<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
/ X / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED] [Fee previously submitted on
filing of Form 10-K]
For the fiscal year ended March 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________ to ____________
Commission file number 1-7872
-----------------------------
TRANSTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-4062211
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
700 Liberty Avenue 07083
Union, New Jersey (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (908) 964-5666
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value $0.01
(Title of class)
New York Stock Exchange
(Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
NONE
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
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
As of June 13, 1994, the aggregate market value of voting stock held by
nonaffiliates of the registrant based on the last sales price as reported by
the New York Stock Exchange was $66,043,000.00
As of June 13, 1994, the registrant had 5,215,327 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
<PAGE> 2
The undersigned registrant hereby amends its Annual Report on Form
10-K for the fiscal year ended March 31, 1994 by amending the information
required by Item 8, Item 10, Item 11, Item 12, Item 13 and Item 14 thereof as
set forth herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Financial Statements:
Independent Auditors' Report 2
Consolidated Balance Sheets as of March 31, 1994 and 1993 3
Statements of Consolidated Operations for years ended March 31, 1994, 1993 and 1992 4
Statements of Consolidated Cash Flows for years ended March 31, 1994, 1993 and 1992 5
Statements of Consolidated Stockholders' Equity for years ended March 31, 1994, 1993
and 1992 6
Notes to Consolidated Financial Statements 7
Financial Statement Schedules:
Schedule I --
Consolidated Marketable Securities and Other Security Investments for the years ended
March 31, 1994, 1993 and 1992 20
Schedule VIII --
Consolidated Valuation and Qualifying Accounts for years ended March 31, 1994,
1993 and 1992 21
Schedule X --
Consolidated Supplementary Income Statement Information for years ended
March 31, 1994, 1993 and 1992 22
</TABLE>
1
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
To the Stockholders and the Board of Directors of TransTechnology Corporation:
We have audited the accompanying consolidated balance sheets of TransTechnology
Corporation and subsidiaries as of March 31, 1994 and 1993 and the related
statements of consolidated operations, stockholders' equity, and cash flows for
each of the three years in the period ended March 31, 1994. Our audits also
included the consolidated financial statement schedules listed in the Table of
Contents at Item 8. These financial statements and the financial statement
schedules are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on the financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of TransTechnology Corporation and
subsidiaries at March 31, 1994 and 1993, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
1994 in conformity with generally accepted accounting principles. Also, in our
opinion, such consolidated financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
As discussed in Note 8 to the consolidated financial statements, in 1994 the
Corporation changed its method of accounting for postretirement benefits other
than pensions to conform with Statement of Financial Accounting Standards No.
106.
As discussed in Note 5 to the consolidated financial statements, in 1994 the
Corporation changed its method of accounting for income taxes to conform with
Statement of Financial Accounting Standards No. 109.
/s/ Deloitte & Touche
Deloitte & Touche
Parsippany, New Jersey
June 20, 1994
2
<PAGE> 4
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
---------------------------
1994 1993
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,027,000 $ 1,505,000
Accounts receivable:
United States Government . . . . . . . . . . . . . . . . . . . . . . . . . . 2,815,000 2,075,000
Commercial (net of allowance for doubtful accounts of $271,000 in 1994 and 19,500,000 17,426,000
$318,000 in 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,814,000 --
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,786,000 33,375,000
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . 2,932,000 1,715,000
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,253,000 3,393,000
Net assets of discontinued businesses . . . . . . . . . . . . . . . . . . . 4,309,000 3,176,000
------------- ------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,436,000 62,665,000
Property:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,223,000 2,780,000
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,657,000 9,997,000
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,611,000 23,825,000
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,050,000 3,499,000
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . 671,000 710,000
------------- ------------
Total 58,212,000 40,811,000
Less accumulated depreciation and amortization . . . . . . . . . . . . . . . . 22,204,000 20,079,000
------------- ------------
Property-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,008,000 20,732,000
Other assets:
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,061,000 5,643,000
Costs in excess of net assets of acquired businesses (net of accumulated
amortization: 1994, $2,423,000; 1993, $2,178,000) . . . . . . . . . . . . . 3,117,000 2,728,000
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,235,000 5,995,000
------------- ------------
Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,413,000 14,366,000
------------- ------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 125,857,000 $ 97,763,000
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . $ 1,479,000 $ 38,000
Accounts payable-trade . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,489,000 5,895,000
Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,570,000 3,433,000
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 943,000 1,871,000
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 7,109,000 7,940,000
------------- ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 21,590,000 19,177,000
------------- ------------
Long-term debt payable to banks and others . . . . . . . . . . . . . . . . . . 33,168,000 12,387,000
------------- ------------
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 5,146,000 4,985,000
------------- ------------
Stockholders' equity:
Preferred stock-authorized, 300,000 shares; none issued . . . . . . . . . . . -- --
Common stock-authorized, 14,700,000 shares of $.01 par value; issued,
5,189,104 and 5,121,604 shares in 1994 and 1993, respectively. . . . . . . . 52,000 51,000
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . 45,283,000 44,616,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,186,000 16,537,000
Other stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . (1,568,000) 10,000
------------- ------------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . 65,953,000 61,214,000
------------- ------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 125,857,000 $ 97,763,000
============= ============
</TABLE>
- - --------------------
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
STATEMENTS OF CONSOLIDATED OPERATIONS
<TABLE>
<CAPTION>
For the years ended March 31,
----------------------------------------------
1994 1993 1992
-------------- ------------- -------------
<S> <C> <C> <C>
Revenues:
Sales . . . . . . . . . . . . . . . . . . . . . . . . . $ 120,507,000 $ 95,913,000 $ 90,267,000
Interest income . . . . . . . . . . . . . . . . . . . . 733,000 661,000 347,000
Other income . . . . . . . . . . . . . . . . . . . . . 299,000 158,000 217,000
-------------- ------------- -------------
Total . . . . . . . . . . . . . . . . . . . . . . . . 121,539,000 96,732,000 90,831,000
-------------- ------------- -------------
Cost of goods sold . . . . . . . . . . . . . . . . . . . 85,322,000 67,258,000 70,354,000
-------------- ------------- -------------
Gross profit . . . . . . . . . . . . . . . . . . . . . . 36,217,000 29,474,000 20,477,000
General, administrative and selling expenses . . . . . . 23,517,000 17,624,000 16,163,000
Environmental charge . . . . . . . . . . . . . . . . . . 374,000 4,167,000 358,000
Corporate office relocation . . . . . . . . . . . . . . - 468,000 2,696,000
Interest expense . . . . . . . . . . . . . . . . . . . . 1,556,000 696,000 2,239,000
-------------- ------------- -------------
Income (loss) from continuing operations before income
taxes . . . . . . . . . . . . . . . . . . . . . . . . . 10,770,000 6,519,000 (979,000)
Provision (credit) for income taxes . . . . . . . . . . 3,902,000 1,325,000 (149,000)
-------------- ------------- -------------
Income (loss) from continuing operations . . . . . . . . 6,868,000 5,194,000 (830,000)
Discontinued Operations:
(Loss) income from operations (net of applicable tax
benefits of $1,055,000 and $1,983,000 for 1994 and
1992, respectively, and including a tax provision of
$3,000 for 1993) . . . . . . . . . . . . . . . . . . (744,000) 10,000 (2,797,000)
Gain (loss) from disposal (includes a tax provision of
$306,000 and $963,000 for 1994 and 1992, respectively,
and net of applicable tax benefit of $1,337,000 for
1993) . . . . . . . . . . . . . . . . . . . . . . . . 760,000 (71,000) (5,788,000)
-------------- ------------- -------------
Net income (loss) . . . . . . . . . . . . . . . . . . . . $ 6,884,000 $ 5,133,000 $ (9,415,000)
============== ============= =============
Earnings per share
Income (loss) from continuing operations . . . . . . . $ 1.34 $ 1.02 $ (0.16)
Loss from discontinued operations . . . . . . . . . . . - (0.01) (1.69)
-------------- ------------- -------------
Income (loss) per share . . . . . . . . . . . . . . . . . $ 1.34 $ 1.01 $ (1.85)
============== ============= =============
Number of shares used in computation of per share
information . . . . . . . . . . . . . . . . . . . . . . 5,143,000 5,095,000 5,081,000
</TABLE>
- - ---------------
See accompanying notes to consolidated financial statements.
4
<PAGE> 6
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
For the years ended March 31,
--------------------------------------------
1994 1993 1992
------------- ------------ -------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . $ 6,884,000 $ 5,133,000 $ (9,415,000)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . 4,505,000 3,369,000 6,318,000
Provision for losses on accounts receivable . . . . . . . . 102,000 79,000 55,000
(Gain) loss on sale or disposal of fixed assets and
discontinued businesses . . . . . . . . . . . . . . . . . . (452,000) 37,000 5,211,000
Deferred income taxes . . . . . . . . . . . . . . . . . . . (1,124,000) (216,000) (1,441,000)
Change in assets and liabilities net of acquisitions and
dispositions:
Decrease in accounts receivable . . . . . . . . . . . . . 261,000 368,000 4,080,000
Increase in inventories . . . . . . . . . . . . . . . . . (200,000) (968,000) (541,000)
(Increase) decrease in net assets of discontinued (1,133,000) 523,000 5,033,000
businesses . . . . . . . . . . . . . . . . . . . . . . .
