-----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, AvwX2DYuc9caNJuN+QIZyszIxc0w3WEE30cymlgGBd3Gwow2vA2XgvS12/S90Gd5 pjytF0Ery+/S4Vqt8aQY+g== 0000099106-06-000018.txt : 20060515 0000099106-06-000018.hdr.sgml : 20060515 20060515170217 ACCESSION NUMBER: 0000099106-06-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20060331 FILED AS OF DATE: 20060515 DATE AS OF CHANGE: 20060515 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: 06842483 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 march0610q.txt MARCH 2006 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, 2006 -------------- Commission file number 1-2257 TRANS-LUX CORPORATION ----------------------------------------------------- (Exact name ofregistrant 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 a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (check one) Large accelerated filer Accelerated filer Non-accelerated filer x ---- ---- --- Indicate by check mark whether the Registrant is a shell company (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 - -------- ------------------------------- ------------------ 05/12/06 Common Stock - $1.00 Par Value 973,598 05/12/06 Class B Stock - $1.00 Par Value 286,814 (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, 2006 and December 31, 2005 (audited) 1 Consolidated Statements of Operations - Three Months Ended March 31, 2006 and 2005 2 Consolidated Statements of Cash Flows - Three Months Ended March 31, 2006 and 2005 3 Notes to Consolidated Condensed Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures about Market Risk 13 Item 4. Controls and Procedures 14 Part II - Other Information Item 1A. Risk Factors 14 Item 5. Other Information 15 Item 6. Exhibits 15 Signatures 16 Exhibits
Part I - Financial Information ------------------------------ TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31 December 31 In thousands, except share data 2006 2005 - ------------------------------------------------------------------------------------------------ (unaudited) (audited) ASSETS Current assets: Cash and cash equivalents $ 8,357 $ 13,610 Available-for-sale securities 438 431 Receivables, less allowance of $952 - 2006 and $935 - 2005 6,002 6,321 Unbilled receivables 759 842 Inventories 6,054 5,658 Prepaids and other 1,258 1,149 -------- --------- Total current assets 22,868 28,011 -------- --------- Rental equipment 92,805 91,648 Less accumulated depreciation 58,206 56,280 -------- --------- 34,599 35,368 -------- --------- Property, plant and equipment 39,259 39,188 Less accumulated depreciation 10,226 9,850 -------- --------- 29,033 29,338 Goodwill 1,004 1,004 Other assets 6,205 6,829 -------- --------- TOTAL ASSETS $ 93,709 $ 100,550 ======== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,714 $ 2,821 Accrued liabilities 7,300 6,986 Current portion of long-term debt 14,285 14,145 -------- --------- Total current liabilities 23,299 23,952 -------- --------- Long-term debt: 8 1/4% limited convertible senior subordinated notes due 2012 17,976 17,868 9 1/2% subordinated debentures due 2012 1,057 1,057 Notes payable 24,907 29,440 -------- --------- 43,940 48,365 Deferred credits, deposits and other 2,790 2,859 Deferred income taxes 2,409 2,978 Stockholders' equity: Capital stock Common - $1 par value - 5,500,000 shares authorized, 2,453,591 shares issued in 2006 and 2005 2,453 2,453 Class B - $1 par value - 1,000,000 shares authorized, 286,814 shares issued in 2006 and 2005 287 287 Additional paid-in-capital 13,902 13,901 Retained earnings 17,767 18,883 Accumulated other comprehensive loss (1,297) (1,287) -------- --------- 33,112 34,237 Less treasury stock - at cost - 1,480,045 shares in 2006 and 2005 (excludes additional 286,814 shares held in 2006 and 2005 for conversion of Class B stock) 11,841 11,841 -------- --------- Total stockholders' equity 21,271 22,396 -------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 93,709 $ 100,550 ======== ========= - ------------------------------------------------------------------------------------------------ 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 2006 2005 - ---------------------------------------------------------------------------- Revenues: Equipment rentals and maintenance $ 3,520 $ 3,775 Equipment sales 5,000 4,813 Theatre receipts and other 3,090 3,061 ------- ------- Total revenues 11,610 11,649 ------- ------- Operating expenses: Cost of equipment rentals and maintenance 2,959 3,045 Cost of equipment sales 3,768 3,267 Cost of theatre receipts and other 2,160 2,200 ------- ------- Total operating expenses 8,887 8,512 ------- ------- Gross profit from operations 2,723 3,137 General and administrative expenses 3,378 2,990 Interest income 65 46 Interest expense (1,128) (992) Other income (loss) (1) 25 ------- ------- Loss from operations before income taxes and income from joint venture (1,719) (774) Benefit for income taxes (572) (262) Income from joint venture 74 90 ------- ------- Net Loss $(1,073) $ (422) ======= ======= Loss per share - basic $ (0.85) $ (0.33) ======= ======= Average common shares outstanding - basic 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 2006 2005 - ---------------------------------------------------------------------------------------------------------------- Cash flows from operating activities Net loss $(1,073) $ (422) Adjustment to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 2,371 2,396 Income from joint venture (74) (90) Deferred income taxes (572) (240) Gain on sale of available-for-sale securities - (1) Changes in operating assets and liabilities: Receivables 402 40 Inventories (396) (236) Prepaids and other assets (108) (190) Accounts payable and accruals (807) (1,399) Deferred credits, deposits and other (68) 562 ------- ------- Net cash (used in) provided by operating activities (325) 420 ------- ------- Cash flows from investing activities Equipment manufactured for rental (1,157) (979) Purchases of property, plant and equipment (71) (328) Purchases of available-for-sale securities - (114) Proceeds from sale of available-for-sale securities - 31 Proceeds from joint venture, net 628 - ------- ------- Net cash used in investing activities (600) (1,390) ------- ------- Cash flows from financing activities Proceeds from long-term debt 150 50 Payments of long-term debt (4,435) (231) Cash dividends (43) (44) ------- ------- Net cash used in financing activities (4,328) (225) ------- ------- Net decrease in cash and cash equivalents (5,253) (1,195) Cash and cash equivalents at beginning of year 13,610 12,398 ------- ------- Cash and cash equivalents at end of period $ 8,357 $11,203 ======= ======= - ---------------------------------------------------------------------------------------------------------------- Interest paid $ 996 $ 932 Interest received 65 47 Income taxes paid 139 160 - ---------------------------------------------------------------------------------------------------------------- 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, 2006 (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. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission and therefore do not include all information and footnote disclosures required under generally accepted accounting principles. It is suggested that the March 31, 2006 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, 2005. The Company has incurred losses in the three-month period ended March 31, 2006 of $1,073,000 and $1,793,000 for the year ended December 31, 2005. The Company also has a negative working capital of $431,000 as of March 31, 2006 and has negative cash flows from operations for the three months ended March 31, 2006 of $325,000. Additionally the Company has current debt obligations of $14,285,000, which includes $12.2 million of the Company's 7 1/2% Notes that are due December 1, 2006. Management believes that its current cash resources will be sufficient to fund its operations and its current obligations for the next twelve months. Management's plans include the use of its non-revolving line of credit to fund its current debt obligations (See Note 3) and monitoring and reducing expenses. However, no assurance can be given at this time as to whether the Company will be able to achieve these objectives. 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(R)"). SFAS 123(R) 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(R) requires using a modified version of prospective application under which compensation costs are recognized over the remaining service period for all unvested share-based payments outstanding or a modified retrospective method under which all prior periods impacted by SFAS 123 are restated. Effective January 1, 2006, the Company adopted SFAS 123(R) using the modified prospective transition method, whereby compensation costs are recognized in the consolidated statements of operations in the period beginning in January 1, 2006. Accordingly, compensation cost amounts for prior periods are presented in the Company's footnotes but the consolidated financial statements have not been restated to reflect, and do not include, the impact of SFAS 123(R). Stock- based compensation expense related to stock options recognized under SFAS 123(R) for the three months ended March 31, 2006 was approximately $1,000, net of tax. See Note 5 - Stock Option Plans, for additional disclosures. 4 Note 2 - Inventories Inventories consist of the following: March 31 December 31 In thousands 2006 2005 - -------------------------------------------- Raw materials $3,875 $3,740 Work-in-progress 1,463 1,411 Finished goods 716 507 ------ ------ $6,054 $5,658 ====== ======
