<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
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
------------ ------------
Commission file number 1-7872
---------------------
TRANSTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-4062211
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
150 Allen Road 07938
Liberty Corner, New Jersey (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (908) 903-1600
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
The registrant's Annual Report for the fiscal year ended March 31,
1996, is incorporated by reference into Part I and II hereof.
The registrant's Proxy Statement for the fiscal year ended March 31,
1996 is incorporated by reference into Part III hereof.
<PAGE> 2
PART I
ITEM 1. BUSINESS.
GENERAL
TransTechnology Corporation develops, manufactures and sells a wide
range of products in two industry segments, as described below. TransTechnology
Corporation was originally organized in 1962 as a California corporation and
reincorporated in Delaware in 1986. Unless the context otherwise requires,
references to the "Company" or the "Registrant" refer to TransTechnology
Corporation (including the California corporation prior to the reincorporation)
and its consolidated subsidiaries. The Company's fiscal year ends on March 31.
Accordingly, all references to years in this report refer to the fiscal year
ended March 31 of the indicated year.
During 1996, the Company continued its program of focusing on core
businesses by acquiring a group of companies that manufacture retaining rings
(the Seeger Group, with locations in Germany, UK, Brazil and New Jersey), and
selling the Company's Electronics division and the domestic and European
portions of the Company's computer graphics service operations. These actions
have positioned the company as a major worldwide supplier of specialty fasteners
to the automotive and industrial markets. The Breeze-Eastern division makes up
the rescue hoist and cargo hook products segment, and is the world's leader in
these systems which are sold primarily to military and civilian agencies.
DISCONTINUED OPERATIONS
The following entities, discontinued in the years indicated, have been
classified as discontinued operations in the Company's financial statements:
Federal Laboratories (tear gas) (1994), the Lundy Technical Center (chaff)
(1995), TransTechnology Electronics (1995), and TransTechnology Systems &
Services (computer maintenance and service) (1995). For a more detailed
description of these transactions, see "Note 2" of the "Notes to Consolidated
Financial Statements" included in the Company's 1996 Annual Report on pages 16
and 17 which is incorporated herein by reference.
SPECIALTY FASTENER PRODUCTS
The Company's specialty fastener products are manufactured by its
Seeger Group of companies ("Seeger-Orbis", "Anderton", and "Seeger Reno"), its
Breeze Industrial Products division ("Breeze Industrial") and its Palnut Company
division ("Palnut", "Industrial Retaining Ring Company" and "Seeger, Inc.").
Seeger, Inc. was acquired as part of the Seeger Group purchase and is now
included in the Palnut Company division. The Seeger Group of companies,
Industrial Retaining Ring Company and Seeger, Inc. design and manufacture highly
engineered retaining rings for both the domestic and international automotive
and industrial markets. Breeze Industrial designs and manufactures a diverse
line of high-quality stainless steel hose clamps including worm drive hose
clamps, T-Bolt and V-Band clamps, and light duty clamps for the appliance and
hardware markets. These clamps are widely used in the heavy-duty vehicle,
industrial, automotive and aircraft industries by both original equipment
manufacturers and replacement suppliers. The Palnut Company manufactures single
and multi-thread metal fasteners for the automotive and industrial products
markets industries. These include lock-nuts used for load carrying in light duty
assemblies or as a supplement to ordinary nuts to assure tightness; the
On-Sert(R) fastener, which is pressed onto hollow plastic
1
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bosses to increase torque and minimize stripping; push-nuts used as temporary
fasteners that hold preinserted bolts in place for final assembly or in rachet
plates which fasten onto a shaft or stud; self-threaders used in the
installation of automotive trim; U-nuts that provide one-sided screw assembly
and are used to fasten bumpers, fenders and grills to vehicles; and various
single-threaded parts designed for insertion into metal or plastic panels.
Specialty fasteners are marketed through a combination of a direct
sales force, distributors and manufacturing representatives. Such products
contributed 81%, 70% and 64% of the Company's consolidated sales from continuing
operations in 1996, 1995 and 1994, respectively.
Through its MassTech product line, Breeze Industrial also manufactures
tachometers and related items such as speed sensors that are used to measure
rotational shaft speeds and direction, and to indicate revolutions per minute.
These products are sold to heavy-duty original equipment manufacturers and in
the military and high-performance markets.
At March 31, 1996, the Company's Specialty Fastener Products segment
backlog was $31.4 million, compared to $12.7 million at March 31, 1995. The
increase is primarily the result of the acquisition of the Seeger Group of
companies. Substantially all of the March 31, 1996 backlog is scheduled to be
shipped during fiscal 1997.
RESCUE HOIST AND CARGO HOOK PRODUCTS
The Company's Breeze-Eastern division ("Breeze-Eastern") specializes in
the design, development and manufacture of sophisticated lifting and restraining
products, principally helicopter rescue hoists, reeling machines and external
hook systems. In addition, Breeze-Eastern designs, develops and manufactures
winches and hoists for aircraft cargo and weapon-handling systems with
applications ranging from cargo handling on fixed-wing aircraft to positioning
television cameras on blimps, antenna and gear drives. Management believes that
Breeze-Eastern is the industry market share leader in sales of personnel-rescue
hoists and cargo hook equipment. As a pioneer of helicopter hoist technology,
Breeze-Eastern continues to develop sophisticated helicopter hoist systems,
including systems for the current generation of Seahawk, Chinook, Dolphin,
Merlin and Super Stallion helicopters. Breeze-Eastern also supplies equipment
for the United States, Japanese and European Multiple-Launch Rocket Systems
which use two specialized hoists to load and unload rocket pod containers.
Breeze-Eastern's external cargo-lift hook systems are original equipment on most
helicopters manufactured today. These hook systems range from small 1,000-pound
capacity models up to the largest 36,000-pound capacity hooks employed on the
Super Stallion helicopter. Breeze-Eastern also manufactures aircraft and cargo
tie-downs and electronic control boxes and components for helicopter tow boom
assemblies for helicopters employed in Navy minesweeping operations.
Breeze-Eastern sells its products through an internal marketing
representative and several independent sales representatives and distributors.
Breeze-Eastern's product lines contributed 19%, 30% and 36% to the Company's
consolidated sales in 1996, 1995 and 1994, respectively. The declining
percentage is attributable primarily to the acquisitions of fastener businesses
(Palnut, Industrial Retaining Ring and the Seeger Group).
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The Rescue Hoist and Cargo Hook Product segment backlog varies
substantially from time to time due to the size and timing of orders. At March
31, 1996, the backlog of unfilled orders was $30.9 million, compared to $21.8
million at March 31, 1995. The majority of the March 31, 1996 backlog is
anticipated to be shipped during fiscal 1997.
DEFENSE INDUSTRY SALES
Only 8% of the Company's revenues in 1996, as compared to 18% and 23%
in 1995 and 1994, respectively, were derived from sales to the United States
Government, principally the military services of the Department of Defense and
its prime contractors. These contracts typically contain precise performance
specifications and are subject to customary provisions which give the United
States Government the contractual right of termination for convenience. In the
event of termination for convenience, however, the Company is typically
protected by provisions allowing reimbursement for costs incurred as well as
payment of any applicable fees or profits. With overall defense spending down,
it is expected that the defense market for the Company's products will decline
in the future. However, the overall reduction in the Company's dependence on
these products renders it less vulnerable to defense budget cuts.
ENVIRONMENTAL MATTERS
Due primarily to Federal and State legislation which imposes liability,
regardless of fault, upon commercial product manufacturers for environmental
harm caused by chemicals, processes and practices that were commonly and
lawfully used prior to the enactment of such legislation, the Company may be
liable for all or a portion of the environmental clean-up costs at sites
previously owned or leased by the Company (or corporations acquired by the
Company). The Company's contingencies associated with environmental matters are
described in Note 11 of Notes to Consolidated Financial Statements included in
the Company's 1996 Annual Report on page 22 which is incorporated herein by
reference.
COMPETITION
The Company's businesses compete in some markets with entities that are
larger and have substantially greater financial and technical resources than the
Company. Generally, competitive factors include design capabilities, product
performance and delivery and price. The Company's ability to compete
successfully in such markets will depend on its ability to develop and apply
technological innovations and to expand its customer base and product lines. The
Company is successfully doing so both internally and through acquisitions. There
can be no assurance that the Company will continue to compete successfully in
any or all of the businesses discussed above. The failure of the Company to
compete in more than one of these businesses could have a material and adverse
effect on the Company's profitability.
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RAW MATERIALS
The various components and raw materials used by the Company to produce
its products are generally available from more than one source. In those
instances where only a single source for any material is available, most of such
items can generally be redesigned to accommodate materials made by other
suppliers. In some cases, the Company stocks an adequate supply of the single
source materials for use until a new supplier can be approved. No material part
of the Company's business is dependent upon a single supplier or a few suppliers
the loss of which would have a materially adverse effect on the Company's
consolidated financial position.
EMPLOYEES
As of May 26, 1996 the Company employed 1,437 persons. There were 1,240
employees associated with the Specialty Fastener Products segment, 178 with the
Rescue Hoist and Cargo Hook Products segment and 19 with the corporate office.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Financial information relating to each of the Company's segments has
been included in Note 13 of Notes to Consolidated Financial Statements included
in the Company's 1996 Annual Report on pages 22-24 and is incorporated herein by
reference.
FOREIGN OPERATIONS AND EXPORT SALES
The Company's foreign-based facilities during fiscal 1996 consisted of
the Seeger-Orbis facilities located in Germany, the Anderton facility located in
England, and the Seeger Reno facility located in Brazil. The Company acquired
these three businesses on June 30, 1995. Additionally, the Company had
foreign-based facilities during fiscal 1996 that are treated as discontinued
operations as of March 31, 1996. The Company had foreign sales of $45.2 million
in fiscal 1996, representing 29% of the Company's consolidated sales from
continuing operations. The Company had export sales of $16.9 million, $15.4
million and $14.9 million in fiscal 1996, 1995 and 1994, respectively,
representing 11%, 15% and 18% of the Company's consolidated sales from
continuing operations in each of those years, respectively. The risk and
profitability attendant to these sales are generally comparable to similar
products sold in the United States. Sales, profits and identifiable assets
attributable to the Company's foreign and domestic operations, and the
identification of export sales by geographic area, are set forth in Note 13 of
Notes to Consolidated Financial Statements in the Company's 1996 Annual Report
on pages 22-24 and is incorporated herein by reference.
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ITEM 2. PROPERTIES
The following table sets forth certain information concerning the
Company's principal facilities for its continuing operations:
<TABLE>
<CAPTION>
Owned or
Location Use of Premises Leased Sq. Ft
-------- --------------- ------ ------
<S> <C> <C> <C>
Liberty Corner, New Jersey Executive Offices Leased 10,000
SPECIALTY FASTENER
PRODUCTS SEGMENT
- ----------------
Saltsburg, Pennsylvania Breeze Industrial offices and Owned 100,000
manufacturing plant
Mountainside, New Jersey Palnut offices and manufacturing Owned 142,000
plant
Irvington, New Jersey Industrial Retaining Ring Owned 37,000
manufacturing plant
Somerset, New Jersey Seeger, Inc. offices Leased 104,000
and manufacturing plant
Konigstein, Germany Seeger Group offices and Owned 149,000
Seeger-Orbis manufacturing
plant
Eichen, Germany Seeger-Orbis manufacturing Owned 51,000
plant
Bingley, England Anderton offices and Owned 124,000
manufacturing plant
Sao Paulo, Brazil Seeger Reno offices and Owned 85,000
manufacturing plant
RESCUE HOIST AND CARGO
HOOK PRODUCTS SEGMENT
- ---------------------
Union, New Jersey Breeze-Eastern offices Owned 188,000
and manufacturing plant
</TABLE>
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The Company believes that such facilities are suitable and adequate for
the Company's foreseeable needs and that additional space, if necessary, will be
available. The Company continues to own or lease property that it no longer
needs in its operations. These properties are located in California,
Pennsylvania, New York, Illinois and North Carolina. In some instances, the
properties are leased or subleased and in nearly all instances these properties
are for sale.
ITEM 3. LEGAL PROCEEDINGS
The information required has been included in Note 11 of Notes to
Consolidated Financial Statements included in the Company's 1996 Annual Report
on page 22 and is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock, par value $0.01, is traded on the New York
Stock Exchange under the symbol TT. The following table sets forth the range of
high and low closing sales prices on the New York Stock Exchange for the Common
Stock for the calendar quarters indicated, as reported by the New York Stock
Exchange.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
Fiscal 1995
First Quarter $ 16-5/8 $ 12-3/8
Second Quarter 13-5/8 10-3/4
Third Quarter 12-1/2 10-1/2
Fourth Quarter 13-5/8 10
Fiscal 1996
First Quarter $ 13-1/2 $ 10-3/4
Second Quarter 14-7/8 12
Third Quarter 15-1/8 11-7/8
Fourth Quarter 15 12-1/2
Fiscal 1997
First Quarter $ 19-3/4 $ 14-7/8
(through May 30, 1996)
</TABLE>
As of May 30, 1996, the number of stockholders of record of the Common
Stock was 2,483. On May 30, 1996 the closing sales price of the Common Stock was
$19.25.
The Company's bank indebtedness permits quarterly dividend payments
which cannot exceed 25% of the Company's cumulative net income in each year. The
Company paid a regular quarterly dividend of $0.06 per share on June 1, 1994,
and an increased dividend of $0.065 per share on September 1 and December 1,
1994, March 1, June 1, September 1 and December 1, 1995 and March 1, 1996.
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ITEM 6. SELECTED FINANCIAL DATA
The information required has been included in the Company's 1996 Annual
Report on page 1 and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required has been included in the Company's 1996 Annual
Report on pages 26-30 and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements: The information required has been included in the
Company's 1996 Annual Report on pages 11-25 and is incorporated herein
by reference.
Quarterly Financial Data: The information required has been included in
Note 14 of Notes to Consolidated Financial Statements in the Company's
1996 Annual Report on page 24 and is incorporated herein by reference.
Financial Statement Schedules:
Schedule II --
Consolidated Valuation and Qualifying Accounts for years ended
March 31, 1996, 1995 and 1994.
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.
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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
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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.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is contained in the Company's
Proxy Statement for the year ended March 31, 1996 and is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is contained in the Company's
Proxy Statement for the year ended March 31, 1996 and is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is contained in the Company's
Proxy Statement for the year ended March 31, 1996 and is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is contained in the Company's
Proxy Statement for the year ended March 31, 1996 and is incorporated herein by
reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) List of documents filed as part of this report:
1. Financial Statements: The following financial statements have
been included in the Company's 1996 Annual Report on pages
11-25 and are incorporated herein by reference:
Consolidated Balance Sheets at March 31, 1996 and March 31,
1995
Statements of Consolidated Operations for the years ended
March 31, 1996, March 31, 1995 and March 31, 1994
Statements of Consolidated Cash Flows for the years ended
March 31, 1996, March 31, 1995 and March 31, 1994
Statements of Consolidated Stockholders' Equity for the years
ended March 31, 1996, March 31, 1995 and March 31, 1994
Notes to Consolidated Financial Statements
Independent Auditors' Report
2. Financial Statement Schedules:
Schedule II - Consolidated Valuation and Qualifying Accounts
for the years ended March 31, 1996, 1995 and 1994
3. Exhibits:
The exhibits listed on the accompanying Index to Exhibits are
filed as part of this report.
(b) Reports on Form 8-K:
In July 1995, a report on Form 8-K was filed to report the
acquisition of substantially all of SKF USA Inc.'s Seeger
Division and all of the outstanding stock of SKF GmbH's
Seeger-Orbis GmbH subsidiary on June 30, 1995.
A report on Form 8-K/A was filed in September 1995 amending
the report on Form 8-K previously filed in July 1995.
A report on Form 8-K/A was filed in November 1995
supplementing the report on Form 8-K previously filed in July
1995 and containing required financial statements.
In November 1995, a report on Form 8-K was filed to report the
sale of substantially all of the assets of the Company's
TransTechnology Electronics Division to ElecSys Incorporated
on August 18, 1995.
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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: June 17, 1996
TRANSTECHNOLOGY CORPORATION
By: /s/Michael J. Berthelot
-----------------------------
Michael J. Berthelot,
Chairman of the Board and
Chief Executive Officer
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Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Michael J. Berthelot Chairman of the Board and June 17, 1996
- ---------------------------- and Chief Executive Officer
MICHAEL J. BERTHELOT (Principal Executive Officer)
/s/Patrick K. Bolger President, Chief Operating June 17, 1996
- ---------------------------- Officer and Director
PATRICK K. BOLGER
/s/Chandler J. Moisen Senior Vice President, Treasurer and June 17, 1996
- ---------------------------- Chief Financial Officer
CHANDLER J. MOISEN (Principal Financial and Accounting Officer)
/s/Walter Belleville Director June 18, 1996
- ----------------------------
WALTER BELLEVILLE
/s/Gideon Argov Director June 17, 1996
- ----------------------------
GIDEON ARGOV
/s/Thomas V. Chema Director June 17, 1996
- ----------------------------
THOMAS V. CHEMA
/s/James A. Lawrence Director June 18, 1996
- ----------------------------
JAMES A. LAWRENCE
/s/Michel Glouchevitch Director June 18, 1996
- ----------------------------
MICHEL GLOUCHEVITCH
</TABLE>
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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. --
10.1 1996-1998 Long Term Incentive Plan of the Company. --
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. --
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. --
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. --
13 The Company's 1996 Annual Report. --
21 List of Subsidiaries of the Company. --
23 Independent Auditors' Consent. --
27 Financial Data Schedule. --
- ----------------------
(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>
15
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<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. --
</TABLE>
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EXHIBIT 3.2
BYLAWS
OF
TRANSTECHNOLOGY CORPORATION
(A Delaware Corporation)
ARTICLE I
Offices
Section 1.01. REGISTERED OFFICE. The registered office of
TransTechnology Corporation (the "Corporation") in the State of Delaware shall
be at Corporation Trust Center, 100 West Tenth Street, in the City of
Wilmington, County of New Castle, State of Delaware, and the name of the
registered agent at that address shall be The Corporation Trust Company.
Section 1.02. PRINCIPAL EXECUTIVE OFFICE. Effective as of May 10,1996
the principal executive address of the corporation shall be located at 150 Allen
Road, Liberty Corner, New Jersey 07938. The Board of Directors of the
Corporation (the "Board") may change the location of said principal executive
office.
Section 1.03. OTHER OFFICES. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 2.01. ANNUAL MEETINGS. The annual meeting of stockholders of the
Corporation shall be held on such date and at such time as the Board shall
determine. At each annual meeting of stockholders, directors shall be elected in
accordance with the provisions of Section 3.03 and any other proper business may
be transacted.
Section 2.02. SPECIAL MEETINGS. Special meetings of stockholders for any
purpose may be called at any time by a majority of the Board, the Chairman of
the Board, the President or the Secretary. Special meetings may not be called by
any other person. Each special meeting shall be held at such date and time as is
requested by the person or persons calling the meeting, within the limits fixed
by law.
Section 2.03. PLACE OF MEETINGS. Each annual or special meeting of
stockholders shall be held at such location as may be determined by the Board
or, if no
BYLAWS - Page 1
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such determination is made, at such place as may be determined by the Chairman
of the Board. If no location is so determined, any annual or special meeting
shall be held at the principal executive office of the Corporation.
Section 2.04. NOTICE OF MEETINGS. Except as otherwise required by law,
notice of each meeting of the stockholders, whether annual or special, shall be
given not less than 10 nor more than sixty days before the date of the meeting
to each stockholder of record entitled to vote at such meeting by delivering a
typewritten or printed notice thereof to him personally, or by depositing such
notice in the United States mail, in a postage prepaid envelope, directed to him
at his post-office address furnished by him to the Secretary for such purpose
or, if he shall not have furnished to the Secretary his address for such
purpose, then at his post-office address last known to the Secretary, or by
transmitting a notice thereof to him at such address by telegraph, cable or
wireless.
