 19,294 18,580
----------- -----------
Total inventories $ 50,971 $ 50,551
=========== ===========
NOTE 3. Discontinued Operations
At December 29, 1996, the Company's only remaining discontinued and
unsold business is its Australian computer graphics service operation,
using the name TransTechnology Australasia.
Through December 1996, the Company recorded an additional $0.7 million
of after-tax disposal costs related to other previously discontinued
businesses. These losses consisted primarily of disposal costs
different from previous estimates associated primarily with
environmental and legal matters.
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Operating results of the discontinued business were as follows:
Three Months Ended Nine Months Ended
----------------------- -----------------------
12/29/96 12/31/95 12/29/96 12/31/95
------- ------- ------- -------
Total revenues $ 177 $ 66 $ 396 $ 7,646
======= ======= ======= =======
Income (loss) before
income taxes $ 11 $ (195) $ 7 $ (969)
Income tax
(provision) benefit (6) 74 (4) 368
------- ------- ------- -------
Income (loss) from
operations $ 5 $ (121) $ 3 $ (601)
======= ======= ======= =======
The income (loss) from operations includes interest expense of $214 for the nine
months ended 12/31/95.
Net assets held for sale at December 29, 1996 and March 31, 1996 were as
follows:
12/29/96 3/31/96
------------ -----------
Accounts receivable $ 125 $ 143
Inventory 565 529
Property 6,581 8,667
Other assets 385 1,269
Liabilities (386) (628)
------------ ----------
Net assets held for sale $ 7,270 $ 9,980
============ ===========
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NOTE 4. Acquisitions
On June 30, 1995 the Company acquired the Seeger Group of companies
from a unit of AB SKF of Goteborg, Sweden for approximately $43 million
in cash plus direct acquisition costs and the assumption of trade debts
and accrued expenses. The Seeger Group, headquartered in Konigstein,
Germany, is the global leader in manufacturing circlips, snap rings and
retaining rings. The Seeger Group operates under the trade names of
"Seeger", "Anderton", and "Waldes" with over 750 employees at its five
manufacturing facilities located in Germany, the UK, Brazil and the
U.S.A.
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, which employs approximately 40
people, is located in Frittlingen, Germany, and manufactures heavy duty
hose clamps primarily for use in the manufacture of heavy trucks in
Europe.
NOTE 5. Employee Benefit Plans
The Company maintains a postretirement benefits plan available to union
employees at one of the Company's divisions. In September 1996, the
Company signed a new contract with the union employees at the above
mentioned division which resulted in the removal of active employees
from the plan. This amendment to the plan resulted in the accumulated
postretirement benefit obligation being reduced by approximately $1.3
million. This reduction was used to offset the remaining unrecognized
transition obligation of approximately $1.7 million with the remainder
being expensed.
NOTE 6. Contingencies
Environmental Matters. The Company has commenced environmental site
assessments and cleanup feasibility studies to determine the presence,
extent and sources of environmental contamination at sites in
Pennsylvania and Illinois which continue to be owned although the
related businesses have been sold. Although no governmental action
requiring remediation has been taken at this time, the Company is
working in cooperation with the relevant state authorities and any
remedial work required to be performed would be subject to their
approval. At the Pennsylvania site, a feasibility study has been
prepared and submitted to the state. At December 29, 1996, the balance
of this cleanup reserve was $2.2 million payable over the next several
years. In addition, the Company is pursuing recovery of a portion of
cleanup costs in litigation with several of its insurance carriers. The
Company expects that remediation work at the Pennsylvania site will not
be completed until fiscal 1999.
The Company also continues to participate in environmental assessments
and remediation work at nine other locations, which include operating
facilities, facilities for sale, and previously owned facilities. The
Company estimates that its potential cost for implementing corrective
action at these sites will not exceed $1.3 million payable over the
next several years, and has provided for the estimated costs in its
accrual for environmental liabilities.
In addition, the Company has been named as a potentially responsible
party in five environmental remediation recovery proceedings pending in
several states in which it is alleged that the Company was a generator
of waste that was sent to landfills and other treatment facilities.
