##### 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:
December 25, 2010
 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
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 35 Vantage Point Drive, Rochester, New York 14624
 (585) 3527777
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



Page(s)PART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Consolidated Financial Statements:Statements of Operations and Comprehensive Income for the Third Quarter and Nine
Months Ended December 25, 2010 and December 26, 2009
    
    3Balance Sheets as of December 25, 2010 and March 27, 2010
    
    4Statements of Cash Flows for the Nine Months Ended December 25, 2010 and December
26, 2009
    
    5Statement of Shareholders Equity for the Nine Months Ended December 25, 2010
    
    6Notes to Consolidated Financial Statements
    
    711Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    1119Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    19Item 4.
    
    Controls and Procedures
    
    19PART II.
    
    OTHER INFORMATIONItem 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    20Item 6.
    
    Exhibits
    
    20SIGNATURES
    
    21INDEX TO EXHIBITS
    
    22EX-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)Third Quarter Ended
    
    
    Nine Months EndedDecember 25,
    
    
    December 26,
    
    
    December 25,
    
    
    December 26,2010
    
    
    2009
    
    
    2010
    
    
    2009Product Sales
    
    $
    16,562
    
    
    $
    15,186
    
    
    $
    43,009
    
    
    $
    38,424Service Revenue
    
    
    7,319
    
    
    
    6,637
    
    
    
    22,420
    
    
    
    19,102Net Revenue
    
    
    23,881
    
    
    
    21,823
    
    
    
    65,429
    
    
    
    57,526Cost of Products Sold
    
    
    12,119
    
    
    
    11,843
    
    
    
    31,863
    
    
    
    29,769Cost of Services Sold
    
    
    5,710
    
    
    
    5,174
    
    
    
    17,198
    
    
    
    14,894Total Cost of Products
and Services Sold
    
    
    17,829
    
    
    
    17,017
    
    
    
    49,061
    
    
    
    44,663Gross Profit
    
    
    6,052
    
    
    
    4,806
    
    
    
    16,368
    
    
    
    12,863Selling, Marketing and Warehouse Expenses
    
    
    2,999
    
    
    
    2,564
    
    
    
    8,577
    
    
    
    7,531Administrative Expenses
    
    
    1,613
    
    
    
    1,451
    
    
    
    4,993
    
    
    
    4,321Total Operating Expenses
    
    
    4,612
    
    
    
    4,015
    
    
    
    13,570
    
    
    
    11,852Operating Income
    
    
    1,440
    
    
    
    791
    
    
    
    2,798
    
    
    
    1,011Interest Expense
    
    
    13
    
    
    
    9
    
    
    
    41
    
    
    
    34Other Expense, net
    
    
    1
    
    
    
    7
    
    
    
    13
    
    
    
    39Total Other Expense
    
    
    14
    
    
    
    16
    
    
    
    54
    
    
    
    73Income Before Income Taxes
    
    
    1,426
    
    
    
    775
    
    
    
    2,744
    
    
    
    938Provision for Income Taxes
    
    
    529
    
    
    
    292
    
    
    
    1,042
    
    
    
    356Net Income
    
    
    897
    
    
    
    483
    
    
    
    1,702
    
    
    
    582Other Comprehensive Income
    
    
    13
    
    
    
    26
    
    
    
    23
    
    
    
    98Comprehensive Income
    
    $
    910
    
    
    $
    509
    
    
    $
    1,725
    
    
    $
    680Basic Earnings Per Share
    
    $
    0.12
    
    
    $
    0.07
    
    
    $
    0.23
    
    
    $
    0.08Average Shares Outstanding
    
    
    7,307
    
    
    
    7,343
    
    
    
    7,299
    
    
    
    7,373Diluted Earnings Per Share
    
    $
    0.12
    
    
    $
    0.06
    
    
    $
    0.23
    
    
    $
    0.08Average Shares Outstanding
    
    
    7,553
    
    
    
    7,560
    
    
    
    7,543
    
    
    
    7,602
  3




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TRANSCAT, INC.
 