Except as otherwise expressly required by law, the notice shall state
the place, date and hour of the meeting, and, in the case of a special meeting,
shall also state the purpose for which the meeting is called. Notice of any
meeting of stockholders shall not be required to be given to any stockholder to
whom notice may be omitted pursuant to applicable Delaware law or who shall have
waived such notice and such notice shall be deemed waived by any stockholder who
shall attend such meeting in person or by proxy, except a stockholder who shall
attend such meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Except as otherwise expressly required by law,
notice of any adjourned meeting of the stockholders need not be given if the
time and place thereof are announced at the meeting at which the adjournment is
taken.
Section 2.05. CONDUCT OF MEETINGS. All annual and special meetings of
stockholders shall be conducted in accordance with such rules and procedures as
the Board may determine subject to the requirements of applicable law and, as to
matters not governed by such rules and procedures, as the chairman of such
meeting shall determine. The chairman of any annual or special meeting of
stockholders shall be the Chairman of the Board if he is willing, and if not,
then the President. The Secretary, or in the absence of the Secretary, a person
designated by the Chairman of the Board or President, as the case may be, shall
act as secretary of the meeting.
Section 2.06. QUORUM. At any meeting of stockholders, the presence, in
person or by proxy, of the holders of record of a majority of shares then issued
and outstanding and entitled to vote at the meeting shall constitute a quorum
for the transaction of business; provided, however, that this Section 2.06 shall
not affect any different requirement which may exist under statute, pursuant to
the rights of any authorized class or series of stock, or under the Certificate
of Incorporation of the Corporation (the "Certificate") for the vote necessary
for the adoption of any measure governed thereby. In the absence of a quorum,
the stockholders present in person or by proxy, by majority
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vote and without further notice, may adjourn the meeting from time to time until
a quorum is attained. At any reconvened meeting following such an adjournment at
which a quorum shall be present, any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2.07. VOTES REQUIRED. A majority of the votes cast at a duly
called meeting of stockholders, at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which may properly come
before the meeting, unless the vote of a greater or different number thereof is
required by statute, by the rights of any authorized class of stock or by the
Certificate. Unless the Certificate or a resolution of the Board of Directors
adopted in connection with the issuance of shares of any class or series of
stock provides for a greater or lesser number of votes per share, or limits or
denies voting rights, each outstanding share of stock, regardless of class,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
stockholders.
Section 2.08. PROXIES. A stockholder may vote the shares owned of record
by him either in person or by proxy executed in writing (which shall include
writings sent by telex, telegraph, cable or facsimile transmission) by the
stockholder himself or by his duly authorized attorney-in-fact. No proxy shall
be valid after 3 years from its date, unless the proxy provides for a longer
period. Each proxy shall be in writing, subscribed by the stockholder or his
duly authorized attorney-in-fact, and dated, but it need not be sealed,
witnessed or acknowledged.
Section 2.09. LIST OF STOCKHOLDERS. The Secretary of the Corporation
shall prepare and make (or cause to be prepared and made), at least 10 days
before every meeting of stockholders, a complete list of stockholders entitled
to vote at the meeting, arranged in alphabetical order and showing the address
of, and the number of shares registered in the name of, each stockholder. Such
list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the duration thereof, and may be inspected by any stockholder who is
present.
Section 2.10. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the Board may appoint Inspectors of Election to act at such
meeting or at any adjournments thereof. If such Inspectors are not so appointed
or fail or refuse to act, the chairman of any such meeting may (and, upon the
demand of any stockholder or stockholder's proxy, shall) make such an
appointment.
The number of Inspectors of Election shall be 1 or 3. If there are 3
Inspectors of Election, the decision, act or certificate of a majority shall be
effective and shall represent
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the decision, act or certificate of all. No such Inspector need be a stockholder
of the Corporation.
The Inspectors of Election shall determine the number of shares
outstanding, the voting power of each, the shares represented at the meeting,
the existence of a quorum and the authenticity, validity and effect of proxies;
they shall receive votes, ballots or consents, hear and determine all challenges
and questions in any way arising in connection with the right to vote, count and
tabulate all votes or consents, determine when the polls shall close and
determine the result; and finally, they shall do such acts as may be proper to
conduct the election or vote with fairness to all stockholders. On request, the
Inspectors shall make a report in writing to the secretary of the meeting
concerning any challenge, question or other matter as may have been determined
by them and shall execute and deliver to such secretary a certificate of any
fact found by them.
ARTICLE III
Directors
Section 3.01. GENERAL POWERS. Subject to any requirements in the
Certificate or the Bylaws, and of applicable law as to action which must be
authorized or approved by the stockholders, any and all corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
Corporation shall be under the direction of, the Board to the fullest extent
permitted by law. Without limiting the generality of the foregoing, it is hereby
expressly declared that the directors shall have the following powers, to wit:
First - To select and remove all the officers, agents and employees of
the Corporation, prescribe such powers and duties for them as may not be
inconsistent with law, with the Certificate or the Bylaws and fix their
compensation.
Second - To conduct, manage and control the affairs and business of the
Corporation, and to make such rules and regulations therefor not
inconsistent with law, or with the Certificate or the Bylaws, as they
may deem best.
Third - To change the location of the registered office of the
Corporation in Section 1.01; to change the principal executive office
for the transaction of the business of the Corporation from one location
to another as provided in Section 1.02; to fix and locate, from time to
time, one or more subsidiary offices of the Corporation within or
without the State of Delaware as provided in Section 1.03; to designate
any place within or without the State of Delaware for the holding of any
stockholders' meeting; and to adopt, make and use a corporate seal, and
to prescribe the forms of certificates of stock,
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and to alter the form of such seal and of such certificates, from time
to time, and in their judgment as they may deem best; provided, however,
that such seal and such certificates shall at all times comply with the
law.
Fourth - To authorize the issuance of shares of stock of the
Corporation, from time to time, upon such terms and for such
considerations as may be lawful.
Fifth - To borrow money and incur indebtedness for the purposes of the
Corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust and
securities therefor.
Section 3.02. NUMBER AND TERM OF OFFICE. Effective as of May 10,1996 the
authorized number of directors of the corporation shall be seven until this
section is amended by a resolution duly adopted by the Board or by the
stockholders, in either case in accordance with the provisions of Article V of
the Certificate. Directors need not be stockholders. Each of the directors shall
hold office until his successor shall have been duly elected and shall qualify
or until he shall resign or shall have been removed in the manner hereinafter
provided.
Section 3.03. ELECTION OF DIRECTORS. The directors shall be elected by
the stockholders of the Corporation, and at each election the persons receiving
the greater number of votes, up to the number of directors then to be elected,
shall be the persons then elected. The election of directors is subject to any
provisions contained in the Certificate relating thereto.
Section 3.04. RESIGNATIONS. Any director may resign at any time by
giving written notice to the Board or to the Secretary. Any such resignation
shall take effect at the time specified therein, or, if the time is not
specified, it shall take effect immediately upon receipt; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 3.05. VACANCIES. Except as otherwise provided in the
Certificate, any vacancy in the Board, whether because of death, resignation,
disqualification, an increase in the number of directors, or any other cause,
may be filled by vote of the majority of the remaining directors, although less
than a quorum. Each director so chosen to fill a vacancy shall hold office until
his successor shall have been elected and shall qualify or until he shall resign
or shall have been removed.
No reduction of the authorized number of directors shall have the effect
of removing any director prior to the expiration of his term of office.
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Section 3.06. PLACE OF MEETING, ETC. The Board or any committee thereof
may hold any of its meetings at any place, within or without the State of
Delaware, as the Board or such committee may, from time to time, by resolution
designate or as shall be designated by the person or persons calling the meeting
or in the notice or a waiver of notice of any such meeting. Directors may
participate in any regular or special meeting of the Board or any committee
thereof by means of conference telephone or similar communications equipment
pursuant to which all persons participating in the meeting of the Board or such
committee can hear each other, and such participation shall constitute presence
in person at such meeting.
Section 3.07. FIRST MEETING. The Board shall meet as soon as practicable
after each annual election of directors and notice of such first meeting shall
not be required.
Section 3.08. REGULAR MEETING. Regular meetings of the Board may be held
at such times as the Board shall, from time to time, by resolution determine. If
any date fixed for a regular meeting shall be a legal holiday at the place where
the meeting is to be held, then the meeting shall be held at the same hour and
place on the next succeeding business day not a legal holiday. Except as
provided by law, notice of regular meetings need not be given.
Section 3.09. SPECIAL MEETING. Special meetings of the Board for any
purpose shall be called at any time by the Chairman of the Board or, if he is
absent or unable or refuses to act, by the President or, if he is absent or
unable or refuses to act, by any Vice President, Secretary or by any two
directors. For any special meeting of the Board of Directors, the Executive
Committee, if such a committee has been created pursuant to Section 3.13 hereof,
may by resolution change the location of that meeting, provided the Executive
Committee resolution to that effect is adopted not later than the later of a)
five days before the called date of the meeting, or b) one day after the receipt
of the call of the meeting by the Chairman of the Executive Committee. Except as
otherwise provided by law or by the Bylaws, written notice of the time and place
of special meetings shall be delivered personally to each director, or sent to
each director by mail or by other form of written communication, charges
prepaid, addressed to him at his address as it is shown upon the records of the
Corporation, or if it is not so shown on such records and is not readily
ascertainable, at the place in which the meetings of the directors are regularly
held. In case such notice is mailed or telegraphed, it shall be deposited in the
United States mail or delivered to the telegraph company in the county in which
the principal executive office for the transaction of business of the
Corporation is located at least forty-eight hours prior to the time of the
holding of the meeting. In case such notice is delivered personally as above
provided, it shall be so delivered at least 24 hours prior to the time of the
holding of the meeting. Such mailing, telegraphing or delivery as above provided
shall be due, legal and personal notice to such director. Except where otherwise
required by law or by the Bylaws, notice of the purpose of a special meeting
need not be given. Notice of any meeting of the Board shall not be required to
be given to any director who is present at
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such meeting, except a director who shall attend such meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
Section 3.10. QUORUM AND MANNER OF ACTING. Except as otherwise provided
in the Bylaws, the Certificate or by applicable law, the presence of a majority
of the total number of directors shall be required to constitute a quorum for
the transaction of business at any meeting of the Board, and all matters shall
be decided at any such meeting, a quorum being present, by the affirmative votes
of a majority of the directors present. In the absence of a quorum, a majority
of directors present at any meeting may adjourn the same, from time to time,
until a quorum shall be present. Notice of any adjourned meeting need not be
given. The directors shall act only as a Board, and the individual directors
shall have no power as such.
Section 3.11. ACTION BY CONSENT. Any action required or permitted to be
taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if consent in writing is given thereto by all members of the
Board or of such committee, as the case may be, and such consent is filed with
the minutes of proceedings of the Board or committee.
Section 3.12. COMPENSATION. Directors who are not employees of the
Corporation or any of its subsidiaries may receive an annual fee for their
services as directors in an amount fixed by resolution of the Board, and in
addition, a fixed fee, with or without expenses of attendance, may be allowed by
resolution of the Board for attendance at each meeting, including each meeting
of a committee of the Board. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity as an
officer, agent, employee, or otherwise, and receiving compensation therefor.
Section 3.13. COMMITTEES. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. Any such committee,
to the extent provided in the resolution of the Board and subject to any
restrictions or limitations on the delegation of power and authority imposed by
applicable law, shall have and may exercise all the powers and authority of the
Board in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it. Any such committee may keep written minutes of its meetings and
shall report on its meetings to the Board at the next regular meeting of the
Board.
Section 3.14 MEETINGS OF COMMITTEES. Each committee of the Board shall
fix its own rules of procedure consist with the provisions of applicable law and
of any resolutions of the Board governing such committee. Each committee shall
meet as provided by such rules or such resolution of the Board. Unless otherwise
provided by such
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rules or by such resolution, the provisions of the Bylaws under Article III
entitled "Directors" relating to the place of holding meetings and the notice
required for meetings of the Board of Directors shall govern the place of
meetings and notice of meetings for committees of the Board. A majority of the
members of each committee shall constitute a quorum thereof, except that when a
committee consists of 1 member, then the 1 member shall constitute a quorum. In
the absence of a quorum, a majority of the members present at the time and place
of any meeting may adjourn the meeting from time to time until a quorum shall be
present and the meeting may be held as adjourned without further notice or
waiver. Except in cases where it is otherwise provided by the rules of such
committee or by a resolution of the Board, the vote of a majority of the members
present at a duly constituted meeting at which a quorum is present shall be
sufficient to pass any measure by the committee.
ARTICLE IV
Officers
Section 4.01 DESIGNATION, ELECTION AND TERM OF OFFICE. The Corporation
shall have a Vice-Chairman of the Board, a President, a chief financial officer,
such vice presidents as the Board deems appropriate, and a Secretary. These
officers shall be elected annually by the Board at the organizational meeting
immediately following the annual meeting of stockholders, and each such officer
shall hold office until the corresponding meeting of the Board in the next year
and until his successor shall have been elected and qualified or until his
earlier resignation, death or removal. In its discretion, the Board may leave
unfilled for any period it may fix any office to the ext allowed by law. Any
vacancy in any of the above offices may be filled for the unexpired portion of
the term by the Board at any regular or special meeting.
Section 4.02. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside, if present and willing, at all stockholders and Board of Directors'
meetings. In addition, he shall have such other duties as may, from
time-to-time, be assigned to him by the Board of Directors.
Section 4.03. VICE-CHAIRMAN OF THE BOARD. The Vice-Chairman of the Board
shall, in the absence or inability of the Chairman of the Board to perform such
duties, assume the duties and responsibilities of the Chairman of the Board as
defined in Section 4.02 of these Bylaws; and shall have such other duties as
may, from time-to-time, be assigned him by the Board of Directors.
Section 4.04. PRESIDENT. Except to the extent that the Bylaws or the
Board of Directors assign specific powers and duties to the Chairman of the
Board and/or the Vice-Chairman of the Board, the President shall be the
Corporation's General Manager and Chief Executive Officer and, subject to the
control of the Board of Directors, shall have
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general charge, supervision and control over the Corporation's assets,
businesses, operations and its officers. The managerial powers and duties of the
President include, but are not limited to, all of the general powers and duties
of management usually vested in the office of a president of a corporation, and
the making of reports to the Board of Directors and stockholders.
Section 4.05. EXECUTIVE VICE PRESIDENT. The Board may appoint an
Executive Vice President, who shall be accountable to the President. He shall
perform such duties as may be assigned to him, from time to time, by the Board
in its enabling resolution and by the President.
Section 4.06. VICE PRESIDENT/CHIEF FINANCIAL OFFICER. The chief
financial officer of the Corporation shall be a vice president. He shall report
to the President and be responsible for the management and supervision of all
financial matters and for the financial growth and stability of the Corporation.
In addition, he shall have the duties usually vested in the treasurer's office
of a corporation.
Section 4.07. VICE PRESIDENTS. Vice Presidents of the Corporation that
are elected by the Board shall perform such duties as may be assigned to them,
from time to time, by the President. Such vice presidents may be designated as
Group Vice Presidents, Senior Vice Presidents or other appropriate designations
given by the Board in its enabling resolutions.
Section 4.08. SECRETARY. The Secretary shall keep the minutes of the
meetings of the stockholders, the Board and all committee meetings. He shall be
the custodian of the corporate seal and shall affix it to all documents which he
is authorized by law or the Board to sign and seal. He also shall perform such
other duties as may be assigned to him, from time to time, by the Chairman of
the Board or the Board.
Section 4.09. OTHER OFFICERS. The Board may also elect one or more
Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers.
Section 4.10. WHEN DUTIES OF AN OFFICER MAY BE DELEGATED. In the case of
the absence or disability of an officer or for any other reason that may seem
sufficient to the Board, the Board, or any officer designated by it, or the
Chairman of the Board may, for the time of the absence or disability, delegate
such officer's duties and powers to any other officer of the Corporation.
Section 4.11. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board, to the Chairman of the Board, to the President, or
to the Secretary. Any such resignation shall take effect at the time specified
therein unless otherwise determined by the Board. The acceptance of a
resignation by the Corporation shall not be necessary to make it effective.
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Section 4.12. REMOVAL. Any officer of the Corporation may be removed,
with or without cause, by the affirmative vote of a majority of the entire
Board.
ARTICLE V
Contracts, Checks, Drafts, Bank Accounts, Etc.
Section 5.01. EXECUTION OF CONTRACTS. The Board, except as otherwise
provided in the Bylaws, may authorize any officer or officers, agent or agents,
to enter into any contract or execute any instrument in the name of and on
behalf of the Corporation, and such authority may be general or confined to
specific instances; and unless so authorized by the Board or by the Bylaws, no
officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or in any amount.
Section 5.02. CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for payment of money, notes or other evidence of indebtedness, issued in the
name of or payable to the Corporation, shall be signed or endorsed by such
person or persons and in such manner as, from time to time, shall be determined
by resolution of the Board. Each such officer, assistant, agent or attorney
shall give such bond, if any, as the Board may require.
Section 5.03. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited, from time to time, to the credit of the Corporation
in such banks, trust companies or other depositaries as the Board may select, or
as may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such powers shall
have been delegated by the Board. For the purpose of deposit and for the purpose
of collection for the account of the Corporation, the President, any Vice
President or the chief financial officer (or any other officer or officers,
assistant or assistants, agent or agents, or attorney or attorneys of the
Corporation who shall from time to time be determined by the Board) may endorse,
sign and deliver checks, drafts and other orders for the payment of money which
are payable to the order of the Corporation.
Section 5.04. GENERAL AND SPECIAL BANK ACCOUNTS. The Board may, from
time to time, authorize the opening and keeping of general and special bank
accounts with such banks, trust companies or other depositaries as the Board may
select or as may be selected by any officer, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent with the
provisions of the Bylaws as it may deem expedient.
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ARTICLE VI
Indemnification
Except to the extent prohibited by then applicable law, the Corporation
(i) shall indemnify and hold harmless each person who was or is a party to, or
is threatened to be made a party to, any threatened, pending or completed
action, suit or proceeding, whether or not by or in the right of the
Corporation, and whether civil, criminal, administrative, investigative or
otherwise (any such action, suit or proceeding being hereafter in this Article
referred to as a "proceeding"), by reason of the fact that such person is or was
a director or officer of the Corporation, is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, or was a director or officer of a
foreign or domestic corporation which was a predecessor corporation of the
Corporation or of another enterprise at the request of such predecessor
corporation; and (ii) may indemnify and hold harmless each person who was or is
a party to, or is threatened to be made a party to, any such proceeding by
reason of the fact that such person is or was an employee or agent of the
Corporation, is or was serving at the request of the Corporation as an employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, or was an employee or agent of a foreign or domestic corporation
which was a predecessor corporation of the Corporation or of any enterprise at
the request of such corporation (any such person being hereafter in the Article
referred to as an "indemnifiable party"). Where required by law, the
indemnification provided for in this Article shall be made only as authorized in
the specific case upon a determination, in the manner provided by law, that the
indemnification of the indemnifiable party is proper in the circumstances. The
Corporation shall advance to indemnifiable parties expenses incurred in
defending any proceeding prior to the final disposition thereof except to the
ext prohibited by then applicable law. This Article shall create a right of
indemnification for each such indemnifiable party whether or not the proceeding
to which the indemnification relates arose in whole or in part prior to adoption
of this Article (or the adoption of the comparable provisions of the Bylaws of
the Corporation's predecessor corporation) and, in the event of the death of an
indemnifiable party, such right shall extend to such indemnifiable party's legal
representatives. The right of indemnification hereby given shall not be
exclusive of any right such indemnifiable party may have, whether by law or
under any agreement, insurance policy, vote of the Board or stockholders, or
otherwise. The Corporation shall have power to purchase and maintain insurance
on behalf of any indemnifiable party against any liability asserted against or
incurred by the indemnifiable party in such capacity or arising out of the
indemnifiable party's status as such whether or not the Corporation would have
the power to indemnify the indemnifiable party against such liability.
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ARTICLE VII
Stock
Section 7.01. CERTIFICATES. Except as otherwise provided by law, each
stockholder shall be entitled to a certificate or certificates which shall
represent and certify the number and class (and series, if appropriate) of
shares of stock owned by him in the Corporation. Each certificate shall be
signed in the name of the Corporation by the Chairman of the Board and the
President, together with the Secretary. Any or all of the signatures on any
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were an officer, transfer agent or registrar at the date of
issue.
