-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IXBhAWjBiPDKawaA27bVTefyV+YusywT7TBOO7IvYNvkPdqI1WdK1RYRATEG3e9e IO5dHSbcf5LQecmK9MWrKA== 0000099106-00-000004.txt : 20000410 0000099106-00-000004.hdr.sgml : 20000410 ACCESSION NUMBER: 0000099106-00-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANS LUX CORP CENTRAL INDEX KEY: 0000099106 STANDARD INDUSTRIAL CLASSIFICATION: 3990 IRS NUMBER: 131394750 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-02257 FILM NUMBER: 584245 BUSINESS ADDRESS: STREET 1: 110 RICHARDS AVE CITY: NORWALK STATE: CT ZIP: 06856-5090 BUSINESS PHONE: 2038534321 MAIL ADDRESS: STREET 1: 110 RICHARDS AVENUE CITY: NORWALK STATE: CT ZIP: 06856-5090 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 ----------------- Commission file number 1-2257 ------ TRANS-LUX CORPORATION ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Delaware 13-1394750 - - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 110 Richards Avenue, Norwalk, CT 06856-5090 ------------------------------------------- (203) 853-4321 -------------- (Address, zip code, and telephone number, including area code, of Registrant's principal executive offices) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered - - ------------------------------- ----------------------------------------- Common Stock, $1.00 par value American Stock Exchange 7 1/2% Convertible Subordinated Notes due 2006 American Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 X No --- --- 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. [ X ] CONTINUED TRANS-LUX CORPORATION 1999 Form 10-K Cover Page Continued As of the close of business on March 27, 2000, there were outstanding, 964,759 shares of the Registrant's Common Stock and 296,005 shares of its Class B Stock. The aggregate market value of the Registrant's Common and Class B Stock (based upon the closing price on the American Stock Exchange) held by non- affiliates on March 27, 2000 (based on the last sale price on the American Stock Exchange as of such date) was $6,245,520. (The value of a share of Common Stock is used as the value for a share of Class B Stock, as there is no established market for Class B Stock, which is convertible into Common Stock on a share-for-share basis.) DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Registrant's definitive Proxy Statement for the Annual Meeting of Stockholders to be held May 31, 2000 (the "Proxy Statement") are incorporated by reference into Part III, Items 10-13 of this Form 10-K to the extent stated herein. TRANS-LUX CORPORATION 1999 Form 10-K Annual Report Table of Contents PART I Page ITEM 1. Business 1 ITEM 2. Properties 7 ITEM 3. Legal Proceedings 7 ITEM 4. Submission of Matters to a Vote of Security Holders 8 PART II ITEM 5. Market for the Registrant's Common Equity and Related Stockholder Matters 8 ITEM 6. Selected Financial Data 9 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 ITEM 8. Financial Statements and Supplementary Data 14 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 25 PART III ITEM 10. Directors and Executive Officers of the Registrant 25 ITEM 11. Executive Compensation 26 ITEM 12. Security Ownership of Certain Beneficial Owners and Management 26 ITEM 13. Certain Relationships and Related Transactions 26 PART IV ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 26 Signatures 29 PART I ITEM 1. BUSINESS Unless the context otherwise requires, the term "Company" as used herein refers to Trans-Lux Corporation and its subsidiaries. The Company is a manufacturer, distributor, and marketer of large-scale, real-time electronic information displays for both indoor and outdoor use. These display systems utilize LED and light bulb technologies to display real-time information entered by the user or via a third party information supplier. The Company provides high quality, reliable display products configured to suit its customers needs, and offers extensive on-site service and maintenance. The Company's display products include data, graphics, and video displays for stock and commodity exchanges, financial institutions, sports venues, casinos, convention centers, corporate, government, theatres, retail, airports, and numerous other applications. In addition to its core display business, the Company also owns and operates a chain of motion picture theatres in the western Mountain States and owns real estate used for both corporate and income-producing purposes. ELECTRONIC INFORMATION DISPLAY PRODUCTS - - --------------------------------------- The Company's high performance electronic information displays are used to communicate messages and information in a variety of indoor and outdoor applications. The Company's product line encompasses a wide range of state-of-the-art electronic displays in various shape, size and color configurations. Most of the Company's display products include hardware components and sophisticated software. In both the indoor and outdoor markets which the Company serves, the Company adapts basic product types and technologies for specific use in various niche market applications. The Company also operates a direct service network throughout the United States and parts of Canada and Australia which performs on-site service and maintenance for its customers and others. The Company employs a modular engineering design strategy, allowing basic "building blocks" of electronic modules to be easily combined and configured in order to meet the broad application requirements of the markets it serves. This approach ensures product flexibility, reliability, ease of service and minimum spare parts requirements. The Company's electronic information display market is broken down into two distinct markets: the indoor market and the outdoor market. Electronic information displays are used by financial institutions, including brokerage firms, banks, energy companies, insurance companies and mutual fund companies; by sports venues; educational institutions; outdoor advertising companies; by corporate and government communication centers; by retail outlets; by casinos, race tracks and other gaming establishments; in airports, train stations, bus terminals, and other transportation facilities; on highways and major thoroughfares; by movie theatres; by health maintenance organizations, and in various other applications. The Indoor Market: The indoor electronic display market is currently dominated by three categories of users: financial, government and corporate, and gaming. The financial market segment, which includes trading floors, exchanges, brokerage firms, banks, mutual fund companies and energy companies, has long been a user of electronic information displays due to the need for real-time dissemination of data. The major stock and commodity exchanges depend on reliable information displays to post stock and commodity prices, trading volumes, interest rates and other financial information. Brokerage firms continue to install electronic ticker displays for both customers and brokers; 1 they have also installed other larger displays to post major headline news events in their brokerage offices to enable their sales force to stay up-to-date on events affecting general market conditions and specific stocks. The changing regulatory environment in the financial marketplace has resulted in the influx of banks and other financial institutions into the brokerage business and the need for these institutions to use information displays to advertise product offerings to consumers. The government and private market segment includes applications found in major corporations, public utilities and government agencies for the display of real-time, critical data in command/control centers, data centers, help desks, visitor centers inbound/outbound telemarketing centers and for employee communications. Electronic displays have found acceptance in applications for the healthcare industry such as outpatient pharmacies; military hospitals and HMOs to automatically post patient names when prescriptions are ready for pick up. Theatres use electronic displays to post current box office and ticket information, directional information, promote concession sales and use the Company's Rear WindowTM system for the hearing-impaired. Information displays are consistently used in airports, bus terminals and train stations to post arrival and departure, gate and baggage claim information, all of which help to guide passengers through these facilities. The gaming market segment includes casinos and Indian gaming establishments. These establishments generally use large information displays to post odds for race and sporting events and to display timely information such as results, track conditions, jockey weights and scratches. Casinos also use electronic displays throughout their facilities to advertise to and attract gaming patrons. This includes using electronic displays in conjunction with slot machines to attract customer attention to potential payoffs and thus increase customer play. Indoor equipment generally has a lead-time of 30 to 120 days depending on the size and type of equipment ordered and material availability. The Outdoor Market: The outdoor electronic display market is even more diverse than the indoor market. Displays are being used by sports stadiums, banks and other financial institutions, gas stations, highway departments, educational institutions and outdoor advertisers attempting to capture the attention of passers-by. The Company has utilized its strong position in the indoor market combined with several acquisitions to enhance its presence in the outdoor display market. The Company's acquisition in May 1997 of the catalog and custom scoreboard sign business of Fairtron Corporation (Fairtron), was in the outdoor display market. Outdoor displays are installed in amusement parks, entertainment facilities, high schools, major and minor league parks, professional and college sports stadiums, military installations, bridges and other roadway installations, automobile dealerships, banks and other financial institutions. Outdoor equipment generally has a lead-time of 10 to 120 days depending on the size and type of equipment ordered and material availability. Sales Order Backlog (excluding leases): The amount of sales order backlog at December 31, 1999 was approximately $4.3 million compared with the December 31, 1998 sales order backlog of $3.4 million. The December 31, 1999 backlog will be recognized in 2000. These amounts do not include new lease orders or renewals of existing lease agreements presently in-house. 2 ENGINEERING AND PRODUCT DEVELOPMENT - - ----------------------------------- The Company's ability to compete and operate successfully depends upon, among other factors, its ability to anticipate and respond to the changing technological and product needs of its customers. The Company continually examines and tests new display technologies and develops enhancements to its existing products in order to meet the needs of its customers. Product enhancement work continues in both the indoor and outdoor areas. Development of new indoor products includes progressive meter and controller systems for use in the gaming industry; new monochrome and tricolor ticker displays utilizing improved LED display technology, curved and flexible displays; higher speed processors for faster data access and improved update speed; integration of blue LED's to provide full color text graphics and video displays; wireless controlled displays and a new graphics interface to display more data in higher resolutions. The Company developed a full color LED video display for the outdoor market which has application particularly in the sports market where enhancing the presentation of live action is of central importance. To drive the video display, the Company developed the ProLineTM controller which is Windows 32-bit software based. The Company also developed a wireless scoreboard controller, an LED scoreboard and a bar-digit scoreboard for its Trans-Lux/Fair-PlayTM catalog business. The Company's Display ConnectionTM, is an electronic display system that uses the Internet to blend Dow Jones Newswires market data, business news headlines, and sports headlines and statistics with consumer messages to make indoor and outdoor displays more effective at focusing customers' attention. This product is designed for banks, brokerages, hotels, airports, exhibition halls, casinos, retail stores, schools, and other venues where high traffic and conditions for immediate customer action are both present. Display Connection is compatible with the Company's VisionWriterTM displays and message centers, as well as most outdoor displays. As part of its ongoing development efforts, the Company seeks to package certain products for specific market segments as well as to continually track emerging technologies that can enhance its products. Future technologies under consideration are trending toward full color, live video, and digital input. The Company is currently focused on certain technologies which incorporate these features and which are expected to provide a choice of products for the custom applications demanded by its customers. The Company maintains a staff of 52 people who are responsible for product development and support. The engineering and product enhancement and development efforts are supplemented by outside independent engineering consulting organizations and colleges where required. Engineering, product enhancement and development amounted to $4,280,000, $3,603,000 and $2,819,000 in 1999, 1998 and 1997, respectively. MARKETING AND DISTRIBUTION - - -------------------------- The Company markets its indoor and outdoor electronic information display products primarily through its 41 direct sales representatives, 7 telemarketers and a network of independent dealers and distributors. The Company divides its domestic sales and marketing efforts into two categories, renewal of existing 3 product leases and product upgrades, and the sale or lease of display products to new customers. In the indoor market for leased equipment, the Company attempts to maintain ongoing relationships with its customers to discuss lease renewals and upgrades. In the outdoor market, sales personnel contact existing and potential customers to discuss the customer's usage or requirements for display equipment. The Company also uses primarily telemarketing personnel to maintain communication with its installed base of lease equipment customers, contacting them in order to obtain lease renewal and upgrades. The Company uses a number of different techniques in order to attract new customers, including direct marketing efforts by its sales force to known or potential users of information displays, advertising in industry publications, and exhibiting at approximately 49 domestic and international trade shows annually. In the outdoor market, the Company supplements these efforts by using a network of independent dealers and distributors who market and sell its products. Internationally, the Company uses a combination of internal sales people and independent distributors to market its products in Europe, South and Central America, Asia, Canada and Australia. The Company currently has assembly operations, service centers and sales offices in New South Wales, Australia and Mississauga, Canada. The Company has existing relationships with approximately 22 independent distributors worldwide covering Europe, South and Central America, Canada, Asia and Australia. International sales have represented less than 10% of total revenues in the past three years, but the Company believes that it is well positioned for expansion. Headquartered in Norwalk, Connecticut, the Company has major sales and service offices in New York; Chicago; Las Vegas; Norcross, Georgia; Torrance, California; Mississauga, Canada; Logan, Utah; Des Moines, Iowa; and New South Wales, Australia, as well as approximately 66 satellite offices in the United States and Canada. The Company's equipment is both leased and sold. A significant portion of the electronic information display revenues are from equipment rentals with current lease terms ranging from 30 days to ten years. The Company's revenues in 1999, 1998 and 1997 did not include any single customer that accounted for more than 10% of total revenues. MANUFACTURING AND OPERATIONS - - ---------------------------- The Company's production facilities are located in Norwalk, Connecticut; Logan, Utah; Des Moines, Iowa; Mississauga, Canada and New South Wales, Australia and consist principally of the manufacturing, assembly and testing of display units, and related components. The Company performs most subassembly and all final assembly of its products. The Company is constructing a new 55,000 square foot outdoor display facility in Logan, Utah, which is expected to be completed in the Spring of 2000. All product lines are design engineered by the Company and controlled throughout the manufacturing process. The Company has the ability to produce printed circuit board fabrications, very large sheet metal fabrications, plastic molded parts, cable assemblies, and surface mount and through-hole designed assemblies. The Company produces more than 80,000 board assemblies annually which are tested with the latest state of the art automated testing equipment. Additional board assembly capacity is increased through outsourcing. The 4 Company's production of many of the subassemblies and all of the final assemblies gives the Company the control needed for on-time delivery to its customers. The Company also has the ability to rapidly modify its product lines. The Company's displays are designed with flexibility in mind, enabling the Company to customize its displays to meet different applications with a minimum of lead-time. The Company's automated planning and purchasing department further enables it to secure materials in a timely fashion without maintaining excessive inventories. The Company also partners with large distributors via volume purchase agreements, giving it the benefit of a third party stocking its components ready for delivery on demand. The Company designs certain of its materials to match components furnished by suppliers. If such suppliers were unable to provide the Company with those components, the Company would have to contract with other suppliers to obtain replacement sources. Such replacement might result in engineering design changes, as well as delays in obtaining such replacement components. The Company believes it maintains suitable inventory and has contracts providing for delivery of sufficient quantities of such components to meet its needs. The Company also believes there presently are other qualified vendors of these components. The Company does not acquire a material amount of purchases directly from foreign suppliers, but certain components are manufactured by foreign sources. The Company is ISO-9001 registered by Underwriters Laboratories for its Norwalk plant facility. The Company's products are also third-party certified as complying with applicable safety, electromagnetic emissions and susceptibility requirements world wide. The Company believes these distinctions in its industry gives it a competitive advantage in the global marketplace. SERVICE AND SUPPORT - - ------------------- The Company emphasizes the quality and reliability of its products and the ability of its field service personnel to provide timely and expert service to the Company's installed base. The Company believes that the quality and timeliness of its on-site service personnel are important components in the Company's success. The Company provides turnkey installation and support for the products it leases and sells in the United States, Canada and Australia. The Company provides training to end-users and provides ongoing support to users who have questions regarding operating procedures, equipment problems or other issues. The Company provides service to customers who lease equipment and offers installation and service to those who purchase equipment. In the market segments the Company's distributors cover, the distributors offer support for the products they sell. Personnel based in regional and satellite service locations throughout the United States, Canada and Australia provide high quality and timely on-site service for the installed equipment rental and maintenance base and other types of customer owned equipment. Purchasers or lessees of the Company's larger products, such as financial exchanges, casinos and sports facilities, often retain the Company to provide on-site service through the deployment of a service technician who is on-site daily or for the scheduled sporting event. The Company also maintains a National Technical Services Center in Norcross, Georgia, which performs equipment repairs and dispatches service technicians on a nationwide basis. The Company's field service is augmented by various outdoor service companies in the United States, Canada and overseas. From time to time 5 the Company uses various third-party service agents to install, service and/or assist in the service of outdoor displays for reasons that include geographic area, size and unusual height of displays. COMPETITION - - ----------- The Company's offer of short and long-term leases to customers and its nationwide sales, service and installation capabilities are major competitive advantages in the display business. The Company believes that it is the largest supplier of large-scale stock, commodity, sports and race book gaming displays in the United States, as well as one of the largest outdoor electronic display and service organizations in the country. The Company competes with a number of competitors, both larger and smaller than itself, and with products based on different forms of technology. In addition, there are several companies whose current products utilize similar technology and who possess the resources necessary to develop competitive and more sophisticated products in the future. The Company's motion picture theatres are subject to varying degrees of competition in the geographic areas in which they operate. In one area, theatres operated by national circuits compete with the Company's theatres. The Company's theatres also face competition from all other forms of entertainment competing for the public's leisure time and disposable income. THEATRE OPERATIONS - - ------------------ The Company currently operates 63 screens in 14 locations in the western Mountain States. In 1997, the Company acquired the Gaslight Twin Cinema in Durango, Colorado, and the Lake Dillon Cinema four-plex in Dillon, Colorado; in 1998, the Company expanded its Storyteller theatre in Taos, New Mexico to a seven-plex; in 1999, the Company acquired a single and a four-plex theatre in Laramie Wyoming, constructed a six-plex theatre in Espanola, New Mexico and a six-plex theatre in Dillon, Colorado; and in 2000, the Company constructed an eight-plex theatre in Los Lunas, New Mexico and has construction in progress on a six-plex theatre in Green Valley, Arizona. The Company also has a twelve-plex theatre in Loveland, Colorado which is a 50% owned joint venture partnership. The Company's theatre revenues are generated from box office admissions, theatre concessions, theatre rentals and other sales. Theatre revenues are generally seasonal and coincide with the release dates of major films during the summer and holiday seasons. The Company is not currently operating any multimedia entertainment venues, but continues to stay abreast of innovations in this area of technology and continues to investigate new opportunities. Commencing in the first quarter of 2000, the Company opened a booking office to book films for its owned theatres and other theatres. INTELLECTUAL PROPERTY - - --------------------- The Company owns or licenses a number of patents and holds a number of trademarks for its display equipment and theatrical enterprises and considers such patents, trademarks and licenses important to its business. 6 EMPLOYEES - - --------- The Company has approximately 765 employees as of February 29, 2000, of which approximately 500 employees support the Company's electronic display business. Less than 1% of the employees are unionized. The Company believes its employee relations are good. ITEM 2. PROPERTIES The Company's headquarters and principal executive offices are located at 110 Richards Avenue, Norwalk, Connecticut. The Company owns the 102,000 square foot facility located at such site, which is occupied by the Company and is used for administration, sales, engineering, production and assembly of its indoor display products. Approximately 14,000 square feet of the building is currently leased to others. In addition, the Company owns facilities in: Torrance, California Norcross, Georgia Des Moines, Iowa Logan, Utah Mississauga, Canada. Theatre Properties in : Sahuarita, Arizona Dillon, Colorado Durango, Colorado Espanola, New Mexico Los Lunas, New Mexico Santa Fe, New Mexico Taos, New Mexico. The Company also leases 9 premises throughout North America and in Australia for use as sales, service and/or administrative operations, and leases 9 theatre locations. The aggregate rental expense was $601,000, $585,000 and $456,000 for 1999, 1998 and 1997, respectively. ITEM 3. LEGAL PROCEEDINGS The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. During June 1999, a jury in the state of New Mexico awarded a former employee of the Company $15,000 in damages for lost wages and emotional distress and $393,000 in punitive damages on a retaliatory discharge claim. The Company denied the charges on the basis that the termination was proper and is appealing such verdict. The Company believes it has made adequate provisions during 1999 to cover such matters. In January 2000, a second former employee of the Company commenced a retaliatory discharge action seeking compensatory and punitive damages in an unspecified amount. The 7 Company has denied such allegations and asserted defenses including that the former employee resigned following her failure to timely report to work. Certain of the amounts are subject to insurance recoveries. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (a) The Company's Common Stock is traded on the American Stock Exchange under the symbol "TLX." Sales prices are set forth in (d) below. (b) The Company had approximately 759 holders of record of its Common Stock and approximately 69 holders of record of its Class B Stock as of March 27, 2000. (c) The Board of Directors approved four quarterly cash dividends of $0.035 per share for Common Stock and $0.0315 per share for Class B Stock during 1999. Management and the Board of Directors will continue to review payment of the quarterly cash dividends. (d) The range of Common Stock prices on the American Stock Exchange are set forth in the following table: High Low ---- --- 1999 First Quarter $11 1/8 $ 8 1/2 Second Quarter 9 1/4 7 3/4 Third Quarter 8 1/4 5 7/8 Fourth Quarter 8 1/4 6 1/2 1998 First Quarter $16 $13 5/8 Second Quarter 14 12 1/8 Third Quarter 12 15/16 8 5/8 Fourth Quarter 10 5 1/2 8 ITEM 6. SELECTED FINANCIAL DATA (a) The following table sets forth selected consolidated financial data with respect to the Company for the five years ended December 31, 1999, which were derived from the audited consolidated financial statements of the Company and should be read in conjunction with them.
