##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: September 26, 2009
 or
 o
    
    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: 000-03905
 TRANSCAT, INC.
  Ohio
    
    16-0874418(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 35 Vantage Point Drive, Rochester, New York 14624
 (585) 352-7777
 þ o
 o o
  Large accelerated filer o
Accelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ o þ




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##### 



Page(s)PART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Consolidated Financial Statements:Statements of Operations and Comprehensive Income for the Second Quarter and Six Months Ended September 26, 2009 and September 27, 2008
    
    
    3Balance Sheets as of September 26, 2009 and March 28, 2009
    
    
    4Statements of Cash Flows for the Six Months Ended September 26, 2009 and September 27, 2008
    
    
    5Statements of Shareholders Equity for the Six Months Ended September 26, 2009
    
    
    6Notes to Consolidated Financial Statements
    
    
    7-11Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12-20Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    20Item 4.
    
    Controls and Procedures
    
    
    20PART II.
    
    OTHER INFORMATIONItem 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    21Item 6.
    
    Exhibits
    
    
    21SIGNATURES
    
    
    22INDEX TO EXHIBITS
    
    
    23EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
 
 TRANSCAT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 (Unaudited)
    
    
    (Unaudited)Second Quarter Ended
    
    
    Six Months EndedSeptember 26,
    
    
    September 27,
    
    
    September 26,
    
    
    September 27,2009
    
    
    2008
    
    
    2009
    
    
    2008Product Sales
    
    $
    11,970
    
    
    $
    12,959
    
    
    $
    23,238
    
    
    $
    25,270Service Revenue
    
    
    6,525
    
    
    
    5,651
    
    
    
    12,465
    
    
    
    11,193Net Revenue
    
    
    18,495
    
    
    
    18,610
    
    
    
    35,703
    
    
    
    36,463Cost of Products Sold
    
    
    9,308
    
    
    
    9,594
    
    
    
    17,930
    
    
    
    18,543Cost of Services Sold
    
    
    5,057
    
    
    
    4,481
    
    
    
    9,800
    
    
    
    8,860Total Cost of Products
and Services Sold
    
    
    14,365
    
    
    
    14,075
    
    
    
    27,730
    
    
    
    27,403Gross Profit
    
    
    4,130
    
    
    
    4,535
    
    
    
    7,973
    
    
    
    9,060Selling, Marketing and Warehouse Expenses
    
    
    2,449
    
    
    
    2,148
    
    
    
    5,008
    
    
    
    4,743Administrative Expenses
    
    
    1,345
    
    
    
    1,648
    
    
    
    2,745
    
    
    
    3,190Total Operating Expenses
    
    
    3,794
    
    
    
    3,796
    
    
    
    7,753
    
    
    
    7,933Operating Income
    
    
    336
    
    
    
    739
    
    
    
    220
    
    
    
    1,127Interest Expense
    
    
    11
    
    
    
    28
    
    
    
    25
    
    
    
    27Other Expense, net
    
    
    17
    
    
    
    4
    
    
    
    32
    
    
    
    12Total Other Expense
    
    
    28
    
    
    
    32
    
    
    
    57
    
    
    
    39Income Before Income Taxes
    
    
    308
    
    
    
    707
    
    
    
    163
    
    
    
    1,088Provision for Income Taxes
    
    
    120
    
    
    
    277
    
    
    
    64
    
    
    
    430Net Income
    
    
    188
    
    
    
    430
    
    
    
    99
    
    
    
    658Other Comprehensive Income (Loss)
    
    
    33
    
    
    
    (11
    )
    
    
    72
    
    
    
    (3
    )Comprehensive Income
    
    $
    221
    
    
    $
    419
    
    
    $
    171
    
    
    $
    655Basic Earnings Per Share
    
    $
    0.03
    
    
    $
    0.06
    
    
    $
    0.01
    
    
    $
    0.09Average Shares Outstanding
    
    
    7,402
    
    
    
    7,282
    
    
    
    7,396
    
    
    
    7,239Diluted Earnings Per Share
    
    $
    0.02
    
    
    $
    0.06
    
    
    $
    0.01
    
    
    $
    0.09Average Shares Outstanding
    
    
    7,611
    
    
    
    7,511
    
    
    
    7,609
    
    
    