Section 7.02. TRANSFER OF SHARES. Shares of stock shall be transferable
on the books of the Corporation only by the holder thereof, in person or by his
duly authorized attorney, upon the surrender of the certificate representing the
shares to be transferred, properly endorsed, to the Corporation's registrar if
the Corporation has a registrar. The Board shall have power and authority to
make such other rules and regulations concerning the issue, transfer and
registration of certificates of the Corporation's stock as it may deem
expedient.
Section 7.03. TRANSFER AGENTS AND REGISTRARS. The Corporation may have
one or more transfer agents and one or more registrars of its stock whose
respective duties the Board or the Secretary may, from time to time, define. No
certificate of stock shall be valid until countersigned by a transfer agent, if
the Corporation has a transfer agent, or until registered by a registrar, if the
Corporation has a registrar. The duties of transfer agent and registrar may be
combined.
Section 7.04. STOCK LEDGERS. Original or duplicate stock ledgers,
containing the names and addresses of the stockholders of the Corporation and
the number of shares of each class of stock held by them, shall be kept at the
principal executive office of the Corporation or at the office of its transfer
agent or registrar.
Section 7.05. RECORD DATES. The Board shall fix, in advance, a date as
the record date for the purpose of determining stockholders entitled to notice
of, or to vote at, any meeting of stockholders or any adjournment thereof, or
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or in order to make a determination of
stockholders for any other proper purpose. Such date in any case shall be not
more than sixty days, and in case of a meeting of stockholders, not less than 10
days, prior to the date on which the particular action requiring such
determination of stockholders is to be taken. Only those stockholders of record
on the date so fixed shall
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be entitled to any of the foregoing rights, notwithstanding the transfer of any
such stock on the books of the Corporation after any such record date fixed by
the Board.
Section 7.06. NEW CERTIFICATES. In case any certificate of stock is
lost, stolen, mutilated or destroyed, the Board may authorize the issuance of a
new certificate in place thereof upon such terms and conditions as it may deem
advisable; or the Board may delegate such power to the Secretary; but the Board
or Secretary or agents, in their discretion, may refuse to issue such a new
certificate unless the Corporation is ordered to do so by a court of competent
jurisdiction.
ARTICLE VIII
General Provisions
Section 8.01. DIVIDENDS. Subject to limitations contained in Delaware
Law and the Certificate, the Board may declare and pay dividends upon the
shares of capital stock of the Corporation, which dividends may be paid either
in cash, securities of the Corporation or other property.
Section 8.02. VOTING OF STOCK IN OTHER CORPORATIONS. Any shares of stock
in other corporations or associations which may, from time to time, be held by
the Corporation, may be represented and voted at any of the stockholders'
meetings thereof by the Chairman of the Board, the President or the Secretary.
The Board, however, may by resolution appoint some other person or persons to
vote such shares, in which case such person or persons shall be entitled to
vote such shares upon the production of a certified copy of such resolution.
Section 8.03. AMENDMENTS. These Bylaws may be adopted, repealed,
rescinded, altered or amended only as provided in the Certificate.
Restated: May 10,1996
GH:1305
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EXHIBIT 10.1
TRANSTECHNOLOGY CORPORATION
FY'96-98 INCENTIVE COMPENSATION PLAN
The goal of the 1996-98 Incentive Compensation Plan is to directly align the
focus and remuneration of the divisional and corporate management with that of
the shareholders. This means that long term growth in the value of the business,
in addition to short term profit increases, will be key considerations in
awarding bonuses. That is not to say, however, that short term achievements
should not be considered for the payment of bonuses or that the time frame of
paying out such "Shareholder Value" based bonuses should be excessively long.
Individuals receiving bonuses should have the criteria used in determining and
measuring those bonuses fall within events which they can control and/or
influence. Individuals, and individual business units, should be rewarded for
their performance and should not be penalized for the failure of another unit,
yet at the same time, at another level, it is important to recognize that we are
all in this together. Incentive Compensation should be adequately high to
motivate the best managers, yet not become an obstacle in the minds of
shareholders that management is receiving a disproportionate award. Each of
these considerations is addressed and included in this plan. The 1996-98 plan
reflects the input of the corporate officers and staff, division presidents, and
the Incentive Compensation Committee of the Board of Directors.
THE OBJECTIVES OF THE 1996-1998 INCENTIVE COMPENSATION PLAN ("THE PLAN") ARE TO
(1) RECOGNIZE THE ACHIEVEMENT OF ABOVE AVERAGE RESULTS IN THE CURRENT FISCAL
YEAR; AND, (2) REWARD INCREASES IN THE VALUE OF THE ENTITY (AS DETERMINED BY THE
MARKETS AND AS SHARED WITH THE SHAREHOLDERS) OVER THE LONGER TERM. These goals
are consistent with the guidelines and objectives of the incentive compensation
program as established by the Board of Directors.
DIVISIONAL BONUS POOLS
ANNUAL CASH BONUS
The Plan will have two components. The first is a bonus to be paid in cash
annually at the conclusion of the fiscal year end audit, as is currently done.
Determination of the bonus pool amount and eligibility will be essentially
unchanged from that used in the old plan. The '96-'98 Plan's bonus pool for a
division staff will be 2% of BTP before the bonus, any acquisition interest, and
corporate charges and .6% of that same sum for Division Presidents. The total
amount of the annual cash bonus pool, however, will be reduced by the
elimination of the "multiples" that were a significant portion of the '93-'95
Plan. The '93-'95 plan "multiples" were established as an incentive for the
divisions to provide consistent financial performance during the difficult
corporate restructuring that was
<PAGE> 2
INCENTIVE COMPENSATION PLAN 1996-98
AS APPROVED BY THE BOARD OF DIRECTORS JULY 12, 1995 AND
AS AMENDED OCTOBER 19, 1995
PAGE 2
accomplished over the period. Now, with the corporate restructuring essentially
complete, the focus of the '96-'98 Plan is to increase shareholder value,
primarily through annual increases in BTP. A comparison of the bonus target
criteria between the old and new plans is as follows:
<TABLE>
<CAPTION>
CRITERIA '93-'95 '96-'98
<S> <C> <C>
Tactical plan operating income 35% 30%
Tactical plan objectives 30% 15%
Tactical plan cash flow 10% 10%
Return on investment 20% 15% 10%
Operating income growth 7.5% 10% 30%
Productivity growth 6% 0% 5%
Total 100% 100%
</TABLE>
Consistent with the overall objective of the '96-'98 Plan to increase BTP over
the prior period, the "growth" criteria, operating income growth and
productivity growth have been increased to provide the proper focus for the
Divisions.
Each individual criteria for the annual cash bonus will stand on its own merit
and no bonus will be paid for the performance against the criteria that is less
than 80% of the target. In the event that a "hurdle" rate, such as tactical plan
targets, ROI, growth, etc are exceeded, then the relative points awarded under
that criteria may exceed the amount shown above by the ratio of the actual over
the target. As a result, based upon the measurable criteria, the bonus paid out
could be more than 100% of the target bonus.
An example of how a bonus could exceed 100% of the target bonus is set forth
below:
<TABLE>
<CAPTION>
CRITERIA Actual Plan points Bonus points
<S> <C> <C> <C>
Tactical plan operating income 120% 30% 36%
Tactical plan objectives 100% 15% 15%
Tactical plan cash flow 90% 10% 9%
Return on investment 20% 25% 10% 12%
Operating income growth 7.5% 10% 30% 40%
Productivity growth 6% 8% 5% 6.5%
Total 100% 100% 118.5%
</TABLE>
<PAGE> 3
INCENTIVE COMPENSATION PLAN 1996-98
AS APPROVED BY THE BOARD OF DIRECTORS JULY 12, 1995 AND
AS AMENDED OCTOBER 19, 1995
PAGE 3
Under the above scenario, the actual bonus to be paid would be 118.5% of the
respective 2% and .6% for Division staff and Presidents. The excess over 100%
has no effect on the DEV portion of the bonus.
Division Presidents, who in the past received a cash bonus equal to 50% (i.e.,
1%) of that paid into the staff pool, has a pool established at 30% (or .6%) of
that established for the division staff. This reflects the desire to have
Division Presidents rewarded more as entrepreneurs who are paid upon the sale of
their business than as caretakers who complete each year and do not necessarily
have the longer term goal in mind. This reduction of 40% compared to the prior
years' plan is compensated for by establishing the Long Term component of the
plan, as discussed below.
The add-on restricted stock bonus would be reduced from the old plan's 25% to
10%. Criteria for awarding bonuses (operating income to tac plan, 20% return on
equity, cash flow objectives, 15% annual operating income growth, and
strategic/operational goals) are generally the same, as shown above, however, 6%
annual productivity increases will become one of the "bogies" for earning annual
cash bonuses.
LONG TERM INCREASE IN SHAREHOLDER VALUE BONUS
The second bonus component will be based upon the relative contribution to
increased shareholder value over a three year period as determined by the market
place. This component, in essence, determines a value for each operating
division based upon its Earnings before interest and taxes ("EBIT") and TTC's
Price Earnings multiple ("PE"). This PE is independently established in the
stock market and is a reflection of the value placed upon TTC by investors. The
increase in value of the entity over the three year term of the Plan (DELTA
ENTERPRISE VALUE, OR "DEV") would be determined and, to the extent that DEV
exceeded a hurdle rate of return, established by the Board and commensurate with
the long term financial goals of TTC, then 2.0% of that excess increase in value
would be paid to the Division President, in cash, at the end of the measurement
period (generally, 3/31/98).
The '96-'98 Plan therefore provides participants the opportunity to realize a
bonus not only by increasing annual earnings and achieving annual operating,
financial, and personal goals, but also for a achieving an increase in the value
of the company as a whole as expressed by a higher PE ratio. The correlation
with the PE ratio ties this portion of the bonus directly to real, long term
increases in shareholder value. However, out of fairness
<PAGE> 4
INCENTIVE COMPENSATION PLAN 1996-98
AS APPROVED BY THE BOARD OF DIRECTORS JULY 12, 1995 AND
AS AMENDED OCTOBER 19, 1995
PAGE 4
to the individual divisions, in order to avoid a "penalty" as a result of a bear
market, or the failure of another business unit, a floor PE, equal to that at
the beginning of the initial measurement period for "Enterprise Value", i.e.,
that at 3/31/95, would be established. The ending DEV then would be determined
using a PE not lower than the floor PE as established at the beginning of the
'96-98 Plan.
ENTERPRISE VALUE of a division will be determined by multiplying the division's
BTP (with corporate fees, interest and any accrued bonuses added back) by the
EBIT multiple. BTP will be that determined upon the completion of the year end
certified audit. Local third party debt will be subtracted in arriving at net
enterprise value, at the beginning and end of the measurement period.
THE EBIT MULTIPLE is derived using TTC's PE ratio based upon the average closing
price for the ten days following the release of the current fiscal year end
earnings (May 17, 1995) divided by the per share income from continuing
operations for that fiscal year ($1.45). The resultant PE ratio is then
multiplied by TTC's ratio of Net Income from continuing operations to EBIT in
order to obtain the EBIT multiple. For the seven trading days following the
release of FY'95 earnings, the average PE was approximately 8 times. For FY'95
net income from continuing operations was $7 million and EBIT was $12.7 million,
yielding a ratio of 55%. Multiplying this ratio times the PE of 8 yields an EBIT
multiple of 4.5.
To determine Enterprise Value, using the above EBIT multiple on Breeze
Industrial's FY'95 results, yields an enterprise value of $35.8 million at the
end of FY'95. The final beginning Enterprise Value, for purposes of calculating
DEV under the bonus plan, would not be determined until the closing trades on
June 1, 1995 are reported, thus completing the ten day trading period.
The DEV Hurdle Rate has been established at 12% by the Board of Directors. This
rate is established to represent the overall return an investor would seek at
the beginning of the three year measurement period. To the extent that the
actual realized return only meets that expectation, no DEV bonus would be paid,
as the increase in shareholder value would not be considered "above average" or
"outstanding", the criteria for earning a bonus. However, to the extent that the
hurdle was exceeded, then an increase in shareholder value beyond the
expectations of the market has been deemed delivered, and participants in the
plan will truly have earned a bonus based upon delivering increases in
shareholder value. The DEV bonus payout has been established at 2% of the excess
of
<PAGE> 5
INCENTIVE COMPENSATION PLAN 1996-98
AS APPROVED BY THE BOARD OF DIRECTORS JULY 12, 1995 AND
AS AMENDED OCTOBER 19, 1995
PAGE 5
the DEV required using the compounded hurdle rate. The "target" Enterprise Value
will be determined in June, 1995. An annual statement of "Interim" Enterprise
Value will be circulated amongst the divisions at the end of FY'96 and FY'97 in
order to communicate progress towards the DEV goal and to provide measurement
points in the event of certain events.
There is no ceiling or cap placed upon the bonuses to be paid. The DEV PE floor
ratio would be established as previously noted.
IN THE EVENT OF THE SALE OF A DIVISION, the final Enterprise Value will be the
selling price of the Division and the DEV bonus will be calculated on the
difference between the final Enterprise Value and the Base Enterprise value.
IN THE EVENT OF THE SALE OR MERGER OF TRANSTECHNOLOGY, the final Enterprise
Value will be calculated using the PE ratio which results from the transaction's
selling price per share of TTC stock against the most recent fiscal year end
earnings data.
IN THE EVENT OF TERMINATION OF EMPLOYMENT, DEATH, OR DISABILITY, bonus
calculation rules will be applied as are currently done for longevity, however,
the final DEV bonus for such participants will be calculated using the PE ratio
and EPS at the end of the current fiscal year as if it were the final year of
the Plan.
IN THE EVENT OF A CHANGE IN CONTROL, as defined in the Long Term Incentive Plan
approved by the shareholders, the Enterprise Value would be calculated using the
EBIT multiplier based on a PE derived from the average closing price of TT stock
for the ten trading days immediately preceding the change in control and the EPS
from the most recent fiscal year ended prior to the change in control or the
trailing four fiscal quarters, whichever is greater, (adjusted for actual shares
outstanding prior to the change in control). Within ten days of a change in
control occurring, the bonus pool under the resultant DEV calculation will be
paid out in cash to the participants.
For purposes of this plan, A GROUP DIRECTOR will be treated as a President of
the entire group with any bonus calculated based upon the operations of the
group on a consolidated basis. PRESIDENTS OF BUSINESS UNITS WITHIN A GROUP will
be treated as Division Presidents. In a case where a Group Director also acts as
a Division President, in recognition of the fact that the second in charge at
the local operation in essence performs the role of a local Division President,
the Group Director shall designate the person to be
<PAGE> 6
INCENTIVE COMPENSATION PLAN 1996-98
AS APPROVED BY THE BOARD OF DIRECTORS JULY 12, 1995 AND
AS AMENDED OCTOBER 19, 1995
PAGE 6
treated, for purposes of this Plan, as Division President. In no instance may a
Group Director receive a bonus as Group Director and Division President.
<PAGE> 7
INCENTIVE COMPENSATION PLAN 1996-98
AS APPROVED BY THE BOARD OF DIRECTORS JULY 12, 1995 AND
AS AMENDED OCTOBER 19, 1995
PAGE 7
CORPORATE OFFICE POOLS
ANNUAL CASH BONUSES
The Plan will have two components. The first is a bonus to be paid in cash
annually at the conclusion of the fiscal year end audit, as is currently done.
The '93-'95 Plan bonus pool for the corporate office pools, combined, was 2.5%
of BTP before the bonus. Under the '96-98 Plan, this pool would change to 3.25%
of net after tax income from continuing operations. This change of measuring the
the pool from BTP to after tax earnings serves as a reduction of annual cash
bonuses by approximately 60%. Criteria for awarding bonuses are as set forth
below:
<TABLE>
<CAPTION>
Officers Officers Staff
CRITERIA '93-'95 '96-'98 '96-98
<S> <C> <C> <C>
Tactical plan operating income 35% 30% 20%
Personal plan objectives 30% 15% 40%
Tactical plan cash flow 10% 10% 5%
Return on investment 20% 15% 10% 5%
Operating income growth 7.5% 10% 30% 25%
Productivity growth 6% 0% 5% 5%
Total 100% 100% 100%
</TABLE>
Each individual criteria for the annual cash bonus will stand on its own merit
and no bonus will be paid for performance against the criteria that is less than
80% of the target. No bonus pool will be paid against the criteria that is less
than 80% of target. As in the Division bonus program, performance in excess of
100% of goal for operating income, cash flow, return on investment, operating
income and/or productivity growth may result in bonus points exceeding 100% of
the target bonus.
<PAGE> 8
INCENTIVE COMPENSATION PLAN 1996-98
AS APPROVED BY THE BOARD OF DIRECTORS JULY 12, 1995 AND
AS AMENDED OCTOBER 19, 1995
PAGE 8
In the old plan, there were two separate pools for the corporate officers/staff
and other corporate staffers received subjective bonuses unaffiliated with hard
targets or measurements. In the new plan, the pool has been slightly increased
but the number of participants broadened. Allocations of the corporate pool are
as follows:
<TABLE>
<S> <C>
CEO 30.46%
COO 20.31%
CFO 16.92%
VP Operations 13.04%
General Counsel 8.46%
Corp. Staff 10.80%
-----
Total 100%
</TABLE>
Bonus awards from the pool for non-officers would be based 40% upon the
achievement of personal objectives and 60% upon the achievement of corporate
goals. Personal goals must be established by department heads jointly with the
participants, in writing, at the beginning of the fiscal year and made subject
to review at year end, prior to recommendation of bonus payments.
Corporate Officers will receive an add-on bonus in restricted stock equal to 10%
of the annual cash bonus, similar to that feature in the Division's plans.
Current criteria for meeting non-financial objectives and goals generally remain
unchanged, although the productivity increase standard has been added to the
corporate goals as a bonus criteria.
LONG TERM INCREASE IN SHAREHOLDER VALUE BONUS
The Corporate Office will have a single DEV pool which will be based upon
changes in Enterprise Value using the PE ratio calculated using the same methods
as that for the Divisions applied to Net income (after tax) from continuing
operations for the period. There would be no adjustment to an EBIT multiplier
for the Corporate Office pool. Payout procedures and timing are the same as that
used in the Divisions. The DEV component of the Corporate Office pool will be
paid in cash upon the conclusion of the FY'98 year end audit and the ten day
stock trading period following the release of the audited earnings. The DEV
bonus pool, which will equal 5% of the excess DEV over the 12% hurdle rate, will
be allocated in the same manner as the annual cash bonus pool as reflected
above.
<PAGE> 1
EXHIBIT 10.9
AMENDMENT AGREEMENT NO.1
dated as of August 29, 1995
to that certain
$115,000,000 REVOLVING CREDIT AND
TERM LOAN AGREEMENT
and other Loan Documents executed in connection therewith
This AMENDMENT AGREEMENT NO.1 (the "Amendment"), dated as of August 29,
1995, is by and among TRANSTECHNOLOGY CORPORATION ("TransTechnology"),
TRANSTECHNOLOGY SEEGER-ORBIS GMBH ("GmbH"), TTUK ACQUISITION CO. LIMITED
("Limited" and, together with TransTechnology and GmbH, the "Borrowers"), THE
FIRST NATIONAL BANK OF BOSTON ("FNBB"), the other lending institutions listed on
Schedule I (the "Banks") and Schedule 2 (the "Term B Lenders") thereto, THE
FIRST NATIONAL BANK OF BOSTON, acting through its London Branch and its
Frankfurt Branch, as fronting bank (in such capacity, the "Fronting Bank"), THE
FIRST NATIONAL BANK OF BOSTON, as issuing bank (in such capacity, the "Issuing
Bank", and together with the Banks, the Term B Lenders and the Fronting Bank,
the "Lenders") and THE FIRST NATIONAL BANK OF BOSTON, as Agent (in such
capacity, the "Agent"). Capitalized terms used herein unless otherwise defined
shall have the respective meanings set forth in the Credit Agreement.
