<PAGE> 1
FORM 10-Q
---------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 1-7872
---------------------
TRANSTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
150 Allen Road
Liberty Corner, New Jersey
(Address of principal executive offices)
95-4062211
(I.R.S. employer
identification no.)
07938
(Zip Code)
Registrant's telephone number, including area code: (908) 903-1600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
As of August 5, 1997, the total number of outstanding
shares of registrant's one class of common stock was
5,037,089.
<PAGE> 2
TRANSTECHNOLOGY CORPORATION
INDEX
<TABLE>
<CAPTION>
PART I. Financial Information Page No.
<S> <C>
Item 1. Financial Statements......................................... 2
-------
Statements of Consolidated Operations--
Three Month Periods Ended June 29, 1997
and June 30, 1996............................................ 3
Consolidated Balance Sheets--
June 29, 1997 and March 31, 1997............................. 4
Statements of Consolidated Cash Flows--
Three Months Ended June 29, 1997 and
June 30, 1996................................................ 5
Statements of Consolidated Stockholders' Equity--
Three Months Ended June 29, 1997 ............................ 6
Notes to Consolidated Financial Statements............... 7 - 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .....................11 - 15
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K............................. 16
-------
SIGNATURES......................................................................... 16
EXHIBIT 11......................................................................... 17
EXHIBIT 27......................................................................... 18
</TABLE>
1
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited Statements of Consolidated Operations, Consolidated
Balance Sheets and Statements of Consolidated Cash Flows are of TransTechnology
Corporation and its consolidated subsidiaries. These reports reflect all
adjustments of a normal recurring nature, which are, in the opinion of
management, necessary to a fair presentation of the results of operations for
the interim periods reflected therein. The results reflected in the unaudited
Statements of Consolidated Operations for the period ended June 29, 1997 are not
necessarily indicative of the results to be expected for the entire year. The
following unaudited Consolidated Financial Statements should be read in
conjunction with the notes thereto, and Management's Discussion and Analysis of
Financial Condition and Results of Operations set forth in Item 2 of Part I of
this report, as well as the audited financial statements and related notes
thereto contained in the Form 10-K filed for the fiscal year ended March 31,
1997.
[THIS SPACE INTENTIONALLY LEFT BLANK]
2
<PAGE> 4
STATEMENTS OF CONSOLIDATED OPERATIONS
UNAUDITED
(In Thousands of Dollars Except Share Data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
JUNE 29, 1997 JUNE 30, 1996
------------- -------------
<S> <C> <C>
Net Sales $ 49,923 $ 44,640
Cost of sales 34,575 30,939
----------- -----------
Gross profit 15,348 13,701
----------- -----------
General, administrative
and selling expenses 9,571 8,561
Interest expense 1,976 1,810
Interest income (243) (269)
Other income (3) (17)
----------- -----------
Income from continuing operations
before income taxes 4,047 3,616
Income taxes 1,680 1,519
----------- -----------
Income from continuing operations 2,367 2,097
Discontinued operations:
Loss from disposal (net of applicable
tax benefit of $72 and $189 for the three
months ended June 29, 1997
and June 30, 1996, respectively) (102) (269)
----------- -----------
Net income $ 2,265 $ 1,828
=========== ===========
Earnings per share: (Note 1)
Income from continuing operations $ 0.46 $ 0.41
Loss from discontinued operations (0.02) (0.05)
----------- -----------
Net income $ 0.44 $ 0.36
=========== ===========
Number of shares used in computation
of per share information 5,186,000 5,104,000
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE> 5
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars Except Share Data)
<TABLE>
<CAPTION>
UNAUDITED
JUNE 29, 1997 MARCH 31, 1997
------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,298 $ 3,540
Accounts receivable (net of allowance for doubtful accounts
of $548 at June 29, 1997 and $588 at March 31, 1997) 32,372 28,392
Notes receivable 3,749 1,838
Inventories 50,928 50,677
Prepaid expenses and other current assets 1,703 1,028
Deferred income taxes 4,212 4,293
Assets held for sale 7,205 7,617
--------- ---------
Total current assets 102,467 97,385
--------- ---------
Property, Plant and Equipment 89,658 82,207
Less accumulated depreciation and amortization 25,145 23,594
--------- ---------
Property, Plant and Equipment - net 64,513 58,613
--------- ---------
Other assets:
Notes receivable 8,988 11,125
Costs in excess of net assets of acquired businesses
(net of accumulated amortization:
June 29, 1997, $4,153; March 31, 1997, $3,869) 46,194 18,878
Other 12,515 13,135
--------- ---------
Total other assets 67,697 43,138
--------- ---------
Total $ 234,677 $ 199,136
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 10,004 $ 5,907
Accounts payable-trade 9,832 11,050
Accrued compensation 4,525 6,845
Accrued income taxes 2,333 1,632
Other current liabilities 16,309 12,844
--------- ---------
Total current liabilities 43,003 38,278
--------- ---------
Long-term debt payable to banks and others 95,378 67,516
--------- ---------
Other long-term liabilities 17,156 15,898
--------- ---------
Stockholders' equity:
Preferred stock-authorized, 300,000 shares; none issued -- --
Common stock-authorized, 14,700,000 shares of $.01 par value;
issued 5,319,759 at June 29, 1997, and 5,316,971 at March 31, 1997 54 53
Additional paid-in capital 46,800 46,745
Retained earnings 38,876 36,937
Other stockholders' equity (2,602) (2,352)
--------- ---------
83,128 81,383
Less treasury stock, at cost - (291,719 shares at June 29,
1997 and 289,237 at March 31, 1997) (3,988) (3,939)
--------- ---------
Total stockholders' equity 79,140 77,444
--------- ---------
Total $ 234,677 $ 199,136
========= =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE> 6
STATEMENTS OF CONSOLIDATED CASH FLOWS
UNAUDITED
(In Thousands of Dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------
JUNE 29, 1997 JUNE 30, 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,265 $ 1,828
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 2,152 1,920
Provision for losses on accounts receivable 23 52
Loss on sale or disposal of fixed assets and discontinued
businesses 5 38
Change in assets and liabilities net of acquisitions and dispositions:
(Increase) decrease in accounts receivable (60) 2,146
Decrease in inventories 1,475 988
Decrease in assets held for sale 412 865
Increase in other assets (325) (3,909)
Decrease in accounts payable (3,356) (2,361)
Decrease in accrued compensation (2,320) (1,663)
Increase in income tax payable 701 770
Increase in other liabilities 1,324 2,645
-------- --------
Net cash provided by operating activities 2,296 3,319
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Business acquisitions net of cash acquired (33,929) (3,344)
Capital expenditures (1,748) (1,307)
Proceeds from sale of fixed assets and discontinued business 261 1,987
Decrease in notes receivable 226 235
-------- --------
Net cash used in investing activities (35,190) (2,429)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 45,500 8,431
Payments on long-term debt (13,541) (10,200)
Proceeds from issuance of stock under stock option plan 56 179
Dividends paid (326) (332)
-------- --------
Net cash provided by (used in) financing activities 31,689 (1,922)
-------- --------
Effect of exchange rate changes on cash (37) --
Decrease in cash and cash equivalents (1,242) (1,032)
Cash and cash equivalents at beginning of period 3,540 2,362
-------- --------
Cash and cash equivalents at end of period $ 2,298 $ 1,330
======== ========
Supplemental Information:
Interest payments $ 1,145 $ 1,342
Income tax payments $ 115 $ 337
- -------------------------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE> 7
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
UNAUDITED
(In Thousands of Dollars Except Share Data)
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK ADDITIONAL OTHER
FOR THE QUARTER ------------------ --------------------- PAID-IN RETAINED STOCKHOLDERS'
ENDED JUNE 29, 1997 SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS EQUITY TOTAL
- -------------------- --------- ------ -------- ------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1997 5,316,971 $53 (289,237) $(3,939) $46,745 $ 36,937 $(2,352) $ 77,444
Net Income -- -- -- -- -- 2,265 -- 2,265
Cash dividends
($.065 per share) -- -- -- -- -- (326) -- (326)
Unrealized investment
holding losses -- -- -- -- -- -- (40) (40)
Effects of stock under
incentive bonus plan - net 2,788 1 (2,482) (49) 55 -- (17) (10)
Foreign translation
adjustments -- -- -- -- -- -- (193) (193)
--------- --- -------- ------- ------- -------- ------- --------
Balance, June 29, 1997 5,319,759 $54 (291,719) $(3,988) $46,800 $ 38,876 $(2,602) $ 79,140
========= === ======== ======= ======= ======== ======= ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE> 8
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars)
NOTE 1. Earnings Per Share:
Earnings per share are based on the weighted average number of common
stock and common stock equivalents (stock options) outstanding during
each period. In computing earnings per share, common stock equivalents
were either anti-dilutive because of the market value of the stock or
not material, and, therefore, have been excluded from the calculation.
