-----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, B0Zo1RLz5UOpKr0ZrJ19H2TW1YHjkM2+JjQcuNZF1sNPlwC+I/FIVyyo1wKDZhcn iKQTmNZPgZxbYhM3XiYDJA== 0000099106-05-000024.txt : 20050513 0000099106-05-000024.hdr.sgml : 20050513 20050513134631 ACCESSION NUMBER: 0000099106-05-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20050331 FILED AS OF DATE: 20050513 DATE AS OF CHANGE: 20050513 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: 05828059 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 tlx0305q.txt TRANS-LUX 10Q FOR PERIOD END 03/31/05 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, 2005 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 - -------- ------------------------------- ------------------ 05/12/05 Common Stock - $1.00 Par Value 973,285 05/12/05 Class B Stock - $1.00 Par Value 287,463 (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 (unaudited) Item 1. Consolidated Balance Sheets - March 31, 2005 and December 31, 2004 (audited) 1 Consolidated Statements of Operations - Three Months Ended March 31, 2005 and 2004 2 Consolidated Statements of Cash Flows - Three Months Ended March 31, 2005 and 2004 3 Notes to Consolidated Condensed Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 3. Quantitative and Qualitative Disclosures about Market Risk 12 Item 4. Controls and Procedures 13 Part II - Other Information Item 5. Other Information 13 Item 6. Exhibits 13 Signatures 14 Exhibits
Part I - Financial Information ------------------------------ TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited) March 31 December 31 In thousands, except share data 2005 2004 - ---------------------------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $11,203 $ 12,398 Available-for-sale securities 446 388 Receivables, less allowance of $856 - 2005 and $711 - 2004 5,802 5,989 Unbilled receivables 732 585 Inventories 6,801 6,565 Prepaids and other 765 534 ------- -------- Total current assets 25,749 26,459 ------- -------- Rental equipment 91,917 90,938 Less accumulated depreciation 54,488 52,538 ------- -------- 37,429 38,400 ------- -------- Property, plant and equipment 38,075 37,747 Less accumulated depreciation and amortization 9,160 8,787 ------- -------- 28,915 28,960 Goodwill 1,004 1,004 Other assets 6,267 6,291 ------- -------- TOTAL ASSETS $99,364 $101,114 ======= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,038 $ 2,413 Accrued liabilities 6,345 7,353 Current portion of long-term debt 2,078 1,744 ------- -------- Total current liabilities 10,461 11,510 ------- -------- Long-term debt: 7 1/2% convertible subordinated notes due 2006 12,309 12,309 8 1/4% limited convertible senior subordinated notes due 2012 17,868 17,868 9 1/2% subordinated debentures due 2012 1,057 1,057 Notes payable 25,047 25,562 ------- -------- 56,281 56,796 Deferred credits, deposits and other 4,521 3,959 Deferred income taxes 3,993 4,244 Stockholders' equity: Capital stock Common - $1 par value - 5,500,000 shares authorized, 2,452,942 shares issued in 2005 and 2004 2,453 2,453 Class B - $1 par value - 1,000,000 shares authorized, 287,463 shares issued in 2005 and 2004 287 287 Additional paid-in-capital 13,901 13,901 Retained earnings 20,386 20,852 Accumulated other comprehensive loss (1,081) (1,050) ------- -------- 35,946 36,443 Less treasury stock - at cost - 1,479,714 shares in 2005 and 2004 (excludes additional 287,463 shares held in 2005 and 2004 for conversion of Class B stock) 11,838 11,838 ------- -------- Total stockholders' equity 24,108 24,605 ------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $99,364 $101,114 ======= ======== 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 2005 2004 - --------------------------------------------------------------------------------- Revenues: Equipment rentals and maintenance $ 3,775 $ 4,248 Equipment sales 4,813 4,860 Theatre receipts and other 3,061 3,221 ------- ------- Total revenues 11,649 12,329 ------- ------- Operating expenses: Cost of equipment rentals and maintenance 3,045 3,151 Cost of equipment sales 3,267 3,255 Cost of theatre receipts and other 2,200 2,298 ------- ------- Total operating expenses 8,512 8,704 ------- ------- Gross profit from operations 3,137 3,625 General and administrative expenses 2,990 2,812 Interest income 46 33 Interest expense (992) (948) Other income 25 12 ------- ------- Loss from continuing operations before income taxes, income from joint venture and discontinued operation (774) (90) Provision (benefit) for income taxes (262) 19 Income from joint venture 90 132 ------- ------- Income (loss) from continuing operations (422) 23 Income from discontinued operation, net of income taxes - 15 ------- ------- Net income (loss) $ (422) $ 38 ======= ======= Earnings (loss) per share - basic and diluted: Continuing operations $ (0.33) $ 0.02 Discontinued operation - 0.01 ------- ------- Total earnings (loss) per