-----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, HJ1o+TwjgWFXr0EuPBH8yTjkQdpN5HqFOHeLp/xmHwzH7+Z43xLc2mctdudUTVyL ZJ/dE4W0cJhU/ovG8rmSkA== 0000099106-99-000008.txt : 19990901 0000099106-99-000008.hdr.sgml : 19990901 ACCESSION NUMBER: 0000099106-99-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANS LUX CORP CENTRAL INDEX KEY: 0000099106 STANDARD INDUSTRIAL CLASSIFICATION: 3990 IRS NUMBER: 131394750 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-02257 FILM NUMBER: 99693813 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 TRANS-LUX CORP FORM 10-Q PERIOD ENDING 06/30/94 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 June 30, 1999 ------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_____________to_____________ Commission file number 1-2257 ------ TRANS-LUX CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 13-1394750 - - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 110 Richards Avenue, Norwalk, CT 06856-5090 - - ---------------------------------------- ---------- (Address of principal executive offices) (Zip code) (203) 853-4321 ---------------------------------------------------- (Registrant's telephone number, including area code) - - ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) 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 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 - - -------- ------------------------------- ------------------ 08/13/99 Common Stock - $1.00 Par Value 996,415 08/13/99 Class B Stock - $1.00 Par Value 296,005 (Immediately convertible into a like number of shares of Common Stock.) TRANS-LUX CORPORATION AND SUBSIDIARIES Index Part I - Financial Information Page No. -------- Consolidated Balance Sheets - June 30, 1999 (unaudited) and December 31, 1998 1 Consolidated Statements of Income -Three and Six Months Ended June 30, 1999 and 1998 (unaudited) 2 Consolidated Statements of Cash Flows - Six Months Ended June 30, 1999 and 1998 (unaudited) 3 Notes to Consolidated Financial Statements (unaudited) 4 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II - Other Information Item 4. Submission of Matters to a Vote of Stockholders 11 Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12 Part 1 - Financial Information ------------------------------ TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
June 30 December 31 In thousands, except share data 1999 1998 - - ------------------------------------------------------------------------------------------------------- (unaudited) ASSETS Current assets: Cash and cash equivalents $ 2,021 $ 1,298 Available-for-sale securities 4,827 4,914 Receivables 7,362 7,287 Unbilled receivables 400 374 Inventories 5,094 5,381 Prepaids and other 586 360 -------- -------- Total current assets 20,290 19,614 -------- -------- Equipment on rental 73,781 70,654 Less accumulated depreciation 31,288 28,289 -------- -------- 42,493 42,365 -------- -------- Property, plant and equipment 36,261 30,816 Less accumulated depreciation and amortization 9,332 8,433 -------- -------- 26,929 22,383 Prepaids, intangibles and other 6,207 5,986 Maintenance contracts, net 721 798 Construction funds 4,694 -- -------- -------- $101,334 $91,146 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accruals $6,834 $6,167 Income taxes payable -- 275 Current portion of long-term obligations 1,433 258 -------- -------- Total current liabilities 8,267 6,700 -------- -------- Long-term obligations: 7 1/2% convertible subordinated notes due 2006 30,625 31,625 9 1/2% subordinated debentures due 2012 1,057 1,057 Obligations payable 27,620 16,841 -------- -------- 59,302 49,523 Deferred revenue, deposits and other 3,487 4,254 Deferred income taxes 4,407 4,818 -------- -------- Stockholders' equity: Capital stock Common - $1.00 par value Authorized - 5,500,000 shares Issued - 2,444,400 shares in 1999 and 2,443,119 in 1998 2,444 2,443 Class B - $1.00 par value Authorized - 1,000,000 shares Issued - 296,005 shares in 1999 and 297,286 in 1998 296 297 Additional paid-in-capital 13,901 13,901 Retained earnings 20,969 20,821 Accumulated other comprehensive income (loss) (128) -- -------- -------- 37,482 37,462 Less treasury stock - at cost 1,448,016 shares in 1999 and 1998 (excludes additional 296,005 shares in 1999 and 297,286 in 1998 for conversion of Class B stock) 11,611 11,611 -------- -------- Total stockholders' equity 25,871 25,851 -------- -------- $101,334 $91,146 ======== ======== The accompanying notes are an integral part of these consolidated financial statements.