    7,453
  3




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TRANSCAT, INC.  CONSOLIDATED BALANCE SHEETS
 (Unaudited)September 26,
    
    
    March 28,2009
    
    
    2009ASSETSCurrent Assets:Cash
    
    $
    36
    
    
    $
    59Accounts Receivable, less allowance for doubtful accounts of $100
and $75 as of September 26, 2009 and March 28, 2009, respectively
    
    
    8,279
    
    
    
    8,981Other Receivables
    
    
    510
    
    
    
    119Inventory, net
    
    
    4,865
    
    
    
    4,887Prepaid Expenses and Other Current Assets
    
    
    1,024
    
    
    
    774Deferred Tax Asset
    
    
    482
    
    
    
    380Total Current Assets
    
    
    15,196
    
    
    
    15,200Property and Equipment, net
    
    
    4,157
    
    
    
    4,174Goodwill
    
    
    9,016
    
    
    
    7,923Intangible Asset, net
    
    
    996
    
    
    
    1,091Deferred Tax Asset
    
    
    608
    
    
    
    635Other Assets
    
    
    385
    
    
    
    368Total Assets
    
    $
    30,358
    
    
    $
    29,391LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts Payable
    
    $
    7,038
    
    
    $
    4,748Accrued Compensation and Other Liabilities
    
    
    1,787
    
    
    
    1,757Income Taxes Payable
    
    
    94
    
    
    
    215Total Current Liabilities
    
    
    8,919
    
    
    
    6,720Long-Term Debt
    
    
    1,592
    
    
    
    3,559Other Liabilities
    
    
    568
    
    
    
    493Total Liabilities
    
    
    11,079
    
    
    
    10,772Shareholders Equity:Common Stock, par value $0.50 per share, 30,000,000 shares authorized;
7,682,617 and 7,656,358 shares issued as of September 26, 2009 and
March 28, 2009, respectively; 7,406,835 and 7,380,576 shares
outstanding as of September 26, 2009 and March 28, 2009, respectively
    
    
    3,841
    
    
    
    3,828Capital in Excess of Par Value
    
    
    9,082
    
    
    
    8,606Accumulated Other Comprehensive Income
    
    
    392
    
    
    
    320Retained Earnings
    
    
    6,952
    
    
    
    6,853Less: Treasury Stock, at cost, 275,782 shares as of
September 26, 2009 and March 28, 2009
    
    
    (988
    )
    
    
    (988
    )Total Shareholders Equity
    
    
    19,279
    
    
    
    18,619Total Liabilities and Shareholders Equity
    
    $
    30,358
    
    
    $
    29,391
  4




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TRANSCAT, INC.  CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)Second Quarter EndedSeptember 26,
    
    
    September 27,2009
    
    
    2008Cash Flows from Operating Activities:Net Income
    
    $
    99
    
    
    $
    658Adjustments to Reconcile Net Income to Net Cash Provided byOperating Activities:Deferred Income Taxes
    
    
    (68
    )
    
    
    55Depreciation and Amortization
    
    
    959
    
    
    
    772Provision for Accounts Receivable and Inventory Reserves
    
    
    25
    
    
    
    84Stock-Based Compensation Expense
    
    
    370
    
    
    
    355Changes in Assets and Liabilities:Accounts Receivable and Other Receivables
    
    
    333
    
    
    
    654Inventory
    
    
    27
    
    
    
    (40
    )Prepaid Expenses and Other Assets
    
    
    (511
    )
    
    
    (710
    )Accounts Payable
    
    
    2,290
    
    
    
    (269
    )Accrued Compensation and Other Liabilities
    
    
    114
    
    
    
    (601
    )Income Taxes Payable
    
    
    (131
    )
    
    
    45Net Cash Provided by Operating Activities
    
    
    3,507
    
    
    
    1,003Cash Flows from Investing Activities:Purchase of Property and Equipment
    
    
    (603
    )
    
    
    (587
    )Payments of Contingent Consideration
    
    
    (1,093
    )
    
    
    Purchase of Westcon, Inc., net of cash acquired
    
    
    
    
    
    
    (4,625
    )Net Cash Used in Investing Activities
    
    
    (1,696
    )
    
    
    (5,212
    )Cash Flows from Financing Activities:Revolving Line of Credit, net
    
    
    (1,955
    )
    