Years Ended 1999 1998 1997 1996 1995 - - ----------- ---- ---- ---- ---- ---- In thousands, except per share data Revenues $ 62,818 $63,778 $53,363 $45,285 $37,791 Net income 788 1,699 1,510 1,250 1,066 Earnings per share: Basic $ 0.61 $ 1.32 $ 1.18 $ 0.99 $ 0.85 Diluted 0.61 0.85 0.80 0.89 0.79 Cash dividends per share: Common stock $ 0.14 $ 0.14 $ 0.14 $ 0.14 $ 0.14 Class B stock 0.126 0.126 0.126 0.126 0.126 Average common shares outstanding 1,286 1,290 1,281 1,258 1,250 Total assets $112,448 $91,146 $88,978 $84,031 $57,460 Long-term debt 65,952 49,523 49,452 48,112 22,495 Stockholders' equity 26,013 25,851 24,332 22,662 21,499
9 (b) The following table sets forth quarterly financial data for the years ended December 31, 1999 and 1998:
Quarter Ended (unaudited) March 31 June 30 September 30 December 31 (1) In thousands, except per share data 1999 Revenues $13,485 $16,003 $17,569 $15,761 Gross profit 4,977 6,027 6,230 5,555 Income before income taxes 69 359 694 110 Net income 38 198 381 171 Earnings per share: Basic $ 0.03 $ 0.15 $ 0.30 $ 0.13 Diluted (2) 0.03 0.15 0.21 0.13 Cash dividends per share: Common stock $ 0.035 $ 0.035 $ 0.035 $ 0.035 Class B stock 0.0315 0.0315 0.0315 0.0315 1998 Revenues $15,956 $15,877 $16,739 $15,206 Gross profit 5,862 5,877 6,034 6,394 Income before income taxes 627 661 813 927 Net income 345 364 446 544 Earnings per share: Basic $ 0.27 $ 0.28 $ 0.35 $ 0.42 Diluted 0.19 0.19 0.22 0.25 Cash dividends per share: Common stock $ 0.035 $ 0.035 $ 0.035 $ 0.035 Class B stock 0.0315 0.0315 0.0315 0.0315 (1) During the fourth quarter of 1999, the Company adjusted certain research and development expenses resulting in a decrease of approximately $78,000 to net income in the quarter. During the fourth quarter of 1998 the Company adjusted certain standard manufacturing cost estimates to year-to-date actual costs resulting in an increase of approximately $77,000 to net income in the quarter. (2) Diluted earnings per share is computed independently for each of the periods presented. Accordingly, the sum of the quarterly diluted earnings per share amounts do not equal the total for the year.
10 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations 1999 Compared to 1998 The Company's total revenues for the year ended December 31, 1999 decreased 1.5% to $62.8 million from $63.8 million for the year ended December 31, 1998. Revenues from equipment rentals and maintenance increased slightly to $23.5 million in 1999 from $23.2 million in 1998 or 1.3%. Of this increase, indoor display rental and maintenance increased $1.0 million in 1999 or 7.2%, which was offset by the $0.7 million or 8.0% continued, expected revenue decline in the outdoor rental and maintenance bases previously acquired. Revenues from equipment sales decreased to $31.3 million in 1999 from $33.9 million in 1998 or 7.6%. The decrease was in the indoor display segment, as 1998 indoor display revenues included a multi-million dollar order from a major exchange, which did not recur this year. Revenues from outdoor displays increased $1.0 million in 1999 or 4.5% from 1998, primarily in the outdoor sports division. Revenues from theatre receipts and other increased $1.3 million or 19.5% in 1999. The increase is primarily from the revenues from two newly constructed six-plex theatres in Dillon, Colorado and Espanola, New Mexico and the acquisition of two theatres in Wyoming in 1999. Gross profit as a percentage of revenues was 36.3% in 1999 compared to 37.9% in 1998. The decrease in the gross profit percentage was anticipated as the Company attempts to increase its market share in the outdoor display market, and expand its theatre operations, which is at a lower gross profit than the display division. Due to the competitive nature of the outdoor display market, the Company anticipates the gross profit margin to continue to decline somewhat as it attempts to increase its market share in certain industry segments of this market. Cost of equipment rentals and maintenance includes field service expenses, plant repair costs, maintenance and depreciation. The indoor display cost of equipment rental and maintenance increased 4.6%, principally due to increased depreciation expense. The outdoor display cost of equipment rental and maintenance increased 7.6%, principally due to competitive market conditions. The cost of equipment rentals and maintenance represented 56.9% of related revenues in 1999 compared to 54.4% in 1998. Cost of equipment sales decreased $1.4 million or 6.7%. The indoor display cost of equipment sales decreased 35.4%, primarily due to a large sale in 1998 which did not recur in 1999. The outdoor display cost of equipment sales increased 4.2%, principally due to a receivables settlement with a customer. The cost of equipment sales represented 64.5% of related revenues in 1999 compared to 63.8% in 1998. Cost of theatre receipts and other, which includes film rental costs, increased $1.1 million or 20.2%, mainly as a result of the expansion of the theatre operations. The cost of theatre receipts and other represented 80.6% of related revenues in 1999 compared to 80.1% in 1998. Total general and administrative expenses increased slightly to $18.3 million in 1999 from $18.0 million in 1998. Corporate general and administrative expenses decreased 3.3%, primarily due to the positive impact of the effect of foreign currency exchange rates and reduced administrative expenses, offset by the special litigation charge of $408,000 on a retaliatory discharge claim (See Note 15). The indoor display general and administrative expenses decreased 7.4%, primarily due to reduced sales overhead expenses. The outdoor display general and administrative expenses increased 19.5%, primarily due to expanded sales and marketing efforts. The entertainment and real estate general and administrative expenses remained level. Net interest expense increased $207,000, which is primarily attributable to the increase in long-term debt for theatre expansion. Other income primarily relates to the equity in earnings of the joint venture, MetroLux Theatres, repurchase of $1,135,000 par value of the Company's 7-1/2% Convertible Subordinated Notes, (the "Notes") and the earned income portion of municipal forgivable loans. 11 The effective tax rate was 36.0% in 1999 and 43.9% in 1998. The decrease in the effective tax rate for 1999 was largely due to utilization of foreign tax net operating losses by the international subsidiaries. 1998 Compared to 1997 The Company's total revenues for the year ended December 31, 1998 increased 19.5% to $63.8 million from $53.4 million for the year ended December 31, 1997. Revenues from equipment rentals and maintenance decreased slightly to $23.2 million in 1998 from $23.5 million in 1997 or 1.2%. Indoor display rental and maintenance increased 6.9%, this increase was more than offset by the 11.9% continued, expected decrease from the outdoor lease and maintenance bases previously acquired. Revenues from equipment sales increased to $33.9 million in 1998 from $24.4 million in 1997 or 38.6%. Indoor display sales increased 42.6%, primarily due to an increase in the volume of sales. Outdoor display sales increased 36.5%, primarily attributable to the acquisition of the catalog and custom scoreboard sign business of Fairtron Corporation in May 1997 and increased sales of other outdoor products. Revenues from theatre receipts and other increased $1.3 million or 23.5% in 1998. This increase is primarily attributable to the acquisitions of the Lake Dillon Cinema in September 1997, the Gaslight Cinema in March 1997, the expansion of the Taos Storyteller Cinema from a four-plex to a seven-plex in February 1998, and increased concession sales. Gross profit as a percentage of revenues was 37.9% in 1998 compared to 40.8% in 1997. The indoor display cost of equipment rental and maintenance increased 13.4%, principally due to increased depreciation expense. The outdoor display cost of equipment rental and maintenance decreased slightly. The cost of equipment rentals and maintenance represented 54.4% of related revenues in 1998 compared to 50.7% in 1997. Cost of equipment sales increased $6.1 million or 39.6%. The indoor display cost of equipment sales increased 37.7%, primarily due to an increase in the volume of sales. During the fourth quarter of 1998, the Company adjusted certain indoor standard manufacturing cost estimates to year-to-date actual costs resulting in an increase of approximately $77,000 to net income in the quarter. The outdoor display cost of equipment sales increased 40.3%, principally due to the Fairtron acquisition and an increase in sales of other outdoor products. The cost of equipment sales represented 63.8% of related revenues in 1998 compared to 63.3% in 1997. Cost of theatre receipts and other increased $1.2 million or 29.0%, mainly as a result of the expansion of the theatre operations. The cost of theatre receipts and other represented 80.1% of related revenues in 1998 compared to 76.7% in 1997. Total general and administrative expenses increased $2.0 million or 12.3%. The indoor display general and administrative expenses increased 3.4%, primarily due to expanded sales and marketing efforts. The outdoor display general and administrative expenses increased 16.5%, primarily due to the Fairtron acquisition. The entertainment and real estate general and administrative expenses increased slightly. Corporate general and administrative expenses increased 18.2%, primarily due to increased administrative support. Interest income decreased $545,000, primarily attributable to the utilization of investments to acquire rental equipment and construct new theatres. Interest expense decreased $255,000, primarily due to a charge in 1997 of approximately $113,000 for the unamortized portion of the financing costs pertaining to the redemption of the 9% Convertible Subordinated Debentures (the "9% Debentures"). Other income relates to the equity in earnings of the joint venture, MetroLux Theatres and gains on sales of securities. The effective tax rate was 43.9% in 1998 and 47.0% in 1997. The decrease in the effective tax rate for 1998 was largely due to reduced foreign tax losses in 1998 compared to 1997. Accounting Standards The Company will adopt the provisions of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133) effective January 1, 2001. The standard requires companies to recognize all derivatives as either assets or liabilities and measure those instruments at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The Company does not expect the adoption of SFAS 133 to have a material impact on its consolidated financial statements. 12 Liquidity and Capital Resources The Company has a $15.0 million revolving credit facility available until June 2002. At December 31, 1999, $8.8 million was outstanding, leaving $5.8 million of additional borrowing capacity under this facility. The interest rate is LIBOR plus 2.0%, (7.8225% at December 31, 1999). The Company has the option to convert the outstanding balance into a four-year term loan. The revolving credit facility also requires an annual facility fee on the total commitment of .375%. During 1999, the Company entered into $10.1 million of real estate construction loans and mortgages, principally to fund the construction of theatre expansion projects. At December 31, 1999, the interest rates ranged from 7.75% to 8.65%. Also during 1999, the Company entered into loan agreements with the City of Logan, Cache County, Utah to issue $4.8 million of a combination of Tax-Exempt and Taxable Revenue Bonds to finance the construction of a new 55,000 square foot outdoor display facility in Logan, Utah. At December 31, 1999, the interest rates were 5.5% and 6.75%, respectively, plus a 1.25% letter of credit fee. The Company is currently authorized by the Board of Directors to repurchase up to $400,000 of its Common Stock. A total of 31,636 shares of Common Stock at a cost of $226,000 were repurchased during 1999. During 1999, the Company also repurchased $1,135,000 face value of its Notes at an average price of $85.80, resulting in a gain of $69,000 (net of tax). The Company believes that cash generated from operations together with cash and cash equivalents on hand and the availability under the revolving credit facility will be sufficient to fund its anticipated near term cash requirements. The Company has two term loans under its amended bank Credit Agreement for a total of $8.7 million of indebtedness at a rate of interest at LIBOR plus 1.75%. The Company has two interest rate swap agreements in place, with a notional value equal to the amount of the two term loans and with corresponding maturity terms, which have the effect of converting the interest rate on such term loans to a fixed average annual rates of 7.82% and 7.88% through July 2002. The Credit Agreement contains certain financial covenants with which the Company must comply, absent a waiver by the bank, on a continuing basis, with which the Company is in compliance and expects to remain in compliance. In late 1996, the Company issued $27.5 million of the Notes. On January 14, 1997, the Underwriter exercised their overallotment option, bringing the total amount outstanding to $31.6 million. In February 1997, the Company called all the outstanding 9% Debentures for redemption. Cash and cash equivalents increased $2.4 million in 1999 compared to a decrease of $0.5 million in 1998. The increase in 1999 is primarily attributable to an increase in accounts payable and accruals, offset somewhat by an increase in trade receivables and inventories, primarily due to the increase of sales and related cost of sales in the outdoor sports division. The decrease in 1998 was primarily attributable to investments in rental equipment and construction of theatres. The Company continues to experience a favorable collection cycle on its trade receivables. Year 2000 Update The Company did not experience any significant malfunctions or errors in its operating or business systems when the date changed from 1999 to 2000. Based on operations since January 1, 2000, the Company does not expect any significant impact to its ongoing business as a result of the Year 2000 issue, but if any problems do occur, they are likely to be minor and correctable. In addition, the Company could still be negatively impacted if its customers or suppliers are adversely affected by the Year 2000 issue. The Company is not aware of any significant Year 2000 problems that have arisen for its customers or suppliers. The Company expended approximately $350,000 on Year 2000 readiness efforts over a period of two years. The efforts included replacing certain hardware and replacing or modifying non-compliant software, as well as identifying and remediating Year 2000 problems. Safe Harbor Statement under the Private Securities Reform Act of 1995 The Company may, from time to time, provide estimates as to future performance. These forward looking statements will be estimates, and may or may not be realized by the Company. The Company undertakes no duty to update such forward looking statements. Many factors could cause actual results to differ from these forward looking statements, including loss of market through competition, introduction of competing products by others, pressure on prices from competition or purchasers of the Company's products, and interest rate and foreign exchange fluctuations. 13 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements and supplementary financial information are set forth below:
CONSOLIDATED STATEMENTS OF INCOME In thousands, except per share data Years ended December 31 1999 1998 1997 --------------------------------------------------------------------------------------------------------------- Revenues: Equipment rentals and maintenance $23,490 $23,181 $23,472 Equipment sales 31,273 33,858 24,434 Theatre receipts and other 8,055 6,739 5,457 -------------------------------------- Total revenues 62,818 63,778 53,363 -------------------------------------- Operating expenses: Cost of equipment rentals and maintenance 13,366 12,602 11,906 Cost of equipment sales 20,171 21,609 15,478 Cost of theatre receipts and other 6,492 5,400 4,187 -------------------------------------- Total operating expenses 40,029 39,611 31,571 -------------------------------------- Gross profit from operations 22,789 24,167 21,792 General and administrative expenses 18,341 17,993 16,023 -------------------------------------- 4,448 6,174 5,769 Interest income 592 646 1,191 Interest expense (4,251) (4,098) (4,353) Other income 443 306 240 -------------------------------------- Income before income taxes 1,232 3,028 2,847 -------------------------------------- Provision for income taxes: Current 470 799 164 Deferred (26) 530 1,173 -------------------------------------- 444 1,329 1,337 -------------------------------------- Net income $ 788 $ 1,699 $ 1,510 ====================================== Earnings per share: Basic $ 0.61 $ 1.32 $ 1.18 Diluted 0.61 0.85 0.80 -------------------------------------- Average common shares outstanding: Basic 1,286 1,290 1,281 Diluted 1,288 3,554 3,617 --------------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these consolidated financial statements.
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CONSOLIDATED BALANCE SHEETS In thousands, except share data December 31 1999 1998 ------------------------------------------------------------------------------------------------------------------ ASSETS Current assets: Cash and cash equivalents $ 3,651 $ 1,298 Available-for-sale securities 3,666 4,914 Receivables, less allowance of $501 and $574 9,064 7,287 Inventories 6,146 5,381 Prepaids and other 890 734 ----------------------- Total current assets 23,417 19,614 ----------------------- Equipment on rental 75,200 70,654 Less accumulated depreciation 31,487 28,289 ----------------------- 43,713 42,365 ----------------------- Property, plant and equipment 44,411 30,816 Less accumulated depreciation and amortization 8,832 8,433 ----------------------- 35,579 22,383 Other assets 6,449 6,784 Construction funds 3,290 ---- ----------------------- $112,448 $91,146 -------------------------------------------------------------------------------------------======================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,688 $ 1,703 Accrued liabilities 5,093 4,739 Current portion of long-term debt 2,381 258 ----------------------- Total current liabilities 12,162 6,700 ----------------------- Long-term debt: 7 1/2% convertible subordinated notes due 2006 30,490 31,625 9 1/2% subordinated debentures due 2012 1,057 1,057 Notes payable 34,405 16,841 ----------------------- 65,952 49,523 Deferred revenue, deposits and other 3,715 4,254 Deferred income taxes 4,606 4,818 ----------------------- Commitments and contingencies Stockholders' equity: Capital stock Common - $1 par value - 5,500,000 shares authorized 2,444,400 shares issued in 1999 and 2,443,119 in 1998 2,444 2,443 Class B - $1 par value - 1,000,000 shares authorized 296,005 shares issued in 1999 and 297,286 in 1998 296 297 Additional paid-in-capital 13,901 13,901 Retained earnings 21,434 20,821 Accumulated other comprehensive income (loss) (225) ---- ----------------------- 37,850 37,462 Less treasury stock - at cost - 1,479,672 shares in 1999 and 1,448,016 in 1998 (excludes additional 296,005 shares held in 1999 and 297,286 in 1998 for conversion of Class B stock) 11,837 11,611 ----------------------- Total stockholders' equity 26,013 25,851 ----------------------- $112,448 $91,146 -------------------------------------------------------------------------------------------======================= The accompanying notes are an integral part of these consolidated financial statements.
15
CONSOLIDATED STATEMENTS OF CASH FLOWS In thousands Years ended December 31 1999 1998 1997 --------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities Net income $ 788 $ 1,699 $ 1,510 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,682 7,862 7,076 Net income of joint venture (185) (183) (47) Deferred income taxes (126) 108 956 Gain on sale of securities 3 (87) (193) Gain on repurchase of Company's 7 1/2% convertible subordinated notes (108) ---- ---- Changes in operating assets and liabilities: Receivables (1,777) (454) (579) Inventories (765) (737) (786) Prepaids and other assets (519) 622 1,071 Accounts payable and accruals 2,257 (348) (2,508) Deferred revenue, deposits and other (539) 599 121 -------------------------------------- Net cash provided by operating activities 7,711 9,081 6,621 -------------------------------------- Cash flows from investing activities Equipment manufactured for rental (7,373) (7,802) (10,500) Purchases of property, plant and equipment (12,992) (5,160) (2,012) Increase in construction funds (3,290) ---- ---- Payments for acquisitions (net) (1,163) ---- (2,283) Proceeds from joint venture 94 94 94 Purchases of securities ---- ---- (18,343) Proceeds from sale of securities 1,054 3,322 11,007 -------------------------------------- Net cash used in investing activities (23,670) (9,546) (22,037) -------------------------------------- Cash flows from financing activities Proceeds from long-term debt 20,671 1,876 7,325 Repayment of long-term debt (984) (1,805) (4,600) Repurchase of Company's 7 1/2% convertible subordinated notes (974) ---- ---- Redemption of Company's 9% convertible subordinated debentures ---- ---- (4,573) Proceeds from exercise of stock options ---- 24 10 Purchase of treasury stock (226) ---- ---- Cash dividends (175) (175) (177) -------------------------------------- Net cash provided by (used in) financing activities 18,312 (80) (2,015) -------------------------------------- Net increase (decrease) in cash and cash equivalents 2,353 (545) (17,431) Cash and cash equivalents at beginning of year 1,298 1,843 19,274 -------------------------------------- Cash and cash equivalents at end of year $ 3,651 $ 1,298 $ 1,843 --------------------------------------------------------------------------------------------------------------------------- Interest paid $ 4,185 $ 3,674 $ 4,115 Interest received 617 733 1,016 Income taxes paid 1,003 519 694 --------------------------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these consolidated financial statements.
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CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY Accumulated Additional Other In thousands, except share data Common Stock Class B Paid-in Treasury Retained Comprehensive For the three years ended December 31, 1999 Shares Amount Shares Amount Capital Stock Earnings Income - - -------------------------------------------------------------------------------------------------------------------------------- Balance December 31, 1996 2,441,765 $2,442 298,640 $298 $13,818 $(11,802) $17,964 $ (58) Net income --- --- --- --- --- --- 1,510 --- Cash dividends --- --- --- --- --- --- (177) --- Other comprehensive income: Unrealized foreign currency translation --- --- --- --- --- --- --- 23 Unrealized holding gain --- --- --- --- --- --- --- 64 Conversion of 9% convertible subordinated debentures --- --- --- --- 89 151 --- --- Exercise of stock options --- --- --- --- (3) 13 --- --- Class B conversion to common stock 1,000 1 (1,000) (1) --- --- --- --- ----------------------------------------------------------------------------------- Balance December 31, 1997 2,442,765 2,443 297,640 297 13,904 (11,638) 19,297 29 Net income --- --- --- --- --- --- 1,699 --- Cash dividends --- --- --- --- --- --- (175) --- Other comprehensive income (loss): Unrealized foreign currency translation --- --- --- --- --- --- --- 49 Unrealized holding loss --- --- --- --- --- --- --- (78) Exercise of stock options --- --- --- --- (3) 27 --- --- Class B conversion to common stock 354 --- (354) --- --- --- --- --- ----------------------------------------------------------------------------------- Balance December 31, 1998 2,443,119 2,443 297,286 297 13,901 (11,611) 20,821 0 Net income --- --- --- --- --- --- 788 --- Cash dividends --- --- --- --- --- --- (175) --- Other comprehensive income (loss): Unrealized foreign currency translation --- --- --- --- --- --- --- (142) Unrealized holding loss --- --- --- --- --- --- --- (83) Common stock acquired (31,656 shares) --- --- --- --- --- (226) --- --- Class B conversion to common stock 1,281 1 (1,281) (1) --- --- --- --- ----------------------------------------------------------------------------------- Balance December 31, 1999 2,444,400 $2,444 296,005 $296 $13,901 $(11,837) $21,434 $(225) ================================================================================================================================ The accompanying notes are an integral part of these consolidated statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME In thousands Years ended December 31 1999 1998 1997 ------------------------------------------------------------------------------------------------------------------ Net income $ 788 $1,699 $1,510 Other comprehensive income / (loss), net of tax: Unrealized foreign currency translation (142) 49 23 Unrealized holding gain / (loss) on securities (83) (78) 64 ----------------------------------- Total other comprehensive income / (loss) (225) (29) 87 Comprehensive income $ 563 $1,670 $1,597 ------------------------------------------------------------------------------------------------------------------ The accompanying notes are an integral part of these consolidated financial statements.
