<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 PREVIOUSLY SUBMITTED ON FILING OF FORM 10-K)
For the fiscal year ended March 31, 1996
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
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Commission file number 1-7872
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TRANSTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-4062211
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
150 Allen Road 07938
Liberty Corner, New Jersey (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (908) 903-1600
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 May 30, 1996, 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 on such date was $90,166,595.
As of May 30, 1996, the registrant had 5,109,228 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
(NONE)
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The undersigned registrant hereby amends its Annual Report on Form 10-K
for the fiscal year ended March 31, 1996 by amending the information required
by Item 7 and Item 8 thereof as set forth herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT
OF OPERATIONS.
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ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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RESULTS OF OPERATIONS
The Company's fiscal year ends on March 31. Accordingly, all references to years
in this Management's Discussion refer to the fiscal year ended March 31 of the
indicated year. Also when referred to herein, operating profit means net sales
less operating expenses, without deduction for general corporate expenses,
interest and income taxes.
Revenue from continuing operations in 1996 was $159.9 million, an increase of
$57.2 million or 56% from 1995, compared with a $19.8 million or 24% increase
from 1994 to 1995. Gross profit in 1996 increased $21.7 million or 71% from
1995, compared with an increase of $5.8 million or 23% from 1994 to 1995.
Operating profit from continuing operations for 1996 was $28.6 million, an
increase of $12 million or 72% from 1995, compared with an increase of $2.9
million or 21% from 1994 to 1995. Changes in sales, operating profit and new
orders from continuing operations are discussed below by segment, and additional
information regarding industry segments is contained in Note 13 of the Notes to
Financial Statements.
Net income, including discontinued operations, for 1996 was $7.4 million or
$1.45 per share, compared to $2.5 million or $.50 per share in 1995. These
changes in net income were affected both by operating profit, as discussed in
the Business Segment sections below, and by discontinued operations, as
discussed in the Discontinued Operations section below. Net loss from
discontinued operations, including disposal losses, was $1.1 million or $.22 per
share in 1996 and $4.9 million or $.95 per share in 1995.
In the fourth quarter of 1996 the Company recorded a $2.6 million pre-tax charge
to continuing operations to write-down the carrying value of equity securities
acquired from the sale of its tear gas division to their current market value
when the decline in value of those securities was determined to be other than
temporary. Unrealized holding losses on these securities had previously been
recorded as a direct reduction to stockholders' equity. In 1996 the company sold
the domestic and European portions of its computer graphics service operations,
which operated under the name TransTechnology Systems & Services, its
Electronics division and the chaff avionics product line as discussed below in
the Discontinued Operations section. On June 30, 1995 the Company acquired the
Seeger Group of companies as discussed below in the Acquisitions section and the
Business Segment section.
In the fourth quarter of 1995 the Company sold primarily all of the assets and
business of its chaff products operation as discussed below in the Discontinued
Operations section. In August, 1994 the Company acquired Industrial Retaining
Ring Company as discussed below in the Acquisitions section and the Business
Segment section.
In the fourth quarter of 1994, the Company recorded a reduction of $0.8 million
of Federal income tax provisions. Also in the fourth quarter of 1994 the Company
sold its tear gas division as discussed below in the discontinued operations
section. In August 1993, the Company acquired the Palnut fastener division as
discussed below in the Acquisitions section and the Business Segment section.
Interest expense increased $3.5 million in 1996 primarily as a result of
increased bank borrowings used for the acquisition of the Seeger Group of
companies, as discussed below in the Liquidity and Capital Resources section.
Interest expense increased $1.7 million from 1994 to 1995 primarily as a result
of increased bank borrowings used for the acquisition of Industrial Retaining
Ring Company, as discussed below in the Liquidity and Capital Resources section,
and higher interest rates on the Company's debt in fiscal 1995 due to increases
in the prime interest rate throughout the year.
New orders received during 1996 by continuing operations totaled $162.6 million,
an increase of $58.1 million or 56% from 1995. New orders received during 1995
by continuing operations totaled $104.5 million, an increase of $17.1 million or
20% from 1994. New orders are discussed below by industry segment. At March 31,
1996, total backlog of unfilled orders was $62.3 million, compared to $34.4
million and $30.9 million at March 31, 1995 and 1994, respectively.
In March 1995, the Financial Accounting Standards Board (FASB) issued SFAS No.
121, "Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of," which the Company is required to adopt during fiscal 1997.
The adoption of SFAS No. 121 is not expected to have a material impact on the
Company's consolidated financial statements. Also in 1995, the FASB issued SFAS
No. 123, "Accounting for Stock-Based Compensation," which requires companies to
measure employee stock compensation plans based on the fair value method of
accounting or to continue to apply APB No. 25, "Accounting for Stock Issued to
Employees," and provide pro forma footnote disclosures under the fair
2
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value method in SFAS No. 123. The Company will continue to apply the principles
of APB No. 25 and provide pro forma fair value disclosures starting in the 1997
Annual Report.
In March 1994, the Company adopted Statement of Financial Accounting Standard
No. 115, related to accounting for certain investments in debt and equity
securities. Adoption of this statement resulted in a gross unrealized holding
loss of $1.6 million, reported as a direct reduction to stockholders' equity in
the March 31, 1994 balance sheet. At March 31, 1996, this gross unrealized
holding loss, which had increased to $2.6 million, was reclassified as a
realized holding loss, and a pre-tax charge of $2.6 million was recorded in the
fourth quarter Statement of Operations.
ACQUISITIONS
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On June 30, 1995, the Company acquired the Seeger Group of companies from a unit
of AB SKF of Goteborg, Sweden for approximately $43 million in cash plus direct
acquisition costs and the assumption of trade debts and accrued expenses. The
Seeger Group, headquartered in Konigstein, Germany, is the global leader in
manufacturing circlips, snap rings and retaining rings. The Seeger Group
operates under the trade names of "Seeger", "Anderton", and "Waldes" with over
900 employees at its five manufacturing facilities located in Germany, the UK,
Brazil and the U.S.A.
Effective August 31, 1994, the Company acquired all of the outstanding capital
stock of Industrial Retaining Ring Company and its affiliated companies for a
total purchase price of $15.3 million in cash and the assumption of liabilities.
Industrial Retaining Ring Company manufactures retaining rings and clips used
primarily in the heavy equipment and industrial machinery industries.
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.
DISCONTINUED OPERATIONS
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In June 1995 and January 1996, the Company sold the domestic and European
portions of its computer graphics service operations, respectively, in two
separate transactions to two different buyers. These businesses operated under
the name TransTechnology Systems & Services and were classified as discontinued
operations in March 1995. The sale of the domestic portion for $0.7 million in
cash and $0.6 million in notes receivable was for book value, and the sale of
the European portion for $0.1 million in cash and $0.2 million in notes
receivable resulted in an after-tax gain on disposal of $0.1 million.
In August 1995, the company sold its Electronics division for $4.4 million in
cash and $9.6 million in notes receivable. The sale of this operation resulted
in an after-tax gain on disposal of $0.2 million.
In March 1995, the Company sold substantially all of the assets and business of
its chaff products operation for $6.7 million in cash. The sale of this
operation resulted in an after-tax loss on disposal of $0.4 million. Additional
after-tax disposal costs of $0.2 million were recorded in 1996 in connection
with the sale. The Company retained the chaff avionics product line and
negotiated its sale separately in May 1995 for $0.3 million in cash and $0.7
million in notes receivable, resulting in an after-tax gain on disposal of $0.4
million. In the fourth quarter of 1996, the Company recorded an after-tax charge
of $0.4 million to record the anticipated loss on the sale of the facility that
was formerly used by this operation.
In March 1994, the Company sold its tear-gas division which operates under the
name Federal Laboratories, 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 after-tax gain on disposal of $0.5
million. Additional after-tax disposal costs of $0.1 million and $0.5 million
were recorded in 1996 and 1995, respectively, in connection with the sale.
Additional after-tax costs of $0.6 million and $1.4 million were recorded in
1996 and 1995, respectively, in connection with other previously discontinued
and sold operations, and an after-tax gain on disposal of $0.3 million was
recorded in 1994. These additional costs represent adjustments to previous
estimates related primarily to environmental and legal matters.
3
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SPECIALTY FASTENER PRODUCTS SEGMENT
1996 COMPARED WITH 1995
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Sales for the Specialty Fastener Products segment were $127.5 million in 1996,
an increase of $56.4 million or 79% from 1995. The increase in sales was
primarily due to the inclusion of nine months of Seeger Group operations in
1996, and to a lesser extent, the inclusion of twelve months of Industrial
Retaining Ring Company operations in 1996 versus eight months in 1995, and
increased industrial and truck fastener demand for gear-driven fasteners in
fiscal 1996.