WHEREAS, the Borrowers, the Lenders and the Agent are parties to (i)
that certain Revolving Credit and Term Loan Agreement dated as of June 30, 1995
(as amended and in effect from time to time, the "Credit Agreement"); and (ii)
the other Loan Documents executed in connection therewith;
WHEREAS, the Lenders, the Agent and the Borrowers have agreed to amend
the Credit Agreement and certain of the Loan Documents as hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing premises, the parties
hereby agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is
hereby amended as follows:
(a) Section 1.1 of the Credit Agreement is hereby amended by deleting
the definition of "Subordinated Debt" in its entirety and substituting therefor
the following:
<PAGE> 2
-2-
Subordinated Debt. Unsecured Indebtedness of TransTechnology or
any of its Subsidiaries in an amount, containing other terms and
conditions, and expressly subordinated and made junior to the payment
and performance in full of the Obligations, pursuant to a written
instrument containing subordination provisions, in each respect
satisfactory to and approved by both the Majority Banks and the Majority
Term B Lenders in writing.
(b) Section 6.3.2. of the Credit Agreement is hereby amended by
inserting before the semi-colon at the end of subsection (a), clause (ii) the
following:
provided, however, that, for purposes of this clause (ii) only, the
Applicable Margin shall be deemed to be that Applicable Margin which
is to be applied to Eurocurrency Rate Loans
(c) Section 6.12 of the Credit Agreement is hereby amended by adding the
following new subsection:
6.12.4. NOTICE TO BANKS. Not less than once each month the Agent
will notify each of the Banks as to such Bank's balance of all Fronted
Loans outstanding at such time.
(d) Section 11.2 of the Credit Agreement is hereby amended by deleting
from clause (i)(B) the phrase "to the extent permitted by Section 11.6".
(e) Section 14.1 of the Credit Agreement is hereby amended by inserting
after the phrase "approval of the Lenders" in subsection (j) thereof the
following:
(and, notwithstanding anything herein to the contrary, if any
guaranty shall be cancelled, terminated, revoked or rescinded
without the consent of the Lenders)
(f) Section 20.1.2 of the Credit Agreement is hereby amended by deleting
clause (iii) of the first sentence thereof in its entirety and substituting
therefor the following:
(iii) each partial assignment shall be in a minimum amount of
$5,000,000 and
SECTION 2. AMENDMENT TO SUBSIDIARY GUARANTY. Section 6.1 of the
Subsidiary Guaranty is hereby amended by
(a) deleting the word "each" in the second line thereof and substituting
therefor the word "none"; and
<PAGE> 3
-3-
(b) deleting the word "such" in the third line thereof and substituting
therefor the word "each".
SECTION 3. AMENDMENT TO SECURITY AGREEMENT. Section 6 of the Security
Agreement is hereby amended by inserting after the phrase "of the Credit
Agreement," the words "none of".
SECTION 4. AMENDMENT TO TRADEMARK COLLATERAL SECURITY AND PLEDGE
AGREEMENT. The Trademark Collateral Security and Pledge Agreement is hereby
amended by deleting Schedule A thereto in its entirety and substituting therefor
the Schedule A attached hereto as Exhibit 1.
SECTION 5. AMENDMENT TO PATENT COLLATERAL ASSIGNMENT AND SECURITY
AGREEMENT. The Patent Collateral Assignment and Security Agreement is hereby
amended by deleting Schedule A thereto in its entirety and substituting therefor
the Schedule A attached hereto as Exhibit 2.
SECTION 6. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment Agreement No. 1 shall be conditioned upon the satisfaction of the
following conditions precedent:
SECTION 6.1. DELIVERY OF DOCUMENTS. The Borrowers shall have delivered
to the Agent this Amendment executed and delivered by each of the Borrowers, the
Lenders and the Agent;
SECTION 6.2. LEGALITY OF TRANSACTION. No change in applicable law shall
have occurred as a consequence of which it shall have become and continue to be
unlawful on the date this Amendment is to become effective (a) for the Agent or
any Lender to perform any of its obligations under any of the Loan Documents or
(b) for any of the Borrowers to perform any of its agreements or obligations
under any of the Loan Documents.
SECTION 6.3. PERFORMANCE. Each of the Borrowers shall have duly and
properly performed, complied with and observed in all material respects its
covenants, agreements and obligations contained in the Loan Documents required
to be performed, complied with or observed by it on or prior to the date this
Amendment is to become effective. No event shall have occurred on or prior to
the date this Amendment is to become effective and be continuing, and no
condition shall exist on the date this Amendment is to become effective which
constitutes a Default or Event of Default under any of the Loan Documents.
SECTION 6.4. PROCEEDINGS AND DOCUMENTS. All corporate, governmental and
other proceedings in connection with the transactions contemplated by this
Amendment and all instruments and documents incidental thereto shall be in form
and substance reasonably satisfactory to the Agent and the Agent shall have
received all such counterpart originals or certified or other copies of all such
instruments and documents as the Agent shall have reasonably requested.
<PAGE> 4
-4-
SECTION 7. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers hereby
represents and warrants to the Lenders as follows:
(a) The representations and warranties of such Borrower contained in the
Credit Agreement and the other Loan Documents, as amended hereby, were true and
correct in all material respects when made and continue to be true and correct
in all material respects on the date hereof, except that the financial
statements referred to therein shall be the financial statements of such
Borrower most recently delivered to the Agent, and except as such
representations and warranties are affected by the transactions contemplated
hereby;
(b) The execution, delivery and performance by such Borrower of this
Amendment and the consummation of the transactions contemplated hereby; (i) are
within the corporate powers of such Borrower and have been duly authorized by
all necessary corporate action on the part of such Borrower, (ii) do not require
any approval, consent of, or filing with, any governmental agency or authority,
or any other person, association or entity, which bears on the validity of this
Amendment and which is required by law or the regulation or rule of any agency
or authority, or other person, association or entity, (iii) do not violate any
provisions of any order, writ, judgment, injunction, decree, determination or
award presently in effect in which such Borrower is named, or any provision of
the charter documents or by-laws of such Borrower, (iv) do not result in any
breach of or constitute a default under any agreement or instrument to which
such Borrower is a party or to which it or any of its properties are bound,
including without limitation any indenture, loan or loan agreement, lease, debt
instrument or mortgage, except for such breaches and defaults which would not
have a material adverse effect on such Borrower and its Subsidiaries taken as a
whole, and (v) do not result in or require the creation or imposition of any
mortgage, deed of trust, pledge or encumbrance of any nature upon any of the
assets or properties of such Borrower; and
(c) This Amendment, the Credit Agreement as amended hereby, and the
other Loan Documents, as amended hereby constitute the legal, valid and binding
obligations of such Borrower, enforceable against such Borrower in accordance
with their respective terms, provided that (i) enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application affecting the rights and remedies of creditors, and (ii)
enforcement may be subject to general principles of equity, and the availability
of the remedies of specific performance and injunctive relief may be subject to
the discretion of the court before which any proceeding for such remedies may be
brought.
SECTION 8. NO OTHER AMENDMENTS. Except as expressly provided in this
Amendment, all of the terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect.
<PAGE> 5
-5-
SECTION 9. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts and by each party on a separate counterpart, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one instrument. In proving this Amendment, it shall
not be necessary to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.
SECTION 10. EFFECTIVE DATE. Subject to the satisfaction of the
conditions precedent set forth in Section 6 hereof, this Amendment shall be
deemed to be effective as of the date hereof (the "Effective Date").
<PAGE> 6
- 6 -
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
Agreement No. 1 as a sealed instrument as of the date first set forth above.
TRANSTECHNOLOGY CORPORATION
By: /s/Chandler J. Moisen
-----------------------------------
Name: Chandler J. Moisen
Title: Senior VP
TRANSTECHNOLOGY SEEGER-ORBIS GmbH
By: /s/Chandler J. Moisen
-----------------------------------
Name: Chandler J. Moisen
Title: Attorney-in-fact
TTUK ACQUISITION CO. LIMITED
By: /s/Chandler J. Moisen
-----------------------------------
Name: Chandler J. Moisen
Title: Attorney
By: /s/Valentina Doss
-----------------------------------
Name: Valentina Doss
Title: Attorney
THE FIRST NATIONAL BANK OF BOSTON,
individually and as Agent, Issuing Bank
and Fronting Bank
By: /s/ J. Peter Mitchell
-----------------------------------
Name: J. Peter Mitchell
Title: Director
<PAGE> 7
EXHIBIT 1
SCHEDULE A
(List of U.S. Trademarks)
U.S. Trademark Registrations
<TABLE>
<CAPTION>
Trademark or Service Mark Registration No.
- ------------------------- ----------------
<S> <C>
BREEZE 294,293
PAL 340,210
PALNUT 556,075
CRESCENT 615,340
PUSHNUT 617,710
AERO-SEAL JET and Design 622,536
PUSHNUTS 651,077
SNAP-PAK 708,065
GRIPRING 721,293
RING-O-MAT 721,869
RING-MOUNT 737,496
RETAINING RING DESIGN 780,219
POWER-SEAL 869,921
ON-SERT 882,005
MASSTECH 970,172
MAKE-A-CLAMP 975,772
TRUARC (BLOCK LETTERS) 1,001,237
MULTIARC (block) 1,020,954
PRONG-LOCK 1,026,539
KLIPRING 1,035,195
BREEZE 1,134,995
BREEZE 1,135,036
BREEZE 1,147,031
RING-GUN 1,172,919
RING-JECTOR 1,172,920
ROL-PAK 1,179,814
"MT" LOGO 1,249,749
BI-PRO 1,261,528
ERC 1,299,267
CONSTANT-TORQUE 1,307,639
TRUARC RADIAL POWER-GUN 1,329,250
RETAINING RING DESIGN 1,330,849
SEEGER 1,437,708
SEEGER & DESIGN 1,444,876
A/U logo 1,449,269
AERO-AW1 1,723,241
</TABLE>
<PAGE> 8
- 2 -
Trademark Applications
<TABLE>
<CAPTION>
Trademark or Service Mark Serial No.
- ------------------------- ----------
<S> <C>
A (design) 74/446,309
EURO-SEAL Application
pending
CLIP-RING WITH GLOBE (design) Application
pending
CLIP-RING Application
pending
FASTENING IS OUR BUSINESS Application
pending
</TABLE>
<PAGE> 9
SCHEDULE A (CONT.)
(LIST OF FOREIGN TRADEMARKS)
TRANSTECHNOLOGY CORPORATION
<TABLE>
<CAPTION>
Trademark or Service Mark Registration No. Country
- ------------------------- ---------------- -------
<S> <C> <C>
PALNUT (R) 32136 Australia
PALNUT (R) 006049 Benelux
PALNUT (R) 002553287 Brazil
PUSHNUT (R) 125904 Canada
PAL (R) 156512 Canada
PALNUT (R) 1,364,519 France
PALNUT (R) 73275/157026 France
PALNUT (R) 114499 India
PALNUT (R) XXXXXX Italy
PALNUT (R) 236052 Italy
ON-SERT with Katakan (R) 1597356 Japan
ON-SERT w/ Katakana (R) 1520146 Japan
PALNUT (R) 860/60 Malawi
PALNUT (R) 283205 Mexico
PALNUT (R) 68730 New Zealand
PALNUT (R) 371521 U.K.
PAL (R) 1056305 U.K.
ON-SERT (R) 1064188 U.K.
PALNUT (R) 1020657 Germany
PALNUT (R) 860/60(ZAM) Zambia
PALNUT (R) 860/60 (Zim) Zimbabwe
<CAPTION>
WALDES TRUARC INC.
Trademark or Service Mark Registration No. Country
- ------------------------- ---------------- -------
TRUARC 113/1947 Denmark
DESIGN MARK 151/38743 Canada
TRUARC 041,123 Benelux
TRUARC 21274 Austria
TRUARC 619,687 Germany
TRUARC RADIAL POWER
GUN 316,711 Mexico
TRUARC (block letters) 21/839 Phillipines
TRUARC (stylized) 351,903 Switzerland
TRUARC 49152 Thailand
TRUARC (block letters) 168460 Uruguay
TRUARC 39911 Norway
TRUARC 0196015 Spain
</TABLE>
<PAGE> 10
-2-
<TABLE>
<S> <C> <C>
TRUARC 76828 Turkey
TRUARC 37,198 Israel
TRUARC 76103-f Venezuela
TRUARC 351,903 Switzerland
TRUARC 62,631 Sweden
TRUARC 214,294 Italy
TRUARC 36809 Israel
WALDES TRUARC 335,459 Chile
TRUARC 335,460 Chile
WALDES TRUARC 1,160,544 Argentina
WALDES TRUARC 1,160,545 Argentina
WALDES TRUARC 1,160,546 Argentina
WALDES TRUARC 1,160,547 Argentina
WALDES TRUARC 1,160,548 Argentina
WALDES TRUARC 1,160,549 Argentina
WALDES TRUARC 1,160,550 Argentina
WALDES TRUARC 1,160,551 Argentina
WALDES TRUARC 1,160,552 Argentina
TRUARC 1,142,971 Japan
TRUARC RADIAL POWER
GUN 328,509 Canada
TRUARC 1,001,443 France
TRUARC 285,851 India
TRUARC 285,853 India
WALDES TRUARC 361,878 Mexico
MULTIARC 347,047 Canada
TRUARC 18695 Canada
TRUARC B716,372 U.K.
RING-JECTOR (word) 1,478,546 France
ROL-PAK (word) 1,478,544 France
GRIPRING 1,478,547 France
RING-GUN (word) 1,478,543 France
RETAINING RING (device) 1,478,542 France
SNAP-PAK (word) 1,478,541 France
RING-O-MAT (word) 1,478,545 France
TRUARC 630,996 U.K.
KLIPRING 1,244,673 France
MULTIARC 1,244,672 France
TRUARC 383,007 Mexico
TRUARC RADIAL POWER
GUN 501,116 Italy
TRUARC 21,274 Austria
TRUARC RADIAL POWER
GUN 1,087,422 Germany
TRUARC A106152 Australia
TRUARC 1,173,535 Japan
TRUARC 56,957 Singapore
</TABLE>
<PAGE> 11
-3-
<TABLE>
<S> <C> <C>
WALDES TRUARC 003588920 Brazil
MULTIARC 2258136 Japan
(PENDING)
WALDES TRUARC INC.
TRUARC RADIAL POWER
GUN 94 544 805 France
</TABLE>
<PAGE> 12
EXHIBIT 2
SCHEDULE A
(LIST OF U.S. PATENTS)
<TABLE>
<CAPTION>
Title Registration No.
- ----- ----------------
<S> <C>
Clamp Body 289,141
Apparatus for Controlling 3,992,300
Iron Content of a Zine
Phosphating Bath
Cable Tensioning Device 4,227,678
Releasable Hose Fitting 4,270,777
Blind Clip Fastener 4,300,865
Self-Retaining Spring Washer 4,300,866
Quick Disconnect Connector with 4,445,743
Positive Locking Device
Self-Locking Coupling Nut 4,588,245
Hand Applicator for Radially Assembled 4,592,122
Spring Retaining Rings
Fastener Clip 4,610,588
Connector Mechanical Interlock 4,610,496
Using Ball Detents
Radially Assembled Spring Retaining Ring 4,667,399
and Power Gun for Assembling Same
Helicopter Cargo Hook 4,678,219
Tiedown Chain 4,850,768
Bowed External Spring Retaining Ring of 4,886,408
the E-Shaped Type
Push-Nut Type Fastener 4,911,594
Push-In Fastener Clip 4,925,351
Twist-off Pushnut Fastener 5,110,246
Pushnut for automatic Feeder 5,195,860
</TABLE>
<PAGE> 13
SCHEDULE A (CONT.)
(LIST OF FOREIGN PATENTS)
TRANSTECHNOLOGY CORPORATION
<TABLE>
<CAPTION>
Title Registration No. Country
- ----- ---------------- -------
<S> <C> <C>
Helicopter Cargo Hook 1,282,094 Canada
Tiedown Chain 2,151,328 U.K.
Tiedown Chain 1,179,862 Italian
Fastener Clip 1,250,163 Canada
Fastener Clip P35246510 Germany
Fastener Clip 2,162,272 U.K.
Fastener Clip 85111233 France
Fastener Clip 292,080 Spain
Push-Nut Type Fastener pending U.K.
Push-Nut Type Fastener pending Japan
Push-Nut Type Fastener pending Korea
Push-Nut Type Fastener pending Netherlands
Push-Nut Type Fastener pending Sweden
WALDES TRUARC INC.
Title Registration No. Country
- ----- ---------------- -------
Double-Bevel Spring Retaining Ring 0019361 U.K.
Double-Bevel Spring Retaining Ring 30 68 775 Germany
Double Bevel Spring Retaining Ring IT 0019361 Italy
Bowed External Spring Retaining
Ring of the E-Shaped Type 1,275,586 Canada
Double-Bevel Spring Retaining Ring 182,386 Mexico
Methods and Apparatus for
Installing a Radially Assembled
Spring Retaining Ring into an
External Groove of a Workpiece 162,356 Mexico
25 54 555 Germany
(PENDING)
Hand Applicator for Radially
Assembled Spring 527,862 Canada
Punching Method and Apparatus for
Making a Bowed External Retaining
Ring 527,864 Canada
</TABLE>
<PAGE> 14
EXHIBIT A
SCHEDULE 1
The Banks
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bank Address of Lending Office Revolving Credit $34,000,000 $4,000,000 $2,000,000
(Domestic and Eurodollar) and Term A Revolver Revolver Revolver
Commitment (Germany) (UK)
Percentage
- --------------------------------------------------------------------------------------------------------------------------
The First National 100 Federal Street 21.166667% 8,216,666.78 966,666.68 483,333.34
Bank of Boston Boston, MA 02110
Fax No: (+1) 617-434-6685
- --------------------------------------------------------------------------------------------------------------------------
National Bank of One Cleveland Center 22.222222% 7,555,555.48 888,888.88 444,444.44
Canada 1375 East 9th Street
Suite 2430
Cleveland, OH 44114
Fax No: (216) 574-9236
- --------------------------------------------------------------------------------------------------------------------------
BHF-Bank AG 590 Madison Avenue 15% 5,100,000.00 600,000.00 300,000.00
New York, NY 10022-2540
Fax No: (212) 766-5911
- --------------------------------------------------------------------------------------------------------------------------
Dresdner Bank AG 75 Wall Street 13.611111% 4,627,777.74 544,444,44 272,222.22
New York Branch New York, NY 10005
and Fax No: (212) 574-0129
Grand Cayman Branch
- --------------------------------------------------------------------------------------------------------------------------
NBD Bank 611 Woodward Avenue 15% 5,100,000.00 600,000.00 300,000.00
Detroit, MI 48226
Fax No: (313) 225-1586
- --------------------------------------------------------------------------------------------------------------------------
United Jersey Bank 26 East Salem, 6th Floor 10% 3,400,000.00 400,000.00 200,000.00
Hackensack, NJ 07602
Fax No: (201) 343-6723
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Bank $30,000,000 $8,000,000 $12,000,000
Term A Term A Term A
(US) (UK) (Germany)
- ----------------------------------------------------------------------------
The First National 7,250,000.10 1,933,333.36 2,900,000.04
Bank of Boston
- ----------------------------------------------------------------------------
National Bank of 6,666,666.60 1,777,777.76 2,666,666.64
Canada
- ----------------------------------------------------------------------------
BHF-Bank AG 4,500,000.00 1,200,000.00 1,800,000.00
- ----------------------------------------------------------------------------
Dresdner Bank AG 4,083,333.30 1,088,888.88 1,633,333.32
New York Branch
and
Grand Cayman Branch
- ----------------------------------------------------------------------------
NBD Bank 4,500,000.00 1,200,000.00 1,800,000.00
- ----------------------------------------------------------------------------
United Jersey Bank 3,000,000.00 800,000.00 1,200,000.00
- ----------------------------------------------------------------------------
</TABLE>
<PAGE> 15
SCHEDULE 2
The Term B Lenders
<TABLE>
<CAPTION>
Term B Address of Lending Office Term B Commitment $25,000,000
Lender (Domestic and Eurodollar) Percentage Term B
- ------ ------------------------- ---------- ------
<S> <C> <C> <C>
The First National 100 Federal Street 5% 1,250,000.00
Bank of Boston Boston, MA 02110
Fax: (+1) 617-434-6685
Dresdner Bank AG, 75 Wall Street 5% 1,250,000,00
New York Branch and New York, NY 10005
Grand Cayman Branch Fax: (212) 574-0129
Senior Debt Portfolio 24 Federal Street, 6th Fl. 30% 7,500,000.00
(Eaton Vance) Boston, MA 02110
Fax: (517) 695-9594
Merrill Lynch Senior 800 Scudders Mills Road 60% 15,000,000.00
Floating Rate Fund, Plainsboro, NJ 08536
Inc. Fax: (609) 282-2756
</TABLE>
<PAGE> 1
EXHIBIT 10.10
CONSENT AND AMENDMENT AGREEMENT NO.2
dated as of October 27, 1995
to that certain
TRANSTECHNOLOGY CORPORATION
$115,000,000 REVOLVING CREDIT AND
TERM LOAN AGREEMENT
This AMENDMENT AGREEMENT NO. 2 AND CONSENT (the "Amendment"), dated as
of October 27, 1995, is by and among TRANSTECHNOLOGY CORPORATION
("TransTechnology"), TRANSTECHNOLOGY SEEGER-ORBIS GMBH, in the process of
changing its name from kimo Buroservice GmbH ("GmbH"), TTUK ACQUISITION CO.