Note 3 - Long-Term Debt During the three months ended March 31, 2006, long-term debt, including current portion, decreased $4.3 million, primarily due to the $4.1 million repayment on the revolving loan; and regular scheduled payments of long-term debt, offset by a $150,000 zero percent interest loan for five years from the State of Iowa and City of Des Moines. The Company has a bank Credit Agreement, which was amended in 2006, which provides for a term loan of $10.0 million, a non-revolving line of credit of up to $6.2 million to finance purchases and/or redemptions of one-half of the 7 1/2% Convertible Subordinated Notes due December 1, 2006 (the "7 1/2% Notes"), and a revolving loan of up to $5.0 million at variable interest rates ranging from LIBOR plus 2.25% to Prime (ranging from 6.44% to 7.24% at March 31, 2006). The Credit Agreement matures on January 1, 2008. The non-revolving line of credit is convertible into a four-year amortizing term loan on December 31, 2006 and maturing January 1, 2008. At March 31, 2006, the non-revolving line of credit was fully available as none had been drawn and $4.1 million was available under the revolving loan facility. 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 through June 30, 2006 and 1.2 to 1.0 for quarters ending September 30, 2006 and thereafter, 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 $19.0 million, a cap on capital expenditures and maintaining accounts with an average monthly compensating balance of not less than $750,000. At March 31, 2006, the Company was in compliance with all the financial covenants as set forth in the amended Credit Agreement. On March 13, 2006, the Company completed an offer to exchange $1,000 principal amount of its 8 1/4% Limited Convertible Senior Subordinated Notes due 2012 (the "8 1/4% Notes") for each $1,000 principal amount of its 7 1/2% Notes. The exchange offer commenced February 6, 2006 and expired on March 13, 2006. A total of $0.1 million principal amount of 7 1/2% Notes were exchanged, leaving $12.2 million principal amount of 7 1/2% Notes outstanding. The 8 1/4% Notes provide for a higher interest rate, which is payable semi-annually, have a longer term, are convertible into Common Stock at a lower conversion price of $9.00 per share until March 1, 2007, may be redeemed by the Company, in whole or in part, at declining premiums beginning March 1, 2006 and are senior to the 7 1/2% Notes and the Company's 9 1/2% Subordinated Debentures (the "Debentures") due 2012. 5 Note 4 - Reporting Comprehensive Income (Loss) Total comprehensive loss for the three months ended March 31, 2006 and 2005 is as follows: Three months ended March 31 In thousands 2006 2005 - ----------------------------------------------------------------------------- Net loss $(1,073) $ (422) -------- ------- Other comprehensive loss: Unrealized foreign currency translation loss (14) (16) Unrealized holding gain (loss) on securities 7 (25) Income taxes related to other comprehensive income (loss) items (3) 10 -------- ------- Total other comprehensive loss, net of tax (10) (31) -------- ------- Comprehensive loss $(1,083) $ (453) ======== =======
Note 5 - Stock Option Plans Effective January 1, 2006, the Company adopted the provisions of SFAS 123(R), which establishes the accounting for stock-based awards exchanged for employee services. SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be measured at fair value and expensed in the consolidated statement of operations over the service period (generally the vesting period). We previously accounted for share-based compensation plans under APB 25 and the related interpretations and provided the required SFAS 123 pro forma disclosures for employee stock options. The Company did not issue any stock options during the three months ended March 31, 2006. The unrecognized compensation costs related to unvested stock options granted under the Company's stock option plans was nominal. Prior to the adoption of SFAS 123(R), we provided the disclosures required under SFAS 123. We did not recognize stock option-based compensation cost in our statement of operations for the periods prior to the adoption of SFAS 123(R), as all options granted had an exercise price equal to the market price of our common stock on the date of grant. The following table illustrates the effect on net loss and loss per share for the three months ended March 31, 2005 as if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation: Three months ended In thousands, except per share data March 31, 2005 - --------------------------------------------------------------- Net loss, as reported $ (422) Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax 6 ------ Pro forma net loss $ (428) ====== Loss per share: As reported - basic $(0.33) Pro forma - basic $(0.34) ------
6 In accordance with SFAS 123(R), the fair value of each option grant has been estimated as of the date of grant using the binomial options-pricing model with the following weighted average assumptions used: Three months ended March 31, 2005 ------------------ Dividend yield 2.06% Expected volatility 43.00% Risk free interest rate 4.59% Expected life (in years) 4.0
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 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. Of the total goodwill of $1,004,000, $938,000 relates to the Outdoor display segment and $66,000 relates to the Indoor display segment. Foreign revenues represent less than 10% of the Company's revenues and therefore are not separately disclosed. The foreign operation does not manufacture their own equipment; the domestic operation provides the equipment that the foreign operation leases or sells. The foreign operation operates similarly to the domestic operation and have similar profit margins. 7 Information about the Company's operations in its three business segments for the three months ended March 31, 2006 and 2005 is as follows: Three months ended March 31 In thousands 2006 2005 - ----------------------------------------------------------------------- Revenues: Indoor display $ 2,990 $ 3,434 Outdoor display 5,530 5,154 Entertainment/real estate 3,090 3,061 ------- ------- Total revenues 11,610 11,649 ======= ======= Operating income: Indoor display (333) 309 Outdoor display 23 124 Entertainment/real estate 821 812 ------- ------- Total operating income 511 1,245 Other income (loss) (1) 25 Corporate general and administrative expenses (1,092) (1,008) Interest expense-net (1,063) (946) Income tax benefit 572 262 ------- ------- Net loss $(1,073) $ (422) ======= =======
Note 7 - Components of Net Periodic Pension Cost As of December 31, 2003, the benefit service under the pension plan had been frozen and, accordingly, there is no service cost for the periods ended March 31, 2006 and 2005. The following table presents the components of net periodic pension cost: Three months ended March 31 In thousands 2006 2005 - ---------------------------------------------------------------- Service cost $ - $ - Interest cost 153 156 Expected return on plan assets (163) (156) Amortization of prior service cost 4 4 Amortization of net actuarial loss 77 67 ----- ----- Net periodic pension cost $ 71 $ 71 ===== =====
The minimum required contribution for 2006 is expected to be zero, but the Company estimates that it will contribute between zero and $200,000 in 2006. 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. 8 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, 2006 and 2005, and summary balance sheet information relates to MetroLux as of March 31, 2006 and December 31, 2005: Three months ended March 31 In thousands 2006 2005 - -------------------------------------------------------------------- Revenues $1,141 $ 747 Gross profit 670 453 Net income 149 180 Company's share of partnership net income 74 90 ------------------ March 31 December 31 In thousands 2006 2005 - -------------------------------------------------------------------- Current assets $ 292 $3,623 Noncurrent assets 1,927 2,021 ------ ------ Total assets 2,219 5,644 ====== ====== Current liabilities 405 2,751 Noncurrent liabilities 910 883 ------ ------ Total liabilities 1,315 3,634 ====== ====== Company's equity in partnership net assets $ 490 $1,047 ------ ------
The Company's equity in partnership net assets is reflected in other assets in the consolidated balance sheets. 9 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 catalog sports, retail and commercial markets. 