Decrease (increase) in other assets . . . . . . . . . . . 93,000 4,485,000 (4,825,000)
Increase (decrease) in accounts payable . . . . . . . . . 506,000 105,000 (3,789,000)
Increase in accrued compensation . . . . . . . . . . . . . 1,137,000 672,000 318,000
(Decrease) increase in other liabilities . . . . . . . . . (2,895,000) (3,998,000) 7,662,000
(Decrease) increase in income tax payable . . . . . . . . (928,000) (1,238,000) 3,109,000
------------- ------------ -------------
Net cash provided by operating activities . . . . . . . . . 6,756,000 8,351,000 11,775,000
------------- ------------ -------------
Cash Flows from Investing Activities:
Business acquisitions . . . . . . . . . . . . . . . . . . . . (22,670,000) -- --
Capital expenditures . . . . . . . . . . . . . . . . . . . . (4,973,000) (5,514,000) (3,077,000)
Proceeds from sale of fixed assets and discontinued business 1,027,000 5,461,000 30,037,000
Increase in notes receivable . . . . . . . . . . . . . . . . (176,000) (687,000) (4,500,000)
------------- ------------ -------------
Net cash provided by (used in) investing activities . . . . (26,792,000) (740,000) 22,460,000
------------- ------------ -------------
Cash Flows from Financing Activities:
Proceeds from long-term borrowings . . . . . . . . . . . . . 34,400,000 28,174,000 29,700,000
Payments on long-term debt . . . . . . . . . . . . . . . . . (12,178,000) (27,414,000) (71,225,000)
Proceeds from issuance of stock under stock option plan . . . 571,000 326,000 --
Stock repurchases and other . . . . . . . . . . . . . . . . . -- -- (12,000)
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . (1,235,000) (7,990,000) --
------------- ------------ -------------
Net cash provided by (used in) financing activities . . . . 21,558,000 (6,904,000) (41,537,000)
------------- ------------ -------------
Net increase (decrease) in cash and cash equivalents . . . . 1,522,000 707,000 (7,302,000)
Cash and cash equivalents at beginning of year . . . . . . . 1,505,000 798,000 8,100,000
------------- ------------ -------------
Cash and cash equivalents at end of year . . . . . . . . . . $ 3,027,000 $ 1,505,000 $ 798,000
============= ============ =============
Supplemental Information:
Interest payments . . . . . . . . . . . . . . . . . . . . . . $ 1,602,000 $ 812,000 $ 5,542,000
Income tax payments . . . . . . . . . . . . . . . . . . . . . $ 4,476,000 $ 600,000 $ 190,000
</TABLE>
- - ---------------
During 1994 the Company received marketable securities valued at $3.4 million
from the sale of a discontinued business. The carrying value of these
securities at March 31, 1994, was $1.8 million.
See accompanying notes to consolidated financial statements.
5
<PAGE> 7
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL OTHER
FOR THE YEARS ENDED MARCH 31, PAID-IN RETAINED STOCKHOLDERS'
1994, 1993 AND 1992 SHARES AMOUNT CAPITAL EARNINGS EQUITY TOTAL
- - --------------------------------- ---------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1991 . . . . . 5,080,310 $ 51,000 $44,302,000 $28,809,000 -- $73,162,000
Net loss . . . . . . . . . . . . -- -- -- (9,415,000) -- (9,415,000)
Other . . . . . . . . . . . . . . 3,482 -- (12,000) -- -- (12,000)
---------- --------- ----------- ----------- ----------- -----------
Balance, March 31, 1992 . . . . . 5,083,792 51,000 44,290,000 19,394,000 -- 63,735,000
Net Income . . . . . . . . . . . -- -- -- 5,133,000 -- 5,133,000
Cash dividends ($1.56 per share) -- -- -- (7,990,000) -- (7,990,000)
Issuance of stock under stock
option plan . . . . . . . . . . 37,812 -- 326,000 -- -- 326,000
Foreign translation adjustments . -- -- -- -- $ 10,000 10,000
---------- --------- ----------- ----------- ----------- -----------
Balance, March 31, 1993 . . . . . 5,121,604 51,000 44,616,000 16,537,000 10,000 61,214,000
Net income . . . . . . . . . . . -- -- -- 6,884,000 -- 6,884,000
Cash dividends ($.24 per share) . -- -- -- (1,235,000) -- (1,235,000)
Issuance of stock under stock
option plan . . . . . . . . . . 57,415 1,000 570,000 -- -- 571,000
Issuance of stock under incentive
bonus plan . . . . . . . . . . 10,085 -- 97,000 -- (65,000) 32,000
Foreign translation adjustments . -- -- -- -- 56,000 56,000
Unrealized investment holding
losses. . . . . . . . . . . . . -- -- -- -- (1,569,000) (1,569,000)
---------- --------- ----------- ----------- ----------- -----------
Balance, March 31, 1994 . . . . . 5,189,104 $ 52,000 $45,283,000 $22,186,000 $(1,568,000) $65,953,000
========== ========= =========== =========== =========== ===========
</TABLE>
- - ----------------------
See accompanying notes to consolidated financial statements.
6
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TransTechnology Corporation and Subsidiaries
1. SUMMARY OF ACCOUNTING PRINCIPLES
Principles of Consolidation. The accompanying consolidated financial
statements include the accounts of TransTechnology Corporation ("the Company")
and its subsidiaries, all of which are wholly-owned. Intercompany balances and
transactions are eliminated in consolidation.
Related Party. Research Industries Incorporated owns approximately
21% of the Company's outstanding common stock. Two former directors of the
Company are the only shareholders of Research Industries Incorporated, and each
of these directors has a consulting contract with the Company; one for $1.4
million and one for $0.7 million. Of the total $2.1 million original
contracts, $1.5 million has been expensed and paid through March 31, 1994,
which includes $0.9 million expensed and paid during fiscal 1994.
Accounting for Contracts. All of the Company's contracts are firm
fixed-price. Sales and cost of sales on such contracts are recorded as
deliveries are made. Estimates of cost to complete are reviewed and revised
periodically throughout the lives of the contracts, and adjustments to profit
resulting from such revisions are recorded in the accounting period in which
the revisions are made. Losses on contracts are recorded in full as they are
identified.
Cash and Cash Equivalents. The Company considers all highly liquid
investments with a maturity at date of acquisition of three months or less to
be cash equivalents.
Accounts Receivable. Accounts receivable from the United States
Government represent billed receivables and substantially all amounts are
expected to be collected within one year. The Company has no amounts billed
under retainage provisions of contracts.
Inventories. Inventories are stated at the lower of cost or market.
Cost is determined using the first-in, first-out method. Cost includes
material, labor and manufacturing overhead costs.
Property and Related Depreciation and Amortization. Provisions for
depreciation are made on a straight-line basis over the estimated useful lives
of depreciable assets ranging from three to thirty years. Amortization of
leasehold improvements is computed on a straight-line basis over the shorter of
the estimated useful lives of the improvements or the terms of the leases.
Costs in Excess of Net Assets of Acquired Businesses. The difference
between the purchase price and the fair value of the net assets of acquired
businesses is included in the accompanying Consolidated Balance Sheets under
the caption "Costs in Excess of Net Assets of Acquired Businesses" and is being
amortized over forty years, or shorter periods where deemed appropriate. The
Company has determined that there is no impairment in value since projected
future operating results on an undiscounted basis through the period such costs
in excess of net assets of acquired businesses is being amortized are expected
to be sufficient to absorb the amortization.
Earnings Per Share. Earnings per share are based on the weighted
average number of common shares and, if dilutive, common stock equivalents
(stock options) outstanding during each year.
Research, Development and Engineering Costs. Research and development
costs and engineering costs in support of active products, which are charged to
expense when incurred, amounted to $2.3 million, $1.8 million and $1.7 million
in 1994, 1993, and 1992, respectively. Included in these amounts were
expenditures of $1.1 million in 1994, $0.9 million in 1993, and $0.6 million in
1992, which represent costs related to research and development activities.
Income Taxes. In February 1992, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes". Statement No. 109 requires a change from the
deferred method of accounting for income taxes of APB Opinion 11 to the asset
and liability method of accounting for income taxes. Under the asset and
liability method of Statement No. 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases.
7
<PAGE> 9
Effective April 1, 1993, the Company adopted Statement No. 109 and has
reported the cumulative effect of this change in the method of accounting for
income taxes in the Consolidated Statements of Income and Retained Earnings.
The adoption of Statement No. 109 had no material effect on the financial
statements.
Postretirement Benefits Other Than Pensions. The Company makes
contributions toward the cost of providing certain health care and life
insurance benefits to certain retirees, their beneficiaries and covered
dependents. Company contributions in 1992 and 1993 were expensed as paid. The
accrual method of accounting for these benefits was adopted April 1, 1993 in
accordance with the provisions of Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." The adoption of Statement No. 106 had no material effect on the
financial statements.
Investments. On March 1, 1994 the Company acquired 465,000 shares of
Mace Security International common stock, valued at $3.4 million, as partial
payment for the sale of a division. At March 31, 1994, the Company adopted
Statement of Financial Accounting Standards No. 115 "Accounting for Certain
Investments in Debt and Equity Securities". The adoption of this statement
resulted in a gross unrealized holding loss of $1.6 million, reported as a
reduction to stockholders' equity in the March 31, 1994 Balance Sheet. The
aggregate fair market value of the investment at March 31, 1994 was $1.8
million.
2. DISCONTINUED OPERATIONS
In March 1994, the Company sold its Federal Laboratories division for
$1.0 million in cash, $1.2 million in notes receivable and 465,000 shares of
Mace Security International, Inc. common stock. The sale of this division
resulted in a gain of $0.5 million (net of applicable income tax provision of
$0.2 million).
