10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

	(Mark one)
	þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: March 27, 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.

(Exact name of registrant as specified in its charter)

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

(Address of principal executive offices) (Zip Code)

(585) 352-7777

(Registrant’s telephone number, including area code)

Securities registered pursuant to section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $0.50 par value	NASDAQ Capital Market

Securities registered pursuant to section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o  No  þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  o  No  þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  þ  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  o  No  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  o  No  þ

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on September 25, 2009 (the last business day of the registrant’s most recently completed second fiscal quarter) was approximately $38 million. The market value calculation was determined using the closing sale price of the registrant’s Common Stock on September 25, 2009, as reported on the NASDAQ Capital Market.

The number of shares of Common Stock of the registrant outstanding as of June 16, 2010 was 7,290,108.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III, Items 10, 11, 12, 13 and 14 of this report, to the extent not set forth herein, is incorporated herein by reference from the registrant’s definitive proxy statement relating to the Annual Meeting of Shareholders to be held on September 14, 2010, which definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days of the end of the fiscal year to which this report relates.

TABLE OF CONTENTS

		Page(s)
Part I
Item 1.	Business	3-14
Item 1A.	Risk Factors	14-16
Item 1B.	Unresolved Staff Comments	16
Item 2.	Properties	17
Item 3.	Legal Proceedings	17
Item 4.	Reserved	17
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17-18
Item 6.	Selected Financial Data	18-19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19-33
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	33
Item 8.	Financial Statements and Supplementary Data	34-57
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	58
Item 9A(T).	Controls and Procedures	58
Item 9B.	Other Information	58
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	59
Item 11.	Executive Compensation	59
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	59
Item 13.	Certain Relationships and Related Transactions, and Director Independence	59
Item 14.	Principal Accountant Fees and Services	60
Part IV
Item 15.	Exhibits and Financial Statement Schedules	60
Signatures		61
Index to Exhibits		62-64
EX-10.24
EX-10.25
EX-10.26
EX-21.1
EX-23.1
EX-31.1
EX-31.2
EX-32.1

PART I

ITEM 1.   BUSINESS

FORWARD-LOOKING STATEMENTS

This report and, in particular, the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this report, contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These include statements concerning expectations, estimates, and projections about the industry, management beliefs and assumptions of Transcat, Inc. (“Transcat”, “we”, “us”, or “our”). Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to forecast, including, among other things, the risks and uncertainties identified by us below under “Risk Factors” in Item IA of Part I of this report. Therefore, our actual results and outcomes may materially differ from those expressed or forecast in any such forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

BUSINESS OVERVIEW

Transcat is a leading global distributor of professional grade handheld test and measurement instruments and accredited provider of calibration, repair and weighing system services. We are primarily focused on providing our products and services to the following markets:

•  The pharmaceutical industry and FDA-regulated (such as food and beverage) businesses;

•  Industrial manufacturing companies;

•  The energy industry and power, natural gas and water utility companies;

•  The chemical process industry; and

•  Other industries which require accuracy in their processes and confirmation of the capabilities of their equipment.

We conduct our business through two segments: distribution products (“distribution products” or “Product”) and calibration services (“calibration services” or “Service”).

Through our distribution products segment, we market and distribute national and proprietary brand instruments to approximately 14,000 global customers. Our product catalog (“Master Catalog”) offers access to more than 25,000 test and measurement instruments, including calibrators, insulation testers, multimeters, pressure and temperature devices, oscilloscopes, recorders and related accessories. These products are available from over 300 of the industry’s leading manufacturers including Fluke, GE, Emerson, and Hart Scientific. In addition, we are the exclusive worldwide distributor for Transmation and Altek products. The majority of the instrumentation we sell requires expert calibration service to ensure that it maintains the most precise measurements.

Through our accredited calibration services segment, we offer precise, reliable, fast calibration, repair and weighting system services. As of our fiscal year ended March 27, 2010 (“fiscal year 2010”), we operated twelve calibration laboratories (“Calibration Centers of Excellence”) strategically located across the United States, Puerto Rico, and Canada servicing approximately 9,200 customers. In addition, our recent acquisition of United Scale & Engineering Corporation has also provided entry into both the distribution and service segments of the industrial scales and weighing systems marketplace in the Wisconsin, Northern Illinois and Upper Michigan areas. Each of our Calibration Centers of Excellence is ISO-9001:2000 registered and our scope of accreditation to ISO/IEC 17025 is believed to be one of the broadest in the industry. Our accreditation meets many international levels of quality, consistency and reliability. See “Calibration Services Segment — Quality” below in this Item 1 for more information.

3

CalTrak^® is our proprietary documentation and asset management system which is used to manage both the workflow at our Calibration Centers of Excellence and our clients’ assets. With CalTrak^®, we are able to provide our customers with timely calibration service while optimizing our own efficiencies. Additionally, CalTrak-Online provides our customers direct access to calibration certificates, calibration data, and access to other key documents required in the calibration process. CalTrak^® has been validated to U.S. federal regulation 21CFR 820.75, which is important to the pharmaceutical and FDA-regulated industries, where federal regulations can be particularly stringent. See the section entitled “Calibration Services Segment — CalTrak^®” below in this Item 1 for more information.

Our attention to quality goes beyond the products and services we deliver. Our sales, customer service and support teams stand ready to provide expert advice, application assistance and technical support wherever and whenever our customers need it. Since calibration is an intangible service, our customers rely on us to uphold high standards and trust in the integrity of our people and processes.

Among our customers, and representing 31% of our consolidated revenue, are Fortune 500/Global 500 companies, including Wyeth, Johnson & Johnson, DuPont, Exxon Mobil, Dow Chemical, Nestle and Duke Energy. Transcat has focused on the pharmaceutical and FDA-regulated industries, industrial manufacturing, energy and utility, chemical process and other industries since its founding in 1964. We are the leading supplier of calibrators in the markets we serve. We believe our customers do business with us because of our integrity, commitment to quality service, our CalTrak^® asset management system, and our broad range of product offerings.

Transcat was incorporated in Ohio in 1964. We are headquartered in Rochester, New York and employ more than 300 people. Our executive offices are located at 35 Vantage Point Drive, Rochester, New York 14624. Our telephone number is 585-352-7777.

OUR STRATEGY

Our strategy for growth is to expand both our distribution products and calibration services segments by leveraging these offerings to markets that value product breadth and availability. Our target customers are those that rely on accredited calibration services to maintain the integrity of their processes and/or operate in regulated environments. Our strategic focus is to serve a customer base that requires precise measurement capability for their manufacturing and testing processes in order to minimize risk, waste and defects. We do this by targeting customers who value superior quality, service and convenience associated with our multiple locations, broad capabilities and breadth of choice. We believe our combined offerings, experience, and integrity create a unique and compelling value proposition for our customers and prospects that is built upon trust and technical competence.

We strive to differentiate ourselves and build barriers to competitive entry by offering the best products, delivering high quality calibration and repair services, and integrating those products and services to benefit our customers’ operations and lower their costs.

ACQUISITIONS

On January 27, 2010, we acquired United Scale & Engineering Corporation (“United Scale”), a scale and weighing systems distributor and calibration and repair services provider based in Wisconsin. United Scale has approximately 2,000 customers located in Wisconsin, Northern Illinois and Upper Michigan and has been in business for almost 50 years meeting both ISO 9001 and ISO/IEC 17025 accreditation standards. United Scale had 26 employees as of March 27, 2010.

Our acquisition of United Scale broadens our calibration capabilities and expands our geographic footprint into the upper Midwest. Through this acquisition, we will also broaden our product offering to include scales and weighing systems which frequently require integration, installation and custom programming.

On August 14, 2008, we acquired Westcon, Inc. (“Westcon”), a test and measurement instruments distributor and calibration services provider based in Portland, Oregon.

4

Our acquisition of Westcon established a west coast distribution center that enables us to provide faster service to a broader base of potential customers while adding a full-service calibration operation that geographically complements and expands our nationwide network of laboratories. Westcon has and will continue to serve the wind energy industry, which we see as a high-growth target market that fits well within our energy market focus.

SEGMENTS

We service our customers through two business segments: distribution products and calibration services. Note 8 of our Consolidated Financial Statements in this report presents financial information for these segments. We serve over 18,000 customers, with no customer or controlled group of customers accounting for 10% or more of our consolidated net revenue for any of the fiscal years 2008 through 2010. We are not dependent on any single customer, the loss of which would have a material adverse effect on our business, cash flows, balance sheet, or results of operations.

We market and sell to our customers through multiple sales channels consisting of direct catalog marketing, our website, a field sales organization, proactive outbound sales, and an inbound call center. Our field, outbound and inbound sales teams are each staffed with technically trained personnel. Our domestic and international inbound sales organization covers territories in North America, Latin America, Europe, Africa, Asia, and the Middle East. Our calibration and repair services are offered only in North America and Puerto Rico. We concentrate on attracting new customers and also on cross-selling to existing customers to increase our Product sales and Service revenue. Our revenue from customers in the following geographic areas during the periods indicated, expressed as a percentage of total revenue, is as follows:

	FY 2010			FY 2009			FY 2008
United States		90	%		89	%		87	%
Canada		7	%		7	%		9	%
Other International		3	%		4	%		4	%
Total		100	%		100	%		100	%

DISTRIBUTION PRODUCTS SEGMENT

Summary.  Our customers use test and measurement instruments to ensure that their processes, and ultimately their end products, are within specification. Utilization of such diagnostic instrumentation also allows for continuous improvement processes to be in place, increasing the accuracies of their measurements. The industrial distribution products industry for test and measurement instrumentation, in those geographic markets where we predominately operate, is serviced by broad-based national distributors and niche or specialty-focused organizations such as Transcat.

Most industrial customers find that maintaining an in-house inventory of back-up test and measurement instruments is cost prohibitive. As a result, the distribution of test and measurement instrumentation has traditionally been characterized by frequent, small quantity orders combined with a need for rapid, reliable, and complete order fulfillment. The decision to buy is generally made by plant engineers, quality managers, or their purchasing personnel. Products are generally obtained from more than one distributor.

The majority of our products are not consumables, but are purchased as replacements, upgrades, or for expansion of manufacturing and research and development facilities. Our catalog and sales activities are designed to maintain a constant presence in front of the customer to ensure we receive the order when they are ready to purchase. As a result, we evaluate revenue trends over a twelve-month rolling period as any individual month’s or quarter’s revenue can be impacted by numerous factors, many of which are unpredictable and potentially non-recurring.

We believe that a distribution products customer chooses a distributor based on a number of different criteria including the timely delivery and accuracy of orders, consistent product quality, the technical competence of the representative serving them, value added services, as well as price. Value added services include providing

5

technical support to insure our customer receives the right product for their specific need through application knowledge and product compatibility. We also provide calibration of product purchases, on-line procurement, same day shipment of in-stock items, a variety of custom product offerings and training programs. Because of the breadth of products we offer and the services we provide, we are often a “one-stop shop” for our customers who gain the operational efficiency of dealing with just one distributor for most or all of their test and measurement equipment needs.

Our distribution products segment accounted for 66% of our consolidated revenue in fiscal year 2010. Within the distribution products segment, our routine business is comprised of customers who place orders to acquire or to replace specific instruments, which average approximately $1,560 per order. Items are regularly added to and deleted from our product lines on the basis of customer demand, market research, recommendations of suppliers, sales volumes and other factors.

Marketing and Sales.  Through our comprehensive Master Catalog, supplemental catalogs, website, e-newsletters, and other direct sales and marketing programs, we offer our customers a broad selection of highly recognized branded products at competitive prices. The instruments typically range in price from $250 to over $25,000.

During fiscal year 2010, we distributed approximately 1.1 million pieces of direct marketing materials including catalogs, brochures, supplements and other promotional materials, of which approximately 665,000 were distributed to customer contacts and approximately 450,000 were distributed to potential customer contacts. We also distributed approximately 180,000 e-newsletters to our list of customers and prospects. Some of the key factors that determine the number of catalogs and other direct marketing materials received by each customer include new product introductions, their market segments and the timing, frequency and monetary value of past purchases.

The majority of our product sales are derived from direct mail and on-line marketing. Our Master Catalog offers access to more than 25,000 test and measurement products and is used by customers, sales representatives and branch personnel to assist with customer product selection. During fiscal year 2010, approximately 85,000 copies of our Master Catalog were produced and distributed to existing and prospective customers in North America and Puerto Rico. The Master Catalog provides standard make/model and related product information and is also available in an electronic format upon request and on our website, transcat.com.

We use smaller catalog supplements that feature new products, promotions, or specific product categories to target prospects and acquire new customers. The catalog supplements are launched at varying periods throughout the year.

Customers can also purchase products through our website, transcat.com. Our website serves as a growing market channel for our products and services and provides product availability, detailed product information, advanced features such as product search and compare capabilities, as well as downloadable product specification sheets. We have optimized the website’s search engine, streamlined order entry and have the unique ability to supplement an order with an accredited calibration. Traffic to our website has grown more than 13% over the prior fiscal year and represented 8% of our Product segment sales in fiscal year 2010.

Competition.  The distribution products markets we serve are highly competitive. Competition for sales in distribution products is quite fragmented and ranges from large national distributors and manufacturers that sell directly to customers to small local distributors. Key competitive factors typically include customer service and support, quality, turn around time, inventory availability, brand recognition and price. To address our customers’ needs for technical support and product application assistance, and to differentiate ourselves from competitors, we employ a staff of highly-trained technical sales specialists. In order to maintain this competitive advantage, technical training is an integral part of developing our sales staff.

Suppliers and Purchasing.  We believe that effective purchasing is a key element to maintaining and enhancing our position as a provider of high quality test and measurement instruments. We frequently evaluate our purchase requirements and suppliers’ offerings to obtain products at the best possible cost. We obtain our products from nearly 400 suppliers of brand name and private-labeled equipment. In fiscal year 2010, our top 10 vendors accounted for approximately 65% of our aggregate business. Approximately 29% of our product

6

purchases on an annual basis are from Fluke Electronics Corporation (“Fluke”), which we believe to be consistent with Fluke’s share of the markets we service.

We plan our product mix and inventory stock to best serve the anticipated needs of our customers whose individual purchases vary in size. We can usually ship to our customers our top selling products the same day they are ordered. During fiscal year 2010, approximately 94% of orders for our top selling products were filled with inventory items already in stock.

Operations.  Our distribution operations take place within an approximate 37,000 square-foot facility located in Rochester, New York and a 12,600 square-foot facility in Portland, Oregon. The Rochester location also serves as our corporate headquarters; houses our customer service, sales and administrative functions; and has a calibration laboratory. The Portland location also serves as a calibration laboratory. In fiscal year 2010, we shipped over 33,000 product orders in aggregate from both locations. In addition, we added two additional distribution facilities in Wisconsin through our acquisition of United Scale, which fulfill orders for scales.

Distribution.  We distribute our products throughout North America and internationally from our distribution centers. We maintain appropriate inventory levels in order to satisfy anticipated customer demand for prompt delivery and complete order fulfillment of their product needs. These inventory levels are managed on a daily basis with the aid of our sophisticated purchasing and stock management information system. Our automated laser bar code scanning facilitates prompt and accurate order fulfillment and freight manifesting.

In addition to our direct end-user customers, we also sell products to resellers who then sell to end-users. Our sales to resellers are typically at a lower gross margin than sales to direct customers and therefore the percentage of reseller sales to total revenue in any given period can have an impact on our overall gross profit margin. During fiscal year 2010, 24% of our distribution product sales were to resellers compared with 25% in fiscal year 2009 and 20% in fiscal year 2008. We believe that these resellers have access, through their existing relationships, to end-user customers to whom we do not market directly.

Exclusivity Agreement with Fluke.  We have been the exclusive worldwide distributor of Altek and Transmation branded products since fiscal year 2002. Annually, in exchange for exclusive distribution rights, we have committed to purchase a minimum amount of Altek and Transmation products from Fluke. Each year, we have exceeded this commitment. By its terms, the most recent exclusivity agreement with Fluke expired on December 31, 2008. We continue to be the exclusive worldwide distributor of these products on terms substantially similar to the agreement that expired on December 31, 2008.

Backlog.  Customer product orders include orders for instruments that we routinely stock in our inventory, customized products, and other products ordered less frequently, which we do not stock. Pending product shipments are primarily backorders, but also include products that are requested to be calibrated in our laboratories prior to shipment, orders required to be shipped complete, and orders required to be shipped at a future date.

At March 27, 2010, the value of our pending product shipments was approximately $1.8 million, compared with approximately $1.2 million and $1.4 million at March 28, 2009 and March 29, 2008, respectively. During the first three fiscal quarters of fiscal year 2010, our pending product shipments continued to increase when compared against the ending balance of the previous fiscal year. We believe that manufacturers reduced production during the economic downturn and then were slower to respond to increased market demand as the economy began to improve, leading to increased backorders. During the fourth quarter of fiscal year 2010, we reduced the outstanding balance of pending product shipments by $0.6 million, when compared to the end of the third quarter of fiscal 2010, by early recognition of the need to accelerate purchases to make up for extended lead times from manufacturers. The net decrease is inclusive of $0.2 million in incremental pending product shipments associated with United Scale, which was acquired during our fiscal fourth quarter. Our pending product shipments and total product backorders increased during the third quarter of fiscal year 2009 as a direct result of our integration of Westcon onto our order entry system. During the fourth quarter of fiscal year 2009, pending product shipments decreased 30%, when compared to the balance at the end of the third quarter of fiscal year 2009. We attribute this to decreased orders as a result of a decline in the general economy as demand from existing customers weakened despite aggressive pricing initiatives. During fiscal year 2010, the month-end level of pending product shipments varied between a low of $1.3 million and a high of $2.6 million.

7

The following graph shows the quarter-end trend of pending product shipments and backorders for fiscal years 2009 and 2010.

CALIBRATION SERVICES SEGMENT

Summary.  Calibration is the act of comparing a unit or instrument of unknown value to a standard of known value and reporting the result in some rigorously defined form. After the calibration has been completed, a decision is made, again based on rigorously defined parameters, on what, if anything, is to be done to the unit to conform to the required standards or specifications. The decision may be to adjust, optimize or repair a unit; limit the use, range or rating of a unit; scrap the unit; or leave the unit as is. The purpose of calibration is to significantly reduce the risk of product or process failures caused by inaccurate measurements.

Within the calibration industry, there is a broad array of measurement disciplines making it costly and inefficient for any one provider to invest the needed capital for facilities, equipment and uniquely trained personnel necessary to address all measurement disciplines with in-house calibration capabilities. Our strategy, within our calibration services segment, has been to focus our investments in the core electrical, temperature, pressure and dimensional disciplines. We can address approximately 90% to 95% of the calibration requests we receive with our in-house capabilities. For customers’ calibration needs in less common and highly technical disciplines, we have historically subcontracted to third party vendors that can have unique or proprietary capabilities. These vendor relationships have enabled us to continue our pursuit of having the broadest calibration offerings to these targeted markets.

Strategy.  Our calibration services segment provides periodic calibration and repair services for our customers’ test and measurement instruments. We specifically target industries where quality calibrations are a critical operational component and believe calibration sourcing decisions are based on accreditation, reliability, trust, customer service, turn-around time, location, documentation, price and a one-source solution. Our success with customers is based on the trust they have in the integrity of our people and processes.

Transcat’s calibration services strategy encompasses two methods to manage a customer’s calibration and repair needs:

1)  If a company wishes to outsource its calibration needs, we offer an “Integrated Calibration Services Solution” that provides a complete wrap-around service which includes:

•  program management;

•  calibration;

•  logistics; and

•  consultation services.

2)  If a company has an in-house calibration operation, we can provide:

•  calibration of primary standards;

•  overflow capability either on-site or at one of our Calibration Centers of Excellence during periods of high demand; and

•  consultation and training services.

8

In either case, we strive to have the broadest accredited calibration offering to our targeted markets which includes certification of our technicians pursuant to the American Society for Quality (“ASQ”) standards, complete calibration management encompassing the entire metrology function, and access to our service offerings. We believe our calibration services are of the highest technical and quality levels, with broad ranges of accreditation and registration. Our quality systems are further detailed in the section entitled “Quality” below.

CalTrak^®.  CalTrak^® and CalTrak-Online are our proprietary metrology management systems that provide a comprehensive calibration quality program. Many of our customers have unique calibration service requirements to which we have tailored specific services. CalTrak-Online allows our customers to track calibration cycles via the Internet and provides the customer with a safe and secure off-site archive of calibration records that can be accessed 24 hours a day. Access to records data is managed through our secure password-protected website. Calibration assets are tracked with records that are automatically cross-referenced to the equipment that was used to calibrate. CalTrak^® has also been validated to meet the most stringent requirements within the industry.

We perform over 145,000 in-house calibrations annually. These are performed at our twelve Calibration Centers of Excellence or at the customer’s location. During fiscal year 2010, services completed by our Calibration Centers of Excellence represented 76% of our calibration services segment revenue while approximately 21% of the revenue was derived from calibration services that were subcontracted to third party vendors. Our calibration services segment accounted for 34% of our total consolidated revenue in fiscal year 2010.

Marketing and Sales.  Calibration improves an operation’s maximum productivity and efficiency by assuring accurate, reliable instruments and processes. Through our calibration services segment, we perform periodic calibrations on new and used instruments as well as repair services for our customers. All of our Calibration Centers of Excellence provide accredited calibration of common measurement parameters.

We have sales teams that seek to acquire new customers in our targeted markets and account management teams to ensure continued relationships with existing customers. In addition, we employ our Master Catalog, supplements, mailings, journal advertising, trade shows, and the Internet to market our calibration services to customers and prospective customers with a strategic focus in the highly regulated industries including pharmaceutical, FDA-regulated, energy and utilities, and chemical processing. We also target industrial manufacturing and other industries that appreciate the value of quality calibrations. Due to growth in wind energy Service revenue in fiscal year 2010, the energy/utilities industry segment’s share of our Service business increased. Our quality process and standards are designed to meet the needs of companies that must address regulatory requirements and/or have a strong commitment to quality and a comprehensive calibration program.

The approximate percentage of our calibration services business by industry segment for the periods indicated is as follows:

	FY 2010			FY 2009			FY 2008
Pharmaceutical/FDA-Regulated		37	%		38	%		37	%
Industrial Manufacturing		22	%		25	%		27	%
Chemical Manufacturing		8	%		9	%		11	%
Energy/Utilities		20	%		15	%		14	%
Other		13	%		13	%		11	%
Total		100	%		100	%		100	%

Competition.  The calibration outsource industry is highly fragmented and is composed of companies ranging from internationally recognized and accredited corporations, such as Transcat, to non-accredited, sole proprietors as well as companies that perform their own calibrations in-house, resulting in a tremendous range of service levels and capabilities. A large percentage of calibration companies are small businesses that provide only basic measurements and service markets in which quality requirements may not be as demanding

9

as the markets that we strategically target. Very few of these companies are structured to compete on the same scale and level of quality as us. There are also several companies with whom we compete who have national or regional operations. Certain of these competitors may have greater resources than us and some of them have accreditations that are similar to ours. We differentiate ourselves from our competitors by demonstrating our commitment to quality and by having a wide range of capabilities that are tailored to the markets we serve. Customers see the value in using our unique CalTrak-Online program to monitor their instrument’s status. We are fundamentally different from most of our competitors because we have the ability to bundle product, calibration and repair as a single source for our customers.

Quality.  The accreditation process is the only system currently in existence that assures measurement competence. Each of our laboratories is audited and reviewed by external accreditation bodies proficient in the technical aspects of the chemistry and physics that underlie metrology, ensuring that measurements are properly made. Accreditation also requires that all standards used for accredited measurements have a fully documented path, known as the traceability chain, either directly or through other accredited laboratories, back to the national or international standard for that measurement parameter. This ensures that our measurement process is consistent with the global metrology network that is designed to standardize measurements worldwide.

To ensure the quality and consistency of our calibrations for our customers, we have sought and achieved several international levels of quality and accreditation. Our calibration laboratories are ISO 9001:2000 registered through Underwriter’s Laboratories, which itself has international oversight from the ANAB-ANSI-ASQ National Accreditation Board. We believe our scope of accreditation to ISO/IEC 17025 to be the broadest for the industries we serve. The accreditation process also ensures that our calibrations are traceable to the National Institute of Standards and Technology or the National Research Council (these are the National Measurement Institutes for the United States and Canada, respectively), or to other national or international standards bodies, or to measurable conditions created in our laboratory, or accepted fundamental and/or natural physical constants, ratio type of calibration, or by comparison to consensus standards. Our laboratories are accredited to ISO/IEC 17025:2005 and ANSI/NCSL Z540-1-1994 using two of the accrediting bodies in the United States that are signatories to the International Laboratory Accreditation Cooperation (“ILAC”). These two accrediting bodies are: National Voluntary Laboratory Accreditation Program (NVLAP) and American Association for Laboratory Accreditation (A2LA). These accrediting bodies provide an objective, third party, internationally accepted evaluation of the quality, consistency, and competency of our calibration processes.

The importance of this international oversight to our customers is the assurance that our documents will be accepted worldwide, removing one of the barriers to trade that they may experience if using a non-ILAC traceable calibration service provider.