17 Notes To Consolidated Financial Statements 1. Summary of Significant Accounting Policies Principles of consolidation: The consolidated financial statements include the accounts of Trans-Lux Corporation and its majority-owned subsidiaries (the Company). The investment in a 50% owned joint venture partnership, MetroLux Theatres, is reflected under the equity method and is recorded as a component of other income in the Consolidated Statements of Income. Cash equivalents: The Company considers all highly liquid investments with a maturity of three months or less, when purchased, to be cash equivalents. Available-for-sale securities: Available-for-sale securities consist of common and preferred stock holdings and corporate debt securities and are stated at fair value. Inventories: Inventories are stated at the lower of cost (first-in, first-out method) or market value. Equipment on rental and property, plant and equipment: Equipment on rental and property, plant and equipment are stated at cost and are being depreciated over their respective useful lives using straight line or 150% declining balance methods. Leaseholds and improvements are amortized over the lesser of the useful lives or term of the lease. The estimated useful lives are as follows: - - ------------------------------------------------------------ Equipment on rental 5 to 15 years Buildings and improvements 10 to 45 years Machinery, fixtures and equipment 4 to 15 years Leaseholds and improvements 2 to 17 years - - ------------------------------------------------------------ When equipment on rental and property, plant and equipment are fully depreciated, retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the accounts. Goodwill and intangibles: Goodwill and intangible assets are amortized on a straight line basis, using the following useful lives: Goodwill over 20 years; non-compete agreements over their contractual terms of five and seven years; deferred financing costs over the life of the related debt; and patents and other intangibles over 14 to 30 years. Maintenance contracts: Purchased maintenance contracts are stated at cost and are being amortized over their economic lives of eight to 15 years using an accelerated method which contemplates contract expiration, fall-out, and non-renewal. Impairment of long-lived assets: The Company evaluates long-lived assets, including intangible assets and goodwill, for possible impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. In making such an evaluation, the Company estimates the future cash flows expected to result from the use of the asset and its eventual disposition to measure whether the asset is recoverable. Revenue recognition: Rental revenue from leasing of equipment and revenue from maintenance contracts are recognized as they accrue during the term of the respective agreements. The Company recognizes revenues on long-term equipment sales contracts, which require more than three months to complete, using the percentage of completion method. The Company records unbilled receivables representing amounts due under these long-term equipment sales contracts which have not yet been billed to the customer. Income is recognized based on the percentage of incurred costs to the estimated total costs. Revenues on equipment sales, other than long-term equipment sales contracts, are recognized upon shipment. Theatre receipts and other revenues are recognized at time service is provided. Taxes on income: The Company computes income taxes using the asset and liability method, under which deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the assets and liabilities. Foreign currency: The functional currency of the Company's non-U.S. business operations is the applicable local currency. The assets and liabilities of such operations are translated into U.S. dollars at the year- end rate of exchange, and the income and cash flow statements are converted at the average annual rate of exchange. The resulting translation adjustment is recorded as a separate component of stockholders' equity. Gains and losses related to the settling of transactions not denominated in the functional currency are recorded as a component of general and administrative expenses in the Consolidated Statements of Income. Derivative financial instruments: The Company has limited involvement with derivative financial instruments and does not use them for trading purposes; they are only used to manage well-defined interest rate risks. From time to time the Company enters into interest rate swap agreements to reduce exposure to interest fluctuations. The net gain or loss from the exchange of interest rate payments is included in interest expense in the Consolidated Statements of Income and in interest paid in the Consolidated Statements of Cash Flows. Accounting pronouncement: The Company will adopt the provisions of Statement of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133) effective January 1, 2001. The standard requires companies to recognize all derivatives as either assets or liabilities and measure those instruments at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The Company does not expect the adoption of SFAS 133 to have a material impact on its consolidated financial statements. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Actual results could differ from those estimates. Reclassifications: Certain reclassifications of prior years' amounts have been made to conform to the current year's presentation. 18 2. Available-for-Sale Securities Available-for-sale securities are carried at estimated fair values and the unrealized holding gains and losses are excluded from earnings and are reported net of income taxes in a separate component of stockholders' equity until realized. Adjustments of $105,000 and $53,000 (before reclassification adjustment for realized gains and losses) were made to equity to reflect the net unrealized losses on available-for-sale securities as of December 31, 1999 and 1998, respectively. The Company realized gains /(losses) on the sales of available-for-sale securities of ($3,000) in 1999 and $88,000 in 1998.
Available-for-sale securities consist of the following: 1999 1998 - - ------------------------------------------------------------------------------ Fair Unrealized Fair Unrealized In thousands Value Gains/(Losses) Value Gains/(Losses) ------------------------------------------------ Equity securities $ 473 $(232) $ 609 $(95) Corporate debt securities- maturities of up to 5 years 3,193 (45) 4,305 10 ----- ----- ----- ---- $3,666 $(277) $4,914 $(85) - - ------------------------------------------------------------------------------
3. Inventories
Inventories consist of the following: In thousands 1999 1998 - - ---------------------------------------------------------------- Raw materials and spare parts $3,532 $3,230 Work-in-progress 1,459 1,218 Finished goods 1,155 933 ----- ----- $6,146 $5,381 - - ----------------------------------------------------------------
4. Property, Plant and Equipment
Property, plant and equipment consist of the following: In thousands 1999 1998 - - ---------------------------------------------------------------- Land, buildings and improvements $27,437 $18,335 Machinery, fixtures and equipment 13,133 9,558 Leaseholds and improvements 3,841 2,923 ------ ------ $44,411 $30,816 - - ----------------------------------------------------------------
Land, buildings and equipment having a net book value of $20.5 million and $7.4 million at December 31, 1999 and 1998, respectively, were pledged as collateral under mortgage agreements. 5. Other Assets
Other assets consist of the following: In thousands 1999 1998 - - ------------------------------------------------------------------------------- Deferred financing costs, net of accumulated amortization of $957 - 1999 and $729 - 1998 $1,861 $1,828 Goodwill and noncompete agreements, net of accumulated amortization of $834 - 1999 and $630 - 1998 1,473 1,667 Investment in and loans to joint ventures 964 899 Prepaids, including pension asset 781 850 Maintenance contracts, net of accumulated amortization of $1,980 - 1999 and $1,827 - 1998 645 798 Patents and other intangibles, net of accumulated amortization of $386 - 1999 and $320 - 1998 152 218 Deposits and other 573 524 ----- ----- $6,449 $6,784 - - -------------------------------------------------------------------------------
Deferred financing costs relate to issuance of the 7-1/2% convertible subordinated notes, the 9-1/2% subordinated debentures, and other financing agreements. Goodwill and noncompete agreements relate to the acquisition of Integrated Systems Engineering, Inc. and Fairtron. The loan to the joint venture, MetroLux Theatres, had a balance of $596,000 and $690,000 at December 31, 1999 and 1998, respectively, of which $94,000 was classified as current at both dates. Maintenance contracts represent the present value of acquired agreements to service outdoor display equipment. 6. Acquisition On May 1, 1997, the Company acquired the catalog and custom scoreboard sign business segment of Fairtron Corporation "Fairtron", an Iowa corporation. The results of operations have been included in the Company's consolidated financial statements since the date of acquisition. The pro forma data presented below gives effect to the acquisition as if the acquisition had occurred on January 1, 1997. Such pro forma data should be read in conjunction with the Company's consolidated financial statements, and does not purport to represent what the Company's results of operations would have been if the acquisition had actually occurred on January 1, 1997. In thousands, except per share data 1997 - - ------------------------------------------------------------ Unaudited Revenues $57,816 Net income $ 1,560 Earnings per share-basic $ 1.22 Earnings per share-diluted $ 0.81 - - ------------------------------------------------------------ 7. Taxes on Income
The components of income tax expense are as follows: In thousands 1999 1998 1997 - - ---------------------------------------------------------------------- Current: Federal $277 $ 637 $ (1) State and local 64 144 165 Foreign 129 18 - ---------------------------------- 470 799 164 Deferred: Federal (157) 304 1,094 State and local 131 226 79 ---------------------------------- (26) 530 1,173 ---------------------------------- Total income tax expense $444 $1,329 $1,337 - - ----------------------------------------------------------------------
Income taxes provided differed from the expected federal statutory rate of 34% as follows: 1999 1998 1997 - - ----------------------------------------------------------------------------- Statutory federal income tax rate 34.0% 34.0% 34.0% State income taxes, net of federal benefit 10.4 8.1 5.7 Foreign losses / (income) (12.8) - 6.0 Other 4.4 1.8 1.3 ---------------------------- Effective income tax rate 36.0% 43.9% 47.0% - - -----------------------------------------------------------------------------
19 Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:
In thousands 1999 1998 - - --------------------------------------------------------------------- Deferred tax asset: Tax credit carryforwards $ 2,469 $2,143 Operating loss carryforwards 1,852 616 Depreciation and amortization 404 446 Net pension cost 247 204 Litigation 176 - Other 695 591 Valuation allowance (219) (202) --------------------- 5,624 3,798 Deferred tax liability: Depreciation 9,213 7,637 Gain on purchase of Company's 9% debentures 439 439 Net pension benefit 373 373 Other 205 167 --------------------- 10,230 8,616 --------------------- Net deferred tax liability $ 4,606 $4,818 - - --------------------------------------------------------------------
Tax credit carryforwards primarily relate to federal alternative minimum taxes paid by the Company which may be carried forward indefinitely. Operating tax loss carryforwards primarily relate to federal net operating loss carryforwards of approximately $4.3 million which begin to expire in 2019. A valuation allowance has been established for the amount of deferred tax assets related to certain net operating loss carryforwards which management estimates will more likely than not expire unused. 8. Accrued Liabilities
Accrued liabilities consist of the following: In thousands 1999 1998 - - -------------------------------------------------------------------- Compensation and employee benefits $1,298 $1,613 Taxes payable 999 1,149 Interest payable 617 487 Other 2,179 1,490 -------------------- $5,093 $4,739 - - --------------------------------------------------------------------
9. Long-Term Debt
Long-term debt consist of the following: In thousands 1999 1998 - - ------------------------------------------------------------------------------ 7-1/2% convertible subordinated notes due 2006 $30,490 $31,625 9-1/2% subordinated debentures due 2012 1,057 1,057 Term loans - bank, secured due in quarterly installments through 2005 8,712 8,712 Revolving credit facility - bank, secured 8,750 3,400 Real estate mortgages - secured, due in monthly installments through 2020 9,478 4,506 Loan payable - IRB, due in annual installments through 2014 4,825 - Construction loans - secured 4,326 - Loan payable - CEBA, secured due in monthly installments through 2006 at 0.0% 336 - Loan payable - CDA, secured due in monthly installments through 2002 at 5.0% 219 299 Capital lease obligations - secured, due in monthly installments through 2004 at 5.3% 140 182 ------------------- 68,333 49,781 Less portion due within one year 2,381 258 ------------------- Long-term debt $65,952 $49,523 - - ------------------------------------------------------------------------------
Payments of long-term debt due for the next five years are: In thousands 2000 2001 2002 2003 2004 - - -------------------------------------------------------------------- $2,381 $2,463 $2,756 $3,601 $3,637 - - -------------------------------------------------------------------- The 7-1/2% convertible subordinated notes (the "Notes") are due in 2006. Interest is payable semiannually. The Notes are convertible into Common Stock of the Company at a conversion price of $14.013 per share. The Notes may be redeemed by the Company, in whole or in part, at any time on or after December 1, 2001 at declining premiums. The related Indenture agreement contains certain financial covenants which include limitations on the Company's ability to incur indebtedness of five times EBITDA plus $5.0 million. During 1999, the Company repurchased $1,135,000 face value of its Notes at an average price of $85.80. The Company recognized $69,000 of income (net of tax), $0.05 per share, basic and diluted. The 9-1/2% subordinated debentures (the "Debentures") are due in annual sinking fund payments of $105,700, beginning in 2009 with the remainder due in 2012. Interest is payable semiannually. The Debentures may be redeemed by the Company, in whole or in part, at any time on or after December 1, 1999 at declining premiums. The Company has a bank Credit Agreement, which was amended subsequent to year end, which provides for both term loans and a $15 million revolving credit facility which is available until June 2002. The Company has provided the bank with a security interest in substantially all assets of its display business. At December 31, 1999, under the term loans, $5.7 million and $3.0 million were outstanding, under the revolving credit facility, $8.8 million was outstanding leaving $5.8 million in borrowing capacity under this facility. The Credit Agreement contains certain financial covenants including a defined debt service coverage ratio of 1.75 to 1.0, a defined debt to cash flow ratio of 3.5 to 1.0 and a limitation on cash dividends. The term loans bear interest at LIBOR plus 1.75%. At December 31, 1999 there were two interest rate swap agreements in place, with a notional value equal to the amount of the two term loans and with corresponding maturity terms, which have the effect of converting the interest rate on such term loans to a fixed average annual rate of 7.86% through July 2002. At December 31, 1999, the gain to the Company to terminate the interest rate swap agreements was $79,000. Payments on the $3.0 million term loan are due in even quarterly installments through July 2002, payments on the $5.7 million term loan are due in even quarterly installments through July 2005 and a final maturity of $2.7 million in August 2005. The borrowings under the revolving credit facility can be converted to a four-year term loan under the Credit Agreement. Upon conversion to a term loan, the revolving credit borrowings would be repayable in even quarterly installments until maturity. Interest is computed at LIBOR plus 2.0% (7.8225% at December 31, 1999). The Company has mortgages on certain of its facilities, which are payable in monthly installments, the last of which extends to 2020. Depending upon the mortgage, the interest rate is either fixed, floating or adjustable. At December 31, 1999, such interest rates ranged from 7.75% to 8.65%. 20 On June 3, 1999 as part of a loan agreement entered into with the City of Logan, Cache County, Utah, the Company financed $4.8 million of a combination of Tax-Exempt and Taxable Revenue Bonds ("Bonds") for the construction of a new 55,000 square foot outdoor display facility in Logan, Utah. The Bonds are secured by an irrevocable letter of credit issued by a bank. At the direction of the Company, the Bonds may be redeemed in whole or in part prior to maturity date. The Bonds were issued with a variable interest rate based upon a Weekly Rate (as determined by a Remarketing Agent) which is the minimum rate necessary for the Remarketing Agent to sell the Bonds on the effective date of such Weekly Rate at a price equal to 100% of the Bonds' principal amount without regard to accrued interest. The Company may from time to time change the method of determining the interest rate to a daily, weekly, commercial paper or long-term interest rate. At December 31, 1999, the interest rates on the Bonds were 5.50% and 6.75%, respectively, plus a 1.25% letter of credit fee. The Company has construction loans for certain of its theatre properties being constructed, which do not require monthly principal installments and mature in 2000. Certain of the loans will convert into mortgages with a final maturity in 2020. Depending on the loan, the interest rate is either fixed or floating. At December 31, 1999, such interest rates ranged from 7.75% to 8.65%. During 1999, the Company incurred interest costs of $4.6 million of which $0.4 million was capitalized during construction of qualified assets. At December 31, 1999, the fair value of the Notes and the Debentures was $26.2 million and $1.0 million, respectively. The fair value of the remaining long-term debt approximates the carrying value. 10. Stockholders' Equity During 1999, the Board of Directors declared four quarterly cash dividends of $0.035 per share on the Company's Common Stock and $0.0315 per share on the Company's Class B Stock, which were paid in April, July and October 1999 and January 2000. Each share of Class B Stock is convertible at any time into one share of Common Stock and has ten votes per share, as compared to Common Stock which has one vote per share but receives a higher dividend. The Company has 3.0 million shares of authorized and unissued capital stock designated as Class A Stock, $1.00 par value. Such shares would have no voting rights except as required by law and would receive a 10% higher dividend than the Common Stock. The Company also has 0.5 million shares of authorized and unissued capital stock designated as Preferred Stock, $1.00 par value. During 1999, the Board of Directors authorized the repurchase, from time to time, of up to $400,000 in shares of the Company's Common Stock. As of December 31, 1999, under this program, the Company had purchased 31,656 shares at a cost of $226,000. During 1998, the stockholders approved an increase in the authorized shares of Common Stock to 11.0 million and Class A Stock to 6.0 million. A Certificate of Amendment increasing the authorized shares will be filed when deemed necessary. Shares of Common Stock reserved for future issuance in connection with convertible securities and stock option plans were 2.3 million at both December 31, 1999 and 1998. 11. Engineering Development Engineering development expense was $535,000, $352,000 and $322,000 for 1999, 1998 and 1997, respectively. 12. Pension Plan All eligible salaried employees of Trans-Lux Corporation and certain of its subsidiaries are covered by a non-contributory defined benefit pension plan. Pension benefits vest after five years of service and are based on years of service and final average salary. The Company's general funding policy is to contribute amounts sufficient to satisfy regulatory funding standards. At December 31, 1999, plan assets consist principally of insurance company funds, mutual funds and $92,000 in the Company's 9-1/2% subordinated debentures.
The funded status of the plan as of December 31, 1999 and 1998 is as follows: In thousands 1999 1998 - - ----------------------------------------------------------------------------- Change in projected benefit obligation - - -------------------------------------- Projected benefit obligation at beginning of year $6,625 $ 5,740 Service cost 565 535 Interest cost 446 401 Actuarial (gain)/loss (657) 273 Benefits paid (541) (324) ------ ------ Projected benefit obligation at end of year $6,438 $ 6,625 ------ ------ Change in plan assets - - --------------------- Fair value of plan assets at beginning of year $5,320 $ 4,612 Actual return on plan assets 752 475 Company contributions 457 557 Benefits paid (541) (324) ------ ------ Fair value of plan assets at end of year $5,988 $ 5,320 ------ ------ Funded status (underfunded) - - --------------------------- Funded status $ (450) $(1,305) Unrecognized net actuarial (gain)/loss 732 1,693 Unrecognized prior service cost 13 15 ------ ------ Prepaid benefit cost $ 295 $ 403 ------ ------ Weighted-average assumptions as of December 31 - - ---------------------------------------------- Discount rate 7.75% 6.75% Expected return on plan assets 9.50% 9.50% Rate of compensation increase 4.50% 4.00% - - ------------------------------------------------------------------------------
The following items are components of the net periodic pension cost for the three years ended December 31, 1999: In thousands 1999 1998 1997 - - ----------------------------------------------------------------------------- Service cost $ 565 $ 535 $ 371 Interest cost 446 401 365 Expected return on plan assets (536) (481) (429) Amortization of prior service cost 2 2 2 Amortization of transition asset - (12) (40) Amortization of net actuarial loss 88 59 36 --- --- --- Net periodic pension cost - funded plan $ 565 $ 504 $ 305 - - -----------------------------------------------------------------------------
In addition, the Company provides unfunded supplemental retirement benefits for the Chief Executive Officer. The Company accrued $97,000, $97,000 and $62,000 for 1999, 1998 and 1997, respectively, for such benefits. The total liability accrued was $472,000, $375,000 and $278,000 at December 31, 1999, 1998 and 1997, respectively. The Company does not offer any postretirement benefits other than the pension and the supplemental retirement benefits described herein. 21 13. Stock Option Plans The Company has three stock option plans. The 1995 Stock Option Plan and the 1992 Stock Option Plan reserved 100,000 and 50,000 shares of Common Stock, respectively, for grant to key employees. The Non-Employee Director Stock Option Plan reserved 30,000 shares of Common Stock for grant.