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, 2006 Compared to Three Months Ended March 31, 2005 Total revenues for the three months ended March 31, 2006 remained level compared to the three months ended March 31, 2005 at $11.6 million, although the Indoor display rentals and maintenance revenues and sales revenues decreased, but were offset by increases in Outdoor display sales revenues. Indoor display revenues decreased $444,000 or 12.9%. Of this decrease, Indoor display equipment rentals and maintenance revenues decreased $283,000 or 11.6%, primarily due to disconnects and non-renewals of equipment on rental and maintenance on existing contracts in the financial services market. Indoor display equipment sales decreased $161,000 or 16.2%, primarily due to a reduction in sales from the financial services market. The financial services market continues to be negatively impacted by the current investment climate, resulting in consolidation within that industry. Although the market conditions appear to be slowly improving, installations of new equipment tend to lag any economic turnaround. Outdoor display revenues increased $376,000 or 7.3%. Of this increase, Outdoor display equipment sales increased $349,000 or 9.1%, primarily in the outdoor catalog sports market. Outdoor display equipment rentals and maintenance revenues increased $27,000 or 2.0%, primarily due to an increase in out of contract service and maintenance offset by the continued expected gradual revenue decline in the older Outdoor display equipment rental and maintenance bases acquired in the early 1990s. 10 Entertainment/Real Estate revenues increased $29,000 or 0.9%, box office revenues remained level, but there was an increase in concession sales. Total operating income for the three months ended March 31, 2006 decreased $734,000 to $511,000 from $1.2 million for the three months ended March 31, 2005, principally due to the reduction in revenues in the Indoor display segment and a decrease in the gross margin in both the Indoor and Outdoor sold equipment due to the product mix. Indoor display operating income decreased $642,000, from $309,000 to an operating loss of $333,000, primarily as a result of the decrease in revenues in the financial services market and a decrease in the gross margin on sold equipment due to the product mix. The cost of Indoor displays represented 76.6% of related revenues in 2006 compared to 62.6% in 2005. The cost of Indoor displays as a percentage of related revenues increased primarily due to the decrease in revenues from Indoor display equipment rentals and maintenance and the costs to maintain the equipment, such as the field services costs remaining level. Indoor display cost of equipment sales decreased $132,000 or 37.3%, primarily due to the decrease in revenues and the product mix. There was a decrease in the gross margin of Indoor display equipment sales due to the product mix of sales to the transportation market. Indoor display general and administrative expenses increased $58,000 or 6.0%, primarily due to an increase in travel costs and commission. Cost of Indoor display equipment rentals and maintenance includes field service expenses, plant repair costs, maintenance and depreciation. Outdoor display operating income decreased $102,000, from $124,000 to $22,000, primarily as a result of the product mix, a $50,000 non-recurring material cost and a $97,000 increase in the allowance for doubtful accounts receivable, offset by a decrease of $100,000 in field service costs. The Company continues to address the cost of field service to bring it in line with revenues from equipment rentals and maintenance. The cost of outdoor displays represented 80.2% of related revenues in 2006 compared to 80.7% in 2005. Outdoor display cost of equipment sales increased $369,000 or 12.7%, principally due to the increase in volume. Outdoor display cost of equipment rentals and maintenance decreased $94,000 or 7.5%, primarily due to a decrease in field service costs. Outdoor display general and administrative expenses increased $203,000, or 23.3%, primarily due to an increase in engineering costs, travel costs, salaries and benefits. Cost of Outdoor display equipment rentals and maintenance includes field service expenses, plant repair costs, maintenance and depreciation. Entertainment/Real Estate operating income increased $10,000 or 1.3%, primarily due to an increase in concession sales. The cost of entertainment/real estate represented 69.9% of related revenues in 2006 compared to 71.9% in 2005. Cost of entertainment/real estate, which includes film rental costs and depreciation expense, decreased $40,000 or 1.8%, primarily due to the reduction in certain overhead costs. Entertainment/Real Estate general and administrative expenses increased $43,000 primarily due to increased salaries and travel costs. Corporate general and administrative expenses increased $84,000 or 8.4%, primarily due to an increase in salaries and benefits, such as medical costs. The Company has taken additional measures to reduce certain overhead costs in the first quarter of 2006, which should be reflected in future 11 quarters. Net interest expense increased $117,000, which is primarily attributable to an increase in variable interest rates. The income from joint venture relates to the operations of the theatre joint venture, MetroLux Theatres, in Loveland, Colorado, which is included in the Entertainment/real estate segment. The effective tax rate for the three months ended March 31, 2006 and 2005 was 34.8% and 38.3%, respectively. Liquidity and Capital Resources The regular quarterly cash dividend for the first quarter of 2006 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, 2006, payable to stockholders of record as of April 20, 2006, and was paid May 2, 2006. The Company has a bank Credit Agreement, which was amended in 2006, which provides for a term loan of $10.0 million, a non-revolving line of credit of up to $6.2 million to finance purchases and/or redemptions of one-half of the 7 1/2% Notes, and a revolving loan of up to $5.0 million at variable interest rates ranging from LIBOR plus 2.25% to Prime (ranging from 6.23% to 7.25% at March 31, 2006). The Credit Agreement matures on January 1, 2008. The non-revolving line of credit is convertible into a four-year amortizing term loan on December 31, 2006 and maturing January 1, 2008. At March 31, 2006, the non-revolving line of credit was fully available as none had been drawn and $4.1 million was available under the revolving loan facility. 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 through June 30, 2006 and 1.2 to 1.0 for quarters ending September 30, 2006 and thereafter, 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 $19.0 million, a cap on capital expenditures and maintaining accounts with an average monthly compensating balance of not less than $750,000. At March 31, 2006, the Company was in compliance with all the financial covenants as set forth in the amended Credit Agreement. The Company continually evaluates the need and availability of long-term capital and is concentrating on restructuring the current 7 1/2% Notes that are due December 1, 2006. On March 13, 2006, the Company completed an offer to exchange $1,000 principal amount of its 8 1/4% Notes for each $1,000 principal amount of its 7 1/2% Notes. The exchange offer commenced February 6, 2006 and expired on March 13, 2006. A total of $0.1 million principal amount of 7 1/2% Notes were exchanged, leaving $12.2 million principal amount of 7 1/2% Notes outstanding and $18.0 million principal amount of the 8 1/4% Notes outstanding. The 8 1/4% Notes provide for a higher interest rate, which is payable semi-annually, have a longer term, are convertible into Common Stock at a lower conversion price of $9.00 per share until March 1, 2007, may be redeemed by the Company, in whole or in part, at declining premiums beginning March 1, 2006 and are senior to the 7 1/2% Notes and the Company's 9 1/2% Debentures due 2012. 12 Under various agreements, the Company is obligated to make future cash payments in fixed amounts. These consist of 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, 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, 2006 for the remainder of 2006 and the next four years: Remainder of - -------------------------------------------------------------------------------- In thousands 2006 2007 2008 2009 2010 - -------------------------------------------------------------------------------- Long-term debt, including interest $16,825 $5,453 $11,207 $3,891 $4,110 Employment and consulting agreement obligations 1,281 1,640 1,435 860 482 Operating lease payments 552 533 446 316 293 ------- ------ ------- ------ ------ Total $18,658 $7,626 $13,088 $5,067 $4,885 - --------------------------------------------------------------------------------
Cash and cash equivalents decreased $5.3 million for the three months ended March 31, 2006 compared to a decrease of $1.2 million in 2005. The decrease in 2006 is primarily attributable to a $4.1 million repayment on the revolving line of credit and $0.3 million of scheduled payments of long-term debt, cash used in operating activities of $325,000 and investment in equipment for rental. The decrease in 2005 is primarily attributable to the investment in equipment for rental, expansion of the Company's movie theatre in Dillon, 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, 2006, the Company did not hold any derivative financial instruments. 13 A one percentage point change in interest rates would result in an annual interest expense fluctuation of approximately $251,000. A 10% change in the Canadian dollar relative to the U.S. dollar would result in a currency exchange expense fluctuation of approximately $152,000, based on dealer quotes, considering current exchange rates. 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. Our disclosure controls and procedures include components of our internal controls over financial reporting. Management's assessment of the effectiveness of our internal controls over financial reporting is expressed at the level of reasonable assurance because a control system, no matter how well designed and operated, can provide only reasonable, but not absolute assurance that the control system's objectives will be met. 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 1A. Risk Factors The Company is subject to a number of risks including general business and financial risk factors. Any or all of such factors could have a material adverse effect on the business, financial condition or results of operations of the Company. You should carefully consider the following risk factors, in addition to those identified in our Annual Report on Form 10-K for the year ended December 31, 2005. The Company has incurred losses in the three-month period ended March 31, 2006 of $1,073,000 and $1,793,000 for the year ended December 31, 2005. The Company also has a negative working capital of $431,000 as of March 31, 2006 and has negative cash flows from operations for the three 14 months ended March 31, 2006 of $325,000. Additionally the Company has current debt obligations of $14,285,000, which includes $12.2 million of the Company's 7 1/2% Notes that are due December 1, 2006. Management believes that its current cash resources will be sufficient to fund its operations and its current obligations for the next twelve months. Management's plans include the use of its non-revolving line of credit to fund its current debt obligations (See Note 3) and monitoring and reducing expenses. However, no assurance can be given at this time as to whether the Company will be able to achieve these objectives. Item 5. Other Information None. Item 6. Exhibits 10.1 Employment Agreement with Karl Hirschauer dated as of April 1, 2006, filed herewith. 10.2 Amendment No. 1 to the Amended and Restated Commercial Loan and Security Agreement with People's Bank dated as of December 31, 2005, filed herewith 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 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. 15 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, 2006 by /s/ Angela D. Toppi ----------------------------- Angela D. Toppi Executive Vice President and Chief Financial Officer 16