 CONSOLIDATED BALANCE SHEETS
  (Unaudited)December 25,
    
    
    March 27,2010
    
    
    2010ASSETSCurrent Assets:Cash
    
    $
    18
    
    
    $
    123Accounts Receivable, less allowance for doubtful accounts of $101
and $82 as of December 25, 2010 and March 27, 2010, respectively
    
    
    10,387
    
    
    
    11,439Other Receivables
    
    
    1,357
    
    
    
    418Inventory, net
    
    
    7,386
    
    
    
    5,906Prepaid Expenses and Other Current Assets
    
    
    1,061
    
    
    
    915Deferred Tax Asset
    
    
    648
    
    
    
    566Total Current Assets
    
    
    20,857
    
    
    
    19,367Property and Equipment, net
    
    
    4,176
    
    
    
    4,163Goodwill
    
    
    10,334
    
    
    
    10,038Intangible Assets, net
    
    
    1,237
    
    
    
    1,234Deferred Tax Asset
    
    
    453
    
    
    
    533Other Assets
    
    
    393
    
    
    
    378Total Assets
    
    $
    37,450
    
    
    $
    35,713LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts Payable
    
    $
    9,252
    
    
    $
    8,798Accrued Compensation and Other Liabilities
    
    
    3,276
    
    
    
    3,171Income Taxes Payable
    
    
    374
    
    
    
    251Total Current Liabilities
    
    
    12,902
    
    
    
    12,220Long-Term Debt
    
    
    1,674
    
    
    
    2,532Other Liabilities
    
    
    807
    
    
    
    704Total Liabilities
    
    
    15,383
    
    
    
    15,456Shareholders Equity:Common Stock, par value $0.50 per share, 30,000,000 shares authorized;
7,750,685 and 7,698,450 shares issued as of December 25, 2010 and
March 27, 2010, respectively; 7,251,903 and 7,279,668 shares
outstanding as of December 25, 2010 and March 27, 2010, respectively
    
    
    3,875
    
    
    
    3,849Capital in Excess of Par Value
    
    
    9,975
    
    
    
    9,357Accumulated Other Comprehensive Income
    
    
    405
    
    
    
    382Retained Earnings
    
    
    10,006
    
    
    
    8,304Less: Treasury Stock, at cost, 498,782 and 418,782 shares as of
December 25, 2010 and March 27, 2010, respectively
    
    
    (2,194
    )
    
    
    (1,635
    )Total Shareholders Equity
    
    
    22,067
    
    
    
    20,257Total Liabilities and Shareholders Equity
    
    $
    37,450
    
    
    $
    35,713
  4




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TRANSCAT, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  (Unaudited)Nine Months EndedDecember 25,
    
    
    December 26,2010
    
    
    2009Cash Flows from Operating Activities:Net Income
    
    $
    1,702
    
    
    $
    582Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:Deferred Income Taxes
    
    
    1
    
    
    
    (86
    )Depreciation and Amortization
    
    
    1,622
    
    
    
    1,524Provision for Accounts Receivable and Inventory Reserves
    
    
    88
    
    
    
    52Stock-Based Compensation Expense
    
    
    398
    
    
    
    530Change in Contingent Consideration
    
    
    (55
    )
    
    
    Changes in Assets and Liabilities:Accounts Receivable and Other Receivables
    
    
    73
    
    
    
    (1,143
    )Inventory
    
    
    (1,517
    )
    
    
    (706
    )Prepaid Expenses and Other Assets
    
    
    (519
    )
    
    
    (833
    )Accounts Payable
    
    
    454
    
    
    
    3,526Accrued Compensation and Other Liabilities
    
    
    332
    
    
    
    645Income Taxes Payable
    
    
    113
    
    
    
    (119
    )Net Cash Provided by Operating Activities
    
    
    2,692
    
    
    
    3,972Cash Flows from Investing Activities:Purchase of Property and Equipment
    
    
    (1,081
    )
    
    
    (941
    )Payments of Contingent Consideration
    
    
    
    
    
    
    (1,093
    )Business Acquisition
    
    
    (491
    )
    
    
    Net Cash Used in Investing Activities
    
    
    (1,572
    )
    
    
    (2,034
    )Cash Flows from Financing Activities:Revolving Line of Credit, net
    
    
    (842
    )
    