share - basic and diluted $ (0.33) $ 0.03 ======= ======= 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 2005 2004 - --------------------------------------------------------------------------------------------------------- Cash flows from operating activities Net income (loss) $ (422) $ 38 Income from discontinued operation - 15 ------- ------- Income (loss) from continuing operations (422) 23 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,396 2,444 Income from joint venture (90) (132) Deferred income taxes (240) 295 Gain on sale of available-for-sale securities (1) (11) Changes in operating assets and liabilities: Receivables 40 (922) Inventories (236) 480 Prepaids and other assets (190) (188) Accounts payable and accruals (1,399) (161) Deferred credits, deposits and other 562 572 ------- ------- Net cash provided by operating activities 420 2,400 ------- ------- Cash flows from investing activities Equipment manufactured for rental (979) (795) Purchases of property, plant and equipment (328) (976) Purchases of available-for-sale securities (114) (239) Proceeds from sale of available-for-sale securities 31 100 ------- ------- Net cash used in investing activities (1,390) (1,910) ------- ------- Cash flows from financing activities Proceeds from long-term debt 50 870 Payments of long-term debt (231) (279) Cash dividends (44) (45) ------- ------- Net cash provided by (used in) financing activities (225) 546 ------- ------- Net cash used in discontinued operation - (160) ------- ------- Net increase (decrease) in cash and cash equivalents (1,195) 876 Cash and cash equivalents at beginning of year 12,398 12,022 ------- ------- Cash and cash equivalents at end of period $11,203 $12,898 ======= ======= - --------------------------------------------------------------------------------------------------------- Interest paid $ 932 $ 290 Interest received 47 36 Income taxes paid (refunded) 160 (201) - --------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these consolidated financial statements.
3 TRANS-LUX CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS March 31, 2005 (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, 2005 consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2004. Certain reclassifications of prior years' amounts have been made to conform to the current year's presentation. The Company records compensation expense for its stock-based employee compensation plans in accordance with the intrinsic-value method prescribed by Accounting Principles Board 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 grant. The Company's options are issued with a strike price equal to the market price of the underlying stock at date of grant and, accordingly, no compensation cost has been recognized for its stock option plans. In December 2004, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123 (revised 2004)"). SFAS 123 (revised 2004) establishes standards that require companies to record the cost resulting from all share-based payment transactions using the fair value method. Transition under SFAS 123 (revised 2004) requires using a modified version of prospective application under which compensation costs are recorded for all unvested share-based payments outstanding or a modified retrospective method under which all prior periods impacted by SFAS 123 are restated. SFAS 123 (revised 2004) is effective, for the Company, as of January 1, 2006, with early adoption permitted. The following table illustrates the effect on net income (loss) and earnings (loss) per share for the three months ended March 31, 2005 and 2004 if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation: Three months ended March 31 In thousands, except per share data 2005 2004 - --------------------------------------------------------------------------- Net income (loss), as reported $ (422) $ 38 Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax 6 2 ------ ----- Pro forma net income (loss) $ (428) $ 36 ====== ===== Earnings (loss) per share: As reported - basic and diluted $(0.33) $0.03 ------ ----- Pro forma - basic and diluted $(0.34) $0.03 ------ -----
4 Note 2 - Inventories Inventories consist of the following: March 31 December 31 In thousands 2005 2004 - ----------------------------------------------------------------- Raw materials and spare parts $4,768 $4,704 Work-in-progress 1,437 1,357 Finished goods 596 504 ------ ------ $6,801 $6,565 ====== ======