LIMITED ("Limited" and, together with TransTechnology and GmbH, the
"Borrowers"), THE FIRST NATIONAL BANK OF BOSTON ("FNBB"), the other lending
institutions listed on Schedule 1 (the "Banks") and Schedule 2 (the "Term B
Lenders") to the Credit Agreement (as defined below), THE FIRST NATIONAL BANK OF
BOSTON, acting through its London Branch and its Frankfurt Branch, as fronting
bank (in such capacity, the "Fronting Bank"), THE FIRST NATIONAL BANK OF BOSTON,
as issuing bank (in such capacity, the "Issuing Bank", and together with the
Banks, the Term B Lenders and the Fronting Bank, the "Lenders") and THE FIRST
NATIONAL BANK OF BOSTON, as Agent (in such capacity, the "Agent") and NATIONAL
BANK OF CANADA as Co-Agent. Capitalized terms used herein unless otherwise
defined shall have the respective meanings set forth in the Credit Agreement.
WHEREAS, the Borrowers, the Lenders and the Agent are parties to that
certain Revolving Credit and Term Loan Agreement dated as of June 30, 1995 (as
amended and in effect from time to time, the "Credit Agreement");
WHEREAS, the Borrowers have proposed to the Lenders and the Agent
certain changes in the structure of the German Merger whereby in place of a
merger (as described in the Credit Agreement), Seeger-Orbis will be converted
into a German commercial general partnership, the interests in which will be
held by GmbH and TransTechnology Seeger-Orbis Beteiligungsgesellschaft mbH
("TTSOB"), a newly acquired wholly-owned subsidiary of GmbH;
WHEREAS, the Borrowers have proposed to the Lenders and the Agent
certain changes in the English Asset Transfer whereby in place of a "hive-down"
of the assets and liabilities of Limited into Anderton, Anderton will transfer
its assets and liabilities to Limited in a so-called "hive-up"; and
WHEREAS, the Lenders, the Agent and the Borrowers have agreed to amend
the Credit Agreement to reflect such changes as hereinafter set forth;
<PAGE> 2
-2-
NOW, THEREFORE, in consideration of the foregoing premises, the parties
hereby agree as follows:
SECTION 1. CONSENT. The Agent and the Lenders hereby consent to the
following:
(a) completion of the English Asset Transfer (as defined in
the Credit Agreement, as amended hereby) and transactions related
thereto, so long as the same are done in conformity with the documents
referred to in Part I of Schedule A hereto, each in form and substance
satisfactory to the Agent and the Lenders;
(b) completion of the German Conversion (as defined in the
Credit Agreement, as amended hereby) and transactions related thereto,
so long as the same are done in conformity with the documents referred
to in Part II of Schedule A hereto, each in form and substance
satisfactory to the Lenders and the Agent, including without limitation
the transfer of one equity interest in Seeger-Orbis to TTSOB;
(c) amendment of the Articles of Association of GmbH and
TTSOB to change the ending date of their fiscal year from December 31 to
March 31;
(d) amendment of the Articles of Association of Anderton in
connection with the English Asset Transfer (as defined in the Credit
Agreement, as amended hereby); and
(e) the changes of names of WTI to "Seeger Inc."; of Limited
to "Anderton International Limited"; of Seeger-Orbis to "Seeger-Orbis
GmbH & Co. oHG" or a similar name; and of Anderton to "AIL Predecessors
Limited" or a similar name.
The Lenders hereby authorize and instruct the Agent to take all actions
necessary to give effect to the foregoing consent.
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is
hereby amended as follows:
(a) Section 1.1 of the Credit Agreement is hereby amended by deleting
the definitions of "Anderton Assumption Agreement", "German Merger" and "Merger
Documents" in their entirety.
(b) Section 1.1 of the Credit Agreement is further amended by deleting
from the definition of "Acquisition Documents" the phrase "Merger Documents" and
substituting therefor the phrase "Conversion Documents".
<PAGE> 3
-3-
(c) Section 1.1 of the Credit Agreement is further amended by inserting
into the definition of "Debenture" after the phrase "made by Anderton" the
following:
and the Debenture made by Limited contemporaneously with the
completion of the English Asset Transfer, each
(d) Section 1.1 of the Credit Agreement is further amended by deleting
the definitions of "Brazilian Pledge Agreement", "German Mortgages", "German
Pledge Agreements" and "German Security Documents" in their entirety and
substituting therefor the following:
Brazilian Pledge Agreement. The Pledge of Quotas made or to be made
in favor of the Fronting Bank with respect to the share capital of the
Brazilian Subsidiary, in form and substance satisfactory to the Agent
and the Lenders.
German Mortgages. The Real Estate Mortgage(s) entered into or to be
entered into by SO oHG in favor of the Fronting Bank with respect to
the real property of SO oHG at:
(a) Wiesbadener Strasse/Fischbacher Strasse, Konigstein, Germany
(Folio 19-615);
(b) Wiesbadener Strasse, Konigstein, Germany (Folio 21-699); and
(c) Zum Junkerwald, Eichen, Germany (Folio 40-1399),
each in form and substance satisfactory to the Lenders and the Agent.
German Pledge Agreement. The Pledge of Shares made by (a) TTSO Inc.
in favor of the Lenders and the Agent with respect to the share capital
of GmbH and (b) GmbH in favor of the Fronting Bank with respect to the
share capital of Seeger-Orbis, in form and substance satisfactory to
the Lenders and the Agent.
German Security Documents. The Pledges as to Equipment, Inventory
and Intangible Assets and Assignment of Accounts Receivable entered
into or to be entered into by SO oHG in favor of the Fronting Bank with
respect to all of the equipment, inventory, intangible assets and
accounts receivable of SO oHG, each in form and substance satisfactory
to the Lenders and the Agent, and the German Pledge Agreement.
(f) Section 1.1 of the Credit Agreement is further amended by deleting
from the definition of "GmbH" the second sentence thereof.
<PAGE> 4
-4-
(g) Section 1.1 of the Credit Agreement is further amended by deleting
from the definition of "Limited" the second sentence thereof.
(h) Section 1.1 of the Credit Agreement is further amended by deleting
from the definition of "Loan Documents" the phrase "the Anderton Assumption
Agreement," and substituting therefor the phrase "the Brazilian Pledge
Agreement,".
(i) Section 1.1 of the Credit Agreement is further amended by inserting
the following new definitions in the appropriate alphabetical sequence thereof:
Conversion Documents. The Partnership Agreement, the resolution of
the shareholders of Seeger-Orbis to convert Seeger-Orbis into SO oHG,
and all other documents required to be filed with various German
Commercial Registrars in order to consummate the German Conversion.
Domestic Subsidiaries. Those Subsidiaries of TransTechnology which
are incorporated in or organized under the laws of any state, district
or territory of the United States or of the Commonwealth of Puerto
Rico.
Foreign Subsidiaries. Those Subsidiaries of TransTechnology other
than the Domestic Subsidiaries.
German Conversion. The conversion of Seeger-Orbis into SO oHG
pursuant to the Conversion Documents.
Partnership Agreement. The partnership agreement of SO oHG entered
into between TTSOB and GmbH, as in effect on October 27, 1995.
SO oHG. Seeger-Orbis GmbH & Co. oHG (or a similar name), a German
general partnership, at least ninety-nine percent (99%) of whose
partnership interests are held by GmbH and the remainder of whose
partnership interests are held by TTSOB.
TTSOB. TransTechnology Seeger-Orbis Beteiligungsgesellschaft mbH, a
German limited liability company and a wholly-owned subsidiary of GmbH.
(j) Section 7.1 of the Credit Agreement is hereby amended by inserting
after the phrase "all of the assets of GmbH" in the second sentence thereof the
phrase "and SO oHG".
<PAGE> 5
-5-
(k) Section 7 of the Credit Agreement is further amended by adding the
following new subsections in the appropriate numerical sequence thereof:
7.3. PLEDGES OF STOCK. Notwithstanding anything to the contrary
contained herein or in any of the other Loan Documents, including
without limitation the German Pledge Agreement and the Charge Over
Shares from TTSO, Inc., to the extent that any pledge, lien, security
interest, charge, mortgage or other encumbrance over any shares of a
Foreign Subsidiary granted by TransTechnology or any of its Domestic
Subsidiaries extends or purports to extend to any shares in excess of
65% of the aggregate issued and outstanding shares of capital stock of
such Foreign Subsidiary, neither the Agent nor any of the Lenders shall
exercise any rights it may have or purport to have with respect to such
excess shares. Notwithstanding anything to the contrary contained
herein or in any of the other Loan Documents, in the event that
TransTechnology or any of the Domestic Subsidiaries delivers to the
Agent or, as the case may be, the Fronting Bank, certificates or other
instruments representing greater than 65% of the aggregate issued and
outstanding shares of capital stock of such Foreign Subsidiary, the
shares in excess of 65% of such Foreign Subsidiary's capital stock
shall not be subject to any pledge, lien, security interest, charge,
mortgage or other encumbrance under this Agreement or any of the other
Loan Documents but shall be held in the custody of the Agent for and on
behalf of TransTechnology or such Domestic Subsidiary, as applicable,
until such time as TransTechnology or such Domestic Subsidiary shall
have delivered to the Agent certificates or other instruments
representing 65% of the aggregate issued and outstanding shares of
capital stock of such Foreign Subsidiary, at which time the Agent shall
release the original certificates or other instruments delivered to it
or the Fronting Bank to TransTechnology or the applicable Domestic
Subsidiary.
7.4. GUARANTEES AND PLEDGES OF ASSETS OF FOREIGN SUBSIDIARIES.
Notwithstanding anything to the contrary contained herein or in any of
the other Loan Documents, no guarantee entered into by any Foreign
Subsidiary, including without limitation either of the English
Guarantees, shall be construed in any way as a guarantee of, and no
pledge, lien, security interest, charge, mortgage or other encumbrance
over any assets of a Foreign Subsidiary shall be construed in any way
to secure, any obligation of TransTechnology or any of its Domestic
Subsidiaries.
(l) Section 8.2 of the Credit Agreement is hereby amended by deleting
the phrase "Merger Documents will" and substituting therefor the phrase
"Conversion Documents".
(m) Section 9.16 of the Credit Agreement is hereby amended by deleting
such section in its entirety and substituting therefor the following:
<PAGE> 6
-6-
9.16. GERMAN CONVERSION. TransTechnology, GmbH and Seeger-Orbis (a)
shall use their respective best efforts to pursue the completion of the
German Conversion pursuant to and in accordance with the Conversion
Documents, (b) shall submit or file by December 31, 1995 all documents
required to be submitted or filed with the appropriate Commercial
Registrar necessary to give legal effect to the German Conversion, and
(c) shall promptly pay all filing fees in connection therewith. Each
such submission or filing shall be true, accurate and complete, and
TransTechnology shall as soon as practicable send, or procure the
sending of, a copy of each such submission or filing to the Agent at
its address specified in Section 21. GmbH and Seeger-Orbis shall
deliver to the Agent, immediately following the submission or filing of
the documents referred to in the first sentence of this Section 9.16,
such documents and instruments as the Agent may request in order to
facilitate the completion of the German Conversion following the
occurrence and during the continuance of any Event of Default.
(n) Section 9.17 of the Credit Agreement is hereby amended by deleting
such section in its entirety and substituting therefor the following:
9.17. ENGLISH ASSET TRANSFER. Limited shall only enter into any
transfer of the assets and liabilities of Anderton to Limited (any such
transaction, the "English Asset Transfer") if the Agent shall have
received such documentary evidence satisfactory to it of:
(a) compliance of the English Asset Transfer, and any variation of
the English Guarantees to be carried out concurrently with the English
Asset Transfer, with sections 151-158 of the Companies Act 1985 of the
United Kingdom, including a copy addressed to the Agent of the
auditor's report and a certified copy of the statutory declaration
required to be delivered under such sections of the Companies Act, a
certified copy of the Articles of Association of Anderton, as amended
to permit (amongst other things) the English Asset Transfer and such
opinions of English solicitors as to such compliance as the Agent may
require; and
(b) the corporate capacity of Limited and Anderton to enter into
the English Asset Transfer and related transactions, including such
opinions of English solicitors on such subject as the Agent may
require.
(o) Section 9 of the Credit Agreement is further amended by inserting
the following new subsections in the appropriate numerical sequence thereof:
9.19. GERMAN MORTGAGES. SO oHG will submit or file as soon as
possible, and in any event by February 29, 1996, all documents required
to be submitted or filed with the appropriate Registrar in order to
give legal effect to the German Mortgages.
<PAGE> 7
-7-
9.20. BRAZILIAN PLEDGE AGREEMENT. GmbH, in its capacity as managing
partner of SO oHG, will execute and deliver to the Agent the Brazilian
Pledge Agreement as soon as possible, and in any event by February
29, 1996.
9.21. SHARES IN ANDERTON. Limited will deliver or cause to be
delivered to the Agent, immediately following completion of
adjudication of the amount payable as stamp duty in connection with the
transfer of the shares of Anderton from Seeger-Orbis to Limited, the
duly-stamped share transfer forms and share certificates of Anderton
evidencing the transfer of the shares of Anderton from Limited to
Firnabos Nominees Limited, as the Agent's nominee, pursuant to and in
accordance with the Charges over Shares.
(p) Section 10.5.1 of the Credit Agreement is hereby amended by:
(i) inserting after the word "consolidation," in the third line
thereof the phrase "convert any of the Borrower or its Subsidiaries
from one form of corporate organization or partnership to another,";
(ii) inserting after the word "merger" in clause (d) thereof the
word ", conversion"; and
(iii) deleting from clause (d) thereof the phrase ", including
without limitation the German Merger and the English Asset Transfer"
and inserting at the end of such section the following:
provided that no assets of any such Subsidiary which prior to
such merger or consolidation were pledged to the Agent or the
Lenders or in or over which the Agent or the Lenders had any
security interest, charge, lien or other encumbrance shall, as a
result of such merger, conversion or consolidation, cease to be so
pledged or otherwise encumbered.
(q) Section 10 of the Credit Agreement is further amended by adding the
following new subsection in the appropriate numerical sequence thereof:
10.12. PARTNERSHIP AGREEMENT. TransTechnology will not, and will
not permit any of its Subsidiaries to, amend, supplement, restate or
otherwise modify the Partnership Agreement as in effect as of October
27, 1995, without the prior written consent of the Agent and the
Majority Lenders.
(r) Section 12.1.1 of the Credit Agreement is hereby amended by
deleting the phrase "the Anderton Assumption Agreement and".
<PAGE> 8
-8-
(s) Section 12.1.2 of the Credit Agreement is hereby amended by
deleting the phrase "Merger Documents" and substituting therefor the phrase
"Conversion Documents".
(t) Section 14.1(q) of the Credit Agreement is hereby amended by
deleting the word "Merger" wherever it appears therein and in each case
substituting therefor the word "Conversion".
(u) Section 20.9 of the Credit Agreement is hereby amended by deleting
the phrase ", including pursuant to the English Asset Transfer and the Anderton
Assumption Agreement,".
SECTION 3. CONDITIONS TO EFFECTIVENESS. The effectiveness of the
amendment to the Credit Agreement as provided above shall be conditioned upon
the satisfaction of the following conditions precedent:
SECTION 3.1. DELIVERY OF DOCUMENTS. The Borrowers shall have delivered
to the Agent (i) this Amendment, duly executed by each of the Borrowers, the
Lenders and the Agent and (ii) unless otherwise specified, each of the documents
listed on Schedule A hereto, duly executed by each of the parties thereto (as
applicable), each in form and substance satisfactory to the Lenders and the
Agent, unless waived by the Agent, and any other documents reasonably requested
by the Agent in connection with the German Conversion, the English Asset
Transfer and the Brazilian Pledge Agreement.
SECTION 3.2. LEGALITY OF TRANSACTION. No change in applicable law shall
have occurred as a consequence of which it shall have become and continue to be
unlawful on the date this Amendment is to become effective (a) for the Agent or
any Lender to perform any of its obligations under any of the Loan Documents or
(b) for any of the Borrowers to perform any of its agreements or obligations
under any of the Loan Documents.
SECTION 3.3. PERFORMANCE. Each of the Borrowers shall have duly and
properly performed, complied with and observed in all material respects its
covenants, agreements and obligations contained in the Loan Documents required
to be performed, complied with or observed by it on or prior to the date this
Amendment is to become effective. No event shall have occurred on or prior to
the date this Amendment is to become effective and be continuing, and no
condition shall exist on the date this Amendment is to become effective which
constitutes a Default or Event of Default under any of the Loan Documents.
SECTION 3.4. PROCEEDINGS AND DOCUMENTS. All corporate, governmental and
other proceedings in connection with the transactions contemplated by this
Amendment and all instruments and documents incidental thereto shall be in form
and substance reasonably satisfactory to the Agent and the Agent shall have
received all such counterpart originals or certified or other copies of all such
instruments and documents as the Agent shall have reasonably requested.
<PAGE> 9
-9-
SECTION 4. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers hereby
represents and warrants to the Lenders as follows:
(a) The representations and warranties of such Borrower contained in
the Credit Agreement and the other Loan Documents, as amended hereby, were true
and correct in all material respects when made and continue to be true and
correct in all material respects on the date hereof, except that the financial
statements referred to therein shall be the financial statements of such
Borrower most recently delivered to the Agent, and except as such
representations and warranties are affected by the transactions contemplated
hereby;
(b) The execution, delivery and performance by such Borrower of this
Amendment and the consummation of the transactions contemplated hereby: (i) are
within the corporate powers of such Borrower and have been duly authorized by
all necessary corporate action on the part of such Borrower, (ii) do not require
any approval, consent of, or filing with, any governmental agency or authority,
or any other person, association or entity, which bears on the validity of this
Amendment and which is required by law or the regulation or rule of any agency
or authority, or other person, association or entity, except for those filings
required by applicable law to give effect to the German Conversion and the
English Asset Transfer, (iii) do not violate any provisions of any order, writ,
judgment, injunction, decree, determination or award presently in effect in
which such Borrower is named, or any provision of the charter documents or
by-laws of such Borrower, (iv) do not result in any breach of or constitute a
default under any agreement or instrument to which such Borrower is a party or
to which it or any of its properties are bound, including without limitation any
indenture, loan or loan agreement, lease, debt instrument or mortgage, except
for such breaches and defaults which would not have a material adverse effect on
such Borrower and its Subsidiaries taken as a whole, and (v) do not result in or
require the creation or imposition of any mortgage, deed of trust, pledge or
encumbrance of any nature upon any of the assets or properties of such Borrower;
and
(c) This Amendment, the Credit Agreement as amended hereby, and the
other Loan Documents, as amended hereby constitute the legal, valid and binding
obligations of such Borrower, enforceable against such Borrower in accordance
with their respective terms, provided that (i) enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application affecting the rights and remedies of creditors, and (ii)
enforcement may be subject to general principles of equity, and the availability
of the remedies of specific performance and injunctive relief may be subject to
the discretion of the court before which any proceeding for such remedies may be
brought.
<PAGE> 10
-10-
SECTION 5. NO OTHER AMENDMENTS. Except as expressly provided in this
Amendment, all of the terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect.