Changes in the stock option plans are as follows: Weighted Number of Shares Average Authorized Granted Available Exercise Price - - -------------------------------------------------------------------------------- Balance December 31, 1996 180,294 85,594 94,700 $ 8.33 Granted - 27,600 (27,600) 11.26 Exercised (6,644) (6,644) - 7.33 ---------------------------------------------------- Balance December 31, 1997 173,650 106,550 67,100 9.14 Terminated (12,500) (13,400) 900 7.54 Granted - 1,000 (1,000) 13.00 Exercised (8,341) (8,341) - 7.57 ---------------------------------------------------- Balance December 31, 1998 152,809 85,809 67,000 9.58 Terminated (300) (1,300) 1,000 7.71 Granted - 44,000 (44,000) 8.83 ---------------------------------------------------- Balance December 31, 1999 152,509 128,509 24,000 $ 9.35 - - --------------------------------------------------------------------------------
Under the 1995 and 1992 Stock Option Plans, option prices must be at least 100% of the market value of the Common Stock at time of grant. No option may be exercised prior to one year after date of grant. Exercise periods are for ten years from date of grant (five years if the optionee owns more than 10% of the voting power) and terminate at a stipulated period of time after an employee's termination of employment. At December 31, 1999, under the 1995 Plan, options for 85,739 shares (granted in 1999, 1998, 1997 and 1995) with exercise prices ranging from $8.125 to $15.1875 per share were outstanding, 48,739 shares of which were exercisable. During 1999, options for 42,500 shares were granted at exercise prices ranging from $8.80 to $9.00 per share, no options were exercised and options for 1,000 shares expired. During 1998, options for 4,411 shares (granted in 1995) with an exercise price of $8.125 per share were exercised, and options for 900 shares expired. During 1997, options for 27,100 shares were granted at exercise prices ranging from $11.0625 to $15.1875 per share, and options for 1,350 shares (granted in 1995) with an exercise price of $8.125 per share were exercised. At December 31, 1999, under the 1992 Plan, options for 31,270 shares (granted in 1995, 1994, 1993 and 1992) with exercise prices ranging from $6.3125 to $9.6875 per share were outstanding, all of which were exercisable. During 1999, no options were exercised, and options for 300 shares expired. During 1998, options for 3,930 shares (granted in 1993 and 1992) with exercise prices ranging from $6.3125 to $7.5625 per share were exercised. During 1997, options for 5,294 shares (granted in 1993 and 1992) with exercise prices ranging from $6.3125 to $7.5625 per share were exercised. Under the Non-Employee Director Stock Option Plan, option prices must be at least 100% of the market value of the Common Stock at time of grant. No option may be exercised prior to one year after date of grant and the optionee must be a director of the Company at time of exercise, except in certain cases as permitted by the Compensation Committee. Exercise periods are for six years from date of grant and terminate at a stipulated period of time after an optionee ceases to be a director. At December 31, 1999, options for 11,500 shares (granted in 1999, 1998, 1997, 1996, 1995, and 1994) with exercise prices ranging from $8.00 to $13.00 per share were outstanding, 10,000 shares of which were exercisable. During 1999, options for 1,500 shares were granted at an exercise price of $8.00 per share, and no options were exercised. During 1998, options for 1,000 shares were granted at an exercise price of $13.00 per share, and no options were exercised. During 1997, options for 500 shares were granted at an exercise price of $12.00 per share, and no options were exercised. The following tables summarize information about stock options outstanding at December 31, 1999:
Weighted Average Range of Number Remaining Weighted Average Exercise Prices Outstanding Contractual Life Exercise Price - - ---------------------------------------------------------------------------- $ 6.31 - $ 7.56 8,970 3.2 $ 6.86 7.57 - 8.63 32,039 5.2 8.13 8.64 - 9.69 51,900 5.6 8.99 9.70 - 12.63 33,500 6.1 11.41 12.64 - 15.19 2,100 6.2 14.15 ------------------------------------------------------- 128,509 5.5 $ 9.35 - - ----------------------------------------------------------------------------
Range of Number Weighted Average Exercise Prices Excercisable Exercise Price - - ------------------------------------------------------------- $ 6.31 - $ 7.56 8,970 $ 6.86 7.57 - 8.63 30,539 8.14 8.64 - 9.69 21,900 9.26 9.70 - 12.63 26,500 11.51 12.64 - 15.19 2,100 14.15 ------------------------------------- 90,009 $ 9.42 - - -------------------------------------------------------------
The estimated fair value of options granted during 1999, 1998 and 1997 was $3.93, $5.24, and $3.64 per share, respectively. The Company applies Accounting Principles Board Opinion No. 25 and related Interpretations in accounting for its stock option plans. Accordingly, no compensation cost has been recognized for its stock option plans. Had compensation cost for the Company's stock option plans been determined based on the fair value at option grant dates for awards in accordance with the accounting provisions of Statement of Financial Accounting Standards No. 123 (SFAS 123), the Company's net income and earnings per share for the years ended December 31, 1999, 1998 and 1997 would have been reduced to the pro forma amounts indicated below:
In thousands, except per share data 1999 1998 1997 - - ------------------------------------------------------------------------------ Net income applicable to common shareholders Basic: As reported $788 $1,699 $1,510 Pro forma 737 1,676 1,477 - - ------------------------------------------------------------------------------ Net income per common and common equivalent share Basic: As reported $0.61 $ 1.32 $ 1.18 Pro forma 0.56 1.30 1.15 Diluted: As reported 0.61 0.85 0.80 Pro forma 0.56 0.84 0.79 - - ------------------------------------------------------------------------------
The fair value of options granted under the Company's stock option plans during 1999, 1998 and 1997 was estimated on dates of grant using the binomial options-pricing model with the following weighted-average assumptions used: dividend yield of approximately 1.77% in 1999, 1.24% in 1998, and 1.05% in 1997, expected volatility of approximately 37% in 1999, 38% in 1998, and 33% in 1997, risk free interest rate of approximately 6.48% in 1999, 5.1% in 1998 and 6.0% in 22 1997, and expected lives of option grants of approximately four years in 1999, 1998 and 1997. The effects of applying SFAS 123 in this pro forma disclosure are not indicative of future pro forma effects, and additional awards in future years are anticipated. 14. Earnings per Share The following table represents the computation of basic and diluted earnings per common share for the three years ended December 31, 1999:
In thousands, except per share data 1999 1998 1997 - - ------------------------------------------------------------------------------ Basic earnings per share computation: Net income $ 788 $1,699 $1,510 --------------------------------- Weighted average common shares outstanding 1,286 1,290 1,281 --------------------------------- Basic earnings per common share $ 0.61 $ 1.32 1.18 --------------------------------- Diluted earnings per share computation: Net income $ 788 $1,699 $1,510 Add: After tax interest expense applicable to convertible debt (1) - 1,411 1,447 Add: After tax changes to income applicable to assumed conversion - (98) (78) --------------------------------- Adjusted net income $ 788 $3,012 $2,879 --------------------------------- Weighted average common shares outstanding 1,286 1,290 1,281 Assumes exercise of options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options (2) 2 7 30 Assumes conversion of 9% convertible subordinated debentures - - 59 Assumes conversion of 7-1/2% convertible subordinated notes (1) - 2,257 2,247 --------------------------------- Total weighted average shares 1,288 3,554 3,617 --------------------------------- Diluted earnings per common share $ 0.61 $ 0.85 $ 0.80 - - ------------------------------------------------------------------------------ (1) The incremental shares from the assumed conversion of the Company's 7-1/2% convertible subordinated notes are not included in the 1999 diluted earnings per share calculation, as the effect is antidilutive. (2) Options to purchase 89 shares of common stock with exercise prices ranging from $8.625 to $15.1875 per share were outstanding at December 31, 1999, but were not included in the 1999 diluted earnings per share calculation because the options exercise price was greater than the average market price of the common share.
15. Commitments and Contingencies Contingencies: The Company has employment agreements with certain executive officers which expire at various dates through December 2007. At December 31, 1999, the aggregate commitment for future salaries, excluding bonuses, was approximately $5.3 million. During 1999, the Company received $400,000 structured as forgivable loans from the State of Iowa, City of Des Moines and Polk County which are classified as deferred revenue, deposits and other in the Consolidated Balance Sheet. The loans will be forgiven on a pro-rata basis when predetermined employment levels are attained. During 1996, the Company received a $350,000 grant from the State of Connecticut Department of Economic Development which are classified as deferred revenue, deposits and other in the Consolidated Balance Sheet. This grant will be forgiven under certain circumstances, which includes attainment of predetermined employment levels within the state and maintaining business operations within the state for a specified period of time. The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. During June 1999, a jury in the state of New Mexico awarded a former employee of the Company $15,000 in damages for lost wages and emotional distress and $393,000 in punitive damages on a retaliatory discharge claim. The Company denied the charges on the basis that the termination was proper and is appealing such verdict. The Company believes it has made adequate provisions during 1999 to cover such matters. In January 2000, a second former employee of the Company commenced a retaliatory discharge action seeking compensatory and punitive damages in an unspecified amount. The Company has denied such allegations and asserted defenses including that the former employee resigned following her failure to timely report to work. Certain of the amounts are subject to insurance recoveries. Operating leases: Theatre and other premises are occupied under operating leases that expire at varying dates through 2044. Certain of these leases provide for the payment of real estate taxes and other occupancy costs. Future minimum lease payments due under operating leases at December 31, 1999 are as follows: $685,000 - 2000, $541,000 - 2001, $487,000 - 2002, $492,000 - 2003, $474,000 - 2004, $4,263,000 - thereafter. Rent expense was $601,000, $585,000, and $456,000 in the years ended December 31, 1999, 1998 and 1997, respectively. Guarantees: The Company has guaranteed a $2.6 million mortgage loan obtained by its joint venture, MetroLux Theatres. The Company has received a guarantee from the unrelated general partner of MetroLux Theatres for their pro-rata share of the indebtedness. 16. Business Segment Data Operating segments are based on the Company's business components about which separate financial information is available, and is evaluated regularly by the Company's chief operating decision maker, in deciding how to allocate resources and in assessing performance. The Company evaluates segment performance and allocates resources based upon operating income. The Company's operations have been classified into three reportable business segments. The Display Division comprises two operating segments, indoor display and outdoor display. Both design, produce, lease, sell and service large-scale, multi-color, real-time electronic information displays. Both operating segments are conducted on a global basis, primarily through operations in the U.S. The Company also has operations in Canada and Australia. The indoor display and outdoor display segments are differentiated primarily by the customers they serve. The Entertainment and Real Estate Division owns and operates a chain of motion picture theatres in the western Mountain States and owns real estate used for both corporate and income-producing purposes in the U.S. and Canada. The accounting policies applied to segment information are the same as those described in the summary of significant accounting policies. 23 Segment operating income is shown after general and administrative expenses directly associated with the segment and includes the operating results of the joint venture activities. Corporate items relate to resources and costs which are not directly identifiable with a segment. There are no intersegment sales. Information about the Company's operations in its three business segments for the three years ended December 31, 1999 is as follows:
In thousands 1999 1998 1997 - - ------------------------------------------------------------------------------- Revenues: Indoor display $ 23,419 $25,983 $21,557 Outdoor display 31,344 31,056 26,349 Entertainment and real estate 8,055 6,739 5,457 --------------------------------- Total revenues $ 62,818 $63,778 $53,363 --------------------------------- Operating income: Indoor display $ 7,331 $ 7,650 $ 5,794 Outdoor display 2,252 4,078 4,539 Entertainment and real estate 1,027 811 711 --------------------------------- Total operating income 10,610 12,539 11,044 Other income 258 123 193 Corporate general and administrative expenses (5,977) (6,182) (5,228) Interest expense - net (3,659) (3,452) (3,162) --------------------------------- Income before income taxes $ 1,232 $ 3,028 $ 2,847 --------------------------------- Assets: Indoor display $ 42,283 $40,719 Outdoor display 36,956 30,502 Entertainment and real estate 24,931 12,704 -------------------- Total identifiable assets 104,170 83,925 General corporate 8,278 7,221 -------------------- Total assets $112,448 $91,146 -------------------- Depreciation and amortization: Indoor display $ 4,853 $ 4,238 $ 3,464 Outdoor display 2,581 2,459 2,344 Entertainment and real estate 594 475 380 General corporate 654 690 888 --------------------------------- Total depreciation and amortization $ 8,682 $ 7,862 $ 7,076 --------------------------------- Capital expenditures: Indoor display $ 5,820 $ 6,847 $ 9,215 Outdoor display 4,147 1,798 2,061 Entertainment and real estate 10,101 3,920 1,039 General corporate 297 397 197 --------------------------------- Total capital expenditures $ 20,365 $12,962 $12,512 - - ------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT DELOITTE & TOUCHE To the Board of Directors and Stockholders of Trans-Lux Corporation: We have audited the accompanying consolidated balance sheets of Trans-Lux Corporation and subsidiaries as of December 31, 1999 and 1998 and the related consolidated statements of income, comprehensive income, cash flows and stockholders' equity for each of the three years in the period ended December 31, 1999. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company and its subsidiaries at December 31, 1999 and 1998 and the results of their operations, and their cash flows for each of the three years in the period ended December 31, 1999 in conformity with accounting principles generally accepted in the United States of America. /s/ DELOITTE & TOUCHE LLP Stamford, Connecticut February 29, 2000 24 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (a) The information required by this Item with respect to directors is incorporated herein by reference to the Section entitled "Election of Directors" in the Company's Proxy Statement. (b) The following executive officers were elected by the Board of Directors for the ensuing year and until their respective successors are elected. Name Office Age ------------------ ----------------------------- --- Richard Brandt Chairman of the Board 72 Victor Liss Vice Chairman of the Board, 63 President and Chief Executive Officer Michael R. Mulcahy Executive Vice President 51 Matthew Brandt Senior Vice President 36 Thomas Brandt Senior Vice President 36 Karl P. Hirschauer Senior Vice President 54 Thomas F. Mahoney Senior Vice President 52 Al L. Miller Senior Vice President 54 Angela D. Toppi Senior Vice President, Treasurer, 44 Secretary and Chief Financial Officer Messrs. R. Brandt, Liss, Mulcahy, Hirschauer and Ms. Toppi have been associated in an executive capacity with the Company for more than five years. Messrs. M. Brandt and T. Brandt were elected Senior Vice Presidents in charge of theatre operations on September 27, 1997 and have been employed since 1985. They each served as Vice Presidents in charge of theatre operations between May 22, 1991 and September 27, 1997. Mr. Mahoney was elected Senior Vice President in charge of sales on June 1, 1996 and has been employed by the Company since 1967. Mr. Mahoney served as Assistant Vice President of sales between December 1, 1994 and June 1, 1996. 25 Mr. Miller was elected Senior Vice President in charge of manufacturing and materials on September 27, 1997, on February 1, 2000, field service operations was added to his area of responsibility. Mr. Miller has been employed by the Company since 1995. Mr. Miller served as Vice President in charge of manufacturing and materials between March 13, 1995 and September 27, 1997. Mr. Miller was self-employed as a consultant between 1994 and 1995. (c) The information required by Item 405 of Regulation S-K is incorporated herein by reference to the Section entitled "Compliance with Section 16(a) of the Securities Exchange Act of 1934" in the Company's Proxy Statement. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item is incorporated herein by reference to the Section entitled "Executive Compensation and Transactions with Management" in the Company's Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is incorporated herein by reference to the Section entitled "Security Ownership of Certain Beneficial Owners, Directors and Executive Officers" in the Company's Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item is incorporated herein by reference to the Section entitled "Executive Compensation and Transactions with Management" in the Company's Proxy Statement. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: (1) Financial Statements: Consolidated Statements of Income for the Years Ended December 31, 1999, 1998 and 1997. Consolidated Balance Sheets as of December 31, 1999 and 1998. Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997. Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1999, 1998 and 1997. Consolidated Statements of Comprehensive Income for the Years Ended December 31, 1999, 1998 and 1997. Notes to Consolidated Financial Statements. Independent Auditors' Report. Individual financial statements for a 50% owned entity accounted for by the equity method, has been omitted because it does not constitute a significant subsidiary. 26 (2) Financial Statement Schedules: None (3) Exhibits: 3(a) Form of Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of Registration No. 333-15481). (b) By-Laws of the Registrant (incorporated by reference to Exhibit 3.2 of Registration No. 333-15481). 4(a) Indenture dated as of December 1, 1994 (form of said indenture is incorporated by reference to Exhibit 6 of Schedule 13E-4 Amendment No.2 dated December 23, 1994). (b) Indenture dated as of December 1, 1996 (form of said indenture is incorporated by reference to Exhibit 4.2 of Registration No. 333-15481). 10.1 Form of Indemnity Agreement -- Directors (form of said agreement is incorporated by reference to Exhibit 10.1 of Registration No. 333-15481). 10.2 Form of Indemnity Agreement -- Officers (form of said agreement is incorporated by reference to Exhibit 10.2 of Registration No. 333-15481). 10.3 Amended and Restated Pension Plan dated August 14, 1996 (incorporated by reference to Exhibit 10.3 of Form 10-K for the year ended December 31, 1996). 10.4(a) 1989 Non-Employee Director Stock Option Plan, as amended, included herewith. (b) 1992 Stock Option Plan (incorporated by reference to Proxy Statement dated April 3, 1992). (c) 1995 Stock Option Plan, as amended (incorporated by reference to Proxy Statement dated April 22, 1996). 10.5 Credit Agreement with First Fidelity Bank dated as of August 28, 1995 (incorporated by reference to Exhibit 10(d) of Form 10-Q for the quarter ended September 30, 1995.) Fourth Amendment Agreement dated as of December 19, 1997 (incorporated by reference to Exhibit 10.5 of Form 10-K for the year ended December 31, 1997). Sixth Amendment Agreement dated as of November 5, 1998, (incorporated by reference to Exhibit 10.5 of Form 10-K for the year ended December 31, 1998). Seventh Amendment Agreement dated as of March 31, 1999 (incorporated by reference to Exhibit 10 of Form 10-Q for the quarter ended March 31, 1999). Eighth Amendment Agreement dated as of June 3, 1999 (incorporated by reference to Exhibit 10 of Form 10-Q for the quarter ended June 30, 1999). Ninth Amendment Agreement dated as of December 31, 1999, included herewith. 10.6 Employment Agreement with Richard Brandt dated as of September 11, 1998 (incorporated by reference to Exhibit 10(a) of Form 10-Q for the quarter ended September 30, 1998). 27 10.7 Employment Agreement with Victor Liss dated as of January 1, 1997 (incorporated by reference to Exhibit 10.7 of Form 10-K for the year ended December 31, 1996). Amendment to Employment Agreement with Victor Liss dated as of September 23, 1999, included herewith. 10.8 Employment Agreement with Michael R. Mulcahy dated as of June 1, 1998 (incorporated by reference to Exhibit 10(b) of Form 10-Q for the quarter ended September 30, 1998). 10.10 Employment Agreement with Karl Hirschauer dated as of January 1, 2000, included herewith. 10.11 Employment Agreement with Thomas F. Mahoney dated as of June 1, 1998 (incorporated by reference to Exhibit 10 of Form 10-Q for the quarter ended June 30, 1998). 10.12 Employment Agreement with Al Miller dated as of January 1, 1999 (incorporated by reference to Exhibit 10.12 of Form 10-K for the year ended December 31, 1998). Amendment to Employment Agreement with Al Miller dated as of January 1, 2000, included herewith. 10.13 Employment Agreement with Angela Toppi dated as of January 1, 2000, included herewith. 10.14 Agreement with Nottingham Partners, Deerfield Partners, Jonathan P. Schwartz and Nathaniel B. Guild dated April 4, 1991 (incorporated by reference to Exhibit 28(a) of Form 8-K filed April 9, 1991). 10.15 Agreement with Baupost Group, Inc. and Baupost Partners dated April 4, 1991 (incorporated by reference to Exhibit 28(b) of Form 8-K filed April 9, 1991). 10.16 Agreement between Trans-Lux Midwest Corporation and Fairtron Corporation dated as of April 30, 1997 (incorporated by reference to Exhibit 10(a) of Form 8-K filed May 15, 1997). 21 List of Subsidiaries, included herewith. 27 Financial Data Schedule, which is submitted electronically to the Securities and Exchange Commission for information only and not filed. (c) No reports on Form 8-K were filed during the last quarter of the period covered by this report. 28 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: TRANS-LUX CORPORATION by /s/ Angela D. Toppi --------------------- Angela D. Toppi Senior Vice President and Chief Financial Officer by /s/ Robert P. Bosworth ------------------------- Robert P. Bosworth Vice President and Chief Accounting Officer Dated: March 28, 2000 29 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 date indicated: /s/ Richard Brandt March 28, 2000 - - ------------------------------------- Richard Brandt, Chairman of the Board /s/ Victor Liss March 28, 2000 - - ------------------------------------- Victor Liss, Vice Chairman of the Board, President and Chief Executive Officer /s/ Steven Baruch March 28, 2000 - - ------------------------------------- Steven Baruch, Director /s/ Howard M. Brenner March 28, 2000 - - ------------------------------------- Howard M. Brenner, Director /s/ Jean Firstenberg March 28, 2000 - - ------------------------------------- Jean Firstenberg, Director /s/ Allan Fromme March 28, 2000 - - ------------------------------------- Allan Fromme, PhD, Director /s/ Robert Greenes March 28, 2000 - - ------------------------------------- Robert Greenes, Director /s/ Gene F. Jankowski March 28, 2000 - - ------------------------------------- Gene F. Jankowski, Director /s/ Howard S. Modlin March 28, 2000 - - ------------------------------------- Howard S. Modlin, Director 30 EX-10 2 Exhibit 10.4(a) TRANS-LUX CORPORATION 1989 Non-Employee Director Stock Option Plan (As Amended at the Board of Directors Meeting held December 9, 1999.) 1. Purpose: The purpose of this Plan is to enable the Corporation to attract and keep non-employee persons of requisite business experience to serve on the Board of Directors of the Corporation by offering them an opportunity to participate in the growth and development of the Corporation through stock ownership, and to thereby provide additional incentive for them to promote the success of the business. 