    
    (1,499
    )Payments on Other Debt Obligations
    
    
    (16
    )
    
    
    (20
    )Payment of Contingent Consideration
    
    
    (52
    )
    
    
    Issuance of Common Stock
    
    
    236
    
    
    
    169Repurchase of Common Stock
    
    
    (559
    )
    
    
    (647
    )Excess Tax Benefits Related to Stock-Based Compensation
    
    
    10
    
    
    
    9Net Cash Used in by Financing Activities
    
    
    (1,223
    )
    
    
    (1,988
    )Effect of Exchange Rate Changes on Cash
    
    
    (2
    )
    
    
    16Net Decrease in Cash
    
    
    (105
    )
    
    
    (34
    )Cash at Beginning of Period
    
    
    123
    
    
    
    59Cash at End of Period
    
    $
    18
    
    
    $
    25Supplemental Disclosures of Cash Flow Activity:Cash paid during the period for:Interest
    
    $
    43
    
    
    $
    49Income Taxes, net
    
    $
    890
    
    
    $
    559
  5




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TRANSCAT, INC.
 
 CONSOLIDATED STATEMENT 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 27, 2010
    
    
    7,698
    
    
    $
    3,849
    
    
    $
    9,357
    
    
    $
    382
    
    
    $
    8,304
    
    
    
    419
    
    
    $
    (1,635
    )
    
    $
    20,257Issuance of Common Stock
    
    
    49
    
    
    
    24
    
    
    
    212
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    236Repurchase of Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    (559
    )
    
    
    (559
    )Stock-Based Compensation
    
    
    
    
    
    
    
    
    
    
    376
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    376Restricted Stock
    
    
    3
    
    
    
    2
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22Tax Benefit from Stock-Based Compensation
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10Comprehensive Income:Currency Translation
Adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Unrecognized Prior Service
Cost, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,702
    
    
    
    
    
    
    
    
    
    
    
    1,702Balance as of December 25, 2010
    
    
    7,750
    
    
    $
    3,875
    
    
    $
    9,975
    
    
    $
    405
    
    
    $
    10,006
    
    
    
    499
    
    
    $
    (2,194
    )
    
    $
    22,067
  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:
  Third Quarter Ended
    
    Nine Months EndedDecember 25,
    
    December 26,
    
    December 25,
    
    December 26,2010
    
    2009
    
    2010
    
    2009Average Shares Outstanding  Basic
    
    
    7,307
    
    
    
    7,343
    
    
    
    7,299
    
    
    
    7,373Effect of Dilutive Common Stock Equivalents
    
    
    246
    
    
    
    217
    
    
    
    244
    
    
    
    229Average Shares Outstanding  Diluted
    
    
    7,553
    
    
    
    7,560
    
    
    
    7,543
    
    
    
    7,602Anti-dilutive Common Stock Equivalents
    
    
    594
    
    
    
    623
    
    
    
    596
    
    
    
    612
 Shareholders Equity:
 Subsequent Events:
   Reclassification of Amounts:
 NOTE 2  DEBT
 Description:
 Interest and Commitment Fees: 1 2
 Covenants:
 Other Terms:
 8




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NOTE 3  STOCK-BASED COMPENSATION
   Restricted Stock:
  Stock Options:
  WeightedAverage
    
    
    Weighted AverageNumber
    
    
    Exercise
    
    
    Remaining
    
    
    AggregateOf
    
    
    Price Per
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Share
    
    
    Term (in years)
    
    
    ValueOutstanding as of March 27, 2010
    
    
    674
    
    
    $
    5.72Granted
    
    
    
    
    
    
    Exercised
    
    
    (12
    )
    
    
    2.43Cancelled/Forfeited
    
    
    (4
    )
    
    
    7.17Outstanding as of December 25, 2010
    
    
    658
    
    
    
    5.77
    
    
    
    6
    
    
    $
    1,088Exercisable as of December 25, 2010
    
    
    507
    
    
    
    5.29
    
    
    
    5
    
    
    
    1,059
   9




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Warrants:
 WeightedAverageNumber
    
