<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
APRIL 17, 1997
TRANSTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-7872 95-4062211
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
150 Allen Road 07938
Liberty Corner, NJ (Zip Code)
(Address of principal
executive offices)
(908) 903-1600
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
On its Form 8-K filed April 29, 1997, TransTechnology Corporation
advised the Commission that it would file audited financial statements
relating to the acquisition. Attached hereto are the required financial
statements.
<TABLE>
<CAPTION>
INDEX:
<S> <C>
(a) HISTORICAL FINANCIAL INFORMATION OF TCR CORPORATION
Independent Auditor's Report............................................... 2
Balance Sheets............................................................. 3
Statements of Income....................................................... 4
Statements of Cash Flows................................................... 5
Statements of Stockholder's Equity......................................... 6
Notes to Financial Statements..............................................7 - 13
(b) PRO-FORMA COMBINED FINANCIAL INFORMATION
Introduction............................................................... 14
Pro Forma Combined Balance Sheet at
March 31, 1997............................................................ 15
Notes to Pro Forma Combined Balance Sheet at March 31, 1997................ 16
Pro Forma Combined Statement of Operations for the Twelve Months Ended
March 31, 1997............................................................ 17
Notes to Pro Forma Combined Statement of Operations
for the Twelve Months Ended March 31, 1997............................. 18
Signatures................................................................. 19
</TABLE>
<PAGE> 3
[OCEL, HEIMER & ASSOCIATES, LTD. LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
TCR Corporation
Minneapolis, Minnesota
We have audited the accompanying balance sheets of TCR Corporation as of
December 31, 1996 and 1995, and the related statements of income, stockholder's
equity, and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of TCR Corporation as of December
31, 1996 and 1995, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
/s/ OCEL, HEIMER & ASSOCIATES, LTD.
Minneapolis, Minnesota
February 6, 1997
2
<PAGE> 4
TCR CORPORATION
BALANCE SHEETS
December 31, 1996 and 1995
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS 1996 1995
---------- ----------
CURRENT ASSETS
Cash and cash equivalents $1,248,197 $ 227,068
Trade receivables, less allowance for
doubtful accounts of $20,000 (Note 4) 2,626,057 2,188,736
Note receivable, stockholder (Note 7) 841,815 937,315
Inventories (Notes 2 and 4) 1,659,886 1,847,964
Prepaid expenses 108,338 40,469
Other current assets 3,049 3,932
Refundable income taxes 37,807 65,452
Deferred income tax assets -- 90,000
--------- ---------
Total current assets 6,525,149 5,400,936
--------- ---------
INVESTMENTS (Notes 3 and 4) 306,939 306,939
--------- ---------
PROPERTY AND EQUIPMENT (Note 4)
Machinery and equipment 5,746,990 5,339,760
Office equipment 711,679 703,480
Transportation equipment 147,481 119,685
Leasehold improvements 307,339 284,625
--------- ---------
6,913,489 6,447,550
Less accumulated depreciation 5,301,071 4,923,799
--------- ---------
1,612,418 1,523,751
--------- ---------
GOODWILL, net accumulated
amortization 1996, $723,164; 1995 $682,801 891,340 931,703
---------- ----------
$9,335,846 $8,163,329
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt (Note 4) $2,229,357 $2,438,306
Trade accounts payable 317,788 895,858
Accrued liabilities 1,854,241 1,415,711
S-Corporation distribution payable 335,000 --
---------- ----------
Total current liabilities 4,736,386 4,749,875
---------- ----------
LONG-TERM DEBT (Notes 4 and 7)
Notes payable, less current maturities 226,586 1,703,406
Note payable, stockholder 432,000 --
---------- ----------
658,586 1,703,406
---------- ----------
DEFERRED INCOME TAXES -- 190,000
---------- ----------
STOCKHOLDER'S EQUITY
Common stock, par value $5 per share;
authorized 10,000 shares; issued 6,860 shares 34,300 34,300
Retained earnings 6,215,471 3,794,645
---------- ----------
6,249,771 3,828,945
Less cost of treasury stock, 4,572 shares
(Note 9) 2,308,897 2,308,897
---------- ----------
3,940,874 1,520,048
---------- ----------
$9,335,846 $8,163,329
========== ==========
</TABLE>
See Notes to Financial Statements.