In March 1992, the Company sold its Financial Systems division,
entered into agreements to sell its textile machinery and special elastomer
products divisions, and entered into discussions with a prospective buyer
regarding its weather instruments division. Financial Systems was sold for
$35.3 million in cash, of which $5.1 million was placed in escrow pending
resolution of matters specified in the purchase agreement, and a $2.5 million
note which was reduced to $1.9 million in the first quarter of fiscal 1993, due
in March 1995. The sale of Financial Systems resulted in a 1992 gain on
disposal of $0.7 million (net of applicable income tax expense of $2.6
million). The sales of the textile machinery and special elastomer products
divisions were completed in May and June 1992 and consisted of $4.3 million in
cash, a $2.0 million note due in April 1997 and a receivable of $0.3 million.
The sales of these divisions resulted in a 1992 loss on disposal of $1.6
million (net of applicable income tax benefit of $0.8 million). In the fourth
quarter of 1993, the Company reported a gain on final disposal of these
divisions of $0.4 million (net of applicable income tax provision of $0.1
million). The weather instruments division was sold in January 1993 for $1
million in cash and a $1.7 million note due in January 1998. In the fourth
quarter of 1992, the division was written down to its net realizable value
based on its expected sales price, which resulted in a loss on disposal of $0.1
million (net of applicable tax benefits of $0.1 million). In the fourth
quarters of 1993 and 1994, the Company recorded additional gains on disposal
relating to the weather instrument division of $0.4 million and $0.1 million,
respectively (net of applicable income tax provision of $0.1 million in 1993).
Additionally, as part of the sale, the Company consigned $1.3 million of
inventory under a five-year contractual purchase agreement of which $0.8
million remained at March 31, 1994. The Company has retained one weather
instrument product line and is continuing to negotiate its sale separately from
the above transaction.
In August 1991, the Company discontinued its Computer Graphics
manufacturing operation. In connection with such decision, the Company
recorded losses on disposal of $0.1 million and $0.9 million for 1994 and 1993,
respectively (net of applicable income tax benefit of $0.3 million in 1993).
In March 1990, the Company entered into an agreement to sell
substantially all of the inventories and plant and equipment of its Space
Ordnance Systems division. A gain on disposal of $0.2 million was recorded in
1994 (net of applicable income tax provision of $0.1 million). Losses on
disposal of $0.7 million and $0.8 million were recorded in 1993 and 1992,
respectively (net of applicable income tax benefits of $0.3 million and $0.5
million in 1993 and 1992, respectively). The gain and losses consist of
disposal costs different from previous estimates associated primarily with
legal and environmental matters and the settlement of a contract claim
receivable in 1991.
8
<PAGE> 10
Operating results of the discontinued businesses were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------------- --------------- -------------
<S> <C> <C> <C>
Total revenues . . . . . . . . . . . . . . . . . . $ 4,965,000 $ 6,391,000 $ 77,531,000
============== =============== =============
Income (loss) before income taxes . . . . . . . . . $ (1,799,000) $ 13,000 $ (4,780,000)
Income tax provision (benefit) . . . . . . . . . . (1,055,000) 3,000 (1,983,000)
-------------- --------------- -------------
Income (loss) from operations . . . . . . . . . . . $ (744,000) $ 10,000 $ (2,797,000)
============== =============== =============
</TABLE>
The loss from operations includes interest expense of $90,000, $91,000
and $2.0 million in 1994, 1993 and 1992, respectively.
Net assets of the discontinued businesses at March 31, 1994 and 1993
were as follows:
<TABLE>
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,000 $ 164,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186,000 454,000
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,203,000 3,116,000
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,198,000 789,000
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (303,000) (1,347,000)
------------ ------------
Net Assets of Discontinued Businesses . . . . . . . . . . . . . . . . . . . $ 4,309,000 $ 3,176,000
============ ============
</TABLE>
Other assets and liabilities retained by the Company associated with
the discontinued businesses at March 31, 1994 and 1993 are included in the
following balance sheet captions:
<TABLE>
<CAPTION>
1994 1993
----------- ----------
<S> <C> <C>
Commercial Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . $ -- $ 87,000
Prepaid Expenses and Other Current Assets . . . . . . . . . . . . . . . . . $ 289,000 $ 632,000
Other Long-term Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 821,000 $ 688,000
</TABLE>
3. ACQUISITIONS
On July 28, 1993, the Company acquired the assets and business of
Electrical Specialties Company for a total purchase price of $1.7 million in
cash. Electrical Specialties Company manufactures electrical cables and wire
harnesses for the heavy equipment industry.
On August 2, 1993, the Company acquired substantially all of the
assets of the Palnut fastener operation ("Palnut") of TRW Inc. for a total
purchase price of $20.5 million in cash and the assumption of certain
liabilities consisting primarily of trade payables and accrued expenses
aggregating approximately $1.4 million. The Palnut operation manufactures
single and multi-thread metal fasteners for the automotive and industrial
products industries.
9
<PAGE> 11
The following summarizes TransTechnology Corporation's unaudited
combined Proforma Revenue, Net Income and Earnings (Loss) per Share information
prepared as if the acquisitions of the Palnut threaded fastener business and
Electrical Specialties Company had occurred at the beginning of the periods
presented.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
---------------------------------------
1994 1993
---------------- ----------------
<S> <C> <C>
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 130,253,000 $ 124,025,000
================ ================
Income from Continuing Operations . . . . . . . . . . . . . . . 6,729,000 7,908,000
Income (loss) from Discontinued Operations . . . . . . . . . . 16,000 (61,000)
---------------- ----------------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . 6,745,000 7,847,000
================ ================
Earnings per Share from Continuing Operations . . . . . . . . . $ 1.31 $ 1.55
Loss per Share from Discontinued Operations . . . . . . . . . . -- (.01)
---------------- ----------------
Earnings per Share . . . . . . . . . . . . . . . . . . . . . . $ 1.31 $ 1.54
================ ================
</TABLE>
4. INVENTORIES
Inventories at March 31, 1994 and 1993 are summarized as follows:
<TABLE>
<CAPTION>
1994 1993
------------ -------------
<S> <C> <C>
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,057,000 $ 4,913,000
Work-in-process:
U.S. Government contracts . . . . . . . . . . . . . . . . . . . . . . . . 1,515,000 1,412,000
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,074,000 5,412,000
Purchased and manufactured parts . . . . . . . . . . . . . . . . . . . . . 23,140,000 21,638,000
------------ -------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,786,000 $ 33,375,000
============ =============
</TABLE>
5. INCOME TAXES
The components of total income (loss) from operations before income
taxes were:
<TABLE>
<CAPTION>
1994 1993 1992
------------- -------------- --------------
<S> <C> <C> <C>
Domestic . . . . . . . . . . . . . . . . . . . . . . . . $ 11,010,000 $ 4,927,000 $ (11,771,000)
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . (973,000) 198,000 1,187,000
------------- -------------- --------------
Total . . . . . . . . . . . . . . . . . . . . . . . . $ 10,037,000 $ 5,125,000 $ (10,584,000)
============= ============== ==============
</TABLE>
10
<PAGE> 12
The provision (benefit) for income taxes is summarized below:
<TABLE>
<CAPTION>
1994 1993 1992
----------- ------------ ------------
<S> <C> <C> <C>
Currently payable:
United States . . . . . . . . . . . . . . . . . . . $ 2,987,000 $ 1,314,000 $ (91,000)
Foreign . . . . . . . . . . . . . . . . . . . . . . (109,000) 203,000 429,000
State . . . . . . . . . . . . . . . . . . . . . . . 734,000 (256,000) (66,000)
----------- ------------ ------------
$ 3,612,000 $ 1,261,000 $ 272,000
Deferred . . . . . . . . . . . . . . . . . . . . . . (459,000) (1,270,000) (1,441,000)
----------- ------------ ------------
Total . . . . . . . . . . . . . . . . . . . . . . . $ 3,153,000 $ (9,000) $ (1,169,000)
=========== ============ ============
</TABLE>
The provision (benefit) for income taxes is allocated between
continuing and discontinued operations as summarized below:
<TABLE>
<CAPTION>
1994 1993 1992
------------ ------------- ------------
<S> <C> <C> <C>
Continuing . . . . . . . . . . . . . . . . . . $ 3,902,000 $ 1,325,000 $ (149,000)
Discontinued . . . . . . . . . . . . . . . . . (749,000) (1,334,000) (1,020,000)
------------ ------------- ------------
Total . . . . . . . . . . . . . . . . . . . . . $ 3,153,000 $ (9,000) $ (1,169,000)
============ ============= ============
</TABLE>
The provision (benefit) for deferred taxes is comprised of the
following tax effect of timing differences:
<TABLE>
<CAPTION>
1993 1992
------------- -------------
<S> <C> <C>
Depreciation . . . . . . . . . . . . . . . . . $ (459,000) $ 352,000
Inventory reserves . . . . . . . . . . . . . . 661,000 549,000
Bad debts . . . . . . . . . . . . . . . . . . . 79,000 63,000
Deferred income . . . . . . . . . . . . . . . . (117,000) (181,000)
Accruals deductible in future years . . . . . . (1,131,000) (2,100,000)
Other . . . . . . . . . . . . . . . . . . . . . (303,000) (124,000)
------------- -------------
Total . . . . . . . . . . . . . . . . . . . . . $ (1,270,000) $ (1,441,000)
============= =============
</TABLE>
In 1992, the consolidated tax credit of $149,000 on loss from
continuing operations of $979,000 is primarily attributable to tax benefits
associated with the foreign sales corporation.