Note 3 - Long-Term Debt During the three months ended March 31, 2005, long-term debt, including current portion, decreased $181,000, primarily due to regular scheduled payments of long-term debt, offset by a $50,000 advance on a construction loan to expand the Company's movie theatre in Dillon, Colorado. During the fourth quarter of 2004, the Company completed an amendment of its senior debt, which included a term loan of $10.0 million, a non-revolving line of credit of up to $6.2 million and a revolving loan of up to $5.0 million at variable interest rates ranging from LIBOR plus 2.25% to Prime plus 0.25% (4.8% at March 31, 2005). The term loan, non-revolving line of credit and revolving loan mature on January 1, 2012, January 1, 2007 and January 1, 2008, respectively. Upon maturity of the non-revolving line of credit, it is convertible into a converted term loan maturing January 1, 2012. At March 31, 2005, both the non-revolving line of credit and the revolving loan were fully available as none had been drawn. The credit agreement requires an annual facility fee on the unused commitment of 0.25%, and requires compliance with certain financial covenants, which include a fixed charge coverage ratio of 1.1 to 1.0, a loan-to-value ratio of not more than 50%, a leverage ratio of 3.0 to 1.0, maintaining a tangible net worth of not less than $20.8 million, plus 50% of net income and maintaining accounts with an average monthly compensating balance of not less than $750,000. At March 31, 2005, the Company was in compliance with such financial covenants. On April 14, 2004, the Company successfully completed its offer to exchange $1,000 principal amount of its new 8 1/4% Limited Convertible Senior Subordinated Notes due 2012 (the "New Notes") for each $1,000 principal amount of its 7 1/2% Convertible Subordinated Notes due 2006 (the "Old Notes"). The exchange offer commenced March 2, 2004 and expired on April 14, 2004. A total of $17.9 million principal amount of Old Notes were exchanged, leaving $12.3 million principal amount of Old Notes outstanding. The New Notes provide for a higher interest rate, have a longer term, are convertible into Common Stock at a lower conversion price of $9.00 per share until March 1, 2007 and are senior to the Old Notes and the Company's 9 1/2% Subordinated Debentures due 2012. 5 Note 4 - Discontinued Operation On April 28, 2004, the Company completed an agreement to sell the capital stock of its Australian subsidiary, Trans-Lux Pty Limited ("PTY"), for $1.7 million in cash, and the operating results were assumed by the buyer effective as of February 29, 2004. In accordance with the provisions of SFAS No. 144, "Accounting For the Impairment or Disposal of Long-lived Assets," the Company has accounted for PTY as a discontinued operation. The consolidated financial statements reflect the assets and liabilities of the discontinued operation and the operations for the current and prior periods are reported as a discontinued operation. The following table presents the financial results of the discontinued operation: Three months ended March 31 In thousands, 2004 - ------------------------------------------------------------- Revenues $ 135 Operating expenses 126 ----- Gross profit 9 General and administrative expenses (126) Foreign currency gain 141 Interest income 3 Income tax provision (12) ----- Income from discontinued operation $ 15 ===== Earnings per share $0.01 -----
Note 5 - Reporting Comprehensive Income Total comprehensive income for the three months ended March 31, 2005 and 2004 is as follows: Three months ended March 31 In thousands 2005 2004 - ------------------------------------------------------------------------------ Net income (loss) $(422) $ 38 Other comprehensive income (loss): ----- ---- Unrealized foreign currency translation gain (loss) (16) (16) Unrealized holding gain (loss) on securities (25) 1 Income taxes related to other comprehensive income (loss) items 10 - ----- ---- Total other comprehensive income (loss), net of tax $ (31) $(15) ----- ---- Comprehensive income (loss) $(453) $ 23 ===== ====
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. 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. Segment operating income is 6 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, 2005 and 2004 is as follows: Three months ended March 31 In thousands 2005 2004 - ------------------------------------------------------------------------ Revenues: Indoor display $ 3,434 $ 4,330 Outdoor display 5,154 4,778 Entertainment/real estate 3,061 3,221 ------- ------- Total revenues 11,649 12,329 ======= ======= Operating income: Indoor display 309 891 Outdoor display 124 114 Entertainment/real estate 812 943 ------- ------- Total operating income 1,245 1,948 Other income 25 12 Corporate general and administrative expenses (1,008) (1,003) Interest expense-net (946) (915) Income tax benefit (provision) 262 (19) ------- ------- Income (loss) from continuing operations (422) 23 Income from discontinued operation, net of tax - 15 ------- ------- Net income (loss) $ (422) $ 38 ======= =======