Operating profit for the Specialty Fastener Products segment was $23.7 million
in 1996, an increase of $7.2 million or 44% from 1995. The primary factors
contributing to the segments increased operating profit in 1996 were the
inclusion of nine months of Seeger Group operations, the inclusion of twelve
months of Industrial Retaining Ring Company operations in 1996 versus eight
months in 1995, and increased shipments of gear-driven fasteners.
In 1996, new orders in the Specialty Fastener Products segment increased $48.8
million or 66% from 1995. The primary reasons for the increase were the
inclusion of nine months of Seeger Group operations in 1996, the inclusion of
twelve months of Industrial Retaining Ring Company operations versus eight
months in 1995, and the increased demand for gear-driven fasteners. Backlog of
unfilled orders was $31.4 million at March 31, 1996, compared to $12.7 million
at March 31, 1995.
1995 COMPARED WITH 1994
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Sales for the Specialty Fastener Products segment were $71.1 million in 1995, an
increase of $18.8 million or 36% from 1994. The increase in sales was primarily
due to the inclusion of twelve months of Palnut fastener operations in 1995
versus eight months in 1994, the inclusion of eight months of Industrial
Retaining Ring Company operations in 1995, and increased industrial and truck
fastener demand for gear-driven fasteners in fiscal 1995.
Operating profit for the Specialty Fastener Products segment was $16.5 million
in 1995, an increase of $6.5 million or 65% from 1994. The primary factors
contributing to the segments increased operating profit in 1995 were the
inclusion of eight months of Industrial Retaining Ring Company operations, the
inclusion of twelve months of Palnut fastener operations in 1995 versus eight
months in 1994 and increased shipments of gear-driven fasteners.
In 1995, new orders in the Specialty Fastener Products segment increased $14.4
million or 24% from 1994. The primary reasons for the increase were the
inclusion of twelve months of Palnut fastener operations in 1995 versus eight
months in 1994, the inclusion of eight months of Industrial Retaining Ring
Company operations and the increased demand for gear-driven fasteners. Backlog
of unfilled orders was $12.7 million at March 31, 1995, compared to $9.5 million
at March 31, 1994.
RESCUE HOIST AND CARGO HOOK PRODUCTS SEGMENT 1996 COMPARED WITH 1995
- --------------------------------------------------------------------------------
Sales for the Rescue Hoist and Cargo Hook Products segment were $30.5 million in
1996, an increase of $0.5 million or 2% from 1995. All three product lines in
this segment, rescue hoists and related spare parts, cargo hooks, and tie-downs
had little change in sales from 1995 levels.
Following the second full year under a new management team, the Rescue Hoist and
Cargo Hook Products segment reported an operating profit of $4.9 million in
1996, compared to $0.2 million in 1995. The increase was primarily due to plant
operating efficiencies, price adjustments and better inventory utilization.
In 1996 new orders in the Rescue Hoist and Cargo Hook Products segment increased
by $9.3 million or 31% from 1995. This increase, led by the Rescue Hoist product
line, was primarily due to increased marketing effort and customer timing of
order placement. At March 31, 1996, the backlog of unfilled orders was $30.9
million, compared to $21.8 million at March 31, 1995.
1995 COMPARED WITH 1994
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Sales for the Rescue Hoist and Cargo Hook Products segment were flat in 1995 at
$30.0 million. All three product lines in this segment, rescue hoists and
related spare parts, cargo hooks, and tie-downs, experienced virtually identical
sales as in 1994.
Operating profit for the Rescue Hoist and Cargo Hook Products segment was $0.2
million in 1995, a decrease of $3.6 million or 96% from 1994. The decrease was
primarily due to reduced margins for all product lines through the first three
quarters from shipments on low profit contracts.
4
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In 1995 new orders in the Rescue Hoist and Cargo Hook Products segment increased
by $2.7 million or 10% from 1994. New orders for rescue hoists and related spare
parts were up $5.2 million or 27%, new orders for cargo hooks were down $2.8
million or 35%, and new orders for tie-downs were up $0.3 million or 55%, in
1995 over 1994. These changes were primarily due to customer timing of order
placement. At March 31, 1995, the backlog of unfilled orders was $21.8 million,
compared to $21.4 million at March 31, 1994.
LIQUIDITY AND CAPITAL RESOURCES
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The Company's debt-to-capitalization ratio was 52%, 38% and 34% as of March 31,
1996, 1995 and 1994, respectively. The current ratio at March 31, 1996, stood at
2.51, compared to 3.25 and 3.49 at March 31, 1995 and 1994, respectively.
Working capital was $57.3 million at March 31, 1996, up $4.2 million from March
31, 1995 and up $3.4 million from March 31, 1994.
At March 31, 1996, the Company's debt consisted of $17.2 million of borrowings
under a revolving credit line, $4.2 million of borrowings under international
lines of credit, a $31.3 million term loan, a $25 million term loan and $0.9
million of other borrowings. The revolving bank credit line commitment of $33.4
million will be available to the Company through December 31, 2000 and is
subject to a borrowing base formula. The agreement provides for borrowings and
letters of credit based on collateralized accounts receivable and inventory. In
addition, all of the remaining assets of the Company and its subsidiaries are
included as collateral. Letters of credit, which are included in the borrowing
base formula, are limited to $5 million. Letters of credit under the line at
March 31, 1996 were $0.8 million. The total commitment from the international
lines of credit are $6.6 million and have the same availability and collateral
as the revolving credit line, but are not subject to a borrowing base formula.
Interest on the revolver and international lines of credit are tied to the
primary bank's prime rate, or at the Company's option, the London Interbank
Offered Rate (LIBOR), plus a margin that varies depending upon the Company's
achievement of certain operating and financial goals.
The $31.3 million and $25 million term loans are with the same lenders as the
revolving and international lines of credit, are secured by the same collateral,
and are due and payable on December 31, 2000 and June 30, 2002, respectively.
The $31.3 million term loan has an additional $15 million available through
March 1997 for future acquisitions. Quarterly principal payments on the $31.3
million term loan of $1.4 million, with escalations to $1.8 million and $2.8
million in June 1999 and June 2000, respectively, began on December 31, 1995,
and are due and payable on the last day of each quarter through December 31,
2000. Interest on the $31.3 million term loan is tied to the lending bank's
prime rate, or LIBOR, plus a margin that varies depending on the Company's
achievement of certain operating and financial goals. Principal payments on the
$25 million term loan of $0.5 million are due and payable annually beginning on
June 30, 1996 through June 30, 2000, with final balloon payments of $7.5 million
and $15 million due and payable on June 30, 2001 and June 30, 2002,
respectively. Interest on the $25 million term loan accrues at the primary
lending bank's prime rate plus two percentage points. The agreement also gives
the Company the option of using LIBOR plus three and one-quarter percentage
points. At March 31, 1996, the Company had $53.8 million of borrowings utilizing
LIBOR.
The credit facility limits the Company's ability to pay dividends to 25% of net
income and restricts capital expenditures to $6.5 million for the fiscal year
ended March 31, 1996, and $7 million annually thereafter for the life of the
agreement, as well as containing other customary financial covenants.
On May 13, 1994, the Company obtained authorization to repurchase up to 200,000
shares of the Company's common stock at an aggregate price not to exceed $2.5
million. Through March 31, 1996, the Company had repurchased 177,500 shares at
an aggregate cost of $2.2 million.
Management believes that the Company's anticipated cash flow from operations,
combined with the bank credit described above, will be sufficient to support
current and forecasted working capital requirements and dividend payments.
Capital expenditures in 1996 were $6.5 million as compared with $5 million in
1995. The Company's two industry segments have similar cash flow requirements.
The Company is subject to various contingencies related to land and groundwater
contamination at several facilities. Expenditures made pursuant to the
remediation and restoration of these sites approximated $1.3 million in 1996
and $1.2 million in 1995. These expenditures are primarily of a non-recurring
nature and are not capitalized. The Company expects similar expenditures in
1997 to be in the same range. These matters are described in Note 11 of
the Notes to Financial Statements. Management believes that, after taking into
consideration information provided by counsel, the resolution of these matters
will not have a material adverse effect on the Company's liquidity.
Additionally, management believes that the Company's cash flow from operations,
combined with the bank credit described above, will be sufficient to cover
future expenditures.
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On May 15, 1996 the Company sold real property in Florida formerly occupied by
its chaff division, and terminated the lease of the property, for total
consideration of $1,984,000, paid in cash.
On May 25, 1996, the Company entered into a definitive agreement to acquire the
assets and business of the hose clamp product line of Pebra GmbH Paul Braun i.K.