EX-10.1 2 hirsch2006.txt EMPLOYMENT AGREEMENT - K. HIRSCHAUER Exhibt 10.1 AGREEMENT made as of the 1st day of April 2006 by and between TRANS-LUX CORPORATION, a Delaware corporation having an office at 110 Richards Avenue, Norwalk, Connecticut 06856-5090 (hereinafter called "Employer"), and KARL HIRSCHAUER residing at 10 Douglas Lane, New Fairfield, CT 06812 (hereinafter called, "Employee"). W I T N E S S E T H: 1. Employer hereby employs Employee, and Employee hereby accepts employment, upon the terms and conditions hereinafter set forth. 2. (a) The term ("Term") of the Agreement shall be the two year period commencing as of April 1, 2006 and terminating March 31, 2008. (b) In the event that Employee remains or continues in the employ of Employer after the Term, such employment, in the absence of a further written agreement, shall be on an at-will basis, terminable by either party hereto on thirty (30) days' notice to the other and, upon the 30th day following such notice the employment of Employee shall terminate. (c) Upon expiration of the Term of this Agreement, neither party shall have any further obligations or liabilities to the other except as otherwise specifically provided in this Agreement. 3. Employee shall be employed in an executive and/or engineering capacity of Employer (and such of its affiliates, divisions and subsidiaries as Employer shall designate). Employer shall use its best efforts to cause Employee to be elected and continue to be elected a Senior Vice President of Employer during the Term of this Agreement. The precise services of Employee may be designated or assigned from time to time at the direction of the Board of Directors, the Chairman of the Board, or President, and all of the services to be rendered hereunder by Employee shall at all times be subject to the control, direction and supervision of the Board of Directors of Employer, to which Employee does hereby agree to be bound. Employee shall devote his entire time, attention and energies during usual business hours (subject to Employer's policy with respect to holidays and illnesses for comparable executives of Employer) to the business and affairs of Employer, its affiliates, divisions and subsidiaries as Employer shall from time to time direct. Employee further agrees during the Term of this Agreement to serve as an officer or director of Employer or of any affiliate or subsidiary of Employer as Employer may request, and if Employee serves as such officer or a director he will do so without additional compensation, other than director's fees or honoraria, if any. During the Term of this Agreement and during any subsequent employment of Employee by Employer, Employee shall use his best efforts, skills and abilities in the performance of his services hereunder and to promote the interests of Employer, its affiliates, divisions and subsidiaries. Employee shall not, during the Term and during any subsequent employment of Employee by Employer, be engaged in any other business activity, whether or not such business activity is pursued for gain, profit or other pecuniary advantage. The foregoing shall not be construed as preventing Employee from investing his assets in such form or manner as will not require any services on the part of Employee in the operation of the affairs of the companies in which such investments are made, provided, however, that Employee shall not, either directly or indirectly, be a director of or make any investments in any company or companies which are engaged in businesses competitive with those conducted by Employer or by any of its subsidiaries or affiliates except where such investments are in stock of a company listed on a national securities exchange, and such stock of Employee does not exceed one percent (1%) of the outstanding shares of stock of such listed company. Employee shall not at any time during or after the Term of this Agreement use (except on behalf of Employer) divulge, furnish or make accessible to any third person or organization any confidential information concerning Employer or any of its subsidiaries or affiliates or the businesses of any of the foregoing including, without limitation, inventions, confidential methods of operations and organization, confidential sources of supply, identity of employees, customer 1ists and confidential financial information. 4. (a) For all services rendered by Employee during the Term of this Agreement, Employer shall pay Employee a salary at the rate of ONE HUNDRED SIXTY THOUSAND DOLLARS ($160,000) per annum during the period April l, 2006, to June 30, 2006; at the rate of ONE HUNDRED SIXTY-FOUR THOUSAND DOLLARS ($164,000) per annum during the period July 1, 2006 to March 31, 2007; at the rate of ONE HUNDRED SIXTY-EIGHT THOUSAND DOLLARS ($l68,000) per annum during the period April 1, 2007 to March 31, 2008. Such salary shall be payable weekly, or monthly, or in accordance with the payroll practices of Employer for its executives. The Employee shall also be entitled to all rights and benefits for which he shall be eligible under any stock option plan, bonus, participation or extra compensation plans, pensions, group insurance or other benefits which Employer presently provides, or may provide for him and for its employees generally. This Agreement shall not be deemed abrogated or terminated if Employer, in its discretion, shall determine to increase the compensation of Employee for any period of time, or if the Employee shall accept such increase. All payments under this Agreement are in United States dollars unless otherwise specified. (b) Employer may make appropriate deductions from the said payments required to be made in this Section 4 to Employee to comply with all governmental withholding requirements. (c) If, during the Term of this Agreement and if the Employee is still in the employ of Employer, Employee shall be prevented from performing or be unable to perform, or fail to perform, his duties by reason of illness or any other incapacity for (4) consecutive months (excluding normal vacation time) during the Term hereof, Employer agrees to pay Employee thereafter during the Term for the duration of such incapacity 35% of the base salary which Employee would otherwise have been entitled to receive if not for the illness or other incapacity. (d) The Board upon the recommendation of the Compensation Committee of the Board shall consider no later than May 31, 2007, 2008, and 2009, respectively (provided there is no delay in obtaining the financial statements as provided below, but in no event later than 45 days following receipt thereof) the grant of a bonus ("Bonus") to Employee based on Employee's performance for the immediately preceding fiscal year. Notwithstanding the foregoing, based on Employer's annual pre-tax consolidated earnings in the applicable Fiscal Year, Employer shall pay Employee a Bonus at the rate of three-eighths of one percent (.375%). for the fiscal years ending December 31, 2006, 2007, and 2008 only (provided however, the Bonus, if any, for 2008 shall be 25% of the amount for such year.) The Bonuses shall not exceed $20,000 for any year ($5,000 for January 1 - March 31, 2008). No Bonus shall be payable for any Fiscal Year in which the annual pre-tax consolidated earnings determined in accordance with Section 4(d) are less than $500,000. There shall be excluded from the calculation of pre-tax consolidated earnings during the Term of this Agreement (1) the amount by which (x) any item or items of unusual or extraordinary gain in the aggregate exceeds 20% of the Employer's net book value as at the end of the immediate preceding fiscal year or (y) any item of unusual or extraordinary loss in the aggregate exceeds 20% of the Employer's net book value as at the end of the immediate preceding fiscal year, in each case in (x) and (y) above as determined in accordance with generally accepted accounting principles and items of gain and loss shall not be netted against each other for purpose of the above 20% calculation, or (2) any contractual Bonuses and/or contractual profit participations accrued or paid to Employee or other employees. Provided Employee is not in default of the Agreement, the Board may, in any event, even if any of the aforesaid pre-tax consolidated earnings levels are not exceeded, grant the Employee the aforesaid Bonus or any portion thereof for such year based on his performance. Notwithstanding anything to the