Note 7 - Components of Net Periodic Pension Cost In December 2003, the FASB issued SFAS No. 132R, "Employers' Disclosures about Pensions and Other Postretirement Benefits" ("SFAS 132R"). SFAS 132R revises the financial statement disclosures required for pension and postretirement obligations, including new interim disclosures. As of December 31, 2003, the benefit service under the pension plan has been frozen and, accordingly, there is no service cost for the period ended March 31, 2005. The following table presents the components of net periodic pension cost: Three months ended March 31 In thousands 2005 2004 - --------------------------------------------------------------------------- Service cost $ - $ - Interest cost 156 152 Expected return on plan assets (156) (148) Amortization of prior service cost 4 5 Amortization of net actuarial loss 67 61 ----- ----- Net periodic pension cost $ 71 $ 70 ===== =====
The Company estimates that a minimum of approximately $56,000 in contributions will be made in 2005. 7 Note 8 - 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. Note 9 - Joint Venture The Company has a 50% ownership in a joint venture partnership, MetroLux Theatres ("MetroLux"), accounted for by the equity method. The following results of operations summary information relates to MetroLux for the three months ended March 31, 2005 and 2004, and summary balance sheet information relates to MetroLux as of March 31, 2005 and December 31, 2004: Three months ended March 31 In thousands 2005 2004 - --------------------------------------------------------------------------- Revenues $747 $957 Gross profit 453 545 Net income 180 264 Company's share of partnership net income 90 132 ---- ---- March 31 December 31 In thousands 2005 2004 - ---------------------------------------------------------------------------- Current assets $ 562 $ 606 Noncurrent assets 3,914 3,897 ------ ------ Total assets 4,476 4,503 ====== ====== Current liabilities 453 608 Noncurrent liabilities 1,583 1,635 ------ ------ Total liabilities 2,036 2,243 ====== ====== Company's equity in partnership net assets $1,233 $1,133 ------ ------
The Company's equity in partnership net assets is reflected in other assets in the consolidated balance sheets. 8 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. 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 catalog sports, retail and commercial markets. In addition, on April 28, 2004, the Company sold its Australian operations, effective as of February 29, 2004. The Company has accounted for the Australian operations as a discontinued operation. Accordingly, the consolidated financial statements reflect the assets and liabilities of the discontinued operation and the operations for the current and prior periods are reported as a discontinued operation (see Note 4). The Entertainment/Real Estate segment includes the operations of the motion picture theatres in the western Mountain States and income-producing real estate properties. Results of Operations Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004 Total revenues for the three months ended March 31, 2005 decreased 5.5% to $11.6 million from $12.3 million for the three months ended March 31, 2004, principally due to decreases in Indoor display sales and in Entertainment/Real Estate revenues, offset by an increase in Outdoor display sales revenues. Indoor display revenues decreased $896,000 or 20.7%. Of this decrease, Indoor display equipment sales decreased $622,000 or 38.5%, primarily due to the timing of recognizing percentage of completion sales, as the March 31, 2005 backlog is approximately $600,000 larger than last year. Indoor display equipment rentals and maintenance revenues decreased $274,000 or 10.1%, primarily due to disconnects and non-renewals of equipment on rental and maintenance on existing contracts in the financial services market. The financial services market continues to be negatively impacted due to the recent downturn in the economy, resulting in consolidation within that industry. Although the market conditions appear to be improving, installations of new equipment tend to lag any economic turnaround. 9 Outdoor display revenues increased $376,000 or 7.9%. Of this increase, Outdoor display equipment sales increased $574,000 or 17.7%, primarily in the commercial outdoor market. Outdoor display equipment rentals and maintenance revenues decreased $198,000 or 12.9%, primarily due to the continued expected revenue decline in the Outdoor display equipment rentals and maintenance bases previously acquired. Entertainment/Real Estate revenues decreased $160,000 or 5.0% primarily from a decrease in overall admissions due to the lack of blockbuster films in 2005, whereas 2004 included a blockbuster independent film. The Company expanded two of its theatre locations with the opening of 2 new screens in Durango, Colorado in April 2004 and 2 new screens in Dillon, Colorado in January 2005. Total operating income for the three months ended March 31, 2005 decreased 36.1% to $1.2 million from $1.9 million for the three months ended March 31, 2004, principally due to the reduction in revenues in the Indoor display segment. Indoor display operating income decreased $582,000 or 65.3%, primarily as a result of the decrease in revenues in the financial services market. The cost of Indoor displays represented 62.6% of related revenues in 2005 compared to 60.5% in 2004. 