2. Stock Subject to the Plan: The shares of stock to be offered pursuant to this Plan shall be shares of the Corporation's authorized common capital stock, and may be unissued shares or reacquired shares. The aggregate number of shares which may be delivered upon exercise of all options granted under the Plan shall not be more than 30,000 shares, subject to adjustment as provided in the Plan. Shares subject to but not delivered under any option terminating or expiring for any reason prior to the exercise thereof by the optionee in full shall be deemed available for options thereafter granted during the continuance of the Plan. 3. Administration of the Plan: The Compensation Committee of the Board of Directors (hereinafter called "Committee"), subject to the provisions of the Plan, shall have plenary authority in its sole discretion to interpret the Plan; and to prescribe, amend, and rescind rules and regulations relating to it. 4. Non-Employee Directors to Whom Options May be Granted: Subject to the terms and conditions set forth herein, the Corporation: (a) hereby grants to each Non-Employee Director who is a member of the Board on the Effective Date of this Plan, options to purchase shares based on the following schedule of Years of Service (as of the Effective Date) which each such person has served as a member of the Board. Years of Service No. of Options (Cumulative) ---------------- -------------- Less than 5 500 5 or more 1,000 10 or more 1,500 20 or more 2,500 (b) shall grant to each Non-Employee Director who receives an option hereunder an option to purchase additional shares based on the following schedule of Years of Service which each such person has served as a member of the Board after the Effective Date. Years of Service No. of Options (Non-Cumulative) ---------------- -------------- 5th full year 500 10th full year 500 20th full year 1,000 (c) shall grant to each Non-Employee Director who is hereafter elected to the Board an option to purchase 500 shares on the date of election to the Board. Such persons shall also be entitled to the grant of options in accordance with (b) above. For purposes hereof, Year of Service shall mean a calendar year or aggregate portions thereof during which a Director is a Non-Employee Director. A Non-Employee Director shall mean a person who is or becomes a Director of the Corporation and is not an employee of the Corporation. (d) shall grant to each Non-Employee Director additional options to purchase additional shares in an amount equal to (i) the number of options granted under Section 4(a) (x) which have previously expired, on the effective date of this amendment to the Plan, or (y) which hereafter expire, on the date of expiration of such option, and (ii) which were heretofore exercised or hereafter are exercised, on the later to occur of (x) four (4) years from the date of grant, (y) the date of exercise of such exercised option or (z) the effective date of this amendment to the Plan. 5. Option Price: The purchase price of the shares of common stock which shall be covered by each option shall be 100% of the fair market value of such shares as of the date of the granting of the option. Such fair market value shall be deemed to be the mean of the high and low prices of the common stock of this Corporation as quoted on a national securities exchange(s) on the day on which the option shall be granted and such option by its terms shall not be exercisable after the expiration of six (6) years from the date such option is granted. 6. Duration of Options: The duration of each option shall be not more than six (6) years from the date of the granting thereof, but may be for a lesser term as shall be fixed by the Board of Directors, but shall be subject to earlier termination as hereinafter provided. 7. Exercise of Options: An option when and after it becomes exercisable may be exercised at any time, or from time to time during its term as to any part of or all of the shares which shall be optioned, provided, however, that: (a) an option may not be exercised as to less than 100 shares at any one time (or the remaining shares then purchasable under the option if the same be less than 100 shares); (b) the purchase price of the shares as to which an option shall be exercised shall be paid in full in cash and/or by delivery of common stock of the Corporation valued at the fair market value of such common stock as determined in paragraph 5 on the date of exercise; (c) each option shall be subject to the following additional conditions precedent and restrictions thereon with respect to its exercise: (i) Each Non-Employee Director to whom an option is granted under the Plan must remain as a Director of the Corporation for one year from the date the option is granted or such shorter period as permitted by the Committee before he shall have the right to exercise any part thereof. Thereafter all or any part of the shares covered by each option may be purchased at any time or from time to time during the option period, provided, however, that no option may be exercised unless the optionee is at the time of such exercise a Director of the Corporation. (ii) No option shall be transferable by an optionee otherwise than by Will or by the laws of descent and distribution and is exercisable during optionee's lifetime only by the optionee. (iii) Each optionee shall agree that optionee will purchase the optioned shares for investment and not with any present intention to resell the shares. (iv) No shares acquired on exercise of options may in any event be sold or otherwise disposed of for value within six (6) months of the date of grant of the options whether or not the shares are registered under the Securities Act of l933 except on a sale to the Corporation in accordance with Rule l6b-3(d) and (e). 8. Limitations on Participation: (a) If an optionee shall cease to be a Director of the Corporation for any reason (other than death or disability), he may, but only within the 90 days next succeeding such cessation of directorship, exercise his option to the extent that he was entitled to exercise it at the date of such cessation, unless he was removed for cause by the stockholders. If an optionee shall be removed for cause, his option shall terminate on the date of such removal and he shall forfeit any and all rights which may have accrued prior thereto. All options to the extent not exercisable on the date of cessation of directorship shall be forfeited. (b) In the event of death of an optionee while a Director of the Corporation, the option theretofore granted to him shall be exercisable only within nine months next following the date of his death by the person or persons to whom the optionee's rights under the option shall pass by the optionee's Will or the laws of descent and distribution, or within six months after the date of the appointment of an administrator or executor of the estate of such optionee, whichever date shall sooner occur, and then only if and to the extent that he was entitled to exercise it at the date of his death, provided, however, that he shall be deemed to be so entitled even if such death shall have taken place prior to the expiration of one year from the date of the granting of the option, anything in this Plan to the contrary notwithstanding. (c) In the event that an optionee becomes permanently and totally disabled and resigns as a Director, the optionee may, but only within one year next succeeding the day of the commencement of such disability, exercise his option to the extent that he was entitled to exercise his option, but in no event after the expiration of the option. For this purpose, an optionee shall be considered permanently and totally disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months. An optionee shall not be considered to be permanently and totally disabled unless he furnishes proof of the existence thereof in such form and manner, and at such times, as the Committee may require. The Committee's determination of whether the optionee is permanently and totally disabled shall be final and absolute, and shall not be subject to question by the optionee, a representative of the optionee, or the Corporation. 9. Adjustments Upon Changes in Capitalization: In the event of changes in the outstanding common stock of the Corporation by reason of stock dividends, split-ups, recapitalizations, mergers, consolidations, combinations, or exchanges of shares, separations, reorganizations, or liquidations, the number and class of shares available under the Plan and the aggregate and the maximum number of shares as to which options may be granted to any Non-Employee Director shall be correspondingly adjusted by the Committee. No adjustment shall be made in the minimum number of shares which may be purchased at any time. 10. Effectiveness of the Plan: The Plan shall become effective on such date as the Board of Directors shall determine, but only after: (a) if not previously listed, the shares of the common stock reserved for the Plan shall have been duly listed, upon official notice of issuance, upon the national exchange whereon they are traded and registered under the Securities Exchange Act of 1934, as amended; and (b) the Board of Directors shall have been advised by counsel that all applicable legal requirements have been complied with. Notwithstanding the foregoing, if all conditions are satisfied or inapplicable, the Effective Date for purposes of paragraph 4 shall be the date of adoption by the Board of Directors. 11. Time of Granting Options: Whenever a director is eligible under paragraph 4 for the receipt of an option, the Corporation shall forthwith send notice thereof to the designee. The date of eligibility shall be the date of granting the option to such participant for all purposes of this Plan. The notice shall be in the form of a Grant approved by the Board of Directors of this Corporation. 12. Termination and Amendment of the Plan: The Plan shall terminate on December 31, 2009, and an option shall not be granted under the Plan after that date. The Board of Directors may at any time, or from time to time, modify or amend the Plan including the form of option agreement, in such respects as it shall deem advisable in order that options shall conform to any change in the law, or in any other respects. By Order of the Board of Directors TRANS-LUX CORPORATION Exhibit 10.5 NINTH AMENDMENT AGREEMENT ------------------------- AGREEMENT, made as of December 31, 1999, among TRANS-LUX CORPORATION, a Delaware corporation, TRANS-LUX DISPLAY CORPORATION, a Delaware corporation, TRANS-LUX MONTEZUMA CORPORATION, a New Mexico corporation, INTEGRATED SYSTEMS ENGINEERING, INC., a Utah corporation, and FIRST UNION NATIONAL BANK, a national banking association. Background ---------- A. Capitalized terms not otherwise defined shall have the meanings ascribed to them in the Credit Agreement dated as of August 28, 1995, among Trans-Lux Corporation, Trans-Lux Consulting Corporation, Trans-Lux Sign Corporation, Trans-Lux Montezuma Corporation, Integrated Systems Engineering, Inc., and First Fidelity Bank of Connecticut (predecessor in interest to First Union National Bank) (as amended, modified or supplemented from time to time, the "Credit Agreement"). B. The Borrowers have requested that the Lender, among other things, (i) extend from June 30, 2001 to June 30, 2002, the Loan C Commitment Termination Date and revise the amortization schedule with respect to Loan C, (ii) provide for a sub-limit of $2,500,000 under Loan C to allow for the issuance of letters of credit, (iii) extend from August 27, 2004 to August 27, 2005 the Term Loan Maturity Date, and revise the amortization schedule with respect to Loan A, and (iv) modify certain of the financial covenants contained in the Credit Agreement. C. The Lender has agreed to the requests of the Borrowers subject to the terms and conditions of this Agreement. Agreement --------- In consideration of the foregoing Background, which is incorporated by reference, the parties, intending to be legally bound, agree as follows: 1. Modifications to Credit Agreement. All of the terms and provisions of the Credit Agreement and the other Loan Documents shall remain in full force and effect except as follows: (a) The following is added as Section 1.15 of the Credit Agreement: 1.15 Letters of Credit. ----------------- (a) Issuance. Upon and subject to the terms and conditions hereof, Lender agrees to incur, upon the request of TLX and for TLX's account, Letter of Credit Obligations by issuing Letters of Credit for TLX's account; provided, that the aggregate amount of all Letter of Credit Obligations at any one time outstanding (whether or not then due and payable) shall not exceed $2,500,000 (the "L/C Sublimit"). The expiration date of (x) any Documentary Credit shall not be later than 180 days after the date of issuance thereof and (y) any Standby Letter of Credit shall not be later than 12 months after the date of issuance thereof and, in any event, Lender shall be under no obligation to incur Letter of Credit Obligations in respect of any Letter of Credit having an expiry date that is later than the Loan C Commitment Termination Date. (b) Advances Automatic. If Lender shall make any payment on or pursuant to any Letter of Credit Obligation, TLX shall pay such amount to Lender no later than one day after Lender's payment, provided, however, that in the event a Default or Event of Default exists at the time of Lender's payment, such payment shall then be deemed automatically to constitute a borrowing under Loan C under Section 1.01 of the Credit Agreement, notwithstanding TLX's failure to satisfy the conditions precedent set forth in Section 2. (c) Cash Collateral. --------------- (i) If TLX is required to provide cash collateral for any Letter of Credit Obligation pursuant to Article 8 of the Credit Agreement prior to the Loan C Commitment Termination Date, TLX will pay to Lender cash or cash equivalents acceptable to Lender ("Cash Equivalents") in an amount equal to 105% of the L/C Sublimit then available to be drawn under all Letters of Credit outstanding for the benefit of TLX. Such funds or Cash Equivalents shall be held by Lender in a cash collateral account (the "Cash Collateral Account") maintained at Lender and which shall be in the name of TLX, and shall be pledged and subject to the control of Lender in a manner satisfactory to Lender. TLX agrees to execute and deliver to Lender such documentation with respect to the Cash Collateral Account as Lender may request, and TLX hereby pledges and grants to Lender a security interest in all such funds and Cash Equivalents and all interest and dividends thereon and the proceeds thereof held in the Cash Collateral Account from time to time, as security for the payment of all amounts due in respect of the Letter of Credit Obligations, whether or not then due. The Credit Agreement shall constitute a security agreement under applicable law. (ii) If any Reimbursement Obligation, whether or not then due and payable shall for any reason be outstanding on the Loan C Commitment Termination Date, TLX shall either (A) provide cash collateral in the manner described above, (B) cause all such Letters of Credit to be canceled and returned, or (C) deliver a stand-by letter (or letters) of credit in guaranty or back-up of such Letter of Credit Obligations, which stand-by letter (or letters) of credit shall be of like tenor and duration as, and in an amount equal to 105% of the aggregate maximum amount then available to be drawn under, the Letters of Credit to which such outstanding Reimbursement Obligations relate and shall be issued by a Person, and be subject to such terms and conditions as are satisfactory to Lender in its sole discretion. (iii) From time to time after cash is deposited in the Cash Collateral Account, whether before or after the Loan C Commitment Termination Date, Lender may apply such funds or Cash Equivalents then held in the Cash Collateral Account to the payment of any Reimbursement Obligation amounts, in such order as Lender may elect, as shall be or shall become due and payable by TLX to Lender with respect to such Reimbursement Obligations and, once all Reimbursement Obligations have been satisfied, to any other outstanding Obligations as and when such become due and payable. (iv) Neither TLX nor any Person claiming on behalf of or through TLX shall have any right to withdraw any cash held in the Cash Collateral Account, except that, upon the termination of all Reimbursement Obligations and the payment of all amounts payable by TLX to Lender in respect thereof, any funds remaining in the Cash Collateral Account shall be applied to other Obligations when due and owing and upon payment in full of such Obligations, any remaining amount shall be paid to TLX or as otherwise required by law. (v) Lender agrees to deposit any funds or Cash Equivalents deposited in the Cash Collateral Account in an interest-bearing account within five Business Days of receipt from TLX, and interest and earnings thereon, if any, shall be the property of TLX, and TLX hereby pledges and grants to Lender a security interest in all such funds and Cash Equivalents and all interest and dividends thereon and the proceeds thereof, in such account(s) from time to time, as security for the payment of all amounts due in respect of the Letter of Credit Obligations, whether or not then due. This Agreement shall constitute a security agreement under applicable law. (d) Fees and Expenses. TLX agrees to pay to Lender, as compensation to Lender for Letter of Credit Obligations incurred hereunder, (i) all costs and expenses incurred by Lender on account of such Letter of Credit Obligations, and (ii) the Applicable Letter of Credit Fee. TLX shall pay such costs, expenses and fees to Lender upon the issuance of each Letter of Credit. In addition TLX shall pay to Lender, on demand, such fees (including per annum fees), charges and expenses of Lender in respect of the issuance, negotiation, acceptance, amendment, transfer and payment of such Letters of Credit or otherwise payable pursuant to the application and related documentation under which each Letter of Credit is issued. (e) Requests for Issuance of Letters of Credit. TLX shall give Lender at least two (2) Business Days prior written notice requesting the issuance of any Letter of Credit, specifying the date such Letter of Credit is to be issued, identifying the beneficiary and describing the nature of the transactions proposed to be supported thereby. The notice shall be accompanied by the form of the Letter of Credit (which shall be acceptable to Lender). Notwithstanding anything contained herein to the contrary, the Letter of Credit application by TLX and approvals by Lender may be made and transmitted pursuant to electronic codes and security measures mutually agreed upon and established between TLX and Lender. (f) Obligations Absolute. TLX's Obligations to Lender with respect to any Letter of Credit or Reimbursement Obligations shall be evidenced by Lender's records and, in the absence of manifest error, shall be absolute, unconditional and irrevocable, without necessity of presentment, demand, protest or other formalities. Such obligations of TLX shall be strictly in accordance with the terms hereof under all circumstances including the following: (i) any lack of validity or enforceability of any Letter of Credit, the Credit Agreement, the other Loan Documents or any other agreement; (ii) the existence of any claim, set-off, defense or other right which TLX or any of its Affiliates may at any time have against a beneficiary or any transferee of any Letter of Credit (or any Persons or entities for whom any such transferee may be acting), Lender, or any other Person, whether in connection with the Credit Agreement, the Letter of Credit, the transactions contemplated herein or therein or any unrelated transaction (including any underlying transaction between TLX or any of its Affiliates and the beneficiary for which the Letter of Credit was procured); (iii) any draft, demand, certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) payment by Lender (except as otherwise expressly provided in paragraph (g)(ii)(C) below or for Lender's gross negligence or willful misconduct) under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit or such guaranty; (v) any other circumstance or happening whatsoever, which is similar to any of the foregoing; or (vi) the fact that a Default or an Event of Default shall have occurred and be continuing. (g) Indemnification; Nature of Lender's Duties. (i) In addition to amounts payable as elsewhere provided in the Credit Agreement, TLX hereby agrees to pay and to protect, indemnify, and save Lender harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys' fees) which Lender may incur or be subject to as a consequence, direct or indirect, of (A) the issuance of any Letter of Credit or guaranty thereof, or (B) the failure of Lender to honor a demand for payment under any Letter of Credit or guaranty thereof as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority, in each case other than to the extent solely as a result of the gross negligence or willful misconduct of Lender (as finally determined by a court of competent jurisdiction). (ii) As between Lender and TLX, TLX assumes all risks of acts, omissions or misuse of each Letter of Credit by the beneficiary or issuer thereof and, in connection therewith, Lender shall not be responsible (A) for the validity, sufficiency, genuineness or legal effect of any document submitted in connection with any drawing under any Letter of Credit even if it should in fact prove in any respect to be invalid, insufficient, inaccurate, untrue, fraudulent or forged, (B) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or any rights or benefits thereunder or any proceeds thereof, in whole or in part, even if it should prove to be invalid or ineffective for any reason, (C) for the failure of any issuer or beneficiary of any Letter of Credit to comply fully with the terms thereof, including the conditions required in order to effect or pay a drawing thereunder, (D) for any errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, telecopy, telex or otherwise, (E) for any loss or delay in transmission or otherwise of any document or draft required in order to make a drawing under any Letter of Credit, or (F) for any consequences arising from causes beyond the control of Lender. (h) Increased Costs. (i) If any law, treaty, order, directive, rule or regulation adopted, issued or becoming effective after the Closing Date or any change in any law or regulation or in the interpretation thereof by any court or administrative or governmental authority charged with the administration thereof (in any case, whether or not having the force of law) or compliance by Lender with respect thereto from that in effect as of the Closing Date shall either (A) impose, modify or deem applicable any reserve, special deposit or similar requirement against Letters of Credit issued by Lender or (B) impose on Lender any other condition regarding Letters of Credit or participation therein, and the result of any event referred to in the preceding clause (A) or (B) shall be to increase the cost to Lender of issuing or maintaining Letters of Credit then, upon demand by Lender, TLX shall promptly pay to Lender, additional amounts which shall be sufficient to compensate Lender for such increased cost. A certificate as to such increased cost, and amount and computation thereof in reasonable detail, incurred by Lender as a result of any event mentioned in clause (A) or (B) above, shall be submitted by Lender to TLX and shall be conclusive and binding for all purposes, absent manifest error. (ii) If any law, treaty, order, directive, rule or regulation shall be adopted, issued or become effective after December 31, 1999, or if there is any change in any law, treaty, order, directive, rule or regulation from that in effect on December 31, 1999 or in the interpretation thereof by any governmental or other regulatory authority charged with the administration thereof (in any case, whether or not having the force of law) and including in any event, all risk-based capital guidelines heretofore adopted by the Comptroller of the Currency, the Federal Reserve Board or any other banking regulatory agency, domestic or foreign, to the extent that any provision contained therein does not have to be complied with as of the date hereof, and the same shall, or if the compliance by Lender with any guidelines or request from any central bank or other governmental authority, shall affect or would affect the amount of capital required or expected to be maintained by Lender or any affiliate of Lender, and Lender determines that the amount of such capital is increased by or based upon the existence of Letters of Credit or participation therein (or similar contingent obligations), then, upon demand by Lender, as the case may be, TLX shall pay to Lender from time to time such additional amounts as may be specified by Lender as sufficient to compensate it in light of such circumstances, to the extent that Lender determines such increase in capital to be allocable to the issuance or maintenance of the Letters of