This business, located in Frittlingen, Germany, manufactures heavy-duty hose
clamps used primarily by heavy truck OEM's in Germany. Revenues for the year
ended December 31, 1995, were approximately $6.5 million. The transaction is
expected to be completed in June 1996 with a purchase price of $3 million
provided by the Company's existing revolving credit line.
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ITEM 8. Financial Statements and Supplementary Data
Table of Contents
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Page
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Financial Statements:
Independent Auditors' Report 8
Consolidated Balance Sheets as of March 31, 1996 and 1995 9
Statements of Consolidated Operations for years ended March 31, 1996,
1995 and 1994 10
Statements of Consolidated Cash Flows for years ended March 31, 1996,
1995 and 1994 11
Statements of Consolidated Stockholders' Equity for years ended
March 31, 1996, 1995 and 1994 12
Notes to Consolidated Financial Statements 12
Financial Statement Schedules:
Independent Auditors' Report 23
Schedule II --
Consolidated Valuation and Qualifying Accounts for the years
ended March 31, 1996, 1995 and 1994 24
Schedules required by Article 5 of Regulation S-X, other than those listed
above, are omitted because of the absence of the conditions under which they
are required.
Report of Independent Public Accountants of The New Seeger Group 25
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INDEPENDENT AUDITORS' REPORT
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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, 1996 and 1995 and the related
statements of consolidated operations, stockholders' equity, and cash flows for
each of the three years in the period ended March 31, 1996. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on the financial statements based on our
audits. We did not audit the financial statements of The New Seeger Group (whose
members are consolidated subsidiaries) for the period ending March 31, 1996,
which statements reflect total assets and total revenues constituting 32% and
28%, respectively, of the related consolidated totals for the year. These
statements were audited by other auditors whose report has been furnished to us,
and our opinion, insofar as it relates to the amounts included for The New
Seeger Group for the period ended March 31, 1996, is based solely on the report
of such other auditors.
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, based on our audits and the report of the other auditors, such
consolidated financial statements present fairly, in all material respects, the
financial position of TransTechnology Corporation and subsidiaries at March 31,
1996 and 1995, and the results of their operations and their cash flows for each
of the three years in the period ended March 31, 1996 in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
May 28, 1996
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Consolidated Balance Sheets
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<TABLE>
<CAPTION>
March 31,
ASSETS 1996 1995
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<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,362,000 $ 1,544,000
Accounts receivable
(net of allowance for doubtful accounts
of $735,000 and $103,000 in 1996 and 1995, respectively) 28,368,000 19,484,000
Notes receivable 1,258,000 836,000
Inventories 50,551,000 25,239,000
Prepaid expenses and other current assets 1,726,000 2,706,000
Deferred income taxes 1,037,000 2,592,000
Net assets held for sale 9,980,000 24,269,000
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Total current assets 95,282,000 76,670,000
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Property:
Land 12,616,000 4,330,000
Buildings 20,523,000 13,268,000
Machinery and equipment 39,600,000 21,772,000
Furniture and fixtures 5,398,000 3,043,000
Leasehold improvements 189,000 161,000
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Total 78,326,000 42,574,000
Less accumulated depreciation and amortization 17,749,000 13,040,000
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Property-net 60,577,000 29,534,000
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Other assets:
Notes receivable 12,824,000 3,274,000
Costs in excess of net assets of acquired businesses (net of accumulated
amortization: $3,308,000 and $2,793,000 in 1996 and 1995, respectively 16,411,000 12,813,000
Other 14,273,000 7,105,000
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Total other assets 43,508,000 23,192,000
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TOTAL $ 199,367,000 $ 129,396,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
Current portion of long-term debt $ 6,026,000 $ 3,356,000
Accounts payable-trade 14,719,000 9,147,000
Accrued compensation 6,473,000 4,247,000
Accrued income taxes 1,415,000 591,000
Other current liabilities 9,301,000 6,267,000
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Total current liabilities 37,934,000 23,608,000
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Long-term debt payable to banks and others 72,565,000 37,021,000
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Other long-term liabilities 16,398,000 4,265,000
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Stockholders' equity:
Preferred stock-authorized, 300,000 shares; none issued -- --
Common stock-authorized, 14,700,000 shares of $.01 par value;
issued, 5,276,463 and 5,242,316 shares in 1996 and 1995, respectively 53,000 52,000
Additional paid-in capital 46,188,000 45,802,000
Retained earnings 29,467,000 23,418,000
Other stockholders' equity (1,083,000) (2,680,000)
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74,625,000 66,592,000
Less treasury stock, at cost - 177,500 shares and 172,500 shares in
1996 and 1995, respectively (2,155,000) (2,090,000)
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Total stockholders' equity 72,470,000 64,502,000
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TOTAL $ 199,367,000 $ 129,396,000
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</TABLE>
See accompanying notes to consolidated financial statements.
9
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STATEMENTS OF CONSOLIDATED OPERATIONS
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<TABLE>
<CAPTION>
For the years ended March 31,
1996 1995 1994
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<S> <C> <C> <C>
Revenues:
Sales $ 158,024,000 $ 101,122,000 $81,873,000
Interest income 1,010,000 760,000 675,000
Other income 820,000 810,000 295,000
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Total 159,854,000 102,692,000 82,843,000
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Cost of goods sold 107,426,000 71,968,000 57,887,000
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Gross profit 52,428,000 30,724,000 24,956,000
General, administrative and selling expenses 31,812,000 17,051,000 14,973,000
Interest expense 6,316,000 2,831,000 1,123,000
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Income from continuing operations
before income taxes 14,300,000 10,842,000 8,860,000
Provision for income taxes 5,792,000 3,457,000 3,060,000
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Income from continuing operations 8,508,000 7,385,000 5,800,000
Discontinued operations:
(Loss) income from operations
(net of applicable tax benefits of
$323,000, $1,619,000 and $213,000 for 1996,
1995 and 1994, respectively) (517,000) (2,602,000) 324,000
(Loss) gain from disposal (net of applicable
tax benefits of $1,077,000, $1,400,000 for 1996
and 1995, respectively, and net of
applicable tax provision of $306,000 for 1994) (617,000) (2,250,000) 760,000
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Net income $ 7,374,000 $ 2,533,000 $ 6,884,000
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Earnings per share
Income from continuing operations $ 1.67 $ 1.45 $ 1.13
(Loss) income from discontinued operations (0.22) (0.95) 0.21
- --------------------------------------------------------------------------------------------------------------------------
Income per share $ 1.45 $ 0.50 $ 1.34
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Number of shares used in computation of
per share information 5,093,000 5,109,000 5,143,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements
10
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Statements of Consolidated Cash Flows
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<TABLE>
<CAPTION>
For the years ended March 31,
1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 7,374,000 $ 2,533,000 $ 6,884,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Loss recognized on write-down of
marketable securities 2,613,000 -- --
Depreciation and amortization 6,027,000 5,349,000 4,505,000
Provision for losses on accounts receivable 468,000 65,000 102,000
Gain (loss) on sale or disposal of fixed assets
and discontinued businesses (307,000) 704,000 (452,000)
Change in assets and liabilities net of
acquisitions and dispositions:
Decrease (increase) in accounts receivable 4,290,000 (2,672,000) 261,000
(Increase) decrease in inventories (6,098,000) 5,595,000 (200,000)
(Increase) in net assets held for sale (1,915,000) (3,672,000) (1,133,000)
Decrease (increase) in other assets 4,825,000 (2,521,000) (1,031,000)
Increase in accounts payable 462,000 3,211,000 506,000
Increase in accrued compensation 2,226,000 1,041,000 1,137,000
(Decrease) in income tax payable (676,000) (121,000) (928,000)
(Decrease) in other liabilities (8,577,000) (2,043,000) (2,895,000)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 10,712,000 7,469,000 6,756,000
- -------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Business acquisitions (45,594,000) (15,952,000) (22,670,000)
Capital expenditures (6,471,000) (5,033,000) (4,973,000)
Proceeds from sale of fixed assets and
discontinued business 8,111,000 6,977,000 1,027,000
Decrease (increase) in notes receivable 1,055,000 2,515,000 (176,000)
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (42,899,000) (11,493,000) (26,792,000)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term borrowings 107,363,000 42,019,000 34,400,000
Payments on long-term debt (73,156,000) (36,289,000) (12,178,000)