SECTION 6. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts and by each party on a separate counterpart, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one instrument. In proving this Amendment, it shall
not be necessary to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.
SECTION 7. EFFECTIVE DATE. Subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, the amendment to the Credit
Agreement as set forth in Section 1 herein shall be deemed to be effective as of
the date hereof (the "Effective Date").
SECTION 8. GOVERNING LAW. This Amendment is intended to take effect as
an agreement under seal and shall be construed according to and governed by the
laws of the Commonwealth of Massachusetts.
(next page is signature page)
<PAGE> 11
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
Agreement No.2 and Consent as a sealed instrument as of the date first set forth
above.
TRANSTECHNOLOGY CORPORATION
By: /s/Chandler J. Moisen
--------------------------------
Name: Chandler J. Moisen
Title: Senior VP
TRANSTECHNOLOGY SEEGER-
ORBIS GmbH
By: /s/Chandler J. Moisen
--------------------------------
Name: Chandler J. Moisen
Title: Attorney-in-Fact
TTUK ACQUISITION CO. LIMITED
By: /s/Chandler J. Moisen
--------------------------------
Name: Chandler J. Moisen
Title: Attorney
By: /s/Michael J. Berthelot
--------------------------------
Name: Michael J. Berthelot
Title: Director
THE FIRST NATIONAL BANK OF BOSTON,
individually and as Agent, Issuing
Bank and Fronting Bank
By: /s/ Nancy E. Fuller
--------------------------------
Name: Nancy E. Fuller
Title: Director
<PAGE> 12
NATIONAL BANK OF CANADA,
individually and as Co-Agent
By: /s/ Douglas K. Winget
--------------------------------
Name: Douglas K. Winget
Title: Assistant Vice President
BHF-BANK AKTIENGESELLSCHAFT
By: /s/David Fraenkel
--------------------------------
Name: David Fraenkel
Title: VP
By: /s/ Linda Pace
--------------------------------
Name: Linda Pace
Title: AVP
DRESDNER BANK AG, NEW YORK
BRANCH AND GRAND CAYMAN
BRANCH
By: /s/Andrew K. Mittag
--------------------------------
Name: Andrew K. Mittag
Title: Vice President
By: /s/ R. Conroy
--------------------------------
Name: Richard W. Conroy
Title: Vice President
<PAGE> 13
NBD BANK
By: /s/ T. J. King
--------------------------------
Name: Timothy J. King
Title: Second Vice President
UNITED JERSEY BANK
By: /s/ Edith Neuman
--------------------------------
Name: Edith Neuman
Title: Vice President
SENIOR DEBT PORTFOLIO
By: Boston Management and Research as
Investment Advisor
By: /s/ Barbara Campbell
--------------------------------
Name: Barbara Campbell
Title: Assistant Treasurer
MERRILL LYNCH SENIOR
FLOATING FUND RATE, INC.
By: /s/Anthony R. Clemente
--------------------------------
Name: Anthony R. Clemente
Title: Authorized Signatory
<PAGE> 14
The Guarantors under (and as defined in) the Subsidiary Guaranty hereby
acknowledge that they have read and are aware of the provisions of this
Amendment and hereby reaffirm their absolute and unconditional guaranty of the
Borrowers' payment and performance of their obligations to the Lenders and the
Agent under the Credit Agreement as amended hereby.
TRANSTECHNOLOGY
ACQUISITION CORPORATION
By: /s/ Chandler J. Moisen
--------------------------------
PALNUT FASTENERS, INC.
By: /s/ Chandler J. Moisen
--------------------------------
INDUSTRIAL RETAINING RING
COMPANY
By: /s/ Chandler J. Moisen
--------------------------------
RETAINERS, INC.
By: /s/ C.S. Raman
--------------------------------
RANCHO TRANSTECHNOLOGY
CORPORATION
By: /s/ Chandler J. Moisen
--------------------------------
<PAGE> 15
TRANSTECHNOLOGY SYSTEMS &
SERVICES, INC.
By: /s/ Chandler J. Moisen
--------------------------------
ELECTRONIC CONNECTIONS AND
ASSEMBLIES, INC.
By: /s/ Chandler J. Moisen
--------------------------------
SSP INDUSTRIES
By: /s/Chandler J. Moisen
--------------------------------
SSP INTERNATIONAL SALES, INC.
By: /s/ Chandler J. Moisen
--------------------------------
TRANSTECHNOLOGY SEEGER INC.
formerly know as
TRANSTECHNOLOGY SEEGER-
ORBIS, INC.
By: /s/ Chandler J. Moisen
--------------------------------
SEEGER INC.
(formerly known as WALDES TRUARC
INC.)
By: /s/ Chandler J. Moisen
--------------------------------
<PAGE> 16
The Guarantors under and as defined in the English Guarantees hereby acknowledge
that they have read and are aware of the provisions of this Amendment and hereby
reaffirm their absolute and unconditional guarantee of the Obligations referred
to in the English Guarantees, as such English Guarantees may be amended in
connection with this Amendment.
ANDERTON INTERNATIONAL
LIMITED
By: /s/ Ulf Jemsby
--------------------------------
Name: Ulf Jemsby
Title: Director
By: /s/ Robert Wieremiej
--------------------------------
Name: Robert Wieremiej
Title: Director
TTUK ACQUISITION CO.
LIMITED
By: /s/ Chandler J. Moisen
--------------------------------
Name: Chandler J. Moisen
Title: Attorney
By: /s/ Michael J. Berthelot
--------------------------------
Name: Michael J. Berthelot
Title: Director
<PAGE> 17
SCHEDULE A
Documents identified with an asterisk (*) should be delivered to the Agent as
certified copies.
I. DOCUMENTS TO BE DELIVERED TO THE AGENT IN CONNECTION WITH THE ENGLISH
ASSET TRANSFER
1. Duly-stamped share transfer form evidencing transfer of shares of
Anderton from Limited to Firnabos Nominees Limited (the nominee company
of the Agent which will hold the shares as collateral), pursuant to the
Charge over Shares given by Limited and dated 30 June 1995 (to be
delivered after completion of Amendment Agreement No.2).
2. Share certificate of Anderton evidencing ownership by Firnabos
Nominees Limited of all of the issued and outstanding share capital of
Anderton (to be delivered after completion of Amendment Agreement No.
2).
*3. Agreement in respect of the purchase and sale of assets between
Anderton and Limited (the "Hive-Up Agreement").
*4. Declaration of all directors of Anderton in relation to assistance
for the acquisition of shares (the "Statutory Declaration", to be filed
with Companies House on Form 155(6)(A)).
5. Report of Arthur Andersen, as auditors of Anderton, addressed to the
Agent.
*6. Deed of Transfer or other conveyance of freehold property at
Ferncliffe Road, Bingley, Yorkshire, from Anderton to Limited.
7. Debenture of Limited in favor of the Agent (the "New Debenture").
*8. Evidence of transfer of one share of Limited from TTSO Inc. to
GmbH, subject to the Agent's interest under the Charge over Shares
given by TTSO Inc. dated 30 June 1995 (the "TTSO Inc. Charge").
9. Share certificates of Limited showing company's name as "Anderton
International Limited", re-issued in the name of Firnabos Nominees
Limited, pursuant to the TTSO Inc. Charge.
10. Deed of Variation between Anderton and the Agent, varying the terms
of the Deed of Guarantee and Indemnity made by Anderton and dated 30
June 1995.
<PAGE> 18
-2-
11. Deed of Variation executed by each of Limited and the Agent,
varying the terms of the Deed of Guarantee and Indemnity made by
Limited and dated 30 June 1995.
12. Certified copy of Anderton's Memorandum and Articles of
Association, as amended.
13. Certificate of Limited to the Agent, certifying no amendment of its
Memorandum or Articles of Association since 30 June 1995.
14. Certificate of Incorporation upon Change of Name evidencing change
of name of Limited to "Anderton International Limited".
15. Certificate of Incorporation upon Change of Name evidencing change
of name of Anderton to "AIL Predecessors Limited" or a similar name.
16. Partial Release by the Agent of existing Debenture granted by
Anderton, to permit registration of item 6 with H.M. Land Registry.
17. Legal opinion of Eversheds, solicitors for Limited and Anderton.
II. DOCUMENTS TO BE DELIVERED TO THE AGENT IN CONNECTION WITH THE GERMAN
CONVERSION
*1. Evidence of filing of draft of resolution by GmbH and TTSOB (as
shareholders of Seeger-Orbis) to convert Seeger-Orbis into SO oHG (the
"Conversion Resolution" or UmwandlungsbeschluB) with the Works Council
(Betriebsrat) of Seeger-Orbis.
*2. Partnership Agreement among GmbH and TTSOB relating to SO oHG.
3. Notarized adoption of the Conversion Resolution at a meeting of the
shareholders of Seeger-Orbis.
4. Evidence of filing of the Conversion Resolution with the Commercial
Registrar, Konigstein.
5. Assignment of Accounts Receivable of SO oHG to the Agent (to be
delivered promptly upon completion of registration of the German
Conversion).
6. Pledges as to Equipment, Inventory and Intangible Assets of SO oHG
to the Agent (to be delivered promptly upon completion of registration
of the German Conversion).
<PAGE> 19
-3-
7. Legal opinion of Jones, Day, Reavis & Pogue, Frankfurt office.
III. DOCUMENTS TO BE DELIVERED TO THE AGENT AFTER COMPLETION OF AMENDMENT
AGREEMENT NO. 2 IN CONNECTION WITH THE PLEDGE OF QUOTAS OF THE
BRAZILIAN SUBSIDIARY
1. Brazilian-law Quota Pledge Agreement by GmbH as managing partner of
SO oHG in favor of the Fronting Bank.
2. Certificates representing all of the issued and outstanding quotas
of the Brazilian Subsidiary, together with voting powers therefor
executed in blank and left undated.
3. Such other documents with respect to the Brazilian Pledge Agreement
as the Agent may reasonably require.
In each of parts I, II and II above, the Agent should also receive certified
copies of all board and shareholder resolutions as referred to in the respective
closing agendas prepared in connection with each of the referenced transactions.
<PAGE> 1
EXHIBIT 10.11
AMENDMENT AGREEMENT NO.3
dated as of March 29, 1996
to that certain
$115,000,000 REVOLVING CREDIT AND
TERM LOAN AGREEMENT
This AMENDMENT AGREEMENT NO.3 (this "Amendment"), dated as of March 29,
1996, is by and among TRANSTECHNOLOGY CORPORATION ("TransTechnology"),
TRANSTECHNOLOGY SEEGER-ORBIS GMBH ("GmbH"), ANDERTON INTERNATIONAL LIMITED
(formerly known as TTUK Acquisition Co. Limited) ("Limited" and, together with
TransTechnology and GmbH, the "Borrowers"), THE FIRST NATIONAL BANK OF BOSTON
("FNBB"), the other lending institutions listed on Schedule 1 (the "Banks") and
Schedule 2 (the "Term B Lenders") to the Credit Agreement (as defined below),
THE FIRST NATIONAL BANK OF BOSTON, acting through its London Branch and its
Frankfurt Branch, as fronting bank (in such capacity, the "Fronting Bank"), THE
FIRST NATIONAL BANK OF BOSTON, as issuing bank (in such capacity, the "Issuing
Bank", and together with the Banks, the Term B Lenders and the Fronting Bank,
the "Lenders") and THE FIRST NATIONAL BANK OF BOSTON, as Agent (in such
capacity, the "Agent"). Capitalized terms used herein unless otherwise defined
shall have the respective meanings set forth in the Credit Agreement.
WHEREAS, the Borrowers, the Lenders and the Agent are parties to that
certain Revolving Credit and Term Loan Agreement dated as of June 30, 1995, as
amended by Amendment Agreement No.1 dated as of August 29, 1995 and by Consent
and Amendment Agreement No.2 dated as of October 27, 1995 (as so amended, the
"Credit Agreement");
WHEREAS, the Borrowers have proposed reallocating the availability of
the respective borrowing facilities provided for in the Credit Agreement by
increasing the maximum amount of Sterling Facility Loans available by the
Sterling Equivalent of $1,000,000, to an aggregate amount of the Sterling
Equivalent of $3,000,000, and by correspondingly decreasing the maximum amount
of Revolving Credit Loans available by $600,000, and by decreasing the maximum
amount of DM Facility Loans available by the DM Equivalent of $400,000;
WHEREAS, the parties to the Credit Agreement wish to amend Schedule 3
thereto to reflect the actual amounts of amortization payments to be made on the
German Tranche and the UK Tranche of Term Loan A in Deutschmarks and Sterling,
rather than the Dollar Equivalents thereof;
<PAGE> 2
-2-
WHEREAS, this Amendment neither affects Term Loan B nor alters the
apportionment of any repayments or prepayment of any Loans to which the Term B
Lenders are entitled, and is consequently effective without the written consent
of the Term B Lenders upon execution and delivery by the Banks, the Fronting
Bank, the Agent and the Borrowers;
WHEREAS, the Banks, the Fronting Bank, the Agent and the Borrowers have
agreed to amend the Credit Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing premises, the parties
hereby agree as follows:
SECTION 1. Amendments to Credit Agreement. The Credit Agreement is
hereby amended with effect from the Effective Date (as defined in Section 6 of
this Amendment) as follows:
(a) Section 1.1 of the Credit Agreement is hereby amended by deleting
the definition of "Borrowing Base" in its entirety and substituting therefor the
following:
"Borrowing Base. At the relevant time of reference thereto, an
amount determined by the Agent by reference to the most recent Borrowing
Base Report, which is equal to the sum of:
(a) 80.00% of Eligible Accounts Receivable for which invoices
have been issued and are payable; plus
(b) 50.00% of the net book value (determined on a first-in
first-out basis at lower of cost or market) of Eligible Inventory
provided however that the aggregate amount included in the Borrowing
Base under this clause (b) shall not exceed $19,000,000, provided
that such $19,000,000 amount may be adjusted by the Agent to reflect
any acquisitions or divestitures subsequent to the Closing Date;
plus
(c) 50.00% of the Determined Value of the Mace Stock; less
(d) $600,000."
(b) Section 1.1 of the Credit Agreement is further amended by inserting
the following new definitions in the appropriate alphabetical sequence thereof:
"Determined Value. At the relevant time of reference thereto, the
lesser of (i) the net book value at such time of the Mace Stock,
determined in accordance with generally accepted accounting principles,
and (ii) the fair market value at such time of the Mace Stock, as
<PAGE> 3
-3-
determined by the most recent appraisal thereof (if any) conducted by or
on behalf of the Agent, provided, however that the Agent shall, upon
written notice to TransTechnology, be entitled to reduce or otherwise
adjust the Determined Value of the Mace Stock, on a commercially
reasonable basis, in light of material changes in the solvency,
organizational structure or financial condition of Mace if such material
changes are not otherwise reflected in the Determined Value."
"Mace. Mace Security International, Inc., a Delaware corporation."
"Mace Stock. The 580,000 fully paid and non-assessable shares of the
common stock, $.01 par value, of Mace issued in the name of
TransTechnology and delivered to the Agent, together with stock powers
therefor executed in blank, on or prior to the Closing Date, so long as
such shares are and remain (a) pledged to the Agent for the benefit of
the Lenders and the Agent pursuant to and in compliance with the
Security Documents, (b) held by the Agent, together with stock powers
therefor executed in blank, subject to a perfected first priority
security interest in favor of the Agent for the benefit of the Lenders
and the Agent under the laws of the Commonwealth of Massachusetts and
(c) subject to no lien, security interest or other encumbrance other
than the security interest described in clause (b) above."
(c) Section 2.12 of the Credit Agreement is hereby amended by deleting
the amount of "$1,000,000" and substituting therefor the amount of "$200,000".
(d) Section 3.1 of the Credit Agreement is hereby amended by deleting
the amount of "$4,000,000" and substituting therefor the amount of "$3,600,000".
(e) Section 3.2 of the Credit Agreement is hereby amended by deleting
the phrase "more that 5%" and substituting therefor the phrase "more than 5%".
(f) Section 3.2 of the Credit Agreement is further amended by deleting
the amount of "$4,000,000" and substituting therefor the amount of "$3,600,000".
(g) Section 3.2 of the Credit Agreement is further amended by deleting
the amount of "$16,000,000" and substituting therefor the amount of
"$15,600,000".
(h) Section 3.3 of the Credit Agreement is hereby amended by deleting
the amount of "$2,000,000" and substituting therefor the amount of "$3,000,000".
<PAGE> 4
-4-
(i) Section 3.4 of the Credit Agreement is hereby amended by deleting
the amount of "$2,000,000" and substituting therefor the amount of "$3,000,000".
(j) Section 3.4 of the Credit Agreement is further amended by deleting
the amount of "$10,000,000" and substituting therefor the amount of
"$11,000,000".
(k) Section 3 of the Credit Agreement is further amended by adding the
following new subsection in the appropriate numerical sequence thereof:
"3.12. OPTIONAL REPAYMENT OF INTERNATIONAL FACILITY LOANS. GmbH and
Limited shall each have the right, at their election, to repay the
outstanding amount of the International Facility Loans, as a whole or in
part, at any time without penalty or premium, provided that any full or
partial prepayment of the outstanding amount of any Eurocurrency Rate
Loans pursuant to this Section 3.12 may be made only on the last day of
the Interest Period relating thereto, unless all costs in connection
with such prepayment are paid in full simultaneously with such
prepayment pursuant to Section 6.10. GmbH and Limited, as the case may
be, shall each give the Fronting Bank, no later than 10:00 a.m.,
Frankfurt time, at least three (3) Eurocurrency Business Days prior
written notice of any proposed prepayment pursuant to this Section 3.12
of Base Rate Loans, and four (4) Eurocurrency Business Days notice of
any proposed prepayment pursuant to this Section 3.12 of Eurocurrency
Rate Loans, in each case specifying the proposed date of prepayment of
International Facility Loans and the principal amount to be prepaid.
Each such partial prepayment of the DM Facility Loans shall be in an
integral multiple of DM50,000, and each such partial prepayment of the
Sterling Facility Loans shall be in an integral multiple of pounds
sterling 50,000. Prepayment shall be accompanied by the payment of
accrued interest on the principal prepaid to the date of prepayment and
shall be applied, in the absence of instruction by GmbH or Limited, as
the case may be, first to the principal of Base Rate Loans and then to
the principal of Eurocurrency Rate Loans or both, at the Fronting Bank's
option. Notwithstanding anything in this Credit Agreement to the
contrary, (a) there shall be an interval of not less than two (2) weeks
between each prepayment by GmbH under this Section 3.12, and (b) there
shall be an interval of not less than two (2) weeks between each
prepayment by Limited under this Section 3.12."
(1) The Credit Agreement is further amended by deleting Schedule 1
thereto in its entirety and substituting therefor the Schedule 1 attached hereto
as Exhibit A, and by deleting Schedule 3 thereto in its entirety and
substituting therefor the Schedule 3 attached hereto as Exhibit B.
<PAGE> 5
-5-
SECTION 2. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment shall be conditioned upon the satisfaction of the following conditions
precedent:
SECTION 2.1. DELIVERY OF DOCUMENTS. The Borrowers shall have delivered
to the Agent: (a) this Amendment executed and delivered by each of the
Borrowers, the Banks, the Fronting Bank and the Agent; (b) the legal opinion of
Eversheds, solicitors for Anderton International Limited, addressed to the
Lenders and the Agent, satisfactory in form and substance to the Agent's
counsel; and (c) the legal opinion of Gerald C. Harvey, Esq., general counsel
for TransTechnology, addressed to the Lenders and the Agent, dated as of the
Effective Date (as defined in Section 6 of this Amendment), and satisfactory in
form and substance to the Agent's counsel.
SECTION 2.2. LEGALITY OF TRANSACTION. No change in applicable law shall
have occurred as a consequence of which it shall have become and continue to be
unlawful on the date this Amendment is to become effective (a) for the Agent or
any Lender to perform any of its obligations under any of the Loan Documents or
(b) for any of the Borrowers to perform any of its agreements or obligations
under any of the Loan Documents.
