<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended May 31, 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 2-29697
-------
THE TRANZONIC COMPANIES
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-0664235
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
30195 Chagrin Blvd., Pepper Pike, Ohio 44124
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 216/831-5757
------------
Indicate by check mark whether the registrant (1) has filed all annual,
quarterly, and other reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and (2) has been
subject to the filing requirements for at least the past 90 days.
Yes X No
----- -----
Number of Class A Common Shares Outstanding at July 3, 1996 2,177,503
---------
Number of Class B Common Shares Outstanding at July 3, 1996 1,312,685
---------
<PAGE> 2
PART I: FINANCIAL INFORMATION
-----------------------------
Item 1. Financial Statements
----------------------------
THE TRANZONIC COMPANIES
Condensed Consolidated Balance Sheets
May 31, 1996 and February 29, 1996
<TABLE>
<CAPTION>
May 31, February 29,
Assets 1996 1996
------ ----------- ----------
(unaudited)
<S> <C> <C>
Current assets
Cash (including cash equivalents of $7,693,000 at
May 31, 1996 and $4,673,200 at February 29, 1996) $ 9,764,715 6,610,933
Short-term investments 1,989,067 --
Receivables, net 13,351,172 13,752,460
Inventories
Raw materials 6,563,300 7,182,278
Finished goods 7,453,396 8,156,387
Deferred income taxes 1,204,852 1,804,106
Prepaid expenses and other current assets 1,674,865 1,219,235
Net assets of discontinued operations -- 9,274,244
----------- ----------
Total current assets 42,001,367 47,999,643
Property, plant and equipment, net 18,827,712 19,376,208
Other noncurrent assets 2,622,223 2,477,913
Intangible assets 5,136,527 5,167,879
----------- ----------
$68,587,829 75,021,643
=========== ==========
</TABLE>
(Continued)
(1)
<PAGE> 3
THE TRANZONIC COMPANIES
Condensed Consolidated Balance Sheets
May 31, 1996 and February 29, 1996
<TABLE>
<CAPTION>
May 31, February 29,
Liabilities and Shareholders' Equity 1996 1996
------------------------------------ ----------- ----------
(unaudited)
<S> <C> <C>
Current liabilities
Trade accounts payable $ 8,002,940 8,337,445
Accrued compensation 2,053,422 2,943,971
Other payables and accrued expenses 4,484,008 3,489,484
----------- ----------
Total current liabilities 14,540,370 14,770,900
Long-term debt -- 7,000,000
Deferred gain 1,872,330 1,912,230
Deferred income taxes 502,725 935,573
Other noncurrent liabilities 1,360,198 1,248,824
Shareholders' equity
Serial preferred shares without par value; authorized 200,000,
no shares issued -- --
Class A common shares, no par value; shares at stated value,
authorized 4,000,000, issued 2,657,949 at May 31, 1996
and 2,658,149 at February 29, 1996 664,487 664,537
Class B common shares, no par value; shares at stated value,
authorized 8,000,000, issued 1,337,590 at May 31, 1996
and 1,337,390 at February 29, 1996 334,398 334,348
Additional paid-in capital 5,780,774 5,780,774
Retained earnings 47,780,141 46,471,200
----------- ----------
54,559,800 53,250,859
Less cost of common shares held in treasury 479,146 Class A
common and 26,205 Class B common shares at May 31, 1996
and 472,846 Class A common and 19,305 Class B common
shares at February 29, 1996 4,247,594 4,096,743
----------- ----------
Total shareholders' equity 50,312,206 49,154,116
----------- ----------
$68,587,829 75,021,643
=========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
(2)
<PAGE> 4
THE TRANZONIC COMPANIES
Condensed Consolidated Statements of Earnings
Three-month periods ended May 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Sales $ 34,715,109 34,427,872
Cost and expenses
Cost of goods sold 23,400,738 23,132,588
Selling, general, and administrative expenses 8,987,220 9,564,866
------------ -----------
32,387,958 32,697,454
------------ -----------
Operating earnings 2,327,151 1,730,418
Interest income 77,406 20,573
Interest expense (27,979) (184,989)
------------ -----------
Earnings from continuing operations before
income taxes 2,376,578 1,566,002
Income taxes 842,000 521,571
------------ -----------
Earnings from continuing operations 1,534,578 1,044,431
Loss from discontinued operations, net of income taxes -- (3,658)
------------ -----------
Net earnings $ 1,534,578 1,040,773
============ ===========
Net earnings per common share
From continuing operations $ .44 .30
From discontinued operations -- --
------------ -----------
$ .44 .30
============ ===========
Dividends per Class A common share $ .050 .045
============ ===========
Dividends per Class B common share $ .090 .085
============ ===========
Average common and common equivalent shares outstanding 3,507,760 3,522,927