Such properties generally relate to businesses which have been sold or
discontinued. It is not possible to reliably estimate the costs
associated with any
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remedial work to be performed until studies at these sites have been
completed, the scope of the work defined and a method of remediation
selected and approved by the relevant state authorities.
Litigation. The Company is also engaged in various other legal
proceedings incidental to its business.
It is the opinion of management that, after taking into consideration
information furnished by its counsel, the above matters will have no
material effect on the Company's consolidated financial position or the
results of the Company's operations in future periods.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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 29, 1996 for fiscal
year 1997 and the three and nine month periods ended December 31, 1995 for
fiscal year 1996. 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 nine month period in 1997 was $131
million, an increase of $19.9 million or 18% from the comparable period in 1996.
For the three month period in 1997 total sales were $42.9 million, a $1.8
million or 4 % increase from the comparable period in 1996. As further discussed
below, the increased sales performance for the nine month period in 1997
resulted primarily from the Seeger Group acquisition on June 30, 1995.
Additionally, the Pebra acquisition on June 18, 1996 and increased rescue hoist
and cargo hook shipments in fiscal 1997 helped contribute to the sales
improvement over the prior year comparable periods.
Gross profit for the nine month period in 1997 increased $6.2 million or 18%
from the comparable period in 1996. For the three month period in 1997, gross
profit increased $0.2 million or 1%. Operating profit from continuing operations
for the nine month period in 1997 was $22.8 million, an increase of $4.2 million
or 23% from the comparable period in 1996. For the three month period in 1997
operating profit from continuing operations was $8.7 million, an increase of $.6
million or 8% from the comparable period in 1996. Changes in sales, operating
profit and new orders from continuing operations are discussed below by segment.
Net income, including discontinued operations, for the nine month period in 1997
was $6.2 million or $1.22 per share, compared to $5.1 million or $1.00 per
share, for the comparable period of 1996. The three month period in 1997
experienced net income of $2.8 million or $.56 per share compared to $2.3
million or $0.46 per share for the year earlier period. As further discussed
below, the increased earnings performance in 1997 resulted primarily from the
inclusion of the Seeger Group in the nine month period, coupled with the Pebra
acquisition and increased operating profit from the rescue hoist and cargo hook
products segment in the nine month and three month periods.
Interest expense increased $0.9 million for the nine month period in 1997, and
remained even compared to last year for the three month period. The nine month
increase was a result of increased bank borrowings used for the acquisition of
the Seeger Group.
New orders received during the nine month period in 1997 totaled $134 million,
an increase of $16.3 million or 14% from 1996's comparable period. For the three
month period, new orders totaled $43.3 million, an increase of $1.2 million or
3% from last year's comparable period. At December 29, 1996, total backlog of
unfilled orders was $65.3 million compared to $66.7 million at December 31,
1995.
DISCONTINUED OPERATIONS
At December 29, 1996, the Company's only remaining discontinued and unsold
business is its Australian computer graphics service operation, using the name
TransTechnology Australaisia.
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Through December 1996, the Company recorded an additional $0.7 million of
after-tax disposal costs related to other previously discontinued businesses.
These losses consisted primarily of disposal costs different from previous
estimates associated primarily with environmental and legal matters.
ACQUISITIONS
On June 30, 1995 the Company acquired the Seeger Group of companies from a unit
of AB SKF of Goteborg, Sweden for approximately $43 million in cash plus direct
acquisition costs and the assumption of trade debts and accrued expenses. The
Seeger Group, headquartered in Konigstein, Germany, is the global leader in
manufacturing circlips, snap rings and retaining rings. The Seeger Group
operates under the trade names of "Seeger", "Anderton", and "Waldes" with over
750 employees at its five manufacturing facilities located in Germany, the UK,
Brazil and the U.S.A..
On June 18, 1996, the Company acquired the Pebra hose clamp business from Pebra
GmbH Paul Braun i.K. for approximately $3.0 million in cash plus direct
acquisition costs. Pebra, which employs approximately 40 people, is located in
Frittlingen, Germany, and manufactures heavy duty hose clamps primarily for use
in the manufacture of heavy trucks in Europe.