SECTION 2.3. PERFORMANCE. Each of the Borrowers shall have duly and
properly performed, complied with and observed in all material respects its
covenants, agreements and obligations contained in the Loan Documents required
to be performed, complied with or observed by it on or prior to the date this
Amendment is to become effective. No event shall have occurred on or prior to
the date this Amendment is to become effective and be continuing, and no
condition shall exist on the date this Amendment is to become effective which
constitutes a Default or Event of Default under any of the Loan Documents.
SECTION 2.4. PROCEEDINGS AND DOCUMENTS. All corporate, governmental and
other proceedings in connection with the transactions contemplated by this
Amendment and all instruments and documents incidental thereto shall be in form
and substance reasonably satisfactory to the Agent and the Agent shall have
received all such counterpart originals or certified or other copies of all such
instruments and documents as the Agent shall have reasonably requested.
SECTION 3. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers hereby
represents and warrants to the Lenders as follows:
(a) The representations and warranties of such Borrower contained in the
Credit Agreement and the other Loan Documents to which it is a party were true
and correct in all material respects when made and continue to be true and
correct in all material respects on the date hereof, except that the financial
statements referred to therein shall be the financial statements of such
Borrower most recently delivered to the Agent, and except as such
<PAGE> 6
-6-
representations and warranties are affected by the transactions contemplated
hereby;
(b) The execution, delivery and performance by such Borrower of this
Amendment and the consummation of the transactions contemplated hereby; (i) are
within the corporate powers of such Borrower and have been duly authorized by
all necessary corporate action on the part of such Borrower, (ii) do not require
any approval, consent of, or filing with, any governmental agency or authority,
or any other person, association or entity, which bears on the validity of this
Amendment and which is required by law or the regulation or rule of any agency
or authority, or other person, association or entity, (iii) do not violate any
provisions of any order, writ, judgment, injunction, decree, determination or
award presently in effect in which such Borrower is named, or any provision of
the charter documents or by-laws of such Borrower, (iv) do not result in any
breach of or constitute a default under any agreement or instrument to which
such Borrower is a party or to which it or any of its properties are bound,
including without limitation any indenture, loan or loan agreement, lease, debt
instrument or mortgage, except for such breaches and defaults which would not
have a material adverse effect on such Borrower and its Subsidiaries taken as a
whole, and (v) do not result in or require the creation or imposition of any
mortgage, deed of trust, pledge or encumbrance of any nature upon any of the
assets or properties of such Borrower; and
(c) This Amendment and the Credit Agreement as amended hereby constitute
the legal, valid and binding obligations of such Borrower, enforceable against
such Borrower in accordance with their respective terms, provided that (i)
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application affecting the rights and
remedies of creditors, and (ii) enforcement may be subject to general principles
of equity, and the availability of the remedies of specific performance and
injunctive relief may be subject to the discretion of the court before which any
proceeding for such remedies may be brought.
SECTION 4. NO OTHER AMENDMENTS. Except as expressly provided in this
Amendment, all of the terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect.
SECTION 5. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts and by each party on a separate counterpart, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one instrument. In proving this Amendment, it shall
not be necessary to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.
SECTION 6. EFFECTIVE DATE. Subject to the Satisfaction of the conditions
precedent set forth in Section 2 hereof, this Amendment shall be deemed to be
effective as of the date hereof (the "Effective Date").
<PAGE> 7
-7-
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
Agreement No. 3 as a sealed instrument as of the date first set forth above.
TRANSTECHNOLOGY CORPORATION
By: /s/ Chandler J. Moisen
---------------------------------
Name: Chandler J. Moisen
Title: Senior Vice President
TRANSTECHNOLOGY SEEGER-
ORBIS GmbH
By: /s/Chandler J. Moisen
---------------------------------
Name: Chandler J. Moisen
Title: Attorney-in-Fact
ANDERTON INTERNATIONAL
LIMITED (formerly known as TTUK
ACQUISITION CO. LIMITED)
By: /s/ Ulf Jemsby
---------------------------------
Name: Ulf Jemsby
Title: Director
By: /s/Michael J. Berthelot
---------------------------------
Name: Michael J. Berthelot
Title: Director
<PAGE> 8
-8-
THE FIRST NATIONAL BANK OF
BOSTON, individually and as Agent,
Issuing Bank and Fronting Bank
By: /s/ Maura C. Wadlinger
---------------------------------
Name: Maura C. Wadlinger
Title: Vice President
NATIONAL BANK OF CANADA
individually and as Co-Agent
By: /s/ Douglas K. Winget
---------------------------------
Name: Douglas K. Winget
Title: Assistant Vice President
BHF-BANK AKTIENGESELLSCHAFT
By: /s/ David Fraenkel
---------------------------------
Name: David Fraenkel
Title: VP
By: /s/ Linda Pace
---------------------------------
Name: Linda Pace
Title: AVP
<PAGE> 9
-9-
DRESDNER BANK AG, NEW YORK
BRANCH AND GRAND CAYMAN
BRANCH
By: /s/ Andrew K. Mittag
---------------------------------
Name: Andrew K. Mittag
Title: Vice President
By: /s/ Nicholas Kalogeropoulos
---------------------------------
Name: Nicholas Kalogeropoulos
Title: Assistant Treasurer
NBD BANK
By: /s/ W.T. Huebner
---------------------------------
Name: W.T. Huebner
Title: Vice President
UNITED JERSEY BANK
By: /s/ Edith Neuman
---------------------------------
Name: Edith Neuman
Title: Vice President
<PAGE> 10
-10-
SENIOR DEBT PORTFOLIO
By: Boston Management and Research as
Investment Advisor
By: /s/ Jeffrey S. Garner
---------------------------------
Name: Jeffrey S. Garner
Title: Vice President
MERRILL LYNCH SENIOR
FLOATING FUND RATE, INC.
By: /s/ Anthony R. Clemente
---------------------------------
Name: Anthony R. Clemente
Title: Authorized Signatory
<PAGE> 11
-11-
The Guarantors under (and as defined in) the Subsidiary Guaranty hereby
acknowledge that they have read and are aware of the provisions of this
Amendment and hereby reaffirm their absolute and unconditional guaranty of the
Borrowers' payment and performance of their obligations to the Lenders and the
Agent under the Credit Agreement as amended hereby.
TRANSTECHNOLOGY
ACQUISITION CORPORATION
By: /s/ Chandler J. Moisen
---------------------------------
Name: Chandler J. Moisen
Title: Vice President & Treasurer
PALNUT FASTENERS, INC.
By: /s/ Chandler J. Moisen
---------------------------------
Name: Chandler J. Moisen
Title: Vice President & Treasurer
INDUSTRIAL RETAINING RING
COMPANY
By: /s/Chandler J. Moisen
---------------------------------
Name: Chandler J. Moisen
Title: Vice President & Chief
Financial Officer
RETAINERS, INC.
By: /s/ Steven R. Wilson
---------------------------------
Name: Steven R. Wilson
Title: President
<PAGE> 12
-12-
RANCHO TRANSTECHNOLOGY
CORPORATION
By: /s/ Chandler J. Moisen
---------------------------------
Name: Chandler J. Moisen
Title: Vice President & Treasurer
TRANSTECHNOLOGY SYSTEMS &
SERVICES, INC.
By: /s/ Chandler J. Moisen
---------------------------------
Name: Chandler J. Moisen
Title: Vice President & Treasurer
ELECTRONIC CONNECTIONS AND
ASSEMBLIES, INC.
By: /s/ Chandler J. Moisen
---------------------------------
Name: Chandler J. Moisen
Title: Vice President & Chief
Financial Officer
SSP INDUSTRIES
By: /s/ Chandler J. Moisen
---------------------------------
Name: Chandler J. Moisen
Title: Vice President & Treasurer
SSP INTERNATIONAL SALES, INC.
By: /s/ Chandler J. Moisen
---------------------------------
Name: Chandler J. Moisen
Title: Vice President & Treasurer
<PAGE> 13
-13-
TRANSTECHNOLOGY SEEGER
INC. (formerly known as
TRANSTECHNOLOGY SEEGER-
ORBIS, INC.)
By: /s/ Chandler J. Moisen
---------------------------------
Name: Chandler J. Moisen
Title: Vice President, Chief
Financial Officer and
Treasurer
SEEGER INC. (formerly known as
WALDES TRUARC INC.)
By: /s/ Chandler J. Moisen
---------------------------------
Name: Chandler J. Moisen
Title: Vice President, Chief
Financial Officer and
Treasurer
<PAGE> 14
-14-
The Guarantors under and as defined in the English Guarantees hereby acknowledge
that they have read and are aware of the provisions of this Amendment and hereby
reaffirm their absolute and unconditional guarantee of the Obligations referred
to in the English Guarantees, as such English Guarantees may be amended in
connection with this Amendment.
ANDERTON INTERNATIONAL
LIMITED (formerly known as TTUK
ACQUISITION CO. LIMITED)
By: /s/ Robert Wieremiej
---------------------------------
Name: Robert Wieremiej
Title: Director
By: /s/ Michael J. Berthelot
---------------------------------
Name: Michael J. Berthelot
Title: Director
ANDERTON (PREDECESSORS)
LIMITED (formerly known as
ANDERTON INTERNATIONAL
LIMITED)
By: /s/ Ulf Jemsby
---------------------------------
Name: Ulf Jemsby
Title: Director
By: /s/ Robert Wieremiej
---------------------------------
Name: Robert Wieremiej
Title: Director
<PAGE> 15
EXHIBIT A
SCHEDULE 1
The Banks
<TABLE>
<CAPTION>
Revolving Credit $3,600,000
Address of Lending Office and Term A Commitment $33,400,000 Revolver
Bank (Domestic and Eurodollar) Percentage Revolver (Germany)
- ---- ------------------------- --------------------- ----------- ----------
<S> <C> <C> <C> <C>
The First National Bank 100 Federal Street 24.166667% 8,071,666.78 870,000.01
of Boston Boston, MA 02110
Fax No: (+1) 617-434-6685
National Bank of One Cleveland Center 22.222222% 7,422,222.15 799,999.99
Canada 1375 East 9th Street,
Suite 2430
Cleveland, OH 44114
Fax No: (216) 574-9236
BHF-Bank AG 590 Madison Avenue 15% 5,010,000.00 540,000.00
New York, NY 10022-2540
Fax No: (212) 756-5911
Dresdner Bank AG 75 Wall Street 13.611111% 4,546,111.07 490,000.00
New York Branch New York, NY 10005
and Fax No: (212) 574-0120
Grand Cayman Branch
NBD Bank 611 Woodward Avenue 15% 5,010,000.00 540,000.00
Detroit, MI 48226
Fax No: (313) 225-1586
United Jersey Bank 25 East Salem, 6th Floor 10% 3,340,000.00 360,000.00
Hackensack, NJ 07602
Fax No: (201) 343-6723
<CAPTION>
$3,000,000 $30,000,000 $8,000,000 $12,000,000
Revolver Term A Term A Term A
Bank (UK) (US) (UK) (Germany)
- ---- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
The First National 725,000.01 7,250,000.10 1,933,333.36 2,900,000.04
Bank of Boston
National Bank of 666,666.66 6,666,666.60 1,777,777.76 2,666,666.64
Canada
BHF-Bank AG 450,000.00 4,500,000.00 1,200,000.00 1,800,000.00
Desdner Bank AG 408,333.33 4,083,333.30 1,088,888.88 1,633,333.32
New York Branch
and
Grand Cayman Branch
NBD Bank 450,000.00 4,500,000.00 1,200,000.00 1,800,000.00
United Jersey Bank 300,000.00 3,000,000.00 800,000.00 1,200,000.00
</TABLE>
<PAGE> 16
EXHIBIT B
SCHEDULE 3
Amortization of
Term Loans
Term Loan A
<TABLE>
<CAPTION>
Quarter First US German UK Term
Ending Tranche ($) Tranche (DM) Tranche (pounds sterling) Loan B ($)
- ------ ----------- ------------ ------------------------- ----------
<S> <C> <C> <C> <C>
12/31/95 600,000 688,080 206,718.37
3/31/96 600,000 666,816 203,627.09
6/30/96 600,000 666,816 203,627.09 500,000
9/30/96 600,000 666,816 203,627.09
12/31/96 600,000 666,816 203,627.09
3/31/97 600,000 666,816 203,627.09
6/30/97 600,000 666,816 203,627.09 500,000
9/30/97 600,000 666,816 203,627.09
12/31/97 600,000 666,816 203,627.09
3/31/98 600,000 666,816 203,627.09
6/30/98 600,000 666,816 203,627.09 500,000
9/98 600,000 666,816 203,627.09
12/98 600,000 666,816 203,627.09
3/99 600,000 666,816 203,627.09
6/99 750,000 833,520 254,533.87 500,000
9/99 750,000 833,520 254,533.87
12/99 750,000 833,520 254,533.87
3/00 750,000 833,520 254,533.87
6/00 1,200,000 1,333,632 407,254.19 500,000
9/00 1,200,000 1,333,632 407,254.19
12/00 1,200,000 1,312,368 404,162.93
--------- --------- ----------
3/01
6/01 7,500,000
9/01
12/01
3/02
6/02 15,000,000
----------
Total(1)/ 15,000,000 16,670,400 5,090,677.33 25,000,000
</TABLE>
- --------------------
(1)/ Total payments to be made on the German Tranche and UK Tranche of
Term Loan A are the respective DM Equivalent and Sterling Equivalent of
$12,000,000 and $8,000,000, as of June 30,1995.
<PAGE> 1
EXHIBIT 13
[GRAPHIC]
[TRANSTECHNOLOGY LOGO]
ANNUAL REPORT
FISCAL YEAR ENDING
MARCH 31, 1996
<PAGE> 2
- --------------------------------------------------------------------------------
Photography by Kan
<TABLE>
<CAPTION>
CONTENTS
- --------------------------------------------------------------------------------
<S> <C>
Selected Financial Data ............................................ 1
Letter to Shareholders ............................................. 2
Specialty Fastener Products ........................................ 6
Rescue Hoist and Cargo Hook Products ............................... 9
Financial Information .............................................. 11
</TABLE>
<PAGE> 3
Selected Financial Data
- --------------------------------------------------------------------------------
The following table provides selected financial data with respect to the
consolidated statements of operations of the Company for the fiscal years ended
March 31, 1996, 1995, 1994, 1993 and 1992 and the consolidated balance sheets of
the Company at the end of each such period.
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA YEARS ENDED MARCH 31,
(in thousands except per share amounts) 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues from continuing operations $ 159,854 $ 102,692 $ 82,843 $64,671 $ 56,790
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing
operations before income taxes $ 14,300 $ 10,842 $ 8,860 $ 4,285 $ (507)
Provision (credit) for income taxes 5,792 3,457 3,060 962 (77)
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations 8,508 7,385 5,800 3,323 (430)
Income (loss) from discontinued operations (1,134) (4,852) 1,084 1,810 (8,985)
- -----------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 7,374 $ 2,533 $ 6,884 $ 5,133 $ (9,415)
Earnings (loss) per share:
Income (loss) from continuing operations $ 1.67 $ 1.45 $ 1.13 $ 0.65 $ (0.08)
Income (loss) from discontinued operations (0.22) (0.95) 0.21 0.36 (1.77)
- -----------------------------------------------------------------------------------------------------------------------------
Earnings (loss) per share $ 1.45 $ 0.50 $ 1.34 $ 1.01 $ (1.85)
- -----------------------------------------------------------------------------------------------------------------------------
Dividends declared and paid per share $ 0.26 $ 0.255 $ 0.24 $ 1.56 --
- -----------------------------------------------------------------------------------------------------------------------------
Total assets $ 199,367 $ 129,396 $125,857 $97,763 $ 104,905
Long-term debt $ 72,565 $ 37,021 $ 33,168 $12,387 $ 528
Shareholders' equity $ 72,470 $ 64,502 $ 65,953 $61,214 $ 63,735
Book value per share $ 14.21 $ 12.72 $ 12.71 $ 11.95 $ 12.54
Shares outstanding at year-end 5,099 5,070 5,189 5,122 5,084
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
MARKET AND DIVIDEND DATA
- -----------------------------------------------------------------------------------------------------------------------------
Market Price
--------------------------------------------------------------
Quarter Ended High Low Dividends
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
June 30, 1994 16-5/8 12-3/8 .060
September 30, 1994 13-5/8 10-3/4 .065
December 31, 1994 12-1/2 10-1/2 .065
March 31, 1995 13-5/8 10 .065
June 30, 1995 13-1/2 10-3/4 .065
September 30, 1995 14-7/8 12 .065
December 31, 1995 15-1/8 11-7/8 .065
March 31, 1996 15 12-1/2 .065
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE> 4
Fellow Shareholders:
- --------------------------------------------------------------------------------
The fiscal year ended March 31, 1996 was the fourth consecutive year of
increasing earnings for your company, with earnings from continuing operations
reaching $1.67 per share, a 15% increase over the prior year's $1.45 per share.
Even more important than a single year's earnings improvement, your company has
firmly established itself as one of the premier specialty fastener companies in
the world. The acquisition and integration of the companies we have acquired
over the past three years, capped by the June 1995 acquisition of the Seeger
Group, have built a solid base for the future of TransTechnology Corporation.
With number one rankings in global market share in two of our four product lines
(retaining rings and helicopter rescue hoists and cargo hooks) and positions of
leadership in the US in the other two (gear driven band fasteners and assembly
fasteners), our company now casts a long shadow over its markets.
Almost every aspect of fiscal year 1996 was an improvement over the prior fiscal
year. Revenues were up 56%, operating profit was up 72%, cash flow from
operating activities was up 43%, and net income was up 191% -- all the result of
our program of focused acquisitions and concentration on improvement in each of
our business units. Capital expenditures rose 29%, reflecting our commitment to
the future of our existing businesses and our desire to seek internally
generated as well as external sources of growth. From each of these
perspectives, it was, indeed, a very good year.
[GRAPH]
<TABLE>
<CAPTION>
INCOME PER SHARE FROM CONTINUING OPERATIONS
(IN DOLLARS)
<C> <C>
1992 (0.08)
1993 0.65
1994 1.13
1995 1.45
1996 1.67
</TABLE>
At the risk of being repetitive, and boring, it is important to once again
evaluate our progress against the goals and strategy we have laid out for our
company. Our simple, straightforward strategy remains unchanged from 1992; to
grow through acquisitions which complement existing product lines with a
continuing focus upon a narrow range of industrial products sold to a wide range
of end-users. The acquisition of the Seeger Group perfectly exemplified this
strategy, vaulting us into the world-wide number one market position in
retaining rings while enhancing our Industrial Retaining Ring business. By the
end of fiscal 1996, specialty fasteners constituted 83% of TransTechnology's
annualized revenues. We expect, in the future, to continue our program of
strategic acquisitions in existing product lines, with a goal of achieving
global number one market positions in each of them. In fiscal 1996 we achieved
most of our financial goals. Our EPS increase of 15.2%, continuing operations'
return on average equity of 12.4%, and dividend payout of 15.6% of income from
continuing operations each met or exceeded our fiscal 1996 goals of 15%, 12% and
less than 25%, respectively. Since the
2
<PAGE> 5
installation of our management team in October 1992, EPS from continuing
operations have grown at a compound rate of 37% from the $.65 per share reported
for the fiscal year ended March 31, 1993 to the $1.67 reported for fiscal 1996.
[GRAPH]
<TABLE>
<CAPTION>
NET SALES
($ IN MILLIONS)
<C> <C>
1992 56,344
1993 63,999
1994 81,873
1995 101,122
1996 158,024
</TABLE>
The only financial goal not achieved in the 1996 fiscal year was our debt to
total capitalization target of 35% or less. Total long and short term debt,
which finished the year at $78.6 million, or 52% of total capitalization, was
well above the objective. This higher than desired level of debt is entirely
attributable to the $43 million acquisition of the Seeger Group. At June 30,
1995, the closing date of that transaction, total debt was $89.5 million, or 58%
of total capitalization. While debt was reduced almost $10 million in the last
three quarters of the fiscal year, we recognize the importance of a strong
balance sheet and will continue our efforts to further reduce debt in the new
fiscal year.
