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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 September 26, 2004
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 95-4062211
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
700 Liberty Avenue 07083
Union, New Jersey (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (908) 688-2440
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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
As of November 11, 2004, the total number of outstanding shares of
registrant's one class of common stock was 6,700,560.
INDEX
PART I. Financial Information Page No.
--------
Item 1. Financial Statements............................................. 3
Statements of Consolidated Operations Three and
Six Month Periods Ended September 26, 2004
and September 28, 2003........................................... 4
Consolidated Balance Sheets
September 26, 2004 and March 31, 2004............................ 5
Statements of Consolidated Cash Flows
Six Month Periods Ended September 26, 2004 and
September 28, 2003............................................... 6
Notes to Consolidated Financial Statements....................... 7-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. 11-19
Item 3. Quantitative and Qualitative Disclosures about Market Risk....... 19
Item 4. Controls and Procedures.......................................... 20
PART II. Other Information
Item 1. Legal Proceedings................................................ 20
Item 4. Submission of Matters to a vote of Security Holders ............. 20-21
Item 6. Exhibits......................................................... 21
SIGNATURES ..................................................................... 22
EXHIBIT 10.3 ................................................................... 23-30
EXHIBIT 31.1.................................................................... 30
EXHIBIT 31.2.................................................................... 31
EXHIBIT 32 .................................................................... 32
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited Statements of Consolidated Operations, Consolidated
Balance Sheets, and Consolidated Cash Flows are of TransTechnology Corporation
and its consolidated subsidiaries (collectively, the "Company"). These reports
reflect all adjustments of a normal recurring nature, which are, in the opinion
of management, necessary for a fair presentation of the results of operations
for the interim periods reflected therein. The results reflected in the
unaudited Statement of Consolidated Operations for the period ended September
26, 2004, 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 Company's Annual Report on Form 10-K filed for
the fiscal year ended March 31, 2004.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
3
TRANSTECHNOLOGY CORPORATION
STATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED)
(In Thousands of Dollars, Except Share Data)
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------------- --------------------------------------
SEPTEMBER 26, 2004 SEPTEMBER 28, 2003 SEPTEMBER 26, 2004 SEPTEMBER 28, 2003
------------------ ------------------ ------------------ ------------------
Net sales $ 15,249 $ 16,333 $ 29,797 $ 32,452
Cost of sales 9,050 9,575 17,761 18,347
--------------- --------------- --------------- ---------------
Gross profit 6,199 6,758 12,036 14,105
General, administrative
and selling expenses 4,201 3,531 8,224 7,302
Interest expense 2,885 2,568 5,681 5,071
Interest and other income-net (82) (159) (69) (206)
--------------- --------------- --------------- ---------------
(Loss) income before income taxes (805) 818 (1,800) 1,938
(Benefit) provision for income taxes (306) 310 (684) 736
--------------- --------------- --------------- ---------------
Net (loss) income $ (499) $ 508 $ (1,116) $ 1,202
=============== =============== =============== ===============
Basic (loss) earnings per share:
Net (loss) income $ (0.07) $ 0.08 $ (0.17) $ 0.18
=============== =============== =============== ===============
Diluted (loss) earnings per share:
Net (loss) income $ (0.07) $ 0.08 $ (0.17) $ 0.18
=============== =============== =============== ===============
Number of shares used in computation
of per share information: (Note 1)
Basic 6,682,000 6,647,000 6,676,000 6,647,000
Diluted 6,682,000 6,676,000 6,676,000 6,662,000
See accompanying notes to unaudited consolidated financial statements.
4
TRANSTECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, Except Share Data)
(UNAUDITED)
SEPTEMBER 26, 2004 MARCH 31, 2004
------------------ --------------
ASSETS
Current assets:
Cash and cash equivalents $ 275 $ 960
Accounts receivable (net of allowance for doubtful accounts
of $17 at September 26, 2004 and $10 at March 31, 2004) 11,067 8,720
Inventories-net 18,098 20,449
Prepaid expenses and other current assets 1,505 842
Income tax receivable 376 395
Deferred income taxes 3,334 3,334
Real estate held for sale - 1,432
----------- --------------
Total current assets 34,655 36,132
----------- --------------
Property, plant and equipment 14,388 13,222
Less accumulated depreciation 11,024 10,794
----------- --------------
Property, plant and equipment - net 3,364 2,428
----------- --------------
Other assets:
Deferred income taxes 27,647 27,035
Other 10,740 11,614
----------- --------------
Total other assets 38,387 38,649
----------- --------------
Total $ 76,406 $ 77,209
=========== ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term debt and short term borrowings $ 4,683 $ 79
Accounts payable-trade 3,085 5,224
Accrued compensation 1,805 2,890
Accrued income taxes 1,466 1,566
Accrued interest 1,877 1,813
Other current liabilities 2,005 2,387
----------- --------------
Total current liabilities 14,921 13,959
----------- --------------
Long-term debt payable to banks and others 55,783 56,472
----------- --------------
Other long-term liabilities 10,492 10,565
----------- --------------
Stockholders' deficit:
Preferred stock - authorized, 300,000 shares; none issued - -
Common stock - authorized, 14,700,000 shares of $.01 par value;
issued 7,090,695 and 7,059,107 at September 26, 2004 and March
31, 2004, respectively 71 71
Additional paid-in capital 76,980 76,728
Accumulated deficit (72,365) (71,249)
Unearned compensation (236) (97)
----------- --------------
4,450 5,453
Less treasury stock, at cost - 560,964 shares at September 26, 2004
and March 31, 2004 (9,240) (9,240)
----------- --------------
Total stockholders' deficit (4,790) (3,787)
----------- --------------
Total $ 76,406 $ 77,209
=========== ==============
See accompanying notes to unaudited consolidated financial statements.