The consolidated effective tax rates for continuing operations differ
from the federal statutory rates as follows:
<TABLE>
<CAPTION>
1994 1993
-------- ---------
<S> <C> <C>
Statutory federal rate . . . . . . . . . . . . . . . . . . . 34.0% 34.0%
State income taxes after federal income tax . . . . . . . . . 4.8% 1.2%
Earnings of the foreign sales corporation . . . . . . . . . . (3.3%) (7.0%)
Amortization of purchase adjustments not
deductible for tax purposes . . . . . . . . . . . . . . . . 2.4% 4.0%
Revision of prior years' tax accruals . . . . . . . . . . . . (7.5%) (11.0%)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0% (0.9%)
-------- ---------
Consolidated effective tax rate . . . . . . . . . . . . . . . 31.4% 20.3%
======== =========
</TABLE>
11
<PAGE> 13
Effective April 1, 1993, the Company adopted Statement of Financial
Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109").
Prior to the adoption of SFAS 109, the Company accounted for income taxes under
the deferral method and prior periods have not been restated to reflect this
change in accounting principle. There was no material effect on the Company's
financial results as a result of adopting SFAS No. 109.
The following is an analysis of accumulated deferred income taxes:
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Assets
Current
Inventory . . . . . . . . . . . . . . . . . . . $ 3,582,000 $ 3,201,000
Other . . . . . . . . . . . . . . . . . . . . . 671,000 192,000
----------- -----------
Total Current . . . . . . . . . . . . . 4,253,000 3,393,000
Non-Current
Environmental . . . . . . . . . . . . . . . . . 1,317,000 1,344,000
----------- -----------
Total Assets . . . . . . . . . . . . . . $ 5,570,000 $ 4,737,000
=========== ===========
Liabilities
Non-Current
Depreciation . . . . . . . . . . . . . . . . . . $ 1,157,000 $ 920,000
----------- -----------
Total Liabilities . . . . . . . . . . . . $ 1,157,000 $ 920,000
=========== ===========
Summary-Accumulated Deferred Income Taxes
Net Current Assets . . . . . . . . . . . . . . . . $ 4,253,000 $ 3,393,000
Net Non-Current Assets . . . . . . . . . . . . . . 160,000 424,000
----------- -----------
Total . . . . . . . . . . . . . . . . . $ 4,413,000 $ 3,817,000
=========== ===========
</TABLE>
6. LONG-TERM DEBT PAYABLE TO BANKS AND OTHERS
Long-term debt payable to banks and others consists of the following:
<TABLE>
<CAPTION>
1994 1993
------------ -------------
<S> <C> <C>
Credit Agreement - 5.50% . . . . . . . . . . . . . . . $ 15,000,000 --
Credit Agreement - 5.375% . . . . . . . . . . . . . . . 10,000,000 --
Credit Agreement - 5.20% . . . . . . . . . . . . . . . -- $ 10,000,000
Credit Agreement - 6.0% . . . . . . . . . . . . . . . . -- 1,900,000
Term Loan - 6.50% . . . . . . . . . . . . . . . . . . . 9,160,000 --
Other . . . . . . . . . . . . . . . . . . . . . . . . . 487,000 525,000
------------ -------------
34,647,000 12,425,000
Less current maturities . . . . . . . . . . . . . . . . 1,479,000 38,000
------------ -------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $ 33,168,000 $ 12,387,000
============ =============
</TABLE>
12
<PAGE> 14
Credit Agreement
At March 31, 1994, outstanding bank debt consisted of a revolving
credit facility which provides for borrowings and letters of credit of $35
million and a term loan of $9.2 million. Borrowing under the credit facility
at March 31, 1994 was $25 million.
The credit facility expires in September 1995. Under this facility,
accounts receivable, inventory and all fixed assets other than real property,
with the exception of certain real property located in Mountainside, New
Jersey, are pledged as collateral. Borrowings are limited to 80% of the unpaid
face amount of eligible accounts receivable, plus the lesser of 50% of eligible
net inventory or $18 million. Letters of credit, which are included in the
borrowing base formula, are limited to $5 million. Letters of credit under
this facility at March 31, 1994 were $1.6 million. Borrowing under this
facility bears interest at the lending bank's prime rate. The agreement also
gives the Company the option of using the London Interbank Offered Rate (LIBOR)
plus two percentage points. At March 31, 1994, the Company had $25 million of
borrowings using LIBOR. The agreement contains requirements for a minimum
tangible net worth of $60 million at March 31, 1994; a quarterly maximum total
liabilities to tangible equity ratio of 1.0 to 1.0 at March 31, 1994; a minimum
annual working capital level of $40 million; a minimum annual cash flow
coverage ratio of 1.2 to 1.0; and minimum net income of $4 million per year
commencing on March 31, 1993. In addition, the agreement requires the Bank's
approval for the repurchase of the Company's common stock, and provides that
quarterly dividend payments cannot exceed 25% of the Company's cumulative net
income in each year. At March 31, 1994, $0.5 million was available for
dividends.
The $9.2 million term loan is with the same lenders as the revolving
credit line. It is secured by the same collateral, and is due and payable on
August 31, 1998. Principal payments of $360,000 are due and payable on the
last day of each quarter through June 30, 1998, with a final balloon payment of
$3,040,000 due and payable on August 31, 1998. Interest accrues at the lending
bank's prime rate plus 1/4 percentage point, but in accordance with the loan
agreement will be reduced to the prime rate for fiscal 1995 since the Company
exceeded $6.0 million in net income for fiscal year 1994. Interest is payable
monthly.
Other
Other long-term debt is comprised principally of an obligation due
under a collateralized borrowing arrangement with a fixed interest rate of 3%
due December 2004.
Debt Maturities
<TABLE>
<S> <C>
1995 (current) . . . . . . . . . . . . . . . . . $ 1,479,000
1996 . . . . . . . . . . . . . . . . . . . . . . 26,481,000
1997 . . . . . . . . . . . . . . . . . . . . . . 1,482,000
1998 . . . . . . . . . . . . . . . . . . . . . . 1,483,000
1999 . . . . . . . . . . . . . . . . . . . . . . 3,444,000
Thereafter . . . . . . . . . . . . . . . . . . . 278,000
---------------
Total . . . . . . . . . . . . . . . . . $34,647,000
===============
</TABLE>
13
<PAGE> 15
7. STOCKHOLDERS' EQUITY AND EMPLOYEE STOCK OPTIONS
Under the Company's stock option plan, options to purchase shares of
the Company's common stock have been granted to officers, key employees, and
two officers/directors at prices determined by the Board of Directors which
may not be less than 100% of the fair market value at date of grant.
At March 31, 1994, there were 230,537 options outstanding, of which
63,914 were exercisable at that date. The remaining options for 166,623 shares
are exercisable on various dates through October 1998.
The table below summarizes stock option transactions:
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Options outstanding, beginning of the year 169,679 375,543 418,489
($5.50-$29.81 per share) . . . . . . . . .
Options granted ($5.50-$18.00 per share) . . 146,500 -- 138,349
Options exercised ($5.50-$13.44 per share) . (57,415) (37,812) --
Options expired and cancelled . . . . . . . . (28,227) (168,052) (181,295)
----------- ----------- -----------
Options outstanding, end of the year . . . . 230,537 169,679 375,543
=========== =========== ===========
Aggregate option price . . . . . . . . . . . $ 2,406,531 $ 2,002,194 $ 4,596,270
Options exercisable ($7.50-$29.81 per share) 63,914 107,973 202,022
</TABLE>
8. EMPLOYEE BENEFIT PLANS
The Company has an incentive bonus plan which provides for cash
payments to selected employees based upon formulas approved by the Board of
Directors. Provisions for awards under the plan approximated $1,419,000 in
1994, $779,000 in 1993 and $226,000 in 1992. The Company has two defined
contribution savings plans. Expenses related to these plans were $1,786,000,
$1,493,000, and $1,106,000 in 1994, 1993, and 1992, respectively. A division
of the Company also makes contributions to a union-sponsored multi-employer
pension plan in accordance with the negotiated labor contract. Contributions
to the plan were $226,000, $218,000 and $179,000 in 1994, 1993 and 1992,
respectively.
Effective April 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106, ("SFAS No. 106") "Employers' Accounting for
Postretirement Benefits Other Than Pensions". This statement requires that the
cost of these benefits, which are primarily health care related, be recognized
in the financial statements during the employee's active working career. The
Company's previous practice was to recognize expense as claims were paid. The
plan maintained by the Company provides postretirement benefits to union
employees at one of the Company's divisions. Adopting the new standard created
a previously unrecognized obligation covering prior years. This transition
obligation, estimated at $2.9 million, before tax effects, is being amortized
on a straight-line basis over the average remaining service life of active
employees, estimated by the Company to be approximately 20 years. During
fiscal year 1994, the Company adopted an amendment to the plan resulting in a
decrease of $859,000 to the transition obligation. The current period charge
was $443,000 before tax effects. The estimated current period charge, using
the Company's previous practice of recognizing expense
14
<PAGE> 16
as claims were paid, would have been approximately $127,000 before tax effects.
Accrued postretirement benefit cost is included in other liabilities on the
balance sheet.