============ ===========
Shares outstanding at end of period 3,490,188 3,493,288
============ ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
(3)
<PAGE> 5
THE TRANZONIC COMPANIES
Condensed Consolidated Statements of Cash Flows
Three-month periods ended May 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Cash flows from operating activities
Net earnings $ 1,534,578 1,040,773
Adjustments to reconcile net earnings to net cash provided
by continuing operations
Loss from discontinued operations -- 3,658
Depreciation and amortization 827,451 890,518
Deferred income taxes 166,406 (58,534)
Changes in assets and liabilities, net of effects of acquisitions
Receivables, net 401,288 317,707
Inventories 1,321,969 (1,603,193)
Prepaid expenses and other current assets (423,226) 594,624
Trade accounts payable (334,505) (1,082,787)
Accrued compensation (890,549) (620,863)
Other payables and accrued expenses 534,829 810,310
Other, net (51,631) (169,514)
----------- ----------
Net cash provided by continuing operations 3,086,610 122,699
Net cash used in discontinued operations (24,143) (500,947)
----------- ----------
Net cash provided by (used in) operating activities 3,062,467 (378,248)
Cash flows from financing activities
Proceeds from revolving credit -- 4,900,000
Repayments of long-term debt (7,000,000) (1,500,000)
Cash dividends (225,637) (207,197)
----------- ----------
Net cash provided by (used in) financing activities (7,225,637) 3,192,803
Cash flows from investing activities
Net proceeds from sale of Housewares Division 9,725,678 --
Purchases of short-term investments (1,989,067) --
Payments for acquisitions, net of cash acquired -- (2,909,735)
Purchase of treasury shares (150,851) --
Proceeds on exercise of share options -- 107,775
Purchases of property, plant and equipment (268,808) (468,205)
----------- ----------
Net cash provided by (used in) investing activities 7,316,952 (3,270,165)
----------- ----------
Cash and cash equivalents
Increase (decrease) during the year 3,153,782 (455,610)
Beginning balance 6,610,933 2,387,540
----------- ----------
Ending balance $ 9,764,715 1,931,930
=========== ==========
Supplemental schedule of noncash investing and financing activities
On March 1, 1995, the Company purchased substantially all the assets
and assumed certain liabilities of Plezall Wipers, Inc.; in conjunction
with the acquisition, liabilities were assumed as follows:
Fair value of assets acquired $ -- 3,091,802
Cash paid -- 2,909,735
----------- ----------
Liabilities assumed $ -- 182,067
=========== ==========
Supplemental disclosure of cash flow information
Income taxes paid $ 1,166,543 695,199
Interest paid $ 36,317 163,079
=========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
(4)
<PAGE> 6
THE TRANZONIC COMPANIES
Notes to Condensed Consolidated Financial Statements
Three-month periods ended May 31, 1996 and 1995
Note A In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain such adjustments (all of
which are normal and recurring in nature) necessary to present fairly
the financial position of The Tranzonic Companies and subsidiaries
(Company) at May 31, 1996 and the results of operations for the
three-month periods ended May 31, 1996 and 1995. The statements
should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's annual report
for the fiscal year ended February 29, 1996.
Note B Net earnings per share have been calculated based on the weighted
average Class A common and Class B common shares outstanding during
the periods plus the incremental shares (calculated using the
treasury share method) for those outstanding share options which are
considered equivalent shares and have a dilutive impact on net
earnings per share.
The table below depicts the average Class A common and Class B common
shares used in the calculation of net earnings per share for the
reported periods:
<TABLE>
<CAPTION>
Three Months
Ended May 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
Class A common 2,188,682 2,193,133
Class B common 1,319,078 1,329,794
--------- ---------
3,507,760 3,522,927
========= =========
</TABLE>
The table below depicts the Class A common and Class B common shares
outstanding at the end of the periods reported:
<TABLE>
<CAPTION>
May 31,
--------------------
1996 1995
---- ----
<S> <C> <C>
Class A common 2,178,803 2,185,223
Class B common 1,311,385 1,308,065
--------- ---------
3,490,188 3,493,288
========= =========
</TABLE>
Note C On March 1, 1995, the Company acquired substantially all the assets
and assumed certain liabilities of Plezall Wipers, Inc., a Miami,
Florida distributor of woven textile wipers. The acquisition was
accounted for under the purchase method of accounting.