5
TRANSTECHNOLOGY CORPORATION
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
(In Thousands of Dollars)
SIX MONTHS ENDED
--------------------------------------
SEPTEMBER 26, 2004 SEPTEMBER 28, 2003
------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (1,116) $ 1,202
Adjustments to reconcile net (loss) income to net cash used in
operating activities:
Depreciation and amortization 806 1,009
Noncash interest expense 1,905 1,537
Increase in provision for bad debt 7 6
Changes in assets and liabilities:
Increase in accounts receivable and other receivables (2,325) (2,938)
Decrease in inventories 2,351 351
(Increase) decrease in deferred taxes net (612) 659
(Increase) decrease in other assets (207) 428
Decrease in accounts payable (2,139) (326)
Decrease in accrued compensation (1,085) (1,034)
Decrease in income taxes payable (100) (2,020)
Decrease in other liabilities (483) (5,100)
--------------- ---------------
Net cash used in operating activities (2,998) (6,226)
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (1,167) (159)
Proceeds from sale of real estate 1,331 -
Decrease in notes receivable 25 -
--------------- ---------------
Net cash provided by (used in) investing activities 189 (159)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt and other short term borrowings - net 2,103 -
Exercise of stock options 21 38
--------------- ---------------
Net cash provided by financing activities 2,124 38
--------------- ---------------
Decrease in cash and cash equivalents (685) (6,347)
Cash and cash equivalents at beginning of period 960 7,104
--------------- ---------------
Cash and cash equivalents at end of period $ 275 $ 757
=============== ===============
Supplemental information:
Interest payments $ 3,221 $ 3,480
Income tax payments $ 28 $ 2,098
Increase in senior subordinated note for paid-in-kind
interest expense $ 1,812 $ 1,443
Increase in additional paid-in-capital from warrant put expiration $ - $ 2,184
See accompanying notes to unaudited consolidated financial statements.
6
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands)
NOTE 1. Earnings (Loss) Per Share
Basic earnings (loss) per share are computed by dividing net income
(loss) by the weighted-average number of shares outstanding. Diluted
earnings (loss) per share is computed by dividing net income (loss) by
the sum of the weighted-average number of shares outstanding plus the
dilutive effect of shares issuable through the exercise of stock options
and warrants.
The components of the denominator for basic earnings (loss) per common
share and diluted earnings (loss) per common share are reconciled as
follows:
Three Months Ended Six Months Ended
------------------------------ ------------------------------
September 26, September 28, September 26, September 28,
2004 2003 2004 2003
------------- ------------- ------------- -------------
Basic Earnings (Loss)
per Common Share:
Weighted-average
common stock out-
standing for basic
earnings (loss) per
share calculation 6,682 6,647 6,676 6,647
============= ============= ============= =============
Diluted Earnings
(Loss) per Common
Share:
Weighted-average
common shares
outstanding 6,682 6,647 6,676 6,647
Stock options and
warrants* -- 29 -- 15
------------- ------------- ------------- -------------
Weighted-average
common stock
outstanding for
diluted earnings
(loss) per share
calculation 6,682 6,676 6,676 6,662
============= ============= ============= =============
* Not including anti-dilutive stock options totaling 144 and 150 for the
three and six month periods ended September 26, 2004 respectively, and 194
and 606 for the three and six month periods ended September 28, 2003,
respectively.
7
NOTE 2. Stock-Based Compensation
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation", encourages, but does not require, companies to record
compensation cost for stock-based employee compensation plans at fair value. The
Company has chosen to continue to account for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", and related interpretations.
Accordingly, the Company records expense in an amount equal to the excess, if
any, of the quoted market price on the grant date over the option price.
The following table includes as reported and proforma information required by
Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure". Proforma information is based on the
fair value method under SFAS No. 123.
Three Months Ended Six Months Ended
------------------------------- -------------------------------
September 26, September 28, September 26, September 28,
2004 2003 2004 2003
------------- ------------- ------------- -------------
Net (loss) income as reported $ (499) $ 508 $ (1,116) $ 1,202
Deduct: Total stock-based
compensation expense determined
under fair value based method for
all awards, net of related tax
effects (41) (47) (63) (86)
------------- ------------- ------------- -------------
Proforma net (loss) income $ (540) $ 461 $ (1,179) $ 1,116
============= ============= ============= =============
Net (loss) income per share:
Basic and diluted - as reported (0.07) 0.08 (0.17) 0.18
Basic and diluted - proforma (0.08) 0.07 (0.18) 0.17
NOTE 3. Inventories
Inventories, net of valuation allowances, are summarized as follows:
September 26, 2004 March 31, 2004
------------------ --------------
Finished goods $ - $ 1
Work in process 5,774 7,037
Purchased and
manufactured parts 12,324 13,411
---------- ----------
Total $ 18,098 $ 20,449
========== ==========
8
NOTE 4. Long-term Debt Payable to Banks and Others
Long-term debt payable to banks and others, including current maturities as
required under the new financing agreement, consisted of the following:
September 26, 2004 March 31, 2004
------------------ --------------
Senior Credit Fidelity 5.75% $ 2,104 $ -
Senior Subordinated Notes 19.5% 58,204 56,393
Other 158 158
---------- ---------
60,466 56,551
Less current maturities 4,683 79
---------- ---------
Total long-term debt $ 55,783 $ 56,472
========== =========
Former Senior Credit Facility - At September 26, 2004, the Company had a senior
credit facility consisting of an $8.0 million asset-based revolving credit
facility, which was established in August 2002 (the "Former Senior Credit
Facility") to refinance all remaining obligations outstanding under the prior
senior credit facility. The Former Senior Credit Facility was amended on August
5, 2003 and was subsequently amended on January 30, 2004 and July 30, 2004, and
was repaid in full on November 10, 2004 (see "Refinancing" below). The maturity
date of this facility, as amended, was January 31, 2005. At September 26, 2004,
the current interest rate is approximately 5.75%. The Former Senior Credit
Facility was secured by all of the Company's assets. At September 26, 2004 the
Company was in compliance with the provisions of the facility and there was $2.1
million outstanding thereunder.
