TransTechnology Reports Second Quarter Results, Reorganization of Industrial Products Group.LIBERTY CORNER, N.J.--(BUSINESS WIRE)--Oct. 13, 1999-- TransTechnology Corporation (NYSE NYSE See: New York Stock Exchange :TT) today reported that income from operations before the recognition of a plant consolidation charge, for the fiscal year 2000 second quarter which ended September September: see month. 26, 1999, increased 10% to $2,437,000, or $.40 per share, from $2,208,000 or $.35 per share for the same period last year. During the second quarter of fiscal 2000, the company recognized a $4,500,000 pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern charge equal to $.45 per share associated with the cost of relocating the company's UK retaining ring operations into the newly acquired Ellison El·li·son , Ralph Waldo 1914-1994. American writer whose novel Invisible Man (1952) is a naturalistic depiction of a young Black man's struggle against American society. Noun 1. facility nearby. Revenues for the second quarter of fiscal 2000 increased 12% to $62,903,000 from $56,368,000 in the same quarter a year ago. Including the plant closing charge and an extraordinary charge of $541,000, or $.09 per share for the write off of fees associated with refinanced bank debt, the net loss for the current year's second quarter was $871,000 or $.14 per share. Last year the company reported second quarter net income of $1,427,000, or $.22 per share, after an extraordinary item resulting from the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of fees associated with refinancing Refinancing An extension and/or increase in amount of existing debt. the company's bank debt and a charge resulting from writing off a receivable from an earlier sale of a business unit. All per share amounts are expressed on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, unless noted otherwise. The company's Specialty Fastener Products segment reported an 8% decrease in second quarter operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. before the plant consolidation charge on 11% higher sales. The company's domestic hose clamp A hose clamp or hose clip is a device used to attach and seal a hose onto a fitting such as a barb or nib. A hose clamp is not the same as a pipe clamp which is a clamp made partly out of a pipe, not a clamp for clamping pipe. , assembly fastener and cold headed products divisions each reported increases in sales and operating income for the second quarter. Lower sales and operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. were reported by the domestic and international retaining ring businesses, except in Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. , where these operations posted higher operating profits on lower sales. While international retaining ring sales were up 3% from the prior year's second quarter, primarily because of the July 1999 acquisition of the Ellison UK retaining ring business, lower automotive OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and sales in the UK, Europe, and Brazil and inventory liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy by major European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. distributors continued throughout the second quarter, resulting in lower sales in business units operated during both periods. The company's Aerospace Rivet Manufacturers ("ARM") subsidiary, which was acquired in June 1998, saw a 45% reduction in revenues in the second quarter of fiscal 2000 compared with fiscal 1999, primarily because of the breach of a purchasing commitment agreement with Wesco Aircraft Hardware Corporation, its largest customer, which is controlled by the sellers of Aerospace Rivet. As a result, ARM reported a $.15 per share negative operating income comparison to last year's second quarter. On September 24, 1999, the company filed an arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the demand against Wesco and the sellers of ARM, seeking damages for fraud and breach of contract, punitive damages Monetary compensation awarded to an injured party that goes beyond that which is necessary to compensate the individual for losses and that is intended to punish the wrongdoer. and rescission The abrogation of a contract, effective from its inception, thereby restoring the parties to the positions they would have occupied if no contract had ever been formed. By Agreement . The company expects ARM to post operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. which will result in negative comparisons aggregating $.13 per share in the third and fourth quarters of fiscal 2000. The company's Aerospace Products segment reported a 30% increase in operating income for the quarter with a 12% increase in sales, primarily because of the acquisition of the NORCO Norco, city (1990 pop. 23,302), Riverside co., SE Calif., a suburb of Los Angeles; inc. 1964. Diversified agriculture is being displaced by rapid urban development. Lubricating oils are manufactured. State prisons for men and women are nearby. hold-open rod and actuator A mechanism that causes a device to be turned on or off, adjusted or moved. The motor and mechanism that moves the head assembly on a disk drive or an arm of a robot is called an actuator. See access arm. business in last year's second quarter. During the last week of the second quarter of fiscal 2000, the company's Breeze Eastern rescue hoist hoist: see winch. and cargo hook unit's labor contract covering 63 of its 180 employees expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. , resulting in the division missing its sales target slightly and posting