Proceeds from issuance of stock under
stock option plan 188,000 202,000 571,000
Stock repurchases increase (65,000) (2,090,000) --
Dividends paid (1,325,000) (1,301,000) (1,235,000)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 33,005,000 2,541,000 21,558,000
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 818,000 (1,483,000) 1,522,000
Cash and cash equivalents at beginning of year 1,544,000 3,027,000 1,505,000
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 2,362,000 $ 1,544,000 $ 3,027,000
- -------------------------------------------------------------------------------------------------------------------
Supplemental Information:
Interest payments $ 5,036,000 $ 3,054,000 $ 1,602,000
Income tax payments $ 1,989,000 $ 1,573,000 $ 4,476,000
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
11
<PAGE> 13
Statements of Consolidated Stockholders' Equity
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the years ended Common Stock Treasury Stock Additional
March 31, 1996, --------------------- ----------------------- Paid-In Retained
1995 and 1994 Shares Amount Shares Amount Capital Earnings
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1993 5,121,604 $51,000 -- $ -- $44,616,000 $ 16,537,000
Net income -- -- -- -- -- 6,884,000
Cash dividends ($.24 per share) -- -- -- -- -- (1,235,000)
Issuance of stock under
stock option plan 57,415 1,000 -- -- 570,000 --
Issuance of stock under
incentive bonus plan - net 10,085 -- -- -- 97,000 --
Foreign translation adjustments -- -- -- -- -- --
Unrealized investment
holding losses -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1994 5,189,104 52,000 -- -- 45,283,000 22,186,000
Net Income -- -- -- -- -- 2,533,000
Cash dividends ($.255 per share) -- -- -- -- -- (1,301,000)
Purchase of treasury stock -- -- (172,500) (2,090,000) -- --
Issuance of stock under
stock option plan 24,789 -- -- -- 202,000 --
Issuance of stock under
incentive bonus plan - net 28,423 -- -- -- 317,000 --
Foreign translation adjustments -- -- -- -- -- --
Unrealized investment
holding losses -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1995 5,242,316 52,000 (172,500) (2,090,000) 45,802,000 23,418,000
Net income -- -- -- -- -- 7,374,000
Cash dividends ($.26 per share) -- -- -- -- -- (1,325,000)
Purchase of treasury stock -- -- (5,000) (65,000) -- --
Issuance of stock under
stock option plan 20,308 1,000 -- -- 187,000 --
Issuance of stock under
incentive bonus plan - net 13,839 -- -- -- 199,000 --
Foreign translation adjustments -- -- -- -- -- --
Realized investment
holding losses -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1996 5,276,463 $53,000 (177,500) $(2,155,00) $46,188,000 $ 29,467,000
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Other
Stockholders'
Equity Total
- ----------------------------------------------------------------------------
<S> <C> <C>
Balance, March 31, 1993 $ 10,000 $ 61,214,000
Net income -- 6,884,000
Cash dividends ($.24 per share) -- (1,235,000)
Issuance of stock under
stock option plan -- 571,000
Issuance of stock under
incentive bonus plan - net (65,000) 32,000
Foreign translation adjustments 56,000 56,000
Unrealized investment
holding losses (1,569,000) (1,569,000)
- ----------------------------------------------------------------------------
Balance, March 31, 1994 (1,568,000) 65,953,000
Net Income -- 2,533,000
Cash dividends ($.255 per share) -- (1,301,000)
Purchase of treasury stock -- (2,090,000)
Issuance of stock under
stock option plan -- 202,000
Issuance of stock under
incentive bonus plan - net (122,000) 195,000
Foreign translation adjustments 54,000 54,000
Unrealized investment
holding losses (1,044,000) (1,044,000)
- ----------------------------------------------------------------------------
Balance, March 31, 1995 (2,680,000) 64,502,000
Net income -- 7,374,000
Cash dividends ($.26 per share) -- (1,325,000)
Purchase of treasury stock -- (65,000)
Issuance of stock under
stock option plan -- 188,000
Issuance of stock under
incentive bonus plan - net (122,000) 77,000
Foreign translation adjustments (894,000) (894,000)
Realized investment
holding losses 2,613,000 2,613,000
- ----------------------------------------------------------------------------
Balance, March 31, 1996 $ (1,083,000) $ 72,470,000
- ----------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING PRINCIPLES
TransTechnology Corporation (the "Company") develops, manufactures and sells a
wide range of products in two industry segments, Specialty Fastener Products,
and Rescue Hoist and Cargo Hook Products. The Company has manufacturing
facilities located in the United States, Germany, the United Kingdom and Brazil.
The Specialty Fastener Products Segment produces highly engineered precision
metal retaining rings, clamps, circlips, spring pins and other fasteners for
primarily the automotive, heavy truck, industrial and toy markets, and accounted
for approximately 81 percent of the Company's consolidated 1996 net sales.
Through its Rescue Hoist and Cargo Hook Products Segment, the Company develops,
manufactures, sells and services a complete line of sophisticated lifting and
restraining products - principally helicopter rescue hoist and cargo hook
systems, and winches and hoists for aircraft and weapons systems, and accounted
for approximately 19 percent of the Company's consolidated 1996 net sales.
12
<PAGE> 14
USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
PRINCIPLES OF CONSOLIDATION. The accompanying consolidated financial statements
include the accounts of TransTechnology Corporation and its subsidiaries, all of
which are wholly-owned. Intercompany balances and transactions are eliminated in
consolidation.
RELATED PARTY. Research Industries Incorporated owns approximately 22% 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 had a consulting contract with the Company that expired during fiscal
1995. During fiscal 1995 and 1994, the Company expensed and paid $0.7 and $0.9
million, respectively, for these contracts.
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.
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 $1.7 million, $1.4 million and $1.4 million in 1996,
1995 and 1994, respectively. Included in these amounts were expenditures of $0.9
million, $0.4 million and $0.6 million in 1996, 1995 and 1994, respectively,
which represent costs related to research and development activities.
FOREIGN CURRENCY TRANSLATION. Pursuant to Statement of Financial Accounting
Standards No. 52, the assets and liabilities of the Company's international
operations, other than the operations located in a highly inflationary country,
have been translated into U.S. Dollars at year-end exchange rates, with
resulting translation gains and losses accumulated as a separate component of
stockholders' equity. Income and expense items are converted into U.S. Dollars
at average rates of exchange prevailing during the year. Translation adjustments
of the operation located in a country with a highly inflationary economy, are
included as a component of operating income.
INCOME TAXES. Effective April 1, 1993, the Company adopted 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
13
<PAGE> 15
statement carrying amounts of existing assets and liabilities and their
respective tax bases. 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. 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."
INVESTMENTS. On March 1, 1994 the Company received 465,000 shares of Mace
Security International common stock, valued at $3.4 million, as partial
consideration for the sale of a division. In the fourth quarter of 1996 the
Company recorded a $2.6 million pre-tax charge to continuing operations to
write-down the carrying value of equity securities acquired from the sale of
this division to their current market value as the decline in value of those
securities was determined to be other than temporary.
FINANCIAL INSTRUMENTS. The Company does not hold or issue financial instruments
for trading purposes. Amounts to be paid or received under interest rate swap
agreements are recognized as increases or reductions in interest expense in the
periods in which they accrue. The company enters into off-balance sheet forward
foreign exchange instruments in order to hedge certain purchase commitments.
Gains and losses on these instruments are included in other income/expense in
the accompanying Statements of Consolidated Operations.
NEW ACCOUNTING STANDARDS. In March 1995, the Financial Accounting Standards
Board (FASB) issued SFAS No. 121, "Accounting for Impairment of Long-Lived
Assets and for Long- Lived Assets to Be Disposed Of," which the Company is
required to adopt during fiscal 1997. The adoption of SFAS No. 121 is not
expected to have a material impact on the Company's consolidated financial
statements. Also in 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation," which requires companies to measure employee stock
compensation plans based on the fair value method of accounting or to continue
to apply APB No. 25, "Accounting for Stock Issued to Employees," and provide pro
forma footnote disclosures under the fair value method in SFAS No. 123. The
Company will continue to apply the principles of APB No. 25 and provide pro
forma fair value disclosures starting in the 1997 Annual Report.
RECLASSIFICATIONS. Certain reclassifications have been made to prior years to
conform to the 1996 presentation.
2. DISCONTINUED OPERATIONS
In June 1995 and January 1996, the Company sold the domestic and European
portions of its computer graphics service operations, respectively, in two
separate transactions to two different buyers. These businesses operated under
the name TransTechnology Systems & Services and were classified as discontinued
operations in March 1995. The sale of the domestic portion for $0.7 million in
cash and $0.6 million in notes receivable was for book value, and the sale of
the European portion for $0.1 million in cash and $0.2 million in notes
receivable resulted in an after-tax gain on disposal of $0.1 million in 1996.
In August 1995, the company sold its Electronics division for $4.4 million in
cash and $9.6 million in notes receivable. The sale of this operation resulted
in an after-tax gain on disposal of $0.2 million.