3
<PAGE> 5
TCR CORPORATION
STATEMENTS OF INCOME
Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Net sales $ 23,342,335 $19,355,173
Cost of goods sold 14,888,399 14,016,142
------------ -----------
Gross profit 8,453,936 5,339,031
------------ -----------
Operating expenses:
Selling 940,555 771,490
General and administrative 2,737,591 3,274,090
------------ -----------
3,678,146 4,045,580
------------ -----------
Operating income 4,775,790 1,293,451
------------ -----------
Other (income) expense:
Interest expense 300,858 421,188
Amortization of goodwill 40,363 40,363
Gain on sale of property and equipment (2,183) --
Other (income) expense (19,607) 17,001
------------ -----------
319,431 478,552
------------ -----------
Income before income taxes 4,456,359 814,899
Provision for income taxes (Note 5) 5,533 325,332
------------ -----------
Net income $ 4,450,826 $ 489,567
============ ===========
</TABLE>
See Notes to Financial Statements.
4
<PAGE> 6
TCR CORPORATION
STATEMENTS OF STOCKHOLDER'S EQUITY
Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK
--------------------- RETAINED ----------------------
SHARES AMOUNT EARNINGS SHARES AMOUNT
------ ------ -------- ------ ------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 6,860 $34,300 $ 3,315,078 4,572 $2,308,897
Net income -- -- 489,567 -- --
Dividends on common stock -- -- (10,000) -- --
----- ------- ----------- ----- ----------
Balance, December 31, 1995 6,860 34,300 3,794,645 4,572 2,308,897
Net income -- -- 4,450,826 -- --
Distributions to stockholder -- -- (2,030,000) -- --
----- ------- ----------- ----- ----------
Balance, December 31, 1996 6,860 $34,300 $ 6,215,471 4,572 $2,308,897
===== ======= =========== ===== ==========
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 7
TCR CORPORATION
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 22,905,014 $ 19,465,151
Cash paid to suppliers and employees (18,233,400) (17,102,308)
Other operating cash receipts (payments) 19,607 (17,001)
Interest paid (334,990) (416,461)
Income taxes (paid) received 22,112 (441,804)
------------ ------------
Net cash provided by operating
activities 4,378,343 1,487,577
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (497,495) (494,449)
Proceeds from sale of property and equipment 3,550 --
------------ ------------
Net cash used in investing activities (493,945) (494,449)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net payments on notes payable (1,685,769) (845,599)
Net proceeds (payments) on note payable, stockholder 432,000 (1,062,685)
Net proceeds from short-term borrowing -- 1,959,146
Net (borrowing to) payment from stockholder 95,500 (937,315)
Dividends paid (10,000) (10,000)
S-Corporation distributions for taxes (1,695,000) --
----------- ------------
Net cash used in financing activities (2,863,269) (896,453)
----------- ------------
Net increase in cash and cash
equivalents 1,021,129 96,675
Cash and cash equivalents, beginning of year 227,068 130,393
------------ ------------
Cash and cash equivalents, end of year $ 1,248,197 $ 227,068
============ ============
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net income $ 4,450,826 $ 489,567
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 407,461 322,555
Amortization of goodwill 40,363 40,363
Gain on sale of property and equipment (2,183) --
Decrease (increase) in assets:
Trade receivables (437,321) 109,978
Inventories 188,078 (253,657)
Prepaid expenses (67,869) 42,609
Other current assets 883 44,034
Refundable income taxes 27,645 (65,452)
Deferred income tax assets 90,000 (12,000)
Assets of discontinued subsidiary -- 124,459
Increase (decrease) in liabilities:
Trade accounts payable (578,070) 372,048
Accrued liabilities 448,530 376,347
Income taxes payable -- (43,020)
Liabilities of discontinued subsidiary -- (66,254)
Deferred income taxes (190,000) 4,000
------------ ------------
Net cash provided by operating activities $ 4,378,343 $ 1,487,577
============ ============
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
S-Corporation distribution payable for taxes $ 335,000
============
</TABLE>
6
<PAGE> 8
TCR CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Nature of Business and Significant Accounting Policies
Nature of business:
TCR Corporation's operations consist of job order processing of
customer designed metal parts. The Company sells, under open
credit terms, to customers located throughout the United States.