Credit. A certificate as to such amounts and computation thereof in reasonable detail shall be submitted to TLX by Lender, and shall be conclusive and binding for all purposes, absent manifest error. (b) The number "2.01" is added before the heading "Conditions to the Funding of the Loans" contained in Section 2 of the Credit Agreement. (c) The phrase "or issue Letters of Credit" is added after the word "Loans" in the fourth line of the first paragraph of Section 2.01 of the Credit Agreement. (d) The following is added as Section 2.02 of the Credit Agreement: 2.02 Conditions to Issuance of Letters of Credit. ------------------------------------------- The following shall be conditions precedent to the issuance of each Letter of Credit on the date of each such incurrence: (a) TLX's representations and warranties contained herein or in any of the Loan Documents shall be true and correct in all material respects as of the date on which each such issuance of a Letter of Credit is made, as though incurred on such date, except to the extent that any such representation or warranty expressly relates to an earlier date and except for changes therein permitted or contemplated by the Credit Agreement. (b) No event shall have occurred and be continuing, or would result from the issuance of a Letter of Credit which constitutes a Default. (c) After giving effect to such Letter of Credit Obligation, the aggregate of such advances shall not exceed the L/C Sublimit. (e) Section 6.03 of the Credit Agreement is deleted and the following is substituted therefor: 6.03 Indebtedness. Borrowers shall not (and shall not permit any of their Subsidiaries to) create, incur, assume or permit to exist any Indebtedness, except (i) the Obligations, (ii) deferred Taxes, (iii) Capital Lease Obligations permitted under clause (iv) of Section 6.07 and Indebtedness secured by purchase money Liens permitted under clause (v) of Section 6.07 in a maximum aggregate amount outstanding not to exceed $250,000, (iv) Indebtedness in connection with Permitted Acquisitions, (v) Subordinated Indebtedness, including the Debentures, owed by any Borrower as of December 31, 1999, (vi) Indebtedness owed other than to the Lender, the sole purpose of which shall be to finance the purchase, construction or lease of movie theaters and multimedia productions upon reasonable notice to Lender, (vii) other Indebtedness set forth on Schedule 6.3, (viii) Guaranteed Indebtedness permitted under Section 6.06 below, (ix) the Los Alamos Loan and any refinancing thereof provided that such refinancing does not exceed the outstanding amount of such Loan at the date of such refinancing, (x) Indebtedness consisting of Iowa Economic Development Loans in an aggregate principal amount up to $850,000, and (xi) other Indebtedness not encompassed within the preceding clauses (i) through (x) in an aggregate amount greater than $5,000,000. (f) The following is added as Section 8.02(b) of the Credit Agreement, and the existing subsection (b) is relettered accordingly: (b) terminate its obligation to issue Letters of Credit (whereupon TLX shall be required to cash collateralize outstanding Letters of Credit as more fully set forth in Section 1.15). (g) The following definition is added to Annex "A" of the Credit Agreement following the definition of "Agreement": "Applicable Letter of Credit Fee" shall mean the following amount per annum based on Borrowers' attainment of the Senior Funded Debt to Cash Flow Ratio set forth below based on the most recent Fiscal Quarter: Senior Funded Applicable Letter of Debt/Cash Flow Credit Fee --------------------------------------------- < 3.00 to 1.00 1.50 % --------------------------------------------- >/= 3.00 to 1.00 2.00 % --------------------------------------------- (h) The following definition is added to Annex "A" of the Credit Agreement following the definition of "Applicable Letter of Credit Fee": "Applicable Margin" shall mean: (i) with respect to Loan A, 1.75%; (ii) with respect to Loan B, 1.75%; and (iii) with respect to Loan C, the rate per annum set forth below, corresponding to the Senior Funded Debt to Cash Flow Ratio, measured quarterly for the four consecutive Fiscal Quarters then ended, applicable to Borrowers, on a consolidated basis, according to the most recent Compliance Certificate delivered by Borrowers to Lender, which rate shall be set at Level II until the Borrowers have delivered a Compliance Certificate for the Fiscal Quarter ending December 31, 1999: Level Senior Funded Applicable Margin Debt/Cash Flow -------------------------------------------------------- I < 3.00 to 1.00 2.00 % -------------------------------------------------------- II >/= 3.00 to 1.00 2.50 % -------------------------------------------------------- (i) The following definition is added to Annex "A" of the Credit Agreement following the definition of "Collateral Documents": "Compliance Certificate" shall mean a certificate, in form acceptable to Lender, of the chief executive officer, chief operating officer, president or chief financial officer of Borrowers stating that to the best of such officer's knowledge, (i) each Borrower during such period has observed or performed all of its covenants and other agreements, and satisfied every condition in the Credit Agreement, this Agreement and the other Loan Documents to be observed, performed or satisfied by it, and that such officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate, and (ii) in the case of financial statements referred to in Section 3.04, including calculations and information demonstrating reasonably detailed compliance with the requirements of Section 6.11 as of the most recent Fiscal Quarter then ended. (j) The following definition is added to Annex "A" of the Credit Agreement following the definition of "DOL": "Documentary Credit" shall have the meaning assigned to it in the UCP. (k) The following definition is added to Annex "A" of the Credit Agreement following the definition of "Lender": "Letter of Credit" shall mean a Documentary Credit or a Standby Letter of Credit issued for the account of TLX pursuant to Schedule 1.1, in form and substance satisfactory to Lender. (l) The following definition is added to Annex "A" of the Credit Agreement following the definition of "Letter of Credit": "Letter of Credit Obligations" shall mean all outstanding obligations incurred by Lender at the request of TLX, whether direct or indirect, contingent or otherwise, due or not due, in connection with the issuance by Lender with respect to any Letter of Credit (with the exception of the Logan Letters of Credit). (m) The definition of "Loan C Commitment Termination Date" contained in Annex "A" of the Credit Agreement is deleted and the following is substituted therefor: "Loan C Commitment Termination Date" shall mean the earliest of (i) June 30, 2002, (ii) the date of the termination of Loan C pursuant to Section 8.2, and (iii) the date of the termination of Loan C in accordance with the provisions of Section (a)(iii)(E) of Schedule 1.1. (n) The following definition is added to Annex "A" of the Credit Agreement after the definition of "Loan Party": "Logan Letters of Credit" shall mean Irrevocable Letter of Credit No. SM408991C dated June 3, 1999 in the face amount of $3,435,079.45 and the Irrevocable Letter of Credit No. SM408992C dated June 3, 1999 in the face amount of $1,466,630.14, each established by the Lender for the benefit of the Lender as trustee under such letters of credit and for the account of TLX and ISE. (o) The following definition is added to Annex "A" of the Credit Agreement after the definition of "Long Term Funded Debt": "Los Alamos Loan" shall mean the construction loan which Los Alamos National Bank extended to Trans-Lux Four Corners Corporation having a current outstanding balance of approximately $2,080,000 which loan matures on May 18, 2000. (p) The following definition is added to Annex "A" of the Credit Agreement after the definition of "Reimbursement Agreement": "Reimbursement Obligations" shall mean, at any time, the sum of (i) unreimbursed amounts of drawings under Letters of Credit, (ii) the aggregate maximum amount available for drawings under outstanding Letters of Credit issued for the account of TLX at such time, and (iii) the aggregate maximum amount available for drawings under Letters of Credit requested by TLX, the issuance of which has been authorized by Lender, but which has not yet been issued. (q) The following definition is added to Annex "A" of the Credit Agreement after the definition of "Solvent": "Standby Letter of Credit" shall have the meaning assigned to it in the UCP. (r) The definition of "Term Loan Maturity Date" contained in Annex "A" of the Credit Agreement is deleted and the following is substituted therefor: "Term Loan Maturity Date" shall mean, with respect to Loan A, August 27, 2005, and with respect to Loan B, July 1, 2002. (s) The definition of "Total Funded Debt to Cash Flow Ratio" contained in Annex "A" of the Credit Agreement is deleted. (t) The following definition is added to Annex "A" of the Credit Agreement after the definition of "Treasury Rate": "UCP" shall mean the Uniform Customs and Procedures for Documentary Credits, 1993 Revision, ICC Publication No. 500. (u) The following is added as subparagraph (iii)(B) of Schedule 1.1 of the Credit Agreement and the existing subparagraphs (iii)(B)-(E) are relettered accordingly: (B) Subject to and in accordance with the terms and conditions contained herein, TLX shall have the right to request, and Lender agrees to incur, Letter of Credit Obligations in respect of TLX. (v) Schedule 1.2 to the Credit Agreement is deleted and Schedule 1.2 attached hereto is substituted therefor. (w) Paragraph 3 of Schedule 1.3 of the Credit Agreement is deleted and the following is substituted therefor: Loan C: (a) Refinance of all indebtedness outstanding under the obligation of TLX to Lender having an outstanding principal balance of $300,000 as evidenced by the Revolving Credit Promissory Note dated April 9, 1992, (b) issuance of letters of credit in an amount not to exceed $2,500,000, and (c) general corporate purposes. (x) Paragraph 1 of Schedule 6.11 of the Credit Agreement is deleted and the following is substituted therefor: 1. Debt Service Coverage Ratio. TLX, on a consolidated basis, shall maintain at the end of each Fiscal Quarter for the most recent 12-month period, a Debt Service Coverage Ratio of not less than 1.75 to 1.00. For purposes of calculation, the amount of Current Maturities shall not include any amount outstanding under Loan C prior to June 30, 2002, but shall include the aggregate of Capital Lease Obligations. (y) Paragraph 2 of Schedule 6.11 of the Credit Agreement is deleted and the phrase "Intentionally Left Blank" is substituted therefor. (z) Paragraph 3 of Schedule 6.11 of the Credit Agreement is deleted and the following is substituted therefor: 3. Senior Funded Debt to Cash Flow Ratio. TLX, on a consolidated basis, shall maintain at the end of each Fiscal Quarter for the most recent 12-month period, a Senior Funded Debt to Cash Flow Ratio of not greater than the following for the period indicated: Period Ratio ------ ----- Prior to December 31, 2000 3.50 to 1.00 December 31, 2000 through December 30, 2001 3.00 to 1.00 December 31, 2001 through December 30, 2003 2.75 to 1.00 December 31, 2003 and thereafter 2.50 to 1.00 (aa) Paragraph 4 of Schedule 6.11 of the Credit Agreement is deleted and the following is substituted therefor: 4. Consolidated Tangible Net Worth. TLX shall maintain at all times Consolidated Tangible Net Worth in an amount not less than the sum of (i) $21,000,000 and (ii) fifty percent (50%) of positive net income of TLX, on a consolidated basis, as at each succeeding Fiscal Year, commencing with the Fiscal Year ending December 31, 2000. (bb) Paragraph 6 of Schedule 6.11 of the Credit Agreement is deleted and the following is substituted therefor: 6. Liquidity Ratio. TLX, on a consolidated basis, shall maintain at the end of each Fiscal Quarter, a Liquidity Ratio for the most recent 12 month period, of not less than 2.25 to 1.00. 2. Conditions Precedent. The obligation of the Lender under this Agreement is subject to the receipt and review, to the satisfaction of the Lender, of the following: (a) Amendment Agreement. This Agreement duly executed by the parties hereto; (b) Amendment Fee. Payment to the Lender of the Amendment Fee; (c) Lender's Expenses. Payment to the Lender of all its out-of- pocket expenses, including all reasonable fees and disbursements of the Lender's legal counsel, incurred in connection with the execution, delivery and performance of this Agreement, to be paid regardless of the final disposition of this Agreement; and (d) Other. Such other agreements as the Lender shall require. 3. Waiver. In consideration of the execution and delivery of this Agreement by Borrowers, the Lender waives compliance by TLX with respect to the Total Funded Debt to Cash Flow Ratio requirement for the Fiscal Quarters ended June 30, 1999 as of such date and September 30, 1999 as of such date. 4. Amendment Fee. In consideration of the Lender's execution, delivery and performance of this Agreement and the First Amendment Agreement dated the date hereof with respect to the Reimbursement Agreement dated as of June 3, 1999 between TLX, ISE and Lender, the Borrowers are simultaneously paying to the Lender the amount of $25,000 in immediately available funds (the "Amendment Fee"). 5. Reaffirmation by the Borrowers. The Borrowers acknowledge that each is legally, validly and enforceably, jointly and severally indebted to the Lender under the Notes, without defense, counterclaim or offset, and that each is legally, validly and enforceably liable to the Lender for all costs and expenses of collection and reasonable attorneys' fees related to or in any way arising out of this Agreement, the Notes, the Credit Agreement and the other Loan Documents. The Borrowers hereby restate and agree to be bound by all the covenants contained in the Credit Agreement and the other Loan Documents and reaffirm that all of the representations and warranties contained in the Credit Agreement and the other Loan Documents remain true and correct in all material respects with the exception that the financial statements described therein are deemed true as of the date made. The Borrowers represent that except as set forth in the Credit Agreement and the other Loan Documents or in writing to the Lender with respect to the judgment entered against TLX in 1999 arising out of a certain litigation proceeding commenced in the state of New Mexico, there are no pending, or to each Borrower's knowledge threatened, any legal proceeding to which any of the Borrowers or any of the Guarantors is a party which materially and adversely affects the transactions contemplated by this Agreement or the ability of the Borrowers or any of the Guarantors to conduct its business on a consolidated basis. The Borrowers and Guarantors acknowledge and represent that the resolutions of each dated July 27, 1995 (except for resolutions of Trans-Lux Midwest Corporation which are dated February 13, 1997), remain in full force and effect, encompass the execution, delivery and performance of this Agreement, and have not been modified, amended, rescinded or otherwise abrogated. 6. Reaffirmation by the Guarantors. The Guarantors acknowledge that each is legally and validly indebted to the Lender under the Guaranty of each without defense, counterclaim or offset, and affirms that each Guaranty remains in full force and effect and includes, without limitation, the indebtedness, liabilities and obligations arising under or in any way connected with the Loans, this Agreement and the other Loan Documents, whether now existing or hereafter arising. 7. Reaffirmation re: Collateral. The Borrowers and the Guarantors reaffirm the liens, security interests and pledges granted to the Lender pursuant to the Loan Documents to secure the obligations of each thereunder. 8. Other Representations by Borrower and Guarantors. Each of the Borrowers and the Guarantors represents and confirms that except as expressly represented in this Agreement, (a) no Event of Default has occurred and is continuing and that the Lender has not given its consent to or waived any Default or Event of Default and (b) the Credit Agreement and the other Loan Documents are in full force and effect and enforceable against the Borrowers and the Guarantors in accordance with the terms thereof. Each of the Borrowers and Guarantors represents and confirms that as of the date hereof, each has no claim or defense (and each of the Borrowers and the Guarantors hereby waives every claim and defense as of the date hereof) against the Lender arising out of or relating to the Credit Agreement, this Agreement and the other Loan Documents or the making, administration or enforcement of the Loans and the remedies provided for under the Loan Documents. 9. No Waiver by Lender. Each of the Borrowers and the Guarantors acknowledges that (a) by execution of this Agreement, except as set forth in Section 3 above, the Lender is not waiving any Default, whether now existing or hereafter occurring, disclosed or undisclosed, by the Borrowers or the Guarantors under the Loan Documents and (b) the Lender reserves all rights and remedies available to it under the Loan Documents and otherwise. 10. Miscellaneous. ------------- (a) This Agreement may be executed by the parties to this Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. (b) This Agreement and the rights and obligations of the parties hereunder shall be governed by and construed in accordance with, the law of the State of Connecticut. (c) This Agreement shall be deemed a Loan Document under the Credit Agreement for all purposes. The parties have executed this Agreement on the date first written above. BORROWERS: --------- TRANS-LUX CORPORATION By /s/ Victor Liss -------------------------------------- Victor Liss Title: President By /s/ Angela Toppi -------------------------------------- Angela Toppi Title: Senior Vice President and Chief Financial Officer TRANS-LUX DISPLAY CORPORATION By /s/ Victor Liss -------------------------------------- Victor Liss Title: President By /s/ Angela Toppi -------------------------------------- Angela Toppi Title: Senior Vice President and Chief Financial Officer TRANS-LUX MONTEZUMA CORPORATION By /s/ Victor Liss -------------------------------------- Victor Liss Title: President By /s/ Angela Toppi -------------------------------------- Angela Toppi Title: Senior Vice President and Chief Financial Office INTEGRATED SYSTEMS ENGINEERING, INC. By /s/ Victor Liss -------------------------------------- Victor Liss Title: President By /s/ Angela Toppi -------------------------------------- Angela Toppi Title: Senior Vice President and Chief Financial Officer GUARANTORS: ---------- TRANS-LUX DISPLAY CORPORATION TRANS-LUX CANADA, LTD. TRANS-LUX COCTEAU CORPORATION TRANS-LUX COLORADO CORPORATION TRANS-LUX DURANGO CORPORATION TRANS-LUX EXPERIENCE CORPORATION TRANS-LUX HIGH FIVE CORPORATION TRANS-LUX INVESTMENT CORPORATION TRANS-LUX LOMA CORPORATION TRANS-LUX LOVELAND CORPORATION TRANS-LUX MIDWEST CORPORATION TRANS-LUX MONTEZUMA CORPORATION TRANS-LUX MULTIMEDIA CORPORATION TRANS-LUX PENNSYLVANIA CORPORATION TRANS-LUX PTY, LTD. TRANS-LUX SEAPORT CORPORATION TRANS-LUX SERVICE CORPORATION TRANS-LUX SOUTHWEST CORPORATION TRANS-LUX STORYTELLER CORPORATION TRANS-LUX SYNDICATED PROGRAMS CORPORATION TRANS-LUX TAOS CORPORATION TRANS-LUX THEATRES CORPORATION INTEGRATED SYSTEMS ENGINEERING, INC. SAUNDERS REALTY CORPORATION TRANS-LUX CASTLE ROCK CORPORATION TRANS-LUX CINEMA CONSULTING CORPORATION TRANS-LUX FOUR CORNERS CORPORATION TRANS-LUX LARAMIE CORPORATION TRANS-LUX LOS LUNAS CORPORATION TRANS-LUX SKYLINE CORPORATION TRANS-LUX SUMMIT CORPORATION TRANS-LUX VALLEY CORPORATION By /s/ Victor Liss -------------------------------------- Victor Liss Title: President By /s/ Angela Toppi -------------------------------------- Angela Toppi Title: Senior Vice President and Chief Financial Officer LENDER: ------ FIRST UNION NATIONAL BANK By /s/ Stehen T. Dorsch ------------------------------------ Stephen T. Dorosh Title: Vice President SCHEDULE 1.2 to CREDIT AGREEMENT Dated as of August 28, 1995 REPAYMENT OF LOANS ------------------ (a) Loan A. (i) TLX, ISE and TLM shall pay interest on the outstanding balance of Loan A quarterly in arrears, (A) for a period commencing on the Closing Date and ending on July 1, 1998, at a per annum rate equal to seven and eighty-six one hundredths percent (7.86%), as more fully set forth in subsection (f) below, (B) commencing July 1, 1998, and continuing through December 31, 1999 at a rate per annum equal to one hundred seventy-five basis points (1.75%) above USD-LIBOR-BBA, (C) commencing January 1, 2000, and continuing through the Term Loan Maturity Date, at a rate per annum equal to USD-LIBOR- BBA plus the Applicable Margin and (D) if any interest remains payable after the Term Loan Maturity Date, upon demand; provided, however, that on June 1, 2001, the obligors under such Loan shall have the right to request a fixed rate of interest for the remaining term of such Loan and, provided that Lender at such time regularly offers fixed interest rates for loans similar to such Loan, Lender agrees to act reasonably with respect to such request; provided further, however, that if the Lender declines such request, the interest rate on such Loan shall continue as set forth in the Agreement. (ii) The aggregate principal amount of Note A shall be payable in quarterly installments (consisting of principal) as follows: Payment Date Amount of Payment ------------ ----------------- October 1, 1995 - July 1, 2005 $ 133,333 Term Loan Maturity Date $2,666,680 (b) Loan B. (i) TLX, ISE, TLCC and TLSC shall pay interest on the outstanding balance of Loan B, quarterly in arrears (A) for a period commencing on the Closing Date and ending on July 1, 1998, at a per annum rate equal to seven and eighty-six one hundredths percent (7.86%), as more fully set forth in subsection (f) below, (B) commencing July 1, 1998, and continuing through December 31, 1999 at a rate per annum equal to one hundred seventy- five basis points (1.75%) above USD-LIBOR-BBA, (C) commencing January 1, 2000, and continuing through the Term Loan Maturity Date, at a rate per annum equal to USD-LIBOR- BBA plus the Applicable Margin, and (D) if any interest remains payable after the Term Loan Maturity Date, upon demand. (ii) The aggregate principal amount of Note B shall be payable in quarterly installments (consisting of principal only) as follows: Payment Date Amount of Payment ------------ ----------------- October 1, 1995 - July 1, 2002 $ 270,750 (c) Loan C. (i) (x) Commencing on the Closing Date and continuing through December 31, 1999, TLX shall pay interest on the outstanding balance of Loan C at an annual interest rate equal to two hundred basis points (2.00%) above LIBOR Market Index Rate, as more fully set forth in subsection (f) below and (y) commencing January 1, 2000 and continuing through the Loan C Commitment Termination Date, TLX shall pay interest on the outstanding balance of Loan C at a per annum rate equal to LIBOR Market Index Rate plus the Applicable Margin. (ii) During the Term Credit Portion, TLX shall pay interest on the outstanding balance of Loan C at an annual interest rate equal to two hundred twenty-five basis points (2.25%) above LIBOR Market Index Rate, as more fully set forth in subsection (f) below; provided, however, that on a date thirty (30) days prior to the Loan C Commitment Termination Date, TLX shall have the right to request a fixed rate of interest for the Term Credit Portion and, provided that Lender at such time regularly offers fixed interest rates for loans similar to the Term Credit Portion, Lender agrees to act reasonably with respect to such request; provided, further, however, that if the Lender delivers such request, the interest rate on such Loan shall continue as set forth in this Agreement. If any interest remains payable after the Loan C Maturity Date, such interest shall be payable upon demand. (iii) On the Loan C Commitment Termination Date, the then outstanding indebtedness under Note C shall be payable in sixteen (16) equal payments each in the amount of one-sixteenth (1/16th) of the amount then outstanding under Note C, payable on the first day of the second Fiscal Quarter subsequent to the Loan C Commitment Termination Date, and continuing on the first day of each successive Fiscal Quarter and a final payment on the Loan C Maturity Date of all amounts then outstanding under Note C. (d) Interest on each of the Loans shall be calculated on the basis of the actual number of days elapsed over a 365-day year. (e) If any interest or other payment under any of the Loans becomes due and payable on a day other than a Business Day, the required payment thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. Upon the failure of Borrowers to make required payments under any of the Notes on the date due (after the expiration of any applicable grace period), Lender shall have the right to directly charge any Borrower's account maintained with Lender for the amount of such required payment. (f) With respect to indebtedness