10

To provide the widest range of service to our customers in our target markets, our ISO/IEC 17025:2005 accreditations extend across many technical disciplines. The following table represents our capabilities for each of our Calibration Centers of Excellence as of March 27, 2010 (A=Accredited; N=Non-accredited):

WORKING-LEVEL CAPABILITIES:

	Electrical Metrology Disciplines				Dimensional Metrology Disciplines
	Direct						Parts
	Current/	High					Inspection
	Alternating	Frequency/					(Geometric
	Current	Ultra	Radio				Dimensioning
	- Low	- High	Frequency/	Luminance/			& Tolerancing/
	Frequency	Frequency	Microwave	Illuminance	Length	Optics	3-D Metrology)
Boston	A	A	A		A
Charlotte	A	A			A
Dayton	A	A			A	A
Ft. Wayne					A		A
Houston	A	A	A		A	N
Los Angeles	A	A	A		A	N
Ottawa	A	A	A		A
Philadelphia	A	A	A	A	A	A
Portland	A	A			A		A
Rochester	A	A	A		A	A	A
San Juan	A	A			A
St. Louis	A	A			A

	Physical Metrology Disciplines
		Particle		Gas	Relative	Mass	Pressure,
	Flow	Counters	Force	Analysis	Humidity	Weight	Vacuum
Boston			A		A	A	A
Charlotte			A	N	A	A	A
Dayton			A		A	A	A
Houston			A			A	A
Los Angeles			A		A	A	A
Ottawa			A		A	A	A
Philadelphia	A		A	N	A	A	A
Portland			A		A	A	A
Rochester		N	A		A	A	A
San Juan			A		A	A	A
St. Louis			A		A	A	A
Wisconsin(1)			A			A

	Physical Metrology Disciplines (continued)				Life Sciences Disciplines
			Revolutions
			Per Minute,	Vibration,		Chemical/
	Torque	Temperature	Speed	Acceleration	Biomedical	Biological	Pharmaceutical
Boston	A	A	A			N
Charlotte	A	A	A			N
Dayton	A	A	A			N
Houston	A	A	A			N
Los Angeles	A	A	A		N	N	N
Ottawa	A	A	A
Philadelphia	A	A	A	A	N	N	N
Portland	A	A	A			N
Rochester	A	A	A		N	N	N
San Juan		A	A
St. Louis	A	A	A			N

11

REFERENCE-LEVEL CAPABILITIES:

					Pressure/
	Dimensional	Electrical	Humidity	Mass	Vacuum	Temperature
	Standards	Standards	Standards	Standards	Standards	Standards
Charlotte	A		A
Dayton	A					A
Ft. Wayne	A
Houston		A			A
Philadelphia			A	A	A	A
Portland	A		A
Rochester	A		A
San Juan			A	A

(1) Wisconsin operations regionally headquartered in Milwaukee (New Berlin), with locations in Madison and Green Bay, includes calibration of legal for trade (NIST Handbook 44) and industrial scales (heavy capacity, medium capacity, small capacity, vehicle, livestock, hopper, belt, platform, bench, counting, laboratory balances, etc.)

CUSTOMER SERVICE AND SUPPORT

Our breadth of distribution products and calibration services along with our strong commitment to customer sales, service and support enable us to satisfy our customer needs through convenient selection and ordering; rapid, accurate, and complete order fulfillment; and on-time delivery.

Key elements of our customer service approach are our technically-trained field sales team, outbound sales team, account management team, inbound sales and customer service organization. Most customer orders are placed through our customer service organization which often provides technical assistance to our customers to facilitate the purchasing decision. To ensure the quality of service provided, we frequently monitor our customer service through customer surveys, interpersonal communication, and daily statistical reports.

Customers may place orders via:

•  Mail to Transcat, Inc., 35 Vantage Point Drive, Rochester, NY 14624;

•  Fax at 1-800-395-0543;

•  Telephone at 1-800-828-1470;

•  Email at sales@transcat.com; or

•  Our website at transcat.com.

INFORMATION REGARDING EXPORT SALES

Approximately 10% of our net revenue in fiscal year 2010 resulted from sales to customers outside the United States, compared with 11% and 13% in fiscal years 2009 and 2008, respectively. Of those sales in fiscal year 2010, 42% were denominated in U.S. dollars and the remaining 58% were in Canadian dollars. Our revenue is subject to the customary risks of operating in an international environment, including the potential imposition of trade or foreign exchange restrictions, tariff and other tax increases, fluctuations in exchange rates and unstable political situations, any one or more of which could have a material adverse effect on our business, cash flows, balance sheet or results of operations. See “Foreign Currency” in Item 7A of Part II of this report for further details.

INFORMATION SYSTEMS

We utilize a basic software platform, Application Plus, to manage our business and operations segments. We also utilize a turnkey enterprise software solution. This software includes a suite of fully integrated modules to manage our business functions, including customer service, warehouse management, inventory management, financial management, customer management, and business intelligence. This solution is a fully mature business package and has been subject to more than 20 years of refinement.

12

SEASONALITY

We believe that our business has certain historical seasonal factors. Historically, our fiscal first and second quarters have been generally weaker and our fiscal third and fourth quarters have been stronger due to industrial operating cycles.

ENVIRONMENTAL MATTERS

We believe that compliance with federal, state, or local provisions relating to the protection of the environment will not have any material effect on our capital expenditures, earnings, or competitive position.

EMPLOYEES

At the end of fiscal year 2010, we had 303 employees, compared with 281 and 247 employees at the end of fiscal years 2009 and 2008, respectively.

EXECUTIVE OFFICERS

The following table presents certain information regarding our executive officers and certain key employees as of March 27, 2010:

Name	Age		Position
Charles P. Hadeed		60	President, Chief Executive Officer and Chief Operating Officer
John J. Zimmer		51	Vice President of Finance and Chief Financial Officer
Michael P. Craig		56	Vice President of Human Resources
John P. Hennessy		61	Vice President of Sales and Marketing
Rainer Stellrecht		59	Vice President of Laboratory Operations
Lori L. Drescher		50	Vice President of Business Process Improvement and Training
David D. Goodhead		62	Vice President of Wind Energy Sales
Jay F. Woychick		53	Vice President of Wind Energy Commercial Operations and Vendor Relations
Derek C. Hurlburt		41	Corporate Controller

AVAILABLE INFORMATION

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and, therefore, we file periodic reports, proxy statements and other information with the SEC. Such reports may be read and copied at the Public Reference Room of the SEC at 100 F Street NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at (800) SEC-0330. Additionally, the SEC maintains a website (sec.gov) that contains reports, proxy statements and other information for registrants that file electronically.

We maintain an internet website at transcat.com. On our website, we make available, free of charge, documents we file with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed with or furnished to the SEC. We make this information available as soon as reasonably practicable after we electronically file such materials with, or furnish such information to, the SEC. Our SEC reports can be accessed in the investor relations section of our website. The other information found on our website is not part of this or any other report we file with, or furnish to, the SEC.

We also post on our website our board of directors’ committee charters (audit committee, compensation committee and corporate governance and nominating committee), and Code of Ethics. Copies of such charters

13

are available in print at no charge to any shareholder who makes a request. Such requests should be made to our corporate secretary at our corporate headquarters, 35 Vantage Point Drive, Rochester, New York 14624.

ITEM 1A.   RISK FACTORS

You should consider carefully the following risks and all other information included in this report. The risks and uncertainties described below and elsewhere in this report are not the only ones facing our business. If any of the following risks were to actually occur, our business, financial condition or results of operations would likely suffer. In that case, the trading price of our common stock could fall and you could lose all or part of your investment.

The Economic Recession Could Have A Negative Impact On Our Major Customers And Suppliers Which In Turn Could Materially Adversely Affect Our Results Of Operations And Liquidity.  The economic recession has had a significant negative impact on businesses around the world. Although we believe that our cash provided by operations and available borrowing capacity under our current credit facility will provide us with sufficient liquidity through current economic conditions, the impact of this recession on our major customers and suppliers cannot be predicted and may be quite severe. The inability of major manufacturers to ship our products could impair our ability to meet the delivery date requirements of our customers. A disruption in the ability of our largest customers to access liquidity could cause serious disruptions or an overall deterioration of their businesses which could lead to a significant reduction in their future orders of our products and services and the inability or failure on their part to meet their payment obligations to us, any of which could have a negative effect on our results of operations and liquidity.

We Depend On Manufacturers To Supply Our Inventory And Rely On One Vendor Group To Supply A Significant Amount Of Our Inventory Purchases. If They Fail To Provide Desired Products To Us, Increase Prices, Or Fail To Timely Deliver Products, Our Revenue and Gross Profit Could Suffer.  A significant amount of our inventory purchases are made from one vendor, Fluke. Our reliance on this vendor leaves us vulnerable to having an inadequate supply of required products, price increases, late deliveries, and poor product quality. Like other distributors in our industry, we occasionally experience supplier shortages and are unable to purchase our desired volume of products. If we are unable to enter into and maintain satisfactory distribution arrangements with leading manufacturers, if we are unable to maintain an adequate supply of products, or if manufacturers do not regularly invest in, introduce to us, and/or make new products available to us for distribution, our sales could suffer considerably. Finally, we cannot provide any assurance that particular products, or product lines, will be available to us, or available in quantities sufficient to meet customer demand. This is of particular significance to our business because the products we sell are often only available from one source. Any limits to product access could materially and adversely affect our business.

Our Future Success May Be Affected By Future Indebtedness.  Under our revolving credit facility, as of March 27, 2010, we owed $2.5 million to our secured creditor. We may borrow additional funds in the future to support our growth and working capital needs. We are required to meet financial tests on a quarterly basis and comply with other covenants customary in secured financings. Although we believe that we will continue to be in compliance with such covenants, if we do not remain in compliance with such covenants, our lender may demand immediate repayment of amounts outstanding. Changes in interest rates may have a significant effect on our payment obligations and operating results. Furthermore, we are dependent on credit from manufacturers of our products to fund our inventory purchases. If our debt burden increases to high levels, such manufacturers may restrict our credit. Our cash requirements will depend on numerous factors, including the rate of growth of our revenues, the timing and levels of products purchased, payment terms, and credit limits from manufacturers, the timing and level of our accounts receivable collections and our ability to manage our business profitably. Our ability to satisfy our existing obligations, whether or not under our secured credit facility, will depend upon our future operating performance, which may be impacted by prevailing economic conditions and financial, business, and other factors described in this report, many of which are beyond our control.

If Existing Shareholders Sell Large Numbers Of Shares Of Our Common Stock, Our Stock Price Could Decline.  The market price of our common stock could decline if a large number of our shares are sold in the

14

public market by our existing shareholders or holders of stock options or as a result of the perception that these sales could occur.

Our Stock Price Has Been, And May Continue To Be, Volatile.  The stock market, from time to time, has experienced significant price and volume fluctuations that are both related and unrelated to the operating performance of companies. As our stock may be affected by market volatility, and by our own performance, the following factors, among others, may have a significant effect on the market price of our common stock:

•  Developments in our relationships with current or future manufacturers of products we distribute;

•  Announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;

•  Litigation or governmental proceedings or announcements involving us or our industry;

•  Economic and other external factors, such as disasters or other crises;

•  Sales of our common stock or other securities in the open market;

•  Period-to-period fluctuations in our operating results; and

•  Our ability to satisfy our debt obligations.

We Expect That Our Quarterly Results Of Operations Will Fluctuate. Such Fluctuation Could Cause Our Stock Price To Decline.  A large portion of our expenses for calibration services, including expenses for facilities, equipment and personnel, are relatively fixed. Accordingly, if revenues decline or do not grow as we anticipate, we may not be able to correspondingly reduce our operating expenses in any particular quarter. Our quarterly revenues and operating results have fluctuated in the past and are likely to do so in the future. If our operating results in some quarters fail to meet the expectations of stock market analysts and investors, our stock price would likely decline. Some of the factors that could cause our revenues and operating results to fluctuate include:

•  Fluctuations in industrial demand for products we sell and/or services we provide; and

•  Fluctuations in geographic conditions, including currency and other economic conditions.

Changes In Accounting Standards, Legal Requirements And The NASDAQ Stock Market Listing Standards, Or Our Ability To Comply With Any Existing Requirements Or Standards, Could Adversely Affect Our Operating Results.  Extensive reforms relating to public company financial reporting, corporate governance and ethics, the NASDAQ Stock Market listing standards and oversight of the accounting profession have been implemented over the past several years and continue to evolve. Compliance with these rules, regulations and standards that have resulted from such reforms has increased our accounting and legal costs and has required significant management time and attention. In the event that additional rules, regulations or standards are implemented or any of the existing rules, regulations or standards to which we are subject undergoes additional material modification, we could be forced to spend significant financial and management resources to ensure our continued compliance, which could have an adverse affect on our results of operations. In addition, although we believe we are in full compliance with all such existing rules, regulations and standards, should we be or become unable to comply with any of such rules, regulations and standards, as they presently exist or as they may exist in the future, our results of operations could be adversely effected and the market price of our common stock could decline.

The Distribution Products Industry Is Highly Competitive, And We May Not Be Able To Compete Successfully.  We compete with numerous companies, including several major manufacturers and distributors. Some of our competitors have greater financial and other resources than we do, which could allow them to compete more successfully. Most of our products are available from several sources and our customers tend to have relationships with several distributors. Competitors could obtain exclusive rights to market particular products, which we would then be unable to market. Manufacturers could also increase their efforts to sell directly to end-users and bypass distributors like us. Industry consolidation among product distributors, the unavailability of products, whether due to our inability to gain access to products or interruptions in supply from manufacturers, or the emergence of new competitors could also increase competition and adversely affect our business or results of operations. In the future, we may be unable to compete successfully and competitive pressures may reduce our sales.

15

If We Fail To Attract And Retain Qualified Personnel, We May Not Be Able To Achieve Our Stated Corporate Objectives.  Our ability to manage our anticipated growth, if realized, effectively depends on our ability to attract and retain highly qualified executive officers and technical personnel. If we fail to attract and retain qualified individuals, we will not be able to achieve our stated corporate objectives.

Our Revenue Depends On Retaining Capable Sales Personnel As Well As Our Relationships With Key Customers, Vendors And Manufacturers Of The Products That We Distribute.  Our future operating results depend on our ability to maintain satisfactory relationships with qualified sales personnel who appreciate the value of our services as well as key customers, vendors and manufacturers. If we fail to maintain our existing relationships with such persons or fail to acquire relationships with such key persons in the future, our business and results of operations may be adversely affected.

Our Future Success Is Substantially Dependent Upon Our Senior Management.  Our future success is substantially dependent upon the efforts and abilities of members of our existing senior management. Competition for senior management is intense, and we may not be successful in attracting and retaining key personnel, the inability of which could have an adverse affect on our business and results of operations.

Our Acquisitions Or Future Acquisition Efforts, Which Are Important To Our Growth, May Not Be Successful, Which May Limit Our Growth Or Adversely Affect Our Results Of Operations And Financial Condition.  Acquisitions have been an important part of our development to date. During the fourth quarter of fiscal year 2010, we acquired United Scale. As part of our business strategy, we may make additional acquisitions of companies that could complement or expand our business, augment our market coverage, provide us with important relationships or otherwise offer us growth opportunities. If we identify an appropriate acquisition candidate, we may not be able to negotiate successfully the terms of or finance the acquisition. In addition, we cannot assure you that we will be able to integrate the operations of our acquisitions without encountering difficulties, including unanticipated costs, possible difficulty in retaining customers and supplier or manufacturing relationships, failure to retain key employees, the diversion of our management’s attention or failure to integrate our information and accounting systems. As a result of our acquisition of United Scale and future acquisitions, we may not realize the revenues and cost savings that we expect to achieve or that would justify the investments, and we may incur costs in excess of what we anticipate. To effectively manage our expected future growth, we must continue to successfully manage our integration of the companies that we acquire and continue to improve our operational systems, internal procedures, accounts receivable and management, financial and operational controls. If we fail in any of these areas, our business growth and results of operations could be adversely affected.

The Financing Of Any Future Acquisitions We Make May Result In Dilution To Your Stock Ownership And/Or Could Increase Our Leverage And Our Risk Of Defaulting On Our Bank Debt.  Our business strategy includes expansion into new markets and enhancement of our position in existing markets, including through acquisitions. In order to successfully complete targeted acquisitions we may issue additional equity securities that could dilute your stock ownership. We may also incur additional debt if we acquire another company, which could significantly increase our leverage and our risk of default under our existing credit facility.

Tax Legislation Initiatives Could Adversely Affect The Company’s Net Earnings And Tax Liabilities.  We are subject to the tax laws and regulations of the United States federal, state and local governments, as well as foreign jurisdictions. From time to time, various legislative initiatives may be proposed that could adversely affect our tax positions. There can be no assurance that our effective tax rate will not be adversely affected by these initiatives. In addition, tax laws and regulations are extremely complex and subject to varying interpretations. Although we believe that our historical tax positions are sound and consistent with applicable laws, regulations and existing precedent, there can be no assurance that our tax positions will not be challenged by relevant tax authorities or that we would be successful in any such challenge.

ITEM 1B.   UNRESOLVED STAFF COMMENTS

Not applicable.

16

ITEM 2.   PROPERTIES

We lease the following properties:

		Approximate
Property	Location	Square Footage
Corporate Headquarters, Product Distribution Center and Calibration Laboratory	Rochester, NY		37,250
Calibration Laboratory	Anaheim, CA		4,000
Calibration Laboratory	Boston, MA		4,000
Calibration Laboratory	Charlotte, NC		4,860
Calibration Laboratory	Cherry Hill, NJ		8,550
Calibration Laboratory	Dayton, OH		9,000
Calibration Laboratory(1)	Fort Wayne, IN		5,000
Calibration Laboratory	Houston, TX		8,780
Calibration Laboratory	Ottawa, ON		3,990
Calibration Laboratory and Product Distribution Center	Portland, OR		12,600
Calibration Laboratory	San Juan, PR		1,560
Calibration Laboratory	St. Louis, MO		4,000
Service and Distribution Center	New Berlin, WI		16,000
Service Center	Green Bay, WI		3,320
Service and Distribution Center	Madison, WI		7,670

(1) Subsequent to March 27, 2010, we have decided to move the operations of the Fort Wayne, IN calibration laboratory to our Houston, TX location.

We believe that our properties are generally in good condition, are well maintained, and are generally suitable and adequate to carry on our business in its current form.

ITEM 3.   LEGAL PROCEEDINGS

None.

ITEM 4.   RESERVED

PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the NASDAQ Capital Market under the symbol “TRNS.” As of June 16, 2010, we had approximately 643 shareholders of record.

17

PRICE RANGE OF COMMON STOCK

The following table presents, on a per share basis, for the periods indicated, the high and low reported sales prices of our common stock as reported on the NASDAQ Capital Market for each quarterly period in fiscal years 2010 and 2009.

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
Fiscal Year 2010:
High	$	6.20	$	7.87	$	7.21	$	8.55
Low	$	4.12	$	4.40	$	4.09	$	5.51
Fiscal Year 2009:
High	$	7.00	$	8.96	$	9.24	$	8.90
Low	$	5.00	$	6.10	$	5.58	$	3.81

DIVIDENDS

We have not declared any cash dividends since our inception and do not intend to pay any dividends in the foreseeable future.

ITEM 6.   SELECTED FINANCIAL DATA

The following table provides selected financial data for fiscal year 2010 and the previous four fiscal years (in thousands, except per share data). Certain reclassifications of financial information for prior fiscal years have been made to conform to the presentation for the current fiscal year.

	FY 2010		FY 2009		FY 2008		FY 2007			FY 2006
Statements of Operations Data:
Net Revenues	$	81,061	$	75,419	$	70,453	$	66,473		$	60,471
Cost of Products and Services Sold		61,767		56,671		51,912		49,860			45,372
Gross Profit		19,294		18,748		18,541		16,613			15,099
Operating Expenses		16,913		16,062		15,258		14,264			13,581
Gain on TPG Divestiture(1)		—		—		—		(1,544	)		—
Operating Income		2,381		2,686		3,283		3,893			1,518
Interest Expense		63		100		101		334			427
Other Expense, net		35		67		437		283			162
Income Before Income Taxes		2,283		2,519		2,745		3,276			929
Provision for (Benefit from) Income Taxes		832		963		382		1,217			(2,648	)
Net Income	$	1,451	$	1,556	$	2,363	$	2,059		$	3,577
Share Data:
Basic Earnings Per Share	$	0.20	$	0.21	$	0.33	$	0.30		$	0.54
Basic Average Shares Outstanding		7,352		7,304		7,132		6,914			6,647
Diluted Earnings Per Share	$	0.19	$	0.21	$	0.32	$	0.28		$	0.50
Diluted Average Shares Outstanding		7,549		7,469		7,272		7,335			7,176
Closing Price Per Share	$	7.14	$	4.90	$	5.50	$	5.25		$	5.00

18

	As of or for the Fiscal Years Ended March
	27, 2010		28, 2009		29, 2008		31, 2007		25, 2006
Balance Sheets and Working Capital Data:
Inventory, net	$	5,906	$	4,887	$	5,442	$	4,336	$	3,952
Property and Equipment, net		4,163		4,174		3,211		2,814		2,637
Goodwill		10,038		7,923		2,967		2,967		2,967
Total Assets		35,713		29,391		24,344		22,422		21,488
Depreciation and Amortization		2,080		1,897		1,761		1,622		1,401
Capital Expenditures		1,128		1,775		1,505		1,194		914
Long-Term Debt		2,532		3,559		302		2,900		4,272
Shareholders’ Equity		20,257		18,619		15,117		11,229		8,647

(1) In fiscal year 2007, we recognized a previously deferred pre-tax gain of $1.5 million from the sale of Transmation Products Group to Fluke in March 2002.

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Operational Overview.  We are a leading global distributor of professional grade handheld test and measurement instruments and accredited provider of calibration, repair and weighing system services across a wide array of measurement disciplines.

We operate our business through two reportable business segments that offer different products and services to the same customer base. Those two segments are distribution products and calibration services.

In our Product segment, our Master Catalog is widely recognized by both original equipment manufacturers and customers as the ultimate source for test and measurement instruments. Additionally, because we specialize in handheld test and measurement instruments, as opposed to a wide array of industrial products, our sales and customer service personnel can provide value-added technical assistance to our customers to aid them in determining what product best meets their particular application requirements.

Sales in our Product segment can be heavily impacted by changes in the economic environment. As customers increase or decrease capital and discretionary spending, our product sales will typically be directly impacted. The majority of our products are not consumables, but are purchased as replacements, upgrades, or for expansion of manufacturing and research and development facilities. Year-over-year sales growth in any one quarter can be impacted by a number of factors including the addition of new product lines or channels of distribution.

Our strength in our Service segment is based upon our wide range of disciplines and our investment in the quality systems that are required in our targeted market segments. Our services range from the calibration and repair of a single unit to managing a customer’s entire calibration program. We believe our Service segment offers an opportunity for long-term growth and the potential for continuing revenue from established customers with regular calibration cycles.

We evaluate revenue growth in both of our business segments against a four quarter trend analysis, and not by analyzing any single quarter.

Financial Overview.  In evaluating our results for fiscal year 2010, the following factors should be taken into account:

•  Fiscal year 2010 operating results include those of United Scale, a Wisconsin based supplier and servicer of industrial scales and weighing systems, from the date of acquisition on January 27, 2010.

19

•  Fiscal year 2010 operating results include a full year of operations from Westcon, whereas, fiscal year 2009 operating results include those of Westcon from the date of acquisition on August 14, 2008.

•  Fiscal year 2008 net income includes a $0.8 million reversal of a deferred tax asset valuation allowance. We reversed the allowance after an evaluation of the status of our foreign tax credits and the likelihood that these credits would be utilized prior to their expiration.

Net revenue for fiscal year 2010 was $81.1 million, a 7.5% increase compared with net revenue of $75.4 million for fiscal year 2009. Product segment sales increased 3.2% to $53.1 million, or 65.6% of total net revenue, in fiscal year 2010. Of our Product segment sales in fiscal year 2010, 75% were sold directly to end-user customers while 24% were to resellers compared with 74% and 25%, respectively, in fiscal year 2009. Domestic sales comprised 90% of the total Product segment sales in fiscal year 2010, while 7% were to Canada and 3% were to other international markets.

Service segment revenue increased 16.6% to $27.9 million, or 34.4% of total net revenue, in fiscal year 2010. Of our Service segment revenue in fiscal year 2010, 76% was generated by our Calibration Centers of Excellence while 21% was generated through subcontracted third party vendors, compared with 80% and 17%, respectively, in fiscal year 2009.

Gross margin for fiscal year 2010 was 23.8%, a 110 basis point decline compared with gross margin of 24.9% in fiscal year 2009. Product segment gross margin was 23.4% in fiscal year 2010 compared with 25.4% in fiscal year 2009, while Service segment gross margin improved to 24.5% in fiscal year 2010 compared with 23.7% in fiscal year 2009.

Operating expenses were $16.9 million, or 20.9% of total net revenue, in fiscal year 2010 compared with $16.1 million, or 21.3% of total net revenue, in fiscal year 2009. Operating income was $2.4 million in fiscal year 2010 compared with $2.7 million in fiscal year 2009.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The following is a summary of our most critical accounting policies. See Note 1 of our Consolidated Financial Statements for a complete discussion of the significant accounting policies and methods used in the preparation of our Consolidated Financial Statements.

Use of Estimates.  The preparation of our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are used for, but not limited to, allowance for doubtful accounts and returns, depreciable lives of fixed assets, estimated lives of our major catalogs and intangible assets, and deferred tax asset valuation allowances. Future events and their effects cannot be predicted with certainty; accordingly, our accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of our Consolidated Financial Statements will change as new events occur, as more experience is acquired, as additional information is obtained, and as our operating environment changes. Actual results could differ from those estimates. Such changes and refinements in estimation methodologies are reflected in reported results of operations in the period in which the changes are made and, if material, their effects are disclosed in the Notes to our Consolidated Financial Statements.

Accounts Receivable.  Accounts receivable represent amounts due from customers in the ordinary course of business. These amounts are recorded net of the allowance for doubtful accounts and returns in the Consolidated Balance Sheets. The allowance for doubtful accounts is based upon the expected collectability of accounts receivable. We apply a specific formula to our accounts receivable aging, which may be adjusted on a specific account basis where the formula may not appropriately reserve for loss exposure. After all attempts to collect a receivable have failed, the receivable is written-off against the allowance for doubtful accounts. The returns reserve is calculated based upon the historical rate of returns applied to revenues over a specific timeframe. The returns reserve will increase or decrease as a result of changes in the level of revenues and/or the historical rate of returns.

20

Inventory.  Inventory consists of products purchased for resale and is valued at the lower of cost or market. Costs are determined using the average cost method of inventory valuation. Inventory is reduced by a reserve for items not saleable at or above cost by applying a specific loss factor, based on historical experience, to specific categories of our inventory. We evaluate the adequacy of the reserve on a quarterly basis.

