-----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, M+YjVc4DpbvQNwEKR7nDBjpoRvJRhTED+tHP7ibDBu6Gj3sowBEFlOnYH2BFHcto AZalLRgX7jTfKXjKRLihWA== 0000099106-03-000017.txt : 20030515 0000099106-03-000017.hdr.sgml : 20030515 20030515143750 ACCESSION NUMBER: 0000099106-03-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANS LUX CORP CENTRAL INDEX KEY: 0000099106 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS MANUFACTURING INDUSTRIES [3990] IRS NUMBER: 131394750 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02257 FILM NUMBER: 03703824 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-Q 1 mar0310q.txt MARCH 31, 2003 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2003 -------------- 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 - ---------------------------------------- ----------- (Address of principal executive offices) (Zip code) (203) 853-4321 -------------------------------------------------- (Registrant's telephone number, including area code) 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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes No X --- --- Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date. Date Class Shares Outstanding - ------- ------------------------------ ------------------ 5/14/03 Common Stock - $1.00 Par Value 973,243 5/14/03 Class B Stock - $1.00 Par Value 287,505 (Immediately convertible into a like number of shares of Common Stock.) TRANS-LUX CORPORATION AND SUBSIDIARIES Table of Contents Page No. -------- Part I - Financial Information Item 1. Consolidated Balance Sheets - March 31, 2003 and December 31, 2002 (unaudited) 1 Consolidated Statements of Operations - Three Months Ended March 31, 2003 and 2002 (unaudited) 2 Consolidated Statements of Cash Flows - Three Months Ended March 31, 2003 and 2002 (unaudited) 3 Notes to Consolidated Financial Statements (unaudited) 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3. Quantitative and Qualitative Disclosures about Market Risk 10 Item 4. Controls and Procedures 11 Part II - Other Information Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12 Certifications 13 Part I - Financial Information ------------------------------ TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited)
March 31 December 31 In thousands, except share data 2003 2002 - ---------------------------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 10,609 $ 8,270 Available-for-sale securities 557 522 Receivables, less allowance of $1,148 in 2003 and $1,009 in 2002 6,888 7,617 Unbilled receivables 1,245 966 Inventories 6,487 7,440 Prepaids and other 1,196 745 ------- ------- Total current assets 26,982 25,560 ------- ------- Rental equipment 89,396 88,374 Less accumulated depreciation 45,365 43,423 ------- ------- 44,031 44,951 ------- ------- Property, plant and equipment 41,413 47,427 Less accumulated depreciation and amortization 10,987 12,170 ------- ------- 30,426 35,257 ------- ------- Goodwill 1,035 1,264 Other assets 3,551 3,942 ------- ------- TOTAL ASSETS $106,025 $110,974 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,016 $ 2,754 Accrued liabilities 7,987 7,189 Current portion of long-term debt 2,974 3,763 ------- ------- Total current liabilities 12,977 13,706 ------- ------- Long-term debt: 7 1/2% convertible subordinated notes due 2006 30,177 30,177 9 1/2% subordinated debentures due 2012 1,057 1,057 Notes payable 31,135 35,975 ------- ------- 62,369 67,209 Deferred revenue, deposits and other 2,768 2,942 Deferred income taxes 4,597 4,092 ------- ------- Stockholders' equity: Capital stock Common - $1 par value - 5,500,000 shares authorized 2,452,900 shares issued in 2003 and 2002 2,453 2,453 Class B - $1 par value - 1,000,000 shares authorized 287,505 shares issued in 2003 and 2002 287 287 Additional paid-in-capital 13,901 13,901 Retained earnings 19,834 19,612 Accumulated other comprehensive loss (1,324) (1,391) ------- ------- 35,151 34,862 Less treasury stock - at cost - 1,479,688 shares in 2003 and 2002 (excludes additional 287,505 shares held in 2003 and 2002 for conversion of Class B stock) 11,837 11,837 ------- ------- Total stockholders' equity 23,314 23,025 ------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $106,025 $110,974 ======= ======= - ---------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these consolidated financial statements.
1 TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
THREE MONTHS ENDED MARCH 31 ------------------ In thousands, except per share data 2003 2002 - --------------------------------------------------------------------------------------------- Revenues: Equipment rentals and maintenance $ 5,019 $ 5,629 Equipment sales 7,364 8,119 Theatre receipts and other 3,107 3,414 ------ ------ Total revenues 15,490 17,162 ------ ------ Operating expenses: Cost of equipment rentals and maintenance 3,558 3,353 Cost of equipment sales 5,731 5,947 Cost of theatre receipts and other 2,320 2,528 ------ ------ Total operating expenses 11,609 11,828 ------ ------ Gross profit from operations 3,881 5,334 General and administrative expenses 4,038 4,268 Interest income 47 23 Interest expense (1,002) (1,172) Gain on sale of assets 1,578 - Other income - 15 ------ ------ Income (loss) before income taxes and income from joint venture 466 (68) Provision for income taxes 297 38 Income from joint venture 98 152 ------ ------ Net income $ 267 $ 46 ====== ====== Earnings per share - basic and diluted $ 0.21 $ 0.04 Average common shares outstanding - basic and diluted 1,261 1,261 Cash dividends per share: Common stock $ 0.035 $ 0.035 Class B stock $0.0315 $0.0315 - --------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these consolidated financial statements.
2 TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
THREE MONTHS ENDED MARCH 31 ----------------- In thousands 2003 2002 - --------------------------------------------------------------------------------------- Cash flows from operating activities Net income $ 267 $ 46 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,961 2,547 Income from joint venture (98) (152) Deferred income taxes 491 37 Gain on sale of assets (1,578) - Changes in operating assets and liabilities: Receivables (78) (605) Inventories 160 (255) Prepaids and other assets (530) 335 Accounts payable and accruals (211) (789) Deferred revenue, deposits and other (174) 59 ----- ----- Net cash provided by operating activities 1,210 1,223 ----- ----- Cash flows from investing activities Equipment manufactured for rental (1,022) (1,559) Purchases of property, plant and equipment (437) (157) Proceeds from joint venture 350 - Proceeds from sale of assets 3,757 - ----- ----- Net cash provided by (used in) investing activities 2,648 (1,716) ----- ----- Cash flows from financing activities Repayment of long-term debt (18,474) (1,533) Proceeds from long-term debt 17,000 - Cash dividends (45) (44) ----- ----- Net cash used in financing activities (1,519) (1,577) ----- ----- Net increase (decrease) in cash and cash equivalents 2,339 (2,070) Cash and cash equivalents at beginning of year 8,270 5,699 ----- ----- Cash and cash equivalents at end of period $10,609 $3,629 ====== ===== - --------------------------------------------------------------------------------------- Interest paid $ 422 $ 526 Interest received 52 34 Income taxes paid (refunded) (119) 229 - --------------------------------------------------------------------------------------- The accompanying notes are an integral part of these consolidated financial statements.