    
    Exercise
    
    
    Remaining

    
    AggregateOf
    
    
    Price Per
    
    
    Contractual

    
    IntrinsicShares
    
    
    Share
    
    
    Term

    
    ValueOutstanding as of March 27, 2010
    
    
    41
    
    
    $
    4.89Granted
    
    
    
    
    
    
    Exercised
    
    
    (20
    )
    
    
    4.26Cancelled/Forfeited
    
    
    (4
    )
    
    
    4.26Outstanding as of December 25, 2010
    
    
    17
    
    
    
    5.80
    
    
    Less than 1 year
    
    $
    23Exercisable as of December 25, 2010
    
    
    17
    
    
    
    5.80
    
    
    Less than 1 year
    
    
    23
  NOTE 4  SEGMENT INFORMATION
  Third Quarter Ended
    
    
    Nine Months EndedDecember 25,
    
    
    December 26,
    
    
    December 25,
    
    
    December 26,2010
    
    
    2009
    
    
    2010
    
    
    2009Net Revenue:Product Sales
    
    $
    16,562
    
    
    $
    15,186
    
    
    $
    43,009
    
    
    $
    38,424Service Revenue
    
    
    7,319
    
    
    
    6,637
    
    
    
    22,420
    
    
    
    19,102Total
    
    
    23,881
    
    
    
    21,823
    
    
    
    65,429
    
    
    
    57,526Gross Profit:Product
    
    
    4,443
    
    
    
    3,343
    
    
    
    11,146
    
    
    
    8,655Service
    
    
    1,609
    
    
    
    1,463
    
    
    
    5,222
    
    
    
    4,208Total
    
    
    6,052
    
    
    
    4,806
    
    
    
    16,368
    
    
    
    12,863Operating Expenses:Product (1)
    
    
    2,826
    
    
    
    2,457
    
    
    
    7,997
    
    
    
    7,114Service (1)
    
    
    1,786
    
    
    
    1,558
    
    
    
    5,573
    
    
    
    4,738Total
    
    
    4,612
    
    
    
    4,015
    
    
    
    13,570
    
    
    
    11,852Operating Income
    
    
    1,440
    
    
    
    791
    
    
    
    2,798
    
    
    
    1,011Unallocated Amounts:Total Other Expense, net
    
    
    14
    
    
    
    16
    
    
    
    54
    
    
    
    73Provision for Income Taxes
    
    
    529
    
    
    
    292
    
    
    
    1,042
    
    
    
    356Total
    
    
    543
    
    
    
    308
    
    
    
    1,096
    
    
    
    429Net Income
    
    $
    897
    
    
    $
    483
    
    
    $
    1,702
    
    
    $
    582
 
 (1)
    
    Operating expense allocations between segments were based on actual
amounts, a percentage of revenues, headcount, and managements estimates. 10




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NOTE 5  ACQUISITIONS
    
 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:
 11




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Revenue Recognition:
 Reclassification of Amounts:
 RESULTS OF OPERATIONS
  (Unaudited)
    
    
    (Unaudited)Third Quarter Ended
    
    
    Nine Months EndedDecember 25,
    
    
    December 26,
    
    
    December 25,
    
    
    December 26,2010
    
    
    2009
    
    
    2010
    
    
    2009Gross Profit Percentage:Product Gross Profit
    
    
    26.8
    %
    
    
    22.0
    %
    
    
    25.9
    %
    
    
    22.5
    %Service Gross Profit
    
    
    22.0
    %
    
    
    22.0
    %
    
    
    23.3
    %
    
    
    22.0
    %Total Gross Profit
    
    
    25.3
    %
    
    
    22.0
    %
    
    
    25.0
    %
    
    
    22.4
    %As a Percentage of Total Net Revenue:Product Sales
    
    
    69.4
    %
    
    
    69.6
    %
    
    
    65.7
    %
    
    
    66.8
    %Service Revenue
    
    
    30.6
    %
    
    
    30.4
    %
    
    
    34.3
    %
    
    
    33.2
    %Total Net Revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Selling, Marketing and Warehouse Expenses
    