Senior Subordinated Notes - On August 30, 2000, the Company completed a private
placement of $75 million of senior subordinated notes (the "Notes") and warrants
to purchase shares of the Company's common stock (the "Warrants") to a group of
institutional investors (collectively, the "Purchasers"). The Company used the
proceeds of the private placement to retire, in full, a $75 million bridge loan
held by a group of lenders led by Fleet National Bank. The Notes, as amended in
August 2002, were due on August 29, 2005 and bear interest at a rate of 18% per
annum consisting of 13% cash interest on principal, payable quarterly, and 5%
interest on principal, payable quarterly in "payment-in-kind" ("PIK") promissory
notes. The PIK portion of the interest rate increases 0.25% each quarter,
commencing December 31, 2002 until the Notes are retired. At September 26, 2004,
the principal balance outstanding on the Notes amounted to $58.2 million, which
included the original principal amount plus the PIK notes. The Company was not
in compliance with certain of the financial covenants of the Notes at September
26, 2004 and received a waiver of this noncompliance from the Purchasers. On
November 10, 2004, the Notes were paid in full (see "Refinancing," below). As a
result of the refinancing described below and in accordance with SFAS No. 6,
"Classification of Short-Term Obligations Expected to Be Refinanced," the
Company has continued to classify the remaining $58.2 million outstanding under
the Notes as long-term obligations at September 26, 2004.
At September 26, 2004, there were 171,041 Warrants outstanding which are each
convertible into common stock at the price of $.01 per warrant. These Warrants
are considered to be common stock equivalents for the purpose of calculating
basic earnings per share at September 26, 2004, and September 28, 2003. On
November 5, 2004, the holder of the remaining 171,041 Warrants
9
outstanding delivered a Notice of Election to the Company with respect to the
exercise of all of its Warrants.
Refinancing - On November 10, 2004, the Company refinanced and repaid in full
the Former Senior Credit Facility and the Notes with a $71.5 million, forty two
month, senior credit facility (the "Senior Credit Facility"). The Senior Credit
Facility consists of a $10.0 million asset-based revolving credit facility, and
three tranches of term loans totaling $61.5 million. At closing, the Senior
Credit Facility has an effective weighted interest rate of approximately 13.0%
which is tied to the prime rate. The term loans require monthly principal
payments of $250,000 over the term of the loan with the balance due at the end
of the term. Accordingly, the balance sheet reflects $2.5 million of current
maturities due under the Senior Credit Facility. The Senior Credit Facility also
contains certain mandatory prepayment provisions which are linked to cash flow
and customary financial covenants and events of default. The Senior Credit
Facility is secured by all of the Company's assets. A non-recurring pre-tax
charge of $2.2 million relating to the write-off of unamortized fees from prior
financings and the payment of pre-payment premiums will be recognized in the
third fiscal quarter.
NOTE 5. New Accounting Standards
In December 2003, the FASB issued Interpretation No. 46R, a revision to
Interpretation No. 46, "Consolidation of Variable Interest Entities", which
addresses how a business enterprise should evaluate whether it has a controlling
financial interest in an entity through means other than voting rights and
accordingly should consolidate the entity. Interpretation No. 46R clarifies some
of the provisions of Interpretation No. 46 and exempts certain entities from its
requirements. Interpretation No. 46R was effective for the Company at the end of
the first quarter ended June 27, 2004. The adoption of this statement did not
have a material impact on the Company's financial position or results of
operations.
NOTE 6. Contingencies
As previously reported, the Company is subject to an investigation being
conducted by the Newark, New Jersey office of the United States Attorney with
respect to Breeze-Eastern's overhaul and repair operations. The Company has, to
date, cooperated fully and will continue to cooperate fully with the
government's investigation. In addition, the Board of Directors retained a fact
finding and forensic accounting firm, The Bradlau Group of Morristown, New
Jersey, to perform an independent review of the overhaul and repair operations
of the Company's Breeze-Eastern business. The Board of Directors has shared the
preliminary and follow-on reports of the findings of this independent review
with the United States Attorney's office. The investigation has had no direct
impact, and the Company does not expect a direct impact, on the Company's
ability to manufacture and ship products and meet customer delivery schedules.
However, the Company has implemented changes in its operating procedures and
added new personnel to its overhaul and repair operation which has had the
effect of producing higher labor and material costs and lower gross profit and
has impeded throughput in that operation. The Company has held initial
discussions with the United States Attorney's office relative to the resolution
of the issues associated with the investigation. As of this date, the United
States Attorney's investigation is continuing and the Company has not been made
aware of any specific statutory or regulatory violations resulting from that
investigation.
The Company sold the assets of its Breeze Industrial Products (BIP) division
in July 2001. As part of that transaction, the Company sold the land and
building occupied by the BIP operation to the Indiana County (PA) Development
Corporation (ICDC) for $2,000,000. The ICDC, in turn, entered into a lease of
the facility in September 2001 with BIP as lessee for an initial term of five
years and up to four additional five-year terms. The lease contains an option
for BIP to purchase the property from ICDC at the end of the first term for
$1,500,000 (the appraised value of the property in July 2001). In the event
that BIP does not exercise the purchase option or the renewal option at the end
of the initial term, ICDC, upon proper notification, can require the Company to
repurchase the property for $1,000,000, of which $500,000 is contractually
required to be maintained on deposit with banks located in Indiana County,
Pennsylvania. The Company considers a decision by BIP to vacate the location in
Saltsburg, Pennsylvania to be unlikely as this is a manufacturing facility with
sophisticated machinery, an established well-trained work force, dependable
suppliers, and excellent distribution access. In the event that the facility is
presented for repurchase, management is confident that the repurchase would not
have a material effect on the Company's financial position or cash flows and
the facility can be resold for at least the repurchase price.