In March 1995, the Company sold substantially all of the assets and business of
its chaff products operation for $6.7 million in cash. The sale of this
operation resulted in an after-tax loss on disposal of $0.4 million. Additional
after-tax disposal costs of $0.2 million were recorded in 1996 in connection
with the sale. The Company retained the chaff avionics product line and
negotiated its sale separately in May 1995 for $0.3 million in cash and $0.7
million in notes receivable, resulting in an after-tax gain on disposal of $0.4
million. In the fourth quarter of 1996, the Company recorded an after-tax charge
of $0.4 million to record the anticipated loss on the sale of the facility, that
was formerly used by this operation.
In March 1994, the Company sold its tear-gas division which operates under the
name Federal Laboratories, 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 an after-tax gain on disposal of $0.5
million. Additional after-tax disposal costs of $0.1 million and $0.5 million
were recorded in 1996 and 1995, respectively, in connection with the sale.
14
<PAGE> 16
Additional after-tax costs of $0.6 million and $1.4 million were recorded in
1996 and 1995, respectively, in connection with other previously discontinued
and sold operations, and an after-tax gain on disposal of $0.3 million was
recorded in 1994. These additional costs represent adjustments to previous
estimates related primarily to legal and environmental matters.
Operating results of the discontinued businesses were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Total revenues $ 7,951,000 $ 35,515,000 $43,661,000
---------------------------------------------------------------------
(Loss) income
before income
taxes $ (840,000) $ (4,221,000) $ 111,000
Income tax
benefit 323,000 1,619,000 213,000
---------------------------------------------------------------------
(Loss) income
from
operations $ (517,000) $ (2,602,000) $ 324,000
---------------------------------------------------------------------
</TABLE>
The loss from operations includes interest expense of $206,000, $488,000 and
$523,000 in 1996, 1995 and 1994, respectively.
Net assets held for sale at March 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
- ---------------------------------------------------------------------
<S> <C> <C>
Accounts receivable $ 143,000 $ 6,344,000
Inventory 529,000 10,993,000
Property 8,667,000 10,109,000
Other assets 1,269,000 1,755,000
Liabilities (628,000) (4,932,000)
- ---------------------------------------------------------------------
Net assets held for sale $ 9,980,000 $ 24,269,000
- ---------------------------------------------------------------------
</TABLE>
3. ACQUISITIONS
On June 30, 1995, the Company acquired the Seeger Group of companies from a unit
of AB SKF of Goteborg, Sweden for approximately $43 million in cash plus direct
acquisition costs and the assumption of trade debts and accrued expenses. The
Seeger Group, headquartered in Konigstein, Germany, is the global leader in
manufacturing circlips, snap rings and retaining rings. The Seeger Group
operates under the trade names of "Seeger", "Anderton", and "Waldes" with over
900 employees at its five manufacturing facilities located in Germany, the UK,
Brazil and the U.S.A.
Effective August 31, 1994, the Company acquired all of the outstanding capital
stock of Industrial Retaining Ring Company and its affiliated companies for a
total purchase price of $15.3 million in cash and the assumption of liabilities.
Industrial Retaining Ring Company manufactures retaining rings and clips used
primarily in the heavy equipment and industrial machinery industries.
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.
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 Seeger Group and Industrial Retaining Ring Company
had occurred at the beginning of the periods presented.
<TABLE>
<CAPTION>
For the years ended March 31,
(Unaudited) 1996 1995
- ----------------------------------------------------------------------
<S> <C> <C>
Revenue $ 180,281,000 $ 165,646,000
- ----------------------------------------------------------------------
Income from continuing
operations $ 10,130,000 $ 8,387,000
Loss from discontinued
operations (1,134,000) (4,852,000)
- ----------------------------------------------------------------------
Net income $ 8,996,000* $ 3,535,000
- ----------------------------------------------------------------------
Earnings per share from
continuing operations $ 1.99 $ 1.64
Loss per share from
discontinued operations (0.22) (0.95)
- ----------------------------------------------------------------------
Earnings per share $ 1.77 $ 0.69
- ----------------------------------------------------------------------
</TABLE>
* 1996 net income includes $2.1 million non-recurring income from the sale of
unused land to an affiliate of the former parent company.
<TABLE>
<CAPTION>
4. INVENTORIES
- ----------------------------------------------------------------------
Inventories at March 31 consisted of the following:
1996 1995
- ----------------------------------------------------------------------
<S> <C> <C>
Finished goods $22,645,000 $ 6,152,000
Work in process 9,326,000 3,867,000
Purchased and
manufactured parts 18,580,000 15,220,000
- ----------------------------------------------------------------------
Total $50,551,000 $ 25,239,000
- ----------------------------------------------------------------------
</TABLE>
15
<PAGE> 17
5. INCOME TAXES
- --------------------------------------------------------------------------------
The components of total income (loss) from operations (including continuing and
discontinued operations) before income taxes were:
<TABLE>
<CAPTION>
1996 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Domestic $8,124,000 $3,694,000 $11,010,000
Foreign 3,642,000 (723,000) (973,000)
- ----------------------------------------------------------------------
Total $11,766,000 $2,971,000 $10,037,000
- ----------------------------------------------------------------------
</TABLE>
The provision (benefit) for income taxes is summarized below:
<TABLE>
<CAPTION>
1996 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Currently payable:
Domestic $1,813,000 $140,000 $2,987,000
Foreign 656,000 - (109,000)
State 517,000 208,000 734,000
- ----------------------------------------------------------------------
2,986,000 348,000 3,612,000
Deferred 1,406,000 90,000 (459,000)
- ----------------------------------------------------------------------
Total $4,392,000 $438,000 $3,153,000
- ----------------------------------------------------------------------
</TABLE>
The provision (benefit) for income taxes is allocated between continuing and
discontinued operations as summarized below:
<TABLE>
<CAPTION>
1996 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Continuing $5,792,000 $3,457,000 $3,060,000
Discontinued (1,400,000) (3,019,000) 93,000
- ----------------------------------------------------------------------
Total $4,392,000 $ 438,000 $3,153,000
- ----------------------------------------------------------------------
</TABLE>
The consolidated effective tax rates for continuing operations differ from the
federal statutory rates as follows:
<TABLE>
<CAPTION>
1996 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Statutory federal rate 34.0% 34.0% 34.0%
State income taxes after
federal income tax 3.6% 4.6% 4.7%
Earnings of the foreign
sales corporation (2.6%) (2.6%) (3.7%)
Amortization of purchase
adjustments not
deductible for tax
purposes 1.9% 1.0% 1.5%
Revision of prior years'
tax accruals - (5.1%) (1.7%)
Foreign rate differential 2.6% - -
Other 1.0% - (0.3%)
- ----------------------------------------------------------------------
Consolidated effective
tax rate 40.5% 31.9% 34.5%
- ----------------------------------------------------------------------
</TABLE>
The following is an analysis of accumulated deferred income taxes:
<TABLE>
<CAPTION>
1996 1995
- ---------------------------------------------------------------------------
<S> <C> <C>
Assets
Current
Inventory $ 969,000 $2,307,000
Other 68,000 285,000
- ---------------------------------------------------------------------------
Total current 1,037,000 2,592,000
- ---------------------------------------------------------------------------
Non-current
Environmental 1,067,000 1,274,000
Purchase accounting
adjustments 3,820,000 --
Investment 1,049,000 --
Other 737,000 360,000
- ---------------------------------------------------------------------------
Total non-current 6,673,000 1,634,000
- ---------------------------------------------------------------------------
Total assets $7,710,000 $4,226,000
- ---------------------------------------------------------------------------
Liabilities
Non-current
Depreciation $1,200,000 $1,147,000
Purchase accounting
adjustments 2,097,000 --
Other 605,000 --
- ---------------------------------------------------------------------------
Total liabilities $3,902,000 $1,147,000
- ---------------------------------------------------------------------------
Summary-accumulated deferred income taxes
Net current assets $1,037,000 $2,592,000
Net non-current assets 2,771,000 487,000
- ---------------------------------------------------------------------------
Total $3,808,000 $3,079,000
- ---------------------------------------------------------------------------
</TABLE>
6. LONG-TERM DEBT PAYABLE TO BANKS AND OTHERS
- --------------------------------------------------------------------------------
Long-term debt payable, including current maturities, at March 31 consisted of
the following:
<TABLE>
<CAPTION>
1996 1995
- -----------------------------------------------------------------
<S> <C> <C>
Credit Agreement - 8.3125% $ -- $16,300,000
Credit Agreement - 7.965% 21,420,000 --
Term Loan - 7.804% 31,320,000 --
Term Loan - 9.0% -- 8,080,000
Term Loan - 9.79% 25,000,000 --
Term Loan - 9.0% -- 15,000,000
Other 851,000 997,000
- ------------------------------------------------------------------
78,591,000 40,377,000
Less current maturities 6,026,000 3,356,000
- ------------------------------------------------------------------
Total $72,565,000 $37,021,000
- ------------------------------------------------------------------
</TABLE>
CREDIT AGREEMENT
At March 31, 1996, the Company's debt consisted of $17.2 million of borrowings
under a revolving credit line, $4.2 million of borrowings under international
lines of credit, a $31.3 million term loan, a $25 million term loan and $0.9
million of other borrowings. The revolving bank credit line commitment is $33.4
million, will be available to the Company through December
16
<PAGE> 18
31, 2000 and is subject to a borrowing base formula. The agreement provides for
borrowings and letters of credit based on collateralized accounts receivable and
inventory. In addition, all of the remaining assets of the Company and its
subsidiaries are included as collateral. Letters of credit, which are included
in the borrowing base formula, are limited to $5 million. Letters of credit
under the line at March 31, 1996 were $0.8 million. The total commitment from
the international lines of credit are $6.6 million and have the same
availability and collateral as the revolving credit line, but are not subject to
a borrowing base formula. Interest on the revolver and international lines of
credit are tied to the primary bank's prime rate, or, at the Company's option,
the London Interbank Offered Rate (LIBOR) plus a margin that varies depending
upon the Company's achievement of certain operating and financial goals.