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FINANCIAL SUMMARY BY PRODUCT SEGMENT
(In Thousands of Dollars)
NINE MONTHS ENDED NET CHANGE
---------------------------- --------------------------
12/29/96 12/31/95 $ %
--------- --------- --------- ---------
Sales:
Specialty fastener products $ 105,497 $ 90,145 $ 15,352 17
Rescue hoist and cargo hook products 25,574 21,010 4,564 22
--------- --------- ---------
Total $ 131,071 $ 111,155 $ 19,916 18
========= ========= =========
Operating profit:
Specialty fastener products $ 17,073 $ 15,729 $ 1,344 9
Rescue hoist and cargo hook products 5,711 2,855 2,856 100
--------- --------- ---------
Total $ 22,784 $ 18,584 $ 4,200 23
Corporate expense (5,667) (4,169)(a) (1,498) (36)
Interest expense (5,418) (4,552)(b) (866) (19)
--------- --------- ---------
Income from continuing
operations before
income taxes $ 11,699 $ 9,863 $ 1,836 19
========= ========= =========
a) The corporate expense for the nine months ended December 31, 1995
has been reduced by $341 thousand to reflect an allocation made to
discontinued operations.
b) The interest expense for the nine months ended December 31, 1995
has been reduced by $214 thousand to reflect an allocation made to
discontinued operations.
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FINANCIAL SUMMARY BY PRODUCT SEGMENT
(In Thousands of Dollars)
THREE MONTHS ENDED NET CHANGE
--------------------------- ----------------------
12/29/96 12/31/95 $ %
-------- --------- -------- --------
Sales:
Specialty fastener products $ 34,391 $ 33,779 $ 612 2
Rescue hoist and cargo hook products 8,460 7,308 1,152 16
-------- --------- --------
Total $ 42,851 $ 41,087 $ 1,764 4
======== ======== ========
Operating profit:
Specialty fastener products $ 6,301 $ 6,756 $ (455) (7)
Rescue hoist and cargo hook products 2,406 1,341 1,065 79
-------- --------- --------
Total $ 8,707 $ 8,097 $ 610 8
Corporate expense (1,893) (1,409) (484) (34)
Interest expense (1,794) (1,787) (7) --
-------- --------- --------
Income from continuing
operations before
income taxes $ 5,020 $ 4,901 $ 119 2
======== ======== ========
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SPECIALTY FASTENER PRODUCTS SEGMENT
Sales for the specialty fastener products segment were $105.5 million for the
nine month period in 1997, an increase of $15.3 million or 17% from the
comparable period in 1996. Sales for the three month period in 1997 were up $0.6
million or 2% from the same period in 1996. The nine month increase was
primarily due to the inclusion of Seeger Group operations and to a lesser extent
the inclusion of Pebra operations. Domestic fastener demand was relatively even
with last year and European demand remained weak for both the three and nine
month periods in 1997 as compared to 1996.
Operating profit for the segment was $17.1 million for the nine month period in
1997, an increase of $1.3 million or 9% from the comparable period in 1996. The
three month period in 1997 showed operating profit of $6.3 million, representing
a decrease of $0.5 million or 7% from the comparable period in 1996. The
increase in operating profit for the nine month period was primarily due to the
inclusion of Seeger Group operations and to a lesser extent the inclusion of
Pebra operations. The decrease in operating profit for the three month period
was primarily due to declines in the European and Brazilian retaining ring
business. These declines were partially offset by the contribution of the Pebra
hose clamp business which was purchased in the first quarter of this fiscal
year. Domestic specialty fastener products earned slightly higher operating
profit on comparable sales for the three month period.
New orders increased by $23 million or 27% for the nine month period in 1997,
primarily due to the Seeger Group and Pebra acquisitions mentioned above. New
orders for the three month period in 1997 increased $3.9 million or 12% from the
comparable period in 1996, primarily due to the Pebra acquisition. Backlog of
unfilled orders at December 29, 1996 was $34.8 million compared to $34.3 million
at December 31, 1995.