We are also engaged in various other legal proceedings incidental to our
business. It is our opinion that, after taking into consideration information
furnished by our counsel, the above matters will have no material effect on our
consolidated financial position or the results of our operations in future
periods.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
This Quarterly Report on Form 10-Q may contain forward-looking statements. See
"Forward Looking Statements" on page 19 hereof for further information of the
risks and uncertainties associated with forward-looking statements.
We design, develop, and manufacture sophisticated lifting equipment for
specialty aerospace and defense applications. With over 50% of the global
market, we have long been recognized as the world's largest designer and leading
supplier of performance-critical rescue hoists and cargo-hook systems. We also
manufacture weapons-handling systems, cargo winches, tie-down equipment, and
tow-hook assemblies. Marketed under the trade name "Breeze-Eastern", our
products are designed to be efficient and reliable in extreme operating
conditions. Our equipment is used to complete rescue operations and military
insertion/extraction operations, move and transport cargo, and load weapons onto
aircraft and ground-based launching systems.
Beginning in fiscal 2001, we implemented a restructuring plan to focus our
resources and capital on our specialty aerospace and defense products business
and exit the specialty fastener segment. On February 24, 2003, we completed our
divestiture program.
All references to fiscal 2005 and beyond in this Management's Discussion and
Analysis of Financial Condition and Results of Operations refer to the fiscal
year ending March 31, 2005 and beyond, and all references to all other fiscal
years refer to the fiscal years ended March 31.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 26, 2004 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
28, 2003
Net sales. Our sales decreased to $15.2 million for the second quarter of fiscal
2005, a 7% decrease from sales of $16.3 million for the second quarter of fiscal
2004. Almost all of the decrease in our sales for the second quarter of fiscal
2005 was attributed to new equipment sales. Sales of new equipment were down
$0.8 million from the prior year's second quarter, primarily due to the
completion of shipments of the HLU-196 Bomb Hoist program. Sales in the overhaul
and repair portion of our business increased 15% from the same period last year
(See discussion of Gross profit).
Gross profit. Gross profit decreased 8% to $6.2 million for the second quarter
of fiscal 2005 from $6.8 million for the second quarter of fiscal 2004.
Generally, repair and overhaul services and spare parts sales have higher gross
margins than sales of new equipment or engineering services. We have implemented
changes in our operating procedures and added new personnel to our overhaul and
repair operation, all of which has had an impact on the results for the quarter.
These changes were made as a result of the process and procedures review of that
operation over the past twelve months. We have instituted additional levels of
verification and are assuring that all personnel are appropriately trained. This
situation produced higher labor and material costs than we had planned. As a
result, our overhaul and repair throughput was impeded resulting in reduced
gross margins in the second quarter. The inefficiencies experienced as we
implement improvements in our overhaul
11
and repair operation accounted for approximately $0.3 million of the decrease in
gross profit with the remaining $0.3 million being related to a higher
percentage of aftermarket products with an above-normal margin in the same
period last year. These inefficiencies are expected to continue through the
remainder of fiscal 2005.
General, administrative and selling expenses. General, administrative and
selling expenses increased 19% to $4.2 million in the second quarter of fiscal
2005 from $3.5 million in the second quarter of fiscal 2004. The increase was
due to approximately $0.3 million of legal and other costs associated with the
ongoing investigation by the Newark, New Jersey office of the United States
Attorney of our overhaul and repair operation. There was also an increase in
product support and marketing costs of approximately$0.2 million and an increase
in information technology costs of $0.1 million associated with the installation
of the new enterprise resource planning system.
Interest expense. Interest expense increased $0.3 million to $2.9 million in the
second quarter of fiscal 2005 from $2.6 million in the second quarter of fiscal
2004 primarily as the result of the increased interest rate on our subordinated
debt and the increased debt level due to payment-in-kind interest.
Net income. We incurred a net loss of $0.5 million in the second quarter of
fiscal 2005, versus net income of $0.5 million in the second quarter of fiscal
2004, which primarily resulted from the reasons discussed above.
New orders. New orders received in the second quarter of fiscal 2005 totaled
$17.3 million, which represents a 108% increase from new orders of $8.3 million
in the second quarter of fiscal 2004. Orders on three specific programs during
the first quarter of fiscal 2005 were delayed and received during the second
quarter, thus accounting for a significant portion of the increase.
Backlog. Backlog at September 26, 2004 was $37.7 million, down $3.3 million from
$41.0 million at March 31, 2004. The reduction in the backlog is due to the
order pattern in the first quarter of fiscal 2005 as well as completion of the
HLU-196 Bomb Hoist program. We measure backlog by the amount of products or
services that our customers have committed by contract to purchase from us as of
a given date. Our book to bill ratio for the second quarter of fiscal 2005 was
1.14, compared to .51 for the second quarter of fiscal 2004. The increase in the
book-to-bill ratio is directly related to the second quarter receipt of
previously delayed orders on three specific programs discussed in "New Orders"
above. Cancellations of purchase orders or reductions of product quantities in
existing contracts, although seldom occurring, could substantially and
materially reduce our backlog. Therefore, our backlog may not represent the
actual amount of shipments or sales for any future period.
SIX MONTHS ENDED SEPTEMBER 26, 2004 COMPARED WITH SIX MONTHS ENDED SEPTEMBER 28,
2003
Net sales. Our sales decreased to $29.8 million for the first six months of
fiscal 2005, an 8% decrease from sales of $32.5 million for the fist six months
fiscal 2004. This decrease in sales is the result of lower shipments of our
weapons handling equipment primarily due to the completion of the HLU-196 Bomb
Hoist program.