The $31.3 million and $25 million term loans are with the same lenders as the
revolving and international lines of credit, are secured by the same collateral,
and are due and payable on December 31, 2000 and June 30, 2002, respectively.
The $31.3 million term loan has an additional $15 million available through
March 1997 for future acquisitions. Quarterly principal payments on the $31.3
million term loan of $1.4 million, with escalations to $1.8 million and $2.8
million in June 1999 and June 2000, respectively, began on December 31, 1995,
and are due and payable on the last day of each quarter through December 31,
2000. Interest on the $31.3 million term loan is tied to the lending bank's
prime rate, or LIBOR, plus a margin that varies, depending on the Company's
achievement of certain operating and financial goals. Principal payments on the
$25 million term loan of $0.5 million are due and payable annually beginning on
June 30, 1996 through June 30, 2000, with final balloon payments of $7.5 million
and $15 million due and payable on June 30, 2001 and June 30, 2002,
respectively. Interest on the $25 million term loan accrues at the primary
lending bank's prime rate plus two percentage points. The agreement also gives
the Company the option of using LIBOR plus three and one-quarter percentage
points. At March 31, 1996, the Company had $53.8 million of borrowings utilizing
LIBOR.
The credit facility limits the Company's ability to pay dividends to 25% of net
income and restricts capital expenditures to $6.5 million for the fiscal year
ended March 31, 1996, and $7 million annually thereafter for the life of the
agreement, as well as containing other customary financial covenants.
OTHER
Other long-term debt is comprised principally of an obligation due under a
collateralized borrowing arrangement with a fixed interest rate of 3% due
December 2004 and loans on life insurance policies owned by the Company with a
fixed interest rate of 5%.
<TABLE>
<CAPTION>
Debt maturities
- -----------------------------------------------------------------
<S> <C>
1997 (current) $ 6,026,000
1998 5,993,000
1999 5,995,000
2000 7,359,000
2001 30,146,000
Thereafter 23,072,000
- -----------------------------------------------------------------
Total $78,591,000
- -----------------------------------------------------------------
</TABLE>
7. STOCKHOLDERS' EQUITY AND EMPLOYEE/DIRECTOR STOCK OPTIONS
Under the Company's stock option plan, options to purchase shares of the
Company's common stock have been granted to directors, officers and key
employees 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, 1996, there were 408,596 options outstanding, of which 177,253 were
exercisable at that date. The remaining options for 231,343 shares become
exercisable on various dates through February 1999.
The table below summarizes stock option transactions:
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding,
beginning of year
($5.50-$18.53
per share) 375,015 230,537 169,679
Options granted
($9.63-$15.13
per share) 109,000 234,836 146,500
Options exercised
($5.50-$13.44
per share) (20,308) (24,789) (57,415)
Options expired
and cancelled (55,111) (65,569) (28,227)
- --------------------------------------------------------------------------------
Options outstanding,
end of year
($5.50-$18.53
per share) 408,596 375,015 230,537
- --------------------------------------------------------------------------------
Aggregate
option price $ 5,156,300 $ 4,637,517 $ 2,406,531
- --------------------------------------------------------------------------------
Options exercisable
($7.50-$18.53
per share) 177,253 72,843 63,914
- --------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 19
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 $1,745,000, $1,220,000 and
$1,301,000 in 1996, 1995 and 1994, respectively. The Company has two defined
contribution plans covering substantially all domestic employees. Contributions
are based on certain percentages of an employee's eligible compensation.
Expenses related to these plans were $1,823,000, $1,373,000, and $1,786,000 in
1996, 1995, and 1994, respectively. Two divisions of the Company also make
contributions to union-sponsored multi-employer pension plans in accordance with
the negotiated labor contracts. Contributions to the plans were $373,000,
$275,000 and $226,000 in 1996, 1995 and 1994, respectively.
Effective April 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 106 ("SFAS No. 106") on 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 components of net postretirement benefit cost for the years ended March 31
were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost (benefits
earned during the
year) $ 88,000 $ 94,000 $124,000
Interest cost
on projected
postretirement
benefit obligation 168,000 168,000 196,000
Amortization of
transition obligation 101,000 101,000 123,000
Amortization of
net gain (10,000) -- --
- --------------------------------------------------------------------------------
Total
postretirement
benefit cost $ 347,000 $363,000 $443,000
- --------------------------------------------------------------------------------
</TABLE>
The accumulated postretirement benefit obligation and funded status at March 31
were as follows:
Accumulated postretirement benefit obligation:
<TABLE>
<CAPTION>
1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Retirees $ (774,000) $ (711,000)
Fully eligible plan participants (365,000) (364,000)
Other active plan participants (1,161,000) (958,000)
- -------------------------------------------------------------------------------
Accumulated postretirement
benefit obligation (2,300,000) (2,033,000)
Plan assets at fair value -- --
- -------------------------------------------------------------------------------
Accumulated postretirement
benefit obligation in
excess of plan assets (2,300,000) (2,033,000)
Unrecognized net (gain) loss (217,000) (356,000)
Unrecognized transition
obligation 1,724,000 1,826,000
- -------------------------------------------------------------------------------
Accrued postretirement
benefit liability $ (793,000) $ (563,000)
- -------------------------------------------------------------------------------
</TABLE>
Accrued postretirement benefit cost is included in other liabilities on the
balance sheet.
The assumed health care cost trend rates used for measurement purposes were 12%
and 13% for 1996 and 1995, respectively, trending down 1% each year to 10% in
1998 and then decreasing .5% each year to 6.0% in 2006 and beyond, for
substantially all participants. The weighted-average discount rates used were
7.5% and 8.5% at March 31, 1996 and 1995, respectively.
A 1% increase in health care trend rate would increase the annual expense by
approximately 12.2% for the year ended March 31, 1996 and accumulated
postretirement benefit obligation by approximately 13.5% at March 31, 1996.
18
<PAGE> 20
In addition, the Company maintains several defined benefit retirement plans for
certain non-U.S. employees. Funding policies are based on local statutes. Net
periodic pension cost for the plans at March 31, 1996 includes the following:
<TABLE>
<CAPTION>
<S> <C>
Service cost $ 40,000
Interest cost 343,000
Net deferral and amortization 34,000
- -------------------------------------------------------------------------------
Net periodic pension cost $ 417,000
- -------------------------------------------------------------------------------
</TABLE>
The following table sets forth the funded status of the plan at March 31, 1996:
<TABLE>
<CAPTION>
<S> <C>
Total accumulated benefit obligation $6,370,000
- -------------------------------------------------------------------------------
Projected benefit obligation $6,615,000
Unrecognized net loss 245,000
- -------------------------------------------------------------------------------
Unfunded accrued pension cost
(included in other long term liabilities) $6,370,000
- -------------------------------------------------------------------------------
</TABLE>
In determining the projected benefit obligation, the discount rate was 7.5% and
the rate of salary increases was 3% in 1996.
9. FINANCIAL INSTRUMENTS
- --------------------------------------------------------------------------------
INTEREST RATE SWAP AGREEMENTS
The Company periodically enters into interest rate swap agreements to
effectively convert all or a portion of its floating-rate debt to fixed-rate
debt in order to reduce the Company's risk to movements in interest rates. Such
agreements involve the exchange of fixed and floating interest rate payments
over the life of the agreement without the exchange of the underlying principal
amounts. Accordingly, the impact of fluctuations in interest rates on these
interest rate swap agreements is fully offset by the opposite impact on the
related debt. Swap agreements are only entered into with strong creditworthy
counterparties. The swap agreements in effect were as follows:
<TABLE>
<CAPTION>
Interest Rate
- -------------------------------------------------------------------------------
Notional Amount Maturities Receive(1) Pay
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
March 31,
1996... $25,000,000 8/98 5.88%(1) 6.54%
- -------------------------------------------------------------------------------
DM15,315,000 12/98 3.36% 4.57%
- -------------------------------------------------------------------------------
(1) Three-month LIBOR.