Property and Equipment, Depreciation and Amortization.  Property and equipment are stated at cost. Depreciation and amortization are computed primarily under the straight-line method over the following estimated useful lives:

	Years
Machinery, Equipment, and Software		2 - 6
Furniture and Fixtures		3 - 10
Leasehold Improvements		2 - 10

Property and equipment determined to have no value are written off at their then remaining net book value. We capitalize certain costs incurred in the procurement and development of computer software used for internal purposes. Leasehold improvements are amortized under the straight-line method over the estimated useful life or the lease term, whichever is shorter. Maintenance and repairs are expensed as incurred. See Note 2 of our Consolidated Financial Statements for further information.

Goodwill and Intangible Assets.  We estimate the fair value of our reporting units using the fair market value measurement requirement, rather than the undiscounted cash flows approach. We test goodwill and intangible assets for impairment on an annual basis, or immediately if conditions indicate that such impairment could exist. The evaluation of our reporting units on a fair value basis indicated that no impairment existed as of March 27, 2010 and March 28, 2009.

Catalog Costs.  We capitalize the cost of each Master Catalog mailed and amortize the cost over the respective catalog’s estimated productive life. We review response results from catalog mailings on a continuous basis; and if warranted, modify the period over which costs are recognized. We amortize the cost of each Master Catalog over an eighteen month period and amortize the cost of each catalog supplement over a three month period. Total unamortized catalog costs in prepaid expenses and other current assets on the Consolidated Balance Sheets were $0.4 million as of March 27, 2010 and March 28, 2009.

Deferred Taxes.  We account for certain income and expense items differently for financial reporting purposes than for income tax reporting purposes. Deferred taxes are provided in recognition of these temporary differences. If necessary, a valuation allowance on deferred tax assets is provided for items for which it is more likely than not that the benefit of such items will not be realized based on an assessment of both positive and negative evidence. See “Taxes” below in this section and Note 4 of our Consolidated Financial Statements for further details.

Stock-Based Compensation.  We measure the cost of services received in exchange for all equity awards granted, including stock options, warrants and restricted stock, based on the fair market value of the award as of the grant date. We record compensation cost related to unvested stock awards by recognizing, on a straight line basis, the unamortized grant date fair value over the remaining service period of each award. Excess tax benefits from the exercise of stock awards are presented in the Consolidated Statements of Cash Flows as a financing activity. Excess tax benefits are realized benefits from tax deductions for exercised awards in excess of the deferred tax asset attributable to stock-based compensation costs for such awards. We did not capitalize any stock-based compensation costs as part of an asset. We estimate forfeiture rates based on our historical experience.

Options generally vest over a period of up to four years, using either a graded schedule or on a straight-line basis, and expire ten years from the date of grant. Beginning in the second quarter of fiscal year 2008, options granted to executive officers vest using a graded schedule of 0% in the first year, 20% in each of the second and third years, and 60% in the fourth year. Prior options granted to executive officers vested equally over three years. The expense relating to these executive officer options is recognized on a straight-line basis over the requisite service period for the entire award.

21

During the first quarter of fiscal years 2010 and 2009, we granted performance-based restricted stock awards in place of options as a primary component of executive compensation. The performance-based restricted stock awards vest after three years subject to certain cumulative diluted earnings per share growth targets over the eligible three-year period. During the second quarter of fiscal year 2009 and in conjunction with the acquisition of Westcon, we modified these awards by increasing the cumulative diluted earnings per share growth performance condition. The modification did not have an impact on our Consolidated Financial Statements.

Compensation cost ultimately recognized for these performance-based restricted awards will equal the grant-date fair market value of the award that coincides with the actual outcome of the performance conditions. On an interim basis, we record compensation cost based on an assessment of the probability of achieving the performance conditions. At March 27, 2010, we estimated the probability of achievement for these performance-based awards granted in fiscal year 2010 and 2009 to be 75% and 0% of the target level, respectively.

See Note 7 of our Consolidated Financial Statements for further disclosure regarding our stock-based compensation.

Revenue Recognition.  Product sales are recorded when a product’s title and risk of loss transfers to the customer. We recognize the majority of our service revenue based upon when the calibration or other activity is performed and then shipped and/or delivered to the customer. Some of our service revenue is generated from managing customers’ calibration programs in which we recognize revenue in equal amounts at fixed intervals. We generally invoice our customers for freight, shipping, and handling charges. Provisions for customer returns are provided for in the period the related revenues are recorded based upon historical data.

Off-Balance Sheet Arrangements.  We do not maintain any off-balance sheet arrangements.

Reclassification of Amounts.  Certain reclassifications of financial information for prior fiscal years have been made to conform to the presentation for the current fiscal year. In addition, certain reclassifications of financial information for prior fiscal quarters have been made to conform to the presentation for the current fiscal quarters.

22

RESULTS OF OPERATIONS

The following table sets forth, for the prior three fiscal years, the components of our Consolidated Statements of Operations.

	FY 2010			FY 2009			FY 2008
Gross Profit Percentage:
Product Gross Profit		23.4	%		25.4	%		27.8	%
Service Gross Profit		24.5	%		23.7	%		23.3	%
Total Gross Profit		23.8	%		24.9	%		26.3	%
As a Percentage of Total Net Revenue:
Product Sales		65.6	%		68.3	%		67.5	%
Service Revenue		34.4	%		31.7	%		32.5	%
Total Net Revenue		100.0	%		100.0	%		100.0	%
Selling, Marketing and Warehouse Expenses		13.2	%		13.2	%		12.9	%
Administrative Expenses		7.7	%		8.1	%		8.8	%
Total Operating Expenses		20.9	%		21.3	%		21.7	%
Operating Income		2.9	%		3.6	%		4.6	%
Interest Expense		0.1	%		0.1	%		0.1	%
Other Expense		—			0.1	%		0.6	%
Total Other Expense		0.1	%		0.2	%		0.7	%
Income Before Income Taxes		2.8	%		3.4	%		3.9	%
Provision for Income Taxes		1.0	%		1.3	%		0.5	%
Net Income		1.8	%		2.1	%		3.4	%

FISCAL YEAR ENDED MARCH 27, 2010 COMPARED TO FISCAL YEAR ENDED MARCH 28, 2009 (dollars in thousands):

Revenue:

	For the Years Ended
	March 27,		March 28,
	2010		2009
Net Revenue:
Product	$	53,143	$	51,480
Service		27,918		23,939
Total	$	81,061	$	75,419

Net revenue increased $5.6 million, or 7.5%, from fiscal year 2009 to fiscal year 2010.

Our products net sales accounted for 65.6% of our total net revenue in fiscal year 2010 and 68.3% of our total net revenue in fiscal year 2009. Year-over-year product net sales increased $1.7 million, or 3.2%. Our fiscal years 2010 and 2009 product sales in relation to prior fiscal year quarter comparisons were as follows:

	FY 2010												FY 2009
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Product Sales Growth (Decline)		20.5	%		8.5	%		(7.6	)%		(8.5	)%		(1.4	)%		7.6	%		15.5	%		12.7	%

Product net sales per day declined in both the first and second quarter of fiscal year 2010 when compared against the same quarter in the prior fiscal year, a direct result of the economy. As the economy began to improve in the second half of fiscal year 2010, we experienced growth in daily sales volume for both the third

23

and fourth quarters of fiscal year 2010 when compared against the third and fourth quarters of fiscal year 2009. Our product sales per business day for each fiscal quarter during fiscal years 2010 and 2009 were as follows:

	FY 2010								FY 2009
	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Product Sales Per Business Day	$	230	$	249	$	190	$	176	$	191	$	226	$	206	$	192

The increase in product net sales was primarily due to increased sales in the wind energy industry. During fiscal year 2010, product sales to the wind energy industry were $4.7 million, or 8.8% of net product sales. The sales growth achieved in the wind energy industry was partially offset by a decline in sales to non-wind energy customers within our direct channel as a result of the economic climate experienced during fiscal year 2010. As economic conditions improved in the latter part of fiscal year 2010, the second half year-over-year sales growth did not fully offset the sales decline from the first half. During the first half of fiscal 2010, non-wind sales to our direct channel declined 17.3%, when compared to the first half of fiscal year 2009. During the second half of fiscal year 2010, non-wind sales to our direct channel increased 6.0%, when compared to the same period in the prior fiscal year. Sales to our reseller channel were relatively consistent from fiscal year 2009 to fiscal year 2010. The following table presents the percent of net sales for our significant product distribution channels for each fiscal quarter during fiscal years 2010 and 2009:

	FY 2010												FY 2009
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Percent of Net Sales:
Direct		75.2	%		70.8	%		77.5	%		75.2	%		77.0	%		72.7	%		71.1	%		74.1	%
Reseller		23.2	%		27.8	%		21.1	%		23.3	%		21.6	%		26.1	%		27.3	%		24.3	%
Freight Billed to Customer		1.6	%		1.4	%		1.4	%		1.5	%		1.4	%		1.2	%		1.6	%		1.6	%
		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Customer product orders include orders for instruments that we routinely stock in our inventory, customized products, and other products ordered less frequently, which we do not stock. Pending product shipments are primarily backorders, but also include products that are requested to be calibrated in our laboratories prior to shipment, orders required to be shipped complete, and orders required to be shipped at a future date. Our total pending product shipments at the end of fiscal year 2010 increased by approximately $0.6 million, or 49.2% from the balance at the end of fiscal year 2009. The increase in pending product shipments was primarily attributable to increased backorders, as well as $0.2 million in incremental pending product shipments associated with United Scale, which was acquired during our fiscal fourth quarter. As the economy improved and customer demand in the marketplace quickly increased, manufacturers were slower to respond, thus resulting in longer lead times for many of the products we sell. The following table reflects the percentage of total pending product shipments that were backorders at the end of each fiscal quarter in 2010 and 2009 and our historical trend of total pending product shipments:

	FY 2010												FY 2009
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Total Pending Product Shipments	$	1,576		$	2,351		$	1,904		$	1,445		$	1,189		$	1,701		$	1,398		$	1,366
% of Pending Product Shipments that are Backorders		89.5	%		82.8	%		78.9	%		72.2	%		81.0	%		84.1	%		70.7	%		74.7	%

Calibration services revenue, which accounted for 34.4% of our total net revenue in fiscal year 2010 and 31.7% of our total net revenue in fiscal year 2009, increased 16.6% from fiscal year 2009 to fiscal year 2010. The growth in revenue is primarily a result of the expansion of our traditional service customer base through

24

new customer acquisition as well as increased in-house and outsourced services provided to the wind energy industry. Service revenue with the wind-energy industry in fiscal year 2010 was $2.1 million, or 7.6% of total service revenue. Also, within any year, while we add new customers, we also have customers from the prior year whose calibrations may not repeat for any number of factors. Among those factors are the variations in the timing of customer periodic calibrations on instruments and other services, customer capital expenditures and customer outsourcing decisions. Because of the timing of calibration orders and segment expenses can vary on a quarter-to-quarter basis, we believe a trailing twelve month trend provides a better indication of the progress of this segment. Our fiscal years 2010 and 2009 calibration service revenue in relation to prior fiscal year quarter comparisons, were as follows:

	FY 2010												FY 2009
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Service Revenue Growth (Decline)		30.6	%		10.7	%		15.5	%		7.2	%		(0.9	)%		10.3	%		4.5	%		5.3	%

Within the calibration industry, there is a broad array of measurement disciplines making it costly and inefficient for any one provider to invest the needed capital for facilities, equipment and uniquely trained personnel necessary to address all measurement disciplines with in-house calibration capabilities. Our strategy has been to focus our investments in the core electrical, temperature, pressure and dimensional disciplines. Accordingly, we have historically outsourced 15% to 20% of Service segment revenue to third party vendors for calibration beyond our chosen scope of capabilities. During fiscal year 2010, we outsourced 21.1% of our total service revenue. The slight increase in the percentage of outsourced revenue is attributable to specific services provided to the wind energy industry, which fall outside our current scope of business. We will continue to evaluate the need for capital investments that could provide more in-house capabilities for our staff of technicians and reduce the need for third party vendors in certain instances. The following table presents the percent of Service segment revenue for the significant sources for each fiscal quarter during fiscal years 2010 and 2009:

	FY 2010												FY 2009
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Percent of Service Revenue:
Depot/Onsite		75.9	%		73.5	%		77.3	%		79.3	%		81.2	%		78.5	%		78.6	%		80.8	%
Outsourced		21.6	%		24.0	%		20.2	%		18.2	%		15.8	%		18.2	%		18.8	%		16.4	%
Freight Billed to Customers		2.5	%		2.5	%		2.5	%		2.5	%		3.0	%		3.3	%		2.6	%		2.8	%
		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Gross Profit:

	For the Years Ended
	March 27,		March 28,
	2010		2009
Gross Profit:
Product	$	12,442	$	13,070
Service		6,852		5,678
Total	$	19,294	$	18,748

Total gross profit dollars in fiscal year 2010 increased by $0.5 million, or 2.9%, from fiscal year 2009. As a percentage of total net revenue, total gross profit declined 110 basis points over the same time period.

We evaluate product gross profit from two perspectives. Channel gross profit includes net sales less the direct cost of inventory sold. Our total product gross profit includes channel gross profit as well as the impact of vendor rebates, cooperative advertising income, freight billed to customers, freight expenses and direct shipping costs. In general, our total product gross profit can vary based upon price discounting; the mix of

25

sales to our reseller channel, which have lower margins than our direct customer base; and the timing of periodic vendor rebates and cooperative advertising income received from suppliers.

Total product gross profit in fiscal year 2010 was 23.4% of total product sales and declined 200 basis points when compared with 25.4% of total product sales in fiscal year 2009. Product gross profit declined $0.6 million in fiscal year 2010 compared to fiscal year 2009. Despite increased product sale volume, an increase in price discounting drove the decrease. The gross profit percentage in our direct and reseller channels declined 140 basis points and 240 basis points, respectively, from fiscal year 2009 to fiscal year 2010. Pricing in the marketplace remained competitive during both the downturn and recovery phases of the economy, and as a result, we increased discounting accordingly. In addition, total product gross profit was negatively impacted by approximately $0.2 million less in combined vendor rebate and cooperative advertising income in fiscal year 2010, when compared to fiscal year 2009. The key driver of this decline in fiscal year 2010 was lower point-of-sale rebates achieved from Fluke. The following table reflects the quarterly historical trend of our product gross profit as a percent of total product sales:

	FY 2010												FY 2009
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Channel Gross Profit % — Direct(1)		24.7	%		23.1	%		23.2	%		24.3	%		24.0	%		24.6	%		26.5	%		25.8	%
Channel Gross Profit % — Reseller(1)		16.0	%		15.0	%		15.6	%		17.0	%		18.7	%		17.8	%		18.3	%		18.2	%
Channel Gross Profit % — Combined(2)		22.6	%		20.8	%		21.6	%		22.6	%		22.8	%		22.8	%		24.2	%		23.9	%
Other Items %(3)		3.1	%		1.2	%		0.6	%		0.9	%		1.2	%		1.6	%		1.8	%		3.4	%
Total Product Gross Profit %		25.7	%		22.0	%		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.

Calibration services gross profit increased $1.2 million, or 20.7%, from fiscal year 2009 to fiscal year 2010. As a percent of service revenue, calibration services gross profit increased 80 basis points from fiscal year 2009 to fiscal year 2010. Despite this increase, margin expansion was somewhat limited during fiscal year 2010 due to the volume of revenue growth attributed to third-party vendor repairs and calibrations, primarily to wind energy customers, and incremental performance-based management bonus and profit sharing expense in fiscal year 2010. The following table reflects our calibration services gross profit growth in relation to prior fiscal year quarters:

	FY 2010												FY 2009
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Service Gross Profit Dollar Growth (Decline)		25.4	%		15.0	%		25.5	%		2.9	%		5.7	%		16.8	%		4.8	%		(0.3	%)

Operating Expenses:

	For the Years Ended
	March 27,		March 28,
	2010		2009
Operating Expenses:
Selling, Marketing and Warehouse	$	10,682	$	9,935
Administrative		6,231		6,127
Total	$	16,913	$	16,062

26

Operating expenses were $16.9 million, or 20.9% of total net revenue, in fiscal year 2010 compared with $16.1 million, or 21.3% of total net revenue, in fiscal year 2009. Increased performance-based management bonus and profit sharing expenses contributed $0.6 million, or 73.4% of the overall annual increase. Exclusive of this increase, the remaining year-over-year increase in operating expense was 1.4%, an indication of our continued commitment to control costs.

Other Expense:

	For the Years Ended
	March 27,		March 28,
	2010		2009
Other Expense:
Interest Expense	$	63	$	100
Other Expense, net		35		67
Total	$	98	$	167

Total other expense decreased by less than $0.1 million from fiscal year 2009 to fiscal year 2010. Lower interest expense was a result of reduced debt balances and lower interest rates, while other expense decreases were due to reductions in foreign currency losses. We have a program in place to hedge the majority of our risk from fluctuations in the value of the U.S. dollar relative to the Canadian dollar.

Taxes:

	For the Years Ended
	March 27,		March 28,
	2010		2009
Provision for Income Taxes	$	832	$	963

Our effective tax rates for fiscal years 2010 and 2009 were 36.4% and 38.2%, respectively.

FISCAL YEAR ENDED MARCH 28, 2009 COMPARED TO FISCAL YEAR ENDED MARCH 29, 2008 (dollars in thousands):

Revenue:

	For the Years Ended
	March 28,		March 29,
	2009		2008
Net Revenue:
Product	$	51,480	$	47,539
Service		23,939		22,914
Total	$	75,419	$	70,453

Net revenue increased $5.0 million, or 7.0%, from fiscal year 2008 to fiscal year 2009.

Our distribution products net sales accounted for 68.3% of our total net revenue in fiscal year 2009 and 67.5% of our total net revenue in fiscal year 2008. Year-over-year product net sales increased 8.3%, primarily due to incremental sales associated with our acquisition of Westcon and increased reseller sales to expand our market reach. We believe that the overall economic environment, specifically the conditions experienced in the second half of our fiscal year, negatively impacted our overall sales performance for the year. This belief stems, in part, from the number of notices we have received from our suppliers and customers regarding plant shut downs, closures and workforce reductions. In the first half of fiscal year 2009, we experienced 14.1% growth in product net sales compared with the first half of fiscal year 2008; while in the second half of fiscal year 2009, we grew only 3.2% compared with the second half of fiscal year 2008, including incremental sales from

27

Westcon. Our fiscal years 2009 and 2008 product sales in relation to prior fiscal year quarter comparisons were as follows:

	FY 2009												FY 2008
	Q4			Q3			Q2			Q1			Q4(1)			Q3			Q2			Q1
Product Sales (Decline) Growth		(1.4	)%		7.6	%		15.5	%		12.7	%		(2.4	)%		5.8	%		13.6	%		3.7	%

(1) The fourth quarter of fiscal year 2008 was a 13-week period compared to a 14-week period in the fourth quarter of fiscal year 2007.

Product net sales per day increased in each quarter of fiscal year 2009 as compared with the same period of fiscal year 2008, except for our fourth quarter of fiscal year 2009. We believe this was primarily due to a decline in the general economy. Our product sales per business day for each fiscal quarter during fiscal years 2009 and 2008 were as follows:

	FY 2009								FY 2008
	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Product Sales Per Business Day	$	191	$	226	$	206	$	192	$	197	$	213	$	178	$	171

Overall product sales from fiscal year 2008 to fiscal year 2009 reflect 1.8% growth in our direct distribution channel. The direct distribution channel experienced a 5.8% growth in the first half of fiscal year 2009, due primarily to a combination of increased prices, new product introductions by strategic suppliers, increased customer response to our sales and marketing efforts, and growing sales through our website. Direct distribution channel’s sales in the third and fourth quarters of fiscal year 2009 declined 1.5% and 1.9%, respectively, compared to those in the third and fourth quarters of fiscal year 2008. We attribute this decline to the general weakness in the economy as demand from customers decreased despite aggressive pricing. For fiscal year 2009, our direct distribution channel gross profit percentage decreased 160 basis points, primarily as a result of more competitive pricing in both our U.S. and Canadian markets. While our direct distribution channel grew modestly in fiscal year 2009, our reseller distribution channel increased 34.0%, when compared to fiscal year 2008. We believe resellers continue to utilize us for our extensive availability to a broad range of new and existing products from within our inventory. While sales increased significantly, our continued use of a volume-based pricing structure allowed us to improve our reseller gross profit percentage by 70 basis points in fiscal year 2009 when compared to the fiscal year 2008. The following table presents the percent of net sales for our significant product distribution channels for each fiscal quarter during fiscal years 2009 and 2008:

	FY 2009												FY 2008
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Percent of Net Sales:
Direct		77.0	%		72.7	%		71.1	%		74.1	%		77.4	%		79.5	%		77.4	%		79.1	%
Reseller		21.6	%		26.1	%		27.3	%		24.3	%		21.1	%		19.1	%		21.0	%		19.3	%
Freight Billed to Customer		1.4	%		1.2	%		1.6	%		1.6	%		1.5	%		1.4	%		1.6	%		1.6	%
		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Customer product orders include orders for instruments that we routinely stock in our inventory, customized products, and other products ordered less frequently, which we do not stock. Pending product shipments are primarily backorders, but also include products that are requested to be calibrated in our laboratories prior to shipment, orders required to be shipped complete, and orders required to be shipped at a future date. Our total pending product shipments at the end of fiscal year 2009 decreased by approximately $0.2 million, or 16.2% from the balance at the end of fiscal year 2008. We believe this decrease was a result of a decline in the general economy. The following table reflects the percentage of total pending product shipments that were

28

backorders at the end of each fiscal quarter in 2009 and 2008 and our historical trend of total pending product shipments:

	FY 2009												FY 2008
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Total Pending Product Shipments	$	1,189		$	1,701		$	1,398		$	1,366		$	1,419		$	1,411		$	1,689		$	1,678
% of Pending Product Shipments that are Backorders		81.0	%		84.1	%		70.7	%		74.7	%		81.5	%		78.1	%		74.1	%		81.0	%

Calibration services revenue, which accounted for 31.7% of our total net revenue in fiscal year 2009 and 32.5% of our total net revenue in fiscal year 2008, increased 4.5% from fiscal year 2008 to fiscal year 2009. Incremental revenue achieved through new customer acquisition, resulting from our sales and marketing efforts and our acquisition of Westcon, was partially offset by declines in our existing customer base. Within any year, while we add new customers, we also have customers from the prior year whose calibrations may not repeat for any number of factors. Among those factors are the variations in the timing of customer periodic calibrations on instruments and other services, customer capital expenditures and customer outsourcing decisions. Because of the timing of calibration orders and segment expenses can vary on a quarter-to-quarter basis, we believe a trailing twelve month trend provides a better indication of the progress of this segment. Our fiscal years 2009 and 2008 calibration service revenue in relation to prior fiscal year quarter comparisons, were as follows:

	FY 2009												FY 2008
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Service Revenue (Decline) Growth		(0.9	)%		10.3	%		4.5	%		5.3	%		10.6	%		9.9	%		8.6	%		5.6	%

Within the calibration industry, there is a broad array of measurement disciplines making it costly and inefficient for any one provider to invest the needed capital for facilities, equipment and uniquely trained personnel necessary to address all measurement disciplines with in-house calibration capabilities. Our strategy has been to focus our investments in the core electrical, temperature, pressure and dimensional disciplines. Accordingly, 15% to 20% of Service segment revenue is generated from outsourcing customer equipment to third party vendors for calibration beyond our chosen scope of capabilities. The following table presents the percent of Service segment revenue for the significant sources for each fiscal quarter during fiscal years 2009 and 2008:

	FY 2009												FY 2008
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Percent of Service Revenue:
Depot/Onsite		81.2	%		78.5	%		78.6	%		80.8	%		81.0	%		78.8	%		78.9	%		79.2	%
Outsourced		15.8	%		18.2	%		18.8	%		16.4	%		16.4	%		18.6	%		18.4	%		18.2	%
Freight Billed to Customers		3.0	%		3.3	%		2.6	%		2.8	%		2.6	%		2.6	%		2.7	%		2.6	%
		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Gross Profit:

	For the Years Ended
	March 28,		March 29,
	2009		2008
Gross Profit:
Product	$	13,070	$	13,205
Service		5,678		5,336
Total	$	18,748	$	18,541

29

Gross profit, as a percent of total net revenue, decreased from 26.3% in fiscal year 2008 to 24.9% in fiscal year 2009.

Distribution products gross profit decreased $0.1 million, or 1.0%, from fiscal year 2008 to fiscal year 2009. Contributing to this decline was a greater mix of sales into our lower margin reseller channel, a decrease of $0.3 million in income from our rebate programs, and increased pricing discounts. These same factors led to a decline in product profit margin from 27.8% in fiscal year 2008 to 25.4% in fiscal year 2009.

Our product gross profit may be influenced by a number of factors that can impact quarterly comparisons. Among those factors are sales to our reseller channel which have lower margins than our direct customer base, periodic rebates on purchases, and cooperative advertising received from suppliers. The following table reflects the quarterly historical trend of our product gross profit as a percent of product net sales:

	FY 2009												FY 2008
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Channel Gross Profit % — Direct(1)		24.0	%		24.6	%		26.5	%		25.8	%		26.2	%		26.7	%		27.8	%		26.6	%
Channel Gross Profit % — Reseller(1)		18.7	%		17.8	%		18.3	%		18.2	%		16.4	%		18.3	%		18.4	%		16.7	%
Channel Gross Profit % — Combined(2)		22.8	%		22.8	%		24.2	%		23.9	%		24.1	%		25.1	%		25.8	%		24.6	%
Other Items %(3)		1.2	%		1.6	%		1.8	%		3.4	%		3.0	%		3.0	%		2.1	%		3.4	%
Total Product Gross Profit %		24.0	%		24.4	%		26.0	%		27.3	%		27.1	%		28.1	%		27.9	%		28.0	%

(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.