The periodic postretirement benefit cost for the year ended March 31,
1994, included the following components:
<TABLE>
<S> <C>
Service cost (benefits earned during the year) . . . . . . . . . . . . . . . . . . . . . . $ 124,000
Interest cost on projected postretirement benefit obligation . . . . . . . . . . . . . . . 196,000
Amortization of transition obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,000
------------
Total periodic postretirement benefit cost . . . . . . . . . . . . . . . . . . . . . . $ 443,000
============
</TABLE>
The funded status and accrued postretirement benefit cost on March 31,
1994 are as follows:
Accumulated postretirement benefit obligation:
<TABLE>
<S> <C>
Retirees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (893,000)
Fully eligible plan participants . . . . . . . . . . . . . . . . . . . . . . . . . . . (295,000)
Other active plan participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,149,000)
------------
Accumulated postretirement benefit obligation . . . . . . . . . . . . . . . . . . . . . . . (2,337,000)
Plan assets at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
------------
Accumulated postretirement benefit obligation in excess of plan assets . . . . . . . . . . (2,337,000)
Unrecognized net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,000
Unrecognized transition obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,927,000
------------
Accrued postretirement benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (316,000)
============
</TABLE>
The assumptions used in accounting for the plan in 1994 were a 14%
health care cost trend rate for substantially all participants (decreasing 1%
each year to 10% in the year 1998 and then decreasing 0.5% each year to 6% in
the year 2006 and beyond) and an 8% discount rate. As of March 31, 1994, the
discount rate used to measure the accumulated postretirement benefit obligation
was changed to 7.5%. A 1% increase in the health care trend rate would
increase the accumulated postretirement benefit obligation by 14.2% at year end
1994 and the net periodic cost by 22.8% for the year.
15
<PAGE> 17
9. COMMITMENTS
Rent expense under operating leases for the years ended March 31,
1994, 1993, and 1992 was $1,450,000, $1,150,000, and $1,731,000, respectively.
The Company has no material capital leases.
The Company and its subsidiaries have minimum rental commitments under
noncancellable operating leases (relating primarily to leased buildings) which
are as follows:
<TABLE>
<S> <C>
Year ending March 31:
1995 . . . . . . . . . . . . . . . . . . . . . . $ 1,943,000
1996 . . . . . . . . . . . . . . . . . . . . . . 1,850,000
1997 . . . . . . . . . . . . . . . . . . . . . . 1,702,000
1998 . . . . . . . . . . . . . . . . . . . . . . 926,000
1999 . . . . . . . . . . . . . . . . . . . . . . 584,000
Thereafter . . . . . . . . . . . . . . . . . . . 1,789,000
------------
Total . . . . . . . . . . . . . . . . . $ 8,794,000
============
</TABLE>
Included in the above amounts is the aggregate lease commitment
associated with the Company's former corporate office. In connection with the
relocation of the corporate office, the loss incurred on this lease (net of
estimated sublease rentals) and other costs associated with the move totalling
$0.5 million and $2.7 million were charged to expense during the years ended
March 31, 1993 and March 31, 1992, respectively. Other-long-term liabilities
at March 31, 1994, include a $0.6 million obligation associated with the lease.
The Company has consulting agreements with certain former members of
the Board of Directors and former executives. The remaining commitments under
such agreements for the year ending March 31, 1994 are $819,000.
10. CONTINGENCIES
The Company has commenced environmental site assessments and cleanup
feasibility studies to determine the presence, extent and sources of any
environmental contamination at two facilities in Pennsylvania, and one facility
in Illinois. 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 sites, a feasibility study has
been prepared and submitted to the state. Based upon that study and upon
claims for recovery which the Company has against others, a pre-tax charge of
$3.6 million (net of $1.2 million in probable recoveries) was recorded in March
1993 for estimated cleanup costs at the Pennsylvania sites. At March 31, 1994,
the balance of this clean-up reserve was $3 million (net of $1.2 million in
probable recoveries). In addition, the Company is pursuing recovery of a
portion of such 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 1997.
In addition, the Company has been named as a potentially responsible
party in various proceedings pending in several other states in which it is
alleged that the Company was a generator of waste that was sent to landfills
and other treatment facilities at which environmental remediation activities
are pending. It is not possible to reliably estimate the costs associated with
any remedial work to be performed until the studies at the Illinois site and
these other sites have been completed, the scope of work defined and a method
of remediation selected and approved by the relevant state authorities.
16
<PAGE> 18
In February 1990, a lawsuit was brought in Los Angeles Superior Court
against the Company and certain of its former officers by Special Devices, Inc.
("Special Devices"), a landlord at one of the Company's former California
facilities, and Placerita Land and Farming Company, a predecessor of Special
Devices, in which plaintiffs seek to recover in excess of $15 million for
compensatory damages and an unspecified sum for punitive damages. The
plaintiffs allege that the Company's waste handling practices have diminished
the value of the leased property, reduced future rental income and caused
plaintiffs to incur substantial defense costs in connection with related legal
proceedings. In November 1985, the Company entered into agreements with the
California Department of Health Services obligating the Company to clean up
soil and groundwater contaminated by hazardous materials on the property.
Substantially all of the remedial work has been performed, with ongoing
monitoring and water treatment activity expected to continue until 2002.
Two of the Company's general liability insurance carriers have filed
actions in California Superior Court asking the Court to determine that their
policies do not cover California environmental cleanup costs, damages to
neighboring landowners for alleged personal injury and property damage, and
related defense costs. The Company continues to believe that these policies
cover such costs and is negotiating with the carriers to settle these actions.
The Company is also engaged in various other legal proceedings
incidental to its businesses.
It is the opinion of the management that, after taking into
consideration information furnished by its counsel, the above matters will not
have a material effect on the consolidated financial position of the Company.
11. SEGMENT INFORMATION
The Company develops, manufactures and sells a wide range of
technically sophisticated products. Industrial Products include: (1)
gear-driven band fasteners and threaded fasteners for the marine, auto, toy and
aircraft industries; (2) electrical wiring harnesses and (3) service and
distribution of drafting (CADD) display workstations. Aerospace Products
include: (1) lifting, control, and restraint devices-principally helicopter
rescue hoists and external hook systems, winches and hoists for aircraft and
weapon-handling systems, and aircraft and cargo tie-downs; (2) custom
electrical interconnection systems and their components used in computers,
communications equipment, aircraft, and military applications and (3)
metallized-glass-fiber products (referred to as chaff and used to reflect
hostile radar signals) and related devices and systems.
Operating profit is net sales less operating expenses. General
corporate expenses, interest and income taxes have not been deducted in
determining operating profit. Assets, depreciation and amortization, and
capital expenditures are those identifiable to a particular segment by their
use. Approximately 20% of sales in 1994, 1993 and 1992 were derived from sales
to the United States Government and its prime contractors which are
attributable primarily to the Aerospace Products segment.
17
<PAGE> 19
As a result of the sale of the Financial Systems division and the
discontinuance of the Computer Graphics manufacturing operation, the
Advanced-Technology products segment has been eliminated as a reporting
segment.
<TABLE>
<CAPTION>
OPERATING DEPRECIATION/
FISCAL PROFIT CAPITAL AMORTIZATION IDENTIFIABLE
YEAR SALES (LOSS)(1) EXPENDITURES(2) EXPENSE(2) ASSETS
------ ----------- ---------- --------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Industrial Products . . . . 1994 $66,436,000 $9,165,000 2,519,000 $2,461,000 48,187,000
1993 36,955,000 7,341,000 1,784,000 1,122,000 24,273,000
1992 35,322,000 6,996,000 1,339,000 956,000 25,168,000
Aerospace Products . . . . 1994 $54,071,000 $8,113,000 1,862,000 $1,552,000 51,936,000
1993 58,958,000 8,540,000 2,993,000 1,826,000 54,405,000
1992 54,945,000 5,000 794,000 1,810,000 52,834,000
- - ---------------------------------------------------------------------------------------------------------------
Total Segments . . . . . . 1994 120,507,000 17,278,000 4,381,000 4,013,000 100,123,000
1993 95,913,000 15,881,000 4,777,000 2,948,000 78,678,000
1992 90,267,000 7,001,000 2,133,000 2,766,000 78,002,000
Corporate . . . . . . . . . 1994 -- (5,791,000) 57,000 282,000 25,734,000
1993 -- (9,301,000)(3) 97,000 227,000 19,085,000
1992 -- (6,058,000) 37,000 64,000 26,903,000
Corporate Interest and Other
Income . . . . . . . . . 1994 -- 839,000 -- -- --
1993 -- 635,000 -- -- --
1992 -- 317,000 -- -- --
Interest Expense . . . . . 1994 -- (1,556,000) -- -- --
1993 -- (696,000) -- -- --
1992 -- (2,239,000) -- -- --
Consolidated . . . . . . . 1994 120,507,000 10,770,000 4,438,000 4,295,000 125,857,000
1993 95,913,000 6,519,000 4,874,000 3,175,000 97,763,000
1992 90,267,000 (979,000) 2,170,000 2,830,000 104,905,000
===============================================================================================================
</TABLE>
(1) Operating profit represents net sales less operating expenses
which include all costs and expenses related to the Company's
operations in each segment. General corporate expenses and
investments and other income earned at the corporate level are
included in the corporate section. Interest expense is also
separately reported. The amount of the "Consolidated" line
represents "Income from Continuing Operations Before Income
Taxes."
(2) The capital expenditures and depreciation/amortization expense
from discontinued operations are excluded from the above
schedule.
(3) Corporate operating profit in 1993 includes a pre-tax charge
of $3,613,000 for estimated future environmental site
remediation costs.