1 TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited)
THREE MONTHS SIX MONTHS ENDED JUNE 30 ENDED JUNE 30 ----------------------- ------------------------ In thousands, except per share data 1999 1998 1999 1998 - - ----------------------------------- ----------------------- ------------------------ Revenues: Equipment rentals and maintenance $ 5,754 $ 6,031 $11,611 $11,793 Equipment sales 8,193 8,391 14,341 17,005 Theatre receipts and other 2,056 1,455 3,536 3,035 -------- -------- -------- -------- Total revenues 16,003 15,877 29,488 31,833 -------- -------- -------- -------- Operating expenses: Cost of equipment rentals and maintenance 3,207 3,210 6,454 6,368 Cost of equipment sales 5,097 5,534 9,156 11,188 Cost of theatre receipts and other 1,672 1,256 2,874 2,538 -------- -------- -------- -------- Total operating expenses 9,976 10,000 18,484 20,094 -------- -------- -------- -------- Gross profit from operations 6,027 5,877 11,004 11,739 General and administrative expenses 4,885 4,360 9,077 8,836 -------- -------- -------- -------- 1,142 1,517 1,927 2,903 Interest income 131 157 252 331 Interest expense (983) (1,041) (1,967) (2,046) Other income 69 28 216 100 -------- -------- -------- -------- Income before income taxes 359 661 428 1,288 Provision for income taxes 161 297 192 579 -------- -------- -------- -------- Net income $198 $364 $236 $709 ======== ======== ======== ======== Earnings per share: Basic $0.15 $0.28 $0.18 $0.55 Diluted $0.15 $0.19 $0.18 $0.38 Average common shares outstanding: Basic 1,292 1,290 1,292 1,290 Diluted 1,295 3,577 1,296 3,579 Cash dividends per share: Common stock $0.035 $0.035 $0.070 $0.070 Class B stock $0.0315 $0.0315 $0.0630 $0.0630
The accompanying notes are an integral part of these consolidated financial statements. 2 TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
SIX MONTHS ENDED JUNE 30 ------------------------- In thousands 1999 1998 - - ------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 236 $ 709 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,294 3,900 Net income of joint venture (71) (53) Deferred income taxes (372) (284) Gain on sale of securities -- (47) Gain on purchase of Company's 7 1/2% convertible subordinated notes (145) -- Changes in operating assets and liabilities: Receivables (75) (1,705) Unbilled receivables (26) 15 Inventories 287 (464) Prepaids and other (732) (179) Accounts payable and accruals 587 (328) Income taxes payable (275) 210 Deferred revenue, deposits and other (767) 673 --------- --------- Net cash provided by operating activities 2,941 2,447 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Equipment manufactured for rental (3,127) (4,065) Purchases of property, plant and equipment (4,292) (1,166) Increase in construction funds (4,694) -- Payments for acquisitions (net) (1,163) -- Proceeds from joint venture 47 47 Redemption of available-for-sale securities -- 1,728 --------- --------- Net cash used in investing activities (13,229) (3,456) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term obligations 12,737 1,500 Repayment of long-term obligations (783) (1,136) Purchase of Company's 7 1/2% convertible subordinated notes (855) -- Proceeds from exercise of stock options -- 9 Cash dividends (88) (89) --------- --------- Net cash provided by financing activities 11,011 284 --------- --------- Net increase (decrease) in cash and cash equivalents 723 (725) Cash and cash equivalents at beginning of year 1,298 1,843 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,021 $ 1,118 ========= ========= - - ------------------------------------------------------------------------------------------------------------- Interest paid $1,976 $1,713 Interest received 243 351 Income taxes paid 772 267 - - ------------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these consolidated financial statements.
3 TRANS-LUX CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1999 (Unaudited) Note 1 - Basis of Presentation Financial information included herein is unaudited, however, such information reflects all adjustments which are, in the opinion of management, necessary for the fair presentation of the consolidated financial statements for the interim periods. The results for the interim periods are not necessarily indicative of the results to be expected for the full year. It is suggested that the June 30, 1999 consolidated financial statements be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report and Form 10-K for the year ended December 31, 1998. Certain reclassifications of prior years' amounts have been made to conform to the current year's presentation. Note 2 - Inventories Inventories consist of the following:
June 30 December 31 In thousands 1999 1998 - - ------------------------------------------------------------------------------- Raw materials and spare parts $3,104 $3,230 Work-in-progress 964 1,218 Finished goods 1,026 933 ----- ----- $5,094 $5,381 ====== ======
Note 3 - Long-Term Obligations At June 30, 1999, long-term obligations included $6.8 million of construction or real estate mortgages which are secured, the last of which extends to 2014. The interest rate is either fixed or floating, at June 30, 1999 such interest rates ranged from 6.7% to 7.75%. During June 1999, the Company received $4.8 million in proceeds from an industrial revenue bond financing for the construction of a new 55,000 square foot manufacturing facility in Logan, Utah. The bonds are secured, mature 2014 and were issued with a variable interest rate. At June 30, 1999 such interest rate ranged from 3.9% to 5.15%. Note 4 - Reporting Comprehensive Income The components of comprehensive income for the Company are foreign currency translation adjustments relating to the Company's foreign subsidiaries and unrealized holding gains or losses on the Company's available-for-sale securities. Comprehensive income is a gain of $176,000 and $369,000 for the three months ended June 30, 1999 and 1998, respectively; and a gain of $130,000 and $696,000 for the six months ended June 30, 1999 and 1998, respectively. 4 Note 5 - Earnings Per Share The following table represents the computation of basic and diluted earnings per common share.