</TABLE>
FOREIGN CURRENCY EXCHANGE AGREEMENTS
The Company enters into off-balance sheet forward foreign exchange instruments
in order to hedge certain purchase commitments. At March 31, 1996 the company
had outstanding forward foreign exchange contracts totalling DM 1,500,000
($1,015,000) maturing through September 1996.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of cash and cash equivalents, receivables and notes receivables
approximate their carrying values due to the short-term nature of the
instruments.
The fair value of the Company's long-term notes receivables and debt
approximates their carrying values due to the variable interest-rate feature of
the instruments. The fair values of the Company's interest rate swaps and
forward foreign exchange agreements are the estimated amounts the Company would
have to pay or receive, ($1,397,000) and $30,000, respectively to terminate the
agreements based upon quoted market prices as provided by financial institutions
which are counterparties to the agreements.
10. COMMITMENTS
- --------------------------------------------------------------------------------
Rent expense under operating leases, net of sub-leases, for the years ended
March 31, 1996, 1995, and 1994 was $1,979,000, $1,802,000 and $1,450,000,
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>
<CAPTION>
Year ending March 31:
- ------------------------------------------------------------------
<C> <C>
1997 $2,864,000
1998 2,482,000
1999 1,853,000
2000 873,000
2001 455,000
Thereafter 497,000
- -------------------------------------------------------------------
Total $9,024,000
- -------------------------------------------------------------------
</TABLE>
Included in the above amounts is the aggregate lease commitment associated with
the Company's former corporate office which has been sub-leased. Future
sub-lease rentals receivable at March 31, 1996 totalled $1,017,000.
Other-long-term liabilities at March 31, 1996, include a $0.2 million obligation
associated with the lease which expires in July 1998.
19
<PAGE> 21
11. CONTINGENCIES
- --------------------------------------------------------------------------------
Environmental Matters. The Company has commenced environmental site assessments
and cleanup feasibility studies to determine the presence, extent and sources
of any environmental contamination at sites in Pennsylvania and Illinois which
continue to be owned although the related businesses have been sold. Although
no governmental action requiring remediation has been taken at this time, the
Company is working in cooperation with the relevant state authorities and any
remedial work required to be performed would be subject to their approval. At
the Pennsylvania site, a feasibility study has been prepared and submitted to
the state. At March 31, 1996, the balance of this clean-up reserve was $2.4
million payable over the next several years. In addition, the Company is
pursuing recovery of a portion of clean-up costs in litigation with several of
its insurance carriers. The Company expects that remediation work at the
Pennsylvania site will not be completed until fiscal 1999.
The Company also continues to participate in environmental assessments and
remediation work at eight other locations, which include operating facilities,
facilities for sale, and previously owned facilities. The Company estimates
that its potential cost for implementing corrective action at these sites will
not exceed $1.5 million payable over the next several years, and has provided
for the estimated costs in its accrual for environmental liabilities.
In addition, the Company has been named as a potentially responsible party in
five environmental remediation recovery proceedings pending in several states
in which it is alleged that the Company was a generator of waste that was sent
to landfills and other treatment facilities. Such properties generally relate to
businesses which have been sold or discontinued. It is not possible to reliably
estimate the costs associated with any remedial work to be performed until
studies at these sites have been completed, the scope of work defined and a
method of remediation selected and approved by the relevant state authorities.
Litigation. The Company is also engaged in various other legal proceedings
incidental to its business.
It is the opinion of the management that, after taking into consideration
information furnished by its counsel, the above matters will have no material
effect on the Company's consolidated financial position or the results of the
Company's operations in future periods.
12. SUBSEQUENT EVENTS
- --------------------------------------------------------------------------------
On May 15, 1996, the Company sold real property in Florida formerly occupied by
its chaff division, and terminated the lease of the property, for total
consideration of $1,984,000, paid in cash.
On May 25, 1996, the Company entered into a definitive agreement to acquire the
assets and business of the hose clamp product line of Pebra GmbH Paul Braun i.K.
This business, located in Frittlingen, Germany, manufactures heavy-duty hose
clamps used primarily by heavy truck OEM's in Germany. Revenues for the year
ended December 31, 1995, were approximately $6.5 million. The transaction is
expected to be completed in June 1996 with a purchase price of $3 million
provided by the Company's existing revolving credit line.
13. SEGMENT AND GEOGRAPHIC INFORMATION
- --------------------------------------------------------------------------------
The Company develops, manufactures and sells primarily specialty fastener
products and rescue hoist and cargo hook products. Specialty Fastener Products
include gear- driven band fasteners, threaded fasteners and retaining rings for
the marine, auto, toy, aircraft, heavy equipment and industrial machinery
industries. Rescue Hoist and Cargo Hook Products include 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.
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 8%, 18% and 23% of sales from continuing operations in 1996, 1995
and 1994, respectively, were derived from sales to the United States Government
and its prime contractors which are attributable primarily to the Rescue Hoist
and Cargo Hook Products Segment.
20
<PAGE> 22
<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>
Specialty fastener 1996 $127,487,000 $23,702,000 $5,171,000 $4,710,000 $138,001,000
products 1995 71,103,000 16,500,000 3,193,000 1,906,000 60,986,000
1994 52,319,000 10,018,000 2,289,000 1,545,000 38,669,000
- ----------------------------------------------------------------------------------------------------------------------------------
Rescue hoist and 1996 30,537,000 4,928,000 901,000 756,000 26,334,000
cargo hook products 1995 30,019,000 160,000 469,000 605,000 24,493,000
1994 29,554,000 3,772,000 661,000 675,000 32,249,000
- ----------------------------------------------------------------------------------------------------------------------------------
Total segments 1996 158,024,000 28,630,000 6,072,000 5,466,000 164,335,000
1995 101,122,000 16,660,000 3,662,000 2,511,000 85,479,000
1994 81,873,000 13,790,000 2,950,000 2,220,000 70,918,000
- ----------------------------------------------------------------------------------------------------------------------------------
Corporate 1996 - (8,987,000)(3) 399,000 438,000 35,032,000
1995 - (3,882,000) 64,000 260,000 43,917,000
1994 - (4,646,000) 56,000 283,000 54,939,000
- ----------------------------------------------------------------------------------------------------------------------------------
Corporate interest 1996 - 973,000 - - -
and other income 1995 - 895,000 - - -
1994 - 839,000 - - -
- ----------------------------------------------------------------------------------------------------------------------------------
Interest expense 1996 - (6,316,000) - - -
1995 - (2,831,000) - - -
1994 - (1,123,000) - - -
- ----------------------------------------------------------------------------------------------------------------------------------
Consolidated 1996 $158,024,000 $14,300,000 $6,471,000 $5,904,000 $199,367,000
1995 101,122,000 10,842,000 3,726,000 2,771,000 129,396,000
1994 81,873,000 8,860,000 3,006,000 2,503,000 125,857,000
- ----------------------------------------------------------------------------------------------------------------------------------
</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." Loss from discontinued
operations is not included.
(2) The capital expenditures and depreciation/amortization expense from
discontinued operations are excluded from the above schedule.
(3) Corporate operating profit in 1996 includes a pre - tax charge of $2.6
million for marketable equity securities write-down.
In 1996, 1995 and 1994, the Company had revenues from export sales as follows:
<TABLE>
<CAPTION>
Location 1996 1995 1994(a)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Western Europe $ 7,230,000 $ 6,641,000 $ 6,221,000
Canada 6,323,000 5,896,000 3,630,000
Pacific and Far East 2,312,000 1,638,000 4,159,000
Mexico, Central and South America 851,000 1,015,000 657,000
Middle East 167,000 114,000 142,000
Other 22,000 136,000 141,000
- --------------------------------------------------------------------------------------------------------
Total $16,905,000 $15,440,000 $14,950,000
- --------------------------------------------------------------------------------------------------------
</TABLE>
(a) Restated to reflect only continuing operations.