18
<PAGE> 20
In 1994, 1993 and 1992, the Company had revenues from export
sales as follows:
<TABLE>
<CAPTION>
1994 1993(a) 1992(a)
------------- ------------- -------------
<S> <C> <C> <C>
LOCATION
Middle East . . . . . . . . . . . . . . . . . . . . . . . . $ 158,000 $ 128,000 $ 219,000
Mexico, Central and South America . . . . . . . . . . . . . 765,000 321,000 984,000
Western Europe . . . . . . . . . . . . . . . . . . . . . . 10,682,000 13,448,000 11,601,000
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . 4,812,000 1,753,000 1,544,000
Pacific and Far East . . . . . . . . . . . . . . . . . . . 5,637,000 3,483,000 3,423,000
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,000 323,000 614,000
------------- ------------- -------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,199,000 $ 19,456,000 $ 18,385,000
============= ============= =============
</TABLE>
- - ---------------
(a) Restated to reflect only continuing operations.
12. UNAUDITED QUARTERLY FINANCIAL DATA (in thousands except per share
amounts)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
1994
- - ----
Total Revenues . . . . . . . . . . 24,006 $29,207 $33,525 $34,801 $121,539
Gross Profit . . . . . . . . . . . 7,279 8,406 9,834 10,698 36,217
Income from Continuing Operations . 1,653 1,530 1,982 1,703 6,868
Income (loss) from Discontinued (139) (299) (377) 831 16
Operations . . . . . . . . . . . .
Net Income . . . . . . . . . . . . 1,514 1,231 1,605 2,534 6,884
Earnings (Loss) Per Share:
Income from Continuing Operations $ 0.32 $ 0.30 $ 0.39 $ 0.33 $ 1.34
Income (loss) from Discontinued (0.03) (0.06) (0.07) 0.16 --
Operations . . . . . . . . . . . .
Net Income . . . . . . . . . . . $ 0.30(a) $ 0.24 $ 0.31(a) $ 0.49 $ 1.34
1993
- - ----
Total Revenues . . . . . . . . . . 23,127 $22,336 $23,952 $27,317 $ 96,732
Gross Profit . . . . . . . . . . . 6,750 6,363 7,150 9,211 29,474
Income from Continuing Operations . 1,265 957 1,469 1,503 5,194
Income (loss) from Discontinued 150 45 (172) (84) (61)
Operations . . . . . . . . . . . .
Net Income . . . . . . . . . . . . 1,415 1,002 1,297 1,419 5,133
Earnings (Loss) Per Share:
Income from Continuing Operations $ 0.25 $ 0.19 $ 0.29 $ 0.29 $ 1.02
Income (loss) from Discontinued
Operations . . . . . . . . . . 0.03 0.01 (0.03) (0.02) (0.01)
Net Income . . . . . . . . . . . $ 0.28 $ 0.20 $ 0.25(a) $ 0.28(a) $ 1.01
</TABLE>
- - ---------------
(a) Per share amounts do not always add because the figures are
required to be independently calculated.
19
<PAGE> 21
TRANSTECHNOLOGY CORPORATION
SCHEDULE I
CONSOLIDATED MARKETABLE SECURITIES AND OTHER SECURITY INVESTMENTS
FOR YEARS ENDED MARCH 31, 1994, MARCH 31, 1993 AND MARCH 31, 1992
<TABLE>
<CAPTION>
DESCRIPTION
- - -----------
NUMBER OF BALANCE SHEET
1994 SHARES HELD COST MARKET VALUE CARRYING AMOUNT
- - ---- ----------- ---- ------------ ---------------
<S> <C> <C> <C> <C>
MACE SECURITY INTERNATIONAL
COMMON STOCK . . . . . . . . 465,000 $ 3,371,000 $ 1,802,000 $ 1,802,000
1993
- - ----
-- -- -- -- --
1992
- - ----
-- -- -- -- --
</TABLE>
20
<PAGE> 22
TRANSTECHNOLOGY CORPORATION
SCHEDULE VIII
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
For Years Ended March 31, 1994, March 31, 1993 and March 31, 1992
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING OF COSTS AND OTHER AT END
DESCRIPTION PERIOD EXPENSES ACCOUNTS(A) DEDUCTIONS(B) OF PERIOD
- - ----------- ------------ ---------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C>
1994
- - ----
Allowances for
doubtful accounts
and sales returns $318,000 $102,000 $72,000 $221,000 $271,000
1993
- - ----
Allowances for
doubtful accounts
and sales returns $ 268,000 $124,000 $31,000 $105,000 $318,000
1992
- - ----
Allowances for
doubtful accounts
and sales returns $ 959,000 $ 55,000 $12,000 $758,000(C) $268,000
</TABLE>
(A) Amount consists primarily of sales adjustments charged to revenue
accounts.
(B) Amount represents write-off of uncollectible accounts.
(C) Amount includes $576,000 reserves for uncollectible accounts of
discontinued operations included in assets of discontinued operations.
21
<PAGE> 23
TRANSTECHNOLOGY CORPORATION
SCHEDULE X
CONSOLIDATED SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR YEARS ENDED MARCH 31, 1994, MARCH 31, 1993 AND MARCH 31, 1992
The amounts summarized below were charged to costs and expenses:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Maintenance and
Repairs $2,352,000 $1,631,000 $1,819,000
</TABLE>
22
<PAGE> 24
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Directors and Executive Officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME TITLE
- - ---- -----
<S> <C>
Michael J. Berthelot Chairman of the Board of Directors, President and Chief Executive Officer
Patrick K. Bolger Executive Vice President, Chief Operating Officer and Director
Chandler J. Moisen Senior Vice President, Treasurer and Chief Financial Officer
Valentina Doss Vice President, General Counsel and Secretary
Walter Belleville Director
H. Gary Carlson Director
Thomas V. Chema Director
George S. Hofmeister Director
James A. Lawrence Director
Richard Mascuch Director
</TABLE>
MR. BERTHELOT, 44, has been a director of the Company since January 1991. In
September 1991, he became Vice Chairman of the Company's Board of Directors and
on January 1, 1992, he became acting President and Chief Executive Officer of
the Company. From July to September 1992, Mr. Berthelot was removed from his
Vice Chairman, acting President and Chief Executive Officer positions. In
October 1992, Mr. Berthelot became the Company's Chairman of the Board of
Directors, President and Chief Executive Officer. Since September 1981, Mr.
Berthelot has been Chief Executive Officer of Canterbury Holdings Corporation
("Canterbury"), a private investment company, and, from 1989 to 1992, he was a
partner in the certified public accounting/management consulting firm of
Barnes, Wendling, Cook & O'Conner, Inc. Mr. Berthelot is also a director of
EWI, Inc., a manufacturer of automotive parts.
MR. BOLGER, 59, joined the Company as Group Vice President--Aerospace Products
in January 1990 and became Executive Vice President, Chief Operating Officer
and a director in October 1992. From August to October 1992, Mr. Bolger served
as one of three executive officers in the Company's Office of the President.
From 1988 to December 1989, Mr. Bolger operated several small businesses as a
private investor and consultant. From 1982 to 1988, Mr. Bolger was Group Vice
President of the Hamilton Standard Division of United Technologies, which
manufactures control systems for the aerospace industry.
Mr. MOISEN, 60, has served as Vice President, Treasurer and Chief Financial
Officer of the Company since August 1991 and as Senior Vice President since
October 1992. From August to October 1992 Mr. Moisen served as one of three
executive officers in the Company's Office of the President. From 1989 to
1991, Mr. Moisen served as Senior Vice President and Chief Financial Officer
of G-Tech Corp., a computer hardware and software manufacturer.
Mrs. DOSS, 43, served the Company as Vice President of Administration from
August 1991 to September 1993, as Vice President and General Counsel since
September 1993 and as Secretary since December 1991. Prior to that time Mrs.
Doss served as the Company's Senior Counsel and Assistant Secretary since 1988
and as Associate Legal Counsel from 1983 to 1988.
MR. BELLEVILLE, 67, has been a director of the Company since June 1992. From
1983 to the present, Mr. Belleville has been Chief Executive Officer and
Chairman of the Board of ATI Machinery, Inc., the largest Caterpillar tractor
rental and leasing company in the western United States. Additionally, since
1985 he has been Chairman of the Board of Sav-Trac of Arizona, Inc., a heavy
equipment repair facility, President of Happy Horizons, Inc., an aircraft
brokerage firm, and President of Pacific Plus, Inc., a consulting firm
specializing in turnarounds of troubled companies.
23
<PAGE> 25
DR. CARLSON, 58, is a consultant specializing in business formations and
turnarounds and is currently the President and a director of GATH Industries,
Inc., which provides consulting services to the Company, as well as other
clients, in areas of operations and manufacturing. During fiscal 1994 the
Company paid $272,000 to GATH Industries, Inc. for such consulting services.
From 1987 until he sold the business in 1991, Dr. Carlson was the Chairman,
President, and Chief Executive Officer of Interconnection Products
Incorporated, a privately-held electronic connector company.
MR. CHEMA, 46, has been a partner in the law firm of Arter & Hadden since 1989,
specializing in energy and telecommunications consulting. Since January 1990,
he has served as Chairman of the Ohio Building authority, an independent state
agency that annually issues approximately $150 million of bonds and is
responsible for financing and operating state office buildings and other
facilities for the State of Ohio. Since May 1990, Mr. Chema has served as
Executive Director of the Gateway Economic Development Corporation of Greater
Cleveland, a not-for-profit corporation chartered to build a baseball stadium
and arena in downtown Cleveland. From January 1985 through April 1989, Mr.
Chema served as Chairman and Chief Executive Officer of the Public Utilities
Commission of Ohio, a state agency responsible for regulating investor-owned
utilities and transportation companies in Ohio.