    
    12.6
    %
    
    
    11.8
    %
    
    
    13.1
    %
    
    
    13.2
    %Administrative Expenses
    
    
    6.8
    %
    
    
    6.6
    %
    
    
    7.6
    %
    
    
    7.5
    %Total Operating Expenses
    
    
    19.4
    %
    
    
    18.4
    %
    
    
    20.7
    %
    
    
    20.7
    %Operating Income
    
    
    5.9
    %
    
    
    3.6
    %
    
    
    4.3
    %
    
    
    1.7
    %Interest Expense
    
    
    0.1
    %
    
    
    0.0
    %
    
    
    0.1
    %
    
    
    0.1
    %Total Other Expense, net
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.1
    %Total Other Expense
    
    
    0.1
    %
    
    
    0.0
    %
    
    
    0.1
    %
    
    
    0.2
    %Income Before Income Taxes
    
    
    5.8
    %
    
    
    3.6
    %
    
    
    4.2
    %
    
    
    1.5
    %Provision for Income Taxes
    
    
    2.2
    %
    
    
    1.3
    %
    
    
    1.6
    %
    
    
    0.6
    %Net Income
    
    
    3.6
    %
    
    
    2.3
    %
    
    
    2.6
    %
    
    
    0.9
    %
 12




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##### Table of Contents



THIRD QUARTER ENDED DECEMBER 25, 2010 COMPARED TO THIRD QUARTER ENDED DECEMBER 26, 2009  (dollars in thousands):
 Revenue:
 Third Quarter EndedDecember 25,
    
    
    December 26,2010
    
    
    2009Net Revenue:Product Sales
    
    $
    16,562
    
    
    $
    15,186Service Revenue
    
    
    7,319
    
    
    
    6,637Total
    
    $
    23,881
    
    
    $
    21,823
   FY 2011
    
    
    FY 2010Q3
    
    Q2
    
    Q1
    
    
    Q4
    
    Q3
    
    Q2
    
    Q1Product Sales
Growth (Decline)
    
    
    9.1
    %
    
    
    12.5
    %
    
    
    15.1
    %
    
    
    
    20.5
    %
    
    
    8.5
    %
    
    
    (7.6
    %)
    
    
    (8.5
    %)
  FY 2011
    
    
    FY 2010Q3
    
    Q2
    
    Q1
    
    
    Q4
    
    Q3
    
    Q2
    
    Q1Product Sales Per Business Day
    
    $
    267
    
    
    $
    214
    
    
    $
    203
    
    
    
    $
    230
    
    
    $
    249
    
    
    $
    190
    
    
    $
    176
   FY 2011
    
    
    
    FY 2010Q3
    
    
    Q2
    
    
    Q1
    
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1Percent of Net Sales:Direct
    
    
    75.2
    %
    
    
    73.5
    %
    
    
    74.3
    %
    
    
    
    75.2
    %
    
    
    70.8
    %
    
    
    77.5
    %
    
    
    75.2
    %Reseller
    
    
    23.3
    %
    
    
    24.9
    %
    
    
    24.1
    %
    
    
    
    23.2
    %
    
    
    27.8
    %
    
    
    21.1
    %
    
    
    23.3
    %Freight Billed to Customers
    
    
    1.5
    %
    
    
    1.6
    %
    
    
    1.6
    %
    
    
    
    1.6
    %
    
    
    1.4
    %
    
    
    1.4
    %
    
    
    1.5
    %100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 13




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##### Table of Contents



FY 2011
    
    
    FY 2010Q3
    
    Q2
    
    Q1
    
    
    Q4
    
    Q3
    
    Q2
    
    Q1Total Pending Product Shipments
    
    $
    2,528
    
    
    $
    1,962
    
    
    $
    1,911
    
    
    
    $
    1,774
    
    
    $
    2,351
    
    
    $
    1,904
    
    
    $
    1,445% of Pending Product Shipments
that are Backorders
    
    
    85.4
    %
    
    
    77.6
    %
    
    
    78.6
    %
    
    
    
    90.6
    %
    
    
    82.8
    %
    
    
    78.9
    %
    
    
    72.2
    %
  FY 2011
    
    
    FY 2010Q3
    
    Q2
    
    Q1
    
    
    Q4
    
    Q3
    
    Q2
    
    Q1Service Revenue Growth
    
    
    10.3
    %
    
    
    14.1
    %
    
    
    28.8
    %
    
    
    