    
    4,026Payments on Other Debt Obligations
    
    
    (12
    )
    
    
    Issuance of Common Stock
    
    
    109
    
    
    
    119Excess Tax Benefits Related to Stock-Based Compensation
    
    
    10
    
    
    
    41Net Cash (Used in) Provided by Financing Activities
    
    
    (1,848
    )
    
    
    4,186Effect of Exchange Rate Changes on Cash
    
    
    14
    
    
    
    (1
    )Net Decrease in Cash
    
    
    (23
    )
    
    
    (24
    )Cash at Beginning of Period
    
    
    59
    
    
    
    208Cash at End of Period
    
    $
    36
    
    
    $
    184Supplemental Disclosures of Cash Flow Activity:Cash paid during the period for:Interest
    
    $
    40
    
    
    $
    18Income Taxes, net
    
    $
    265
    
    
    $
    260Supplemental Disclosures of Non-Cash Investing and Financing Activities:Stock Issued in Connection with Business Acquisition
    
    $
    
    
    
    $
    1,113
  5




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TRANSCAT, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 CapitalCommon Stock
    
    
    In
    
    
    Accumulated
    
    
    
    
    
    
    Treasury StockIssued
    
    
    Excess
    
    
    Other
    
    
    
    
    
    
    Outstanding$0.50 Par Value
    
    
    of Par
    
    
    Comprehensive
    
    
    Retained
    
    
    at CostShares
    
    
    Amount
    
    
    Value
    
    
    Income
    
    
    Earnings
    
    
    Shares
    
    
    Amount
    
    
    TotalBalance as of March 28, 2009
    
    
    7,656
    
    
    $
    3,828
    
    
    $
    8,606
    
    
    $
    320
    
    
    $
    6,853
    
    
    
    276
    
    
    $
    (988
    )
    
    $
    18,619Issuance of Common Stock
    
    
    26
    
    
    
    13
    
    
    
    96
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109Stock-Based Compensation
    
    
    
    
    
    
    
    
    
    
    370
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    370Tax Benefit from Stock-
Based Compensation
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10Comprehensive Income:Currency TranslationAdjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66Unrecognized Prior Service Cost, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    99Balance as of September 26, 2009
    
    
    7,682
    
    
    $
    3,841
    
    
    $
    9,082
    
    
    $
    392
    
    
    $
    6,952
    
    
    
    276
    
    
    $
    (988
    )
    
    $
    19,279
  6




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TRANSCAT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1  GENERAL
 Description of Business:
 Basis of Presentation:
  Fair Value of Financial Instruments:
 Stock-Based Compensation:
 Foreign Currency Translation and Transactions:
  7




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Earnings Per Share:
  Second Quarter Ended
    
    

    Six Months EndedSeptember 26,
    
    
    September 27,
    
    
    September 26,
    
    
    September 27,2009
    
    
    2008
    
    
    2009
    

    
    2008Average Shares Outstanding  Basic
    
    
    7,402
    
    
    
    7,282
    
    
    
    7,396
    
    
    
    7,239Effect of Dilutive Common Stock Equivalents
    
    
    209
    
    
    
    229
    
    
    
    213
    
    
    
    214Average Shares Outstanding  Diluted
    
    
    7,611
    
    
    
    7,511
    
    
    
    7,609
    
    
    
    7,453Anti-dilutive Common Stock Equivalents
    
    
    636
    
    
    
    559
    
    
    
    631
    
    
    
    574
 Income Taxes:
 Subsequent
Events:
 Reclassification of Amounts:
 NOTE 2  DEBT
 Description.
 Interest and Commitment Fees. 1 2
 Covenants.
 Other Terms.
 NOTE 3  STOCK-BASED COMPENSATION
  8




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Restricted Stock:
  Stock Options:
  WeightedAverage
    
    
    Weighted AverageNumber
    
    
    Exercise
    
    
    Remaining
    
    
    AggregateOf
    
    
    Price Per
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Share
    
    
    Term (in years)
    
    
    ValueOutstanding as of March 28, 2009
    
    
    665
    
    
    $
    5.70Granted
    
    
    
    
    
    
    Exercised/Cancelled/Forfeited
    
    
    
    
    
    
    Outstanding as of September 26, 2009
    
    
    665
    
    
    
    5.70
    
    
    