The receivables resulting from these sales are generally
unsecured.
A summary of the Company's significant accounting policies follows:
Estimates and assumptions:
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 and disclosure of contingent 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.
Inventories:
Inventories are stated at the lower of cost (first-in, first-out
method) or market.
Investments:
Investments are carried at cost, except where there is a
permanent impairment of value, in which case they would be
carried at estimated realizable value. See Note 3.
Property and equipment:
Property and equipment is stated at cost. Depreciation is
provided on the straight-line and declining-balance methods over
the following estimated useful lives:
<TABLE>
<CAPTION>
Years
-----
<S> <C>
Machinery and equipment 10
Office equipment 5-7
Transportation equipment 5
Leasehold improvements 7-20
</TABLE>
7
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies (continued)
When property and equipment is sold or otherwise disposed of,
the cost and accumulated depreciation are removed from the
accounts, with any gain or loss reflected in operations. Repairs
and maintenance are charged to operations as incurred.
Goodwill:
Goodwill is being amortized on a straight-line basis over a
forty-year period.
Income taxes:
Effective January 1, 1996, the Company, with the consent of its
sole stockholder, elected to be taxed under sections of the
federal and state income tax laws which provide that, in lieu of
corporation income taxes, the stockholder separately accounts
for the Company's items of income and deductions. Therefore, the
financial statements for the year ended December 31, 1996 do not
include any provision for corporate income taxes, other than
built-in gains taxes and state minimum fee requirements. See
Note 5.
For the year ended December 31, 1995, deferred income taxes are
provided on temporary differences between reporting of income
for financial statement and tax purposes arising from
differences in the methods of accounting for depreciation and
other deductions. Accelerated depreciation is used for tax
reporting and straight-line depreciation is used for financial
statement reporting. The Company accounted for these differences
using the liability method, whereby the related tax consequences
are based on the applicable tax rate.
Cash and cash equivalents:
For purposes of reporting cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents. The Company has
cash on deposit with a bank in amounts which are in excess of
federally insured limits.
8
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS
Note 2. Inventories
Inventories consist of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Work-in-process $ 923,910 $1,076,117
Raw materials 735,976 771,847
---------- ----------
$1,659,886 $1,847,964
========== ==========
</TABLE>
Note 3. Long-Term Investments
Market value of long-term investments is approximately
$124,570 and $131,255 at December 31, 1996 and 1995,
respectively. Management deems the decline in market value to
be temporary.
Long-term investments are those which management does not
intend to convert within the following twelve months.
Note 4. Long-Term Debt
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
--------- ----------
<S> <C> <C>
Norwest Bank Minnesota, N.A., note payable,
interest payable monthly at prime plus 1.5%,
due in quarterly installments of $90,792
through December, 1999, secured by all
assets and the personal guaranty of the
Company's stockholder. $ 562,500 $1,205,458
</TABLE>
9
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
Note 4. Long-Term Debt (continued)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Norwest Bank Minnesota, N.A., $1,900,000
revolving credit facility, interest payable
monthly at prime plus 0.75%, due January 10,
1998, secured by all assets and the personal
guaranty of the Company's stockholder. -- 900,000
Norwest Bank Minnesota, N.A., $2,000,000 short
term note payable, due in monthly
installments of $25,000 including interest
at prime plus 1.5%, remaining principal
balance due July 31, 1997, secured by all
assets and the personal guaranty of the
Company's stockholder. See Note 7. 1,840,171 1,959,146
NSP, conservation improvement note payable, due
in monthly installments of $1,698 including
interest at 9%, through April, 1999,
secured by energy efficient lighting equipment. 44,094 58,474
Other 9,178 18,634
---------- ----------
2,455,943 4,141,712
Less current maturities 2,229,357 2,438,306
---------- ----------
$ 226,586 $1,703,406
========== ==========
Stockholder, note payable, interest payable
monthly at prime plus 1.5%, unsecured and
subordinated to Norwest Bank notes payable.