(5)
<PAGE> 7
PART I: FINANCIAL INFORMATION
-----------------------------
Item 2. Management's Discussion and Analysis of
-----------------------------------------------
Financial Condition and Results of Operation
--------------------------------------------
The Company's financial position remains strong. At May 31, 1996, the current
ratio was 2.9:1 and current assets continued to exceed total liabilities.
Revenues from continuing operations in the first fiscal quarter ended May 31,
1996 increased slightly to $34.7 million from $34.4 million as recorded in the
prior year like period. Volume revenue gains from the extension of existing
product lines, mostly serving the Company's institutional customers, were
largely offset by a decrease in revenues from the fiscal 1996 fourth quarter
sale of our Personal Care Division's douche and enema line of business and
reduced revenues from certain other product lines.
Gross margins in the current year first quarter were 32.6 percent, down
factionally from 32.8 percent of a year ago. Raw material costs, particularly
fluff pulp, which have influenced cost of sales during the current year fiscal
quarter are in a downward trend, and approaching the level of the prior year
like period. In addition, product mix shifts to historically higher margin
products were offset to some degree with competitive pricing pressures.
Operating margins in the current year first quarter improved to 6.7 percent of
sales as compared to 5.0 percent of sales from the prior year. Cost containment
and efficiency programs covering administration, distribution, and marketing
have reflected positively on earnings.
On March 28, 1996, the Company closed on the divestiture of its Housewares
Division substantially as expected when the Company reported the sale in the
prior year fourth fiscal quarter. The cash proceeds received were used to pay
off the outstanding line of credit, with the remainder invested in short-term
cash investments. As a consequence, interest income has increased and interest
expense has decreased on a quarter to quarter comparison.
Earnings from continuing operations in the first quarter ended May 31, 1996
increased to $1.5 million or 44 cents per share up 45.9 percent from $1.0
million or 30 cents per share recorded in the like period a year ago.
Cash increased $3.2 million during the first quarter along with a $2.0 million
increase in short-term investments. Cash generated from operations of $3.1
million, cash received from the Housewares Division divestiture of $10.0
million, and the pay off of $7.0 million in long-term debt were key
contributors to this net increase.
(6)
<PAGE> 8
FORM 10-Q - PART II: OTHER INFORMATION
--------------------------------------
Items 1 through 5 are not applicable or the answer to such items is negative;
therefore, the items have been omitted and no reference is required in this
report.
ITEM 6. Exhibits and reports on Form 8-K
<TABLE>
<CAPTION>
a) Exhibit
Number Exhibit
------ -------
<S> <C>
10.1 Second Amendment to Credit Agreement dated
June 7, 1996, between the Registrant, Society
National Bank and National City Bank
27 Financial Data Schedule(1)
99 Independent Auditors' Review Report
b) Reports on Form 8-K
-------------------
On April 11, 1996, the Registrant filed a report on Form 8-K dated
March 29, 1996. On May 17, 1996, the Registrant filed Amendment No. 1
to such Form 8-K on Form 8-K/A dated May 16, 1996. The filings were
made under Item 2 of Form 8-K, in conjunction with the sale by the
Registrant and its wholly-owned subsidiaries, Design Trend, Inc. and
Ever-Ready Appliance Mfg. Co. (collectively, the "Subsidiaries"), of
substantially all of the assets of the Subsidiaries. The following
financial statements were filed as a part of the Form 8-K, as amended:
1. The Tranzonic Companies Unaudited Pro Forma Condensed Consolidated
Statement of Earnings for the year ended February 29, 1996; and
2. The Tranzonic Companies Unaudited Pro Forma Condensed Consolidated
Balance Sheet dated February 29, 1996.
<FN>
(1) Filed only in electronic format pursuant to Item 601(b)(27) of Regulation
S-K.
</TABLE>
(7)
<PAGE> 9
SIGNATURE
---------
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 thereto duly authorized.
THE TRANZONIC COMPANIES
(Registrant)
Date: July 6, 1996 By: /s/ Richard J. Pennza
----------------------------------
Richard J. Pennza
(Duly authorized officer and
Principal Accounting Officer)
(8)
<PAGE> 1
Exhibit 10.1
SECOND AMENDMENT TO CREDIT AGREEMENT ("Amendment")
- ------------------------------------
WHEREAS, THE TRANZONIC COMPANIES ("Borrower") and SOCIETY NATIONAL BANK and
NATIONAL CITY BANK (collectively, the "Banks"), and SOCIETY NATIONAL BANK, as
agent for the Banks ("Agent") are parties to a certain Credit Agreement dated
October 7, 1993, as amended by an amendment dated June 30, 1994 (the "Loan
Agreement"); and
WHEREAS, Borrower, Banks and Agent have agreed to amend the Loan
Agreement.