3 TRANS-LUX CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2003 (unaudited) Note 1 - Basis of Presentation Financial information included herein is unaudited, however, such information reflects all adjustments which are, in the opinion of management, necessary for the fair presentation of the consolidated financial statements for the interim periods. The results for the interim periods are not necessarily indicative of the results to be expected for the full year. It is suggested that the March 31, 2003 consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report and Form 10-K for the year ended December 31, 2002. Certain reclassifications of prior years' amounts have been made to conform to the current year's presentation. On January 1, 2002, the Company adopted the provisions of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). Under SFAS 142, goodwill and indefinite-lived intangible assets are no longer amortized, but are reviewed annually for impairment, or more frequently if indications of potential impairment exist. The Company performed the requisite transitional impairment tests for goodwill as of January 1, 2002, which indicated that there was no transitional impairment loss. The Company performed the annual impairment tests for goodwill as of October 1, 2002 and had determined that goodwill was not impaired as of that date. All other intangible assets continue to be amortized over their useful lives and are evaluated when indicators of impairment exist. During the three months ended March 31, 2003, the Company wrote off $229,000 of goodwill relating to the sale of assets (see Note 4). In addition, during the three months ended March 31, 2003, the Company paid $250,000 (the first of two installments) toward a $450,000 restrictive covenant agreement in Dillon Colorado, where the Company operates a six-plex theatre in the same community. The Company made the second installment of $200,000 during April 2003. In June 2002, the FASB issued Statement of Financial Accounting Standards No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" (SFAS 146). SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred and that the initial measurement of a liability be at fair value. SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of SFAS 146 did not have a material impact on the Company's financial statements and results of operations. In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN 45). FIN 45 requires that upon issuance of a guarantee, a guarantor must recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45 also requires additional disclosures by a guarantor in its interim and annual financial statements about the obligations associated with guarantees issued. The recognition provisions of FIN 45 are effective for any guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The Company records compensation expense for its stock-based employee compensation plans in accordance with the intrinsic-value method prescribed by APB Opinion No. 25, "Accounting for Stock Issued to Employees". Intrinsic value is the amount by which the market price of the underlying stock exceeds the exercise price of the stock option or award on the measurement date, generally the date of 4 grant. The Company's options are issued at fair market value, accordingly, no compensation cost has been recognized for its stock option plans. In December 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure" (SFAS 148), that amends Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based Compensation". The Company adopted the disclosure provisions of SFAS 148 at December 31, 2002. The following table illustrates the effect on net income and earnings per share for the three months ended March 31, 2003 and 2002 if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation:
March 31 March 31 In thousands, except per share data 2003 2002 - --------------------------------------------------------------------------- Net income, as reported $ 267 $ 46 Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax 10 3 --- -- Pro forma net income $ 257 $ 43 --- -- Earnings per share Basic and diluted, as reported $0.21 $0.04 ---- ---- Basic and diluted, pro forma $0.20 $0.03 ---- ----
Note 2 - Inventories Inventories consist of the following:
March 31 December 31 In thousands 2003 2002 - --------------------------------------------------------------- Raw materials and spare parts $4,434 $4,663 Work-in-progress 1,507 1,384 Finished goods 546 1,393 ----- ----- $6,487 $7,440 ===== =====
Note 3 - Long-Term Debt During the three months ended March 31, 2003, long-term debt, including the current portion, decreased $5.6 million, primarily as a result of assumption of $4.2 million in Industrial Revenue Bonds by the purchaser of the Company's custom sports business in Logan, Utah, (see Note 4), and other scheduled payments of long-term debt. On February 12, 2003, the Company completed a refinancing of its senior debt with two term loans totaling $17.0 million and a revolving credit facility of up to $5.0 million at variable interest rates ranging from LIBOR plus 1.75% to Prime plus 0.25% (4.25% at March 31, 2003) and maturing September 30, 2005. At March 31, 2003, the entire revolving credit facility was available as none had been drawn. The Credit Agreement requires an annual facility fee on the unused commitment of .30%, and requires compliance with certain financial covenants, which include a fixed charge coverage ratio of 1.0 to 1.0, a total funded debt ratio of 5.0 to 1.0, a leverage ratio of 3.0 to 1.0 and maintaining a tangible net worth of not less than $19.5 million. At March 31, 2003, the Company was in compliance with such financial covenants. Note 4 - Sale of Assets On March 28, 2003, the Company sold its custom sports business located in Logan, Utah for $7.9 million, 5 of which $3.7 million was paid in cash and $4.2 million was in assumption of two Industrial Revenue Bonds. The Company recorded a gain of approximately $745,000, net of tax, on the sale. As part of the sale, the Company recorded bonuses to certain continuing employees of $75,000, which was offset against the gain. As part of the asset purchase agreement, the Company provided standard representations and warranties with respect to the assets sold and guaranteed indemnification of up to $400,000, provided notification of the claim is made by the purchaser prior to December 30, 2003, and the Company would re-acquire any sold accounts receivable greater than 90 days old. The Company believes it will not incur any liability with respect to the guarantee, and accordingly does not believe the fair value of the guarantee is significant. As of May 13, 2003, the purchaser has not notified the Company of any claims relating to such guarantee. Note 5 - Reporting Comprehensive Income (Loss) The components of other comprehensive income (loss) are foreign currency translation adjustments relating to the foreign subsidiaries, unrealized holding gains or losses on the available-for-sale securities, and a minimum pension liability adjustment relating to the defined benefit pension plan. Total comprehensive income was $334,000 and $40,000 for the three months ended March 31, 2003 and 2002, respectively. Note 6 - Business Segment Data The Company evaluates segment performance and allocates resources based upon operating income. The Company's operations are managed in 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/Real Estate segment owns a chain of motion picture theatres in the western Mountain States, a national film booking service and income-producing real estate properties. 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 general and administrative items relate to costs that 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 months ended March 31, 2003 and 2002 is as follows:
In thousands 2003 2002 - -------------------------------------------------------------------------- Revenues: Indoor display $ 5,106 $ 5,687 Outdoor display 7,277 8,061 Entertainment/real estate 3,107 3,414 ------ ------ Total revenues $15,490 $17,162 ------ ------ Operating income (loss): Indoor display $ 988 $ 1,411 Outdoor display (521) 183 Entertainment/real estate 675 834 ------ ------ Total operating income $ 1,142 $ 2,428 Other income 1,578 15 Corporate general and administrative expenses (1,201) (1,210) Interest expense-net (955) (1,149) Income tax provision (297) (38) ------ ------ Net income $ 267 $ 46 ====== ======
6 Note 7 - Legal Proceedings and Claims The Company is subject to legal proceedings and claims, which arise in the ordinary course of its business. The Company is not a party to any pending legal proceedings and claims that it believes will have a material adverse effect on the consolidated financial position or operations of the Company. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Trans-Lux is a full service provider of integrated multimedia systems for today's communications environments. The essential elements of these systems are the real-time, programmable electronic information displays we manufacture, distribute and service. Designed to meet the evolving communications needs of both the indoor and outdoor markets, these displays are used primarily in applications for the financial, banking, gaming, corporate, transportation, entertainment and sports industries. In addition to its display business, the Company owns and operates a chain of motion picture theatres in the western Mountain States, as well as a national film booking service. The Company operates in three reportable segments: Indoor Display, Outdoor Display, and Entertainment/Real Estate. The Indoor Display segment includes worldwide revenues and related expenses from the rental, maintenance and sale of indoor displays. This segment includes the financial, gaming, government and corporate markets. The Outdoor Display segment includes worldwide revenues and related expenses from the rental, maintenance and sale of outdoor displays. Included in this segment are the custom sports (which the Company sold during the quarter), catalog sports, retail and commercial markets. The Entertainment/Real Estate segment includes the operations of the motion picture theatres in the western Mountain States, a national film booking service and income-producing real estate properties. Results of Operations Three Months Ended March 31, 2003 Compared to Three Months Ended March 31, 2002 Total revenues for the three months ended March 31, 2003 decreased 9.7% to $15.5 million from $17.2 million for the three months ended March 31, 2002. Indoor display revenues decreased $581,000 or 10.2%. Of this decrease, indoor display equipment rentals and maintenance revenues decreased $508,000 or 13.2%, primarily due to disconnects and non-renewals of equipment on rental and maintenance on existing contracts in the financial services market, and indoor display equipment sales decreased $73,000 or 4.0%, also primarily in the financial services market. The financial services market continues to be negatively impacted due to the consolidation within that industry resulting mainly from the current economic downturn. Outdoor display revenues decreased $784,000 or 9.7%. Of this decrease, outdoor display equipment sales decreased $683,000 or 10.9%, primarily in the custom outdoor sports business, which was sold during the quarter (see Note 4). Outdoor display equipment rentals and maintenance revenues decreased $101,000 or 5.6%, primarily due to the continued expected revenue decline in the outdoor equipment rentals and maintenance bases previously acquired. Entertainment/real estate revenues decreased $307,000 or 9.0%. This decrease is primarily from a decrease in overall admissions and concessions, mainly related to fewer high grossing films. The Company closed its older non-profitable Lake Dillon theatre at the end of January 2003 for a net payment of $34,000 to the landlord. In connection with its newer six-plex theatre in Dillon, Colorado, the Company entered into a 15-year non-compete agreement for $450,000, which was paid in installments during January and April 2003. 8 Total operating income for the three months ended March 31, 2003 decreased 52.9% to $1.1 million from $2.4 million for the three months ended March 31, 2002. Indoor display operating income decreased $423,000 or 30.0%, primarily as a result of the decrease in revenues in the financial services market. The cost of indoor displays represented 57.2% of related revenues in 2003 compared to 50.0% in 2002. The cost of indoor displays as a percentage of related revenues increased primarily due to the relationship between field service costs of equipment rentals and maintenance increasing and the revenues from indoor equipment rentals and maintenance decreasing. The Company continues to strategically address the field service costs, and recently consolidated its field service center from Norcross, Georgia to its Norwalk, Connecticut headquarters. In addition, the Company is evaluating its strategic objectives for its field service offices. Indoor display cost of equipment sales decreased $22,000 or 2.3%, primarily due to the decrease in volume. Indoor display cost of equipment rentals and maintenance increased $100,000 or 5.3%, largely due to an increase in depreciation expense. Indoor display general and administrative expenses decreased $235,000 or 16.4% due to continued reduction of certain overhead costs such as sales and marketing expenses. Outdoor display operating income decreased $704,000, primarily as a result of the continuing expected revenue decline in outdoor equipment rentals and maintenance bases from previous acquisitions and field service costs increasing not in relation to the reduction of the revenues from outdoor equipment rentals and maintenance. The cost of outdoor displays represented 87.5% of related revenues in 2003 compared to 80.1% in 2002. Outdoor display cost of equipment sales decreased $194,000 or 3.9%, principally due to the decrease in volume, offset by increased costs associated with the sale of the custom sports business (see Note 4). Outdoor display cost of equipment rentals and maintenance increased $105,000 or 7.2%, primarily due to an increase in field service costs. Outdoor display general and administrative expenses remained level. Cost of indoor and outdoor equipment rentals and maintenance includes field service expenses, plant