John Wolz

TransTechnology plans to reduce its debt by almost 50% by restructuring and divesting several businesses.
TransTechnology will sell its cold-headed products, aerospace rivet, retaining ring and hose clamp operations for $110 million to $130 million in order to cut its $280 million debt.\
For the nine months ended December 31, 2000, TransTechnology reported revenues of $111.3 million and operating income of $2.1 million. The figures include a $6.8 million loss for its UK operation.
CEO Michael Berthelot said the �changing debt and equity markets, compounded by changes in the circumstances of our principal customers, have made the pursuit of our long-standing strategic plan problematic for the foreseeable future. As a result, we have decided to divest those businesses that were originally acquired to serve as platforms for future acquisitions but cannot do so in today�s market, or whose operations have failed to achieve our strategic goals.�
Berthelot predicted the restructuring will �de-leverage� TransTechnology and put the company �in a position to realize the tremendous value that lies within our aerospace products segment and our assembly fastener business.�
TransTechnology hired investment bankers Evercore Partners as its financial advisor in restructuring.
The aerospace segment reported a 30% increase in third fiscal quarter operating income on a 16% increase in sales. The industrial segment reported a 64% decrease on 15% lower sales.
The decrease in industrial sales was attributed to weak operations at the UK retaining ring facility and reduced production schedules at domestic automotive and heavy-duty truck OEMs.
The retaining ring business in Brazil reported higher sales and profits, and the German retaining ring and hose clamp businesses reported higher operating profit on slightly lower sales. Sales and profits were down at U.S. assembly fastener, hose clamp and retaining ring businesses.
�Heavy-duty truck OEMs substantially reduced production in our second and third fiscal quarters,� Berthelot said. �Major U.S. automakers have also implemented substantial cuts in production during our third quarter.�
The heavy-duty truck and automotive markets account for 45% of TransTechnology�s sales.
Berthelot anticipates the fourth fiscal quarter sales will be down even more. �We have reacted promptly to this slowdown and have lowered employment levels at the affected operations by 145 people, or 12%, so far this fiscal year, while trimming capital expenditures and focusing on lowered working capital, especially inventories.�
The UK operation �has started to make some progress towards returning to profitability,� Berthelot said. Trans-Technology cut employment from 585 in December 2000 to 442 as of mid-January 2001. However, Berthelot does not expect the UK operation to be profitable until the second quarter of 2002.
TransTechnology manufactures specialty fasteners and aerospace products at 14 plants in the U.S., Canada, England, Germany and Brazil.