Gross profit. Gross profit decreased 15% to $12.0 million for the first six
months of fiscal 2005 from $14.1 million for the first six months of fiscal
2004. Generally, repair and overhaul services and spare parts sales have higher
gross margins than sales of new equipment or engineering services. We have
implemented changes in our operating procedures and added new personnel to our
overhaul and
12
repair operation, all of which has had an impact on the results for the first
six months of fiscal 2005. These changes were made as a result of the process
and procedures review of that operation over the past twelve months. We have
instituted additional levels of verification and are assuring that all personnel
are appropriately trained. This situation produced higher labor and material
costs than we had planned. As a result, our overhaul and repair throughput was
impeded resulting in reduced gross margins in the first six months of fiscal
2005. The inefficiencies experienced as we implement improvements in our
overhaul and repair operation accounted for approximately $1.3 million of the
decrease in gross profit with the remaining $0.8 million being related to a
higher percentage of aftermarket products with an above-normal margin in the
same period last year. These inefficiencies are expected to continue through the
remainder of fiscal 2005.
General, administrative and selling expenses. General, administrative and
selling expenses increased 13% to $8.2 million in the first six months of fiscal
2005 from $7.3 million in the first six months of fiscal 2004. The increase was
due to approximately $0.8 million of legal and other costs associated with the
ongoing investigation by the Newark, New Jersey office of the United States
Attorney of our overhaul and repair operation. There was also an increase in
product support and marketing costs of approximately $0.2 million and an
increase of $0.1 million in information technology costs associated with the
installation of the new enterprise resource planning system. This increase was
offset by a reduction in our corporate office expense of $0.4 million which was
principally the result of the recognition of a non-recurring settlement charge
of the same amount in the first quarter of fiscal 2004.
Interest expense. Interest expense increased $0.6 million to $5.7 million in the
first six months of fiscal 2005 from $5.1 million in the first six months of
fiscal 2004 primarily as the result of the increased interest rate on our
subordinated debt and the increased debt level due to payment-in-kind interest.
Net income. We incurred a net loss of $1.1 million in the first six months of
fiscal 2005, versus net income of $1.2 million in the first six months of fiscal
2004, which primarily resulted from the reasons discussed above.
New orders. New orders received in the first six months of fiscal 2005 totaled
$26.5 million, which represents a 12% decrease from new orders received of $30.0
million in the first six months of fiscal 2004. An order for the HLU-196 Bomb
Hoist program was received in the fist six months of fiscal 2004, with no new
orders being received in the first six months of fiscal 2005.
Backlog. Backlog at September 26, 2004 was $37.7 million, down $3.3 million from
$41.0 million at March 31, 2004. The reduction in the backlog is due to the
order pattern mentioned above as well as completion of the HLU-196 Bomb Hoist
program. We measure backlog by the amount of products or services that our
customers have committed by contract to purchase from us as of a given date. Our
book to bill ratio for the first six months of fiscal 2005 was .89, compared to
..93 for the first six months of fiscal 2004. Cancellations of purchase orders or
reductions of product quantities in existing contracts, although seldom
occurring, could substantially and materially reduce our backlog. Therefore, our
backlog may not represent the actual amount of shipments or sales for any future
period.
13
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity requirements depend on a number of factors, many of which are
beyond our control, including the timing of production under our long-term
contracts with the U.S. Government. Although we have infrequently received
payments on these government contracts based on performance milestones, as was
the case with our contract with the U.S. Navy for the HLU-196 Bomb Hoist, our
working capital needs fluctuate between periods as a result of changes in
program status and the timing of payments by program. Additionally, as our sales
are generally made on the basis of individual purchase orders, our liquidity
requirements vary based on the timing and volume of these orders.
As previously reported, the New York Stock Exchange (NYSE) notified us on or
about April 7, 2003, that we had fallen below the NYSE continued listing
standards requiring total market capitalization of not less than $50 million
over a 30-day trading period and total stockholders' equity of not less than $50
million. We submitted to the NYSE an 18-month plan to comply with the listing
standards, which was accepted by the NYSE on July 7, 2003. The conclusion of the
plan implementation period was October 7, 2004. We received a letter from the
NYSE dated October 8, 2004, informing us of the determination of the NYSE to
delist our common stock from the NYSE. We have filed a notice of appeal with the
NYSE requesting a subsequent review of this determination of delisting by a
committee of the NYSE Board of Directors. We have been informed that a hearing
before the NYSE Board's Regulation, Enforcement and Lisiting Standards Committee
with respect to the review of the delisting determination is scheduled to take
place in January 2005. It is our understanding that a suspension date will be
announced if the subsequent review of the delisting determination finds that our
common stock should be delisted. It is also our understanding that our common
stock will continue to be listed on the NYSE pending the announcement of a
suspension date, subject to certain conditions. The NYSE has indicated that it
may, at any time, suspend a security if it believes that continued dealings in
the security on the NYSE are not advisable. In the event of delisting from the
NYSE, we believe an alternate trading venue would be available.
WORKING CAPITAL
Our working capital at September 26, 2004, was $19.7 million, compared to $22.2
million at March 31, 2004. The ratio of current assets to current liabilities
was 2.3 to 1.0 and 2.6 to 1.0 at September 26, 2004, and March 31, 2004
respectively.
Changes in working capital during the first six months of fiscal 2005 resulted
from a decrease in cash of $0.7 million, an increase in accounts receivable of $
2.4 million, a decrease in inventories of $ 2.4 million, an increase in prepaid
and other current assets of $0.6 million, a decrease in real estate held for
sale of $1.4 million and a decrease in accounts payable of $ 2.1 million and a
decrease in accrued compensation of $1.1 million. In addition, the current
portion of long-term debt and short term borrowings increased by $4.6 million
due to working capital needs and the refinancing as described in Note 4. The
increase in accounts receivable was due to strong sales at the end of the second
quarter fiscal 2005 and the decrease in accrued compensation was due to the
payment of bonuses earned in fiscal 2004. The decrease in inventory was largely
due to increased sales, and the increase in prepaid and other current assets was
mainly due to the prepayment fees associated with the refinancing of our senior
credit facility and subordinated notes, and the prepayment of insurance
premiums. The decrease in real estate held for sale was due to the sale of land
and building retained from a previous divestiture. The decrease in accounts
payable was mainly due to the payments
14
coming due for purchases made in the fourth quarter of fiscal 2004. The number
of days that sales were in accounts receivable increased to 46.7 days at
September 26, 2004 from 35.2 days at March 31, 2004. The increase in days was
attributable to September sales representing 49% of fiscal 2005 second quarter
sales. Inventory turnover increased to 2.0 turns for the second quarter of
fiscal 2005 versus 1.79 turns for fiscal 2004. The increase in inventory turns
is reflective of normal inventory and production patterns.