    7
    
    
    $
    606Exercisable as of September 26, 2009
    
    
    413
    
    
    
    4.83
    
    
    
    6
    
    
    
    585
  Warrants:
 WeightedAverage
    
    
    Weighted AverageNumber
    
    
    Exercise
    
    
    Remaining
    
    
    AggregateOf
    
    
    Price Per
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Share
    
    
    Term (in years)
    
    
    ValueOutstanding as of March 28, 2009
    
    
    63
    
    
    $
    4.28Granted
    
    
    
    
    
    
    Exercised
    
    
    (14
    )
    
    
    2.88Cancelled/Forfeited
    
    
    (4
    )
    
    
    2.88Outstanding as of September 26, 2009
    
    
    45
    
    
    
    4.84
    
    
    
    1
    
    
    $
    46Exercisable as of September 26, 2009
    
    
    45
    
    
    
    4.84
    
    
    
    1
    
    
    
    46
  9




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NOTE 4  SEGMENT INFORMATION
  Second Quarter Ended
    
    
    Six Months EndedSeptember 26,
    
    
    September 27,
    
    
    September 26
    
    
    September 272009
    
    
    2008
    
    
    2009
    
    
    2008Net Revenue:Product Sales
    
    $
    11,970
    
    
    $
    12,959
    
    
    $
    23,238
    
    
    $
    25,270Service Revenue
    
    
    6,525
    
    
    
    5,651
    
    
    
    12,465
    
    
    
    11,193Total
    
    
    18,495
    
    
    
    18,610
    
    
    
    35,703
    
    
    
    36,463Gross Profit:Product
    
    
    2,662
    
    
    
    3,365
    
    
    
    5,308
    
    
    
    6,727Service
    
    
    1,468
    
    
    
    1,170
    
    
    
    2,665
    
    
    
    2,333Total
    
    
    4,130
    
    
    
    4,535
    
    
    
    7,973
    
    
    
    9,060Operating Expenses:Product (1)
    
    
    2,298
    
    
    
    2,294
    
    
    
    4,648
    
    
    
    4,708Service (1)
    
    
    1,496
    
    
    
    1,502
    
    
    
    3,105
    
    
    
    3,225Total
    
    
    3,794
    
    
    
    3,796
    
    
    
    7,753
    
    
    
    7,933Operating Income
    
    
    336
    
    
    
    739
    
    
    
    220
    
    
    
    1,127Unallocated Amounts:Total Other Expense, net
    
    
    28
    
    
    
    32
    
    
    
    57
    
    
    
    39Provision for Income Taxes
    
    
    120
    
    
    
    277
    
    
    
    64
    
    
    
    430Total
    
    
    148
    
    
    
    309
    
    
    
    121
    
    
    
    469Net Income
    
    $
    188
    
    
    $
    430
    
    
    $
    99
    
    
    $
    658
 
 (1)
    
    Operating expense allocations between segments were based on actual amounts, a percentage of revenues, headcount, and
managements estimates. NOTE 5  ACQUISITION
   10




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(Unaudited)
    
    
    (Unaudited)Second Quarter
    
    
    Six MonthsEnded
    
    
    EndedSeptember 27,
    
    
    September 27,2008
    
    
    2008Net Revenue
    
    $
    19,614
    
    
    $
    39,613Net Income
    
    $
    404
    
    
    $
    514Basic Earnings Per Share
    
    $
    0.06
    
    
    $
    0.07Diluted Earnings Per Share
    
    $
    0.05
    
    
    $
    0.07
 11




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Statements.
 CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 Accounts Receivable:
 Stock-Based Compensation.
   Revenue Recognition.
 Reclassification of Amounts:
 12




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RESULTS OF OPERATIONS
  (Unaudited)
    
    (Unaudited)Second Quarter Ended
    
    Six Months EndedSeptember 26,
    
    September 27,
    
    September 26,
    
    September 27,2009
    
    2008
    
    2009
    
    2008Gross Profit Percentage:Product Gross Profit
    
    
    22.2
    %
    
    
    26.0
    %
    
    
    22.8
    %
    
    
    26.6
    %Service Gross Profit
    
    
    22.5
    %
    
    
    20.7
    %
    
    
    21.4
    %
    
    
    20.8
    %Total Gross Profit
    
    
    22.3
    %
    
    
    24.4
    %
    
    
    22.3
    %
    
    
    24.8
    %As a Percentage of Total Net Revenue:Product Sales
    
    
    64.7
    %
    
    
    69.6
    %
    
    
    65.1
    %
    
    
    69.3
    %Service Revenue
    
    
    35.3
    %
    
    
    30.4
    %
    
    
    34.9
    %
    
    
    30.7
    %Total Net Revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Selling, Marketing and Warehouse Expenses
    