a reduction in second quarter operating income of almost $.02 per share. The division does not expect the current work stoppage stoppage - /sto'p*j/ Extreme lossage that renders something (usually something vital) completely unusable. "The recent system stoppage was caused by a fried transformer." to affect its third quarter results. Michael J. Berthelot, TransTechnology's Chairman and Chief Executive Officer, commented, "There is a tremendous amount of activity currently going on within our company. The consolidation of the two UK retaining ring facilities under the name TransTechnology (GB) is progressing on schedule and within budget. While we took a $4.5 million pretax charge this quarter associated with the consolidation of the two UK facilities, we expect annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. savings from the new facility to be in excess of $4.2 million, starting in the first quarter of fiscal 2001. The integration of our Palnut assembly fastener business with that of the Tinnerman businesses we acquired from Eaton Corporation This article is about an industrial manufacturer. For other meanings see Eaton. Eaton Corporation (NYSE: ETN) is a diversified industrial manufacturer with 2006 sales of $12.4 billion, putting it at 198 on the Fortune 500 for 2007. in August is going smoothly. Unlike the Ellison acquisition, which was driven purely by cost savings, the Tinnerman acquisition is expected to provide TransTechnology with the infrastructure needed to achieve solid growth in the assembly fastener and retaining ring businesses in the U.S., especially with regard to the automotive OEM's. We are very excited about the opportunities this combination presents, and have already begun to see the benefits of being able to put forth a stronger and wider product line in Detroit. "In order to tie together the marketing and manufacturing efforts of our international and domestic fastener businesses, which must work together closely in order to provide global customers a seamless level of service, we reorganized re·or·gan·ize v. re·or·gan·ized, re·or·gan·iz·ing, re·or·gan·iz·es v.tr. To organize again or anew. v.intr. To undergo or effect changes in organization. our fastener businesses effective on October 1. We have done away with the recognition of International and Domestic Groups, and we now have all fastener products in a single Group, TransTechnology Industrial Products, under the direction of Robert Tunno, formerly President of the Domestic Industrial Products Group. Within the new Industrial Products Group are three other Groups, TransTechnology Engineered Components (Tinnerman and Palnut), with Mr. Tunno as acting President, TransTechnology Enginered Rings (domestic and international retaining rings) under Ulf Jemsby, formerly President of the International Industrial Products Group, and TransTechnology Industrial Components (domestic and international hose clamps, specialty cold headed and machined parts, and aerospace fasteners fasteners In construction, connectors between structural members. Bolted connections are used when it is necessary to fasten two elements tightly together, especially to resist shear and bending, as in column and beam connections. ), also currently under Mr. Tunno. We believe that this new structure will allow our marketing organization to better serve our global customers who are predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. in the automotive, heavy truck, and industrial equipment industries. "While we have not yet seen the nascent nascent /nas·cent/ (nas´ent) (na´sent) 1. being born; just coming into existence. 2. just liberated from a chemical combination, and hence more reactive because uncombined. recovery in Germany benefit our business, we have begun to see increasing demand from automotive OEM's in Germany. Distributors remain weak, but indications are that from November forward we should begin to see healthy improvement in our portions of the European markets. On the domestic front, our retaining ring business has made progress in regaining re·gain tr.v. re·gained, re·gain·ing, re·gains 1. To recover possession of; get back again: regain one's strength. See Synonyms at recover. 2. market share, recently winning a single customer that could increase its annual revenues more than 10%. We know that there remains much to do, and our local management teams are clearly focused on winning market share, reducing costs and capital employed Capital Employed 1. The total amount of capital used for the acquisition of profits. 2. The value of all the assets employed in a business. 3. Fixed assets plus working capital. 4. Total assets less current liabilities. in each business unit, and improving operating performance and financial results. " Joseph F. Spanier, Vice President and Chief Financial Officer of TransTechnology, said "Our second quarter earnings were negatively affected by the non-cash amortization of fees associated with our bridge loan from the Tinnerman acquisition. While the charge in the second quarter was almost $.02 per share (included in general and administrative expense), we expect those charges to be $.05 per share in each of the third and fourth quarters. Our cash flow allowed us to reduce our total outstanding debt at the end of the quarter to $286 million from its peak of $292 million at the Tinnerman closing. Further reductions of debt planned for the remainder of this fiscal year should allow us to reduce the debt to $268 million or less. Because of the company's high leverage, we have rethought our previously announced plan to retire the $75 million bridge loan and to