Calibration services gross profit increased $0.3 million, or 6.4%, from fiscal year 2008 to fiscal year 2009. As a percent of service revenue, calibration services gross profit increased 40 basis points from fiscal year 2008 to fiscal year 2009. The improvement in calibration services gross profit and margin is a direct result of reduced performance-based bonus and profit sharing expense. The following table reflects our calibration services gross profit growth in relation to prior fiscal year quarters:

	FY 2009												FY 2008
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Service Gross Profit Dollar Growth (Decline)		5.7	%		16.8	%		4.8	%		(0.3	)%		32.5	%		14.0	%		5.0	%		3.8	%

Operating Expenses:

	For the Years Ended
	March 28,		March 29,
	2009		2008
Operating Expenses:
Selling, Marketing and Warehouse	$	9,935	$	9,056
Administrative		6,127		6,202
Total	$	16,062	$	15,258

Operating expenses were $16.1 million, or 21.3% of total net revenue, in fiscal year 2009 compared with $15.3 million, or 21.7% of total net revenue, in fiscal year 2008. Included in fiscal year 2009 operating expenses were $1.1 million in Westcon expenses, of which $0.3 million related to non-recurring administrative expenses associated with integration. Exclusive of incremental Westcon expenses, our organic operating expenses decreased 1.8% in fiscal year 2009 compared with fiscal year 2008, primarily due to reductions in

30

employee stock-based compensation, performance-based management bonus and employee profit sharing expense, partially offset by investments in our sales and marketing for the Service segment.

Other Expense:

	For the Years Ended
	March 28,		March 29,
	2009		2008
Other Expense:
Interest Expense	$	100	$	101
Other Expense, net		67		437
Total	$	167	$	538

Interest expense of $0.1 million in fiscal year 2009 was consistent with interest expense in fiscal year 2008. Other expense decreased $0.4 million from fiscal year 2008 to fiscal year 2009 due to reduced foreign exchange losses. We have a program in place to hedge the majority of our risk to fluctuations in the value of the U.S. dollar relative to the Canadian dollar.

Taxes:

	For the Years Ended
	March 28,		March 29,
	2009		2008
Provision for Income Taxes	$	963	$	382

In fiscal year 2009, we recognized a $1.0 million provision for income taxes, compared with a $0.4 million provision in fiscal year 2008. Fiscal year 2008 included a $0.8 million benefit from a reduction in our deferred tax asset valuation allowance relating to our U.S. foreign tax credit carryforwards.

LIQUIDITY AND CAPITAL RESOURCES

We believe that amounts available under our current credit facility and our cash on hand are sufficient to satisfy our expected working capital and capital expenditure needs as well as our lease commitments for the foreseeable future.

Cash Flows.  The following table is a summary of our Consolidated Statements of Cash Flows (dollars in thousands):

	For the Years Ended
	March 27,			March 28,
	2010			2009
Cash Provided by (Used in):
Operating Activities	$	5,649		$	3,816
Investing Activities		(4,139	)		(7,416	)
Financing Activities		(1,469	)		3,472

Operating Activities:  Cash provided by operating activities for fiscal year 2010 was $5.6 million compared to $3.8 million in fiscal year 2009. Significant working capital fluctuations were as follows:

•  Inventory/Accounts Payable:  Inventory balance at March 27, 2010 was $5.9 million, an increase of $1.0 million when compared to the $4.9 million on-hand on March 28, 2009. The increase was partly due to inventory acquired in the acquisition of United Scale as well as a strategic decision we made to maintain higher inventory levels of specific, higher-volume products, in support of greater sales growth and in an effort to reduce future backorder issues similar to those experienced at times during fiscal year 2010. The timing of inventory receipts impacted the accounts payable balance and is the primary reason for the $3.6 million increase in accounts payable in fiscal year 2010, compared to a $1.6 million

31

decrease in 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.

The following table illustrates our days sales outstanding from fiscal year 2009 to fiscal year 2010:

	March 27,		March 28,
	2010		2009
Net Sales, for the last two fiscal months	$	17,824	$	14,226
Accounts Receivable, net	$	11,439	$	8,981
Days Sales Outstanding		39		38

•  Accrued Compensation and Other Liabilities:  Lower payments for employee profit sharing and performance-based management bonuses during fiscal year 2010, while accruing for future payments at March 27, 2010, contributed to the $1.5 million of cash provided during fiscal year 2010 compared with $0.8 million of cash used in fiscal year 2009.

Investing Activities:  In fiscal year 2010, we used $4.1 million of cash in investing activities. The primary uses of the cash were $1.9 million for the acquisition of United Scale, $1.1 million in contingent consideration relating to our acquisition of Westcon and $1.1 million to purchase property and equipment, primarily for additional lab capabilities and information technology. In fiscal year 2009, we used $7.4 million of cash in investing activities, of which approximately $5.6 million was associated with the purchase of Westcon. In addition, during fiscal year 2009, we used $1.8 million of cash for the purchase of property and equipment primarily for the expansion of capabilities in our calibration laboratories which included improvements to our facilities and infrastructure.

Financing Activities:  During fiscal year 2010, we used $1.5 million in cash for financing activities, including $1.0 million to reduce our debt. In addition, we used $0.6 million of cash for the repurchase of 143,000 shares of common stock from beneficiaries of a former Board member’s estate at a price of $4.45 per share. This use of cash was offset by $0.2 million of cash generated primarily from the issuance of common stock through the exercise of stock options and warrants. Financing activities provided $3.5 million in cash during fiscal year 2009. Net borrowings from our revolving line of credit provided $3.2 million during fiscal year 2009, primarily due to borrowings used to acquire Westcon. In addition, $0.2 million of cash was generated in fiscal year 2009 primarily from the issuance of common stock through the exercise of stock options and warrants.

Contractual Obligations and Commercial Commitments.  The table below contains aggregated information about future payments related to contractual obligations and commercial commitments such as debt and lease agreements (in millions):

	Payments Due By Period
	Less than		1-3		3-5		More than
	1 Year		Years		Years		5 Years		Total
Revolving Line of Credit(1)	$	—	$	2.5	$	—	$	—	$	2.5
Operating Leases		1.1		1.6		0.7		1.4		4.8
Total Contractual Cash Obligations	$	1.1	$	4.1	$	0.7	$	1.4	$	7.3

(1) Due to the uncertainty of forecasting expected variable rate interest payments, this amount excludes interest portion of the debt obligation.

32

OUTLOOK

With an expanded service capability and product portfolio, we are strategically positioned to further capitalize on our customers’ requirements for high quality calibration and repair services and a convenient, cost-competitive source for a broad inventory of handheld test and measurement equipment. Looking ahead to fiscal year 2011, we anticipate that our quarterly performance should result in strong first half year-over-year comparisons that will moderate in the second half to be more in line with our previously communicated organic growth rates of low-to-mid single digit growth in our Product segment and low double digit growth in our Service segment. More significantly, we expect that as our top line expands, we will continue to realize the significant leverage available in our Service segment and our bottom line should expand at an appreciably greater rate. Capital spending, excluding any acquisitions, is expected to be in the range of $1.5 million to $2.0 million in fiscal year 2011.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATES

Our exposure to changes in interest rates results from borrowing activities. In the event interest rates were to move by 1%, our yearly interest expense would increase or decrease by less than $0.1 million assuming our average-borrowing levels remained constant. As of March 27, 2010, $13.8 million was available under our credit facility, subject to the maximum borrowing restriction based on a 2.75 multiple of earnings before income taxes, depreciation and amortization for the preceding four consecutive fiscal quarters, of which $2.5 million was outstanding.

Under our credit facility described in Note 3 of our Consolidated Financial Statements, interest is adjusted on a quarterly basis based upon our calculated leverage ratio. We mitigate our interest rate risk by electing the lower of the base rate available under the credit facility and the London Interbank Offered Rate (“LIBOR”). As of March 27, 2010, the base rate and the LIBOR rate were 3.3% and 0.2%, respectively. Our interest rate for fiscal year 2010 ranged from 1.1% to 2.8%. On March 27, 2010 and March 28, 2009, we had no hedging arrangements in place to limit our exposure to upward movements in interest rates.

FOREIGN CURRENCY

Over 90% of our net revenues for fiscal years 2010 and 2009 were denominated in United States dollars, with the remainder denominated in Canadian dollars. A 10% change in the value of the Canadian dollar to the United States dollar would impact our net revenues by less than 1%. We monitor the relationship between the United States and Canadian currencies on a continuous basis and adjust sales prices for products and services sold in Canadian dollars as we believe to be appropriate.

We periodically enter into foreign exchange forward contracts to reduce the risk that our earnings would be adversely affected by changes in currency exchange rates. We do not apply hedge accounting and therefore, the change in the fair value of the contracts, which totaled less than $0.1 million in each of fiscal years 2010 and 2009 was recognized as a component of other expense in the Consolidated Statements of Operations and Comprehensive Income. The change in the fair value of the contracts is offset by the change in fair value on the underlying receivables denominated in Canadian dollars being hedged. On March 27, 2010, we had a foreign exchange contract set to mature in April 2010, outstanding in the notional amount of $0.4 million. On March 28, 2009, we had foreign exchange contracts outstanding in the notional amount of $0.3 million. We do not use hedging arrangements for speculative purposes.

33

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX

	Page(s)
Report of Independent Registered Public Accounting Firm		35
Consolidated Financial Statements
Statements of Operations and Comprehensive Income for the Years Ended March 27, 2010, March 28, 2009 and March 29, 2008		36
Balance Sheets as of March 27, 2010 and March 28, 2009		37
Statements of Cash Flows for the Years Ended March 27, 2010, March 28, 2009 and March 29, 2008		38
Statements of Shareholders’ Equity for the Years Ended March 27, 2010, March 28, 2009 and March 29, 2008		39
Notes to Consolidated Financial Statements		40-56
Schedule II — Valuation and Qualifying Accounts for the Years Ended March 27, 2010, March 28, 2009 and March 29, 2008		57

34

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Transcat, Inc.

Rochester, New York

We have audited the accompanying consolidated balance sheets of Transcat, Inc. and its subsidiaries (“the Company”) as of March 27, 2010 and March 28, 2009 and the related consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended March 27, 2010. In connection with our audits of the financial statements, we have also audited the schedule listed in the accompanying index. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedule. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Transcat, Inc. and its subsidiaries at March 27, 2010 and March 28, 2009, and the results of their operations and their cash flows for each of the three years in the period ended March 27, 2010, in conformity with accounting principles generally accepted in the United States.

As discussed in Note 10 to the consolidated financial statements, effective March 29, 2009 the Company adopted Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations, now codified as Accounting Standards Codification Topic 805, Business Combinations.

Also, in our opinion, the financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ BDO Seidman, LLP

BDO Seidman, LLP

New York, New York

June 24, 2010

35

TRANSCAT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In Thousands, Except Per Share Amounts)

	For the Years Ended
	March 27,		March 28,			March 29,
	2010		2009			2008
Product Sales	$	53,143	$	51,480		$	47,539
Service Revenue		27,918		23,939			22,914
Net Revenue		81,061		75,419			70,453
Cost of Products Sold		40,701		38,410			34,334
Cost of Services Sold		21,066		18,261			17,578
Total Cost of Products and Services Sold		61,767		56,671			51,912
Gross Profit		19,294		18,748			18,541
Selling, Marketing and Warehouse Expenses		10,682		9,935			9,056
Administrative Expenses		6,231		6,127			6,202
Total Operating Expenses		16,913		16,062			15,258
Operating Income		2,381		2,686			3,283
Interest Expense		63		100			101
Other Expense, net		35		67			437
Total Other Expense		98		167			538
Income Before Income Taxes		2,283		2,519			2,745
Provision for Income Taxes		832		963			382
Net Income		1,451		1,556			2,363
Other Comprehensive Income (Loss)		62		(116	)		393
Comprehensive Income	$	1,513	$	1,440		$	2,756
Basic Earnings Per Share	$	0.20	$	0.21		$	0.33
Average Shares Outstanding		7,352		7,304			7,132
Diluted Earnings Per Share	$	0.19	$	0.21		$	0.32
Average Shares Outstanding		7,549		7,469			7,272

See accompanying notes to consolidated financial statements.

36

TRANSCAT, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, Except Share and Per Share Amounts)

	March 27,			March 28,
	2010			2009
ASSETS
Current Assets:
Cash	$	123		$	59
Accounts Receivable, less allowance for doubtful accounts of $82 and $75 as of March 27, 2010 and March 28, 2009, respectively		11,439			8,981
Other Receivables		418			119
Inventory, net		5,906			4,887
Prepaid Expenses and Other Current Assets		915			774
Deferred Tax Asset		566			380
Total Current Assets		19,367			15,200
Property and Equipment, net		4,163			4,174
Goodwill		10,038			7,923
Intangible Assets, net		1,234			1,091
Deferred Tax Asset		533			635
Other Assets		378			368
Total Assets	$	35,713		$	29,391
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	8,798		$	4,748
Accrued Compensation and Other Liabilities		3,171			1,757
Income Taxes Payable		251			215
Total Current Liabilities		12,220			6,720
Long-Term Debt		2,532			3,559
Other Liabilities		704			493
Total Liabilities		15,456			10,772
Shareholders’ Equity:
Common Stock, par value $0.50 per share, 30,000,000 shares authorized;
7,698,450 and 7,656,358 shares issued as of March 27, 2010 and March 28, 2009, respectively; 7,279,668 and 7,380,576 shares outstanding as of March 27, 2010 and March 28, 2009, respectively		3,849			3,828
Capital in Excess of Par Value		9,357			8,606
Accumulated Other Comprehensive Income		382			320
Retained Earnings		8,304			6,853
Less: Treasury Stock, at cost, 418,782 and 275,782 shares as of March 27, 2010 and March 28, 2009, respectively		(1,635	)		(988	)
Total Shareholders’ Equity		20,257			18,619
Total Liabilities and Shareholders’ Equity	$	35,713		$	29,391

See accompanying notes to consolidated financial statements.

37

TRANSCAT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the Years Ended
	March 27,			March 28,			March 29,
	2010			2009			2008
Cash Flows from Operating Activities:
Net Income	$	1,451		$	1,556		$	2,363
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
Deferred Income Taxes		35			246			40
Depreciation and Amortization		2,080			1,897			1,761
Provision for (Recovery of) Accounts Receivable and Inventory Reserves		133			304			(23	)
Stock-Based Compensation Expense		579			666			780
Changes in Assets and Liabilities, net of acquisitions:
Accounts Receivable and Other Receivables		(2,453	)		1,418			(186	)
Inventory		(669	)		836			(1,039	)
Prepaid Expenses and Other Assets		(707	)		(694	)		(662	)
Accounts Payable		3,639			(1,585	)		640
Accrued Compensation and Other Liabilities		1,529			(789	)		(15	)
Income Taxes Payable		32			(39	)		(66	)
Net Cash Provided by Operating Activities		5,649			3,816			3,593
Cash Flows from Investing Activities:
Purchase of Property and Equipment		(1,128	)		(1,775	)		(1,505	)
Payments of Contingent Consideration		(1,094	)		—			—
Business Acquisitions, net of cash acquired		(1,917	)		(5,641	)		—
Net Cash Used in Investing Activities		(4,139	)		(7,416	)		(1,505	)
Cash Flows from Financing Activities:
Revolving Line of Credit, net		(1,001	)		3,199			(2,598	)
Payments on Other Debt Obligations		(26	)		(10	)		—
Issuance of Common Stock		201			239			266
Repurchase of Common Stock		(647	)		—			—
Excess Tax Benefits Related to Stock-Based Compensation		4			44			86
Net Cash (Used in) Provided by Financing Activities		(1,469	)		3,472			(2,246	)
Effect of Exchange Rate Changes on Cash		23			(21	)		9
Net Increase (Decrease) in Cash		64			(149	)		(149	)
Cash at Beginning of Period		59			208			357
Cash at End of Period	$	123		$	59		$	208
Supplemental Disclosures of Cash Flow Activity:
Cash paid during the period for:
Interest	$	74		$	91		$	114
Income Taxes, net	$	741		$	715		$	253
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Contingent Consideration Related to Business Acquisition	$	207		$	—		$	—
Stock Issued in Connection with Business Acquisition	$	—		$	1,113		$	—
Capital Lease Obligation	$	—		$	49		$	—
Expiration of Warrants from Debt Retirement	$	—		$	—		$	329

See accompanying notes to consolidated financial statements.

38

TRANSCAT, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In Thousands)

					Capital
	Common Stock				In						Accumulated					Treasury Stock
	Issued				Excess						Other					Outstanding
	$0.50 Par Value				of Par						Comprehensive			Retained		at Cost
	Shares		Amount		Value			Warrants			Income			Earnings		Shares		Amount			Total
Balance as of March 31, 2007		7,286	$	3,643	$	5,268		$	329		$	43		$	2,934		276	$	(988	)	$	11,229
Issuance of Common Stock		130		65		201																266
Stock-Based Compensation						608																608
Tax Benefit from Stock-Based Compensation						86																86
Restricted Stock		30		15		157																172
Expired Warrants						329			(329	)												—
Comprehensive Income:
Currency Translation Adjustment												385										385
Unrecognized Prior Service Cost, net of tax												8										8
Net Income															2,363							2,363
Balance as of March 29, 2008		7,446	$	3,723	$	6,649		$	—		$	436		$	5,297		276	$	(988	)	$	15,117
Issuance of Common Stock		210		105		1,247																1,352
Stock-Based Compensation						666																666
Tax Benefit from Stock-Based Compensation						44																44
Comprehensive Income:
Currency Translation Adjustment												(104	)									(104	)
Unrecognized Prior Service Cost, net of tax												(12	)									(12	)
Net Income															1,556							1,556
Balance as of March 28, 2009		7,656	$	3,828	$	8,606		$	—		$	320		$	6,853		276	$	(988	)	$	18,619
Issuance of Common Stock		42		21		180																201
Repurchase of Common Stock																	143		(647	)		(647	)
Stock-Based Compensation						579																579
Tax Expense from Stock-Based Compensation						(8	)															(8	)
Comprehensive Income:
Currency Translation Adjustment												101										101
Unrecognized Prior Service Cost, net of tax												(39	)									(39	)
Net Income															1,451							1,451
Balance as of March 27, 2010		7,698	$	3,849	$	9,357		$	—		$	382		$	8,304		419	$	(1,635	)	$	20,257

See accompanying notes to consolidated financial statements.

39

TRANSCAT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands, Except Per Share Amounts)

NOTE 1 — GENERAL

Description of Business:  Transcat, Inc. (“Transcat” or the “Company”) is a leading global distributor of professional grade handheld test and measurement instruments and accredited provider of calibration, repair and weighing system services primarily for the pharmaceutical and FDA-regulated, industrial manufacturing, energy and utilities, chemical process, and other industries.

Basis of Presentation:  During the second quarter of the fiscal year ended March 27, 2010, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. This statement, now codified as Accounting Standards Codification (“ASC”) Topic 105, Generally Accepted Accounting Principles, did not change accounting principles generally accepted in the United States (“GAAP”), but established the ASC as the single source of authoritative accounting principles recognized by the Financial Accounting Standards Board (“FASB”). The adoption of this statement did not have an impact on the Company’s Consolidated Financial Statements.

Principles of Consolidation:  The Consolidated Financial Statements of Transcat include the accounts of Transcat, Inc. and the Company’s wholly-owned subsidiaries, Transmation (Canada) Inc., Westcon, Inc. (“Westcon”) and USEC Acquisition Corp. (“USEC Acquisition”). All significant intercompany balances and transactions have been eliminated in consolidation.

On January 27, 2010, Transcat, through its wholly-owned subsidiary USEC Acquisition acquired United Scale & Engineering Corporation (“United Scale”), a Wisconsin corporation, pursuant to a Stock Purchase Agreement. See Note 10 for more information on this acquisition.

On March 29, 2009, the Company adopted SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51, now codified within ASC Topic 810, Consolidation. This statement applies to the accounting for noncontrolling interests (previously referred to as minority interests) in a subsidiary and for the deconsolidation of a subsidiary and requires noncontrolling interests to be reported as a component of equity, which changes the accounting for transactions with noncontrolling interest holders. Since the Company does not have any noncontrolling interests, the adoption of this statement did not have an impact on the Company’s Consolidated Financial Statements.

Use of Estimates:  The preparation of Transcat’s Consolidated Financial Statements in accordance with Generally Accepted Accounting Principles (GAAP) requires that the Company make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are used for, but not limited to, allowance for doubtful accounts and returns, depreciable lives of fixed assets, estimated lives of major catalogs and intangible assets, and deferred tax asset valuation allowances. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the Consolidated Financial Statements will change as new events occur, as more experience is acquired, as additional information is obtained, and as the operating environment changes. Actual results could differ from those estimates. Such changes and refinements in estimation methodologies are reflected in reported results of operations in the period in which the changes are made and, if material, their effects are disclosed in the Notes to the Consolidated Financial Statements.

Fiscal Year:  Transcat operates on a 52/53 week fiscal year, ending the last Saturday in March. In a 52-week fiscal year, each of the four quarters is a 13-week period. In a 53-week fiscal year, the last quarter is a 14-week period. The fiscal years ended March 27, 2010 (“fiscal year 2010”), March 28, 2009 (“fiscal year 2009”) and March 29, 2008 (“fiscal year 2008”) consisted of 52 weeks.

40

Accounts Receivable:  Accounts receivable represent amounts due from customers in the ordinary course of business. These amounts are recorded net of the allowance for doubtful accounts and returns in the Consolidated Balance Sheets. The allowance for doubtful accounts is based upon the expected collectability of accounts receivable. Transcat applies a specific formula to its accounts receivable aging, which may be adjusted on a specific account basis where the formula may not appropriately reserve for loss exposure. After all attempts to collect a receivable have failed, the receivable is written-off against the allowance for doubtful accounts. The returns reserve is calculated based upon the historical rate of returns applied to revenues over a specific timeframe. The returns reserve will increase or decrease as a result of changes in the level of revenue and/or the historical rate of returns.

Inventory:  Inventory consists of products purchased for resale and is valued at the lower of cost or market. Costs are determined using the average cost method of inventory valuation. Inventory is reduced by a reserve for items not saleable at or above cost by applying a specific loss factor, based on historical experience, to specific categories of inventory. The Company evaluates the adequacy of the reserve on a quarterly basis.

Property and Equipment, Depreciation and Amortization:  Property and equipment are stated at cost. Depreciation and amortization are computed primarily under the straight-line method over the following estimated useful lives:

	Years
Machinery, Equipment and Software	2 - 6
Furniture and Fixtures	3 - 10
Leasehold Improvements	2 - 10

Property and equipment determined to have no value are written off at their then remaining net book value. Transcat capitalizes certain costs incurred in the procurement and development of computer software used for internal purposes. Leasehold improvements are amortized under the straight-line method over the estimated useful life or the lease term, whichever is shorter. Maintenance and repairs are expensed as incurred. See Note 2 for further information on property and equipment.

Goodwill and Intangible Assets:  Goodwill represents costs in excess of fair values assigned to the underlying net assets of an acquired business. Other intangible assets, namely customer base, represent an allocation of purchase price to identifiable intangible assets of an acquired business.

Transcat estimates the fair value of the Company’s reporting units using the fair market value measurement requirement, rather than the undiscounted cash flows approach. The Company tests goodwill and intangible assets for impairment on an annual basis, or immediately if conditions indicate that such impairment could exist. The evaluation of the Company’s reporting units on a fair value basis indicated that no impairment existed as of March 27, 2010 and March 28, 2009.

A summary of changes in the Company’s goodwill and intangible assets is as follows:

	Goodwill						Intangible Assets
	Product		Service		Total		Product			Service			Total
Net Book Value as of March 29, 2008	$	1,524	$	1,443	$	2,967	$	—		$	—		$	—
Additions (see Note 10)		3,965		991		4,956		480			726			1,206
Amortization		—		—		—		(45	)		(70	)		(115	)
Net Book Value as of March 28, 2009	$	5,489	$	2,434	$	7,923	$	435		$	656		$	1,091
Additions (see Note 10)		1,283		832		2,115		17			324			341
Amortization		—		—		—		(79	)		(119	)		(198	)
Net Book Value as of March 27, 2010	$	6,772	$	3,266	$	10,038	$	373		$	861		$	1,234

The intangible assets are being amortized on an accelerated basis over their estimated useful life of 10 years. Amortization expense relating to intangible assets is expected to be $0.2 million in fiscal year 2011,

41

$0.3 million in fiscal year 2012, $0.2 million in each of the fiscal years 2013 and 2014, and $0.1 million in fiscal year 2015.

Catalog Costs:  Transcat capitalizes the cost of each Master Catalog mailed and amortizes the cost over the respective catalog’s estimated productive life. The Company reviews response results from catalog mailings on a continuous basis, and if warranted, modifies the period over which costs are recognized. The Company amortizes the cost of each Master Catalog over an eighteen month period and amortizes the cost of each catalog supplement over a three month period. Total unamortized catalog costs included as a component of prepaid expenses and other current assets on the Consolidated Balance Sheets were $0.4 million as of March 27, 2010 and March 28, 2009.

Deferred Taxes:  Transcat accounts for certain income and expense items differently for financial reporting purposes than for income tax reporting purposes. Deferred taxes are provided in recognition of these temporary differences. If necessary, a valuation allowance on net deferred tax assets is provided for items for which it is more likely than not that the benefit of such items will not be realized based on an assessment of both positive and negative evidence. See Note 4 for further discussion on income taxes.

Fair Value Measurements:  Transcat has determined the fair value of debt and other financial instruments using a valuation hierarchy. The hierarchy, which prioritizes the inputs used in measuring fair value, consists of three levels. Level 1 uses observable inputs such as quoted prices in active markets; Level 2 uses inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, which is defined as unobservable inputs in which little or no market data exists, requires the Company to develop its own assumptions. The carrying amount of debt on the Consolidated Balance Sheets approximates fair value due to variable interest rate pricing, and the carrying amounts for cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short-term nature.

During fiscal year 2010, the Company adopted Financial Statement of Position (“FSP”) No. 157-2, Partial Deferral of the Effective Date of Statement 157, and FSP No. 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, now codified within ASC Topic 820, Fair Value Measurements (“ASC 820”). The adoption of these pronouncements did not have a material impact on the Company’s Consolidated Financial Statements.

Stock-Based Compensation:  The Company measures the cost of services received in exchange for all equity awards granted, including stock options, warrants and restricted stock, based on the fair market value of the award as of the grant date. The Company records compensation cost related to unvested stock awards by recognizing, on a straight line basis, the unamortized grant date fair value over the remaining service period of each award. Excess tax benefits from the exercise of stock awards are presented in the Consolidated Statements of Cash Flows as a financing activity. Excess tax benefits are realized benefits from tax deductions for exercised awards in excess of the deferred tax asset attributable to stock-based compensation costs for such awards. The Company did not capitalize any stock-based compensation costs as part of an asset. The Company estimates forfeiture rates based on its historical experience. During fiscal years 2010, 2009 and 2008, the Company recorded non-cash stock-based compensation cost in the amount of $0.6 million, $0.7 million and $0.8 million, respectively, in the Consolidated Statements of Operations and Comprehensive Income.