under the Loans which bears interest tied to LIBOR Market Index Rate, Borrowers shall pay such interest quarterly in arrears on the sooner to occur of (x) the next preceding Business Day immediately prior to a Reset Date and (y) the last day of each Fiscal Quarter. (g) Lender may collect a late charge of four percent (4%) of any installment of principal, interest or other amount not contested in good faith by Borrowers due to Lender which is not paid by Borrowers within 10 days after the due date thereof to cover the extra expense involved in handling such delinquent payment and Borrowers agree that such amount is reasonable; however, such late charge shall not affect Lender's right to exercise any of its rights and remedies provided in the Credit Agreement if an Event of Default has occurred. Exhibit 10.7 AMENDMENT TO EMPLOYMENT AGREEMENT --------------------------------- AGREEMENT ("Amendment") made as of the 23rd day of September, 1999, by and between TRANS-LUX CORPORATION, a Delaware corporation having an office at 110 Richards Avenue, Norwalk, Connecticut 06856-5090 (hereinafter called "Employer"), and VICTOR LISS, residing at 112 Buckboard Lane, Fairfield, Connecticut 06430 (hereinafter called "Employee"). W I T N E S E T H: WHEREAS, Employer and Employee entered into an employment agreement made December 27, 1996, effective January 1, 1997 (the "Agreement"); WHEREAS, Employer and Employee desire to amend the Agreement with respect to calendar years subsequent to 1998. NOW, THEREFORE, the parties agree as follows: 1. Section 4(d) of the Agreement is amended in its entirety to read as follows: "(d) As additional compensation, Employer shall pay to Employee a bonus ("Bonus") for each calendar year during the Term in an amount equal to the highest percentage of Employer's pre-tax consolidated income (after deducting minority interests, if any) calculated in accordance with the following table: If Annual Pre-Tax Bonus Percent from Consolidated Income falls between: the first dollar --------------------------------- ------------------ $250,000- 999,999 3 1/2% $l,000,000-l,999,999 4 l/2% $2,000,000-2,999,999 5% $3,000,000-3,999,999 5% + $25,000 $4,000,000 - $5,000,000 maximum 5% + $50,000 (Total) No Bonus shall be payable for Annual Pre-Tax Consolidated Income in excess of $5,000,000 and the maximum Bonus payable for any year during the Term is $300,000. Such pre-tax consolidated income shall be fixed and determined by the independent certified public accountants regularly employed by Employer. Such independent certified public accountants, in ascertaining such pre-tax consolidated income shall apply all accounting practices and procedures heretofore applied by Employer's independent certified public accountants in arriving at such annual pre-tax consolidated income as disclosed in Employer's annual statement for that year of profit and loss released to its stockholders. The determination by such independent certified public accountants shall be final, absolute and controlling upon the parties. Notwithstanding the foregoing, any interest expense savings resulting from conversion of the Employer's 7 1/2% Convertible Subordinated Notes due 2006 may be included or excluded from such calculation by the Board in its sole discretion. Payment of such amount, if any is due, shall be made for each year by Employer to Employee within thirty (30) days after which such accountant shall have furnished such statement to Employer disclosing Employer's pre-tax consolidated income for each of the years during the Term. Employer undertakes to use reasonable efforts to cause said accountants to prepare and furnish such statements within one hundred thirty (130) days from the close of each such calendar year and to cause said independent certified public accountants, concomitantly with delivery of such statement by accountants to it, to deliver a copy of such statement to Employee. The Employer shall not have any liability to Employee arising out of any delays with respect to the foregoing. Notwithstanding the provisions of this Section 4(d), there shall be excluded from the calculation of pre-tax consolidated income during the Term of this Agreement (i) the amount by which (x) any item or items of unusual or extraordinary gain in the aggregate exceeds 20% of the Employer's net book value as at the end of the immediate preceding calendar year or (y) any item of unusual or extraordinary loss in the aggregate exceeds 20% of the Employer's net book value as at the end of the immediate preceding calendar year, in each case in (x) and (y) above as determined in accordance with generally accepted accounting principles and items of gain and loss shall not be netted against each other for purpose of the above 20% calculation, (ii) any effect of FASB l09 or similar promulgation, or (iii) any direct effect on pre-tax consolidated income of write-offs in excess of $l00,000 of existing prepaid financing costs prior to the normal amortization schedule of such financing, with any such amount excluded for such year considered in calculating future year's pre-tax consolidated income as if no prepayment had occurred. Provided Employee is not in default of the Agreement, the Board may, in any event, even if any of the aforesaid pre-tax consolidated income levels are not exceeded, grant the Employee the aforesaid Bonus or any portion thereof for such year based on his performance. If the pre-tax consolidated income of Employer for any calendar year exceeds $5,250,000, the Board of Directors of Employer shall review the foregoing Bonus provision for such calendar year but nothing herein shall require or otherwise obligate the Board of Directors to change such provision or to grant Employee an additional Bonus for such calendar year. Employee may defer payment of any Bonus for any year, for up to ten (l0) years, by written notice to Employer prior to the commencement of any such year, such notice to set forth the number of years any such payments are to be deferred." 2. Section 4(e) of the Agreement is amended in its entirety to read as follows: "(e) In the event Employee terminates his employment prior to the end of any calendar year other than as provided in Section 9 of the Agreement, (i) if such termination is at the end of the Term on April 1, 2002, Employee shall be entitled to one-fourth (25%) of the Bonus for the year ended December 31, 2002, as calculated for 2002 under Section 4(d), and (ii) if Employee terminates his employment in accordance with Section 2, Employee shall be entitled to a pro rata portion of the Bonus for the year in which such termination occurs, as calculated under Section 4(d) based on the Early Termination Date, in each case such Bonus to be paid at the same time as provided in Section 4(d). If (iii) Employer terminates Employee's employment with cause prior to the end of any such calendar year, or (iv) Employee terminates his employment otherwise than in accordance with Section 2 or Section 9, no Bonus shall be paid for such calendar year in either such case." 3. This Amendment shall be construed in accordance with the laws of the State of New York. 4. All other terms and conditions of the Agreement remain in full force and effect. 5. This instrument contains the entire agreement between the parties. It may not be changed, modified, extended or renewed orally except by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, discharge or extension is sought. IN WITNESS WHEREOF, this Amendment to the Agreement has been duly executed on the day and year above written. TRANS-LUX CORPORATION By /s/ Richard Brandt ----------------------- Chairman of the Board /s/ Victor Liss ----------------------- Victor Liss Exhibit 10.10 AGREEMENT made as of the 15th day of December l999 effective January l, 2000 by and between TRANS-LUX CORPORATION, a Delaware corporation having an office at 110 Richards Avenue, Norwalk, Connecticut 06856-5090 (hereinafter called "Employer"), and KARL HIRSCHAUER residing at 11 Lorna Lane, Tallman, NY 10982 (hereinafter called, "Employee"). W I T N E S S E T H: - - - - - - - - - - 1. Employer hereby employs Employee, and Employee hereby accepts employment, upon the terms and conditions hereinafter set forth. 2. (a) The term ("Term") of the Agreement shall be the period commencing on January l, 2000 and terminating December 3l, 2002. (b) In the event that Employee remains or continues in the employ of Employer after the Term, such employment, in the absence of a further written agreement, shall be on an at-will basis, terminable by either party hereto on thirty (30) days' notice to the other and, upon the 30th day following such notice the employment of Employee shall terminate. (c) Upon expiration of the Term of this Agreement, neither party shall have any further obligations or liabilities to the other except as otherwise specifically provided in this Agreement. 3. Employee shall be employed in an executive and/or engineering capacity of Employer (and such of its affiliates, divisions and subsidiaries as Employer shall designate). Employer shall use its best efforts to cause Employee to be elected and continue to be elected a Senior Vice President of Employer during the Term of this Agreement. The precise services of Employee may be designated or assigned from time to time at the direction of the Board of Directors, the Chairman of the Board, the Vice-Chairman of the Board, President or Executive Vice President, and all of the services to be rendered hereunder by Employee shall at all times be subject to the control, direction and supervision of the Board of Directors of Employer, to which Employee does hereby agree to be bound. Employee shall devote his entire time, attention and energies during usual business hours (subject to Employer's policy with respect to holidays and illnesses for comparable executives of Employer) to the business and affairs of Employer, its affiliates, divisions and subsidiaries as Employer shall from time to time direct. Employee further agrees during the Term of this Agreement to serve as an officer or director of Employer or of any affiliate or subsidiary of Employer as Employer may request, and if Employee serves as such officer or a director he will do so without additional compensation, other than director's fees or honoraria, if any. During the Term of this Agreement and during any subsequent employment of Employee by Employer, Employee shall use his best efforts, skills and abilities in the performance of his services hereunder and to promote the interests of Employer, its affiliates, divisions and subsidiaries. Employee shall not, during the Term and during any subsequent employment of Employee by Employer, be engaged in any other business activity, whether or not such business activity is pursued for gain, profit or other pecuniary advantage. The foregoing shall not be construed as preventing Employee from investing his assets in such form or manner as will not require any services on the part of Employee in the operation of the affairs of the companies in which such investments are made, provided, however, that Employee shall not, either directly or indirectly, be a director of or make any investments in any company or companies which are engaged in businesses competitive with those conducted by Employer or by any of its subsidiaries or affiliates except where such investments are in stock of a company listed on a national securities exchange, and such stock of Employee does not exceed one percent (1%) of the outstanding shares of stock of such listed company. Employee shall not at any time during or after the Term of this Agreement use (except on behalf of Employer) divulge, furnish or make accessible to any third person or organization any confidential information concerning Employer or any of its subsidiaries or affiliates or the businesses of any of the foregoing including, without limitation, inventions, confidential methods of operations and organization, confidential sources of supply, identity of employees, customer 1ists and confidential financial information. 4. (a) For all services rendered by Employee during the Term of this Agreement, Employer shall pay Employee a salary at the rate of ONE HUNDRED TWENTY-EIGHT THOUSAND DOLLARS ($128,000) per annum during the period January l, 2000 to December 31, 2000; at the rate of ONE HUNDRED THIRTY-FIVE THOUSAND DOLLARS ($135,000) per annum during the period January 1, 2001 to December 31, 2001 and at the rate of ONE HUNDRED FORTY THOUSAND DOLLARS ($l40,000) per annum during the period January 1, 2002 to December 31, 2002. Such salary shall be payable weekly, or monthly, or in accordance with the payroll practices of Employer for its executives. The Employee shall also be entitled to all rights and benefits for which he shall be eligible under any stock option plan, bonus, participation or extra compensation plans, pensions, group insurance or other benefits which Employer presently provides, or may provide for him and for its employees generally. This Agreement shall not be deemed abrogated or terminated if Employer, in its discretion, shall determine to increase the compensation of Employee for any period of time, or if the Employee shall accept such increase. All payments under this Agreement are in United States dollars unless otherwise specified. (b) Employer may make appropriate deductions from the said payments required to be made in this Section 4 to Employee to comply with all governmental withholding requirements. (c) If, during the Term of this Agreement and if the Employee is still in the employ of Employer, Employee shall be prevented from performing or be unable to perform, or fail to perform, his duties by reason of illness or any other incapacity for (4) consecutive months (excluding normal vacation time) during the Term hereof, Employer agrees to pay Employee thereafter during the Term for the duration of such incapacity 35% of the base salary which Employee would otherwise have been entitled to receive if not for the illness or other incapacity. (d) The Board upon the recommendation of the Compensation Committee of the Board shall consider no later than May 31, 2001, 2002, and 2003, respectively (provided there is no delay in obtaining the financial statements as provided below, but in no event later than 45 days following receipt thereof) the grant of a bonus ("Bonus") to Employee based on Employee's performance for the immediately preceding fiscal year. Notwithstanding the foregoing, Employer shall pay Employee the highest Bonus applicable for any of the fiscal years ending December 31, 2000, 2001, and 2002 only, in the event Employer's pre-tax consolidated earnings for such year determined in accordance with Section 4(d) exceed the respective amounts hereinafter set forth. The Bonuses shall not exceed $20,000 for any year. If Pre-Tax Consolidated Earnings Exceed For Annual Non-Cumulative Level of 2000, 2001 and 2002 Bonus Payable - - ----------------------- ------------------------------ $ 250,000 625.00 375,000 937.50 500,000 1,250.00 625,000 1,562.50 750,000 1,875.50 875,000 2,187.50 l,000,000 2,500.00 1,125,000 2,812.50 l,250,000 3,125.00 1,375,000 3,437.50 1,500,000 3,750.00 1,625,000 4,062.50 1,750,000 4,375.00 1,875,000 4,687.50 2,000,000 5,000.00 2,125,000 5,312.50 2,250,000 5,625.00 2,375,000 5,937.50 2,500,000 6,250.00 2,625,000 6,562.50 2,750,000 6,875.00 2,875,000 7,187.50 3,000,000** 7,500.00 4,000,000** 10,000.00 5,000,000** 12,500.00 6,000,000** 15,000.00 7,000,000** 17,500.00 8,000,000** 20,000.00 (Maximum) _______ ** For each incremental level of $l25,000 between $3,000,000 and $8,000,000 not listed, there is an additional Bonus of $3l2.50 up to the maximum. There shall be excluded from the calculation of pre-tax consolidated earnings during the Term of this Agreement the amount by which (x) any item or items of unusual or extraordinary gain in the aggregate exceeds 20% of the Employer's net book value as at the end of the immediate preceding fiscal year or (y) any item of unusual or extraordinary loss in the aggregate exceeds 20% of the Employer's net book value as at the end of the immediate preceding fiscal year, in each case in (x) and (y) above as determined in accordance with generally accepted accounting principles and items of gain and loss shall not be netted against each other for purpose of the above 20% calculation. Provided Employee is not in default of the Agreement, the Board may, in any event, even if any of the aforesaid pre-tax consolidated earnings levels are not exceeded, grant the Employee the aforesaid Bonus or any portion thereof for such year based on his performance. Notwithstanding anything to the contrary contained herein, if Employee is not in the employ of Employer at the end of any aforesaid 2000, 2001 or 2002 fiscal year, no Bonus shall be paid for such fiscal year. In the event of Employee's death on or after January 1 of 2001, 2002 or 2003, any Bonus to which he is otherwise entitled for the prior fiscal year shall be paid to his widow if she shall survive him or if she shall predecease him to his surviving issue per stirpes and not per capita. Such pre-tax consolidated earnings shall be fixed and determined by the independent certified public accountants regularly employed by Employer. Such independent certified public accountants, in ascertaining such pre-tax consolidated earnings, shall apply all accounting practices and procedures heretofore applied by Employer's independent certified public accountants in arriving at such annual pre-tax consolidated earnings as disclosed in Employer's annual statement for that year of profit and loss released to its stockholders. The determination by such independent certified public accountants shall be final, absolute and controlling upon the parties. Notwithstanding the foregoing, any interest expense savings resulting from converstion of the Employer's 7 1/2% Convertible Subordinated Notes due 2006 may be included or excluded in such calculation by the Board in its sole discretion. Payment of such amount, if any is due, shall be made for each year by Employer to Employee within sixty (60) days after which such accountant shall have furnished such statement to Employer disclosing Employer's pre-tax consolidated earnings for each of the years 2000, 2001 and 2002. Employer undertakes to use reasonable efforts to cause said accountants to prepare and furnish such statements within one hundred thirty (130) days from the close of each such fiscal year and to cause said independent certified public accountants, concommitantly with delivery of such statement by accountants to it, to deliver a copy of such statement to Employee. The Employer shall not have any liability to Employee arising out of any delays with respect to the foregoing. (e) In the event Employee dies during the Term of this Agreement while the Employee is still in the Employ of Employer, Employer shall pay to Employee's widow or his surviving issue, as the case may be, for the balance of the Term of the Agreement, or eighteen (18) months, whichever is less, annual death benefits payable weekly or in accordance with Employer's payroll practices in an amount equal to 35% of Employee's then annual base salary rate. 5. During the Term of this Agreement, Employer will reimburse Employee for traveling or other out-of-pocket expenses and disbursements incurred by Employee with Employer's approval in furtherance of the businesses of Employer, its affiliates, divisions or subsidiaries, upon presentation of such supporting information as Employer may from time to time request. 6. During the Term of this Agreement, Employee shall be entitled to a vacation during the usual vacation period of Employer in accordance with such vacation schedules as Employer may prescribe. 7. Both parties recognize that the services to be rendered by Employee pursuant to this Agreement are extraordinary and unique. During the Term of this Agreement, and during any subsequent employment of Employee by Employer, Employee shall not, directly or indirectly, enter into the employ of or render any services to any person, partnership, association or corporation engaged in a business or businesses in anyway, directly or indirectly, competitive to those now or hereafter engaged in by Employer or by any of its subsidiaries during the Term of this Agreement and during any subsequent employment of Employee by Employer and Employee shall not engage in any such business, directly or indirectly on his own account and, except as permitted by Section 3 of this Agreement, Employee shall not become interested in any such business, directly or indirectly, as an individual, partner, shareholder, director, officer, principal, agent, employee, trustee, consultant, or in any other relationship or capacity. For a period of two (2) years following termination of employment for any reason, Employee shall not directly or indirectly (i) engage or otherwise be involved in the recruitment or employment of any Employer employee or (ii) solicit or render any service directly or indirectly to any other person or entity with regard to soliciting any customer of the Employer during the two (2) year period prior to termination of employment with respect to products or services competitive with products or services of Employer. Employee shall at no time during or after employment disclose to any person, other than Employer, or otherwise use any information of or regarding Employer except on behalf of Employer, nor communicate, publish, or otherwise transmit, in any manner whatsoever, untrue information or negative, competitive, personal or other information or comments regarding Employer. In addition, Employee agrees that all lists, materials, books, files, reports, correspondence, records and other documents and information ("Employer Materials") used, prepared or made available to Employee, shall be and shall remain the property of Employer. Upon the termination of employment of Employee or the expiration of this Agreement, whichever is earlier, all Employer Materials shall be immediately returned to Trans-Lux Corporation, and Employee shall not make or retain any copies thereof, nor disclose or otherwise use any information relating to said Employer Materials to any other party. As used herein the term Employer shall include Employer, Employer's subsidiaries and affiliates, and any individuals employed or formerly employed by any of them. Employer shall be entitled, if it so elects, to institute and prosecute proceedings in any court of competent jurisdiction, either in law or in equity, to obtain damages for any breach of this Agreement, or to enjoin Employee from any breach of this Agreement, but nothing herein contained shall be construed to prevent Employer from pursuing such other remedies as Employer may elect to invoke. In addition to the obligations of the Employee contained in this Agreement, Employee agrees to be bound by the provisions contained in Exhibits A and B to this Agreement. 8. In the event any provision of Section 7 of this Agreement shall be held invalid or unenforceable by reason of the geographic or business scope or the duration thereof, such invalidity or unenforceability shall attach only to such provision and shall not affect or render invalid or unenforceable any other provision of this Agreement, and this Agreement shall be construed as if the geographic or business scope or the duration of such provision had been more narrowly drawn so as not to be invalid or unenforceable. 9. The waiver by Employer of a breach of any provision of this Agreement by Employee shall not operate or be construed as a waiver of any subsequent breach by Employee. 10. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and served personally or sent by United States certified or registered mail, return receipt requested, or overnight courier such as Federal Express or Airborne to his address as stated on Employer's records, in the case of Employee, or to the office of Trans-Lux Corporation, attention of the Chairman or Vice Chairman of the Board, 110 Richards Avenue, Norwalk, Connecticut 06856-5090, in the case of Employer, or such other address as designated in writing by the parties. 