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At the beginning of fiscal 2002 , our Board of Directors adopted a plan of restructuring that would significantly alter our
company. We determined that we would exit the specialty fasteners business and concentrate all of our resources into a smaller,
less leveraged company that was involved solely in the design, manufacture, and servicing of aerospace equipment and components.
In a very difficult environment, we completed the sale of our Breeze and Pebra hose clamp businesses in July 2001; in December
2001, we sold our TransTechnology Engineered Components business; in February 2002 we sold our Seeger-Orbis retaining ring
business; in April 2002, we sold our Aerospace Rivet Manufacturers Inc. subsidiary; and, in May 2002, we sold our TransTechnology
Engineered Rings USA business. While we were divesting these businesses, the economy continued to weaken and, combined with the
shocks to financial markets due to the events of September 11th, put further downward pressure on the valuations of our business
units held for sale and on the buyers' ability to finance them. We persevered, and through May 2002, we have realized over $168
million of proceeds from these divestitures, all of which have been applied to reduce our outstanding debt to $107.6 million at
the fiscal year end from $272.5 million one year earlier, cutting our senior debt by almost 85%. We remain committed to
completing our restructuring program, which involves the sale of two more retaining ring businesses, our TCR cold heading
business, and some surplus real estate. By the end of the first quarter of fiscal 2003, we expect to have a new senior credit
facility in place, eliminating the forbearance agreements under which we have operated in fiscal 2002. At the end of July we will
relocate our corporate staff, reduced from 24 people to just nine, into our Breeze-Eastern facility in Union, New Jersey.
Fiscal 2002 was a year of many successes. Our continuing operations, made up of Breeze-Eastern and Norco, each had record levels
of new orders, sales, backlog, and operating profit during fiscal 2002. As a result of this strong showing, and significant
reductions in corporate office expenses, our continuing operations returned to profitability in fiscal 2002, with income from
continuing operations of $.8 million, or $.12 per diluted share. Our operating income, exclusive of non-recurring, non-operating
gains and losses, was up 97% and EBITDA was up 46%. Our share price improved 68% during the fiscal year, and, in share price
improvement, TT was the 25th best performing company on the NYSE for calendar year 2001. Several new programs were won in the
weapons system, helicopter rescue hoist, cargo hook, and regional jet component industries. Because of this continuing string
of new program wins, we believe that each of these units is poised for further growth in revenue and profitability in the future.
Our strategy for the short-term is simple. As a company now solely focused on aerospace products and components, we will focus
on developing new products for new customers and existing customers. We will concentrate on lowering our costs through
productivity and efficiency improvements. We will work harder to develop our people and improve the depth of our management and
front line team members. We will strive for more sales, lower costs, quicker cash flow cycles, and lower debt. Our target is
to grow both sales and operating income at least ten percent in fiscal 2003.
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Fiscal 2003 will be the year we work to strengthen our balance sheet and
shareholder value.
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As we enter the new fiscal year, we must now work on restructuring our balance sheet to provide the capital structure necessary
to support our company with the resources it needs to move forward and to yield our share-holders an immediate and long-term
increase in value. At the same time, we must be attentive to other opportunities that present themselves to enhance shareholder
value. As fiscal 2002 was the year we worked to strengthen our operations, so fiscal 2003 will be the year we work to strengthen
our balance sheet and shareholder value.
Fiscal 2002 brought much more attention to the importance of corporate governance. I am pleased to report that for the past
ten years our company's Incentive and Compensation and Audit Committees have both been made up entirely of outside directors.
Our Audit Committee, comprised of individuals with substantial experience in public and private company finance, is actively
involved in the review of our financial affairs and meets quarterly with management, our internal audit staff, and, without
management present, our outside auditors. Our Board of Directors has been, and remains, committed to the concepts of transparent
financial reporting, openness, and independence in fact and perception. Our outside auditors do no strategic, information
technology or other consulting for the company, limiting their work to our annual audit, quarterly reviews, the statutory
audits required for our operations around the world, and advising us in the preparation of our income tax returns.
While our workforce is much smaller now than at the beginning of the year, the work-load really has grown rather than diminished.
I would like to express my appreciation and gratitude to each member of the TransTechnology team for their professionalism and
support, which have proven invaluable to our company this past year.
I would also like to thank our Board of Directors, which has remained deeply involved throughout the year. As we see three of
our long-serving directors retire at this year's shareholders' meeting, I would like to especially thank James A. Lawrence and
Walter H. Belleville for their ten years of counsel, and Michel Glouchevitch for his six years of service to our company. We
wish them each well as they move on to another chapter of their lives.
Most importantly, I thank you, the shareholders, who have placed your trust, confidence, and resources in our hands. We
appreciate your support and look forward to seeing TransTechnology continue as a provider of value to its owners.
Michael J. Berthelot
Chairman, President
and Chief Executive Officer
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