The estimated fair value of options granted was calculated using the Black-Scholes-Merton pricing model (“Black-Scholes”), which produced a weighted average fair value granted of $3.67 per share in fiscal year 2010, $4.02 per share in fiscal year 2009 and $4.59 per share in fiscal year 2008.

The following are the weighted average assumptions used in the Black-Scholes model:

	FY 2010	FY 2009	FY 2008
Expected life	6 years	6 years	6 years
Annualized volatility rate	57.3%	61.3%	68.3%
Risk-free rate of return	2.8%	3.3%	4.5%
Dividend rate	0.0%	0.0%	0.0%

42

The Black-Scholes model incorporates assumptions to value stock-based awards. The risk-free rate of return for periods within the contractual life of the award is based on a zero-coupon U.S. government instrument over the contractual term of the equity instrument. Expected volatility is based on historical volatility of the Company’s stock. The expected option term represents the period that stock-based awards are expected to be outstanding based on the simplified method, which averages an award’s weighted-average vesting period and expected term for “plain vanilla” share options. Options are considered to be “plain vanilla” if they have the following basic characteristics: granted “at-the-money”; exercisability is conditioned upon service through the vesting date; termination of service prior to vesting results in forfeiture; limited exercise period following termination of service; and options are non-transferable and non-hedgeable. The Company will continue to use the simplified method until it has the historical data necessary to provide a reasonable estimate of expected life. For the expected term, the Company has “plain vanilla” stock options, and therefore used a simple average of the vesting period and the contractual term for options granted subsequent to January 1, 2006.

Revenue Recognition:  Product sales are recorded when a product’s title and risk of loss transfers to the customer. The Company recognizes the majority of its service revenue based upon when the calibration or repair activity is performed and then shipped and/or delivered to the customer. Some service revenue is generated from managing customers’ calibration programs in which the Company recognizes revenue in equal amounts at fixed intervals. The Company generally invoices its customers for freight, shipping, and handling charges. Provisions for customer returns are provided for in the period the related revenue is recorded based upon historical data.

Vendor Rebates:  Vendor rebates are based on a specified cumulative level of purchases and incremental product sales and are recorded as a reduction of cost of products sold. Purchase rebates are calculated and recorded quarterly based upon our volume of purchases with specific vendors during the quarter. Point of sale rebate programs are based upon annual year-over-year sales performance on a calendar year basis and are recorded as earned, on a quarterly basis, based upon the expected level of annual achievement.

Cooperative Advertising Income:  Transcat records cash consideration received from a vendor as a reduction of cost of products sold as the related inventory is sold. The Company recorded, as a reduction of cost of products sold, consideration in the amount of $1.1 million in each of the fiscal years 2010, 2009 and 2008.

Shipping and Handling Costs:  Freight expense and direct shipping costs are included in cost of products and services sold. These costs were approximately $1.4 million, $1.5 million and $1.4 million for fiscal years 2010, 2009 and 2008, respectively. Direct handling costs, the majority of which represent direct compensation of employees who pick, pack, and otherwise prepare, if necessary, merchandise for shipment to customers, are reflected in selling, marketing, and warehouse expenses. These costs were $0.7 million in fiscal year 2010, $0.5 million in fiscal year 2009 and $0.4 million in fiscal year 2008.

Foreign Currency Translation and Transactions:  The accounts of Transmation (Canada) Inc. are maintained in the local currency and have been translated to United States dollars. Accordingly, the amounts representing assets and liabilities, except for equity, have been translated at the period-end rates of exchange and related revenue and expense accounts have been translated at average rates of exchange during the period. Gains and losses arising from translation of Transmation (Canada) Inc.’s balance sheets into United States dollars are recorded directly to the accumulated other comprehensive income component of shareholders’ equity.

Transcat records foreign currency gains and losses on Canadian business transactions. The net foreign currency loss was less than $0.1 million in each of the fiscal years 2010 and 2009 and $0.4 million in fiscal year 2008. Beginning in the third quarter of fiscal year 2008, the Company began utilizing foreign exchange forward contracts to reduce the risk that future earnings would be adversely affected by changes in currency exchange rates. The Company does not apply hedge accounting and therefore, the change in the fair value of the contracts, which totaled less than $0.1 million in each of the fiscal years 2010 and 2009 and $0.2 million in fiscal year 2008, was recognized as a component of other expense in the Consolidated Statements of Operations and Comprehensive Income. The change in the fair value of the contracts is offset by the change in fair value on the underlying receivables denominated in Canadian dollars being hedged. On March 27, 2010,

43

the Company had a foreign exchange contract set to mature in April 2010, outstanding in the notional amount of $0.4 million. On March 28, 2009, the Company had foreign exchange contracts outstanding in the notional amount of $0.3 million. The Company does not use hedging arrangements for speculative purposes.

On March 29, 2009, the Company adopted SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, now codified within ASC Topic 815, Derivatives and Hedging. This statement intends to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. The adoption of this pronouncement did not have a material impact on the Company’s Consolidated Financial Statements.

Comprehensive Income:  Other comprehensive income is comprised of net income, currency translation adjustments and unrecognized prior service costs, net of tax. At March 27, 2010, accumulated other comprehensive income consisted of cumulative currency translation gains of $0.6 million and unrecognized prior service costs, net of tax, of $0.2 million. At March 28, 2009, accumulated other comprehensive income consisted of cumulative currency translation gains of $0.5 million and unrecognized prior service costs, net of tax, of $0.2 million.

Earnings Per Share:  Basic earnings per share of common stock are computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share of common stock reflect the assumed conversion of stock options, warrants, and unvested restricted stock awards using the treasury stock method in periods in which they have a dilutive effect. In computing the per share effect of assumed conversion, funds which would have been received from the exercise of options, warrants, and unvested restricted stock are considered to have been used to purchase shares of common stock at the average market prices during the period, and the resulting net additional shares of common stock are included in the calculation of average shares of common stock outstanding.

For fiscal year 2010, the net additional common stock equivalents had a $.01 per share effect on the calculation of dilutive earnings per share. For fiscal years 2009 and 2008, the net additional common stock equivalents had no effect and a $0.01 per share effect, respectively, on the calculation of dilutive earnings per share. The average shares outstanding used to compute basic and diluted earnings per share are as follows:

	For the Years Ended
	March 27,		March 28,		March 29,
	2010		2009		2008
Average Shares Outstanding — Basic		7,352		7,304		7,132
Effect of Dilutive Common Stock Equivalents		197		165		140
Average Shares Outstanding — Diluted		7,549		7,469		7,272
Anti-dilutive Common Stock Equivalents		644		616		615

On March 29, 2009, the Company adopted FASB Staff Position No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, now codified within ASC Topic 260, Earnings Per Share (“ASC 260”). This pronouncement addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore, need to be included in the computation of earnings per share under the two-class method as described in ASC 260. The adoption of this pronouncement did not have a material impact on the Company’s Consolidated Financial Statements.

Subsequent Events:  In May 2009, the FASB issued SFAS No. 165, Subsequent Events, now codified as ASC Topic 855, Subsequent Events (“ASC 855”). This statement established general standards of accounting and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It is effective for financial periods ending after June 15, 2009 and is to be applied prospectively. In February 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-09, Subsequent Events, which amended ASC 855 by clarifying that Securities and Exchange Commission filers need not

44

disclose the date through which subsequent events have been evaluated and that reissuances for which a subsequent events evaluation is required are limited to “revised” financial statements, as defined in the ASU.

The Company has evaluated all events and transactions that occurred subsequent to March 27, 2010. No material subsequent events have occurred that require recognition or disclosure in the Consolidated Financial Statements.

Reclassification of Amounts:  Certain reclassifications of financial information for prior fiscal years have been made to conform to the presentation for the current fiscal year.

NOTE 2 — PROPERTY AND EQUIPMENT

Property and equipment consist of:

	March 27,			March 28,
	2010			2009
Machinery, Equipment and Software	$	16,608		$	15,475
Furniture and Fixtures		1,710			1,688
Leasehold Improvements		904			657
Total Property and Equipment	$	19,222		$	17,820
Less: Accumulated Depreciation and Amortization		(15,059	)		(13,646	)
Total Property and Equipment, net	$	4,163		$	4,174

Total depreciation and amortization expense amounted to $1.3 million in fiscal year 2010 and $1.1 million in each of the fiscal years 2009 and 2008.

NOTE 3 — DEBT

Description.  Transcat, through a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. maturing in August 2011, has a revolving credit facility in the amount of $15.0 million (the “Revolving Credit Facility”), subject to the maximum borrowing restriction based on a 2.75 multiple of earnings before income taxes, depreciation and amortization for the preceding four consecutive fiscal quarters. As of March 27, 2010, $13.8 million was available under the Credit Agreement, of which $2.5 million was outstanding and included in long-term debt on the Consolidated Balance Sheet.

Interest and Other Costs.  Interest on the Revolving Credit Facility accrues, at Transcat’s election, at either a base rate (defined as the highest of prime, a three month certificate of deposit plus 1%, or the federal funds rate plus 1/2 of 1%) (the “Base Rate”) or the London Interbank Offered Rate (“LIBOR”), in each case, plus a margin. Commitment fees accrue based on the average daily amount of unused credit available on the Revolving Credit Facility. Interest and commitment fees are adjusted on a quarterly basis based upon the Company’s calculated leverage ratio, as defined in the Credit Agreement. The Base Rate and the LIBOR rates as of March 27, 2010 were 3.3% and 0.2%, respectively. The Company’s interest rate for fiscal year 2010 ranged from 1.1% to 2.8%. Loan costs associated with the Chase Credit Agreement, totaling less than $0.1 million, are being amortized over the term of the agreement.

Covenants.  The Credit Agreement has certain covenants with which the Company has to comply, including a fixed charge ratio covenant and a leverage ratio covenant. The Company was in compliance with all loan covenants and requirements throughout fiscal year 2010.

Other Terms.  The Company has pledged all of its U.S. tangible and intangible personal property and the common stock of its wholly-owned subsidiaries, Transmation (Canada) Inc. and Westcon as collateral security for the loans made under the Revolving Credit Facility.

45

NOTE 4 — INCOME TAXES

Transcat’s net income before income taxes on the Consolidated Statements of Operations is as follows:

	FY 2010			FY 2009			FY 2008
United States	$	2,289		$	2,544		$	2,695
Foreign		(6	)		(25	)		50
Total	$	2,283		$	2,519		$	2,745

The net provision for income taxes for fiscal years 2010, 2009 and 2008 is as follows:

	FY 2010		FY 2009		FY 2008
Current Tax Provision:
Federal	$	710	$	631	$	236
State		87		86		106
	$	797	$	717	$	342
Deferred Tax Provision (Benefit):
Federal	$	34	$	225	$	69
State		1		21		(29	)
	$	35	$	246	$	40
Provision for Income Taxes	$	832	$	963	$	382

A reconciliation of the income tax provision computed by applying the statutory United States federal income tax rate and the income tax provision reflected in the Consolidated Statements of Operations is as follows:

	FY 2010			FY 2009		FY 2008
Federal Income Tax at Statutory Rate	$	776		$	856	$	933
State Income Taxes, net of Federal benefit		91			101		110
Valuation Allowance(1)		—			—		(784	)
Other, net		(35	)		6		123
Total	$	832		$	963	$	382

(1) In fiscal year 2008, after assessing all available evidence, the Company determined that it was more likely than not that the benefits associated with its U.S. foreign tax credit carryforwards would be realized. As a result, the Company reduced its deferred tax valuation allowance by $0.8 million and recorded the reduction as a benefit from income taxes in the Consolidated Statements of Operations.

46

The components of the net deferred tax assets are as follows:

	March 27,			March 28,
	2010			2009
Current Deferred Tax Assets:
Accrued Liabilities	$	263		$	231
Other		303			149
Total Current Deferred Tax Assets	$	566		$	380
Non-Current Deferred Tax Assets (Liabilities):
Stock-Based Compensation	$	708		$	511
Foreign Tax Credits (expiring through March 2018)		494			614
Depreciation		(524	)		(536	)
Intangible Assets		(469	)		(414	)
Other		324			460
Total Non-Current Deferred Tax Assets	$	533		$	635
Net Deferred Tax Assets	$	1,099		$	1,015

Deferred U.S. income taxes have not been recorded for basis differences related to the investments in the Company’s foreign subsidiary, which consist primarily of undistributed earnings. During fiscal year 2008, the Company’s foreign subsidiary declared and paid dividends to Transcat in the amount of $2.6 million (in U.S. dollars), of which $1.3 million was previously taxed. The Company incurred additional tax of $0.4 million on the remaining dividend, which was fully offset by the utilization of a portion of the Company’s available foreign tax credits, as a component of the provision for income taxes in the Consolidated Statements of Operations. The remaining earnings of the Company’s foreign subsidiary are considered permanently reinvested in the subsidiary, therefore, the determination of the deferred tax liability on unremitted earnings is not practicable because such liability, if any, depends on circumstances existing if and when remittance occurs.

The Company files income tax returns in the U.S. federal jurisdiction, various states and Canada. During fiscal year 2010, the Internal Revenue Service (the “IRS”) commenced an examination of the Company’s U.S. federal income tax returns for the tax years ended March 28, 2009 and March 29, 2008. Subsequent to March 27, 2010, the IRS completed its examination with no material adjustments being proposed. The Company is no longer subject to examination by U.S. federal income tax authorities for the tax years 2009 and prior, by state tax authorities for the tax years 2006 and prior, and by Canadian tax authorities for the tax years 2002 and prior. There are no tax years currently under examination by state or Canadian tax authorities.

During fiscal years 2010, 2009 and 2008, the Company recognized no adjustments for material uncertain tax benefits and expects no material changes to unrecognized tax positions within the next twelve months. The Company recognizes interest and penalties, if any, related to uncertain tax positions in the provision for income taxes. No interest and penalties related to uncertain tax positions were recognized in fiscal years 2010, 2009 and 2008 or were accrued at March 27, 2010 and March 28, 2009.

NOTE 5 — DEFINED CONTRIBUTION PLAN

All of Transcat’s United States based employees are eligible to participate in a defined contribution plan, the Long-Term Savings and Deferred Profit Sharing Plan (the “Plan”), provided certain qualifications are met.

In the long-term savings portion of the Plan (the “401K Plan”), plan participants are entitled to a distribution of their vested account balance upon termination of employment or retirement. Plan participants are fully vested in their contributions while Company contributions vest over a three year period. The Company temporarily suspended matching contributions to the 401K Plan for fiscal year 2010. The Company’s matching contributions to the 401K Plan were $0.3 million in each of the fiscal years 2009 and 2008.

47

In the deferred profit sharing portion of the Plan, Company contributions are made at the discretion of the Board of Directors. The Company made no profit sharing contributions in fiscal years 2010, 2009 and 2008.

NOTE 6 — POSTRETIREMENT HEALTH CARE PLANS

The Company has two defined benefit postretirement health care plans. One plan provides limited reimbursement to eligible non-officer participants for the cost of individual medical insurance coverage purchased by the participant following qualifying retirement from employment with the Company (the “Non-Officer Plan”). The other plan provides long-term care insurance benefits, medical and dental insurance benefits and medical premium reimbursement benefits to eligible retired corporate officers and their eligible spouses (the “Officer Plan”).

The change in the postretirement benefit obligation is as follows:

	FY 2010			FY 2009
Postretirement benefit obligation, at beginning of fiscal year	$	458		$	359
Service cost		85			50
Interest cost		33			24
Benefits paid		(7	)		(6	)
Actuarial loss		82			31
Postretirement benefit obligation, at end of fiscal year		651			458
Fair value of plan assets, at end of fiscal year		—			—
Funded status, at end of year	$	(651	)	$	(458	)
Accumulated postretirement benefit obligation, at end of fiscal year	$	651		$	458

The accumulated postretirement benefit obligation is included as a component of other liabilities (non-current) in the Consolidated Balance Sheets. The components of net periodic postretirement benefit cost and other amounts recognized in other comprehensive income are as follows:

	FY 2010			FY 2009			FY 2008
Net periodic postretirement benefit cost:
Service cost	$	85		$	50		$	34
Interest cost		33			24			16
Amortization of prior service cost		13			13			13
		131			87			63
Benefit obligations recognized in other comprehensive income:
Amortization of prior service cost		(13	)		(13	)		(13	)
Net loss		77			31			—
		64			18			(13	)
Total recognized in net periodic benefit cost and other comprehensive income	$	195		$	105		$	50
Amount recognized in accumulated other comprehensive income, at end of fiscal year:
Unrecognized prior service cost	$	327		$	263		$	245

The prior service cost is amortized on a straight-line basis over the average remaining service period of active participants for the Non-Officer Plan and over the average remaining life expectancy of active participants for the Officer Plan. The estimated prior service cost that will be amortized from accumulated other comprehensive gain into net periodic postretirement benefit cost during the fiscal year 2011 is less than $0.1 million.

48

The postretirement benefit obligation was computed by an independent third party actuary. Assumptions used to determine the postretirement benefit obligation and the net periodic benefit cost were as follows:

	March 27,			March 28,			March 29,
	2010			2009			2008
Weighted average discount rate		6.1	%		7.4	%		6.7	%
Medical care cost trend rate:
Trend rate assumed for next year		8.5	%		9.0	%		9.5	%
Ultimate trend rate		5.0	%		5.0	%		5.0	%
Year that rate reaches ultimate trend rate		2018			2018			2018
Dental care cost trend rate:
Trend rate assumed for next year and remaining at that level thereafter		5.0	%		5.0	%		5.0	%

Benefit payments are funded by the Company as needed. Payments toward the cost of a retiree’s medical and dental coverage, which are initially determined as a percentage of a base coverage plan in the year of retirement as defined in the plan document, are limited to increase at a rate of no more than 3% per year. The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:

Fiscal Year	Amount
2011	$	26
2012		29
2013		43
2014		64
2015		77
2016-2020		397

Increasing the assumed health care cost trend rate by one percentage point would increase the accumulated postretirement benefit obligation and the annual net periodic cost by less than $0.1 million. A one percentage point decrease in the healthcare cost trend would decrease the accumulated postretirement benefit obligation and the annual net periodic cost by less than $0.1 million.

NOTE 7 — STOCK-BASED COMPENSATION

The Transcat, Inc. 2003 Incentive Plan, as amended (the “2003 Plan”), provides for, among other awards, grants of restricted stock and stock options to directors, officers and key employees to purchase common stock at no less than the fair market value at the date of grant. At March 27, 2010, the number of shares available for future grant under the 2003 Plan totaled 0.2 million.

In addition, Transcat maintains a warrant plan for directors (the “Directors’ Warrant Plan”). Under the Directors’ Warrant Plan, as amended, warrants have been granted to non-employee directors to purchase common stock at the fair market value at the date of grant. All warrants authorized for issuance pursuant to the Directors’ Warrant Plan have been granted and were fully vested as of August 2009.

Restricted Stock:  During the first quarter of fiscal years 2010 and 2009, the Company granted performance-based restricted stock awards in place of options as a primary component of executive compensation. These performance-based restricted stock awards vest after three years subject to certain cumulative diluted earnings per share targets over the eligible three-year period.

Compensation cost ultimately recognized for these performance-based restricted stock awards will equal the grant-date fair market value of the award that coincides with the actual outcome of the performance conditions. On an interim basis, the Company records compensation cost based on an assessment of the probability of achieving the performance conditions. At March 27, 2010, the Company estimated the probability of achievement for the performance-based restricted stock awards granted in fiscal year 2010 to be

49

75% of the target level. During the fourth quarter of fiscal year 2010, based on an assessment of achieving the performance condition, the Company adjusted the estimated probability of achievement for the performance-based restricted stock awards granted in fiscal year 2009 from 50% to 0%. As a result, cumulative compensation cost relating to these awards was reduced by $0.1 million and reflected as a reduction of expense in the Consolidated Statement of Operations in fiscal year 2010. Total expense relating to performance-based restricted stock awards, based on grant-date fair market value and the estimated probability of achievement, was less than $0.1 million during each of fiscal years 2010 and 2009. Unearned compensation totaled $0.2 million as of March 27, 2010.

Restricted stock awards granted in fiscal year 2008 vested immediately and as such, the Company realized total expense, based on fair market value, in the amount of $0.2 million in fiscal year 2008.

Stock Options:  Options generally vest over a period of up to four years, using either a graded schedule or on a straight-line basis, and expire ten years from the date of grant. Beginning in the second quarter of fiscal year 2008, options granted to executive officers vest using a graded schedule of 0% in the first year, 20% in each of the second and third years, and 60% in the fourth year. Prior options granted to executive officers vested equally over three years. The expense relating to these executive officer options is recognized on a straight-line basis over the requisite service period for the entire award.

The following table summarizes the Company’s options for fiscal years 2010, 2009 and 2008:

				Weighted
				Average		Weighted Average
	Number			Exercise		Remaining		Aggregate
	of			Price per		Contractual		Intrinsic
	Shares			Share		Term (in Years)		Value
Outstanding as of March 31, 2007		329		$	3.11
Granted		407			6.90
Exercised		(71	)		1.37
Cancelled/Forfeited		(9	)		4.12
Outstanding as of March 29, 2008		656			5.64
Granted		19			6.75
Exercised		(6	)		2.69
Cancelled/Forfeited		(4	)		6.35
Outstanding as of March 28, 2009		665			5.70
Granted		10			6.55
Cancelled/Forfeited		(1	)		2.89
Outstanding as of March 27, 2010		674			5.72		6	$	1,106
Exercisable as of March 27, 2010		417			4.84		6		1,004

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of fiscal year 2010 and the exercise price, multiplied by the number of in-the-money stock options) that would have been received by the option holders had all option holders exercised their options on March 27, 2010. The amount of aggregate intrinsic value will change based on the fair market value of the Company’s stock.

Total unrecognized compensation cost related to non-vested stock options as of March 27, 2010 was $0.5 million, which is expected to be recognized over a weighted average period of one year. In fiscal year 2010, there were no stock options exercised. The aggregate intrinsic value of stock options exercised in fiscal year 2009 was less than $0.1 million and was $0.3 million in fiscal year 2008. Cash receipts from the exercise of options in fiscal year 2009 were less than $0.1 million and were $0.1 million in fiscal year 2008.

50

The following table presents options outstanding and exercisable as of March 27, 2010:

	Options Outstanding						Options Exercisable
			Weighted		Weighted				Weighted
			Average		Average				Average
			Remaining		Exercise				Exercise
	Number		Contractual		Price		Number		Price
	of		Term		per		of		per
	Shares		(in Years)		Share		Shares		Share
Range of Exercise Prices:
$2.20-$3.50		133		4	$	2.51		133	$	2.51
$3.51-$5.00		55		5		4.31		55		4.31
$5.01-$6.50		204		7		5.58		147		5.57
$6.51-$7.72		282		7		7.61		82		7.72
Total		674		6		5.72		417		4.84

Warrants:  Warrants expire in five years from the date of grant. The following table summarizes warrants for fiscal years 2010, 2009 and 2008:

				Weighted
				Average		Weighted Average
	Number			Exercise		Remaining		Aggregate
	of			Price per		Contractual		Intrinsic
	Shares			Share		Term (in years)		Value
Outstanding as of March 31, 2007		153		$	3.27
Exercised		(43	)		1.82
Cancelled/Forfeited		(11	)		4.51
Outstanding as of March 29, 2008		99			3.75
Exercised		(32	)		2.57
Cancelled/Forfeited		(4	)		5.25
Outstanding as of March 28, 2009		63			4.28
Exercised		(18	)		3.19
Cancelled/Forfeited		(4	)		2.88
Outstanding as of March 27, 2010		41			4.89		1	$	92
Exercisable as of March 27, 2010		41			4.89		1		92

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of fiscal year 2010 and the exercise price, multiplied by the number of in-the-money warrants) that would have been received by the warrant holders had all warrant holders exercised their warrants on March 27, 2010. The amount of aggregate intrinsic value will change based on the fair market value of the Company’s stock. The aggregate intrinsic value of warrants exercised was $0.1 million in each of the fiscal years 2010 and 2009, and $0.2 million in fiscal year 2008. Cash received from the exercise of warrants was less than $0.1 million in each of fiscal years 2010, 2009 and 2008.

51

The following table presents warrants outstanding and exercisable as of March 27, 2010:

	Warrants Outstanding
			Remaining
	Number		Contractual		Warrants
	of		Life		Exercisable
	Shares		(in Years)		(in Shares)
Exercise Prices:
$4.26		24		—		24
$5.80		17		1		17
Total		41		1		41

NOTE 8 — SEGMENT AND GEOGRAPHIC DATA

Transcat has two reportable segments: Distribution Products (“Product”) and Calibration Services (“Service”). The accounting policies of the reportable segments are the same as those described above in Note 1 of the Consolidated Financial Statements. The Company has no inter-segment revenues. The following table presents segment and geographic data for fiscal years 2010, 2009 and 2008:

	FY 2010		FY 2009		FY 2008
Net Revenue:
Product	$	53,143	$	51,480	$	47,539
Service		27,918		23,939		22,914
Total		81,061		75,419		70,453
Gross Profit:
Product		12,442		13,070		13,205
Service		6,852		5,678		5,336
Total		19,294		18,748		18,541
Operating Expenses:
Product(1)		10,155		9,622		9,392
Service(1)		6,758		6,440		5,866
Total		16,913		16,062		15,258
Operating Income		2,381		2,686		3,283
Unallocated Amounts:
Other Expense, net		98		167		538
Provision for Income Taxes		832		963		382
Total		930		1,130		920
Net Income	$	1,451	$	1,556	$	2,363
Total Assets(2):
Product	$	20,969	$	16,807	$	13,871
Service		11,938		10,233		7,407
Unallocated		2,806		2,351		3,066
Total	$	35,713	$	29,391	$	24,344

52

	FY 2010		FY 2009		FY 2008
Depreciation and Amortization(3):
Product	$	742	$	778	$	739
Service		1,136		954		893
Unallocated		202		165		129
Total	$	2,080	$	1,897	$	1,761
Capital Expenditures:
Product	$	25	$	21	$	45
Service		767		1,456		1,268
Unallocated		336		298		192
Total	$	1,128	$	1,775	$	1,505
Geographic Data:
Net Revenues to Unaffiliated Customers(4):
United States(5)	$	72,595	$	66,892	$	60,881
Canada		5,872		5,296		6,597
Other International		2,594		3,231		2,975
Total	$	81,061	$	75,419	$	70,453
Long-Lived Assets:
United States(5)	$	4,059	$	4,065	$	3,093
Canada		104		109		118
Total	$	4,163	$	4,174	$	3,211

(1)	Operating expense allocations between segments were based on actual amounts, a percentage of revenues, headcount, and management’s estimates.
(2)	Goodwill and intangible assets were allocated based on the percentage of segment revenue acquired. For fiscal year 2010, goodwill and intangible assets of $11.2 million were allocated between our segments as follows: 63% to Product and 37% to Service. For fiscal year 2009, goodwill and intangible assets of $9.0 million were allocated between our segments as follows: 66% to Product and 34% to Service. For fiscal year 2008, goodwill of $3.0 million was allocated between our segments as follows: 51% to Product and 49% to Service.
(3)	Including amortization of catalog costs.
(4)	Net revenues are attributed to the countries based on the destination of a product shipment or the location where service is rendered.
(5)	United States includes Puerto Rico.