    30.6
    %
    
    
    10.7
    %
    
    
    15.5
    %
    
    
    7.2
    %
  FY 2011
    
    
    
    FY 2010Q3
    
    
    Q2
    
    
    Q1
    
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1Percent of Service Revenue:Depot/Onsite
    
    
    77.6
    %
    
    
    77.9
    %
    
    
    74.4
    %
    
    
    
    75.9
    %
    
    
    73.5
    %
    
    
    77.3
    %
    
    
    79.3
    %Outsourced
    
    
    20.0
    %
    
    
    19.8
    %
    
    
    23.3
    %
    
    
    
    21.6
    %
    
    
    24.0
    %
    
    
    20.2
    %
    
    
    18.2
    %Freight Billed to Customers
    
    
    2.4
    %
    
    
    2.3
    %
    
    
    2.3
    %
    
    
    
    2.5
    %
    
    
    2.5
    %
    
    
    2.5
    %
    
    
    2.5
    %100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 14




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##### Table of Contents



Gross Profit:
 Third Quarter EndedDecember 25,
    
    
    December 26,2010
    
    
    2009Gross Profit:Product
    
    $
    4,443
    
    
    $
    3,343Service
    
    
    1,609
    
    
    
    1,463Total
    
    $
    6,052
    
    
    $
    4,806
     FY 2011
    
    
    
    FY 2010Q3
    
    
    Q2
    
    
    Q1
    
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1Channel Gross Profit %  Direct (1)
    
    
    25.2
    %
    
    
    25.5
    %
    
    
    25.0
    %
    
    
    
    24.7
    %
    
    
    23.1
    %
    
    
    23.2
    %
    
    
    24.3
    %Channel Gross Profit %  Reseller (1)
    
    
    16.2
    %
    
    
    16.6
    %
    
    
    16.9
    %
    
    
    
    16.0
    %
    
    
    15.0
    %
    
    
    15.6
    %
    
    
    17.0
    %Channel Gross Profit %  Combined (2)
    
    
    23.1
    %
    
    
    23.3
    %
    
    
    23.0
    %
    
    
    
    22.6
    %
    
    
    20.8
    %
    
    
    21.6
    %
    
    
    22.6
    %Other Items % (3)
    
    
    3.7
    %
    
    
    0.5
    %
    
    
    4.0
    %
    
    
    
    3.1
    %
    
    
    1.2
    %
    
    
    0.7
    %
    
    
    0.9
    %Total Product Gross Profit %
    
    
    26.8
    %
    
    
    23.8
    %
    
    
    27.0
    %
    
    
    
    25.7
    %
    
    
    22.0
    %
    
    
    22.3
    %
    
    
    23.5
    %
 
 (1)
    
    Channel gross profit % is 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 costs divided
by net sales.(3)
    
    Includes vendor rebates, cooperative advertising income, freight billed to customers, freight expenses, and direct
shipping costs.  FY 2011
    
    
    FY 2010Q3
    
    Q2
    
    Q1
    
    
    Q4
    
    Q3
    
    Q2
    
    Q1Service Gross Profit Dollar Growth
    
    
    10.0
    %
    
    
    16.4
    %
    
    
    50.1
    %
    
    
    
    25.4
    %
    
    
    15.0
    %
    
    
    25.5
    %
    
    
    2.9
    %
 15




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##### Table of Contents



Operating Expenses:
 Third Quarter EndedDecember 25,
    
    
    December 26,2010
    
    
    2009Operating Expenses:Selling, Marketing and Warehouse
    
    $
    2,999
    
    
    $
    2,564Administrative
    
    
    1,613
    
    
    
    1,451Total
    
    $
    4,612
    
    
    $
    4,015
  Taxes:
 Third Quarter EndedDecember 25,
    
    December 26,2010
    
    2009Provision for Income Taxes
    
    $
    529
    
    
    $
    292
  NINE MONTHS ENDED DECEMBER 25, 2010 COMPARED TO NINE MONTHS ENDED DECEMBER 26, 2009  (dollars in
thousands):
 Revenue:
 Nine Months EndedDecember 25,
    