contrary contained herein, if Employee is not in the employ of Employer at the end of any aforesaid 2006 or 2007 fiscal year or March 31, 2008, no Bonus shall be paid for such fiscal year or 2008, as the case may be. In the event of Employee's death on or after January 1 of 2007 or 2008 or March 31, 2008, any Bonus to which he is otherwise entitled for the prior fiscal year or 2008, as the case may be, shall be paid to his widow if she shall survive him or if she shall predecease him to his surviving issue per stirpes and not per capita. Such pre-tax consolidated earnings shall be fixed and determined by the independent certified public accountants regularly employed by Employer. Such independent certified public accountants, in ascertaining such pre-tax consolidated earnings, shall apply all accounting practices and procedures heretofore applied by Employer's independent certified public accountants in arriving at such annual pre-tax consolidated earnings as disclosed in Employer's annual statement for that year of profit and loss released to its stockholders. The determination by such independent certified public accountants shall be final, absolute and controlling upon the parties. Notwithstanding the foregoing, any interest expense savings resulting from conversion of the Employer's 7 1/2% Convertible Subordinated Notes due 2006 and 8 1/4% Limited Convertible Senor Subordinated Notes due 2012 may be included or excluded in such calculation by the Board in its sole discretion. Payment of such amount, if any is due, shall be made for each year by Employer to Employee within sixty (60) days after which such accountant shall have furnished such statement to Employer disclosing Employer's pre-tax consolidated earnings for each of the years 2006, 2007 and 2008. Employer undertakes to use reasonable efforts to cause said accountants to prepare and furnish such statements within one hundred thirty (130) days from the close of each such fiscal year and to cause said independent certified public accountants, concomitantly with delivery of such statement by accountants to it, to deliver a copy of such statement to Employee. The Employer shall not have any liability to Employee arising out of any delays with respect to the foregoing. (e) In the event Employee dies during the Term of this Agreement while the Employee is still in the Employ of Employer, Employer shall pay to Employee's widow or his surviving issue, as the case may be, for the balance of the Term of the Agreement, or eighteen (18) months, whichever is less, annual death benefits payable weekly or in accordance with Employer's payroll practices in an amount equal to 35% of Employee's then annual base salary rate. 5. During the Term of this Agreement, Employer will reimburse Employee for traveling or other out-of-pocket expenses and disbursements incurred by Employee with Employer's approval in furtherance of the businesses of Employer, its affiliates, divisions or subsidiaries, upon presentation of such supporting information as Employer may from time to time request. 6. During the Term of this Agreement, Employee shall be entitled to a vacation during the usual vacation period of Employer in accordance with such vacation schedules as Employer may prescribe. 7. Both parties recognize that the services to be rendered by Employee pursuant to this Agreement are extraordinary and unique. During the Term of this Agreement, and during any subsequent employment of Employee by Employer, Employee shall not, directly or indirectly, enter into the employ of or render any services to any person, partnership, association or corporation engaged in a business or businesses in anyway, directly or indirectly, competitive to those now or hereafter engaged in by Employer or by any of its subsidiaries during the Term of this Agreement and during any subsequent employment of Employee by Employer and Employee shall not engage in any such business, directly or indirectly on his own account and, except as permitted by Section 3 of this Agreement, Employee shall not become interested in any such business, directly or indirectly, as an individual, partner, shareholder, director, officer, principal, agent, employee, trustee, consultant, or in any other relationship or capacity. For a period of two (2) years following termination of employment for any reason, Employee shall not directly or indirectly (i) engage or otherwise be involved in the recruitment or employment of any Employer employee or (ii) solicit or render any service directly or indirectly to any other person or entity with regard to soliciting any customer of the Employer during the two (2) year period prior to termination of employment with respect to products or services competitive with products or services of Employer. Employee shall at no time during or after employment disclose to any person, other than Employer, or otherwise use any information of or regarding Employer except on behalf of Employer, nor communicate, publish, or otherwise transmit, in any manner whatsoever, untrue information or negative, competitive, personal or other information or comments regarding Employer. In addition, Employee agrees that all lists, materials, books, files, reports, correspondence, records and other documents and information ("Employer Materials") used, prepared or made available to Employee, shall be and shall remain the property of Employer. Upon the termination of employment of Employee or the expiration of this Agreement, whichever is earlier, all Employer Materials shall be immediately returned to Trans-Lux Corporation, and Employee shall not make or retain any copies thereof, nor disclose or otherwise use any information relating to said Employer Materials to any other party. As used herein the term Employer shall include Employer, Employer's subsidiaries and affiliates, and any individuals employed or formerly employed by any of them. Employer shall be entitled, if it so elects, to institute and prosecute proceedings in any court of competent jurisdiction, either in law or in equity, to obtain damages for any breach of this Agreement, or to enjoin Employee from any breach of this Agreement, but nothing herein contained shall be construed to prevent Employer from pursuing such other remedies as Employer may elect to invoke. In addition to the obligations of the Employee contained in this Agreement, Employee agrees to be bound by the provisions contained in Exhibits A and B to this Agreement. 8. In the event any provision of Section 7 of this Agreement shall be held invalid or unenforceable by reason of the geographic or business scope or the duration thereof, such invalidity or unenforceability shall attach only to such provision and shall not affect or render invalid or unenforceable any other provision of this Agreement, and this Agreement shall be construed as if the geographic or business scope or the duration of such provision had been more narrowly drawn so as not to be invalid or unenforceable. 9. The waiver by Employer of a breach of any provision of this Agreement by Employee shall not operate or be construed as a waiver of any subsequent breach by Employee. 10. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and served personally or sent by United States certified or registered mail, return receipt requested, or overnight courier such as Federal Express or Airborne to his address as stated on Employer's records, in the case of Employee, or to the office of Trans-Lux Corporation, attention of the President, 110 Richards Avenue, Norwalk, Connecticut 06856-5090, in the case of Employer, or such other address as designated in writing by the parties. 11. This Agreement shall be construed in accordance with the laws of the State of New York. 12. This instrument contains the entire agreement between the parties and supersedes as of April 1, 2006 the Employment Agreement between the parties dated April 2, 2003, effective January 1, 2003. It may not be changed, modified, extended or renewed orally except by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, discharge or extension is sought. IN WITNESS WHEREOF, this Agreement has been duly executed on the day and year above written. TRANS-LUX CORPORATION By /s/ Michael R. Mulcahy _________________________ President /s/ Karl Hirschauer ___________________________ Karl Hirschauer EXHIBIT A TO EMPLOYMENT AGREEMENT EFFECTIVE AS OF APRIL 1, 2006 ADDITIONAL OBLIGATIONS OF EMPLOYEE 1. All inventions, developments and improvements conceived or made by Employee, solely or jointly with others, during the period of Employee's employment by the Employer, whether or not conceived during business hours, which pertain to any product, goods, apparatus, equipment, systems, methods or processes made, used or sold by the Employer, or with regard to which the Employer is conducting research or development work, either alone or in cooperation with others, shall be a work made for hire, under the supervision of the Employer, and shall be the property of the Employer, whether patentable or not. 2. Employee agrees to promptly and voluntarily disclose to the Employer all such inventions, developments, and improvements conceived or made by Employee during the period of Employee's employment, and one year thereafter, and to sign, when requested by Employer any United States and foreign patent applications or any divisional, continuing, renewal or reissue applications pertaining thereto, and to provide the Employer or its agents or attorneys with all reasonable assistance in the preparation and presentation of patent or copyright applications, drawings, specifications and the like, provided that all fees pertaining to such applications are to be paid by the Employer. Employee also agree to assign to the Employer all such inventions, developments and improvements and any United States and foreign patent applications or divisional, continuing, renewal or reissue applications pertaining thereto, and any patent issuing thereon, and Employee agrees to sign any assignments or other instruments that might, in the opinion of the Employer, be required to carry out this provision. Employee will perform Employee's obligations under this paragraph without requesting or receiving any payment therefore other than Employee's usual salary from the Employer. 