Calculation of earnings per share for the period ended June 29, 1997
includes common stock equivalents of approximately 159,000 shares
relating to stock options.
NOTE 2. Inventories:
Inventories are summarized as follows:
<TABLE>
<CAPTION>
June 29, 1997 March 31, 1997
--------------- ----------------
<S> <C> <C>
Finished goods $22,003 $21,897
Work-in-process 10,131 10,335
Purchased and
manufactured parts 18,794 18,445
------- -------
Total inventories $50,928 $50,677
======= =======
</TABLE>
7
<PAGE> 9
NOTE 3. Long-Term Debt Payable to Banks and Others
Long-term debt payable, including current maturities, at June 29, 1997
and March 31, 1997 consisted of the following:
<TABLE>
<CAPTION>
June 29, 1997 March 31, 1997
------------- --------------
<S> <C> <C> <C>
Credit agreement -- 5.15% $ 2,441 --
Credit agreement -- 7.58% -- $ 22,825
Credit agreement -- 7.8125% 10,000 --
Credit agreement -- 8.72% 5,320 --
Credit agreement -- 9% 2,200 --
Term loan -- 6.57% 7,451 --
Term loan -- 7.5% -- 25,289
Term loan -- 7.6875% 600 --
Term loan -- 7.8125% 45,800 --
Term loan -- 8.72% 6,325 --
Term loan -- 9.0625% 24,000 --
Term loan -- 9.79% 500 24,500
Other 745 809
-------- --------
105,382 73,423
Less current maturities 10,004 5,907
-------- --------
Total $ 95,378 $ 67,516
======== ========
</TABLE>
Credit Agreement
On June 29, 1997 the Company's debt consisted of $12.2 million of
borrowings under a revolving credit line ("the Revolver"), $7.8 million
of borrowings under international lines of credit ("the International
Lines of Credit"), a $60.2 million term loan ("Term Loan A"), a $24.5
million term loan ("Term Loan B") and $0.7 million of other borrowings.
The Revolver commitment of $30 million will be available to the Company
through December 31, 2000 and is subject to a borrowing base formula.
The Company's credit agreement with a group of commercial banks
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 June 29,
1997 were $0.1 million. The total commitment under the International
Lines of Credit is $10 million and is subject to the same availability
and collateral as the revolver, but is not subject to a borrowing base
formula. Interest on the Revolver and the International Lines of Credit
is tied to the primary lending 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.
On March 31,1997, the Company amended its Term Loan A bank debt to
increase the availability by $20 million, giving the company a total of
$35 million available for acquisitions. On April 17, 1997, $32.6
million of this amount was used by the Company to acquire TCR
Corporation.
8
<PAGE> 10
The $60.2 million and $24.5 million term loans are with the same
lenders as the revolving and international lines of credit, are secured
by the same collateral, and are due and payable on March 31, and June
30, 2002, respectively. Quarterly principal payments on Term Loan A are
$2.2 million, with escalations to $3 million, $3.2 million and $4
million in June, 1998, 1999 and 2000, respectively. Interest on Term
Loan A is tied to the primary lending banks prime rate, or LIBOR, plus
a margin that varies depending upon the Company's achievement of
certain operating and financial goals. Annual principal payments on
Term Loan B of $0.5 million are due through June 30, 2000, with final
balloon payments of $7.5 million and $15 million due on June 30, 2001
and June 30, 2002, respectively. Interest on Term Loan B 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 June 29, 1997, $79.8 million of
the Company's outstanding borrowings utilized LIBOR.
Additionally, the credit facility limits capital expenditures to $9
million annually and contains other customary financial covenants
including a limit on the Company's ability to pay dividends to 25% of
net income.
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%.