provide additional capital for growth by issuing $150 million of high-yield debt In finance, a high yield bond (non-investment grade bond, speculative grade bond or junk bond) is a bond that is rated below investment grade at the time of purchase. in addition to our $250 million senior credit facility. We now plan to take on only enough debt to replace the existing bridge loan. We do not plan to undertake another significant acquisition until our debt to total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. ratio is reduced to 50% or less." Mr. Berthelot continued, "While our decision not to pursue any further major acquisitions until we reduce our debt to a more acceptable level might defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. achieving our goal of $500 million in revenues by the end of the next fiscal year, we believe that it is better to maximize what we have rather than pursue growth for growth's sake. We expect to begin a phase of significant internal growth in fiscal 2001, and expect our consolidation, cost and debt reduction, and marketing programs to push our net income margin closer to our 7% goal over the next two fiscal years." TransTechnology Corporation is a multinational manufacturer of specialty fasteners and rescue hoists and cargo hooks. The company employs 2,600 people at its fourteen manufacturing facilities in the U.S., Canada, England, Germany and Brazil. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Such risks and uncertainties include, but are not limited to, unanticipated slowdowns in the Company's major markets, the impact of competition, the effectiveness of operational changes expected to increase efficiency and productivity, and worldwide economic and political conditions and foreign currency fluctuations that may affect worldwide results of operations. -0-
Results for the second quarter were as follows:
(In thousands of dollars, except per share data)
TransTechnology Corporation
STATEMENTS OF CONSOLIDATED OPERATIONS
Three Months Ended Six Months Ended
9/26/99 9/27/98 9/26/99 9/27/98
Net sales $62,903 $56,368 $118,271 $107,851
Cost of sales 44,040 38,419 83,291 73,002
-------- -------- ---------- -------
Gross profit 18,863 17,949 34,980 34,849
General, administrative
& selling
expenses 11,739 11,341 22,924 21,677
Interest expense 3,466 1,910 5,096 3,261
Interest income (73) (99) (136) (198)
Royalty and other income (131) (120) (363) (190)
Allowance for possible
loss on
notes receivable ---- 1,206 ---- 1,206
Provision for
plant consolidation 4,490 ---- 4,490 ----
--------- ------- ------ ------
Income (loss)
before income
taxes and
extraordinary item (628) 3,711 2,969 9,093
Income taxes (benefit) ( 298) 1,503 1,141 3,683
--------- --------- ----------- ---------
Income (loss) before
extraordinary item (330) 2,208 1,828 5,410
Extraordinary charge
for refinancing
of debt,
net of taxes (541) (781) (541) (781)
--------- --------- ------------ ---------
Net income (loss) $ ( 871) $ 1,427 $ 1,287 $ 4,629
========= ======= ========== ========
Basic Earnings
per Share:
Income (loss) before
extraordinary item $ (0.05) $ 0.35 $ 0.30 0.86
Extraordinary charge
for refinancing
of debt (0.09) (0.12) (0.09) (0.12)
--------- ----------- ------------ ---------
Net income (loss) $ (0.14) $ 0.23 $ 0.21 $ 0.74
========= =========== =========== =========
Diluted Earnings
per Share:
Income (loss) before
extraordinary item $ (0.05) $ 0.34 $ 0.30 $ 0.84
Extraordinary charge
for refinancing
of debt (0.09) (0.12) (0.09) (0.12)
--------- ----------- ------------ ---------
Net income (loss) $ (0.14) $ 0.22 $ 0.21 $ 0.72
========= =========== =========== =========
Weighted average
basic shares 6,138,000 6,302,000 6,131,000 6,293,000
Weighted average
diluted shares 6,148,000 6,402,000 6,154,000 6,420,000
SEGMENT INFORMATION
Three Months Ended Six Months Ended
9/26/99 9/27/98 9/26/99 9/27/98
Sales:
Specialty fasteners $ 50,335 $ 45,147 $ 91,519 $ 87,367
Aerospace 12,568 11,221 26,752 20,484
--------- ---------- ---------- ----------
Total $ 62,903 $ 56,368 $118,271 $107,851
======== ========= ======== ========
Operating profit:
Specialty fasteners (a) $ 1,467 $ 6,504 $ 5,694 $ 13,383
Aerospace 2,982 2,287 6,205 4,676
--------- ---------- ---------- -----------
Total 4,449 8,791 11,899 18,059
Corporate expenses (b) (1,611) (3,170) (3,834) (5,705)
Interest expense (3,466) (1,910) (5,096) (3,261)
---------------------------------------------
Income (loss) before
income taxes
and extraordinary item $ (628) $ 3,711 $ 2,969 $ 9,093
=========== ========= ========== ==========
(a) The results of operations of the Specialty fasteners segment
for the three month and six month periods ended September 26,
1999, include a $4.5 million plant consolidation charge.
(b) The Corporate expenses for the three month and six month
periods ended September 27, 1998, include a $1.2 million
increase to the allowance to offset a possible loss on notes
receivable.
BALANCE SHEET INFORMATION
9/26/99 3/31/99
Current assets $ 131,661 $ 100,901
Property, plant & equipment - net 109,556 76,384
Costs in excess of net assets of
acquired businesses 192,679 76,731
Other assets 46,996 25,704
----------- -----------
Total assets $ 480,892 $ 279,720
========= =========
Current portion of long-term debt $ 82,500 $ 46
Other current liabilities 45,301 29,761
----------- -----------
Total current liabilities 127,801 29,807
Long term debt 204,412 102,463
Other liabilities 24,616 23,740
Shareholders' equity 124,063 123,710
---------- ----------
Total liabilities and
shareholders' equity $ 480,892 $ 279,720
========= =========
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