53

NOTE 9 — COMMITMENTS

Leases:  Transcat leases facilities, equipment, and vehicles under non-cancelable operating leases. Total rental expense was approximately $1.3 million in fiscal year 2010, $1.2 million in fiscal year 2009 and $1.1 million in fiscal year 2008. The minimum future annual rental payments under the non-cancelable leases at March 27, 2010 are as follows (in millions):

Fiscal Year
2011	$	1.1
2012		0.9
2013		0.7
2014		0.4
2015		0.3
Thereafter		1.4
Total minimum lease payments	$	4.8

The Company leases its facility in Portland, Oregon from an executive officer of the company (the former sole shareholder of Westcon) under a non-cancelable operating lease which expires in August 2011. The minimum future annual rental payments are approximately $0.1 million per year.

Concurrent with the acquisition of United Scale, the Company entered into a non-cancelable operating lease agreement for a facility in New Berlin, Wisconsin, which is owned by an employee of the Company (a former owner of United Scale). The lease agreement is for a three year period commencing on the acquisition date. The minimum future rental payments are approximately $0.1 million per year.

NOTE 10 — ACQUISITIONS

On March 29, 2009, the Company adopted SFAS No. 141 (revised 2007), Business Combinations, now codified as ASC Topic 805, Business Combinations. This statement, which is to be applied prospectively upon adoption, established principles and requirements for how an acquirer in a business combination recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; requires the need to recognize contingent consideration at fair value on the acquisition date; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The statement also requires acquisition-related transaction expenses and restructuring costs be expensed as incurred rather than capitalized as a component of the business combination.

On January 27, 2010, Transcat, through its wholly-owned subsidiary USEC Acquisition, acquired United Scale pursuant to a Stock Purchase Agreement (the “Purchase Agreement”) for approximately $2.0 million. United Scale is a supplier and servicer of industrial scales and weighing systems to customers located primarily in Wisconsin, Northern Illinois and Upper Michigan. The acquisition expands the Company’s footprint in the Midwest and broadens Transcat’s product and service offerings. The results of operations of United Scale are included in Transcat’s consolidated operating results as of the date the business was acquired. Pro forma information as of the beginning of the fiscal years presented and the operating results of United Scale since the date of acquisition have not been disclosed as the acquisition was not considered significant.

The assets and liabilities of United Scale are recorded under the purchase method of accounting at their estimated fair values as of the date of acquisition. Goodwill, totaling $1.0 million, represents costs in excess of fair values assigned to the underlying net assets of the acquired business. Other intangible assets, namely customer base totaling $0.3 million, represent an allocation of purchase price to identifiable intangible assets of the acquired business. Intangible assets are being amortized for financial reporting purposes on an accelerated basis over the estimated useful life of 10 years. Goodwill and the intangible assets are not deductible for tax purposes.

54

Contingent consideration, relating to certain holdback provisions under the terms of the Purchase Agreement, with an estimated fair value of $0.2 million, using Level 3 inputs to assess fair value under ASC 820, was accrued at the date of purchase. The value of the contingent consideration remained unchanged at March 27, 2010 and is included as an other current liability in the Consolidated Balance Sheet. Acquisition costs, totaling $0.2 million, were recorded as incurred as an administrative expense in the Consolidated Statement of Operations.

In addition, concurrent with the acquisition, Transcat and the former owners of United Scale entered into an Earn Out Agreement. This agreement provides that the former owners may be entitled to receive earn out payments subject to certain continued employment and post-closing gross profit targets. These potential future payments are expected to be recorded as compensation expense in the period earned.

On August 14, 2008, Transcat acquired Westcon, a distributor of professional grade test and measurement instruments and provider of calibration and repair services to customers located primarily in the western United States. Under the terms of the Agreement and Plan of Merger (the “Merger Agreement”), Transcat paid an aggregate purchase price of approximately $6.9 million, which was paid in a combination of the issuance of 150,000 shares of Transcat common stock valued at approximately $1.1 million and approximately $5.8 million in cash. $0.5 million of the cash purchase price was distributed to satisfy certain debt obligations of Westcon, with the remainder being paid to the sole shareholder.

The following is a summary of the preliminary purchase price allocation:

Purchase Price Paid:
Cash Paid to Seller at Closing	$	4,216
Westcon Debt Paid by Transcat at Closing		466
Fair Value of Common Stock Issued		1,113
Cash Paid to Seller in November 2008		1,017
Direct Acquisition Costs		116
Total Purchase Price	$	6,928
Allocation of Purchase Price:
Intangible Asset — Customer Base	$	1,206
Deferred Tax Liability		(458	)
Goodwill		4,956
		5,704
Plus: Current Assets		1,675
Non-Current Assets		274
Less: Current Liabilities		(658	)
Non-Current Liabilities		(67	)
Total Purchase Price	$	6,928

The assets and liabilities of Westcon were recorded under the purchase method of accounting at their estimated fair values as of the date of acquisition. Goodwill represents costs in excess of fair values assigned to the underlying net assets of the acquired business. Other intangible assets, namely customer base, represent an allocation of purchase price to identifiable intangible assets of the acquired business. Intangible assets are being amortized for financial reporting purposes on an accelerated basis over the estimated useful life of 10 years. Goodwill and the intangible assets are not deductible for tax purposes.

The primary reasons for the Company’s acquisition of Westcon and the principal factors that contributed to the recognition of goodwill were the strengthening of the Company’s presence in the western United States and/or the synergies and related cost savings gained from the integration of the acquired operation.

55

Under the terms of the Merger Agreement, a contingent payment of up to $1.4 million was subject to holdback restrictions to secure the obligations of Westcon and its sole shareholder for post-closing adjustments, retention of business, reimbursement and indemnification. During fiscal year 2010, the Company paid $1.1 million to the sole shareholder in full satisfaction of this contingency and recorded the payment as additional goodwill on the Company’s Consolidated Balance Sheet.

In addition, Transcat and the sole shareholder of Westcon entered into an Earn Out Agreement dated as of the closing of the merger. This agreement provides that the sole shareholder may be entitled to certain contingent earn out payments subject to continued employment and achieving certain post-closing gross profit and revenue targets. During fiscal year 2010, payments totaling $0.1 million were earned and recorded as compensation expense in the Consolidated Statement of Operations and Comprehensive Income.

The results of operations of Westcon were included in Transcat’s consolidated operating results as of the date the business was acquired. The following unaudited pro forma results assume the acquisition occurred at the beginning of each period presented. The pro forma results do not purport to represent what the Company’s results of operations actually would have been if the transactions set forth had occurred on the date indicated or what the Company’s results of operations will be in future periods.

	(Unaudited)
	FY 2009		FY 2008
Net Revenue	$	78,569	$	79,781
Net Income	$	1,413	$	2,353
Basic Earnings Per Share	$	0.19	$	0.32
Diluted Earnings Per Share	$	0.19	$	0.32

NOTE 11 — QUARTERLY DATA (Unaudited)

The following table presents a summary of certain unaudited quarterly financial data for fiscal years 2010 and 2009:

					Net			Basic			Diluted
	Net		Gross		Income			Earnings (Loss)			Earnings (Loss)
	Revenues		Profit		(Loss)			per Share(a)			per Share(a)
FY 2010:
Fourth Quarter	$	23,535	$	6,431	$	869		$	0.12		$	0.12
Third Quarter		21,823		4,806		483			0.07			0.06
Second Quarter		18,495		4,172		188			0.03			0.02
First Quarter		17,208		3,885		(89	)		(0.01	)		(0.01	)
FY 2009:
Fourth Quarter	$	18,964	$	5,042	$	556		$	0.08		$	0.07
Third Quarter		19,992		4,731		342			0.05			0.05
Second Quarter		18,610		4,574		430			0.06			0.06
First Quarter		17,853		4,525		228			0.03			0.03

(a) Earnings per share calculations for each quarter include the weighted average effect of stock issuances and common stock equivalents for the quarter; therefore, the sum of quarterly earnings per share amounts may not equal full-year earnings per share amounts, which reflect the weighted average effect on an annual basis. Diluted earnings per share calculations for each quarter include the effect of stock options, warrants and non-vested restricted stock, when dilutive to the quarter. In addition, basic earnings per share and diluted earnings per share may not add due to rounding.

56

TRANSCAT, INC.
SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)

			Expense
			(Income)
	Balance		Realized in			Additions			Balance
	at the		Consolidated			(Reductions) to			at the
	Beginning		Statements			Allowance/			End of
	of the Year		of Operations			Reserve			the Year
Allowance for Doubtful Accounts:
FY 2010	$	75	$	85		$	(78	)	$	82
FY 2009	$	56	$	160		$	(141	)	$	75
FY 2008	$	47	$	49		$	(40	)	$	56
Reserve for Inventory Loss:
FY 2010	$	223	$	31		$	93		$	347
FY 2009	$	62	$	103		$	58		$	223
FY 2008	$	129	$	(67	)	$	—		$	62
Deferred Tax Valuation Allowance:
FY 2010	$	—	$	—		$	—		$	—
FY 2009	$	35	$	(35	)	$	—		$	—
FY 2008	$	819	$	(784	)	$	—		$	35

57

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A(T).  CONTROLS AND PROCEDURES

(a) Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures.  Our principal executive officer and our principal financial officer evaluated our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this annual report. Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our principal executive officer and principal financial officer to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of such date.

(b) Management’s Annual Report on Internal Control over Financial Reporting.  Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. In designing and evaluating our internal control system, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives and that the effectiveness of any system has inherent limitations including, but not limited to, the possibility of human error and the circumvention or overriding of controls and procedures. Management, including the principal executive officer and the principal financial officer, is required to apply judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected in a timely manner. Management excluded United Scale from its assessment of internal control over financial reporting as of March 27, 2010 due to the acquisition occurring during the fourth quarter of fiscal year 2010.

An evaluation was performed under the supervision and with the participation of our management, including the principal executive officer and the principal financial officer, of the effectiveness of the design and operation of our procedures and internal control over financial reporting using the framework and criteria established by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management, including the principal executive officer and the principal financial officer, concluded that our internal control over financial reporting was effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles as of March 27, 2010.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report on internal control over financial reporting was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

(c) Changes in Internal Controls over Financial Reporting.  There has been no change in our internal control over financial reporting that occurred during the last fiscal quarter covered by this annual report (our fourth fiscal quarter) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.   OTHER INFORMATION

Not applicable.

58

PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item 10 is incorporated herein by reference from our proxy statement for our 2010 Annual Meeting of Shareholders under the headings “Election of Directors,” “Corporate Governance,” “Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance,” which proxy statement will be filed pursuant to Regulation 14A within 120 days after the March 27, 2010 fiscal year end.

ITEM 11.  EXECUTIVE COMPENSATION

The information required by this Item 11 is incorporated herein by reference from our proxy statement for our 2010 Annual Meeting of Shareholders under the heading “Compensation of Named Executive Officers and Directors,” which proxy statement will be filed pursuant to Regulation 14A within 120 days after the March 27, 2010 fiscal year end.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

With the exception of the information presented in the table below, the information required by this Item 12 is incorporated herein by reference from our proxy statement for our 2010 Annual Meeting of Shareholders under the headings “Security Ownership of Certain Beneficial Owners” and “Security Ownership of Management,” which proxy statement will be filed pursuant to Regulation 14A within 120 days after the March 27, 2010 fiscal year end.

Securities Authorized for Issuance Under Equity Compensation Plans as of March 27, 2010:

Equity Compensation Plan Information
(In Thousands, Except Per Share Amounts)

						Number of securities
	Number of securities					remaining available
	to be issued			Weighted average		for future issuance under
	upon exercise of			exercise price of		equity compensation plans
	outstanding options,			outstanding options,		(excluding securities
	warrants and rights			warrants and rights		reflected in column (a))
Plan category	(a)			(b)		(c)
Equity compensation plans approved by security holders		841	(1)	$	5.68		221
Equity compensation plans not approved by security holders		—			—		—
Total		841		$	5.68		221

(1) Includes performance-based restricted stock awards granted to officers and key employees pursuant to our 2003 Incentive Plan. See Note 7 of our Consolidated Financial Statements in Item 8 of Part II.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item 13 is incorporated herein by reference from our proxy statement for our 2010 Annual Meeting of Shareholders under the headings “Corporate Governance” and “Certain Relationships and Related Transactions,” which proxy statement will be filed pursuant to Regulation 14A within 120 days after the March 27, 2010 fiscal year end.

59

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item 14 is incorporated herein by reference from our proxy statement for our 2010 Annual Meeting of Shareholders under the heading “Ratification of Selection of Independent Registered Public Accounting Firm,” which proxy statement will be filed pursuant to Regulation 14A within 120 days after the March 27, 2010 fiscal year end.

PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) See Index to Financial Statements included in Item 8 of this report.

(b) Exhibits.

See Index to Exhibits contained in this report.

60

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

TRANSCAT, INC.

Date: June 24, 2010 By: /s/  Charles P. Hadeed Charles P. Hadeed
President, Chief Executive Officer and
Chief Operating Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date	Signature	Title
June 24, 2010	/s/  Charles P. Hadeed Charles P. Hadeed	Director, President, Chief Executive Officer and Chief Operating Officer (Principal Executive Officer)
June 24, 2010	/s/  John J. Zimmer John J. Zimmer	Vice President of Finance and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
June 24, 2010	/s/  Carl E. Sassano Carl E. Sassano	Chairman of the Board of Directors
June 24, 2010	/s/  Francis R. Bradley Francis R. Bradley	Director
June 24, 2010	/s/  Richard J. Harrison Richard J. Harrison	Director
June 24, 2010	/s/  Nancy D. Hessler Nancy D. Hessler	Director
June 24, 2010	/s/  Paul D. Moore Paul D. Moore	Director
June 24, 2010	/s/  Harvey J. Palmer Harvey J. Palmer	Director
June 24, 2010	/s/  Alan H. Resnick Alan H. Resnick	Director
June 24, 2010	/s/  John T. Smith John T. Smith	Director

61

INDEX TO EXHIBITS

(2)	Plan of acquisition, reorganization, arrangement, liquidation or succession
	Not applicable.
(3)	Articles of Incorporation and Bylaws
	3.1	The Articles of Incorporation, as amended, are incorporated herein by reference from Exhibit 4(a) to the Company’s Registration Statement on Form S-8 (Registration No. 33-61665) filed on August 8, 1995 and from Exhibit 3(i) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
	3.2	Code of Regulations, as amended through May 4, 2009, are incorporated herein by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K dated October 26, 2009.
(4)	Instruments defining the rights of security holders, including indentures
	Not applicable.
(9)	Voting trust agreement
	Not applicable.
(10)	Material contracts
	#10.1	Transcat, Inc. Amended and Restated Directors’ Warrant Plan is incorporated herein by reference from Exhibit 99(b) to the Company’s Registration Statement on Form S-8 (Registration No. 33-61665) filed on August 8, 1995.
	#10.2	Transcat, Inc. Employees’ Stock Purchase Plan is incorporated herein from Exhibit 99(e) to the Company’s Registration Statement on Form S-8 (Registration No. 33-61665) filed on August 8, 1995.
	#10.3	Amendment No. 1 to the Transcat, Inc. Employees’ Stock Purchase Plan is incorporated herein by reference from Exhibit 10(b) to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1996.
	#10.4	Amendment No. 1 to the Transcat, Inc. Amended and Restated Directors’ Warrant Plan is incorporated herein by reference from Exhibit II to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1996.
	#10.5	Amendment No. 2 to the Transcat, Inc. Employees’ Stock Purchase Plan is incorporated herein by reference from Exhibit V to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1996.
	#10.6	Amendment No. 2 to the Transcat, Inc. Amended and Restated Directors’ Warrant Plan is incorporated herein by reference from Exhibit 10(i) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.
	#10.7	Amendment No. 3 to the Transcat, Inc. Employees’ Stock Purchase Plan is incorporated herein by reference from Exhibit 10(k) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997.
	#10.8	Amendments No. 3 and 4 to the Transcat, Inc. Amended and Restated Directors’ Warrant Plan are incorporated herein by reference from the Company’s definitive proxy statement filed on July 7, 1998 in connection with the 1998 Annual Meeting of Shareholders.
	#10.9	Amendment No. 5 to the Transcat, Inc. Amended and Restated Directors’ Warrant Plan is incorporated herein by reference from Appendix B to the Company’s 1999 preliminary proxy statement filed on June 21, 1999 in connection with the 1999 Annual Meeting of Shareholders.
	#10.10	Amendment No. 4 to the Transcat, Inc. Employees’ Stock Purchase Plan is incorporated herein by reference from Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.
	#10.11	Form of Award Notice for Incentive Stock Options granted under the Transcat, Inc. 2003 Incentive Plan is incorporated herein by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 25, 2004.

62

#10.12	Form of Award Notice for Restricted Stock granted under the Transcat, Inc. 2003 Incentive Plan is incorporated herein by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 25, 2004.
#10.13	Form of Warrant Certificate representing warrants granted under the Amended and Restated Directors’ Warrant Plan is incorporated herein by reference from Exhibit 10.42 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 26, 2005.
#10.14	Form of Award Notice for Non-Qualified Stock Options granted under the Transcat, Inc. 2003 Incentive Plan is incorporated herein by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 24, 2005.
#10.15	Form of Amended and Restated Agreement for Severance Upon Change in Control for Charles P. Hadeed is incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 19, 2006.
#10.16	Transcat, Inc. 2003 Incentive Plan, as amended, is incorporated herein by reference from Appendix D to the Company’s definitive proxy statement filed on July 10, 2006 in connection with the 2006 Annual Meeting of Shareholders.
10.17	Credit Agreement dated as of November 21, 2006 by and between Transcat, Inc. and JPMorgan Chase Bank, N.A. is incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November 21, 2006.
10.18	Amendment Number One to Credit Agreement dated as of August 14, 2008 between Transcat, Inc. and JPMorgan Chase Bank, N.A. is incorporated herein by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2008.
10.19	Agreement and Plan of Merger by and among Transcat Acquisition Corp., Westcon, Inc. and David Goodhead dated as of August 14, 2008 is incorporated herein by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2008.
10.20	Lease Addendum between Gallina Development Corporation and Transcat, Inc. dated June 2, 2008 is incorporated herein by reference from Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2008.
#10.21	Amendment to Agreement for Severance Upon Change in Control for Charles P. Hadeed dated December 16, 2008 is incorporated herein by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 27, 2008.
#10.22	Form of Award Notice for Performance-Based Restricted Stock granted under the Transcat, Inc. 2003 Incentive Plan is incorporated herein by reference from Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2009.
10.23	Transcat, Inc. 2009 Insider Stock Sales Plan is incorporated herein by reference from Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2009.
*#10.24	Transcat, Inc. Post-Retirement Benefit Plan for Officers (Amended and Restated Effective January 1, 2010).
*10.25	Transcat, Inc. Post-Retirement Benefit Plan for Non-Officer Employees (Amended and Restated Effective January 1, 2010).
*10.26	Amendment No. 2 to Credit Agreement dated February 26, 2010 between Transcat, Inc. and JPMorgan Chase Bank, N.A.
#10.27	Certain compensation information for Charles P. Hadeed, President, Chief Executive Officer and Chief Operating Officer of the Company is incorporated herein by reference from the Company’s Current Report on Form 8-K dated April 5, 2010.
#10.28	Certain compensation information for John J. Zimmer, Vice President of Finance and Chief Financial Officer of the Company is incorporated herein by reference from the Company’s Current Report on Form 8-K dated May 20, 2010.

63

(11)	Statement re computation of per share earnings
		Computation can be clearly determined from the Consolidated Statements of Operations and Comprehensive Income included in this Form 10-K as Item 8.
(13)	Annual report to security holders, Form 10-Q or quarterly report to security holders
	Not applicable.
(14)	Code of Ethics
	Not applicable.
(16)	Letter re change in certifying accountant
	Not applicable.
(18)	Letter re change in accounting principles
	Not applicable.
(21)	Subsidiaries of the registrant
	*21.1	Subsidiaries
(22)	Published report regarding matters submitted to a vote of security holders
	Not applicable.
(23)	Consents of experts and counsel
	*23.1	Consent of BDO Seidman, LLP
(24)	Power of Attorney
	Not applicable.
(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 2002
	*31.2	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

*	Exhibit filed with this report.
#	Management contract or compensatory plan or arrangement.

64

EX-10.24

Exhibit 10.24

Transcat Inc. Post-Retirement Benefit Plan
For Officers

(Amended and Restated Effective January 1, 2010)

Introduction

The Transcat Inc. Post-Retirement Benefit Plan for Officers (the “Plan”) is a group health plan that provides benefits to eligible retired Corporate Officers and their eligible spouses. There are three kinds of benefits provided under the Plan: (i) long term care insurance coverage; (ii) medical and dental insurance coverage; and (iii) medical premium reimbursement benefits. In this document, Transcat Inc. is referred to as the “Company.”

This document, together with the subscriber contracts and coverage certificates issued by the insurance carriers and health maintenance organizations (“HMO”) through which coverage is provided, is the summary plan description of the Plan. This document, together with the subscriber contracts and coverage certificates, is also considered the written instrument for the Plan for purposes of Section 402(a)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”).

The original effective date of the Plan is December 23, 2006. This amendment and restatement is effective January 1, 2010.

Eligibility Requirements

Corporate Officer Eligibility. Corporate Officers who retire from active employment with the Company on or after December 23, 2006 at age 55 or older with 5 or more years of Qualifying Service and who do not work in any full-time employment (as defined below) after retirement are eligible to participate in the Plan. In this document, a Corporate Officer who retires and is eligible to participate in the Plan may also be referred to as a “Retiree.”

For purposes of eligibility to participate in the Plan, an individual will be considered a Corporate Officer if the individual has the title of Vice President or higher or is the Corporate Controller.

Qualifying Service means an individual’s most recent period of continuous, uninterrupted employment with the Company on or after the date the individual reaches age 50. Service prior to age 50 does not count as years of Qualifying Service for purposes of determining eligibility to participate in the Plan. Service with a business acquired by the Company on or after December 23, 2006 (the original effective date of the Plan) is not counted as Qualifying Service. An employee is considered to be employed by the Company during any period of absence for which the employee is paid his or her regular compensation or receives short-term disability benefits under a Company-sponsored plan and during any other Company-authorized paid or unpaid leave of absence, provided that the employee returns to active employment with the Company at the expiration of such period of absence.

A Retiree will be considered to be working in full-time employment after retirement if the Retiree regularly works 30 or more hours per week at a job at which the Retiree is eligible for medical benefits. The Company, in its sole discretion, will determine whether an individual is working in such full-time employment after retirement for purposes of determining eligibility to participate in the Plan. As a condition to participating in the Plan, a Retiree is required to report to the Company when the Retiree begins working in full-time employment (as defined above)

1

after retirement. If the Company determines that a Retiree has commenced full-time employment after retirement and has not reported such employment to the Company, the Retiree will cease to be eligible to participate in the Plan and may be required to reimburse the Company for the cost of any benefits (including premiums paid for long term care coverage, dental and medical coverage and premium reimbursement payments) provided during the period the Retiree was working in full-time employment.

Spousal Eligibility. A Retiree’s spouse is eligible for benefits under the Plan as described in more detail below and subject to the following:

1) the spouse and Retiree must be legally married under the law of the State in which they reside;

2) a spouse who becomes the spouse of a Retiree after the date the Retiree retires from the Company is not eligible for benefits under the Plan;

3) long term care coverage is not available to a spouse who is not the original spouse with respect to whom the Company provided long term care coverage on or after the date the Corporate Officer reached age 55 with 5 years of Qualifying Service;

4) long term care coverage is not available to a spouse who becomes the spouse of a Corporate Officer after the Corporate Officer’s long term care coverage began.

A Retiree’s spouse who is eligible for benefits under the terms of the Plan is referred to as an “Eligible Spouse.”

No Guarantee of Coverage. Eligibility for medical and dental coverage and for long term care coverage is subject to the eligibility provisions contained in the subscriber contracts and coverage certificates through which benefits are provided under the Plan. In the event that an insurance carrier or HMO through which coverage is provided determines that a retiree or spouse is not eligible for that coverage under a contract with the carrier or HMO, the individual shall not be eligible for that coverage under the Plan. The Company does not guarantee that coverage will be available to a Retiree or Eligible Spouse under any carrier or HMO contract, or that a Retiree or Eligible Spouse will be eligible to obtain any individual coverage.

Description of Benefits

Long Term Care Insurance Coverage. During active employment, the Company provides long term care insurance coverage for Corporate Officers who reach age 55 and have 5 years of Qualifying Service. An actively employed eligible Corporate Officer may enroll the Officer’s spouse in long term care insurance coverage on the date the Officer is first eligible for coverage. Once a Corporate Officer has enrolled a spouse in long term care insurance coverage, no subsequent spouse of that Corporate Officer may be enrolled in long term care insurance coverage through the Company.