11. This Agreement shall be construed in accordance with the laws of the State of New York. 12. This instrument contains the entire agreement between the parties and supersedes as of January l, 2000 the Employment Agreement between the parties dated December 27, 1996, except for any Bonus for l999 payable in 2000 in accordance with paragraph 4(d) of such agreement. It may not be changed, modified, extended or renewed orally except by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, discharge or extension is sought. IN WITNESS WHEREOF, this Agreement has been duly executed on the day and year above written. TRANS-LUX CORPORATION By: /s/ Michael R. Mulcahy ----------------------------- Executive Vice President /s/ Karl Hirschauer ----------------------------- Karl Hirschauer EXHIBIT A TO EMPLOYMENT AGREEMENT EFFECTIVE AS OF JANUARY 1, 2000 ADDITIONAL OBLIGATIONS OF EMPLOYEE 1. All inventions, developments and improvements conceived or made by Employee, solely or jointly with others, during the period of Employee's employment by the Employer, whether or not conceived during business hours, which pertain to any product, goods, apparatus, equipment, systems, methods or processes made, used or sold by the Employer, or with regard to which the Employer is conducting research or development work, either alone or in cooperation with others, shall be a work made for hire, under the supervision of the Employer, and shall be the property of the Employer, whether patentable or not. 2. Employee agrees to promptly and voluntarily disclose to the Employer all such inventions, developments, and improvements conceived or made by Employee during the period of Employee's employment, and one year thereafter, and to sign, when requested by Employer any United States and foreign patent applications or any divisional, continuing, renewal or reissue applications pertaining thereto, and to provide the Employer or its agents or attorneys with all reasonable assistance in the preparation and presentation of patent or copyright applications, drawings, specifications and the like, provided that all fees pertaining to such applications are to be paid by the Employer. Employee also agree to assign to the Employer all such inventions, developments and improvements and any United States and foreign patent applications or divisional, continuing, renewal or reissue applications pertaining thereto, and any patent issuing thereon, and Employee agrees to sign any assignments or other instruments that might, in the opinion of the Employer, be required to carry out this provision. Employee will perform Employee's obligations under this paragraph without requesting or receiving any payment therefore other than Employee's usual salary from the Employer. 3. In any action, claim, or proceeding in which this Agreement or any provision thereof is in issue, the parties agree that the Employer shall have the benefit of a prima facie presumption that any invention, development or improvement as referred to in paragraph 1 which is disclosed or offered to others, or published or reduced to practice by Employee within a period of one year after the termination of Employee's employment with Employer, or any such inventions, developments or improvements disclosed in a patent application filed by Employee within one year of the termination of Employee's employment by Employer, was conceived or made during the period of Employee's employment. 4. All work done by Employee for the Employer relating in any way to the conception, design, development, support, maintenance, sales or leasing of products for the Employer is the property of the Employer and Employee hereby assigns to the Employer all of Employee's rights therein. This paragraph applies to work performed by Employee before and after the signing of this Agreement. Trans-Lux Corporation By: /s/ Michael R. Mulcahy /s/ Karl Hirschauer ------------------------------ --------------------------------- Karl Hirschauer Exhibit 10.12 AMENDMENT TO EMPLOYMENT AGREEMENT --------------------------------- AGREEMENT ("Amendment") made as of the 20th day of December, 1999 by and between TRANS-LUX CORPORATION, a Delaware corporation having an office at 110 Richards Avenue, Norwalk, Connecticut 06856-5090 (hereinafter called "Employer"), and AL MILLER residing at 22 Deer Run Lane, Shelton, Connecticut 06484 (hereinafter called, "Employee"). W I T N E S S E T H - - - - - - - - - - WHEREAS, Employer and Employee entered into an employment agreement made as of the 1st day of January, 1999 (the "Agreement"). WHEREAS, Employer and Employee desire to amend the Agreement. NOW, THEREFORE, the parties agree as follows: 1. The first sentence of Section 4(a) of the Agreement is amended in its entirety to read as follows: "4. (a) For all services rendered by Employee during the Term of this Agreement, Employer shall pay Employee a salary at the rate of NINETY THOUSAND DOLLARS ($90,000) per annum during the period January 1, 1999 to December 31, 1999; at the rate of ONE HUNDRED FOUR THOUSAND DOLLARS ($104,000) per annum during the period January 1, 2000 to December 31, 2000 and at the rate of ONE HUNDRED TEN THOUSAND DOLLARS ($110,000) per annum during the period January 1, 2001 to December 31, 2001." 2. Section 4(d) of the Agreement is amended by adding the following sentence on Page 7 in the last paragraph, line 8 after "parties.": "Notwithstanding the foregoing, any interest expense savings resulting from conversion of the Employer's 7 1/2% Convertible Subordinated Notes due 2006 may be included or excluded in such calculation by the Board in its sole discretion." 3. This Amendment shall be construed in accordance with the laws of the State of New York. 4. All other terms and conditions of the Agreement remain in full force and effect. 5. This instrument contains the entire agreement between the parties. It may not be changed, modified, extended or renewed orally except by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, discharge or extension is sought. IN WITNESS WHEREOF, this Amendment to the Agreement has been duly executed on the day and year above written. TRANS-LUX CORPORATION By: /s/ Michael R. Mulcahy --------------------------------- Executive Vice President /s/ Al Miller --------------------------------- AL MILLER Exhibit 10.13 AGREEMENT made as of December 22nd, 1999 effective the lst day of January, 2000 by and between TRANS-LUX CORPORATION, a Delaware corporation having an office at l10 Richards Avenue, Norwalk, Connecticut 06856-5090 (hereinafter called "Employer"), and ANGELA TOPPI residing at l05 Cedar Lane, Ridgefield, Connecticut 06877 (hereinafter called, "Employee"). W I T N E S S E T H: - - - - - - - - - - l. Employer hereby employs Employee, and Employee hereby accepts employment, upon the terms and conditions hereinafter set forth. 2. (a) The term ("Term") of the Agreement shall be the period commencing on January l, 2000 and terminating December 3l, 2002. (b) In the event that Employee remains or continues in the employ of Employer after the Term, such employment, in the absence of a further written agreement, shall be on an at-will basis, terminable by either party hereto on thirty (30) days' notice to the other and, upon the 30th day following such notice the employment of Employee shall terminate. (c) Upon expiration of the Term of this Agreement, neither party shall have any further obligations or liabilities to the other except as otherwise specifically provided in this Agreement. 3. Employee shall be employed in an executive capacity of Employer (and such of its affiliates, divisions and subsidiaries as Employer shall designate). Employer shall use its best efforts to cause Employee to be elected and continue to be elected a Senior Vice President of Employer during the Term of this Agreement. The precise services of Employee may be designated or assigned from time to time at the direction of the Board of Directors, the Chairman of the Board, the Vice Chairman of the Board, President or Executive Vice President, and all of the services to be rendered hereunder by Employee shall at all times be subject to the control, direction and supervision of the Board of Directors of Employer, to which Employee does hereby agree to be bound. Employee shall devote her entire time, attention and energies during usual business hours (subject to Employer's policy with respect to holidays and illnesses for comparable executives of Employer) to the business and affairs of Employer, its affiliates, divisions and subsidiaries as Employer shall from time to time direct. Employee further agrees during the Term of this Agreement to serve as an officer or director of Employer or of any affiliate or subsidiary of Employer as Employer may request, and if Employee serves as such officer or a director she will do so without additional compensation, other than director's fees or honoraria, if any. During the Term of this Agreement and during any subsequent employment of Employee by Employer, Employee shall use her best efforts, skills and abilities in the performance of her services hereunder and to promote the interests of Employer, its affiliates, divisions and subsidiaries. Employee shall not, during the Term and during any subsequent employment of Employee by Employer, be engaged in any other business activity, whether or not such business activity is pursued for gain, profit or other pecuniary advantage. The foregoing shall not be construed as preventing Employee from investing her assets in such form or manner as will not require any services on the part of Employee in the operation of the affairs of the companies in which such investments are made, provided, however, that Employee shall not, either directly or indirectly, be a director of or make any investments in any company or companies which are engaged in businesses competitive with those conducted by Employer or by any of its subsidiaries or affiliates except where such investments are in stock of a company listed on a national securities exchange, and such stock of Employee does not exceed one percent (l%) of the outstanding shares of stock of such listed company. Employee shall not at any time during or after the Term of this Agreement use (except on behalf of Employer), divulge, furnish or make accessible to any third person or organization any confidential information concerning Employer or any of its subsidiaries or affiliates or the businesses of any of the foregoing including, without limitation, confidential methods of operations and organization, confidential sources of supply, identity of employees, customer lists and confidential financial information. 4. (a) For all services rendered by Employee during the Term of this Agreement, Employer shall pay Employee a salary at the rate of ONE HUNDRED TWENTY THOUSAND DOLLARS ($l20,000) per annum during the period January l, 2000 to December 3l, 2000; at the rate of ONE HUNDRED TWENTY-SIX THOUSAND DOLLARS ($126,000) per annum during the period January l, 2001 to December 3l, 2001 and at the rate of ONE HUNDRED THIRTY-TWO THOUSAND DOLLARS ($l32,000) per annum during the period January l, 2002 to December 3l, 2002. Such salary shall be payable weekly, or monthly, or in accordance with the payroll practices of Employer for its executives. The Employee shall also be entitled to all rights and benefits for which she shall be eligible under any stock option plan, bonus, participation or extra compensation plans, pensions, group insurance or other benefits which Employer presently provides, or may provide for her and for its employees generally. This Agreement shall not be deemed abrogated or terminated if Employer, in its discretion, shall determine to increase the compensation of Employee for any period of time, or if the Employee shall accept such increase. All payments under this Agreement are in United States dollars unless otherwise specified. (b) Employer may make appropriate deductions from the said payments required to be made in this Section 4 to Employee to comply with all governmental withholding requirements. (c) If, during the Term of this Agreement and if the Employee is still in the employ of Employer, Employee shall be prevented from performing or be unable to perform, or fail to perform, her duties by reason of illness or any other incapacity for (4) consecutive months (excluding normal vacation time) during the Term hereof, Employer agrees to pay Employee thereafter during the Term for the duration of such incapacity or l8 months, whichever is less, 35% of the base salary which Employee would otherwise have been entitled to receive if not for the illness or other incapacity. (d) The Board upon the recommendation of the Compensation Committee of the Board shall consider no later than May 3l, 2001, 2002, and 2003, respectively (provided there is no delay in obtaining the financial statements as provided below, but in no event later than 45 days following receipt thereof) the grant of a bonus ("Bonus") to Employee based on Employee's performance for the immediately preceding fiscal year. Notwithstanding the foregoing, Employer shall pay Employee the highest Bonus applicable for any of the fiscal years ending December 3l, 2000, 2001 and 2002 only, in the event Employer's pre-tax consolidated earnings for such year determined in accordance with Section 4(d) exceed the respective amounts hereinafter set forth. The Bonuses shall not exceed $20,000 for any year If Pre-Tax Consolidated Earnings Exceed for Annual Non-Cumulative Level of 2000, 2001 and 2002 Bonus Payable - - ----------------------- ------------------------------ $ 250,000 625.00 375,000 937.50 500,000 1,250.00 625,000 1,562.50 750,000 1,875.50 875,000 2,187.50 1,000,000 2,500.00 1,125,000 2,812.50 1,250,000 3,125.00 1,375,000 3,437.50 1,500,000 3,750.00 1,625,000 4,062.50 1,750,000 4,375.00 1,875,000 4,687.50 2,000,000 5,000.00 2,125,000 5,312.50 2,250,000 5,625.00 2,375,000 5,937.50 2,500,000 6,250.00 2,625,000 6,562.50 2,750,000 6,875.00 2,875,000 7,187.50 3,000,000** 7,500.00 4,000,000** 10,000.00 5,000,000** 12,500.00 6,000,000** 15,000.00 7,000,000** 17,500.00 8,000,000 and up** 20,000.00 (maximum) _______ ** For each incremental level of $125,000 between $3,000,000 and $8,000,000 not listed, there is an additional Bonus of $3l2.50 up to maximum. There shall be excluded from the calculation of pre-tax consolidated earnings during the Term of this Agreement the amount by which (x) any item or items of unusual or extraordinary gain in the aggregate exceeds 20% of the Employer's net book value as at the end of the immediate preceding fiscal year or (y) any item of unusual or extraordinary loss in the aggregate exceeds 20% of the Employer's net book value as at the end of the immediate preceding fiscal year, in each case in (x) and (y) above as determined in accordance with generally accepted accounting principles and items of gain and loss shall not be netted against each other for purpose of the above 20% calculation. Provided Employee is not in default of the Agreement, the Board may, in any event, even if any of the aforesaid pre-tax consolidated earnings levels are not exceeded, grant the Employee the aforesaid Bonus or any portion thereof for such year based on her performance. Notwithstanding anything to the contrary contained herein, if Employee is not in the employ of Employer at the end of any aforesaid 2000, 2001 or 2002 fiscal year, no Bonus shall be paid for such fiscal year. In the event of Employee's death on or after January l of 2001, 2002 or 2003, any Bonus to which she is otherwise entitled for the prior fiscal year shall be paid to her surviving spouse if he shall survive her or if he shall predecease her to her surviving issue per stirpes and not per capita. Such pre-tax consolidated earnings shall be fixed and determined by the independent certified public accountants regularly employed by Employer. Such independent certified public accountants, in ascertaining such pre-tax consolidated earnings, shall apply all accounting practices and procedures heretofore applied by Employer's independent certified public accountants in arriving at such annual pre-tax consolidated earnings as disclosed in Employer's annual statement for that year of profit and loss released to its stockholders. The determination by such independent certified public accountants shall be final, absolute and controlling upon the parties. Notwithstanding the foregoing, any interest expense savings resulting from conversion of the Employer's 7 1/2% Convertible Subordinated Notes due 2006 may be included or excluded in such calculation by the Board in its sole discretion. Payment of such amount, if any is due, shall be made for each year by Employer to Employee within sixty (60) days after which such accountant shall have furnished such statement to Employer disclosing Employer's pre-tax consolidated earnings for each of the years 2000, 2001 and 2002. Employer undertakes to use reasonable efforts to cause said accountants to prepare and furnish such statements within one hundred thirty (l30) days from the close of each such fiscal year and to cause said independent certified public accountants, concommitantly with delivery of such statement by accountants to it, to deliver a copy of such statement to Employee. The Employer shall not have any liability to Employee arising out of any delays with respect to the foregoing. (e) In the event Employee dies during the Term of this Agreement while the Employee is still in the employ of Employer, Employer shall pay to Employee's surviving spouse or her surviving issue, as the case may be, for the balance of the Term of the Agreement, or eighteen (l8) months, whichever is less, annual death benefits payable weekly or in accordance with Employer's payroll practices in an amount equal to 35% of Employee's then annual base salary rate. 5. During the Term of this Agreement, Employer will reimburse Employee for traveling or other out-of-pocket expenses and disbursements incurred by Employee with Employer's approval in furtherance of the businesses of Employer, its affiliates, divisions or subsidiaries, upon presentation of such supporting information as Employer may from time to time request. 6. During the Term of this Agreement, Employee shall be entitled to a vacation during the usual vacation period of Employer in accordance with such vacation schedules as Employer may prescribe. 7. Both parties recognize that the services to be rendered by Employee pursuant to this Agreement are extraordinary and unique. During the Term of this Agreement, and during any subsequent employment of Employee by Employer, Employee shall not, directly or indirectly, enter into the employ of or render any services to any person, partnership, association or corporation engaged in a business or businesses in any way, directly or indirectly, competitive to those now or hereafter engaged in by Employer or by any of its subsidiaries during the Term of this Agreement and during any subsequent employment of Employee by Employer and Employee shall not engage in any such business, directly or indirectly on her own account and, except as permitted by Section 3 of this Agreement, Employee shall not become interested in any such business, directly or indirectly, as an individual, partner, shareholder, director, officer, principal, agent, employee, trustee, consultant, or in any other relationship or capacity. For a period of two (2) years following termination of employment for any reason, Employee shall not directly or indirectly (i) engage or otherwise be involved in the recruitment or employment of any Employer employee or, (ii) solicit or render any service directly or indirectly to any other person or entity with regard to soliciting any customer of the Employer during the two (2) year period prior to termination of employment with respect to products or services competitive with products or services of Employer. Employee shall at no time during or after employment disclose to any person, other than Employer, or otherwise use any information of or regarding Employer except on behalf of Employer, nor communicate, publish, or otherwise transmit, in any manner whatsoever, untrue information or negative, competitive, personal or other information or comments regarding Employer. In addition, Employee agrees that all lists, materials, books, files, reports, correspondence, records and other documents and information ("Employer Materials") used, prepared or made available to Employee, shall be and shall remain the property of Employer. Upon the termination of employment of Employee or the expiration of this Agreement, whichever is earlier, all Employer Materials shall be immediately returned to Trans-Lux Corporation, and Employee shall not make or retain any copies thereof, nor disclose or otherwise use any information relating to said Employer Materials to any other party. As used herein the term Employer shall include Employer, Employer's subsidiaries and affiliates, and any individuals employed or formerly employed by any of them. Employer shall be entitled, if it so elects, to institute and prosecute proceedings in any court of competent jurisdiction, either in law or in equity, to obtain damages for any breach of this Agreement, or to enjoin Employee from any breach of this Agreement, but nothing herein contained shall be construed to prevent Employer from pursuing such other remedies as Employer may elect to invoke. In addition to the obligations of the Employee contained in this Agreement, Employee agrees to be bound by the provisions contained in Exhibit A to this Agreement. 8. In the event any provision of Section 7 of this Agreement shall be held invalid or unenforceable by reason of the geographic or business scope or the duration thereof, such invalidity or unenforceability shall attach only to such provision and shall not affect or render invalid or unenforceable any other provision of this Agreement, and this Agreement shall be construed as if the geographic or business scope or the duration of such provision had been more narrowly drawn so as not to be invalid or unenforceable. 9. The waiver by Employer of a breach of any provision of this Agreement by Employee shall not operate or be construed as a waiver of any subsequent breach by Employee. l0. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and served personally or sent by United States certified or registered mail, return receipt requested, or overnight courier such as Federal Express or Airborne to her address as stated on Employer's records, in the case of Employee, or to the office of Trans-Lux Corporation, attention of the Chairman, Vice Chairman of the Board or President, ll0 Richards Avenue, Norwalk, Connecticut 06856-5090, in the case of Employer, or such other address as designated in writing by the parties. ll. This Agreement shall be construed in accordance with the laws of the State of New York. l2. This instrument contains the entire agreement between the parties and supersedes as of January 1, 2000 the Employment Agreement between the parties dated January 1, 1997 except for any Bonus for 1999 payable in 2000 in accordance with paragraph 4(d) of such agreement. It may not be changed, modified, extended or renewed orally except by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, discharge or extension is sought. IN WITNESS WHEREOF, this Agreement has been duly executed on the day and year above written. TRANS-LUX CORPORATION By: /s/ Michael R. Mulcahy --------------------------- Executive Vice President /s/ Angela Toppi ------------------------- Angela Toppi EX-21 3 Exhibit 21 SUBSIDIARIES OF THE COMPANY A. As of December 31, 1999 the following are subsidiaries more than 50% owned (included in the consolidated financial statements):
Jurisdiction of Percentage Name Incorporation Owned - - ------------------------- --------------- ---------- Integrated Systems Engineering, Inc Utah 100% Saunders Realty Corporation New York 100 Trans-Lux Canada Ltd. Canada 100 Trans-Lux Castle Rock Corporation (2) Colorado 100 Trans-Lux Cinema Consulting Corporation (4) California 100 Trans-Lux Cocteau Corporation (2) New Mexico 100 Trans-Lux Colorado Corporation (2) Colorado 100 Trans-Lux Display Corporation Delaware 100 Trans-Lux Durango Corporation (2) Colorado 100 Trans-Lux Experience Corporation New York 100 Trans-Lux Four Corners Corporations (2) New Mexico 100 Trans-Lux FSC Corporation (3) Barbados 100 Trans-Lux High Five Corporation (2) Colorado 100 Trans-Lux Investment Corporation Delaware 100 Trans-Lux Laramie Corporation (2) Wyoming 100 Trans-Lux Loma Corporation (2) New Mexico 100 Trans-Lux Los Lunas Corporation (2) New Mexico 100 Trans-Lux Loveland Corporation (2) Colorado 100 Trans-Lux Midwest Corporation Iowa 100 Trans-Lux Montezuma Corporation (2) New Mexico 100 Trans-Lux Multimedia Corporation New York 100 Trans-Lux Pennsylvania Corporation (2) Pennsylvania 100 Trans-Lux Pty Limited Australia 100 Trans-Lux Seaport Corporation New York 100 Trans-Lux Service Corporation New York 100 Trans-Lux Skyline Corporation (2) Colorado 100 Trans-Lux Southwest Corporation (2) New Mexico 100 Trans-Lux Storyteller Corporation (2) New Mexico 100 Trans-Lux Summit Corporation (2) Colorado 100 Trans-Lux Syndicated Programs Corporation New York 100 Trans-Lux Taos Corporation (2) New Mexico 100 Trans-Lux Theatres Corporation (1) Texas 100 Trans-Lux Valley Corporation (2) Arizona 100 (1) Wholly-owned subsidiary of Trans-Lux Investment Corporation. (2) Wholly-owned subsidiary of Trans-Lux Theatres Corporation. (3) Wholly-owned subsidiary of Trans-Lux Syndicated Programs Corporation. (4) Wholly-owned subsidiary of Trans-Lux Multimedia Corporation.
B. Other entities (accounted for in the consolidated financial statements under the equity method): MetroLux Theatres - A joint venture partnership in which Trans-Lux Loveland Corporation, listed in A. above as a wholly-owned subsidiary of the Registrant, is a 50% venturer. Metro Colorado Corporation owns the remaining 50% of the joint venture and is unrelated to the Registrant. EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS PART OF THE ANNUAL REPORT ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT ON FORM 10-K. 1,000 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 3,651 3,666 9,565 501 6,146 23,417 119,611 40,319 112,448 12,162 31,547 2,740 0 0 23,273 112,448 39,328 62,818 26,663 40,029 0 0 4,251 1,232 444 788 0 0 0 788 0.61 0.61
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