3. In any action, claim, or proceeding in which this Agreement or any provision thereof is in issue, the parties agree that the Employer shall have the benefit of a prima facie presumption that any invention, development or improvement as referred to in paragraph 1 which is disclosed or offered to others, or published or reduced to practice by Employee within a period of one year after the termination of Employee's employment with Employer, or any such inventions, developments or improvements disclosed in a patent application filed by Employee within one year of the termination of Employee's employment by Employer, was conceived or made during the period of Employee's employment. 4. All work done by Employee for the Employer relating in any way to the conception, design, development, support, maintenance, sales or leasing of products for the Employer is the property of the Employer and Employee hereby assigns to the Employer all of Employee's rights therein. This paragraph applies to work performed by Employee before and after the signing of this Agreement. Trans-Lux Corporation By: /s/ Michael R. Mulcahy ________________________ President /s/ Karl Hirschauer _________________________ Karl Hirschauer EX-10.2 3 peoplesamendment1.txt AMMENDMENT - COMMERCIAL LOAN AND SECURITY AGREEMENT Exhibit 10.2 AMENDMENT NO. 1 TO AMENDED AND RESTATED COMMERCIAL LOAN AND ----------------------------------------------------------- SECURITY AGREEMENT ------------------ This AMENDMENT NO. 1 TO AMENDED AND RESTATED COMMERCIAL LOAN AND SECURITY AGREEMENT (this "Agreement") is made as of the 9th day of May, 2006, by and among TRANS-LUX CORPORATION, a Delaware corporation, with its chief executive office and principal place of business located at 110 Richards Avenue, Norwalk, Connecticut 06854 ("Borrower"), each of the other corporations signatory hereto as guarantors (collectively, the "Guarantors"), and PEOPLE'S BANK, a Connecticut chartered banking corporation with an office located at 350 Bedford Street, Stamford, Connecticut 06901 ("Lender"). WITNESSETH: WHEREAS, Lender has made certain loans (collectively, the "Loans") to Borrower pursuant to a certain Amended and Restated Commercial Loan and Security Agreement dated as of December 23, 2004 (as amended from time to time, the "LSA"); WHEREAS, capitalized terms not otherwise defined in this Agreement shall have the meanings ascribed to them in the LSA; WHEREAS, the Guarantors have guaranteed all obligations of the Borrower to the Lender under the LSA and related Loan Documents pursuant to a certain Amended and Restated Unlimited Guaranty dated as of December 23, 2004 (as the same may be amended or reaffirmed from time to time, the "Guaranty Agreement"); WHEREAS, as security for its obligations to the Lender, including, without limitation, those arising under the LSA the Borrower has, among other things, granted to the Lender a lien on and security interest in all of its personal property assets pursuant to the LSA; and WHEREAS, as security for their respective obligations to the Lender under the Guaranty Agreement, each Secured Guarantor has granted to the Lender a lien on and security interest in all if its personal property assets pursuant to a certain Amended and Restated Guarantor Security Agreement dated as of December 23, 2004 (the "Guarantor Security Agreement"); and WHEREAS, Borrower and the Guarantors (collectively, the "Obligors") have requested Lender (i) to retroactively amend certain financial covenants for the quarters ended December 31, 2005 and March 31, 2006; (ii) to prospectively amend certain financial covenants for the quarters ending June 30, 2006, September 30, 2006, December 31, 2006 and all quarters thereafter; (iii) to amend the maturity dates of all Loans to January 1, 2008; (iv) to modify the interest rate applicable to the Line of Credit Loan as well as certain terms and conditions relating to advances under said Line of Credit Loan; (v) to amend and restate the Term Loan Note to reflect the modification of the maturity date applicable thereto; (vi) to modify covenants relating to the maximum amount of non- financed capital expenditures; (vii) to clarify that the proceeds of the Revolving Loans shall not be used to repay Subordinated Debt; and (viii) to add an additional mandatory prepayment event and a forbearance and amendment fee; and WHEREAS, Section 10.1 of the LSA provides that no modification or amendment of the Credit Agreement shall be effective unless the same shall be in writing and signed by the Lender and Borrower. NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lender and each Obligor agree as follows: 1. Acknowledgments, Affirmations and Representations and Warranties. a. The Obligors acknowledge, affirm, represent and warrant that: (i) All of the statements contained herein are true and correct and that each understands that the Lender is relying on the truth and completeness of such statements to enter into this Agreement. (ii) As of May 1, 2006, the Borrower is legally and validly indebted to the Lender: (A) by virtue of the Term Loan in the principal amount of $8,750,000.00, (B) by virtue of the Revolving Loan in the principal outstanding amount of $850,000.00, (C) by virtue of the Line of Credit Loan in the principal outstanding amount of $0.00, (D) by virtue of the Converted Term Loan in the principal amount of $0.00, plus interest and fees accrued and accruing on each of the foregoing and costs and expenses of collection, including without limitation, attorneys' fees, relating thereto and there is no defense, offset or counterclaim with respect to any of the foregoing or independent claim or action against the Lender. (iii) Each Guarantor is legally and validly indebted to the Lender by virtue of the Guaranty Agreement and there is no defense, offset or counterclaim with respect thereto or independent claim or action against the Lender. (iv) The resolutions previously adopted by the Board of Directors of the Borrower and provided to the Lender have not in any way been rescinded or modified and have been in full force and effect since their adoption to and including the date hereof and are now in full force and effect, except to the extent that they have been modified or supplemented to authorize this Agreement and the documents and transactions described herein. (v) The Borrower has the power and authority to enter into, and has taken all necessary corporate action to authorize, this Agreement and the transactions contemplated hereby and thereby. (vi) The resolutions previously adopted by the Board of Directors of each of the Guarantors and provided to the Lender have not in any way been rescinded or modified and have been in full force and effect since their adoption to and including the date hereof and are now in full force and effect, except to the extent that they have been modified or supplemented to authorize this Agreement and the documents and transactions described herein. (vii) Each Guarantor has the power and authority to enter into, and has taken all necessary corporate action to authorize, this Agreement and the transactions contemplated hereby and thereby. -2- (viii) All representations, warranties and covenants contained in, and schedules and exhibits to, the LSA, the Guaranty Agreement and the other Loan Documents are true and correct in all material respects on and as of the date hereof, are incorporated herein by reference and are hereby remade except that Schedule 4.4(c) to the LSA relating to outstanding indebtedness of the Borrower and the Guarantors is hereby updated and replaced with Schedule 4.4(c) attached hereto. (ix) After giving effect to the amendments provided herein, no Default currently exists under the LSA, the Guaranty Agreement or any of the other Loan Documents and no condition exists which would constitute a default or an event of default (howsoever defined) under any of the Loan Documents but for the giving of notice or passage of time, or both. (x) The consummation of the transactions contemplated hereby is not prevented or limited by, nor does it conflict with or result in a breach of terms, conditions or provisions of the Borrower's or any Guarantor's Certificate of Incorporation or Bylaws or any evidence of indebtedness, agreement or instrument of whatever nature to which the Borrower or any Guarantor is a party or by which it is bound, does not constitute a default under any of the foregoing and does not violate any federal, state or local law, regulation or order or any order of any court or agency which is binding upon the Borrower or any Guarantor. 