Debt Maturities
<TABLE>
<CAPTION>
June 30,
--------
<S> <C>
1998 (current) $ 10,004
1999 12,524
2000 13,980
2001 43,859
2002 25,015
--------
Total $105,382
========
</TABLE>
NOTE 4. Discontinued Operations
After-tax costs of $0.1 million were recorded in the first quarter of
1998, in connection with previously discontinued and sold businesses.
These costs represent adjustments to previous estimates related
primarily to environmental and legal matters.
9
<PAGE> 11
Assets held for sale at June 29, 1997 and March 31, 1997 were as follows:
<TABLE>
<CAPTION>
June 29, 1997 March 31, 1997
--------------- ----------------
<S> <C> <C>
Inventory $ 427 $ 429
Property 6,611 6,577
Other assets 167 611
------- -------
Assets held for sale $ 7,205 $ 7,617
======= =======
</TABLE>
NOTE 5. Acquisitions
On June 18, 1996 the Company acquired the Pebra hose clamp business
from Pebra GmbH Paul Braun i.K. for approximately $3 million in cash
plus direct acquisition costs. Pebra is located in Frittlingen,
Germany, and manufactures heavy duty hose clamps primarily for use in
the manufacture of heavy trucks in Europe.
On April 17, 1997 the Company acquired all of the outstanding stock of
TCR Corporation for $32.6 million in cash plus direct acquisition costs
and other contingent consideration. TCR Corporation, located in
Minneapolis, Minnesota, produces externally threaded fasteners and
related products for the automotive, heavy vehicle, marine and
industrial markets.
NOTE 6. New Accounting Standard
In February 1997, the Financial Accounting Standards Board adopted
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share," which establishes standards for computing and presenting
earnings per share. This statement is effective for the Company's
financial year ending March 31, 1998. The Company believes that the
effect of implementing this standard will result in a basic earnings
per share amount which will not be materially different from primary
earnings per share as currently reported.
NOTE 7. Reclassifications
Certain reclassifications have been made to the prior year to conform
to the 1998 presentation.
10
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
All references to three-month periods in this Management's Discussion refer to
the three-month period ended June 29, 1997 for fiscal year 1998 and the
three-month period ended June 30, 1996 for fiscal year 1997. Also when referred
to herein, operating profit means net sales less operating expenses, without
deduction for general corporate expenses, interest and income taxes.
Sales from continuing operations for the three-month period in 1998 were $49.9
million, a $5.3 million or 12% increase from the comparable period in 1997.
Gross profit was $15.3 million for the three-month period in 1998, up $1.6
million or 12% from the comparable period in 1997. Operating profit from
continuing operations for the three-month period in 1998 was $8.1 million, an
increase of $0.4 million or 6% from the comparable period in 1997. Changes in
sales, operating profit and new orders from continuing operations are discussed
below by segment.
Net income, including discontinued operations, for the three-month period in
1998 was $2.3 million or $.44 per share, compared to $1.8 million or $.36 per
share for the comparable period of 1997. As further discussed below, the
increased earnings performance in 1998 resulted primarily from the inclusion of
TCR Corporation operations in the three-month 1998 period.
Interest expense increased $0.2 million for the three-month period in 1998,
primarily as a result of increased bank borrowings used for the acquisition of
TCR Corporation on April 17, 1997.
New orders received during the three-month period in 1998 totaled $51.8 million,
an increase of $7 million or 16% from 1997's comparable period. At June 29,
1997, total backlog of unfilled orders was $73.7 million compared to $59.2
million at June 30, 1996.
DISCONTINUED OPERATIONS
After-tax costs of $0.1 million were recorded in the first quarter of 1998, in
connection with previously discontinued and sold businesses. These costs
represent adjustments to previous estimates related primarily to environmental
and legal matters.
11
<PAGE> 13
ACQUISITIONS
On April 17, 1997 the Company acquired all of the outstanding stock of TCR
Corporation for $32.6 million in cash plus direct acquisition costs and other
contingent consideration. TCR Corporation, located in Minneapolis, Minnesota,
produces externally threaded fasteners and related products for the automotive,
heavy vehicle, marine and industrial markets.