See Note 7. $ 432,000 $ --
========== ==========
</TABLE>
10
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
Note 4. Long-Term Debt (continued)
Aggregate annual maturities of long-term debt are as follows at December
31:
<TABLE>
<S> <C>
1997 $2,229,357
1998 216,429
1999 10,157
----------
$2,455,943
==========
</TABLE>
Note 5. Income Taxes
The provision for income taxes consists of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
--------- --------
<S> <C> <C>
Currently payable at statutory rates:
Federal taxes $ 461 $279,570
State taxes 5,072 53,762
Deferred taxes -- (8,000)
--------- --------
$ 5,533 $325,332
========= ========
</TABLE>
Income tax expense for the year ended December 31, 1996 consists of
built-in gains taxes and state minimum fee requirements.
Note 6. Retirement Plan
The Company has established the TCR Corporation Retirement Plan
conforming with provisions under Section 401(k) of the Internal Revenue
Code. The plan is a discretionary contribution profit sharing plan
covering substantially all employees working for TCR Corporation. The
total contributions to the plan for the years ended December 31, 1996
and 1995 were $388,595 and $253,432 respectively.
Note 7. Related Party Transactions
At December 31, 1996 and 1995, the Company was related, through common
ownership and/or management, to Polo Investment Co., a real estate
management company.
11
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
Note 7. Related Party Transactions (continued)
The Company had the following transactions with Polo Investment Co.:
The Company is under a ten year lease agreement with Polo
Investment Co. which commenced on January 1, 1992 for its office
and manufacturing facilities in Minneapolis, Minnesota. The
agreement calls for monthly rentals of $25,655 in addition to
the Company's proportionate share of real estate taxes, special
assessments, insurance premiums and building operating expenses.
Total payments under this agreement approximated $542,000 and
$578,000 for the years ending December 31, 1996 and 1995,
respectively. Future minimum lease payments amount to
approximately $308,000 annually for each of the years 1997
through 2001.
TCR Corporation owed Polo Investment Co. $29,915 and $44,835 on
open accounts payable invoices at December 31, 1996 and 1995,
respectively.
The Company was indebted to its stockholder/officer on an unsecured note
payable at December 31, 1996 in the amount of $432,000. The note has an
interest rate of 1.5% over prime and is subordinated to the Norwest Bank
notes described in Note 4. Interest expense paid on this note was
$42,315 for the year ended December 31, 1996. During the year ended
December 31, 1995, the Company borrowed $2,000,000 from a bank and used
the proceeds to pay off another stockholder note payable and lend the
stockholder $937,315 on a prime plus 1.5% unsecured note receivable.
Interest paid on that note payable totaled $73,415 during the year ended
December 31, 1995. The balance of the note receivable of $841,815 at
December 31, 1996 is due July, 1997. This note receivable is pledged to
Norwest Bank Minnesota, N.A. See Note 4.
Note 8. Contingencies
The Company is involved in a pending claim at December 31, 1996.
Provision for estimated losses have been provided by the Company as of
December 31, 1996.
12
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
Note 9. Purchase of Treasury Stock
On May 23, 1988, the Company purchased 2,288 shares of common stock from
a 50% shareholder for a total cash consideration of $2,188,897. This
amount represented the value of the shareholder's interest in the
Company. The purchase was made pursuant to a settlement agreement dated
May 23, 1988, which was the resolution of a lawsuit filed February 11,
1985. The lawsuit essentially arose from a shareholder dispute, and no
damages were asked from the Company. However, it was determined by
management to be in the best interest of the Company, for the Company to
purchase the common shares for the treasury.