    
    13.2
    %
    
    
    11.5
    %
    
    
    14.0
    %
    
    
    13.0
    %Administrative Expenses
    
    
    7.3
    %
    
    
    8.9
    %
    
    
    7.7
    %
    
    
    8.7
    %Total Operating Expenses
    
    
    20.5
    %
    
    
    20.4
    %
    
    
    21.7
    %
    
    
    21.7
    %Operating Income
    
    
    1.8
    %
    
    
    4.0
    %
    
    
    0.6
    %
    
    
    3.1
    %Interest Expense
    
    
    0.1
    %
    
    
    0.2
    %
    
    
    0.1
    %
    
    
    0.1
    %Total Other Expense, net
    
    
    0.1
    %
    
    
    0.0
    %
    
    
    0.1
    %
    
    
    0.0
    %Total Other Expense
    
    
    0.2
    %
    
    
    0.2
    %
    
    
    0.2
    %
    
    
    0.1
    %Income Before Income Taxes
    
    
    1.6
    %
    
    
    3.8
    %
    
    
    0.4
    %
    
    
    3.0
    %Provision for Income Taxes
    
    
    0.6
    %
    
    
    1.5
    %
    
    
    0.2
    %
    
    
    1.2
    %Net Income
    
    
    1.0
    %
    
    
    2.3
    %
    
    
    0.2
    %
    
    
    1.8
    %
 13




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SECOND QUARTER ENDED SEPTEMBER 26, 2009 COMPARED TO SECOND QUARTER ENDED SEPTEMBER 27, 2008 (dollars in thousands):
 Revenue:
 Second Quarter EndedSeptember 26,
    
    
    September 27,2009
    
    
    2008Net Revenue:Product Sales
    
    $
    11,970
    
    
    $
    12,959Service Revenue
    
    
    6,525
    
    
    
    5,651Total
    
    $
    18,495
    
    
    $
    18,610
   FY 2010
    
    
    FY 2009Q2
    
    Q1
    
    
    Q4
    
    Q3
    
    Q2
    
    Q1Product Sales (Decline) Growth
    
    
    (7.6
    %)
    
    
    (8.5
    %)
    
    
    
    (1.4
    %)
    
    
    7.6
    %
    
    
    15.5
    %
    
    
    12.7
    %
  FY 2010
    
    
    FY 2009Q2
    
    Q1
    
    
    Q4
    
    Q3
    
    Q2
    
    Q1Product Sales Per Business Day
    
    $
    190
    
    
    $
    176
    
    
    
    $
    191
    
    
    $
    226
    
    
    $
    206
    
    
    $
    192
  FY 2010
    
    
    FY 2009Q2
    
    Q1
    
    
    Q4
    
    Q3
    
    Q2
    
    Q1Percent of Net Sales:Direct
    
    
    84.2
    %
    
    
    80.5
    %
    
    
    
    83.0
    %
    
    
    79.7
    %
    
    
    77.6
    %
    
    
    81.8
    %Reseller
    
    
    14.4
    %
    
    
    18.0
    %
    
    
    
    15.6
    %
    
    
    19.1
    %
    
    
    20.8
    %
    
    
    16.6
    %Freight
Billed to Customers
    
    
    1.4
    %
    
    
    1.5
    %
    
    
    
    1.4
    %
    
    
    1.2
    %
    
    
    1.6
    %
    
    
    1.6
    %100.0
    %
    
    
    100.0
    %
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  14




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##### Table of Contents



FY 2010
    
    
    FY 2009Q2
    
    Q1
    
    
    Q4
    
    Q3
    
    Q2
    
    Q1Total Pending Product Shipments
    
    $
    1,904
    
    
    $
    1,445
    
    
    
    $
    1,189
    
    
    $
    1,701
    
    
    $
    1,398
    
    
    $
    1,366% of Pending Product Shipments
that are Backorders
    
    
    78.9
    %
    
    
    72.2
    %
    
    
    