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 decreasing, and the revenues from Indoor display equipment rentals and maintenance also decreasing but not at the same rate. The Company continues to strategically address the field service costs. Field service costs in the first quarter of 2005 compared to the first quarter of 2004 were reduced by approximately $49,000. Indoor display cost of equipment sales decreased $402,000 or 53.2%, primarily due to the decrease in revenues and the volume mix. Indoor display cost of equipment rentals and maintenance decreased $66,000 or 3.5%, largely due to the reduction in the rentals and maintenance bases. Indoor display general and administrative expenses increased $154,000 or 18.8% due primarily to an increase in the reserve for doubtful accounts. Cost of Indoor display equipment rentals and maintenance includes field service expenses, plant repair costs, maintenance and depreciation. Outdoor display operating income increased $10,000 or 8.8%, primarily as a result of the increase in sales, offset by the decrease in rentals and maintenance. The cost of outdoor displays represented 80.7% of related revenues in 2005 compared to 79.3% in 2004. This change is primarily due to the increase in volume of sales in the commercial outdoor market. Outdoor display cost of equipment sales increased $413,000 or 16.5%, principally due to the increase in volume. Outdoor display cost of equipment rentals and maintenance decreased $40,000 or 3.1%, primarily due to a decrease in field service costs. Outdoor display general and administrative expenses decreased slightly. Cost of Outdoor display equipment rentals and maintenance includes field service expenses, plant repair costs, maintenance and depreciation. Entertainment/Real Estate operating income decreased $131,000 or 13.9%, primarily due to a decrease in overall admissions. The cost of entertainment/real estate represented 71.9% of related revenues in 2005 compared to 71.3% in 2004. Cost of entertainment/real estate, which includes film rental costs and depreciation expense, decreased $97,000 or 4.2%, primarily due to the reduction in revenues. Entertainment/Real Estate general and administrative expenses increased $26,000 due to 10 increased travel and office expenses. Corporate general and administrative expenses decreased slightly despite an increase in the foreign currency loss compared to the prior year. Net interest expense increased $31,000, which is primarily attributable to an increase in interest rates. 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, 2005 and 2004 was 38.3% and 45.2%, respectively. Liquidity and Capital Resources The regular quarterly cash dividend for the first quarter of 2005 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 21, 2005, payable to stockholders of record as of April 20, 2005, and was paid April 29, 2005. During the fourth quarter of 2004, the Company completed an amendment of its senior debt, which included a term loan of $10.0 million, a non-revolving line of credit of up to $6.2 million and a revolving loan of up to $5.0 million at variable interest rates ranging from LIBOR plus 2.25% to Prime plus 0.25% (4.8% at March 31, 2005). The term loan, non-revolving line of credit and revolving loan mature on January 1, 2012, January 1, 2007 and January 1, 2008, respectively. Upon maturity of the non-revolving line of credit, it is convertible into a converted term loan maturing January 1, 2012. At March 31, 2005, both the non-revolving line of credit and the revolving loan were fully available as none had been drawn. The credit agreement requires an annual facility fee on the unused commitment of 0.25%, and requires compliance with certain financial covenants, which include a fixed charge coverage ratio of 1.1 to 1.0, a loan-to-value ratio of not more than 50%, a leverage ratio of 3.0 to 1.0, maintaining a tangible net worth of not less than $20.8 million, plus 50% of net income and maintaining accounts with an average monthly compensating balance of not less than $750,000. At March 31, 2005, the Company was in compliance with such financial covenants. During the second quarter of 2004, the Company successfully completed its offer to exchange $1,000 principal amount of its new 8 1/4% Limited Convertible Senior Subordinated Notes due 2012 for each $1,000 principal amount of its 7 1/2% Convertible Subordinated Notes due 2006. The exchange offer commenced March 2, 2004 and expired on April 14, 2004. A total of $17.9 million principal amount of Old Notes were exchanged, leaving $12.3 million principal amount of Old Notes outstanding. The New Notes provide for a higher interest rate, have a longer term, are convertible into Common Stock at a lower conversion price of $9.00 per share until March 1, 2007 and are senior to the Old Notes and the Company's 9 1/2% Subordinated Debentures due 2012. Under various agreements, the Company is obligated to make future cash payments in fixed amounts. These include payments under the Company's long-term debt agreements, including the 7 1/2% Convertible Subordinated Notes not exchanged in the Exchange Offer that mature December 1, 11 2006, employment and consulting agreement payments and rent payments required under operating lease agreements. The following table summarizes the Company's fixed cash obligations as of March 31, 2005 for the remainder of 2005 and the next four years: Remainder of In thousands 2005 2006 2007 2008 2009 - ------------ ---- ---- ---- ---- ---- Long-term debt $1,512 $14,458 $2,090 $4,704 $2,258 Employment and consulting agreement obligations 1,161 1,298 1,309 1,345 851 Operating leases 558 645 466 359 263 ------ ------- ------ ------ ------ Total $3,231 $16,401 $3,865 $6,408 $3,372 ====== ======= ====== ====== ======
Cash and cash equivalents decreased $1.2 million for the three months ended March 31, 2005 compared to an increase of $876,000 in 2004. The decrease in 2005 is primarily attributable to a reduction in cash provided by operating activities of $420,000, offset by investment in equipment for rental, expansion of the Company's movie theatre in Dillon, Colorado, and scheduled payments of long-term debt. The increase in 2004 is primarily attributable to cash provided by operating activities of $2.4 million and proceeds received from construction loan borrowings, offset by investment in equipment for rental, expansion of the Company's movie theatre in Durango, Colorado 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 investment in its Canadian subsidiary and previously its Australian subsidiary. The Company may, from time to time, enter into derivative contracts to manage its interest risk. The Company does not enter into derivatives for trading or speculative purposes. At March 31, 2005, the Company did not hold any derivative financial instruments. A one percentage point change in interest rates would result in an annual interest expense fluctuation of approximately $259,000. A 10% change in the Canadian dollar relative to the U.S. dollar would result in a currency exchange expense fluctuation of approximately $188,000, based on dealer quotes, considering current exchange rates. 12 Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures. The Company's President and Co-Chief Executive Officer, Michael R. Mulcahy, the Company's Executive Vice President and Co-Chief Executive Officer, Thomas Brandt, and the Company's Executive Vice President and Chief Financial Officer, Angela D. Toppi, have evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered by this quarterly report. The Company's disclosure controls and procedures are designed to ensure that material 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, the Company's Co-Chief Executive Officers and Chief Financial Officer have concluded that these controls and procedures are effective. Changes in Internal Control over Financial Reporting. There has been no change in the Company's internal control over financial reporting, that occurred in the first fiscal quarter, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. Part II - Other Information --------------------------- Item 5. Other Information During the quarter for which this report on Form 10-Q is filed, the registrant filed a Form 8-K dated March 31, 2005, containing a press release pertaining to the financial performance for the fourth quarter of 2004 and annual results. Item 6. Exhibits 31.1 Certification of Michael R. Mulcahy, President and Co-Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Thomas Brandt, Executive Vice President and Co-Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.3 Certification of Angela D. Toppi, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Michael R. Mulcahy, President and Co-Chief Executive 13 Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 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. 32.3 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. 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 13, 2005 by /s/ Angela D. Toppi ------------------------------- Angela D. Toppi Executive Vice President and Chief Financial Officer 14 EX-31.1 2 tlxex311.txt CERTIFICATION - M. MULCAHY EXHIBIT 31.1 CERTIFICATION I, Michael R. Mulcahy, President and Co-Chief Executive Officer of Trans-Lux Corporation certify that: 1. I have reviewed this Report on Form 10-Q (the "Report") of Trans-Lux Corporation; 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report; 4. The Registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15(e)) for the Registrant and have; a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and c) disclosed in this Report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. 