CAPITAL EXPENDITURES
Our additions to property, plant and equipment were $1.2 million for the six
months of fiscal 2005, compared to $159 thousand for the first six months of
fiscal 2004. Projects budgeted in fiscal 2005, are expected to be in a range of
$2.6-$3.3 million and include the installation of a new enterprise resource
planning (ERP) system.
FORMER SENIOR CREDIT FACILITY
At September 26, 2004, we had a senior credit facility consisting of an $8.0
million asset-based revolving credit facility, which was established in August
2002 (the "Former Senior Credit Facility") to refinance all remaining
obligations outstanding under our prior senior credit facility. The Former
Senior Credit Facility was amended on August 5, 2003 and was subsequently
amended on January 30, 2004 and July 30, 2004 and repaid in full on November 10,
2004 (see "Refinancing" below). The maturity date of this facility, as amended,
was January 31, 2005. At September 26, 2004, the current interest rate was
approximately 5.75%. The Former Senior Credit Facility was secured by all of our
assets. At September 26, 2004 we were in compliance with the provisions of the
facility and there was $2.1 million outstanding thereunder.
SENIOR SUBORDINATED NOTES
On August 30, 2000, we completed a private placement of $75 million of senior
subordinated notes (the "Notes") and warrants to purchase shares of our common
stock (the "Warrants") to a group of institutional investors (collectively, the
"Purchasers"). We used the proceeds of the private placement to retire, in full,
a $75 million bridge loan held by a group of lenders led by Fleet National Bank.
The Notes, as amended in August 2002, are due on August 29, 2005 and bear
interest at a rate of 18% per annum consisting of 13% cash interest on
principal, payable quarterly, and 5% interest on principal, payable quarterly in
"payment-in-kind" ("PIK") promissory notes. The PIK portion of the interest rate
increases 0.25% each quarter, commencing December 31, 2002 until the Notes are
retired. At September 26, 2004, the principal balance outstanding on the Notes
amounted to $58.2 million, which included the original principal amount plus the
PIK notes. We were not in compliance with certain of the financial covenants of
the Notes at September 26, 2004 and received a waiver of this noncompliance from
the Purchasers. On November 10, 2004 the Notes were paid in full (see
"Refinancing," below). As a result the refinancing described below and in
accordance with SFAS No. 6, "Classification of Short-Term Obligations Expected
to Be Refinanced," we have continued to classify the remaining $58.2 million
outstanding under the Notes as long-term obligations at September 26, 2004.
At September 26, 2004, there were 171,041 Warrants outstanding which are each
convertible into common stock at the price of $.01 per warrant. These Warrants
are considered to be common stock equivalents for the purpose of calculating
basic earnings per share at September 26, 2004, and September 28, 2003. On
November 5, 2004, the holder of the remain 171,041 Warrants outstanding
delivered a Notice of Election to the Company with respect to the exercise of
all of its Warrants.
15
REFINANCING
On November 10, 2004, we refinanced and repaid in full the Former Senior Credit
Facility and the Notes with a $71.5 million 42-month senior credit facility (the
"Senior Credit Facility"). The Senior Credit Facility consists of a $10.0
million asset-based revolving credit facility, and three tranches of term loans
totaling $61.5 million. At closing, the Senior Credit Facility has an effective
weighted interest rate of approximately 13.0% which is tied to the prime rate.
The term loans require monthly principal payments of $250,000 over the term of
the loan with the balance due at the end of the term. Accordingly, the balance
sheet reflects $2.5 million of current maturities due under the Senior Credit
Facility. The Senior Credit Facility also contains certain mandatory prepayment
provisions which are linked to cash flow and customary financial covenants and
events of default. The Senior Credit Facility is secured by all of our assets. A
non-recurring pre-tax charge of $2.2 million relating to the write-off of
unamortized fees from prior financings and the payment of pre-payment premiums
will be recognized in the third fiscal quarter.
TAX BENEFITS FROM NET OPERATING LOSSES
At September 26, 2004, we had federal and state net operating loss
carryforwards, or NOLs, of approximately $57.8 million and $77.7 million,
respectively, which are due to expire in fiscal 2006 through fiscal 2024. These
NOLs may be used to offset future taxable income through their respective
expiration dates and thereby reduce or eliminate our federal and state income
taxes otherwise payable. The Internal Revenue Code of 1986, as amended (the
"Code") imposes significant limitations on the utilization of NOLs in the event
of an "ownership change" as defined under section 382 of the Code (the "Section
382 Limitation"). The Section 382 Limitation is an annual limitation on the
amount of pre-ownership NOLs that a corporation may use to offset its
post-ownership change income. The Section 382 Limitation is calculated by
multiplying the value of a corporation's stock immediately before an ownership
change by the long-term tax-exempt rate (as published by the Internal Revenue
Service). Generally, an ownership change occurs with respect to a corporation if
the aggregate increase in the percentage of stock ownership by value of that
corporation by one or more 5% shareholders (including specified groups of
shareholders who in the aggregate own at least 5% of that corporation's stock)
exceeds 50 percentage points over a three-year testing period. We believe that
we have not gone through an ownership change that would cause our NOLs to be
subject to the Section 382 Limitation.