repair costs, maintenance and depreciation. Entertainment/real estate operating income decreased $159,000 or 19.0%, primarily due to the decrease in revenues. The cost of entertainment/real estate represented 74.7% of related revenues in 2003 compared to 74.0% in 2002. Cost of entertainment/real estate, which includes film rental costs and depreciation expense, decreased $208,000 or 8.2%, due to the decrease in overall admissions. Entertainment/real estate general and administrative expenses remained level. Corporate general and administrative expenses decreased $9,000 or 0.7%, principally due to a positive impact of the effect of foreign currency rates of $344,000 in 2003 compared to $160,000 in 2002, continued reduction of certain overhead costs, offset by an increase in medical costs, general insurance costs and pension expense. Net interest expense decreased $194,000, which is primarily attributable to the decrease in variable interest rates in 2003 vs. 2002 and a decrease in long-term debt due to scheduled payments. The Company uses its revolving credit facility to meet its short-term working capital requirements, which at March 31, 2003 was fully available. The gain on sale of assets relates to the sale of the custom sports business (see Note 4). The income from joint venture relates to the operations of the theatre joint venture, MetroLux Theatres in Loveland, Colorado. The effective tax rate for the three months ended March 31, 2003 was 52.7% and 45.0% in 2002. The increase in the rate for 2003 is primarily from the gain on the sale of the custom sports business and non deductibility of goodwill written off in connection with the sale (see Note 4). 9 Liquidity and Capital Resources The regular quarterly cash dividend for the first quarter of 2003 of $0.035 per share on the Company's Common Stock and $0.0315 per share on the Company's Class B Stock was declared by the Board of Directors on March 17, 2003 payable to stockholders of record as of April 10, 2003 and was paid April 23, 2003. On February 12, 2003, the Company refinanced its senior debt. The refinancing consisted of two term loans totaling $17.0 million and a revolving line of credit of up to $5.0 million at variable interest rates ranging from LIBOR plus 1.75% to Prime plus 0.25% and matures September 30, 2005. At March 31, 2003, $17.0 million was outstanding under the term loans and the entire revolving credit facility was available as none had been drawn. The Credit Agreement contains certain financial covenants which include a fixed charge coverage ratio of 1.0 to 1.0, a total funded ratio of 5.0 to 1.0, a leverage ratio of 3.0 to 1.0 and maintaining a tangible net worth of not less than $19.5 million. At March 31, 2003 the Company was in compliance with such financial covenants. Payments of long-term debt due, including the $17.0 million term loans and the 7.5% convertible subordinated notes that mature December 1, 2006, and the future minimum lease payments due under operating leases for the remainder of 2003 and the next four years are as follows: Remainder of In thousands 2003 2004 2005 2006 2007 - ------------ ---- ---- ---- ---- ---- Long-term debt $2,229 $2,982 $14,781 $31,307 $1,135 Operating leases 387 449 424 295 118 ----- ----- ------ ------ ----- Total $2,616 $3,431 $15,205 $31,602 $1,253 ===== ===== ====== ====== ===== Cash and cash equivalents increased $2.3 million for the three months ended March 31, 2003 compared to a decrease of $2.1 million in 2002. The increase in 2003 is primarily attributable to cash received on the sale of the custom sports business, offset by investment in rental equipment and a repayment of long-term debt. The decrease in 2002 was primarily attributable to cash utilized for investment in rental equipment and a repayment of long-term debt. The Company reduced its long-term debt, including the current portion, during the three months ended March 31, 2003 by $5.6 million, principally from the assumption of $4.2 million of Industrial Revenue Bonds by the purchaser of the custom sports business and scheduled payments of long-term debt. Safe Harbor Statement under the Private Securities Litigation 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 share through competition, introduction of competing products by others, pressure on prices from competition or purchasers of the Company's products, interest rate and foreign exchange fluctuations, terrorist acts and war. Item 3. Quantitative and Qualitative Disclosures about Market Risk The Company is subject to interest rate risk on its long-term debt. The Company manages its exposure to changes in interest rates by the use of variable and fixed interest rate debt. In addition, the Company is exposed to foreign currency exchange rate risk mainly as a result of investments in its Australian and Canadian subsidiaries. The Company may, from time to time, enter into derivative contracts to manage its 10 interest risk. The Company does not enter into derivatives for trading or speculative purposes. At March 31, 2003, the Company was not involved in any derivative financial instruments. A one percentage point change in interest rates would result in an annual interest expense fluctuation of approximately $323,000. A 10% change in the Australian and Canadian dollar relative to the U.S. dollar would result in a currency exchange expense fluctuation of approximately $364,000. The fair value is based on dealer quotes, considering current exchange rates. Item 4. Controls and Procedures (a) Evaluation of disclosure controls and procedures. The Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of a date within 90 days of the filing date of this quarterly report. The Company's disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that are filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Based on this evaluation, Michael R. Mulcahy, the Company's President and Co-Chief Executive Officer, Thomas Brandt, the Company's Executive Vice President and Co-Chief Executive Officer, and Angela D. Toppi, the Company's Executive Vice President and Chief Financial Officer, have concluded that these controls and procedures are effective. (b) Changes in internal controls. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of the Company's evaluation, and there were no significant deficiencies or material weaknesses requiring corrective action. Part II - Other Information --------------------------- Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10(a) First Amendment to Commercial Loan and Security Agreement and Waiver Agreement dated May 13, 2003 among Trans-Lux Corporation, People's Bank as Agent and People's Bank and The Bank of New York. 99.1 Certification of Michael R. Mulcahy, President and Co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.2 Certification of Thomas Brandt, Executive Vice President and Co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.3 Certification of Angela D. Toppi, Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002 11 (b) Reports on Form 8-K. During the quarter for which this report on Form 10-Q is filed, the registrant filed the following: Form 8-K dated February 13, 2003, pertaining to the completion of the Company's senior debt refinancing with People's Bank and The Bank of New York. Form 8-K dated March 27, 2003, press release pertaining to the financial performance for the fourth quarter of 2002 and annual results. Form 8-K dated March 28, 2003, pertaining to the sale of the custom sports business to Barco, Inc. for cash and assumption of debt. SIGNATURES Pursuant to the requirements 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 (Registrant) Date: May 15, 2003 by /s/ Angela D. Toppi ---------------------- Angela D. Toppi Executive Vice President and Chief Financial Officer 12 CERTIFICATIONS I, Michael R. Mulcahy, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Trans-Lux Corporation, the "registrant"; 2. Based on my knowledge, the quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements and other financial information included in this quarterly report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have; a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function); a) all significant deficiencies in the design or operation of the internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 13 6. The registrant's other certifying officers and I have indicated in this quarterly report there were no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, and there were no significant deficiencies or material weaknesses requiring corrective action. /s/ Michael R. Mulcahy ---------------------------------------- Date: May 15, 2003 President and Co-Chief Executive Officer Michael R. Mulcahy 14 CERTIFICATIONS I, Thomas Brandt, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Trans-Lux Corporation, the "registrant"; 2. Based on my knowledge, the quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements and other financial information included in this quarterly report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have; a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function); a) all significant deficiencies in the design or operation of the internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 15 6. The registrant's other certifying officers and I have indicated in this quarterly report there were no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, and there were no significant deficiencies or material weaknesses requiring corrective action. /s/ Thomas Brandt ----------------------------------- Date: May 15, 2003 Executive Vice President and Co-Chief Executive Officer Thomas Brandt 16 CERTIFICATIONS I, Angela D. Toppi certify, that: 1. I have reviewed this quarterly report on Form 10-Q of Trans-Lux Corporation, the "registrant"; 2. Based on my knowledge, the quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements and other financial information included in this quarterly report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have; a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function); a) all significant deficiencies in the design or operation of the internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 17 6. The registrant's other certifying officers and I have indicated in this quarterly report there were no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, and there were no significant deficiencies or material weaknesses requiring corrective action. /s/ Angela D. Toppi ----------------------------------- Date: May 15, 2003 Executive Vice President and Chief Financial Officer Angela D. Toppi 18 EX-10 3 ex10303q.txt EXHIBIT 10 AMENDMENT TO LOAN AGREEMENT Exhibit 10(a) FIRST AMENDMENT TO COMMERCIAL LOAN AND SECURITY AGREEMENT AND WAIVER AGREEMENT THIS FIRST AMENDMENT AND WAIVER AGREEMENT (the "Amendment"), dated May 13, 2003 is entered into by and among TRANS-LUX CORPORATION, a Delaware corporation (the "Borrower"), PEOPLE'S BANK ("People's") and THE BANK OF NEW YORK ("BNY" and together with People's and their respective successors and assigns, the "Lenders" and each individually a "Lender") and PEOPLE'S BANK, a Connecticut state chartered banking corporation with an office at 350 Bedford Street, Stamford, Connecticut 06901, as agent for the Lenders, (hereinafter referred to as the "Agent"). Background ---------- A. Reference is made to that certain Commercial Loan and Security Agreement, dated February 12, 2003, by and among the Borrower, Lenders and the Agent (as the same may be amended, supplemented or otherwise modified from time to time, the "Loan Agreement"), pursuant to which the Lenders agreed to make loans to, and otherwise extend credit for the benefit and/or account of, the Borrower in the amounts and subject to the terms and conditions set forth in the Loan Agreement. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement. B. Subsequent to the execution of the Loan Agreement, Trans-Lux West Corporation ("Seller"), a Secured Guarantor under the Loan Agreement, agreed to sell certain of its assets in connection with the sale of its Custom Sports Division (the "Sale") to Barco, Inc. (the "Purchaser"). The Sale had been listed on Schedule 6.6 to the Loan Agreement, and was authorized by the Lenders. C. On March 28, 2003 Borrower entered into that certain Asset Purchase Agreement (the "Asset Purchase Agreement") by and among Borrower, Seller, Purchaser and Barco, NV, pursuant to which Borrower agreed under Section 2.1.4 and Section 10.5 of the Asset Purchase Agreement to guaranty certain payment obligations of Seller (the "Guarantor Obligations"). Borrower simultaneously executed that certain Guaranty of even date therewith by and among Borrower, Seller and Barco, Inc. guaranteeing the Guarantor Obligations. D. Section 6.2 of the Loan Agreement provides that Borrower shall not, without the consent of Lenders, "[C]reate, incur, assume, or suffer to exist any recourse or nonrecourse Indebtedness." Section 6.7 of the Loan Agreement provides that Borrower shall not, without the consent of Lenders, "[A]ssume, guarantee, endorse or otherwise become liable upon the obligations of any Person, firm or corporation..." E. Borrower has requested that Lenders, among other things, (i) amend the Loan Agreement to reflect certain changes as a result of the Sale, (ii) correct an error in a payment date of the Term Loans, and (iii) waive the Events of Default arising from Borrower's guaranty described in paragraph C above. F. Lenders have agreed to Borrower's request, subject to the terms and conditions contained in this Agreement. Agreement --------- In consideration of the Background, which is incorporated by this reference, other good and valuable consideration, the receipt and sufficiency of which is acknowledged, and the mutual promises and covenants contained in this Amendment, the parties, intending to be bound legally, agree as follows: 1. (a) Amended and Restated Term Loan Notes. Simultaneously with the execution and delivery of this Amendment, Borrower is executing and delivering to Lenders (i) the $4,666,666.67 Amended and Restated Term Loan A Promissory Note payable to the order of People's in the form of Exhibit A-1 attached hereto, and (ii) the $2,333,333.33 Amended and Restated Term Loan A Promissory Note payable to the order of BNY in the form of Exhibit A-2 attached hereto (collectively, the "Amended Term Loan A Notes"), (iii) the $6,666,666.67 