RESCUE HOIST AND CARGO HOOK PRODUCTS SEGMENT
Sales for the rescue hoist and cargo hook products segment were $25.6 million
for the nine month period in 1997, an increase of $4.6 million or 22% from the
comparable period in 1996. Sales for the three month period in 1997 were $8.5
million, up $1.2 million or 16% from the comparable period in 1996. These
increases were primarily due to shipments being made this fiscal year on large
multi-year contracts which were placed last fiscal year for hoist and winch, and
tie-down products, increased repair and spares business this fiscal year and a
$0.7 million one time royalty payment received in the third quarter of fiscal
1997.
Operating profit for the nine month period in 1997 was $5.7 million, an increase
of $2.9 million or 100% from the comparable period in 1996. The three month
period had an operating profit of $2.4 million, an increase of $1.0 million or
79% from the comparable period in 1996. The increased sales volume, as mentioned
above, royalty income and operating efficiencies were the
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primary factors contributing to the improvement in operating profit in both the
nine and three month periods.
New orders for the nine month period in 1997 decreased $7.1 million or 22% from
the comparable period in 1996. New orders for the three month period in 1997
decreased $2.7 million or 30% from the comparable period in 1996. The decreases
in both 1997 periods were primarily due to a large multi-year order for hoist
and winch products being placed in the prior year third quarter. Backlog of
unfilled orders at December 29, 1996 was $30.5 million compared to $32.4 million
at December 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's debt-to-capitalization ratio was 50% as of December 29, 1996, down
from 52% at March 31, 1996. The current ratio at December 29, 1996, stood at
2.58 compared to 2.51 at March 31, 1996. Working Capital was $54.8 million at
December 29, 1996, down $2.5 million from March 31, 1996.
At December 29, 1996, the Company's debt consisted of $16.8 million of
borrowings under a revolving credit line, $6.1 million of borrowings under
international lines of credit, a $27.4 million term loan, a $24.5 million term
loan and $0.9 million of other borrowings. The revolving bank credit line
commitment is $33.4 million, and is available to the Company through December
31, 2000 and is subject to a borrowing base formula. The agreement 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 29,1996 were $0.2 million. The total commitment from
the international lines of credit are $6.6 million and have the same
availability and collateral as the revolving credit line, but are not subject to
a borrowing base formula. Interest on the revolver and the international lines
of credit are 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 and financial goals.
The $27.4 million and $24.5 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 December 31, 2000 and June 30, 2002, respectively.
The $27.4 million term loan has an additional $15 million available through
March 1997 for future acquisitions. Quarterly principal payments on the $27.4
million term loan of $1.4 million, with escalations to $1.8 million and $2.8
million in June 1999 and June 2000, respectively, began on December 31, 1995,
and are due and payable on the last day of each quarter through December 31,
2000. Interest on the $27.4 million term loan is tied to the primary bank's
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 the $24.5 million term loan of $0.5 million, began on
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June 30, 1996 and continue through June 30, 2000, with final balloon payments of
$7.5 million and $15 million due and payable on June 30, 2001 and June 30, 2002,
respectively. Interest on the $24.5 million term loan 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 December 29, 1996, the Company had $51.5 million of borrowings
utilizing LIBOR.
The credit facility limits the Company's annual ability to pay dividends to 25%
of net income and restricts capital expenditures to $7.0 million, as well as
containing other customary financial covenants.
On September 13, 1996, the Company obtained authorization and repurchased
100,000 shares of the Company's common stock from a private estate at an
aggregate price of $1.6 million.
Management believes that the Company's anticipated cash flow from operations,
combined with the bank credit described above, will be sufficient to support
current and forecasted working capital requirements and dividend payments.
Capital expenditures in the nine month period in 1997 were $3.6 million as
compared with $4.1 million in the comparable period in 1996.
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PART II. OTHER INFORMATION
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 December 29,
1996.
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 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.
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EXHIBIT INDEX
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Exhibit No. Description
----------- -----------
11 Statement of Computation of Per Share Earnings
27 Financial Data Schedule