    81.0
    %
    
    
    84.1
    %
    
    
    70.7
    %
    
    
    74.7
    %
  FY 2010
    
    
    FY 2009Q2
    
    Q1
    
    
    Q4
    
    Q3
    
    Q2
    
    Q1Service Revenue
Growth (Decline)
    
    
    15.5
    %
    
    
    7.2
    %
    
    
    
    (0.9
    %)
    
    
    10.3
    %
    
    
    4.5
    %
    
    
    5.3
    %
  FY 2010
    
    
    FY 2009Q2
    
    Q1
    
    
    Q4
    
    Q3
    
    Q2
    
    Q1Percent of Service Revenue:Depot/Onsite
    
    
    77.3
    %
    
    
    79.3
    %
    
    
    
    81.2
    %
    
    
    78.5
    %
    
    
    78.6
    %
    
    
    80.8
    %Outsourced
    
    
    20.2
    %
    
    
    18.2
    %
    
    
    
    15.8
    %
    
    
    18.2
    %
    
    
    18.8
    %
    
    
    16.4
    %Freight Billed to
Customers
    
    
    2.5
    %
    
    
    2.5
    %
    
    
    
    3.0
    %
    
    
    3.3
    %
    
    
    2.6
    %
    
    
    2.8
    %100.0
    %
    
    
    100.0
    %
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 Gross Profit:
 Second Quarter EndedSeptember 26,
    
    
    September 27,2009
    
    
    2008Gross Profit:Product
    
    $
    2,662
    
    
    $
    3,365Service
    
    
    1,468
    
    
    
    1,170Total
    
    $
    4,130
    
    
    $
    4,535
   15




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##### Table of Contents



FY 2010
    
    
    
    FY 2009Q2
    
    
    Q1
    
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1Channel Gross Profit %  Direct (1)
    
    
    22.8
    %
    
    
    23.8
    %
    
    
    
    23.6
    %
    
    
    23.9
    %
    
    
    25.8
    %
    
    
    25.2
    %Channel Gross Profit %  Reseller (1)
    
    
    14.7
    %
    
    
    17.4
    %
    
    
    
    18.7
    %
    
    
    18.1
    %
    
    
    18.2
    %
    
    
    17.5
    %Channel Gross Profit %  Combined (2)
    
    
    21.6
    %
    
    
    22.6
    %
    
    
    
    22.8
    %
    
    
    22.8
    %
    
    
    24.2
    %
    
    
    23.9
    %Other Items % (3)
    
    
    0.6
    %
    
    
    0.9
    %
    
    
    
    1.2
    %
    
    
    1.6
    %
    
    
    1.8
    %
    
    
    3.4
    %Total Product Gross Profit %
    
    
    22.2
    %
    
    
    23.5
    %
    
    
    
    24.0
    %
    
    
    24.4
    %
    
    
    26.0
    %
    
    
    27.3
    %
 
 (1)
    
    Channel gross profit % calculated as net sales less purchase costs divided by net sales.(2)
    
    Represents aggregate gross profit % for direct and reseller channels, calculated as net sales less purchase cost divided by net sales.(3)
    
    Includes vendor rebates, cooperative advertising income, freight billed to customers, freight expenses, and direct shipping costs.  FY 2010
    
    
    FY 2009Q2
    
    Q1
    
    
    Q4
    
    Q3
    
    Q2
    
    Q1Service Gross
Profit Dollar
Growth (Decline)
    
    
    25.5
    %
    
    
    2.9
    %
    
    
    
    5.7
    %
    
    
    16.8
    %
    
    
    4.8
    %
    
    
    (0.3
    %)
 Operating Expenses:
 Second Quarter EndedSeptember 26,
    
    
    September 27,2009
    
    
    2008Operating Expenses:Selling, Marketing and Warehouse
    
    $
    2,449
    
    
    $
    2,148Administrative
    
    
    1,345
    
    
    
    1,648Total
    
    $
    3,794
    
    
    $
    3,796
  16




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##### Table of Contents



Taxes:
 Second Quarter EndedSeptember 26,
    
    September 27,2009
    
    2008Provision for Income Taxes
    
    $
    120
    
    
    $
    277
  SIX MONTHS ENDED SEPTEMBER 26, 2009 COMPARED TO SIX MONTHS ENDED SEPTEMBER 27, 2008  (dollars in thousands):
 Revenue:
 Six Months EndedSeptember 26,
    