21
<PAGE> 23
Results set forth below for international operations represents sales and
operating income of foreign based Company members:
<TABLE>
<CAPTION>
1996
- ------------------------------------------------------------------------------------------------
<S> <C>
Net sales
Domestic operations $ 112,860,000
International operations (1) 45,164,000
- ------------------------------------------------------------------------------------------------
Net sales $ 158,024,000
- ------------------------------------------------------------------------------------------------
Operating income
Domestic operations $ 22,454,000
International operations (1) 6,176,000
- ------------------------------------------------------------------------------------------------
Operating income 28,630,000
Interest expense (6,316,000)
Corporate expense and other (8,014,000)
- ------------------------------------------------------------------------------------------------
Income from continuing operations before tax $ 14,300,000
- ------------------------------------------------------------------------------------------------
Identifiable assets
Domestic operations $ 96,944,000
International operations (1) 67,391,000
Corporate 35,032,000
- ------------------------------------------------------------------------------------------------
Total assets $ 199,367,000
- ------------------------------------------------------------------------------------------------
</TABLE>
In prior years the Company had no significant international operations.
(1) International operations are primarily located in Europe.
<TABLE>
<CAPTION>
14. UNAUDITED QUARTERLY FINANCIAL DATA (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
- ---------------------------------------------------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
- ---------------------------------------------------------------------------------------------------------------------
1996
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $ 26,410 $ 44,434 $ 41,601 $ 47,409 $ 159,854
Gross profit 8,471 12,462 14,332 17,163 52,428
Income from continuing operations 1,733 1,343 2,793 2,639 8,508
Loss from discontinued operations (172) (149) (447) (366) (1,134)
- ---------------------------------------------------------------------------------------------------------------------
Net income $ 1,561 $ 1,194 $ 2,346 $ 2,273 7,374
- ---------------------------------------------------------------------------------------------------------------------
Earnings (loss) per share:
Income from continuing operations $ 0.34 $ 0.26 $ 0.55 $ 0.52 $ 1.67
Loss from discontinued operations (0.03) (0.03) (0.09) (0.07) (0.22)
- ---------------------------------------------------------------------------------------------------------------------
Net income $ 0.31 $ 0.23 $ 0.46 $ 0.45 $ 1.45
- ---------------------------------------------------------------------------------------------------------------------
1995
- ---------------------------------------------------------------------------------------------------------------------
Total revenues $ 22,437 $ 22,411 $ 26,328 $ 31,516 $ 102,692
Gross profit 6,138 6,951 8,569 9,066 30,724
Income from continuing operations 1,597 1,169 2,434 2,185 7,385
Loss from discontinued operations (525) (972) (1,080) (2,275) (4,852)
- ---------------------------------------------------------------------------------------------------------------------
Net income (loss) 1,072 197 1,354 (90) 2,533
- ---------------------------------------------------------------------------------------------------------------------
Earnings (loss) per share:
Income from continuing operations $ 0.31 $ 0.23 $ 0.48 $ 0.43 $ 1.45
Loss from discontinued operations (0.10) (0.19) (0.21) (0.45) (0.95)
- ---------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 0.21 $ 0.04 $ 0.27 $ (0.02) $ 0.50
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 24
INDEPENDENT AUDITORS' REPORT
To the Stockholders and the Board of Directors of TransTechnology Corporation:
We have audited the financial statements of TransTechnology Corporation as of
March 31, 1996 and 1995, and for each of the three years in the period ended
March 31, 1996, and have issued our report thereon dated May 28, 1996; such
financial statements and report are included in your 1996 Annual Report and are
incorporated herein by reference. Our audits also included the financial
statement schedule of TransTechnology Corporation, listed in Item 14. This
financial statement schedule is the responsibility of the Corporation's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, such financial statement schedule, when considered in relation to
the basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
/s/Deloitte & Touche LLP
- ------------------------
Parsippany, New Jersey
May 28, 1996
23
<PAGE> 25
TRANSTECHNOLOGY CORPORATION
SCHEDULE II
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
FOR YEARS ENDED MARCH 31, 1996, MARCH 31, 1995 AND MARCH 31, 1994
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE
BEGINNING OF COSTS AND OTHER AT END
DESCRIPTION PERIOD EXPENSES INCREASES DEDUCTIONS(A) OF PERIOD
- ----------- ------ -------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C>
1996
Allowances for
doubtful accounts
and sales returns $103,000 $468,000 $382,000(B) $218,000 $735,000
1995
Allowances for
doubtful accounts
and sales returns $271,000 $ 65,000 $ 23,000(C) $256,000(D) $103,000
1994
Allowances for
doubtful accounts
and sales returns $318,000 $102,000 $ 72,000(C) $221,000 $271,000
</TABLE>
(A) Amount represents write-off of uncollectible accounts.
(B) Amount represents balance acquired from Seeger acquisition.
(C) Amount consists primarily of sales adjustments charged to revenue accounts.
(D) Amount includes $97,000 reserves for uncollectible accounts of discontinued
operations reclassed to net assets held for sale.
24
<PAGE> 26
ARTHUR
ANDERSEN
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
The New Seeger Group:
We have audited the accompanying combined balance sheet in U.S.-Dollars of
The New Seeger Group (as defined in Notes 1 and 3) as of March 31, 1996, and
the related combined statements of income, shareholders' equity and cash flows
for the period July 1, 1995 through March 31, 1996 which, as described in Note
3, have been prepared on the basis of accounting principles generally accepted
in the United States. These financial statements are the responsibility of The
New Seeger Group's management. Our responsibility is to express an opinion on
these combined financial statements based on our audit.
We conduct our audit 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 audit provides a reasonable basis for our
opinion.
In our opinion, the combined financial statements in U.S.-Dollars referred to
above present fairly, in all material respects, the financial position of The
New Seeger Group as of March 31, 1996, and the results of their operations and
their cash flows for the period July 1, 1995 through March 31, 1996, in
conformity with accounting principles generally accepted in the United States.
ARTHUR ANDERSEN
Wirtschaftsprufungsgesellschaft [Arthur Andersen
Steuerberatungsgesellschaft mbH Seal]
/s/ Laupenmuhlen /s/ Kugler
- ----------------- -----------
Laupenmuhlen Kugler
Wirtschaftsprufer Wirtschaftsprufer
(certified auditor) (certified auditor)
Eschborn/Frankfurt/M.
May 28, 1996
25
<PAGE> 27
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: September 16, 1996
TRANSTECHNOLOGY CORPORATION
By: /s/Chandler J. Moisen
-----------------------------
Chandler J. Moisen,
Sr. Vice President
and Chief Financial Officer*
*On behalf of the Registrant and as Principal Financial Officer.
26
<PAGE> 28
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.(8) --
10.1 1996-1998 Long Term Incentive Plan of the Company.(8) --
10.3 Form of Incentive Stock Option Agreement.(2) --
10.4 Form of Director Stock Option Agreement.(3) --
10.5 Form of Restricted Stock Award Agreement used under the Company's 1996-1998
Long Term Incentive Plan.(4) --
10.6 Indemnification Agreement dated February 11, 1987 between the Company and each of
its officers and directors.(5) --
10.7 Executive Life Insurance Plan.(6) --
10.8 Revolving Credit and Loan Agreement dated as of June 30, 1995 between the Company
and the First National Bank of Boston.(7) --
10.9 First Amendment to the Revolving Credit and Loan Agreement dated as of August 29, 1995
between the Company and the First National Bank of Boston.(8) --
10.10 Second Amendment to the Revolving Credit and Loan Agreement dated as of October 27, 1995
between the Company and the First National Bank of Boston.(8) --
10.11 Third Amendment to the Revolving Credit and Loan Agreement dated as of March 29, 1996
between the Company and the First National Bank of Boston.(8) --
13 The Company's 1996 Annual Report.(8) --
21 List of Subsidiaries of the Company.(8) --
23 Independent Auditors' Consent. --
27 Financial Data Schedule.(8) --
- ----------------------
(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 Registration Statement on
Form S-8 No. 33-87800 dated December 22, 1994. --
(3) Incorporated by reference from the Company's Annual Report on Form 10-K
for the Fiscal Year ended March 31, 1995. --
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
Page
Sequentially
Numbered
--------
<S> <C>
(4) Incorporated by reference from the Company's Annual Report on Form 10-K
for the Fiscal Year ended March 31, 1994. --
(5) Incorporated by reference from the Company's Annual Report on Form 10-K for
the Fiscal Year ended March 31, 1987. --
(6) Incorporated by reference from the Company's Annual Report on Form 10-K for
the Fiscal Year ended March 31, 1989. --
(7) Incorporated by reference from the Company's Report on Form 8-K
filed on July 14, 1995. --
(8) Incorporated by reference from the Company's Annual Report on Form 10-K for
the Fiscal Year ended March 31, 1996. --
</TABLE>
<PAGE> 1
EXHIBIT 23
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, Registration Statement No.33-59546, and
Registration Statement No.33-878000 on Forms S-8, of our report dated May 28,
1996 appearing in this Annual Report on Form 10-K/A of TransTechnology
Corporation for the year ended March 31, 1996.
/s/Deloitte & Touche LLP
- ------------------------
Parsippany, New Jersey
September 13, 1996