13
<PAGE> 15
PRO FORMA COMBINED FINANCIAL STATEMENTS
INTRODUCTION
(Unaudited)
The unaudited pro forma combined financial information presented herein gives
effect to the purchase of all outstanding shares of TCR Corporation by
TransTechnology Corporation effective April 17,1997. TransTechnology
Corporation's fiscal year ends on March 31, and TCR Corporation's fiscal year
ends on December 31.
The unaudited pro forma combined balance sheet data at March 31, 1997 combines
the historical balance sheets of TransTechnology Corporation and its
subsidiaries, and TCR Corporation. The pro forma adjustments to the balance
sheet assumes that the acquisition was consummated at the end of the period
being presented.
The unaudited pro forma combined statement of operations data being presented
for the twelve month period ended March 31, 1997 combines TCR Corporation's
twelve months of operations ended December 31, 1996 with TransTechnology
Corporation's twelve months of operations ended March 31, 1997. The pro forma
adjustments to the statement of operations assumes that the acquisition was
consummated at the beginning of the period being presented.
TransTechnology Corporation expects to achieve certain reductions in costs
subsequent to the purchase of TCR Corporation as a result of the elimination of
duplicative ownership efforts. To comply with the Commission's pro forma
reporting rules, the cost reductions reflected in the accompanying Unaudited Pro
Forma Combined Statement of Operations have been limited to specific salary and
benefit costs, and certain leasing transactions of the seller's affiliate, that
are expected to be eliminated after the acquisition.
The unaudited pro forma combined financial statements are intended for
informational purposes only and are not necessarily indicative of the future
financial position or future results of operations of the combined company, or
of the financial position or results of operations of the combined company that
would have actually occurred had the acquisition taken place as of the date or
for the periods presented. These unaudited pro forma combined financial
statements and the accompanying notes should be read in conjunction with the
consolidated financial statements, including the accompanying notes, of TCR
Corporation which are attached and of TransTechnology Corporation which are
incorporated by reference from the Company's annual report on Form 10-K for the
fiscal year ended March 31, 1997.
In the opinion of management, all adjustments have been made that are necessary
to present fairly the pro forma data.
14
<PAGE> 16
PRO FORMA COMBINED BALANCE SHEET
March 31, 1997
(Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
TransTechnology TCR Corporation Pro Forma Pro Forma
Historical Historical Adjustments Combined
<S> <C> <C> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 3,540 $ 1,248 ($ 1,248)(B) $ 3,540
Accounts receivable, less allowance
for doubtful accounts of $608 28,392 2,626 31,018
Notes receivable 1,838 842 (842)(E) 1,838
Inventories 50,677 1,660 52,337
Prepaid and other current assets 1,028 149 1,039 (A) 2,216
Deferred income taxes 4,293 0 4,293
Assets held for sale 7,617 0 7,617
--------- ------- -------- --------
Total current assets 97,385 6,525 (1,051) 102,859
--------- ------- -------- --------
Property - net 58,613 1,612 5,053 (A) 65,278
--------- ------- -------- --------
Notes receivable 11,125 0 11,125
Costs in excess of net assets of acquired
businesses (not of accumulated
amortization of $4,621 18,878 891 28,779 (A)(B)(C)(D)(E) 48,548
Other assets 13,135 307 (188)(D) 13,254
--------- ------- -------- --------
Total other assets 43,138 1,198 28,591 72,927
--------- ------- -------- --------
Total assets $ 199,136 $ 9,335 $ 32,593 $241,064
========= ======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Current portion of long-term debt $ 5,907 $ 2,229 $ 1,171 (B)(F) $ 9,307
Accounts payable and accrued expenses 11,050 2,172 13,222
Accrued compensation 6,845 0 6,845
Accrued income taxes 1,632 0 1,632
Other current liabilities 12,844 335 65 (A)(E) 13,244
--------- ------- -------- --------
Total current liabilities 38,278 4,736 1,236 44,250
--------- ------- -------- --------
LONG-TERM DEBT PAYABLE TO BANKS AND OTHERS 67,516 227 30,529 (A)(F) 98,272
--------- ------- -------- --------
OTHER LONG-TERM LIABILITIES 15,898 432 4,768 (A)(C)(E) 21,098
--------- ------- -------- --------
STOCKHOLDERS' EQUITY:
Common stock 53 34 (34)(A) 53
Additional paid-in-capital 46,745 0 46,745
Retained earnings 36,937 6,215 (6,215)(A) 36,937
Other stockholders' equity (2,352) 0 (2,352)
Less treasury stock (3,939) (2.309) 2,309 (A) (3,939)
--------- ------- -------- --------
Total stockholders' equity 77,444 3,940 (3,940) 77,444
--------- ------- -------- --------
Total liabilities and stockholders' equity $ 199,136 $ 9,335 $ 32,593 $241,064
========= ======= ======== ========
</TABLE>
See notes to pro forma combined financial statements
15
<PAGE> 17
NOTES TO PRO FORMA COMBINED BALANCE SHEET
March 31,1997
(Unaudited)
(A) Reflects the acquisition of TCR Corporation at the beginning of the
period.