    
    September 27,2009
    
    
    2008Net Revenue:Product Sales
    
    $
    23,238
    
    
    $
    25,270Service Revenue
    
    
    12,465
    
    
    
    11,193Total
    
    $
    35,703
    
    
    $
    36,463
    Gross Profit:
 Six Months EndedSeptember 26,
    
    
    September 27,2009
    
    
    2008Gross Profit:Product
    
    $
    5,308
    
    
    $
    6,727Service
    
    
    2,665
    
    
    
    2,333Total
    
    $
    7,973
    
    
    $
    9,060
   17




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##### Table of Contents



Operating Expenses:
 Six Months EndedSeptember 26,
    
    
    September 27,2009
    
    
    2008Operating Expenses:Selling, Marketing and Warehouse
    
    $
    5,008
    
    
    $
    4,743Administrative
    
    
    2,745
    
    
    
    3,190Total
    
    $
    7,753
    
    
    $
    7,933
  Taxes:
 Six Months EndedSeptember 26,
    
    September 27,2009
    
    2008Provision for Income Taxes
    
    $
    64
    
    
    $
    430
  18




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
  Cash Flows .
 Six Months EndedSeptember 26,
    
    September 27,2009
    
    2008Cash Provided by (Used in):Operating Activities
    
    $
    3,507
    
    
    $
    1,003Investing Activities
    
    
    (1,696
    )
    
    
    (5,212
    )Financing Activities
    
    
    (1,848
    )
    
    
    4,186
 Operating Activities
 
    
    Inventory/Accounts Payable: Inventory balances at September 26, 2009 and September
27, 2008 were similar to the respective ending balances of the prior fiscal year-end
and have not provided any significant changes in working capital in either year.
However, the timing of inventory receipts has impacted the accounts payable balance and
is the primary reason for the $2.3 million increase in accounts payable in the first
six months of fiscal year 2010, compared to a $0.3 million decrease in the first six
months of fiscal year 2009. In general, our accounts payable balance increases or
decreases as a result of timing of vendor payments for inventory receipts.
    
    Receivables: We continue to generate positive operating cash flows and maintain
strong collections on our accounts receivable.
 September 26,
    
    September 27,2009
    
    2008Net Sales, for the last two fiscal months
    
    $
    13,172
    
    
    $
    13,517Accounts Receivable, net
    
    $
    8,279
    
    
    $
    9,105Days Sales Outstanding
    
    
    38
    
    
    
    40
 
    
    Accrued Compensation and Other Liabilities: Lower payments for employee profit
sharing and performance-based management bonuses contributed to the $0.7 million
decline in cash used to pay accrued compensation and other liabilities during the first
six months of fiscal year 2010 compared with the first six months of fiscal year 2009.
 Investing Activities
 Financing Activities
 19




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##### Table of Contents



OUTLOOK
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 INTEREST RATES
   FOREIGN CURRENCY
   
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures.
 Changes in Internal Controls over Financial Reporting.
 20




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Proposal 1
  Nominees
    
    Votes For
    
    Votes WithheldFrancis R. Bradley
    
    
    7,060,958
    
    
    
    16,144Alan H. Resnick
    
    
    7,057,558
    
    
    
    19,544Carl E. Sassano
    
    
    7,057,363
    
    
    
    19,739
  Proposal 2
  Votes For:
    
    
    7,056,491Votes Against:
    
    
    16,453Votes Abstained:
    
    
    4,158
 
 ITEM 6. EXHIBITS
  21




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##### Table of Contents



SIGNATURES
  TRANSCAT, INC.Date:  November 10, 2009
    /s/ Charles P. HaddedCharles P. HadeedChief Executive Officer, President and Chief Operating Officer Date:  November 10, 2009
    /s/ John J. ZimmerJohn J. ZimmerVice President of Finance and Chief Financial Officer 22




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##### Table of Contents



INDEX TO EXHIBITS
 (31)
    
    Rule 13a-14(a)/15d-14(a) Certifications
 31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 (32)
    
    Section 1350 Certifications
 32.1
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 23