SUMMARY DISCLOSURE ABOUT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
The following table reflects a summary of our contractual cash obligations for
the next several fiscal years:
(DOLLARS IN THOUSANDS)
2005 2006 2007 2008 2009 TOTAL
---------- ---------- ---------- ---------- ---------- ----------
Long-term debt $ 3,183 $ 3,079 $ 3,000 $ 51,204 $ - $ 60,466
Operating leases 148 271 174 65 - 658
---------- ---------- ---------- ---------- ---------- ----------
Total $ 2,331 $ 58,554 $ 174 $ 65 $ - $ 61,124
========== ========== ========== ========== ========== ==========
16
In addition, we have divested ten businesses since March 31, 2001. Under the
terms of the agreements associated with the sales of those businesses, we have
agreed to indemnify the purchasers for certain damages that might arise in the
event that a representation we made with respect to the divested business is
found to have contained a material misstatement, subject in each case to a
customary cap on the indemnification amount and customary limitations on the
survivability of the representations made. As of the date of this report, we
have unresolved claims for indemnification with respect to these divested
businesses that aggregate less than $0.1 million. Additionally, the terms of
these divestiture agreements generally require the calculation of purchase price
adjustments based upon the amount of working capital or net assets transferred
at the closing date. In the case of each divestiture completed as of the filing
date purchase price adjustments have been agreed and paid.
INFLATION
While neither inflation nor deflation has had, and we do not expect it to have,
a material impact upon operating results, we cannot assure you that our business
will not be affected by inflation or deflation in the future.
ENVIRONMENTAL MATTERS
We evaluate our exposure to environmental liabilities using a financial risk
assessment methodology, including a system of internal environmental audits and
tests and outside consultants. This risk assessment includes the identification
of risk events/issues, including potential environmental contamination at
company and off-site facilities; characterizes risk issues in terms of
likelihood, consequences and costs, including the year(s) when these costs could
be incurred; analyses risks using statistical techniques; and, constructs risk
cost profiles for each site. Remediation cost estimates are prepared from this
analysis and are taken into consideration in developing project budgets from
third party contractors. Although we take great care in the development of these
risk assessments and future cost estimates, the actual amount of the remediation
costs may be different from those estimated as a result of a number of factors
including, changes to government regulations or laws; changes in local
construction costs and the availability of personnel and materials; unforeseen
remediation requirements that are not apparent until the work actually
commences; and other similar uncertainties. We do not include any unasserted
claims we might have against others in determining our liability for such costs,
and, except as noted with regard to specific cost sharing arrangements, have no
such arrangements, nor have we taken into consideration any future claims
against insurance carriers we might have in determining our environmental
liabilities . In those situations where we are considered a de minimus
participant in a remediation claim, the failure of the larger participants to
meet their obligations could result in an increase in our liability with regard
to such a site.
We continue to participate in environmental assessments and remediation work at
eleven locations, including our former facilities. Due to the nature of
environmental remediation and monitoring work, such activities can extend for up
to thirty years, depending upon the nature of the work, the substances involved,
and the regulatory requirements associated with each site. In calculating the
net present value (where appropriate) of those costs expected to be incurred in
the future, we use a discount rate of 7.5%. Based on the above, we estimate the
current range of undiscounted cost for remediation and monitoring to be between
$7.1 million and $9.7 million with an undiscounted amount of $8.0 million to be
most probable. Estimates for expenditures for each of the five succeeding fiscal
years will be $1.1 million, $0.8 million, $0.3 million, $0.3 million, and $0.3
million respectively, with $5.2 million payable thereafter. Of the total
undiscounted costs, we estimate that
17
approximately 30% will relate to remediation activities and that 70% will be
associated with monitoring activities.
We estimate that our potential cost for implementing corrective action at nine
of these sites will not exceed $0.5 million in the aggregate, payable over the
next several years, and have provided for the estimated costs, without
discounting for present value, in our accrual for environmental liabilities. In
the first quarter of fiscal 2003, we entered into a consent order for a former
facility in New York, which is currently subject to a contract for sale,
pursuant to which we are developing a remediation plan for review and approval
by the New York Department of Environmental Conservation. Based upon the
characterization work performed to date, we have accrued estimated costs of
approximately $2.4 million. The amounts and timing of such payments are subject
to an approved remediation plan.
The environmental cleanup plan we presented during the fourth quarter of fiscal
2000 for a portion of a site in Pennsylvania which continues to be owned
although the related business has been sold was approved during the third
quarter of fiscal 2004. This plan was submitted pursuant to the Consent Order
and Agreement with the Pennsylvania Department of Environmental Protection
("PaDEP") concluded in fiscal 1999. Pursuant to the Consent Order, upon its
execution we paid $0.2 million for past costs, future oversight expenses and in
full settlement of claims made by PaDEP related to the environmental remediation
of the site with an additional $0.2 million paid in fiscal 2001. A second
Consent Order was concluded with PaDEP in the third quarter of fiscal 2001 for
another portion of the site, and a third Consent Order for the remainder of the
site was concluded in the third quarter of fiscal 2003. An environmental cleanup
plan for the portion of the site covered by the 2003 Consent Order was presented
during the second quarter of fiscal 2004. We are also administering an agreed
settlement with the Federal government under which the government pays 50% of
the direct and indirect environmental response costs associated with a portion
of the site. We have also reached an agreement in principle with the Federal
government and are in the process of finalizing the necessary documentation
under which the Federal government will pay 45% of the direct and indirect
environmental response costs associated with another portion of the site. At
September 26, 2004, our cleanup reserve was $1.9 million based on the net
present value of future expected cleanup and monitoring costs. We expect that
remediation at this site, which is subject to the oversight of the Pennsylvania
authorities, will not be completed for several years, and that monitoring costs
could extend for up to thirty years.