NEW ACCOUNTING STANDARD
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share," which
establishes standards for computing and presenting earnings per share. This
statement is effective for the Company's fiscal year ending March 31, 1998. The
Company believes that the effect of implementing this standard will result in a
basic earnings per share amount which will not be materially different from
primary earnings per share as currently reported.
12
<PAGE> 14
FINANCIAL SUMMARY BY PRODUCT SEGMENT
(In Thousands of Dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NET CHANGE
----------------------------- --------------------
June 29, 1997 June 30, 1996 $ %
------------- ------------- ------- -------
<S> <C> <C> <C> <C>
Sales:
Specialty fastener products $ 41,155 $ 35,499 $ 5,656 16
Rescue hoist and cargo hook products 8,768 9,141 (373) (4)
-------- -------- -------
Total $ 49,923 $ 44,640 $ 5,283 12
======== ======== =======
Operating profit:
Specialty fastener products $ 6,092 $ 5,702 $ 390 7
Rescue hoist and cargo hook products 1,979 1,923 56 3
-------- -------- -------
Total $ 8,071 $ 7,625 $ 446 6
Corporate expense (2,255) (2,439) 184 8
Corporate interest and other income 207 240 (33) (14)
Interest expense (1,976) (1,810) (166) (9)
-------- -------- -------
Income from continuing
operations before
income taxes $ 4,047 $ 3,616 $ 431 12
======== ======== =======
</TABLE>
13
<PAGE> 15
SPECIALTY FASTENER PRODUCTS SEGMENT
Sales for the specialty fastener products segment were $41.2 million for the
three-month period in 1998, an increase of $5.7 million, or 16% from the same
period in 1997. The increase in sales was primarily due to the inclusion of TCR
Corporation and Pebra for the 1998 three-month period and increased gear-driven
fastener demand to the heavy-duty truck market, offset by a decrease in domestic
and European retaining ring sales due to the consolidation of the marketing and
customer service operations of the domestic businesses, and the stronger dollar
versus Deutsche Mark for the European businesses.
Operating profit for the three-month period in 1998 was $6.1 million, an
increase of $0.4 million or 7% from the comparable period of 1997. The increase
was primarily due to the inclusion of TCR Corporation and Pebra for the 1998
three-month period and increased sales volume of gear-driven fasteners, offset
by the decrease in domestic and European retaining ring sales and the stronger
dollar versus Deutsche Mark, mentioned above.
New orders for the three-month period in 1998 increased $6.4 million or 18% from
the comparable period in 1997, primarily due to the inclusion of operations of
TCR Corporation and Pebra for the 1998 three-month period. Backlog of unfilled
orders at June 29, 1997 was $40.7 million, compared to $28.9 million at June 30,
1996.
RESCUE HOIST AND CARGO HOOK PRODUCTS SEGMENT
Sales of the rescue hoist and cargo hook products segment were $8.8 million for
the three-month period in 1998, down $0.4 million or 4% from the comparable
period in 1997. The decrease was primarily due to the timing of customers
placing new orders.
Operating profit for the three-month period in 1998 was $2.0 million, an
increase of $0.1 million or 3% from the comparable period in 1997. The primary
factors contributing to the increase in the segment's operating profit in the
1998 three-month period were the product sales mix and a slight decrease in
engineering expense during the quarter.
New orders increased for the three-month period in 1998 by $0.6 million or 7%
from the comparable period in 1997 primarily due to customer timing and
placement of new orders. Backlog of unfilled orders at June 29, 1997 was $33
million, compared to $30.4 million at June 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's debt-to-capitalization ratio was 57% as of June 29, 1997, compared
to 49% as of March 31, 1997. The current ratio at June 29, 1997, stood at 2.38
compared to 2.54 at March 31, 1997. Working Capital was $59.5 million at June
29, 1997, up $0.4 million from March 31, 1997.
14
<PAGE> 16
On June 29, 1997 the Company's debt consisted of $12.2 million of borrowings
under a revolving credit line ("the Revolver"), $7.8 million of borrowings under
international lines of credit ("the International Lines of Credit"), a $60.2
million term loan ("Term Loan A"), a $24.5 million term loan ("Term Loan B") and
$0.7 million of other borrowings. The Revolver commitment of $30 million will be
available to the Company through December 31, 2000 and is subject to a borrowing
base formula. The Company's credit agreement with a group of commercial banks
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 June 29, 1997 were $0.1 million. The total
commitment under the International Lines of Credit is $10 million and is subject
to the same availability and collateral as the revolver, but is not subject to a
borrowing base formula. Interest on the Revolver and the International Lines of
Credit is tied to the primary lending 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.