NOW, THEREFORE, for valuable consideration received to their
satisfaction, Borrower, Banks and Agent mutually agree as follows:
1. Article I of the Loan Agreement is hereby amended by adding
the following definition:
" 'Adjusted Consolidated Net Income' shall mean Consolidated
Net Income less the non-cash charge recorded in the fourth quarter of
its fiscal year ending February 29, 1996 [not to exceed Eight Million
Dollars ($8,000,000)] related to the sale of Design Trend, Inc. and
Ever-Ready Appliance Mfg. Co. to Whitney Corr-Pak International, Inc."
2. Article I of the Loan Agreement is hereby amended by deleting the
definitions of "Level I Status", "Level II Status", "Level III Status" and
"Level IV Status" in their entirety and substituting the following in place
thereof:
" 'Level I Status' exists as of the fifth business day following the
Banks' receipt of the Consolidated financial statements and covenant
compliance certificate from the Borrower for the preceding quarter, if
as of the end of the immediately preceding Fiscal Quarter, the
Applicable Leverage Ratio was equal to or less than .20 to 1.00.
'Level II Status' exists as of the fifth business day following the
Banks' receipt of the Consolidated financial statements and covenant
compliance certificate from the Borrower for the preceding quarter, if
as of the end of the immediately preceding Fiscal Quarter, the
Applicable Leverage Ratio was .21 to 1.00 or greater but less than or
equal to .50 to 1.00.
'Level III Status' exists as of the fifth business day following the
Banks' receipt of the Consolidated financial statements and covenant
compliance certificate from the Borrower for the preceding quarter, if
as of the end of the immediately preceding Fiscal Quarter, the
Applicable Leverage Ratio was greater than .50 to 1.00 or greater but
less than or equal to .74 to 1.00.
-1-
<PAGE> 2
'Level IV Status' exists as of the fifth business day following the
Banks' receipt of the Consolidated financial statements and covenant
compliance certificate from the Borrower for the preceding quarter, if
as of the end of the immediately preceding Fiscal Quarter, the
Applicable Leverage Ratio exceeded .74 to 1.00, or exists on any other
day in which Level I Status or Level II Status or Level III Status is
not applicable."
3. Section 6.11 of the Loan Agreement is hereby amended by deleting the
period at the end of subpart (iii), inserting "; or" in place thereof, and
inserting a new subpart (iv) reading as follows:
"(iv) sell or otherwise transfer any asset(s) whose value is less than
or equal to ten percent (10%) of the Borrower's Consolidated Net Worth."
4. Section 6.14 of the Loan Agreement is hereby amended by deleting
subpart (i) in its entirety and substituting the following in place thereof:
"(i) It furnishes to each of the Banks the pro forma financial
statements required by Section 6.3(c)."
5. Section 6.18 of the Loan Agreement's hereby amended by deleting it
in its entirety and substituting the following in place thereof:
"SECTION 6.18. INTEREST COVERAGE RATIO. Borrower shall
maintain at all times a ratio of (a) (i) Adjusted Consolidated Net
Income, plus (ii) its Consolidated taxes including, but not limited to,
Consolidated taxes on Adjusted Consolidated Net Income or based on
Adjusted Consolidated Net Income and the amount of any deferred
Consolidated taxes, plus (iii) all interest on all Consolidated
indebtedness of the Companies (including Subordinated indebtedness)
accrued during the period in question to (b) all interest on all
Consolidated indebtedness of the Companies (including Subordinated
indebtedness) accrued during the period in question, of no less than
3.00 to 1.00 until February 28, 1997 and 3.50 to 1.00 thereafter, based
upon Borrower's Consolidated financial statements for the most recent
calendar quarter and the previous three (3) calendar quarters."
6. Except as otherwise specifically provided in this Amendment, the
provisions of this Amendment shall be effective on June 7, 1996.
7. Except as amended hereby, all provisions of the Loan Agreement are
ratified and confirmed and shall remain in full force and effect.
8. Borrower hereby represents and warrants to Banks and Agent that (a)
Borrower has the legal power and authority to execute and deliver this
Amendment; (b)the officials executing this Amendment have been duly authorized
to execute and deliver the same and bind Borrower with respect to the provisions
hereof; (c) the execution and delivery hereof by
-2-
<PAGE> 3
Borrower and the performance and observance by Borrower of the provisions hereof
do not violate or conflict with the organizational agreements of Borrower or any
law applicable to Borrower or result in a breach of any provisions of or
constitute a default under any other agreement, instrument or document binding
upon or enforceable against Borrower; and (d) this Amendment constitutes a valid
and binding obligation upon Borrower in every respect.