2. Amendment of LSA and other Loan Documents. a. Section 1.1 of the LSA entitled "Defined Terms" is amended as follows: (i) by deleting the definition of "Existing Term Notes" set forth therein in its entirety and by substituting the following therefor: "Existing Term Note" means that certain Replacement Term Loan Promissory Note of the Borrower payable to the Lender dated December 23, 2004 in the original principal amount of $10,000,000. (ii) by deleting the definition of "Maturity Date" set forth therein in its entirety and by substituting the following therefor: "Maturity Date" means: (i) with respect to the Term Loan, January 1, 2008; (ii) with respect to all outstanding Line of Credit Loans and all Converted Term Loans, January 1, 2008; and (iii) with respect to all outstanding Revolving Loans, January 1, 2008. (iii) by adding the following defined terms in alphabetical order: "Additional Mandatory Prepayment Event" shall have the meaning set forth in Section 2.19A hereof. "Forbearance and Amendment Fee" shall mean the fee to be paid by the Borrower to the Lender in consideration of the amendments and waivers granted by the Lender to the Borrower and the Guarantors as set forth in that certain Amendment No. 1 to Amended and Restated Commercial Loan and Security Agreement among the Borrower, the Guarantors -3- and the Lender dated as of May 9, 2006 which Forbearance and Amendment Fee shall be paid as follows: (i) $125,000, if there is an Additional Mandatory Prepayment Event on or before October 1, 2006, (ii) $250,000, if there is an Additional Mandatory Prepayment Event after October 1, 2006 but on or before December 31, 2006, and (iii) $350,000, if there is an Additional Mandatory Prepayment Event after December 31, 2006. "Routine Asset Transfer" means the transfer of assets of the Borrower and/or any Guarantor which are permitted under Section 6.6 hereof. b. Section 2.2 of the LSA is hereby entitled "Term Loan" is hereby amended as follows: (i) by deleting Section 2.2(a) in its entirety and by substituting the following therefor: "(a) The Lender extended to the Borrower a term loan in the original principal amount of $10,000,000 on December 23, 2004 (the "Term Loan") which Term Loan has an outstanding principal balance of $8,750,000.00 as of May 9, 2006." (ii) by deleting Section 2.2(b) therein in its entirety and by substituting the following therefor: "(b) The Term Loan shall be evidenced by, and repaid in accordance with the promissory note of the Borrower, substantially in the form attached hereto as Exhibit B (the "Term Loan Note"). The Term Loan Note issued to Lender shall (i) be executed by the Borrower, (ii) be payable to Lender and be dated as of May 9, 2006, (iii) be in a stated principal amount equal to $8,750,000.00 and be payable as provided in Section 2.2(d), (iv) mature on the Maturity Date of the Term Loan, (v) bear interest as provided in Section 2.5, and (vi) be entitled to the benefits of this Agreement and the other Loan Documents. The Term Loan Note amends, restates and replaces in its entirety the Existing Term Note provided, however, that the amendment, restatement and replacement of the Existing Term Note shall in no way be construed as a novation of the Borrower's indebtedness evidenced by the Existing Term Note." c. Section 2.3 of the LSA entitled "Line of Credit" is hereby amended as follows: (i) by deleting Section 2.3(d) in its entirety and by substituting the following therefor: "(d) The Borrower may prepay the Line of Credit, in whole or in part, together with accrued interest to the date of prepayment on the amount prepaid on any Business Day, without any Make-Whole Premium." (ii) by adding the following subsection immediately after Section 2.3(e): -4- "(f) Advances under the Line of Credit Loan shall be subject to the following additional terms and conditions: (i) Simultaneously with the making of each Line of Credit Loan, the Borrower shall pay to the Lender a line of credit advance fee equal to 1.25% of the principal amount of each Line of Credit Loan. (ii) Each Line of Credit Loan shall be in a minimum principal amount of not less than $1,000,000. (iii) Simultaneously with the making of each Line of Credit Loan, the Borrower repay the Subordinated Notes from cash on hand in an amount equal to not less than the principal amount of the Line of Credit Loan then being made. For purposes hereof, cash on hand shall not include any cash proceeds received from the Line of Credit Loans." d. Section 2.4 of the LSA entitled "Conversion to the Converted Term Loan" is hereby amended as follows: (i) by deleting Section 2.4(b) in its entirety and by substituting the following therefor: "(b) The Converted Term Loan shall be evidenced by , and repaid with interest in accordance with, the promissory note of the Borrower, substantially in the form of Exhibit D hereto (such promissory note is referred to herein as the "Converted Term Note"). On the Conversion Date, the Borrower shall issue the Converted Term Note to the Lender which shall (i) be executed by the Borrower, (ii) be payable to Lender and be dated the Conversion Date, (iii) be in a stated principal amount equal to the outstanding principal amount of all Line of Credit Loans on the Conversion Date, (iv) be payable in quarterly installments of principal and interest based on a 4-year straight line amortization schedule with a final payment of all outstanding principal and interest due on the Maturity Date of the Converted Term Loan, (v) mature on the Maturity Date of the Converted Term Loan, (vi) bear interest as provided in Section 2.5, and (vii) be entitled to the benefits of this Agreement and the other Loan Documents." (ii) by deleting Section 2.4(c) in its entirety and by substituting the following therefor: "(c) The Borrower may prepay the Converted Term Loan, in whole or in part, together with accrued interest to the date of prepayment on the amount prepaid on any Business Day, without any Make-Whole Premium." e. Section 2.5 of the LSA entitled "Interest Provisions" is hereby amended by deleting Section 2.5(a)(ii) entitled "Line of Credit Loans" in its entirety and by substituting the following therefor: -5- (ii) Line of Credit Loans. Subject to the provisions of Sections 2.5(c) or 2.12 hereof, during the period from the date made through and including the date of payment in full, each Line of Credit Loan shall bear interest on the outstanding principal amount thereof at a rate per annum equal to the Base Rate, on a floating basis." f. Section 2.5 of the LSA entitled "Interest Provisions" is hereby further amended by deleting Section 2.5(a)(iv) entitled "Converted Term Loan" in its entirety and by substituting the following therefor: "(iv) Converted Term Loan. Subject to the provisions of Sections 2.5(c) or 2.12 hereof, during the period from the date made through and including the date of payment in full, the Converted Term Loan shall bear interest on the outstanding principal amount thereof at a rate per annum equal to the Base Rate, on a floating basis. Interest payments shall be due and payable in arrears commencing on April 1, 2007 and continuing on the first Business Day of each subsequent fiscal quarter of the Borrower thereafter through and including the Maturity Date of the Converted Term Loan." g. Section 2.15 of the LSA entitled "Use of Proceeds" is hereby deleted in its entirety and the following is substituted therefor: "Section 2.15 Use of Proceeds. The proceeds of the Term Loan were used by the Borrower to refinance the term loans replaced by the Existing Term Loans. The proceeds of the Revolving Loans made hereunder shall be used by the Borrower for itself or for its Subsidiaries to support the Borrower's working capital requirements and trading assets and to purchase equipment but in no event shall the proceeds of any Revolving Loans be used by the Borrower to repay any Subordinated Debt. The proceeds of the Line of Credit Loans shall be used by the Borrower solely for the purpose of funding the repayment of up to 50% of the Subordinated Notes. The Letters of Credit shall finance the Borrower's purchase of goods in the ordinary course of its business. The Borrower will not, directly or indirectly, use any part of the proceeds of any of the Loans, or any Letter of Credit, for the purpose of purchasing or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or to extend credit to any Person for the purpose of purchasing or carrying any such margin stock." h. Article 2 of the LSA is hereby amended by adding the following section immediately after Section 2.19: "Section 2.19A Additional Mandatory Prepayments. Except for Routine Asset Transfers, in the event that the Borrower or any Secured Guarantor sells, leases, assigns or otherwise transfers any of its assets other than in the ordinary course of business, then, simultaneously with such sale, lease, assignment or transfer (each such sale, lease, assignment or transfer being referred to herein as an "Additional Mandatory Prepayment Event"): (a) the Revolving Loan Commitment and the Line of Credit Commitment shall automatically terminate; (b) the obligation of the Lender to issue any Letters of Credit shall automatically and immediately terminate; (c) the Borrower shall immediately prepay all Loans and all other outstanding Obligations; (d) the Borrower shall deposit in an account -6- with the Lender an amount in cash equal to the Available Amount as of the date of the Additional Mandatory Prepayment Event which amounts shall be held by the Lender as collateral for the payment and performance of all Reimbursement Obligations then arising or which in the future arise for any and all outstanding Letters of Credit and the Lender shall have exclusive dominion and control over such account; and (e) the Borrower shall pay to the Lender the applicable Forbearance and Amendment Fee. i. Article 6 of the LSA is hereby amended by adding the following section immediately after Section 6.14: "Section 6.15 Limitations on Non-Financed Capital Expenditures. Make Non-Financed Capital Expenditures (as that term is defined in Section 7.5(h) hereof) in excess of $1,000,000 per fiscal quarter of the Borrower commencing with the fiscal quarter of the Borrower ending