As I said at our shareholders' meeting last year, now is the time to raise the
hurdle with regard to our goals. While our operating and acquisition strategies
remain unchanged, our target financial goals, to be achieved by the fiscal year
ending in 2001, have been moved upwards to $500 million in revenues with a 7%
net income margin and a 15% return on average equity. We continue to keep our
EPS growth goal at 15%, compounded annually over that same period, to limit our
dividend to 25% or less of continuing operations' income and to pursue a debt to
total capitalization ratio of 35% or less. We believe that, with hard work and
the avoidance of a calamity, all of these goals are achievable over the next
five years.
[GRAPH]
<TABLE>
<CAPTION>
INCOME FROM CONTINUING OPERATIONS
($ IN MILLIONS)
<C> <C>
1992 (430)
1993 3,323
1994 5,800
1995 7,385
1996 8,508
</TABLE>
We also remain keenly focused on maintaining a flexible and diversified mix of
end-user markets for our fastener products. It is important to us that we not
become overly dependent upon a single geographic or end-user market. To this
end, we are attempting to develop a mix that includes diversification by
geographic (Europe, North America, and South America) and end-user markets, such
as automotive, heavy- truck, repair maintenance and overhaul, industrial
equipment, and consumer products. In fiscal year 1996 almost 40% of our revenues
were generated outside of the United States, and the largest single end-user
market, worldwide automotive OEM's, accounted for only 30% of global revenues.
This focus on diversified
3
<PAGE> 6
geographic and end-user markets impacts our analysis of acquisition candidates
as well as the utilization of our resources for capital expenditures, new
product development and marketing programs.
Fiscal 1996 was a year of integration and foundation building for fiscal 1997
and beyond, as we stepped up the pace of inter-divisional cooperation and
assistance as a result of the Seeger Group's acquisition. As the only
multinational manufacturer of our fastener products, we are well positioned to
meet our customers' increasing demands for a single global source of supply. We
see significant opportunities to increase sales of fastener products through our
cross-selling program, begun in April 1996. Under this program, we expect our US
manufactured gear driven band and assembly fasteners to be marketed in Europe
and South America by our business units there, and for the products manufactured
in Europe and Brazil to be marketed in the US by our domestic units. In many
instances, prospective cross-selling customers are the same customers we already
call on for other TransTechnology products. We have also commenced a
manufacturing rationalization program, whereby manufacturing of specific parts
is centralized rather than having multiple factories manufacture the same
component. This rationalization lowers costs and working capital needs while
improving efficiency. A great amount of effort has gone into a program of
complete tooling review and upgrades at each of our factories, again with an eye
towards lower manufacturing costs through higher efficiencies and throughput. We
believe that each of these programs will be a key part of our effort to achieve
our internal revenue and margin improvement goals over the next five years.
[GRAPH]
<TABLE>
<CAPTION>
YEAR-END MARKET PRICE OF STOCK
(IN DOLLARS)
<C> <C>
1992 8.00
1993 10.50
1994 15.38
1995 11.38
1996 15.00
</TABLE>
Much remains to be done, however, before we fully realize the potential which
lies within our company, and many challenges must be met along the way. We need
to become more proactive with our customers to meet their needs and we must
react more quickly in those instances where events seem to overtake us in the
market-place. A greater effort towards customer service, specifically product
engineering support and marketing resources, must continue as an internal focus
for improvement. The reduction of costs, at every level of the company, through
improved production efficiencies and investments in modern equipment, is
imperative to remaining competitive in the global marketplace. It is equally
important to have properly skilled people in the appropriate positions at every
level of the company to provide the resources for our new products and projects,
and the identification and development of these people is a "must do" to assure
our future.
4
<PAGE> 7
[PHOTO OF MICHAEL J. BERTHELOT]
I would like to thank each of our 1,500 employees and associates for their
efforts over the past fiscal year. The people at Breeze-Eastern, who have
achieved a solid turnaround of their business, worked hard and long for several
years and have emerged victorious. The people of our Breeze Industrial, Palnut
and Industrial Retaining Ring businesses have literally travelled about the
world on an almost continuous basis over the past year, performing due diligence
and then integration activities in Germany, England, the US and Brazil. Adapting
to a new system of objectives, management, data processing, and accounting and
finance rules is a daunting challenge, yet the people of the Seeger Group put
forth a yeoman's effort to ensure a smooth and seamless transition. Without the
enthusiasm and desire to succeed shown by our people around the world, the
results of the past year could not have been achieved. To each of you, I extend
the thanks of the Board of Directors, the shareholders, and my own personal
appreciation for your hard work and dedication.
We welcome Michel Glouchevitch, a managing director of a California based
investment firm, as the newest member of our Board of Directors. Michel's
observations and guidance as we move forward with acquisitions and financing
issues in the future will be greatly valued by the Board and the management
team.
On behalf of our Board of Directors and the management team, I express our
appreciation for the confidence and support shown by the shareholders over the
past year. Our goal is to enhance shareholder value, and we try to guide our
actions by that basic principle. I personally thank you for the opportunity to
participate in the revitalization and rebirth of this company, and I commit
myself to continuing our efforts to move TransTechnology to even greater heights
in the future.
/s/ Michael J. Berthelot
Michael J. Berthelot
Chairman and
Chief Executive Officer
5
<PAGE> 8
SPECIALTY FASTENER PRODUCTS
- --------------------------------------------------------------------------------
TransTechnology Corporation derives over 80% of its revenues from the
manufacture and sale of specialty fasteners and is the seventh largest fastener
manufacturer in the United States. Operating in small niches within the $6
billion domestic and $30 billion global fastener markets, the company operates
under some of the most well known brand names in the world and is an
acknowledged market leader in each of its product lines. The company's specialty
fastener products are used in a myriad of industries, ranging from automotive
and heavy truck manufacturing to computer disk drives, toys and caskets.
Specialty fastener products are distributed through in-house sales forces,
distributors, and manufacturers' representatives around the world. Through
increased engineering and marketing resources, the company continues to search
for new applications for its products in new industries throughout the globe.
[GRAPHIC]
Breeze Industrial's Aero Seal clamps.
6
<PAGE> 9
- --------------------------------------------------------------------------------
GEAR DRIVEN BAND FASTENERS
TransTechnology's Breeze Industrial Products division is the only full-line
manufacturer of gear driven band clamps in the world. Worm gear,
constant-torque, T-Bolt and V-Band, as well as perforated and non-perforated
clamps are part of a broad line of products for automotive, heavy truck,
industrial and marine. "Breeze" stainless steel clamps, well known for their
quality and engineering, are specified by Caterpillar, Navistar, and other major
heavy equipment manufacturers for whom Breeze is a certified supplier. Breeze
"Aero-Seal(R)", "Power-Seal(R)" and "Euro-Seal(TM)" clamps are sold in hardware,
automotive and retail stores for use in repair, maintenance and overhaul
applications and are used by many manufacturers of industrial and consumer
products.
ASSEMBLY FASTENERS
TransTechnology's Palnut division is one of the leading manufacturers of
assembly fasteners in the United States, supplying "Palnut" highly engineered
custom fastening devices primarily to the automotive industry. Lock-nuts,
push-nuts, u-nuts, and a variety of single and multi-threaded stainless and
high-carbon steel fasteners are provided to the toy, appliance, casket, and
lighting industries for use in assembling products.
[GRAPHICS]
The Palnut Company's lock-nuts and pushnuts.
7
<PAGE> 10
RETAINING RINGS
TransTechnology is the world's largest manufacturer of retaining rings, with six
distinct operations in the United States, Germany, England, and Brazil. These
products are highly engineered, usually to a customer's exacting specifications,
and are used in engines, transmissions, drive trains, and braking systems on
automobiles, trucks, and off-road equipment. They also find application in
industrial equipment, computers, photographic equipment, appliances, marine
applications, and almost any situation where movement on a shaft must be
restricted. The company operates under the well known brand names "Seeger-Orbis"
(Germany), "Seeger- Reno" (Brazil), "Anderton" and "Anderton-United" (United
Kingdom and United States), "Waldes/Truarc" (United States) and "Industrial
Retaining Ring" (United States).
[GRAPHIC]
Seeger Group's retaining rings.
8
<PAGE> 11
Rescue Hoist and Cargo Hook Products
- --------------------------------------------------------------------------------
TransTechnology's Breeze-Eastern division is the world's leading designer and
manufacturer of sophisticated helicopter rescue hoists and cargo hook systems.
These systems add significantly to the versatility of an aircraft for a
relatively small cost. They are used around the world by military and civilian
agencies to save lives, complete missions, and transport cargo. Most helicopter
manufacturers today, including Sikorsky, Bell, Aerospatiale, and Agusta specify
Breeze-Eastern's systems as standard equipment on their aircraft because of
Breeze-Eastern's record for safety, reliability, durability, and service.
Breeze-Eastern also manufactures handling systems for weapon's platforms and
motion control actuation devices.
Innovation and new product development remain an important focus at
Breeze-Eastern. Participation in the V-22 Osprey program presents the division
with an opportunity for substantial growth in the future on one of the first new
airframe projects in years. The use of computerized testing equipment, composite
materials, the integration of electronics into hoists and hooks, and the use of
lighter and faster motors are all Breeze-Eastern's accomplishments over the past
several years. Breeze-Eastern has made a substantial commitment to increased
engineering, new product, and research and development projects for the future
in order to maintain the confidence and trust of its customers and users and to
assure its continued position as the global market leader.
[GRAPHIC]
Breeze-Eastern rescue hoist
9
<PAGE> 12
BOARD OF DIRECTORS AND CORPORATE OFFICERS
- --------------------------------------------------------------------------------
[PHOTO OF BOARD OF DIRECTORS]
BOARD OF DIRECTORS
(From left to right)
Back Row: Gideon Argov, James A. Lawrence, Michel Glouchevitch,
Walter Belleville
Center Row: Thomas V. Chema, Patrick K. Bolger
Center Front: Michael J. Berthelot
[PHOTO OF CORPORATE OFFICERS]
CORPORATE OFFICERS
Standing from left to right:
Winston Lau, Vice President of Operations
Michael J. Berthelot, Chairman of the Board and Chief Executive Officer
Monica Aguirre, Assistant Secretary
Chandler J. Moisen, Senior Vice President, Chief Financial Officer and Treasurer
Sitting from left to right:
Gerald C. Harvey, Vice President, Secretary and General Counsel
Patrick K. Bolger, President and Chief Operating Officer
10
<PAGE> 13
Consolidated Balance Sheets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31,
ASSETS 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<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
- -----------------------------------------------------------------------------------------------------------------------
Total current assets 95,282,000 76,670,000
- -----------------------------------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------
Total 78,326,000 42,574,000
Less accumulated depreciation and amortization 17,749,000 13,040,000
- -----------------------------------------------------------------------------------------------------------------------
Property-net 60,577,000 29,534,000
- -----------------------------------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------
Total other assets 43,508,000 23,192,000
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 199,367,000 $ 129,396,000
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------
Total current liabilities 37,934,000 23,608,000
- -----------------------------------------------------------------------------------------------------------------------
Long-term debt payable to banks and others 72,565,000 37,021,000
- -----------------------------------------------------------------------------------------------------------------------
Other long-term liabilities 16,398,000 4,265,000
- -----------------------------------------------------------------------------------------------------------------------
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)
- -----------------------------------------------------------------------------------------------------------------------
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)
- -----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 72,470,000 64,502,000
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 199,367,000 $ 129,396,000
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
11
<PAGE> 14
STATEMENTS OF CONSOLIDATED OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the years ended March 31,
1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------
<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
- --------------------------------------------------------------------------------------------------------------------------
Total 159,854,000 102,692,000 82,843,000
- --------------------------------------------------------------------------------------------------------------------------
Cost of goods sold 107,426,000 71,968,000 57,887,000
- --------------------------------------------------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------------------------------------------------
Net income $ 7,374,000 $ 2,533,000 $ 6,884,000
- --------------------------------------------------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------------------------------------------------
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
12
<PAGE> 15
Statements of Consolidated Cash Flows
- --------------------------------------------------------------------------------
<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.
13
<PAGE> 16
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.
14
<PAGE> 17
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
15
<PAGE> 18
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.
16
<PAGE> 19
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>
17
<PAGE> 20
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
18
<PAGE> 21
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>
19
<PAGE> 22
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.
20
<PAGE> 23
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.
21
<PAGE> 24
11. CONTINGENCIES
- --------------------------------------------------------------------------------
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 sites, a
feasibility study has been prepared and submitted to the state. Based upon that
study and upon claims for recovery which the Company has against others, a
pre-tax charge of $3.6 million (net of $1.2 million in probable recoveries from
third parties) was recorded in March 1993 for future cleanup costs at the
Pennsylvania sites. At March 31, 1996, the balance of this clean-up reserve was
$2.4 million. 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.
In addition, the Company has been named as a potentially responsible party in
various environmental remediation recovery proceedings pending in several other
states in which it is alleged that the Company was a generator of waste that was
sent to landfills and other treatment facilities and, as to several sites, it is
alleged that the Company was an owner or operator. 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.
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 not have a material
effect on the consolidated financial position of the Company.
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.
22
<PAGE> 25
<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.
23
<PAGE> 26
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>
24
<PAGE> 27
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Stockholders and the Board of Directors of TransTechnology Corporation:
We have audited the accompanying consolidated balance sheets of TransTechnology
Corporation and subsidiaries as of March 31, 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
25
<PAGE> 28
Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------
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
26
<PAGE> 29
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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.
27
<PAGE> 30
SPECIALTY FASTENER PRODUCTS SEGMENT
1996 COMPARED WITH 1995
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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.
28
<PAGE> 31
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
- --------------------------------------------------------------------------------
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. 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.
29
<PAGE> 32
- --------------------------------------------------------------------------------
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.
30
<PAGE> 33
DIRECTORS
- --------------------------------------------------------------------------------
- -- Gideon Argov
Chairman of the Board, President
and Chief Executive Officer
Kollmorgen Corporation
(High-performance motion control systems)
- - --Walter Belleville
Chairman and Chief Executive Officer
ATI Machinery, Inc.
(Heavy machinery)
+ Michael J. Berthelot
Chairman of the Board and
Chief Executive Officer
TransTechnology Corporation
Patrick K. Bolger
President and Chief Operating Officer
TransTechnology Corporation
+ --Thomas V. Chema
Partner
Arter & Hadden
(Telecommunications consulting)
Michel Glouchevitch
Managing Director
Triumph Capital Group
- - + James A. Lawrence
President and Chief Executive Officer
Asia/Middle East/Africa
Pepsi-Cola Company
- - Audit Committee
+ Nominating Committee
- -- Incentives & Compensation Committee
CORPORATE OFFICE
- --------------------------------------------------------------------------------
150 Allen Road
Liberty Corner, NJ 07938
908/903-1600
Fax 908/903-1616
COUNSEL
- --------------------------------------------------------------------------------
Hahn, Loeser & Parks
Cleveland, Ohio
AUDITORS
- --------------------------------------------------------------------------------
Deloitte & Touche LLP
Parsippany, New Jersey
CORPORATE OFFICERS
- --------------------------------------------------------------------------------
Michael J. Berthelot
Chairman of the Board and
Chief Executive Officer
Patrick K. Bolger
President and Chief Operating Officer
Chandler J. Moisen
Senior Vice President, Chief Financial
Officer and Treasurer
Winston Lau
Vice President of Operations
Gerald C. Harvey
Vice President, Secretary and
General Counsel
Monica Aguirre
Assistant Secretary
ANNUAL MEETING
- --------------------------------------------------------------------------------
The Annual Shareholders' Meeting will be held on Wednesday, July 24, 1996 at the
Marriott Financial Center Hotel, 85 West Street,
New York, NY 10006.
FORM 10-K AND ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
The Company, upon request to the Investor Relations department, will provide to
any shareholder a copy of the Form 10-K required to be filed with the Securities
and Exchange Commission and any other available information.
TRANSFER AGENT AND REGISTRAR
- --------------------------------------------------------------------------------
Wachovia Bank & Trust Co., N.A.
Winston-Salem, North Carolina
INVESTOR RELATIONS CONTACT
Michael J. Berthelot
Chairman of the Board and
Chief Executive Officer
TransTechnology Corporation
150 Allen Road
Liberty Corner, NJ 07938
908/903-1600
OPERATIONAL GROUPS
- --------------------------------------------------------------------------------
Specialty Fasteners
BREEZE INDUSTRIAL PRODUCTS
Gear-driven band fasteners
100 Aero-Seal Drive
Saltsburg, PA 15681-9594
412/639-3571
Fax 412/639-3020
Robert Tunno - Division President
THE PALNUT COMPANY
Single and multi-thread fasteners
152 Glen Road
Mountainside, NJ 07092-2997
908/233-3300
Fax 908/233-6566
Winston Lau - Division President
INDUSTRIAL RETAINING RING (IRR)
Multi-sized retaining rings
57 Cordier Street
Irvington, NJ 07111-4035
201/926-5000
Fax 201/926-4699
SEEGER INC.
Retaining rings and assembly tools
500 Memorial Drive
Somerset, NJ 08875
908/469-7999
Fax 908/469-2413
THE SEEGER GROUP
Retaining rings and circlips
Wiesbadener Strasse 243
D-61462 Konigstein, Germany
49/6174 2050
Fax 49/6174 205 100
Ulf Jemsby - Managing Director
SEEGER-ORBIS GmbH
Konigstein, Germany
Ulf Jemsby - Managing Director
ANDERTON INTERNATIONAL LTD.
Bingley, West Yorkshire, England
Robert Wieremiej - Managing Director
SEEGER-RENO
INDUSTRIA E COMERCIO LTD.
Sao Paulo, Brazil
Joao Scivoletto - Managing Director
RESCUE HOISTS AND CARGO HOOKS
BREEZE-EASTERN
Lifting and restraint products
700 Liberty Avenue
Union, NJ 07083-4115
908/686-4000
Fax 908/686-9292
Robert White - Division President
<PAGE> 34
150 Allen Road
Liberty Corner, New Jersey 07938
908/903-1600
<PAGE> 1
EXHIBIT 21
TRANSTECHNOLOGY CORPORATION
SUBSIDIARIES OF THE COMPANY
LISTED BELOW ARE THE WHOLLY OWNED SUBSIDIARIES
OF TRANSTECHNOLOGY CORPORATION AS OF MAY 30,1996
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation
-------------
<S> <C>
Anderton (Predecessors) Limited (formerly Anderton International Ltd.) England
Anderton International Limited (formerly TTUK Acquisition Co. Ltd.) England
Electronic Connections and Assemblies, Inc. Delaware
Industrial Retaining Ring Company New Jersey
Palnut Fasteners, Inc. Delaware
Rancho TransTechnology Corporation California
Retainers, Inc. New Jersey
Seeger Inc. DBA Seeger of New Jersey Company Delaware
Seeger-Orbis Beteiligungsgesellschaft mbH Germany
Seeger-Orbis GmbH & Co. OHG Germany
Seeger Reno Industria e Comercio Ltd. Brazilian
SSP Industries California
SSP International Sales, Inc. California
TransTechnology Acquisition Corporation Delaware
TransTechnology Australasia Pty. Ltd. Australia
TransTechnology (Europe) Ltd. England
TransTechnology International Corporation Virgin Islands
TransTechnology Seeger Inc. Delaware
TransTechnology Seeger-Orbis GmbH Germany
TransTechnology Systems & Services, Inc. Michigan
</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, and this Annual Report on Form
10-K of TransTechnology Corporation for the year ended March 31, 1996, of our
report dated May 28, 1996.
/s/Deloitte & Touche LLP
- ------------------------
Parsippany, New Jersey
June 24, 1996
<TABLE> <S> <C>
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<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,352
<SECURITIES> 0
<RECEIVABLES> 28,368
<ALLOWANCES> 735
<INVENTORY> 50,551
<CURRENT-ASSETS> 95,282
<PP&E> 78,326
<DEPRECIATION> 17,749
<TOTAL-ASSETS> 199,367
<CURRENT-LIABILITIES> 37,934
<BONDS> 78,591
0
0
<COMMON> 53
<OTHER-SE> (3,238)
<TOTAL-LIABILITY-AND-EQUITY> 199,367
<SALES> 158,024
<TOTAL-REVENUES> 159,854
<CGS> 107,426
<TOTAL-COSTS> 38,128
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 6,316
<INCOME-PRETAX> 14,300
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