9. In consideration of this Amendment, Borrower hereby releases and
discharges the Banks and Agent and their shareholders, directors, officers,
employees, attorneys, affiliates and subsidiaries from any and all claims,
demands, liability, and causes of action whatsoever, now known or unknown,
arising out of or in any way related to the extension or administration of the
Loan, the Loan Agreement or any mortgage or security interest related thereto.
10. This Amendment shall be construed in accordance with the laws of
the State of Ohio, without regard to principles of conflict of laws.
IN WITNESS WHEREOF, Borrower, Banks and Agent have caused this
Amendment to be executed by their duly authorized officers on June 7, 1996.
Address: 30195 Chagrin Boulevard THE TRANZONIC COMPANIES
Pepper Pike, Ohio
By: /s/ Alayne L. Reitman
--------------------------
Title: Vice President
-----------------------
Address: 127 Public Square SOCIETY NATIONAL BANK
Cleveland, Ohio 44114 individually and as Agent
Attn: Large Corporate Group
By: /s/ William J. Kysela
--------------------------
Title: Vice President
-----------------------
Address: 1900 East Ninth Street NATIONAL CITY BANK
Cleveland, Ohio 44114
Attn: Metro-Ohio East Division By: /s/ Timothy G. Healy
--------------------------
Title: Vice President
-----------------------
-3-
<PAGE> 4
Consent of Guarantors
---------------------
The undersigned, being guarantors of the indebtedness, obligations, and
liabilities of The Tranzonic Companies pursuant to the provisions of a certain
Guaranty of Payment of Debt dated October 7, 1993 ("Guaranty"), consent to the
preceding Amendment to Loan Agreement and agree that the provisions of the
Guaranty are ratified and confirmed and remain in full force and effect.
CCP INDUSTRIES, INC. BAXTER TUBE COMPANY
By: /s/ Alayne L. Reitman By: /s/ Alayne L. Reitman
------------------------------ ------------------------------
Its: Vice President Its: Vice President
----------------------------- -----------------------------
And: And:
------------------------------ ------------------------------
Its: Its:
----------------------------- -----------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AT MAY 31, 1996 AND FEBRUARY 29, 1996 AND
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS FOR THE THREE MONTH PERIODS ENDED
MAY 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000001761
<NAME> THE TRANZONIC COMPANIES
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> MAY-31-1996
<CASH> 9,764,715
<SECURITIES> 1,989,067
<RECEIVABLES> 13,351,172
<ALLOWANCES> 0
<INVENTORY> 14,016,696
<CURRENT-ASSETS> 42,001,367
<PP&E> 18,827,712
<DEPRECIATION> 0
<TOTAL-ASSETS> 68,587,829
<CURRENT-LIABILITIES> 14,540,370
<BONDS> 0
<COMMON> 998,885<F1>
0
0
<OTHER-SE> 53,560,915<F2>
<TOTAL-LIABILITY-AND-EQUITY> 68,587,829
<SALES> 34,715,109
<TOTAL-REVENUES> 34,715,109
<CGS> 23,400,738
<TOTAL-COSTS> 32,387,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,979
<INCOME-PRETAX> 2,376,578
<INCOME-TAX> 842,000
<INCOME-CONTINUING> 1,534,578
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,534,578
<EPS-PRIMARY> .44
<EPS-DILUTED> 0
<FN>
<F1>THIS FIGURE INCLUDES $664,487 CLASS A COMMON AND $334,398 CLASS B COMMON
SHARES.
<F2>THIS FIGURE INCLUDES $5,780,774 IN ADDITIONAL PAID-IN-CAPITAL AND $47,780,141
IN RETAINED EARNINGS.
</FN>
</TABLE>
<PAGE> 1
Form 10-Q, Part II
Item 6
Exhibit 99
INDEPENDENT AUDITORS' REVIEW REPORT
-----------------------------------
The Board of Directors
The Tranzonic Companies:
We have reviewed the condensed consolidated balance sheet of The Tranzonic
Companies and subsidiaries as of May 31, 1996, and the related condensed
consolidated statements of earnings and cash flows for the three-month periods
ended May 31, 1996 and 1995. These condensed consolidated financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical review procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of The Tranzonic Companies and
subsidiaries as of February 29, 1996, and the related consolidated statements of
operations, shareholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated March 29, 1996, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of February 29, 1996, is fairly presented, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
Cleveland, Ohio
June 28, 1996
(9)