Amended and Restated Term Loan B Promissory Note payable to the order of People's in the form of Exhibit B-1 attached hereto, and (iv) the $3,333,333.33 Amended and Restated Term Loan B Promissory Note in the form of Exhibit B-2 attached hereto (collectively, the "Amended Term Loan B Notes") (The Amended Term Loan A Notes and the Amended Term Loan B Notes are hereinafter referred to as the "Amended Term Loan Notes"). The Lenders shall return to Borrower the original $4,666,666.67 Term Loan A Promissory Note, the original $2,333,333.33 Term Loan A Promissory Note, the original $6,666,666.67 Term Loan B Promissory Note and the original $3,333,333.33 Term Loan B Promissory Note, each marked "Replaced." All references in the Loan Agreement to Term Loan A Notes shall be deleted and replaced with references to the Amended Term Loan A Notes, and all references in the Loan Agreement to the Term Loan B Notes shall be deleted and replaced with references to the Amended Term Loan B Notes. (b) Borrower shall pay interest on the outstanding principal balance of the Amended Term Loan Notes and shall repay the indebtedness evidenced by the Amended Term Loan Notes in accordance with their terms. (c) Borrower's obligations under the Amended Term Loan Notes shall continue to be secured by the Collateral. 2. Amendments. All of the other provisions of the Loan Agreement shall remain in full force and effect except as follows: 2 (a) Section 1.1 (Definitions and Accounting Terms) of the Loan Agreement is modified such that the definition of "Federal Funds Rate" is hereby deleted and the following is substituted therefor: "Federal Funds Rate" means, for any day, the rate per annum (rounded, if necessary, to the next greater 1/16 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by the Federal funds brokers, as published for such day (or if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or if such rate is not so published for any day which is a Business Day, the average of such quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent. (b) Section 1.1 (Definitions and Accounting Terms) of the Loan Agreement is further modified such that the following definitions are hereby deleted in their entirety: (i) "Subordinated Debentures" (ii) "Subordinated Notes" (c) Section 1.1 (Definitions and Accounting Terms) of the Loan Agreement is further modified such that the definition of "Subordinated Debt" is hereby deleted and the following is substituted therefor: "Subordinated Debt" has the meaning set forth in Section 7.5(h). (d) Section 2.2A (Term Loan A) of the Loan Agreement is modified such that paragraph (c) is hereby deleted in its entirety and the following is substituted therefor: (c) The Borrower shall make equal quarterly payments of principal in respect to Term Loan A plus accrued interest in accordance with a fifteen year amortization schedule, commencing April 1, 2003 and continuing on the first Business Day of each succeeding fiscal quarter of the Borrower thereafter through and including July 1, 2005 until the outstanding principal amount of Term Loan A, together with all interest accrued thereon, has been fully paid, except that if not sooner paid, the principal amount, together with all accrued but unpaid interest thereon, shall be due and payable on the Maturity Date. (e) Section 2.2B (Term Loan B) of the Loan Agreement is modified such that paragraph (c) is hereby deleted in its entirety and the following is substituted therefor: (c) Commencing April 1, 2003 and continuing on the First Business Day of each succeeding fiscal quarter of the Borrower thereafter through and including July 1, 2005, the Borrower shall make equal quarterly payments of principal, plus accrued interest, in 3 accordance with a seven year amortization schedule, until the outstanding principal amount of Term Loan B, together with all interest accrued thereon, has been fully paid, except that if not sooner paid, the principal amount, together with all accrued but unpaid interest thereon, shall be due and payable on the Maturity Date. (f) Section 7.5 (Certain Financial Terms) of the Loan Agreement is modified such that paragraph (h) is hereby deleted and the following is substituted therefor: (h) "Subordinated Debt" means Indebtedness of the Borrower which is subordinated in payment and priority to the Debt upon terms and conditions and pursuant to subordination agreements satisfactory to the Lenders in their sole discretion. (g) Section 8.4 (Lenders' Appointment as Attorney-in-fact) of the Loan Agreement is modified such that the entire section is hereby deleted and the following is substituted therefor: 8.4 Agent's Appointment as Attorney-in-fact. On the Closing Date the Borrower shall execute and deliver a Power of Attorney in the form attached as Exhibit G. The power of attorney granted pursuant to the Power of Attorney and all powers granted under any Loan Documents are powers coupled with an interest and shall be irrevocable until the Maturity Date. The powers conferred on the Agent for the Lenders under the Power of Attorney are solely to protect Lenders' interests in the Collateral and shall not impose any duty upon Agent or any Lender to exercise any such powers. Agent agrees and promises that (a) it shall not exercise any power or authority granted under the Power of Attorney unless an Event of Default has occurred and is continuing, (b) Agent shall only exercise the powers granted under the Power of Attorney in respect of Collateral, provided, except as otherwise required by applicable law, Agent and Lenders shall not have any duty as to any Collateral, and Agent and Lenders shall be accountable only for amounts that Agent actually receives as a result of the exercise of such powers. NONE OF AGENT, LENDERS OR THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO THE BORROWER FOR ANY ACT OR FAILURE TO ACT PURSUANT TO THE POWERS GRANTED UNDER THE POWER OF ATTORNEY OR OTHERWISE, EXCEPT FOR THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES. The Borrower also hereby authorizes Agent and any Lender to file 4 any financing or continuation statement without the signature of the Borrower to the extent permitted by applicable law. 3. Waiver. Borrower acknowledges that the actions in connection with the Sale described in Paragraph C of the Background hereof constitute Events of Default. Lenders hereby waive the Events of Default arising solely out of the Borrower's failure to comply with the negative covenants set forth in Sections 6.2 and 6.7 of the Loan Agreement by guaranteeing the payment and performance obligations of Seller pursuant to the Asset Purchase Agreement and the Guaranty. 4. Reservation of Rights. Lenders hereby reserve all of their rights and remedies under the Loan Agreement and under applicable law with respect to any Event of Default other than the Events of Default set forth in Paragraph 3 above, or as otherwise expressly set forth herein. No action or inaction on the part of the Lenders or Agent shall constitute a waiver of any Event of Default or of the Lenders' rights and remedies in respect thereof other than as expressly set forth herein. The granting of such waiver shall not impose or imply an obligation on the Lenders to grant a waiver on any future occasion. 