September 30, 2006." j. Section 7.1 of the LSA entitled "Minimum Fixed Charge Coverage Ratio" is hereby deleted in its entirety and the following is substituted therefor: "Section 7.1 Minimum Fixed Charge Coverage Ratio. (A) Maintain as of the end of the fiscal quarters of the Borrower ending on each December 31, 2005, March 31, 2006 and June 30, 2006, in each case for the then ended Rolling Period, a ratio of (i) EBITDA for such period minus total Non-Financed Capital Expenditures during such period minus total dividends paid during such period divided by (ii) Current Maturities of Long-Term Debt as of the end of such period plus Interest Expense for such period plus total cash taxes paid for corporate income taxes for such period of not less than 1.10 to 1.00. (B) Maintain as of the end of the fiscal quarter of the Borrower ending on September 30, 2006 and as of the end of each fiscal quarter thereafter, in each case for the then ended Rolling Period, a ratio of (i) EBITDA for such period minus total Non-Financed Capital Expenditures during such period minus total dividends paid during such period divided by (ii) Current Maturities of Long-Term Debt as of the end of such period plus Interest Expense for such period plus total cash taxes paid for corporate income taxes for such period of not less than 1.20 to 1.00." k. Section 7.2 of the LSA entitled "Minimum Tangible Net Worth" is hereby deleted in its entirety and the following is substituted therefor: "Section 7.2 Minimum Tangible Net Worth. Maintain at all times on and after December 31, 2005, Tangible Net Worth of not less than $19,000,000." l. Section 7.5 of the LSA entitled "Certain Financial Terms" is hereby amended as follows: -7- (i) by deleting the definition of "Capital Expenditures" set forth in Section 7.5(b) in its entirety and by substituting the following therefor: "(b) "Capital Expenditures" means the difference of: (i) the gross amounts paid or accrued by the Borrower or any of its Subsidiaries in connection with the purchase or lease by the Borrower or any of its Subsidiaries of Capital Assets that would be required to be capitalized and shown on the balance sheet of such Person in accordance with GAAP; minus (ii) $2,500,000." (ii) by deleting the definition of "Current Maturities of Long-Term Debt" set forth in Section 7.5(d) in its entirety and by substituting the following therefor: "(d) "Current Maturities of Long-Term Debt" means, with respect to all Debt which, in accordance with GAAP, may be properly classified as long-term debt: (i) the portion of such Debt which is due within one (1) year from the date of determination thereof; minus (ii) the portion of such Debt due on December 1, 2006 under the Subordinated Notes." (iii) by deleting the definition of "Non-Financed Capital Expenditures" set forth in Section 7.5(h) in its entirety and by substituting the following therefor: "(h) "Non-Financed Capital Expenditures" means those Capital Expenditures which were not financed with the proceeds of the Loans or other Indebtedness permitted hereunder; provided, however, that such Non-Financed Capital Expenditures shall not include Non-Financed Capital Expenditures which the Borrower certifies to the Lender will be financed within 180 days from the date such Non-Financed Capital Expenditure was made; and provided, further, however, that in the event the Capital Expenditure Financing does not occur within the time period provided, said Non-Financed Capital Expenditure shall be included in the definition of Non-Financed Capital Expenditures for purposes of the calculation of the Borrower's Minimum Fixed Charge Coverage Ratio set forth in Section 7.1 and for purposes of determining compliance with Section 6.15 hereof." m. The replacement term loan promissory note attached to the LSA as Exhibit B is hereby deleted and the Second Replacement Term Loan Promissory Note attached hereto as Exhibit A is substituted therefor. n. The form of converted term loan promissory note attached to the LSA as Exhibit D is hereby deleted and the Form of Converted Term Loan Promissory Note attached hereto as Exhibit B is substituted therefor. o. Any reference in any of the Notes or any of the other Loan Documents to: (i) the Amended and Restated Commercial Loan and Security Agreement between the Borrower and the Lender dated as of December 23, 2004 (howsoever defined), shall be amended to refer to and mean the Amended and Restated Commercial Loan and Security Agreement between the -8- Borrower and the Lender dated as of December 23, 2004, as amended and modified by this Agreement. 3. Effect of Amendment; Reaffirmation of Liens and other Obligations. Lender and each Obligor hereby agree and acknowledge that except as provided in this Agreement and the Second Replacement Term Loan Promissory Note, the LSA, the Guaranty Agreement, the Guarantor Security Agreement and the other Loan Documents (together with all Schedules and Exhibits attached hereto) remain in full force and effect and have not been modified or amended in any respect, it being the intention of Lender and each Obligor that this Agreement and the LSA be read, construed and interpreted as one and the same instrument. In addition: (i) the Borrower acknowledges, affirms and agrees that the Lender's security interest in the Collateral shall continue to secure any and all of the Borrower's indebtedness to the Lender, including without limitation, the indebtedness arising under the LSA, as amended hereby; and (ii) each Guarantor acknowledges, affirms and agrees that (A) the Obligations of the Borrower to the Lender which have been guaranteed by such Guarantor include, without limitation the Loans, as modified hereby; and (B) each Secured Guarantor acknowledges, affirms and agrees that the Lender's security interest in the Collateral (as defined in the Guarantor Security Agreement) shall continue to secure the payment and performance of all of its obligations and liabilities to the Lender arising under the Guaranty Agreement. 4. Fees and Expenses. In addition to any Forbearance and Amendment Fee that may be due, the Borrower agrees to pay all legal fees and expenses of Lender incurred in connection with the preparation, negotiation and execution of this Agreement and the other documents executed and/or delivered in connection herewith. 5. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut (except its conflicts of laws provisions). 6. Counterparts. This Agreement may be executed in any number of identical counterparts, each of which shall be deemed to be an original, and all of which shall collectively constitute a single agreement, fully binding upon and enforceable against the parties hereto. 7. Capitalized Terms. All capitalized terms not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the LSA. 8. Benefit. This Agreement shall inure to the benefit of and bind the parties hereto and their respective successors and assigns. [NEXT PAGE IS SIGNATURE PAGE] -9- IN WITNESS WHEREOF, Lender, Borrower and Guarantors have executed this Agreement as of the date first above written. WITNESSES: TRANS-LUX CORPORATION By: /s/ Angela D. Toppi ----------------------------------- Name: Angela D. Toppi Its: Executive Vice President Duly Authorized TRANS-LUX DISPLAY CORPORATION TRANS-LUX MIDWEST CORPORATION TRANS-LUX WEST CORPORATION TRANS-LUX DURANGO CORPORATION TRANS-LUX SERVICE CORPORATION TRANS-LUX FOUR CORNERS CORPORATION TRANS-LUX LOS LUNAS CORPORATION TRANS-LUX MONTEZUMA CORPORATION TRANS-LUX REAL ESTATE CORPORATION TRANS LUX SUMMIT CORPORATION TRANS-LUX TAOS CORPORATION TRANS-LUX VALLEY CORPORATION TRANS-LUX WYOMING CORPORATION TRANS-LUX CASTLE ROCK COPORATION TRANS-LUX COCTEAU CORPORATION TRANS-LUX COLORADO CORPORATION TRANS-LUX DESERT SKY CORPORATION TRANS-LUX DREAMCATCHER CORPORATION TRANS-LUX HIGH FIVE CORPORATION TRANS-LUX LARAMIE CORPORATION TRANS-LUX LOMA CORPORATION TRANS-LUX SKYLINE CORPORATION TRANS-LUX STARLIGHT CORPORATION TRANS-LUX STORYTELLER CORPORATION TRANS-LUX NEW MEXICO CORPORATION TRANS-LUX HOLDING CORPORATION TRANS-LUX CINEMA CONSULTING CORPORATION TRANS-LUX LOVELAND CORPORATION TRANS-LUX MOVIE OPERATIONS CORPORATION TRANS-LUX MULTIMEDIA CORPORATION By: /s/ Angela D. Toppi ----------------------------------- Angela D. Toppi Its: Executive Vice President PEOPLE'S BANK By: /s/ Martin H. Anderson ----------------------------------- Name: Martin H. Anderson Its: Vice President Duly Authorized EX-31 4 tlxex311.txt CERTIFICATION SECTION 302 - 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 15, 2006 Michael R. Mulcahy President and Co-Chief Executive Officer EX-31 5 tlxex312.txt CERTIFICATION SECTION 302 - 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 15, 2006 Thomas Brandt Executive Vice President and Co-Chief Executive Officer EX-31 6 tlxex313.txt CERTIFICATION SECTION 302 - 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 15, 2006 Angela D. Toppi Executive Vice President and Chief Financial Officer EX-32 7 tlxex321.txt CERTIFICATION SECTION 906 - 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, 2006 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 15, 2006 Michael R. Mulcahy President and Co-Chief Executive Officer EX-32 8 tlxex322.txt CERTIFICATION SECTION 906 -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, 2006 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 15, 2006 Thomas Brandt Executive Vice President and Co-Chief Executive Officer EX-32 9 tlxex323.txt CERTIFICATION SECTION 906 - 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, 2006 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 15, 2006 Angela D. Toppi Executive Vice President and Chief Financial Officer
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