5. The Registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors: a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. /s/ Michael R. Mulcahy ---------------------------------------- Date: May 13, 2005 Michael R. Mulcahy President and Co-Chief Executive Officer EX-31.2 3 tlxex312.txt CERTIFICATION - T. BRANDT EXHIBIT 31.2 CERTIFICATION I, Thomas Brandt, Executive Vice President and Co-Chief Executive Officer of Trans-Lux Corporation certify that: 1. I have reviewed this Report on Form 10-Q (the "Report") of Trans-Lux Corporation; 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report; 4. The Registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15(e)) for the Registrant and have; a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and c) disclosed in this Report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. 5. The Registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors: a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. /s/ Thomas Brandt ------------------------------ Date: May 13, 2005 Thomas Brandt Executive Vice President and Co-Chief Executive Officer EX-31.3 4 tlxex313.txt CERTIFICATION - A. TOPPI EXHIBIT 31.3 CERTIFICATION I, Angela D. Toppi, Executive Vice President and Chief Financial Officer of Trans-Lux Corporation certify that: 1. I have reviewed this Report on Form 10-Q (the "Report") of Trans-Lux Corporation; 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report; 4. The Registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15(e)) for the Registrant and have; a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and c) disclosed in this Report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. 5. The Registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors: a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. /s/ Angela D. Toppi ----------------------------- Date: May 13, 2005 Angela D. Toppi Executive Vice President and Chief Financial Officer EX-32.1 5 tlxex321.txt 906 CERTIFICATION - M. MULCAHY EXHIBIT 32.1 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 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), I, Michael R. Mulcahy, President and Co-Chief Executive Officer of Trans-Lux Corporation, do hereby certify, to the best of my knowledge that: (1) The Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 being filed with the Securities and Exchange Commission (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This Certification accompanies this Form 10-Q as an exhibit, but shall not be deemed as having been filed for purposes of Section 18 of the Securities Exchange Act of 1934 or as a separate disclosure document of the Registrant or the certifying officer. /s/ Michael R. Mulcahy ---------------------------------------- Date: May 13, 2005 Michael R. Mulcahy President and Co-Chief Executive Officer EX-32.2 6 tlxex322.txt 906 CERTIFICATION - T. BRANDT EXHIBIT 32.2 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 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), I, Thomas Brandt, Executive Vice President and Co-Chief Executive Officer of Trans-Lux Corporation, do hereby certify, to the best of my knowledge that: (1) The Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 being filed with the Securities and Exchange Commission (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This Certification accompanies this Form 10-Q as an exhibit, but shall not be deemed as having been filed for purposes of Section 18 of the Securities Exchange Act of 1934 or as a separate disclosure document of the Registrant or the certifying officer. /s/ Thomas Brandt ----------------------------- Date: May 13, 2005 Thomas Brandt Executive Vice President and Co-Chief Executive Officer EX-32.3 7 tlxex323.txt 906 CERTIFICATION - A. TOPPI EXHIBIT 32.3 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 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), I, Angela D. Toppi, Executive Vice President and Chief Financial Officer of Trans-Lux Corporation, do hereby certify, to the best of my knowledge that: (1) The Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 being filed with the Securities and Exchange Commission (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This Certification accompanies this Form 10-Q as an exhibit, but shall not be deemed as having been filed for purposes of Section 18 of the Securities Exchange Act of 1934 or as a separate disclosure document of the Registrant or the certifying officer. /s/ Angela D. Toppi -------------------------------- Date: May 13, 2005 Angela D. Toppi Executive Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----