5. Representations and Warranties. All of the representations, warranties and covenants contained in the Loan Documents are true and correct on and as of the date hereof, are incorporated herein by this reference, and are remade. Without limiting the generality of the foregoing, the Borrower specifically represents, warrants and covenants that: (a) Loan Balances. As of the close of business on May 8, 2003 (i) the principal balance outstanding of the Revolving Loans is $0, plus accrued and unpaid interest, (ii) the principal balance outstanding of Term Loan A is $6,883,333.33, plus accrued and unpaid interest, (iii) the principal balance outstanding of Term Loan B is $9,642,857.14, plus accrued and unpaid interest, and (iv) the outstanding amount due under all Letters of Credit issued for the account of the Borrower is $0. All amounts set forth in the preceding sentence and all costs and expenses thereon are due under the Loan Agreement without defense, off-set or counterclaim. Borrower acknowledges that it is legally, validly and enforceably liable to Lenders for all costs and expenses of collection and attorneys' fees related to or in any way arising out of this Amendment, the Loan Agreement as amended hereby, the Amended Term Loan Notes, and the First Amendment to Guarantor Security Agreement referred to in Paragraph 6(c) hereof, and that Borrower has no claims, demands or rights of set-off against Lenders in connection with the Loans or the Letters of Credit. Borrower further acknowledges that all indebtedness, liabilities and obligations of Borrower to Lenders, whenever and however arising including, without limitation, the Loans, is secured by a first lien on and security interest in the Collateral. Borrower further acknowledges that in accordance with the terms of the Loan Agreement, Borrower may borrow, repay and reborrow revolving loan funds, and accordingly the principal balance of the Revolving Loans may increase or decrease from time to time. (b) No Default. Except as set forth in Paragraph 3 above, neither Borrower nor Seller is in default under the Loan Documents. No event has occurred which would constitute a Default or an Event of Default. 5 (c) No Liquidation. There are no liquidation or dissolution proceedings pending or threatened against Borrower or any Secured Guarantor and no other event has occurred which affects or threatens the corporate existence of Borrower or any Secured Guarantor. (d) Advised by Counsel. Borrower acknowledges that (i) it has been advised by counsel in the negotiation, execution and delivery of this Amendment, (ii) it has made an independent decision to enter into this Amendment without reliance on any representation, warranty, covenant or undertaking by Agent or Lenders, (iii) Lenders have no fiduciary obligation toward Borrower with respect to this Amendment or the Loan Documents, (iv) the relationship between Borrower and Lenders pursuant to this Amendment and the Loan Documents is and shall be solely that of debtor and creditors, respectively, and (v) it understands the meaning and legal effect of this Amendment. (e) No Adverse Developments. There has not been any change in the business or financial condition of Borrower since February 12, 2003 which would have a Material Adverse Effect or adversely impair the ability of Borrower to comply with its obligations under the Loan Documents, as amended. (f) No Litigation. Except as disclosed on Schedule 4.6 to the Loan Agreement, there are no pending, or to Borrower's knowledge threatened, proceedings before any court, Governmental Authority, board of arbitration, or arbitrator to which Borrower or any Guarantor is a party and which would materially and adversely affect the transactions contemplated by this Amendment or the Loan Documents or materially and adversely affect Borrower's ability to conduct its business. (g) No Conflict. The execution and delivery of this Amendment, the consummation of the transactions contemplated herein, and the fulfillment of or compliance with the terms and conditions of this Amendment are not prevented or limited by, and do not conflict with or result in a breach of the terms, conditions or provisions of Borrower's Certificate of Incorporation or By-Laws, any law, rule, regulation, judgment, order or decree applicable to or binding on the Borrower or any Guarantor or any evidence of indebtedness, agreement or instrument of any nature to which Borrower or any Guarantor is now a party or by which Borrower or any Guarantor is bound, nor constitute a default under any of the foregoing. (h) No Violation of Law. To the best of its knowledge, neither the Borrower nor any Guarantor is in violation of any federal, state or local law, regulation or order, which violation would have a Material Adverse Effect and Borrower has not received any notice of any such violation. (i) Corporate Authority. The Borrower has full corporate power and authority to enter into and perform its obligations under this Amendment, the Loan Agreement as amended hereby and the Amended Term Loan Notes, and to incur the obligations provided for herein and therein, all of which have been duly authorized by all necessary and proper corporate 6 action. No other consent or approval, or the taking of any other action in respect of shareholders, members or any public authority, is required as a condition to the validity or enforceability of this Amendment, the Loan Agreement as amended hereby, the Amended Term Loan Notes or any of the other Loan Documents. 6. Conditions Precedent. Lenders' obligations hereunder are subject to the satisfaction as of the date of this Amendment of each of the following conditions precedent which shall be in form, scope and substance satisfactory to Lenders and their counsel: (a) Evidence of Corporate Action. Lenders shall have received certified copies of all Board of Director resolutions adopted by Borrower to authorize the execution, delivery and performance of this Amendment, together with copies of all amendments to Borrower's Certificate of Incorporation and By-Laws adopted since February 12, 2003, and such other papers as Agent or its counsel may reasonably require. (b) Amendment and Waiver Fee. In consideration for entering into this Amendment, the Borrower shall have paid to the Agent for the benefit of Lenders, upon execution of this Amendment, a fee in the amount of $27,500.00. (c) First Amendment to Guarantor Security Agreement. Lenders shall have received an executed First Amendment to Guarantor Security Agreement of even date herewith from the Secured Guarantors, amending the description of collateral securing the Loans. (d) Amended Term Loan Notes. Lenders shall have received the Amended Term Loan Notes duly executed and drawn to each Lender's respective order as appropriate. (e) Legal Fees. Borrower shall have reimbursed Agent for the reasonable legal fees of Shipman & Goodwin LLP, counsel to Agent, in connection with the negotiation, review, execution and delivery of all of the documents prepared with respect to the transactions contemplated herein, plus related disbursements. (f) Certificate of Qualification To Do Business. Lenders shall have received a current Certificate of Qualification to Do Business as a foreign corporation for Seller from the Secretary of State of Iowa. (g) Other. Borrower shall have delivered to Lenders such other documents as Agent or its counsel reasonably require. 