On March 31,1997, the Company amended its Term Loan A bank debt to increase the
availability by $20 million, giving the company a total of $35 million available
for acquisitions. On April 17, 1997, $32.6 million of this amount was used by
the Company to acquire TCR Corporation.
The $60.2 million and $24.5 million term loans are with the same lenders as the
revolving and international lines of credit, are secured by the same collateral,
and are due and payable on March 31, and June 30, 2002, respectively. Quarterly
principal payments on Term Loan A are $2.2 million, with escalations to $3
million, $3.2 million and $4 million in June, 1998, 1999 and 2000, respectively.
Interest on Term Loan A is tied to the primary lending banks prime rate, or
LIBOR, plus a margin that varies depending upon the Company's achievement of
certain operating and financial goals. Annual principal payments on Term Loan B
of $0.5 million are due through June 30, 2000, with final balloon payments of
$7.5 million and $15 million due on June 30, 2001 and June 30, 2002,
respectively. Interest on Term Loan B 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 June 29,
1997, $79.8 million of the Company's outstanding borrowings utilized LIBOR.
Additionally, the credit facility limits capital expenditures to $9 million
annually and contains other customary financial covenants including a limit on
the Company's ability to pay dividends to 25% of net income.
Management believes that the Company's anticipated cash flow from operations,
combined with the bank credit described above, will be sufficient to support
working capital requirements, capital expenditures and dividend payments at
their current or expected levels. Capital expenditures in the three-month period
in 1998 were $1.7 million as compared with $1.3 million in the comparable period
in 1997.
15
<PAGE> 17
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Statement of Computation of Per Share Earnings
27 Financial Data Schedule
(b) A report on Form 8-K was filed on April 29, 1997 to report the Company's
April 17, 1997 acquisition of all of the outstanding stock of TCR
Corporation. This report on Form 8-K was amended by the filing of a
report on Form 8-K/A dated June 27, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANSTECHNOLOGY CORPORATION
(Registrant)
Dated: August 11, 1997 By: /s/ Joseph F. Spanier
---------------------------------------
JOSEPH F. SPANIER, Vice President,
Treasurer and Chief Financial Officer*
* On behalf of the Registrant and as Principal Financial and Accounting
Officer.
16
<PAGE> 1
EXHIBIT 11
TRANSTECHNOLOGY CORPORATION
STATEMENT OF THE COMPUTATION OF PER SHARE EARNINGS
IN ACCORDANCE WITH INSTRUCTION 4(g)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------
JUNE 29, 1997 JUNE 30, 1997
------------- -------------
<S> <C> <C>
Primary earnings per share:
Weighted average number of
common shares outstanding 5,027,829 5,103,635
Dilutive effect of stock
option plan 158,589 - (a)
---------- ----------
5,186,418 5,103,635
========== ==========
Net income $2,265,000 $1,828,000
========== ==========
Primary earnings per share $ 0.44 $ 0.36
========== ==========
</TABLE>
(a) The inclusion of stock options in the calculation of primary earnings
per share was either anti-dilutive or not material as per APB 15.
17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-29-1997
<CASH> 2,298
<SECURITIES> 0
<RECEIVABLES> 32,372
<ALLOWANCES> 548
<INVENTORY> 50,928
<CURRENT-ASSETS> 102,467
<PP&E> 89,658
<DEPRECIATION> 25,145
<TOTAL-ASSETS> 234,677
<CURRENT-LIABILITIES> 43,003
<BONDS> 105,382
0
0
<COMMON> 54
<OTHER-SE> (6,590)
<TOTAL-LIABILITY-AND-EQUITY> 234,677
<SALES> 49,923
<TOTAL-REVENUES> 50,169
<CGS> 34,575
<TOTAL-COSTS> 11,547
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 23
<INTEREST-EXPENSE> 1,976
<INCOME-PRETAX> 4,042
<INCOME-TAX> 1,680
<INCOME-CONTINUING> 2,367
<DISCONTINUED> (102)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,367
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0.44
</TABLE>