2

The long term care insurance coverage benefit under this Plan consists of the continuation of the Company’s payment of the premium for the long term care insurance coverage that commenced at the time the Officer first qualified for coverage. The Company’s payment for coverage continues through the end of the ten year period measured from the commencement of long term care insurance coverage, provided that the Company may at any time elect to fully pay up a Retiree’s and/or Eligible Spouse’s policy prior to the end of the ten year period. The long term care insurance coverage will be provided under individual insurance policies owned by the Retiree and Eligible Spouse. Such policies will be designed to be fully paid up policies after ten years of premium payments. Eligibility for coverage under a policy is subject to the discretion of the insurance carrier through which coverage is provided and the Company does not guarantee that any Retiree or Eligible Spouse will qualify for coverage. In the event that a Retiree’s or Eligible Spouse’s long term care insurance policy is terminated solely due to the Company’s failure to pay the required premium payments during the ten year period and, before the Company has acquired a comparable replacement policy, the Retiree or Eligible Spouse incurs expenses that would have been covered under the terminated policy, the Company will pay the benefits that would have been payable under the terminated policy if it had remained in effect.

Example: Corporate Officer continues in active employment after reaching age 55 with 5 years of Qualifying Service. Long term care coverage for the Officer and the Officer’s spouse begins during active employment when the Officer reaches age 55. The Officer retires from the Company at age 58. Long term care coverage commences immediately (continues) upon retirement under the Plan and, subject to the terms of the Plan, the Company pays the premiums for the Officer’s and Eligible Spouse’s coverage until the Officer reaches age 65, the end of the ten year period that began when coverage commenced.

Medical and Dental Insurance Coverage. Company subsidized medical and dental insurance coverage benefits are provided under the Plan to eligible Retirees and their Eligible Spouses beginning when the Retiree reaches age 60. A Retiree who retires prior to reaching age 60 may elect to purchase medical and dental coverage under this Plan for the Retiree and Eligible Spouse until subsidized coverage begins at age 60 by paying 100% of the applicable premium for coverage, subject to the insurance carrier’s determination that the Retiree and Eligible Spouse are eligible for coverage. To the extent possible, medical and dental coverage under this Plan shall be provided through the same insurance contract through which such coverage is provided to active employees of the Company. Benefits are provided under contracts with insurance carriers and HMOs and are fully described in the subscriber contract or coverage certificate issued to the Retiree and/or spouse upon enrollment. The Company does not pay or otherwise guarantee any of the benefits under the contracts with the insurance carriers or HMOs. The subscriber contracts or coverage certificates are considered part of the summary plan description for the Plan.

A Retiree who retires prior to reaching age 60 and is not enrolled for medical and/or dental benefits at the time the Retiree reaches age 60, must contact the Company at least 90 days in advance of the Retiree’s 60^th birthday to request enrollment material and must complete and return the appropriate enrollment forms on a timely basis (as specified in the enrollment information) in order for coverage to be effective on the first coverage entry date on or after the Retiree’s 60^th birthday (subject to the insurance carrier’s determination as to eligibility and effective date of coverage). Subsidized coverage for an Eligible Spouse who reaches age 60 prior to the date the Retiree reaches age 60 cannot begin until the Retiree reaches age 60. An Eligible Spouse may not be enrolled for medical or dental insurance coverage under the Plan

3

unless the Retiree is enrolled for such coverage under the Plan or is eligible for medical premium reimbursements, as described below.

Example: Corporate Officer retires from the Company immediately upon reaching age 55 with 5 years of Qualifying Service. The Officer does not elect to purchase coverage under the Plan. The Officer must notify the Company 90 days prior to the Officer’s 60^th birthday that the Officer wishes to enroll for medical and dental coverage under the Plan effective as of the Officer’s 60^th birthday. If the Officer completes and returns the enrollment material in a timely manner and the insurance carrier(s) and/or HMO(s) approve the enrollment, Company subsidized medical and dental coverage will commence on the first coverage entry date on or after the Officer’s 60^th birthday. Even if the Officer’s Eligible Spouse reached age 60 prior to the Officer reaching age 60, subsidized coverage for the Eligible Spouse would not begin until the Officer reached age 60.

Subsidized medical insurance coverage for a Retiree under the Plan terminates when the Retiree reaches age 65. Subsidized medical insurance coverage for the Eligible Spouse of a Retiree terminates when the Eligible Spouse reaches age 65, provided, however, that if the Retiree reaches age 65 before the Eligible Spouse reaches age 65, the amount of the Company’s contribution toward the cost of an Eligible Spouse’s subsidized medical insurance coverage will be reduced at the time the Retiree reaches age 65, as described below.

Subsidized dental insurance coverage for a Retiree and Eligible Spouse continues after the date the Retiree and Eligible Spouse reach age 65, subject to the terms of the Plan.

Example 1: Corporate Officer retires from the Company at age 60 with 10 years of Qualifying Service. The Officer’s Eligible Spouse is age 63 at the time the Officer retires. Medical and dental coverage for the Officer and Eligible Spouse begin immediately upon the Officer’s retirement. The Eligible Spouse’s subsidized medical insurance coverage terminates on the Eligible Spouse’s 65^th birthday and the Eligible Spouse becomes eligible for medical insurance premium reimbursements (described below). The Eligible Spouse is responsible for taking steps to obtain individual medical insurance coverage. The Officer’s medical insurance coverage continues until the Officer reaches age 65, subject to the terms of the Plan. The Officer’s and Eligible Spouse’s subsidized dental insurance coverage continues subject to the terms of the Plan.

Example 2: Corporate Officer retires from the Company at age 63 with 13 years of Qualifying Service. The Officer’s Eligible Spouse is age 61 at the time the Officer retires. Medical and dental coverage for the Officer and Eligible Spouse begin immediately upon the Officer’s retirement. The Officer’s subsidized medical insurance coverage terminates on the Officer’s 65^th birthday. The Eligible Spouse is age 63 on the Officer’s 65^th birthday and remains eligible for continued subsidized medical insurance coverage (at a reduced Company contribution rate beginning on the date of the Officer’s 65^th birthday, as described below) until the Eligible Spouse reaches age 65, at which time the Eligible Spouse’s subsidized medical insurance coverage terminates and the Eligible Spouse becomes eligible for medical insurance premium reimbursements (described below). The Officer’s and Eligible Spouse’s subsidized dental insurance coverage continues subject to the terms of the Plan.

The Company will contribute toward the cost of coverage up to a maximum “capped” amount determined by the Company. The capped amount applicable to a Retiree or Eligible Spouse

4

beginning in the first year in which the Retiree or Eligible Spouse is eligible for subsidized medical and dental insurance coverage is based on the capped amount that was in effect for the year in which the Retiree retired, or, in the case of an Officer who had satisfied the eligibility requirements to participate in the Plan but died before retiring, the capped amount in effect for the year in which the Officer died, increased by 3% each year beginning after the year in which the Officer retired or died. The capped amount is equal to 72% of the applicable premium for one-person or two-person coverage under a base coverage plan determined by the Company for the year in which the Retiree retires. For Retirees who retire in 2007, the base plan used for determining the Company contribution amount is the Preferred Care TriVantage plan for medical coverage and the Business Council of New York State Dental Plan for dental coverage. For Retirees who retire in 2007, the maximum monthly Company contribution is equal to $230.48 for Retiree-only medical insurance coverage, $518.57 for Retiree and Eligible Spouse medical insurance coverage, $20.28 for Retiree-only dental insurance coverage and $58.14 for Retiree and Eligible Spouse dental insurance coverage. The base plans selected by the Company for purposes of determining the Company contribution amount may change from year to year in the discretion of the Company, but will be plans that provide benefits at a substantially comparable level to the benefits provided under the Preferred Care TriVantage plan and the Business Council of New York State Dental Plan. The Company’s contribution toward the cost of coverage for a Retiree and/or Eligible Spouse will increase to reflect any increase in the cost of the base plan coverage, but the increase in the Company’s contribution for any year will not exceed 3%.

Example: Officer 1 is not married and retires from the Company in 2007 at age 63 with 13 years of Qualifying Service. Medical and dental coverage for Officer 1 begins immediately and the Company contribution toward the cost of coverage is equal to$230.48 per month for medical insurance coverage and $20.28 per month for dental insurance coverage. The 2007 Company contribution amounts represent 72% of $320.11, the monthly cost for one-person medical coverage under the base medical plan and 72% of $28.17, the monthly cost for one-person coverage under the base dental plan.

Officer 2 is not married and retires from the Company in 2008 at age 63 with 13 years of Qualifying Service. Medical and dental coverage for Officer 2 begins immediately. For 2008, assume that the monthly cost for one-person coverage under the base medical plan is $400 and the monthly cost for one-person coverage under the base dental plan is $45. For Officer 2, the Company contribution toward the cost of coverage is equal to $288 per month for medical insurance coverage (72% of $400) and $32.40 for dental insurance coverage (72% of $45). For Officer 1, the Company contribution toward the cost of coverage for 2008 is equal to $237.39 for medical insurance coverage and $20.89 for dental insurance coverage. The reason for the difference in the Company’s contribution toward the cost of coverage for Officer 1 and Officer 2 in 2008 is that the increase in the Company’s contribution toward the cost of coverage for Officer 1 in 2008 is limited by the 3% cap on increases.

In the event that an Eligible Spouse remains eligible for subsidized medical insurance coverage after the date the Retiree reaches age 65 (see Example 2 above), the amount of the Company’s contribution toward the cost of medical insurance coverage for the Eligible Spouse will be reduced beginning on the date the Retiree reaches age 65. The reduced contribution amount is an amount equal to the maximum medical premium reimbursement the Retiree is eligible to receive, as described below in the “Medical Premium Reimbursements” section.

5

The Retiree and/or Eligible Spouse are required to pay any additional cost of coverage over and above the amount paid by the Company. If the coverage option selected costs less than the applicable maximum monthly Company contribution, the Company contribution will be equal to the cost of the coverage selected. The Company will not pay the Retiree or Eligible Spouse the difference between the cost of coverage selected and the maximum monthly Company contribution. Nor will the Company pay any amount to a Retiree or Eligible Spouse who is eligible for but does not elect coverage under the Plan. The Retiree’s and/or Eligible Spouse’s contributions toward the cost of coverage must be paid on a timely basis as specified by the Company. If required contributions are not paid on a timely basis, coverage may be terminated.

Example: Corporate Officer retires from the Company in 2007 at age 63 with 10 years of Qualifying Service. Officer’s Eligible Spouse is age 58 at the time the Officer retires. The cap amounts applicable for Officers who retire in 2007 are $230.48 for Retiree-only medical insurance coverage, $518.57 for Retiree and Eligible Spouse medical insurance coverage, $20.28 for Retiree-only dental insurance coverage and $58.14 for Retiree and Eligible Spouse dental insurance coverage. The medical and dental coverage for the Officer and Eligible Spouse begin immediately upon the Officer’s retirement and the Officer and Eligible Spouse are covered under two-person medical and two-person dental coverage. The maximum Company monthly contribution toward the cost of their coverage during 2007 is $518.57 for medical insurance coverage and $58.14 for dental insurance coverage. Assume that for 2008 and 2009, the total cost of medical and dental insurance coverage increases by 10% each year, so the amount of the increase in the Company’s contribution for the Officer and Spouse is 3% each year. For 2008, the maximum Company monthly contribution cap amounts for the Officer and Eligible Spouse increase by 3% to $534.13 and $59.88 and increase by 3% again for 2009 to $550.15 and $61.68. The Officer reaches age 65 in 2009. The Eligible Spouse is age 60 at that time.

The Officer’s subsidized medical insurance coverage terminates at age 65 and the Officer becomes eligible for medical insurance premium reimbursements (described below). The Officer is responsible for taking steps to obtain individual medical insurance coverage. The Eligible Spouse’s subsidized medical insurance coverage may continue (at the reduced Company contribution amount, which is equal to the amount of the Retiree’s premium reimbursement, as described below) until the date the Eligible Spouse reaches age 65. When the Eligible Spouse reaches age 65, the Eligible Spouse’s subsidized medical insurance coverage terminates and the Eligible Spouse becomes eligible for medical insurance premium reimbursements. The Eligible Spouse is responsible for taking steps to obtain individual medical insurance coverage.

Medical Premium Reimbursements. When a Retiree reaches age 65, the Retiree is eligible for limited reimbursement from the Company of premiums paid by the Retiree for an individual policy of medical insurance coverage purchased by the Retiree. Such medical premium reimbursements are available to the Eligible Spouse of an age 60 or older Retiree when the Eligible Spouse reaches age 65. The Retiree and/or Eligible Spouse is responsible for obtaining such policies of individual insurance.

Example 1: Corporate Officer retires from the Company at age 60 with more than 5 years of Qualifying Service. The Officer’s Eligible Spouse is age 64 at the time the Officer retires. Immediately upon retirement, medical and dental insurance coverage begins for the Officer and Eligible Spouse. The Eligible Spouse reaches age 65 and the Eligible Spouse’s medical insurance coverage under the Plan terminates. The Eligible Spouse is responsible for obtaining

6

individual medical insurance coverage and the Eligible Spouse becomes eligible for medical premium reimbursements (in the amount described below) for individual medical insurance coverage purchased by the Eligible Spouse. The Officer’s medical insurance coverage under the Plan continues, subject to the terms of the Plan, until the Officer reaches age 65, at which point the Officer’s medical insurance coverage under the Plan terminates and the Officer becomes eligible for medical premium reimbursements. Dental coverage continues subject to the terms of the Plan.

Example 2: Corporate Officer retires from the Company at age 62 with more than 5 years of Qualifying Service. The Officer’s Eligible Spouse is age 54 at the time the Officer retires. Immediately upon retirement, medical and dental insurance coverage begins for the Officer and Eligible Spouse. When the Officer reaches age 65, the Officer’s medical insurance coverage under the Plan terminates and the Officer is responsible for obtaining individual medical insurance coverage and becomes eligible for medical premium reimbursements (in the amount described below) for individual medical insurance coverage purchased by the Officer. The Eligible Spouse may continue to receive subsidized medical insurance under the Plan (at the reduced Company contribution amount beginning when the Officer reaches age 65) until the Eligible Spouse reaches age 65. When the Eligible Spouse reaches age 65, the Eligible Spouse’s medical insurance coverage terminates and the Eligible Spouse is responsible for obtaining individual medical insurance coverage and becomes eligible for medical premium reimbursements (in the amount described below) for individual medical insurance coverage purchased by the Eligible Spouse. As described above, although the Eligible Spouse’s subsidized medical insurance coverage continues until the Eligible Spouse reaches age 65 (subject to the terms of the Plan), the amount of the Company’s contribution toward the cost of the Eligible Spouse’s medical insurance coverage is reduced beginning on the date the Officer reaches age 65. Dental coverage continues subject to the terms of the Plan.

The maximum amount of reimbursement available to a Retiree or Eligible Spouse for any month is a “capped” amount determined by the Company. The capped amount applicable to a Retiree or Eligible Spouse beginning in the year when the Retiree or Eligible Spouse reaches age 65 is based on the capped amount that was in effect for the year in which the Retiree retired, or, in the case of an Officer who had satisfied the eligibility requirements to participate in the Plan but died before retiring, the capped amount in effect for the year in which the Officer died, increased by 3% each year beginning after the year in which the Officer retired or died.

Example: Corporate Officer retires from the Company in 2007 at age 60 with 10 years of Qualifying Service. In 2007, when the Officer retires, the capped amount for medical premium reimbursements is $53.28 (as described below). Medical and dental coverage for the Officer begins immediately upon the Officer’s retirement. When the Officer reaches age 65 in 2012, the Officer’s medical insurance coverage terminates and the Officer is responsible for obtaining individual medical insurance coverage and becomes eligible for medical insurance premium reimbursements. The maximum monthly reimbursement amount for the Officer in 2012 is $61.78, determined by increasing the $53.28 capped amount 3% each year after 2007.

The capped amount is equal to 72% of the applicable premium for a base Medicare supplemental coverage plan determined by the Company. For Retirees who retire in 2007, the maximum reimbursement amount is $53.28 per month per individual, which is equal to 72% of $74, the 2007 monthly premium for the Excellus Medicare Blue Choice HMO Optimum Plan, the base

7

plan selected by the Company for 2007. The maximum monthly reimbursement amount will be adjusted on an annual basis, but in no case will the amount of the maximum monthly reimbursement amount for an individual increase by more than 3% over the preceding year’s maximum monthly reimbursement amount. The base Medicare supplemental plan selected by the Company for purposes of determining the maximum reimbursement amount may change from year to year in the discretion of the Company, but will be a plan that provides benefits at a substantially comparable level to the benefits provided under the Excellus Medicare Blue Choice HMO Optimum Plan.

If a Retiree or Eligible Spouse purchases coverage that costs more than the maximum reimbursement amount available under the Plan, the Retiree or Eligible Spouse is responsible for paying the additional cost of coverage over and above the maximum reimbursement amount. If the coverage purchased by a Retiree or Eligible Spouse costs less than the applicable maximum monthly reimbursement amount, the reimbursement from the Plan will be equal to the cost of the coverage. The Plan will not reimburse the excess of the maximum monthly reimbursement over the actual cost of coverage.

A Retiree or Eligible Spouse may claim reimbursement on an annual or periodic basis (not more frequently than quarterly) for premiums paid by the individual for coverage. The individual claiming reimbursement must provide the Company with adequate verification of the premium payments for which he or she is claiming reimbursement.

Example: Corporate Officer retires from the Company in 2007 at age 60 with 10 years of Qualifying Service. In 2007 when the Officer retires, the capped amount for medical premium reimbursements is $53.28. The Officer’s Eligible Spouse is age 63 at the time the Officer retires. Medical and dental coverage for the Officer and Eligible Spouse begin immediately upon the Officer’s retirement. When the Eligible Spouse reaches age 65 in 2009, the Eligible Spouse’s medical insurance coverage terminates and the Eligible Spouse is responsible for obtaining individual medical insurance coverage and becomes eligible for medical insurance premium reimbursements. The maximum monthly reimbursement amount for the Eligible Spouse in 2009 is $56.53.

Surviving Spouse Benefits

The surviving spouse of a Retiree or of an Officer who had satisfied the eligibility requirements to participate in the Plan but died before retiring is eligible for surviving spouse benefits as described below. An eligible surviving spouse is referred to as a “Surviving Spouse.”

Long Term Care Insurance Coverage. Long term care insurance coverage is available under the Plan only to a spouse who was the Officer’s spouse on the date the Officer first becomes eligible to enroll for long term care insurance coverage through the Company. If a Corporate Officer who has satisfied the eligibility requirements to participate in the Plan but dies before retirement or if a Retiree dies before the end of the period during which the Company pays for long term care insurance coverage, the Company will continue to pay for long term care insurance coverage for the Surviving Spouse through the end of the applicable ten year period for the Surviving Spouse’s coverage (subject to the insurance carrier’s determination as to the Surviving Spouse’s continued eligibility for coverage). A spouse who becomes the spouse of an

8

Officer after the date the Officer first becomes eligible to enroll for long term care insurance through the Company is not eligible for long term care insurance coverage and is not eligible for coverage as a surviving spouse after the Retiree’s death.

Example: Corporate Officer continues in active employment after reaching age 55 with 5 years of Qualifying Service. Long term care coverage for the Officer and the Officer’s spouse begins during active employment when the Officer reaches age 55. At that time, the Officer’s spouse is age 50. The Officer retires from the Company at age 58. Long term care coverage commences immediately (continues) upon retirement under the Plan and the Company pays the premiums for the Officer’s and spouse’s coverage. The Officer dies at age 62. The Company pays the premiums for the Surviving Spouse’s coverage until the Surviving Spouse reaches age 60, which is the end of the 10 year period during which the Company pays for coverage.

Medical and Dental Insurance Coverage. The spouse of a Corporate Officer who was eligible to retire but had not retired as of the date of his or her death is eligible for continued medical and dental insurance coverage under the Plan. Medical insurance coverage for the Surviving Spouse may continue through the date the Surviving Spouse reaches age 65, provided that the Company’s contribution toward the cost of the Surviving Spouse’s medical coverage is reduced on the date the Corporate Officer would have reached age 65 to the amount of the maximum medical premium reimbursement the Corporate Officer would have been eligible to receive at age 65, with such amount determined as if the Corporate Officer had retired on the Corporate Officer’s date of death. Dental insurance coverage continues subject to the terms of the Plan. When the Surviving Spouse’s medical insurance coverage terminates on the date the Surviving Spouse reaches age 65, the Surviving Spouse will be eligible for medical premium reimbursements as described below.

A spouse who was the Retiree’s spouse on the date the Retiree retired from the Company is eligible for continued medical and dental insurance coverage under the Plan after the retiree’s death. Medical insurance coverage continues through the date the Surviving Spouse reaches age 65, provided that the Company’s contribution toward the cost of the Surviving Spouse’s medical coverage is reduced beginning on the date the Retiree would have reached age 65 to the amount of the maximum medical premium reimbursement the Corporate Officer would have been eligible to receive at age 65. Dental insurance coverage continues subject to the terms of the Plan. When the Surviving Spouse’s medical insurance coverage terminates on the date the Surviving Spouse reaches age 65, the Surviving Spouse will be eligible for medical premium reimbursements as described below.

A spouse who was not the Retiree’s spouse on the date the Retiree retired from the Company is not eligible for medical and dental insurance coverage after the Retiree’s death. A Surviving Spouse who is eligible for coverage is eligible only for self-only coverage under the Plan.

Medical Premium Reimbursements. A spouse who was the Retiree’s spouse on the date the Retiree retired from the Company or who is the spouse of a Corporate Officer who was eligible to retire but had not retired as of the date of his or her death is eligible for continued reimbursements for premiums paid by the Surviving Spouse for an individual policy of medical insurance purchased by the Surviving Spouse after the date the Surviving Spouse reaches age 65. The maximum amount of reimbursements available and the requirements for obtaining such reimbursements are as set forth in this Plan. A spouse who was not the Retiree’s spouse on the

9

date the Retiree retired from the Company is not eligible for medical premium reimbursements after the Retiree’s death. A Surviving Spouse is eligible only for reimbursement for self-only coverage purchased by the Surviving Spouse.

Provisions Applicable to Medical and Dental Insurance Coverage

The following provisions are applicable to the medical and dental insurance coverage provided through the Plan to Retirees and Eligible Spouses. These provisions are not applicable to long term care insurance coverage or to the individual policies of medical insurance purchased by a Retiree or Eligible Spouse when the Retiree or Eligible Spouse is eligible for medical premium reimbursement benefits under the Plan.

Annual Enrollment Period. If there is more than one subsidized coverage option available in a Retiree’s/Eligible Spouse’s geographic area, before the beginning of each plan year, the Retiree/Eligible Spouse will be given the opportunity to change coverage options under the Plan. If there is more than one coverage option available in the Retiree’s/Eligible Spouse’s geographic area, more detailed coverage, cost and election material will be furnished each year during the annual open enrollment period.

Certificate of Creditable Coverage. A certificate of creditable coverage is a document that reports the period of time that a Retiree or Eligible Spouse has had medical benefits coverage under the Plan without a 63-day break in coverage. This information may be helpful if the Retiree or Eligible Spouse becomes covered under a group health plan other than the Plan and that other group health plan contains a preexisting condition limitation. Under Federal law, the Retiree’s or Eligible Spouse’s coverage under the Plan may reduce or eliminate the application of the other plan’s preexisting condition limitation.

A certificate of creditable coverage will be provided automatically when a Retiree’s or Eligible Spouse’s coverage under the Plan terminates. A Retiree or Eligible Spouse also has the right to request a certificate of creditable coverage from the Plan at any time, as long as the request is made within 24 months after their coverage under the Plan terminates. Requests should be directed to the insurance carrier or HMO through which the coverage was provided.

Medicaid-Eligible Individuals. In determining whether an individual is eligible for coverage and in making benefit payments, the Plan will not take into account the fact that an individual is eligible for or is covered by Medicaid. In addition, the Plan will make benefit payments in accordance with any assignment of rights made by or on behalf of an individual as required by a state Medicaid Plan and in accordance with any state law, which provides that the state has acquired rights to payment with respect to a participant.

Mastectomy Benefit Coverage. Under Federal law, group health plans, insurance companies, and health maintenance organizations (HMOs) that provide coverage for medical and surgical benefits for mastectomy must also provide coverage for reconstructive surgery in a manner determined in consultation with the attending physician and the patient. Required coverage includes reconstruction of the breast on which the mastectomy was performed, surgery and reconstruction of the other breast to produce a symmetrical appearance, and prostheses and treatment of physical complications at all stages of the mastectomy, including lymphedemas.

10

These benefits are subject to the normal deductible and coinsurance provisions that apply to other benefits under the individual’s coverage.

Minimum Stay for Mothers and Newborns. Group health plans and health insurance issuers generally may not, under Federal law, restrict benefits for any hospital length of stay in connection with childbirth for the mother or newborn child to less than 48 hours following a vaginal delivery, or less than 96 hours following a cesarean section. However, Federal law generally does not prohibit the mother’s or newborn’s attending provider, after consulting with the mother, from discharging the mother or her newborn earlier than 48 hours (or 96 hours as applicable). In any case, plans and issuers may not, under Federal law, require that a provider obtain authorization form the plan or the insurance issuer for proscribing a length of stay not in excess of 48 hours (or 96 hours).

COBRA Continuation Coverage for Spouses. A Retiree’s spouse will be eligible to purchase temporary continuation of medical and/or dental coverage under the Plan if the spouse loses medical and/or dental insurance coverage under the Plan as a result of divorce from the retiree or the retiree’s death. In the event of the Retiree’s death, the spouse may be eligible for surviving spouse benefits as described above and may choose either surviving spouse coverage or to purchase temporary COBRA continuation coverage. COBRA continuation coverage may be purchased for a maximum of 36 months from the date of death or divorce.

A spouse is required to notify the Company in writing not later than 60 days after a divorce from the Retiree. If written notice is not provided to the Company on a timely basis, the spouse will not be eligible for COBRA continuation coverage.