In addition, we have been named as a potentially responsible party in five
environmental proceedings pending in several states in which it is alleged that
we were a generator of waste that was sent to landfills and other treatment
facilities and, as to one site, it is alleged that we were an owner or operator.
Such properties generally relate to businesses which have been sold or
discontinued. We estimate that our expected future costs, and our estimated
proportional share of remedial work to be performed, associated with these
proceedings will not exceed $0.2 million and have provided for these estimated
costs in our accrual for environmental liabilities.
LITIGATION
We are also engaged in various other legal proceedings incidental to our
business. It is our opinion that, after taking into consideration information
furnished by our counsel, the above matters will have no material effect on our
consolidated financial position or the results of our operations in future
periods.
18
FORWARD LOOKING STATEMENTS
Certain statements in this Quarterly Report constitute "forward-looking
statements" within the meaning of the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended (the "Acts"). Any statements
contained herein that are not statements of historical fact are deemed to be
forward-looking statements.
The forward-looking statements in this Quarterly Report are based on current
beliefs, estimates and assumptions concerning the operations, future results and
prospects of the Company. As actual operations and results may materially differ
from those assumed in forward-looking statements, there is no assurance that
forward-looking statements will prove to be accurate. Forward-looking statements
are subject to the safe harbors created in the Acts.
Any number of factors could affect future operations and results, including,
without limitation, the results of audits and inquiries into the Company's
business practices; the Company's ability to satisfy the listing requirements of
the NYSE or any other national exchange on which its shares are or will be
listed or otherwise provide a trading venue for its shares; the value of
replacement operations, if any; determination by the Company to dispose of or
acquire additional assets; general industry and economic conditions; events
impacting the U.S. and world financial markets and economies; interest rate
trends; capital requirements; competition from other companies; changes in
applicable laws, rules and regulations affecting the Company in the locations in
which it conducts its business; the availability of equity and/or debt financing
in the amounts and on the terms necessary to support the Company's future
business and those specific risks that are discussed in this Quarterly Report.
Additional information concerning factors that could cause actual results to
differ materially from those expressed or implied in forward-looking statements
is available in the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 2004, and subsequent filings with the United States Securities
and Exchange Commission (SEC). Copies of these filings are available at no cost
on the SEC's website at www.sec.gov or on the Company's website at
www.transtechnology.com. Management may elect to update forward-looking
statements at some future point; however, it specifically disclaims any
obligation to do so.
RECENTLY ISSUED ACCOUNTING STANDARDS
In December 2003, the FASB issued Interpretation No. 46R, a revision to
Interpretation No. 46, "Consolidation of Variable Interest Entities", which
addresses how a business enterprise should evaluate whether it has a controlling
financial interest in an entity through means other than voting rights and
accordingly should consolidate the entity. Interpretation No. 46R clarifies some
of the provisions of Interpretation No. 46 and exempts certain entities from its
requirements. Interpretation No. 46R was effective at the end of the first
quarter ended June 27, 2004. The adoption of this statement did not have a
material impact on our financial position or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have been and are exposed to various market risks, primarily changes in
interest rates associated with the Former Senior Credit Facility under which
there were borrowings of $2.1 million at September 26, 2004, which were repaid
and changes in interest rates under the Senior Credit Facility, under which
there were borrowings of $2.0 at November 10, 2004.
19
ITEM 4. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. In designing and evaluating the disclosure
controls and procedures, management recognizes that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives, and management necessarily is
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
Within 90 days prior to the date of this report, the Company carried out an
evaluation under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and the Company's
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on the forgoing, the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect the internal controls subsequent
to the date the Company completed its evaluation.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are engaged in various legal proceedings incidental to our business. It
is the opinion of management that, after taking into consideration
information furnished by our counsel, these matters will not have a
material effect on our consolidated financial position or the results of
our operations in future periods.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At our annual stockholders' meeting, held on September 2, 2004, all seven
of our directors nominated for reelection were reelected for a term of one
year and the TransTechnology Corporation 2004 Long Term Incentive Plan was
approved.
The results of the voting on the election of directors were as follows:
FOR WITHHELD
--------- --------
Gideon Argov 5,823,817 442,295
Michael J. Berthelot 5,728,066 538,046
Thomas V. Chema 5,763,815 502,297
Jan Naylor Cope 5,774,776 491,336
John H. Dalton 5,763,915 502,197
William J. Recker 5,823,767 442,345
Robert L.G. White 5,821,906 444,206
20
The results of the voting on the approval of the TransTechnology Corporation
2004 Long Term Incentive Plan were as follows:
FOR: 3,591,757
AGAINST: 870,246
ABSTAIN: 14,813
NO-VOTE: 1,789,296
ITEM 6. EXHIBITS
Exhibits
10.1 Amendment dated as of July 30, 2004 by and among TransTechnology
Corporation, NORCO, Inc. (n/k/a TransTechnology Connecticut
Corporation) and The CIT Group/Business Credit, Inc. (Filed as
Exhibit 10.29 to TransTechnology Corporation's Current Report on
Form 8-K dated as of August 4, 2004 and incorporated herein by
reference).
10.2 TransTechnology Corporation 2004 Long Term Incentive Plan (filed as
Annex A to TransTechnology's Proxy Statement for its 2004 Annual
Meeting of Stockholders dated September 2, 2004, and incorporated
herein by reference).
10.3 Waiver dated October 1, 2004 of certain financial covenants of the
Securities Purchase Agreement between the Company and the Purchasers
named therein, dated as of August 29, 2000, as amended by the First
Amendment Agreement dated as of August 7, 2002, and the Second
Amendment Agreement dated as of August 26, 2003.
31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
32 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
21
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: November 15, 2004 By: /s/ Joseph F. Spanier
----------------------------------------
Joseph F. Spanier, Vice President,
Chief Financial Officer and Treasurer*
*On behalf of the Registrant and as Principal Financial and Accounting Officer.
22