7. Notices. All notices, requests, consents, demands and other communications hereunder shall be in writing and shall be mailed by registered or certified first class mail or delivered by an overnight courier to the respective parties to this Amendment as set forth in the Loan Agreement. 8. Governing Law. This Amendment shall be governed and controlled by the internal laws of the State of Connecticut. 7 9. Amendment and Restatement. Upon the execution of this Amendment, the Loan Agreement and the other Loan Documents are restated to the extent that this Amendment restates them and are amended to the extent that this Amendment amends them. Except as specifically amended by the terms of this Amendment, the Amended Term Loan Notes or the First Amendment to Guarantor Security Agreement, all terms and conditions set forth in the Loan Documents, together with all schedules and exhibits attached thereto, shall remain in full force and effect. This Amendment, to the extent that it is inconsistent with the Loan Documents, supersedes the Loan Documents and any and all prior written or oral amendments of the Loan Documents. 10. Waiver of Prejudgment Remedy. THE BORROWER ACKNOWLEDGES AND AGREES THAT THE TRANSACTIONS ARE COMMERCIAL TRANSACTIONS AND IT HEREBY WAIVES ANY RIGHT TO NOTICE AND HEARING AS MAY BE ALLOWED UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, OR AS OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY AND PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED THE COMPLAINT SETS FORTH A COPY OF THE WAIVER AND WAIVES ANY CLAIM IN TORT, CONTRACT OR OTHERWISE AGAINST LENDERS' ATTORNEYS WHICH MAY ARISE OUT OF SUCH ISSUANCE OF A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER. FURTHER, TO THE EXTENT ALLOWED UNDER APPLICABLE LAW, BORROWER HEREBY WAIVES DEMAND, PRESENTMENT FOR PAYMENT, PROTEST, NOTICE OF PROTEST, NOTICE OF DISHONOR, DILIGENCE IN COLLECTION, NOTICE OF NONPAYMENT OF ANY NOTE AND ANY AND ALL NOTICES OF A LIKE NATURE. THE BORROWER ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY AND WITHOUT DURESS, AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS. 11. Waiver of Jury Trial and Consequential Damages. (a) THE BORROWER AND THE LENDERS EACH HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO TRIAL BY JURY IN ANY COURT OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (1) ARISING UNDER THIS AMENDMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AMENDMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND THE BORROWER AND THE LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THE AGENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS 8 SECTION 10(a) WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH OF THEM TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY. THE BORROWER AND THE LENDERS EACH ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY AND WITHOUT DURESS, AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS. (b) NONE OF THE AGENT, ANY LENDER, BORROWER, OR ANY AGENT OR ATTORNEY OF EITHER OF THEM SHALL BE LIABLE TO ANY OF THE OTHERS FOR PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING FROM ANY BREACH OF CONTRACT, TORT, OR OTHER WRONG RELATING TO THE ESTABLISHMENT, ADMINISTRATION, OR COLLECTION OF THE OBLIGATIONS RELATING IN ANY WAY TO THIS AMENDMENT, THE NOTES, OR ANY OF THE OTHER LOAN DOCUMENTS, OR THE ACTION OR INACTION OF ANY OF SUCH PERSONS UNDER ANY ONE OR MORE HEREOF OR THEREOF. (c) IN THE EVENT THE AGENT SEEKS TO TAKE POSSESSION OF ANY OR ALL OF THE COLLATERAL BY COURT PROCESS OR OTHER METHOD AVAILABLE UNDER THE LAW, BORROWER IRREVOCABLY WAIVES ANY BOND AND ANY SURETY OR SECURITY RELATING THERETO REQUIRED BY ANY STATUTE, COURT RULE OR OTHERWISE AS AN INCIDENT TO SUCH POSSESSION, AND WAIVES ANY DEMAND FOR POSSESSION PRIOR TO THE COMMENCEMENT OF ANY SUIT OR ACTION TO RECOVER WITH RESPECT THERETO. BORROWER FURTHER WAIVES THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS. [Signature Page to Follow] 9 IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date first written above. BORROWER: TRANS-LUX CORPORATION By:/s/ Angela D. Toppi -------------------------------- Angela D. Toppi Its: Executive Vice President AGENT: PEOPLE'S BANK By:/s/ Martin Anderson -------------------------------- Martin Anderson Its: Vice President LENDERS: THE BANK OF NEW YORK By:/s/ J. Scott Bognar -------------------------------- J. Scott Bognar Its: Vice President PEOPLE'S BANK By:/s/ Martin Anderson -------------------------------- Martin Anderson Its: Vice President 10 EX-99 4 ex990303.txt EXHIBIT 99 CERTIFICATIONS EXHIBIT 99.1 CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Trans-Lux Corporation (the "Company") for the period ended March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Michael R. Mulcahy, President and Co-Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. A signed original of this written statement required by Section 906 has been provided to Trans-Lux Corporation and will be retained by Trans-Lux Corporation and furnished to the Securities and Exchange Commission or its staff upon request. This Certification accompanies this Form 10-Q and shall not be treated as having been filed as part of this Form 10-Q. /s/ Michael R. Mulcahy ---------------------------------------- Date: May 15, 2003 President and Co-Chief Executive Officer Michael R. Mulcahy EXHIBIT 99.2 CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Trans-Lux Corporation (the "Company") for the period ended March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Thomas Brandt, Executive Vice President and Co-Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. A signed original of this written statement required by Section 906 has been provided to Trans-Lux Corporation and will be retained by Trans-Lux Corporation and furnished to the Securities and Exchange Commission or its staff upon request. This Certification accompanies this Form 10-Q and shall not be treated as having been filed as part of this Form 10-Q. /s/ Thomas Brandt ---------------------------------- Date: May 15, 2003 Executive Vice President and Co-Chief Executive Officer Thomas Brandt EXHIBIT 99.3 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Trans-Lux Corporation (the "Company") for the period ended March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Angela D. Toppi, Executive Vice President and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. A signed original of this written statement required by Section 906 has been provided to Trans-Lux Corporation and will be retained by Trans-Lux Corporation and furnished to the Securities and Exchange Commission or its staff upon request. This Certification accompanies this Form 10-Q and shall not be treated as having been filed as part of this Form 10-Q. /s/ Angela D. Toppi ----------------------------------- Date: May 15, 2003 Executive Vice President and Chief Financial Officer Angela D. Toppi -----END PRIVACY-ENHANCED MESSAGE-----