A spouse who is eligible to purchase COBRA continuation coverage must make written election for continuation coverage no later than the date that is 60 days after the later of the date coverage would otherwise end or the date the Company provides written notice of the right to purchase continuation coverage. The election form must be hand-delivered to the Company or postmarked on or before the 60^th day or the spouse will not be permitted to purchase continuation coverage.

In considering whether to elect continuation coverage, a spouse should take into account that a failure to continue group health coverage will affect the spouse’s future rights under Federal law. First, the spouse can lose the right to avoid having pre-existing condition exclusions applied to the spouse by other group health plans if the spouse has more than a 63-day gap in health coverage, and election of continuation coverage may help the spouse not have such a gap. Second, a spouse will lose the guaranteed right to purchase individual health insurance policies that do not impose such pre-existing condition exclusions if the spouse does not get continuation coverage for the maximum time available. Finally, a spouse has the right to request special enrollment in another group health plan for which the spouse is otherwise eligible (such as a plan sponsored by the spouse’s employer) within 30 days after their group health coverage ends because of a qualifying event listed above. The spouse will also have the same special enrollment right at the end of continuation coverage if the spouse gets continuation coverage for the maximum time available.

11

COBRA continuation coverage will end as of the date any of the following occurs:

1) The required premiums are not paid on a timely basis.

2) The maximum 36 month continuation coverage period expires.

3) The Company ceases to provide any group health coverage to any employees.

4) The date the spouse becomes covered under another group health plan that does not contain any exclusion or limitation with respect to a preexisting condition of the spouse.

5) The date the spouse becomes entitled to Medicare.

Termination of Participation

A Retiree’s participation in the Plan (or a specific benefit under the Plan) will terminate on the earliest of the following dates:

1) all participation for the Retiree terminates on the date the Retiree dies;

2) with respect to medical and/or dental insurance coverage under the Plan, coverage terminates on the last day of the period for which the Retiree has paid the required contribution for coverage, if the Retiree fails to timely make a required contribution (the Company shall establish a policy regarding the payment of required contributions, which policy shall provide a 60 day grace period following notification to the Retiree before coverage is terminated);

3) with respect to the Company’s continued payment of long term care premiums, the Company’s payment of such premiums terminates on the date the Retiree begins to work in full-time employment after retirement from the Company; or

4) with respect to subsidized medical and dental coverage and medical premium reimbursements under the Plan, benefits terminate on the date the Retiree begins to work in full-time employment at which the Retiree is eligible for medical benefits after retirement from the Company.

A Retiree’s Eligible Spouse will cease to participate in the Plan (or a specific benefit under the Plan) on the earliest of the following dates:

1) the date the Retiree ceases to participate in the Plan, unless the Retiree’s participation ceases due to the Retiree’s death and the Eligible Spouse is eligible for surviving spouse benefits;

2) in the case of an Eligible Spouse’s medical and/or dental insurance coverage, coverage terminates on the last day of the period for which the Eligible

12

Spouse has paid the required contribution for coverage, if the Eligible Spouse fails to timely make a required contribution (the Company shall establish a policy regarding the payment of required contributions, which policy shall provide a 60 day grace period following notification to the Eligible Spouse before coverage is terminated);

3) in the case of a surviving spouse’s coverage, the date the surviving spouse remarries;

4) all participation for the Eligible Spouse terminates on the date the Eligible Spouse dies or is divorced from the Retiree.

A Retiree’s or Eligible Spouse’s long term care insurance coverage and/or medical and dental insurance coverage under the Plan may terminate prior to the date the Retiree’s or Eligible Spouse’s participation in the Plan terminates in the event that the insurance carrier or HMO determines that the individual ceases to be eligible for coverage under the applicable insurance contract.

A Retiree may at the time of retirement elect to delay the commencement of medical and dental insurance coverage under the Plan for the Retiree and/or the Retiree’s Eligible Spouse. A Retiree who elects to delay commencement of medical and dental insurance coverage under the Plan must notify the Company when the Retiree and/or Eligible Spouse desires to later enroll in medical and dental insurance coverage and such coverage will become effective as soon as administratively practicable after such notice is provided, subject to the insurance carriers/HMOs agreement to make such coverage available to the Retiree and/or Eligible Spouse. Delayed enrollment in medical and dental insurance coverage does not extend the time period during which a Retiree and/or Eligible Spouse is eligible for such coverage under the Plan. A Retiree or Eligible Spouse whose medical and/or dental insurance coverage under the Plan terminates after having become effective (regardless of the reason for such termination) are not eligible to later re-enroll for medical or dental insurance coverage and are not eligible for medical premium reimbursements.

Amendment or Termination of Plan

Except for Corporate Officers who have attained age 55 with 5 years of Qualifying Service and Retirees who have retired from the Company and qualified for benefits, no Corporate Officer or spouse has a vested right to benefits under the Plan. This means that Corporate Officers who have not attained age 55 with 5 years of Qualifying Service (and their spouses) do not have a non-forfeitable right to qualify for coverage under the Plan and the Company reserves the right to amend the Plan at any time to change or terminate the Plan with respect to such Corporate Officers and their spouses. If the Plan is so amended, any Corporate Officer (and spouse) who is not age 55 with 5 years of Qualifying Service at the time of the amendment may be ineligible for benefits under the Plan or may be eligible for reduced or changed benefits under the Plan. Such an amendment to the Plan may change the benefits under the Plan in a way that changes, reduces or increases benefits or reduces or increases the amount that retirees and spouses pay for benefits, either as a share of the premium cost or as deductibles, co-payments, co-insurance or other cost-sharing provisions. The Plan may not be terminated or modified in a manner that

13

reduces benefits for any Retiree or Corporate Officer who has attained age 55 with 5 years of Qualifying Service.

Claim Procedures

Claims for the payment of medical, dental or long term care insurance benefits are subject to the claim procedures contained in the insurance contract through which such coverage is provided and are not the responsibility of the Company.

For medical premium reimbursements under the Plan, if you disagree with the amount of a medical premium reimbursement, you have the right to appeal to the Company. All appeals must be made in writing within 180 days after the date the reimbursement in question was paid. Appeals should be addressed to the Company at the address specified below. You may submit written comments, documents, records and other information relating to your claim and you will be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to your claim for benefits. The review of your appeal will take into account all comments, documents, records and other information you submit, without regard to whether such information was considered in the initial benefit determination.

You will be notified in writing of the Company’s decision on your appeal not later than 60 days after the Company receives your request for review. If the decision is adverse, the notification will set forth: (1) the specific reason or reasons for the adverse determination; (2) reference to the specific plan provisions on which the determination is based; (3) a statement that you are entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to your claim; and (4) a statement of your right to bring an action under section 502(a) of ERISA. Please refer to the claim section of your subscriber contract or coverage certificate for a description of the specific claim procedures applicable to your claims for benefits.

Discretionary Authority

The insurance carriers and HMOs through which coverage is provided under the Plan have full discretionary authority to interpret the terms of the subscriber contracts and coverage certificates that they issue and to determine eligibility for benefits in accordance with the terms of such subscriber contracts and coverage certificates. In carrying out its responsibilities under the Plan as the plan administrator, the Company has full discretionary authority to interpret the terms of the Plan. Any interpretation or determination made by an insurance carrier or HMO, or by the Company pursuant to such discretionary authority shall be given full force and effect unless found by a court of competent jurisdiction to be arbitrary and capricious.

Statement of Rights

As a participant in the Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all Plan participants be entitled to:

14

Receive Information About Your Plan and Benefits

Examine, without charge, at the plan administrator’s corporate office all documents governing the Plan including insurance contracts.

Obtain upon written request to the plan administrator, copies of documents governing the operation of the Plan, including insurance contracts and updated summary plan description. The plan administrator may make a reasonable charge for the copies.

Prudent Actions by Plan Fiduciaries

In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries. No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.

Enforce Your Rights

If your claim for a welfare benefit is denied or ignored, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of Plan documents or the latest annual report from the Plan and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for benefits, which is denied or ignored, in whole or in part, you may file suit in a state or Federal court, provided that you have exhausted all your administrative appeal rights. If it should happen that Plan fiduciaries misuse the Plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees; for example, if it finds your claim is frivolous.

Assistance With Your Questions

If you have any questions about your Plan, you should contact the plan administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the plan administrator, you should contact the nearest Area Office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W.,

15

Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Pension and Welfare Benefits Administration.

In order to protect your family’s rights, you should keep the plan administrator informed of any charges in the addresses of family members. You should also keep a copy, for your records, of any notices you send to the plan administrator.

Plan Name

The legal name of the Plan is the Transcat Inc. Post-Retirement Benefit Plan for Officers.

Plan Number

511

Employer

Transcat Inc.
35 Vantage Point Drive
Rochester, New York 14624
(585) 352-7777

Employer Identification Number

16-0874418

Type of Plan

The Plan is a welfare benefit plan that provides medical, dental and long term care insurance benefits through contracts issued by insurance carriers and health maintenance organizations. A list of the carriers and health maintenance organizations that provide coverage under the Plan is attached to the end of this document. The Plan also provides limited reimbursement of premiums paid by Retirees and spouses for individual medical and dental insurance coverage obtained by the Retiree and/or spouse.

Plan Administrator

Transcat Inc.
35 Vantage Point Drive
Rochester, New York 14624
(585) 352-7777

16

Type of Administration

The Plan is administered by Transcat Inc. The insurance carriers and health maintenance organizations through which benefits are provided administer claims under the contracts through which such benefits are provided.

Agent for Service of Legal Process

Transcat Inc.
35 Vantage Point Drive
Rochester, New York 14624
(585) 352-7777

Contributions/Funding

The Company and participants contribute toward the cost of coverage under the Plan.

Plan Year

The plan year for the Plan is the calendar year.

17

Insurance Carriers and Health Maintenance Organizations
Providing Medical and Dental Insurance Coverage
(Excluding Carriers/HMOs providing individual coverage)

18

Acknowledgment of Receipt

By signing below, the authorized representative of the Company certifies that a copy of this summary plan description/plan document for the Transcat Inc. Post-Retirement Benefit Plan for Officers was provided to the below-named Corporate Officer and Eligible Spouse (if any), and the Corporate Officer and Eligible Spouse (if any) acknowledge that the Company provided the Corporate Officer and Eligible Spouse with a copy of this summary plan description/plan document for the Transcat Inc. Post-Retirement Benefit Plan for Officers.

Transcat Inc.

By:
	Date
Signature of Retiree	Date
Print Name of Retiree
Signature of Eligible Spouse	Date
Print Name of Eligible Spouse

19

EX-10.25

Exhibit 10.25

Transcat Inc. Post-Retirement Benefit Plan
For Non-Officer Employees

(Amended and Restated Effective January 1, 2010)

Introduction

The Transcat Inc. Post-Retirement Benefit Plan for Non-Officer Employees (the “Plan”) provides limited reimbursements to eligible Participants for the cost of individual medical insurance coverage purchased by the Participant following qualifying retirement from employment with Transcat Inc. (the “Company”). The Plan does not itself provide health benefits. The actual health benefits provided to a Participant are provided through the individual policy of insurance purchased by a Participant after retirement from the Company.

This document is the summary plan description of the Plan and is also considered the written instrument for the Plan for purposes of Section 402(a)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”).

The original effective date of the Plan is December 23, 2006. This amendment and restatement is effective January 1, 2010.

Eligibility Requirements

Non-Officer Employees who retire from active employment with the Company on or after December 23, 2006 at age 65 or older with 20 or more years of Qualifying Service and who do not work in any other full-time employment (as defined below) after retirement are eligible to participate in the Plan. A Non-Officer Employee who retires after satisfying the eligibility requirements is referred to as a “Participant” in this document.

For purposes of eligibility to participate in the Plan, an individual will be considered a “Non-Officer Employee” if the individual is classified by the Company as a common law employee and does not have the title of Vice President or higher and is not the Corporate Controller. An individual who the Company classifies as a leased employee, or who is on the payroll of another company or is treated as an independent contractor by the Company for employment tax purposes is not eligible to participate in the Plan, even if a court or other authority determines that the individual is a common law employee.

Qualifying Service means an employee’s most recent period of continuous, uninterrupted employment with the Company on a full-time basis on or after the date the employee reaches age 45. Service prior to age 45 does not count as years of Qualifying Service for purposes of determining eligibility to participate in the Plan. Service with a business acquired by the Company on or after December 23, 2006 (the original effective date of the Plan) is not counted as Qualifying Service. An employee is considered to be employed on a full-time basis if the employee regularly works 30 or more hours per week. An employee who has a break in service of 12 months or less will not lose service credited prior to the break and will receive service credit for the period of the break in service if each of the following requirements is satisfied: (i) the employee had at least 15 years of Qualifying Service at the time the employee began the period of absence; (ii) the employee received his or her regular compensation or received short-term disability benefits under a Company-sponsored plan during the period of absence or the absence was otherwise authorized by the Company; and (iii) the employee returns to active full-time employment with the Company not later than 12 months after the absence begins.

1

An individual will be considered to be working in full-time employment after retirement (and therefore not eligible to participate in the Plan) if he or she regularly works at a job for 30 or more hours per week. The Company, in its sole discretion, will determine whether an individual is working in full-time employment after retirement for purposes of determining eligibility to participate in the Plan.

Premium reimbursement benefits are available only for coverage for the eligible retiree. Reimbursement for the cost of coverage for a spouse or other dependents is not provided under the Plan.

The Plan does not provide any benefits other than premium reimbursements in accordance with the rules described in this document. The Company does not guarantee that a Participant will be eligible for any Individual Coverage. The Participant is solely responsible for obtaining Individual Coverage.

Initial Enrollment

If you are eligible to participate in the Plan at the time you retire, you will be provided with current reimbursement benefit information at that time.

Description of Premium Reimbursement Benefits

The maximum amount of reimbursement available to a Participant for any month is a “capped” amount equal to 72% of the applicable premium for a base Medicare supplemental coverage plan determined by the Company. The capped amount applicable to a Participant is determined based on the year in which the Participant retired and will be increased by 3% each year. For Participants who retire in 2007, the maximum reimbursement amount is $53.28 per month, which is 72% of $74, the 2007 monthly premium for the Excellus Medicare Blue Choice HMO Optimum Plan, the base Medicare supplemental coverage plan selected by the Company for 2007.

Example: Employee 1 retires in 2007 at age 65 with 20 years of Qualifying Service, qualifying to participate in the Plan. Employee 1 is responsible for obtaining individual medical insurance coverage and is eligible for a maximum reimbursement amount of $53.28 per month for coverage purchased in 2007. In 2008, Employee 1’s maximum reimbursement amount is increased 3% to $54.88. Employee 2 retires in 2008 at age 65 with 20 years of Qualifying Service, qualifying to participate in the Plan. If the premium for the base Medicare supplemental coverage plan in 2008 is $95, the maximum reimbursement amount in 2008 for employees who retire in 2008 would be $68.40 per month (72% of $95). The reason for the difference in the maximum reimbursement amounts for Employee 1 and Employee 2 in 2008 is that Employee 1’s maximum reimbursement amount is determined based on the maximum in the year Employee 1 retired and is increased 3% per year after that.

If a Participant purchases Individual Coverage that costs more than the maximum reimbursement amount available under the Plan, the Participant is responsible for paying the additional cost of coverage over and above the maximum reimbursement amount. If the Individual Coverage

2

purchased by a Participant costs less than the applicable maximum monthly reimbursement amount, the reimbursement from the Plan will be equal to the cost of the coverage. The Plan will not reimburse the excess of the maximum monthly reimbursement over the actual cost of coverage. Nor will any amount be paid to an individual who does not purchase individual coverage. For example, if the maximum monthly reimbursement amount established by the Company is $55 and the Participant purchases coverage that costs $35 per month, the Plan will reimburse the Participant $35 per month.

As noted below in the section titled “No Vesting; Amendment or Termination of Plan,” the Company reserves the right to amend or terminate the Plan at any time. This includes the right to reduce the amount of or terminate the reimbursements available under the Plan.

Claiming Reimbursement

A Participant may claim reimbursement on an annual or periodic basis (not more frequently than quarterly) for premiums paid by the Participant for Individual Coverage. The Participant must provide the Company with evidence satisfactory to the Company of the premium payments for which the Participant is claiming reimbursement.

Termination of Participation

A Participant will cease to participate in the Plan on the earliest of the following dates:

1) the date the Participant dies;

2) the date the Participant begins to work in full-time employment (as determined by the Company) after retirement from the Company;

Amendment or Termination of Plan

The Company has the right to amend or terminate the Plan at any time, except with regard to employees who have reached age 65 and completed 20 or more years of Qualifying Service with the Company and Participants (employees who retired from the Company at or after age 65 with 20 or more years of Qualifying Service with the Company and qualified for benefits). This means that employees who have not reached age 65 with 20 or more years of Qualifying Service with the Company do not have any vested rights under the Plan and the Company may amend or terminate the Plan at any time. If the Plan is amended or terminated, such employees may cease to have the right to accrue Qualifying Service for purposes of qualifying to participate in the Plan, or the reimbursement benefit under the Plan may be reduced. The Plan may not be terminated or modified in a way that reduces premium reimbursements for any Participant or employee who has attained age 65 with 20 or more years of Qualifying Service with the Company.

Claim Procedures

Claims for the payment of medical benefits under the Individual Coverage purchased by a Participant are subject to the claim procedures contained in the insurance contract through which

3

such coverage is provided and are not the responsibility of the Company. Such claims must be submitted to the insurance carrier in accordance with the claim procedures specified in the insurance contract.

A Participant who disagrees with the amount of a reimbursement under this Plan has the right to appeal. All appeals must be made in writing within 180 days after the date the reimbursement in question was paid. Appeals should be addressed to the Company at the address specified below. A Participant may submit written comments, documents, records and other information relating to the Participant’s claim and will be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the Participant’s claim for benefits. The review of the appeal will take into account all comments, documents, records and other information submitted by the Participant, without regard to whether such information was considered in the initial benefit determination.

The Participant will be notified in writing of the Plan Administrator’s decision on the appeal not later than 60 days after the Plan Administrator receives the request for review. If the decision is adverse, the notification will set forth: (1) the specific reason or reasons for the adverse determination; (2) reference to the specific plan provisions on which the benefit determination is based; (3) a statement that the Participant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Participant’s claim for benefits; and (4) a statement of the Participant’s right to bring an action under section 502(a) of ERISA.

Discretionary Authority

In carrying out its responsibilities under the Plan as the plan administrator, the Company has full discretionary authority to interpret the terms of the Plan. Any interpretation or determination made by the Company pursuant to such discretionary authority shall be given full force and effect unless found by a court of competent jurisdiction to be arbitrary and capricious.

Statement of Rights

As a Participant in the Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all Plan Participants be entitled to:

Receive Information About Your Plan and Benefits

Examine, without charge, at the plan administrator’s corporate office and at other specific locations, such as worksites, all documents governing the Plan.

4

Obtain upon written request to the plan administrator, copies of documents governing the operation of the Plan and updated summary plan description. The plan administrator may make a reasonable charge for the copies.

Prudent Actions by Plan Fiduciaries

In addition to creating rights for Plan Participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other Plan Participants and beneficiaries. No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.

Enforce Your Rights

If your claim for a premium reimbursement benefit is denied or ignored, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of Plan documents and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for premium reimbursement benefits which is denied or ignored in whole or in part, you may file suit in a state or Federal court, provided that you have exhausted all your administrative appeal rights. If it should happen that Plan fiduciaries misuse the Plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees; for example, if it finds your claim is frivolous.

Assistance With Your Questions

If you have any questions about your Plan, you should contact the plan administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the plan administrator, you should contact the nearest Area Office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Pension and Welfare Benefits Administration.

5

In order to protect your family’s rights, you should keep the plan administrator informed of any charges in the addresses of family members. You should also keep a copy, for your records, of any notices you send to the plan administrator.

Plan Name

The legal name of the Plan is the Transcat Inc. Post-Retirement Benefit Plan for Non-Officer Employees.

Plan Number

510

Employer

Transcat Inc.
35 Vantage Point Drive
Rochester, New York 14624
(585) 352-7777

Employer Identification Number

16-0874418

Type of Plan

The Plan is a welfare benefit plan that provides limited reimbursements to Participants for the cost of individual medical insurance coverage purchased by the Participant.

Plan Administrator

Transcat Inc.
35 Vantage Point Drive
Rochester, New York 14624
(585) 352-7777

Type of Administration

The Plan is administered by Transcat Inc. The insurance carrier through which a Participant purchases individual coverage administers claims under the insurance contract.

6

Agent for Service of Legal Process

Transcat Inc.
35 Vantage Point Drive
Rochester, New York 14624
(585) 352-7777

Contributions/Funding

The Company pays reimbursement benefits under the Plan out of its general assets.

Plan Year

The plan year for the Plan is the calendar year.

7

Acknowledgment of Receipt

By signing below, the authorized representative of the Company certifies that a copy of this summary plan description/plan document for the Transcat Inc. Post-Retirement Benefit Plan for Non-Officer Employees was provided to the below-named employee and the employee acknowledges that the Company provided the employee with a copy of this summary plan description/plan document for the Transcat Inc. Post-Retirement Benefit Plan for Non-Officer Employees.

Transcat Inc.

By:
	Date
Signature of Participant	Date
Print Name of Participant

8

EX-10.26

Exhibit 10.26

February 26, 2010 

Transcat, Inc.
35 Vantage Point Drive
Rochester, New York 14624
Attention: John J. Zimmer, Vice President, Finance & CFO

Ladies and Gentlemen:

Reference is made to the Credit Agreement dated as of November 21, 2006 between Transcat, Inc. (the “Borrower”) and JPMorgan Chase Bank, N.A. (the “Lender”), as amended as of August 14, 2008 by Amendment Number One to Credit Agreement (collectively, the “Credit Agreement”). Terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.

The Borrower has requested, and the Lender has agreed, subject to the terms and conditions hereof, to modify the provisions of the Credit Agreement with respect to Permitted Acquisitions and to amend the Credit Agreement as follows:

1. The following definition is hereby added to Section 1.01 of the Credit Agreement in the appropriate alphabetical order:

“Amendment No. 2” means that certain letter amendment between Borrower and Lender dated February 26, 2010.

2. The definition of “Permitted Acquisition” as set forth in Section 1.01 of the Credit Agreement shall be amended so that subsection (e) thereof is hereby deleted in its entirety and replaced with the following:

(e) The cash consideration paid for all Acquisitions made after the date of Amendment No. 2 shall not exceed $6,000,000.

The foregoing amendments are subject to and conditioned upon the following:

(a) The Lender shall have received an executed original counterpart signature of the Borrower to this letter amendment.

(b) All of the Borrower’s representations and warranties as set forth below shall be true, correct and complete as of the effective date of this letter amendment.

By signing below, the Borrower represents and warrants to the Lender that: (i) the covenants, representations and warranties set forth in the Credit Agreement are true and correct on and as of the date of execution hereof as if made on and as of said date; (ii) no Event of Default specified in the Credit Agreement and no event, which, with the giving of notice or lapse of time or both, would become such an Event of Default has occurred and is continuing; (iii) since the date of the Credit Agreement, there has been no material adverse change in the financial condition or business operations of the Borrower which has not been disclosed to the Lender: (iv) the making and performance by the Borrower of this letter amendment have been duly authorized by all necessary corporate action and the person signing below on behalf of the Borrower is duly authorized to act in such capacity; and (v) the security interest granted by the Borrower to the Lender pursuant to the Security Agreement constitutes a valid, binding and enforceable, first in priority lien on all Collateral subject to such Security Agreement.

In consideration of the execution of this letter amendment by the Lender, the Borrower agrees to pay on demand all costs and expenses of the Lender in connection with the preparation, execution and delivery of this letter amendment and the other documents related hereto, including the fees and out-of-pocket expenses of counsel for the Lender.

Except as specifically modified herein, the terms, conditions and covenants of the Credit Agreement shall remain in full force and effect.

This letter amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any parties hereto may execute this letter amendment by signing any such counterpart.

Very truly yours, JPMORGAN CHASE BANK, N.A.
By:	/s/ Thomas C. Strasenburgh
	Thomas C. Strasenburgh, Vice President

ACCEPTED and AGREED to this
26^th day of February, 2010.

TRANSCAT, INC.
 

By:	/s/ John J. Zimmer
	Name:	John J. Zimmer
	Title:	VP Finance & CFO

EX-21.1

Exhibit 21.1

SUBSIDIARIES

Subsidiary	Jurisdiction
Transmation (Canada) Inc.	Canada
Westcon, Inc.	Oregon
USEC Acquisition Corp.	Wisconsin

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Transcat Inc.
Rochester, NY

     We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Registration Nos. 33-61665 and 333-109985) and Form S-3 (Registration No. 333-152392) of Transcat, Inc. of our report dated June 24, 2010 relating to the consolidated financial statements and financial statement schedule, which appear in this Form 10-K.

/s/ BDO Seidman, LLP BDO Seidman, LLP

New York, NY
June 24, 2010

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Charles P. Hadeed, President, Chief Executive Officer and Chief Operating Officer of Transcat, Inc., certify that:

1. I have reviewed this annual report on Form 10-K of Transcat, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 24, 2010
	/s/ Charles P. Hadeed
	Charles P. Hadeed
	President, Chief Executive Officer and
	Chief Operating Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John J. Zimmer, Vice President of Finance and Chief Financial Officer of Transcat, Inc., certify that:

1. I have reviewed this annual report on Form 10-K of Transcat, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 24, 2010
	/s/ John J. Zimmer
	John J. Zimmer
	Vice President of Finance and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with this annual report on Form 10-K of Transcat, Inc., Charles P. Hadeed, the Chief Executive Officer of Transcat, Inc. and John J. Zimmer, the Chief Financial Officer of Transcat, Inc. certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of their knowledge, that:

1.	This annual report on Form 10-K for the fiscal year ended March 27, 2010 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in this annual report on Form 10-K for the fiscal year ended March 27, 2010 fairly presents, in all material respects, the financial condition and results of operations of Transcat, Inc.

Date: June 24, 2010
	/s/ Charles P. Hadeed
	Charles P. Hadeed
	President, Chief Executive Officer and Chief Operating Officer

Date: June 24, 2010
	/s/ John J. Zimmer
	John J. Zimmer
	Vice President of Finance and Chief Financial Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Transcat, Inc. and will be retained by Transcat, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.