MR. HOFMEISTER, 42, presently is Chairman of the Board and Chief Executive
Officer of EWI, Inc., a position he has held since April 1991. From November
1989 to present, Mr. Hofmeister has been Chairman of the Board and Chief
Executive Officer of American Metals Industries, Inc., a metal working business
that is no longer operating. From 1987 through 1989, Mr. Hofmeister was
Chairman and Chief Executive Officer of Alliance Machine, which designs and
builds steel mill equipment. In 1990, American Metals Industries, Inc.
acquired American Tube & Wire Fabricators, Inc., which manufactured automotive
parts through a secured party private sale, and Mr. Hofmeister became President
of the subsidiary. In 1991, American Tube & Wire Fabricators, Inc. filed a
petition for bankruptcy under Chapter 7 of the Bankruptcy Act and subsequently
dissolved. In February 1993, American Metals Industries, Inc. sold a
subsidiary, Transue & Williams Stamping Co., of which Mr. Hofmeister was an
executive officer prior to the sale. Shortly following the sale, the new
owners caused Transue & Williams Stamping Co. to file a petition for
reorganization under Chapter 11 of the Bankruptcy Code.
MR. LAWRENCE, 41, is President of the Asia/Middle East/Africa Group of
Pepsi-Cola International, the unit of Pepsico responsible for soft drink
operations outside North America. From 1992 to 1993 he served as an Executive
Vice President of Pepsi-Cola International. From 1983 to 1992, Mr. Lawrence
was a partner of The LEK Partnership, a general partnership organized in
England to provide management consulting and merger and acquisition advisory
services. From 1986 to 1992, he was also the Chairman of LEK Consulting Inc.,
the United States operating subsidiary of the partnership. Mr. Lawrence has
held directorships with Continental Airline Holdings, Inc. (the parent company
of Continental Airlines) from 1990 to 1993, Fuqua Industries from 1991 to 1992,
and Equivest Inc. (formerly Realty South Investors) from 1991 to 1992. Since
1993, he continues to serve on the Boards of American Re-Insurance Corporation
and the reorganized Transworld Airlines.
MR. MASCUCH, 74, has been a Director of the Company since the Company's 1982
merger with Breeze Corporations, Inc., where Mr. Mascuch served as President
and a director. Mr. Mascuch has been a private investor for at least the past
five years.
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended March 31, 1994, 1993 and 1992, of those persons who were, at March 31,
1994 (i) the chief executive officer and (ii) the other executive officers of
the Company who received in excess of $100,000 in total annual salary and bonus
for fiscal 1994. During each fiscal year in the three year period ended March
31, 1994, no executive officer named above received perquisites and other
personal benefits, securities or property in an aggregate amount in excess of
the lesser of $50,000 or 10% of such executive officer's annual salary and
bonus.
24
<PAGE> 26
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------- ------
RESTRICTED SECURITIES PAYOUTS
OTHER ANNUAL STOCK UNDERLYING ------- ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS LTIP COMPENSATION
PRINCIPAL POSITION YEAR (1)($) (2)($) (3)(4)($) (5)(#) (#) PAYOUTS (4)(6)($)
------------------ ---- ------ ------ --------- ------ ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael J. Berthelot 1994 295,000 137,088 41,931 -- 60,000 -- 20,824
President and Chief 1993 212,308 194,800 -- -- -- -- 2,832
Executive Officer 1992 102,105 -- -- -- -- -- --
Patrick K. Bolger 1994 185,000 91,392 28,337 2,127 40,000 -- 14,242
Executive Vice 1993 175,573 81,581 -- -- -- -- 11,539
President and Chief 1992 158,144 -- -- -- 2,265 -- --
Operating Officer
Chandler J. Moisen 1994 175,000 78,872 30,334 2,127 15,000 -- 13,796
Senior Vice President 1993 167,212 80,858 -- -- -- -- 252,890(7)
and Chief Financial 1992 95,059 -- -- -- 10,000 -- --
Officer
Valentina Doss 1994 110,800 41,521 16,078 1,509 7,500 -- 8,273
Vice President, 1993 98,339 55,287 -- -- -- -- 79,993(8)
General Counsel and 1992 84,488 -- -- -- 11,568 -- --
Secretary
</TABLE>
25
<PAGE> 27
(1) Amounts shown include compensation earned and received by executive
officers as well as amounts earned but deferred at the election of
those officers under the Company's 401(K) plan.
(2) Represents payments made to executive officers pursuant to the
Company's Incentive Compensation Plan.
(3) Fiscal 1994 amounts represent (i) fair market value on date of award
of unrestricted stock awards and (ii) dividends paid on restricted
stock not yet vested.
(4) In accordance with the transitional provisions of the new executive
compensation disclosure rules adopted by the Securities and Exchange
Commission, amounts of Other Annual Compensation and All Other
Compensation for fiscal year 1992 are excluded from this table.
(5) An aggregate of 10,025 shares of restricted shares were held for the
benefit of the executive officers at fiscal year-end. Such shares
vest in annual increments of one-third each year. The executive
officer receives dividends on issued but unvested shares.
(6) These amounts include the Company's contributions to the Retirement
Savings Plan and insurance premiums paid by the Company under the
Company's group benefits plan.
(7) The amount includes relocation expenses of $245,538 paid on behalf of
Mr. Moisen.
(8) The amount includes relocation expenses of $73,407 paid on behalf of
Ms. Doss.
INCENTIVE PLANS
The Fiscal Year 1994 Incentive Compensation Plan (the "Incentive Compensation
Plan") provides for the award of cash bonuses from profits based upon operating
results. Results are measured by a wide range of goals which must be met,
including goals for operating income, return on investment, individual
strategic and/or operational issues, cash flow and annual income growth. The
stock feature of the Incentive Compensation Plan provides for the award of
restricted stock and stock options to corporate officers, division presidents
and other key personnel. The number of restricted shares awarded is equal to
shares that could be purchased at $9.625 per share (the closing price of the
stock on the date the Board of Directors approved the Plan) with 25% of the
cash bonus pool. Voting and dividend rights vest immediately. Restrictions on
sale lapse over three years in annual one-third increments. Shares for which
restrictions have not yet expired are forfeited upon termination of employment.
Stock options are awarded at an exercise price equal to the fair market value
of the shares on the date of grant. Options become exercisable in annual equal
installments over three years and expire five years after grant date. Both
restricted stock and stock options are awarded pursuant to the 1992 Long Term
Incentive Plan, which provides the mechanism for awarding various kinds of
stock based awards.
RETIREMENT PLANS
The Company maintains three retirement plans covering substantially all
active employees, two of which are defined contribution plans and one of which
is a defined benefit plan. The TransTechnology Corporation Retirement Savings
Plan (the "Retirement Savings Plan"), a defined contribution plan under Section
401(k) of the Internal Revenue Code, covers non-union employees who have been
employed by the Company for more than one year. Approximately 551 employees
participate in the Retirement Savings Plan. Benefits are payable on retirement,
disability, death, or other separation from service. Participants in the
Retirement Savings Plan may defer receipt and taxation of up to 15% of their
compensation by contributing such compensation to the plan. The Company
contributes a minimum of 3% and a maximum of 6% of employees' compensation to
the Retirement Savings Plan, depending on the level of contribution by each
employee. The other two plans cover approximately 311 members of collective
bargaining units.
EXECUTIVE LIFE INSURANCE PLAN
The Company maintains life insurance policies for its executive officers which
supplement the group life policies available to all salaried employees.
26
<PAGE> 28
STOCK OPTIONS
The following table sets forth information concerning options granted to those
persons who were the chief executive officer and the other executive officers
of the Company during fiscal 1994.
OPTION/SAR GRANTS IN FISCAL 1994
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE OF ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
----------------- -----------
% OF
TOTAL
OPTIONS/
SARS EXERCISE
OPTIONS/ GRANTED TO OR BASE
SARS EMPLOYEES PRICE
GRANTED IN FISCAL $ PER EXPIRATION
NAME (#)(1) YEAR SHARE DATE 5%($) 10%($)
---- ------ ---- ----- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Berthelot 60,000 42 9.6250 5-28-98 159,553 352,570
Patrick K. Bolger 40,000 28 9.6250 5-28-98 106,368 235,046
Chandler J. Moisen 15,000 11 9.6250 5-28-98 39,888 88,142
Valentina Doss 7,500 5 9.6250 5-28-98 19,944 44,071
</TABLE>
(1) Amounts shown represent stock options only. No stock appreciation
rights (SARs) were awarded.
The following table summarizes option exercises during fiscal 1994 and the
total number and value of exercisable and unexercisable stock options held by
each of the named executive officers on March 31, 1994, the last day of fiscal
1994:
27
<PAGE> 29
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1994
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FY-END(#) AT FY-END($)
SHARES ------------ ------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISED REALIZED UNEXERCISABLE UNEXERCISABLE
---- --------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Michael J. Berthelot -- -- 0/60,000 0/345,000
Patrick K. Bolger -- -- 3,835/44,915 16,485/228,780
Chandler J. Moisen 3,333 13,732 0/18,334 0/112,505
Valentina Doss 4,867 28,174 0/11,357 0/80,167
</TABLE>
The following table sets forth information concerning long-term incentive plan
awards in the form of restricted stock awarded during fiscal 1994 to the chief
executive officer and the other executive officers of the Company.
LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL 1994(1)
<TABLE>
<CAPTION>
PERFORMANCE
NUMBER OF OR OTHER
SHARES, UNITS PERIOD UNTIL
OR OTHER MATURATION
NAME RIGHTS(#) OR PAYOUT
---- --------- ---------
<S> <C> <C>
Michael J. Berthelot 4,870 3 years
Patrick K. Bolger 3,247 3 years
Chandler J. Moisen 2,923 3 years
Valentina Doss 1,462 3 years
</TABLE>
(1) Restricted stock awards are calculated based upon a cash bonus pool,
which is itself based upon annual profit. The number of restricted
shares awarded is equal to shares that could be purchased at $9.625
(the closing price of the stock on the date of the award) with 25% of
the cash bonus pool, which is described above.
28
<PAGE> 30
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of June 6, 1994 (except as set forth in the
footnotes) by (i) each person who is known by the Company to be the beneficial
owner of more than 5% of the Common Stock, (ii) each director of the Company,
individually, (iii) each executive officer of the Company, individually, and
(iv) all directors and executive officers as a group:
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
SHARES OF OF COMMON
NAME COMMON STOCK(1) STOCK(1)
---- --------------- --------
<S> <C> <C>
Arch C. Scurlock
c/o Research Industries, Incorporated
123 North Pitt Street
Alexandria, Virginia 22314 1,146,740(2) 22.0
Heine Securities Corporation
51 J.F.K. Parkway
Short Hills, New Jersey 07078 305,800(3) 5.9
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 295,600(4) 5.7
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109 476,800(5) 9.1
Michael J. Berthelot 308,098(6) 6.0
Patrick K. Bolger 26,970(7) *
Chandler J. Moisen 27,389(8) *
Valentina Doss 6,456(9) *
Walter Belleville 2,000 *
Richard Mascuch 22,272 *
George S. Hofmeister 21,000 *
Thomas V. Chema 714 *
H. Gary Carlson 2,850 *
James A. Lawrence 25,200 *
Directors and executive officers as a group
(10 persons) 442,949(10) 8.5
</TABLE>
* Less than 1%.
(1) Except as set forth in these footnotes, the persons named in this
table have sole voting power and investment power with respect to all
shares of capital stock shown as beneficially owned by them, subject
to community property laws where applicable and the information
contained in this table and these notes.
(2) Includes 1,100,000 shares of Common Stock owned by Research
Industries, Incorporated of which Dr. Scurlock owns 95% of the
outstanding shares of stock.
(3) According to a February 9, 1994 filing on Schedule 13G with the
Securities and Exchange Commission, Heine Securities Corporation and
Michael F. Price exercise voting control and dispositive power over
all 305,800 shares. Heine Securities Corporation is a registered
investment advisor and Mr. Price is its President.
(4) Based on a February 9, 1994 filing on Schedule 13G with the Securities
and Exchange Commission, the Dimensional Fund Advisors Inc.
("Dimensional") owned this amount of shares
29
<PAGE> 31
of Common Stock as of February 9, 1994. Dimensional, a registered
investment advisor, is deemed to have beneficial ownership of this
amount of shares of Common Stock at such date, all of which shares are
held in portfolios of DFA Investment Dimensions Group Inc., a
registered open-end investment company, the DFA Investment Trust
Company, a registered open-end investment company, or the DFA Group
Trust and the DFA Participating Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional Fund
Advisors Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of such shares.
(5) Based on information supplied by FMR Corp. as of February 14, 1994.
Includes 362,400 shares deemed to be beneficially owned by Fidelity
Management & Research Company, which shares are held in portfolios of
companies for which Fidelity Management & Research Company serves as
investment advisor. Also includes 114,400 shares deemed to be
beneficially owned by Fidelity Management Trust Company as a result of
serving as trustee or managing agent for various private investment
accounts, primarily employee benefit plans. FMR Corp. has, through
these corporations, sole dispositive power with respect to all 476,800
shares and sole voting power with respect to such 114,400 shares.
(6) Includes 19,998 shares issuable with respect to options exercisable
within 60 days of June 6, 1994.
(7) Includes 18,247 shares issuable with respect to options exercisable
within 60 days of June 6, 1994.
(8) Includes 8,334 shares issuable with respect to options exercisable
within 60 days of June 6, 1994.
(9) Includes 3,023 shares issuable with respect to options exercisable
within 60 days of June 6, 1994.
(10) Includes 49,602 shares issuable with respect to options exercisable
within 60 days of June 6, 1994.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See Item 10 above for a description of consulting services provided by
Dr. Carlson.
30
<PAGE> 32
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) List of documents filed as part of the Annual Report:
1. Financial Statements:
Consolidated Balance Sheets at March 31, 1994 and March 31, 1993
Statements of Consolidated Operations for the years ended March
31, 1994, March 31, 1993 and March 31, 1992
Statements of Consolidated Cash Flows for the years ended March
31, 1994, March 31, 1993 and March 31, 1992
Statements of Consolidated Stockholders' Equity for the years
ended March 31, 1994, March 31, 1993 and March 31, 1992
Notes to Consolidated Financial Statements
2. Financial Statement Schedules:
Schedule I - Consolidated Marketable Securities and Other Security
Investments for the years ended March 31, 1994, 1993 and 1992
Schedule VIII - Consolidated Valuation and Qualifying Accounts for
the years ended March 31, 1994, 1993 and 1992
Schedule X - Consolidated Supplementary Income Statement
Information for the years ended March 31, 1994, 1993 and 1992
3. Exhibits:
The exhibits listed on the accompanying Index to Exhibits are
filed as part of this Annual Report.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended March
31, 1994.
31
<PAGE> 33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: August 8, 1994
TRANSTECHNOLOGY CORPORATION
By: /s/Valentina Doss
-----------------------------------
Valentina Doss,
Vice President, General Counsel
and Secretary
32
<PAGE> 34
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Page
Sequentially
Numbered
------------
<S> <C>
3.1 Certificate of Incorporation of the Company.(1)
3.2 Bylaws of the Company.(2)
10.1 1982 Stock Option Plan of the Company, as amended.(3)
10.2 Form of Incentive Stock Option Agreement used under the Company's 1982 Stock
Option Plan.(4)
10.3 Form of Nonqualified Stock Option Agreement used under the Company's 1982 Stock
Option Plan.(4)
10.4 1992 Long Term Incentive Plan of the Company.(5)
10.5 Indemnification Agreement dated February 11, 1987 between the Company and each of
its officers and directors.(6)
10.6 Executive Life Insurance Plan.(7)
10.7 Revolving Loan and Security Agreement dated as of June 21, 1991 between the
Company and National Canada Finance Corp.(8)
10.8 First Amendment to Revolving Loan and Security Agreement dated as of December 12,
1991 between the Company and National Canada Finance Corp.(9)
10.9 Second Amendment to Revolving Loan and Security Agreement dated as of December 10,
1992 between the Company and National Canada Finance Corp.(9)
10.10 Letter Agreement and General Release dated June 27, 1991 between Paul
Grosher and the Company.(11)
10.11 Amended Compensation Agreement dated April 2, 1993 between Arch Scurlock and
the Company.(12)
10.12 Amended Compensation Agreement dated April 2, 1993 between John H. Grover
and the Company.(12)
10.13 Severance and Consulting Agreement dated December 12, 1991 between Ralph
Hutchins and the Company.(10)
10.14 Third Amendment to Revolving Loan and Security Agreement dated August 2, 1993
between the Company and National Canada Finance Corp.(13)
10.15 Form of Restricted Stock Award Agreement used under the Company's 1992 Long Term
Incentive Plan.(13)
21.1 List of Subsidiaries of the Company.(13)
23.1 Independent Auditor's Consent.
</TABLE>
- - ----------------------
(1) Incorporated by reference from the Company's Form 8-A Registration
Statement No. 2-85599 dated February 9, 1987.
(2) Incorporated by reference from the Company's Quarterly Report on Form
10-Q for the Quarter ended September 27, 1992.
33
<PAGE> 35
<TABLE>
<CAPTION>
Page
Sequentially
Numbered
------------
<S> <C>
(3) Incorporated by reference from the Company's Annual Report on Form
10-K for the Fiscal Year ended March 31, 1983.
(4) Incorporated by reference from the Company's Post-Effective Amendment
No. 1 to Form S-8 Registration Statement No. 33-19390.
(5) Incorporated by reference from the Company's Registration Statement on
Form S-8 No. 33-59546 dated March 15, 1993.
(6) Incorporated by reference from the Company's Annual Report on Form
10-K for the Fiscal Year ended March 31, 1987.
(7) Incorporated by reference from the Company's Annual Report on Form
10-K for the Fiscal Year ended March 31, 1989.
(8) Incorporated by reference from the Company's Annual Report on Form
10-K for the Fiscal Year ended March 31, 1991.
(9) Incorporated by reference from the Company's Quarterly Report on Form
10-Q for the Quarter ended December 27, 1992.
(10) Incorporated by reference from the Company's Quarterly Report on Form
10-Q for the Quarter ended December 29, 1991.
(11) Incorporated by reference from the Company's Quarterly Report on Form
10-Q for the Quarter ended September 29, 1991.
(12) Incorporated by reference from the Company's Annual Report on Form
10-K for the Fiscal Year ended March 31, 1993.
(13) Incorporated by reference from the Company's Annual Report on Form
10-K for the Fiscal Year ended March 31, 1994.
</TABLE>
34
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Post-Effective Amendment No. 1
to Registration Statement No. 33-19390, Post-Effective Amendment No. 1 to
Registration Statement No. 2-84205, and Registration Statement No. 33-59546 on
Forms S-8 of our report dated June 20, 1994, appearing in this Annual Report on
Form 10-K/A of TransTechnology Corporation for the year ended March 31, 1994.
S\DELOITTE & TOUCHE
- - ------------------------
Parsippany, New Jersey
August 8, 1994
35