(B) Represents the removal of assets and liabilities not acquired by
TransTechnology Corporation.
(C) Represents the deferred tax effect on the pro forma adjustments using
the Company's statutory tax rate.
(D) Reflects the adjustment to value the assets acquired at FMV per APB 16.
(E) Reflects the removal of payables and receivables to former owner, per
agreement.
(F) Reflects the reclass of external debt at the end of the period per the
Bank agreement.
16
<PAGE> 18
PRO FORMA COMBINED STATEMENT OF OPERATIONS
For the Twelve Months Ended March 31, 1997
(Unaudited)
(in Thousands of Dollars Except Per Share Amounts)
<TABLE>
<CAPTION>
TransTechnology TCR Corporation Pro Forma Pro Forma
Historical Historical Adjustments Combined
--------------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $ 178,684 $ 23,342 $ 202,026
Cost of sales 122,480 14,888 994 (A)(B) 138,362
----------- ----------- --------- -------
Gross profit 56,204 8,454 (994) 63,664
General administrative and
selling expenses 35,309 3,717 (400)(E) 38,626
Interest expense 6,797 301 2,800 (C) 9,898
Interest income (1,202) 0 (1,202)
Royalty and other income (1,320) (20) (1,340)
----------- ----------- --------- -------
Income from continuing operations
before income taxes 16,620 4,456 (3,394) 17,682
Provision for income taxes 6,898 5 708 (D) 7,611
----------- ----------- --------- -------
Income from continuing operations 9,722 4,451 (4,102) 10,071
Discontinued operations:
Loss from disposal (net of applic-
able tax benefit of $663) (934) 0 (934)
----------- ----------- --------- -------
Net income $ 8,788 $ 4,451 $ (4,102) $ 9,137
=========== =========== ========= =======
Earnings per sham:
Income from continuing operations $ 1.92 $ 1.99
Loss from discontinued operations $ (0.18) $ (0.18)
---------- -------
Net income $ 1.74 $ 1.80
========== =======
Number of shares used in
computation of per share
information: 5,064,000 5,064,000
</TABLE>
See notes to pro forma combined financial statements
17
<PAGE> 19
NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS
For the Twelve Months Ended March 31,1997
(Unaudited)
(A) Reflects twelve months depreciation expense on the stepped-up fixed
assets, assuming the acquisition occurred at the beginning of the
period.
(B) Reflects twelve months of amortization expense on the intangibles,
assuming the acquisition occurred at the beginning of the period.
(C) Reflects twelve months of interest expense on the additional long-term
debt recorded at the beginning of the period.
(D) Reflects the tax effect on the pro forma adjustments using the Company's
statutory tax rate.
(E) Represents the planned reduction of salaries and benefits and the
elimination of certain leasing transactions of seller's affiliate, per
the agreement.
18
<PAGE> 20
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 hereunto duly authorized.
Date: June 27, 1997
TRANSTECHNOLOGY CORPORATION
/s/Joseph F. Spanier
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Vice President, Chief Financial
Officer and Treasurer
GH:1963
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