    
    December 26,2010
    
    
    2009Net Revenue:Product Sales
    
    $
    43,009
    
    
    $
    38,424Service Revenue
    
    
    22,420
    
    
    
    19,102Total
    
    $
    65,429
    
    
    $
    57,526
   16




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##### Table of Contents



Gross Profit:
 Nine Months EndedDecember 25,
    
    
    December 26,2010
    
    
    2009Gross Profit:Product
    
    $
    11,146
    
    
    $
    8,655Service
    
    
    5,222
    
    
    
    4,208Total
    
    $
    16,368
    
    
    $
    12,863
     Operating Expenses:
 Nine Months EndedDecember 25,
    
    
    December 26,2010
    
    
    2009Operating Expenses:Selling, Marketing and Warehouse
    
    $
    8,577
    
    
    $
    7,531Administrative
    
    
    4,993
    
    
    
    4,321Total
    
    $
    13,570
    
    
    $
    11,852
  17




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##### Table of Contents



Taxes:
 Nine Months EndedDecember 25,
    
    December 26,2010
    
    2009Provision for Income Taxes
    
    $
    1,042
    
    
    $
    356
  LIQUIDITY AND CAPITAL RESOURCES
  Cash Flows:
 Nine Months EndedDecember 25,
    
    December 26,2010
    
    2009Cash Provided by (Used in):Operating Activities
    
    $
    2,692
    
    
    $
    3,972Investing Activities
    
    
    (1,572
    )
    
    
    (2,034
    )Financing Activities
    
    
    (1,223
    )
    
    
    (1,988
    )
 Operating Activities:
 
    
    Inventory/Accounts Payable: Our inventory balance at December 25, 2010 was $7.4
million, an increase of $1.5 million when compared to $5.9 million on-hand on March 27,
2010. The increase was primarily due to our strategic decision to maintain higher
inventory levels of specific, higher-volume products, in support of greater sales
growth and in response to increased lead times from manufacturers. In general, our
accounts payable balance increases or decreases as a result of timing of vendor
payments for inventory receipts. However, this correlation may vary at a quarter-end
due to the timing of vendor payments for inventory receipts and inventory shipped
directly to customers, as well as the timing of product sales.
    
    Receivables: We continue to maintain strong collections on our accounts receivable.
The following table illustrates our days sales outstanding for the fiscal quarters
ended December 25, 2010 and December 26, 2009:
 December 25,
    
    December 26,2010
    
    2009Net Sales, for the last two fiscal months
    
    $
    17,086
    
    
    $
    15,559Accounts Receivable, net
    
    $
    10,387
    
    
    $
    9,997Days Sales Outstanding
    
    
    36
    
    
    
    39
 Investing Activities
 Financing Activities
 18




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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
 Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures:
 Changes in Internal Control over Financial Reporting:
 19




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Issuer Purchases of Equity Securities:
 (a)
    
    (b)
    
    (c)
    
    (d)Total Number of
    
    Maximum Number (orTotal
    
    
    
    
    
    Shares Purchased as
    
    Approximate Dollar Value)Number of
    
    Price
    
    Part of Publicly
    
    of Shares that May Yet BeShares
    
    Paid per
    
    announced Plans or
    
    Purchased Under the PlansPeriod
    
    Purchased
    
    Share
    
    Programs
    
    or Programs09/25/10  12/25/10 (1)
    
    
    80,000
    
    
    $
    6.90
    
    
    
    
    
    
    
    
 
 (1)
    
    The Company repurchased these common shares in a private transaction and assigned
the shares into treasury. 
 ITEM 6. EXHIBITS
  20




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##### Table of Contents



SIGNATURES
  TRANSCAT, INC.Date:  February 8, 2011
    /s/ Charles P. HadeedCharles P. HadeedPresident, Chief Executive Officer and Chief Operating Officer
(Principal Executive Officer)Date:  February 8, 2011
    /s/ John J. ZimmerJohn J. ZimmerVice President of Finance and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer) 21




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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
 22