Three months ended June 30 Six months ended June 30 In thousands, except per share data 1999 1998 1999 1998 - - --------------------------------------------------------------------------------------------------------------------------------- Basic earnings per share computation: Net income (1) $ 198 $ 364 $ 236 $ 709 --- --- --- --- Weighted average common shares outstanding 1,292 1,290 1,292 1,290 ----- ----- ----- ----- Basic earnings per common share (1) $0.15 $0.28 $0.18 $0.55 ==== ==== ==== ==== - - --------------------------------------------------------------------------------------------------------------------------------- Diluted earnings per share computation: Net income (1) $ 198 $ 364 $ 236 $ 709 Add: After tax interest expense applicable to convertible debt (2) -- 352 -- 704 Add: After tax changes to income applicable to assumed conversion (2) -- (33) -- (59) --- --- --- ----- Adjusted net income $ 198 $ 683 $ 236 $1,354 === === === ===== Weighted average common shares outstanding 1,292 1,290 1,292 1,290 Assumes exercise of options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options 3 30 4 32 Assumes conversion of 7 1/2% convertible subordinated notes (2) -- 2,257 -- 2,257 ----- ----- ----- ----- Total weighted average common shares 1,295 3,577 1,296 3,579 ===== ===== ===== ===== Diluted earnings per common share (1) $0.15 $0.19 $0.18 $0.38 ==== ==== ==== ==== (1) The 1999 income before the special litigation charge was $389,000 ($0.30 per share, basic and $0.21 per share diluted) and $427,000 ($0.33 per share, basic and $0.30 per share, diluted) for the three and six months ended June 30, 1999, respectively. (2) The 1999 diluted earnings per share calculation does not include the assumed conversion of the Company's 7 1/2% convertible subordinated notes, as the effect is antidilutive. - - ---------------------------------------------------------------------------------------------------------------------------------
Note 6 - Business Segment Data The Company evaluates segment performance and allocates resources based upon operating income. The Company's operations have been classified into three reportable business segments. The Display Division comprises two operating segments, indoor display and outdoor display. Both segments design, produce, lease, sell and service large-scale, multi-color, real-time electronic information displays and both are conducted on a global basis, primarily through operations in the U.S. The Company also has operations in Canada and Australia. The indoor display and outdoor display segments are differentiated primarily by the customers they serve. The Entertainment and Real Estate Division owns a chain of motion picture theatres in the western U.S. and owns real estate used for both corporate and income-producing purposes in the U.S. and Canada. Segment operating income is shown after general and administrative expenses directly associated with the segment and includes the operating results of the joint venture activities. Corporate items relate to resources and costs which are not directly identifiable with a segment. There are no intersegment sales. 5 Information about the Company's operations in its three business segments is as follows:
Three months ended June 30 Six months ended June 30 In thousands 1999 1998 1999 1998 - - --------------------------------------------------------------------------------------------------------------------------------- Revenues: Indoor display $ 6,351 $ 7,110 $11,558 $14,599 Outdoor display 7,596 7,312 14,394 14,199 Entertainment and real estate 2,056 1,455 3,536 3,035 ----- ----- ------ ------ Total revenues $16,003 $15,877 $29,488 $31,833 ------ ------ ------ ------ Operating income: Indoor display $ 2,062 $ 2,159 $ 3,499 $ 4,253 Outdoor display 745 834 1,383 1,602 Entertainment and real estate 241 (7) 314 134 --- --- --- --- $ 3,048 $ 2,986 $ 5,196 $ 5,989 Other income -- 24 145 47 Corporate general and administrative expenses (1,837) (1,465) (3,198) (3,033) Interest expense-net (852) (884) (1,715) (1,715) --- --- ----- ----- Income before income taxes $ 359 $ 661 $ 428 $ 1,288 === === === =====
Note 7 - Litigation The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. During June of 1999 a jury in New Mexico awarded a former employee of the Company $15,000 in damages for lost wages and emotional distress and $393,000 in punitive damages on a retaliatory discharge claim. The Company denied the charges on the basis that the termination was proper and intends to appeal such verdict. The Company believes it has made adequate provisions in the quarter to cover such matters. Certain of the amounts are subject to insurance recoveries. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998 The Company's total revenues for the six months ended June 30, 1999 decreased 7.4% to $29.5 million from $31.8 million for the six months ended June 30, 1998. Revenues from equipment rentals and maintenance decreased $182,000 or 1.5%. Indoor display rental and maintenance revenues increased 2.5%, which was offset by the 7.7% continued expected revenue decline in the outdoor rental and maintenance bases previously acquired, however such decline was less than originally planned. Revenues from equipment sales decreased $2.7 million or 15.7% in 1999. This decrease was primarily in the indoor display segment. Last year included a multi-million dollar order from a major exchange being recognized on a percentage of completion basis, which did not recur this year. Revenues from theatre receipts and other increased $501,000 or 16.5% in 1999, due to film product and the acquisition of two theatres in Wyoming in May 1999. Gross profit as a percentage of revenues was 37.3% in 1999 compared to 36.9% in 1998. Cost of equipment rentals and maintenance includes field service expenses, plant repair costs and maintenance and depreciation. Both the indoor display and outdoor display cost of equipment rental and maintenance increased slightly, principally due to depreciation expense. The cost of equipment rentals and maintenance represented 55.6% of related revenues for the six months ended June 30, 1999 compared to 54.0% in 1998. Cost of equipment sales decreased $2.0 million or 18.2%. The indoor display cost of equipment sales decreased 49.8%, primarily due to a large indoor sale in 1998 which did not recur in 1999. The outdoor display cost of equipment sales remained level. The cost of equipment sales represented 63.8% of related revenues for the six months ended June 30, 1999 compared to 65.8% in 1998. Cost of theatre receipts and other, which includes film rental costs, increased $336,000 or 13.2% in 1999, mainly due to higher volume. The cost of theatre receipts and other represented 81.3% of related revenues for the six months ended June 30, 1999 compared to 83.6% in 1998. Total general and administrative expenses increased $241,000 or 2.7%. The corporate general and administrative expenses increased 5.4%, primarily attributable to the special litigation charge of $408,000 on a retaliatory discharge claim. (See Note 7.) The indoor display general and administrative expenses decreased 10.2%, primarily due to control of certain administrative costs. The outdoor display general and administrative expenses increased 16.4%, primarily due to expanded sales and marketing efforts relating to the sports sector. The entertainment and real estate general and administrative expenses remained level. Interest income decreased $79,000, primarily attributable to the utilization of investments to construct new theatres and manufacture new equipment for rental. Interest expense decreased $79,000, primarily due to capitalization of interest during construction of theatre projects. Other income relates to the gain on the purchase of $1 million principal amount of the Company's 7 1/2% convertible subordinated notes in January 1999 at a discount. The effective tax rate at June 30, 1999 and 1998 was 45.0%. 7 Three Months Ended June 30, 1999 Compared to Three Months Ended June 30, 1998 The Company's total revenues for the three months ended June 30, 1999 increased slightly to $16.0 million from $15.9 million for the three months ended June 30, 1998. Revenues from equipment rentals and maintenance decreased $277,000 or 4.6%. Indoor display rental and maintenance revenues remained level. Outdoor display rental and maintenance revenues decreased 10.4%, primarily due to the continued expected revenue decline from the outdoor lease and maintenance bases previously acquired, however the accumulated expected decline was less than originally planned. Revenues from equipment sales decreased $198,000 or 2.4% in 1999, primarily in the indoor display segment. Last year's quarter included a portion of a multi-million dollar order from a major exchange being recognized on a percentage of completion basis, which did not recur in 1999. Revenues from the outdoor display segment increased 10.7% in 1999, primarily due to an increase in the sports sector. Revenues from theatre receipts and other increased $601,000 or 41.3% in 1999, tracking the national theatrical market, which was higher during the quarter compared to last year due to the film product and the acquisition of the two theatres in Wyoming in May 1999. b Gross profit as a percentage of revenues was 37.7% in 1999 compared to 37.0% in 1998. Both the indoor and outdoor display cost of equipment rental and maintenance remained level. The cost of equipment rentals and maintenance represented 55.7% of related revenues for the three months ended June 30, 1999 compared to 53.2% in 1998. Cost of equipment sales decreased $437,000 or 7.9%. The indoor display cost of equipment sales decreased 34.6%, primarily due to a large indoor sale in 1998 that did not recur in 1999. The outdoor display cost of equipment sales increased 5.7%, primarily due to the higher volume in the sports sector. The cost of equipment sales represented 62.2% of related revenues for the three months ended June 30, 1999 compared to 66.0% in 1998. Cost of theatre receipts and other increased $416,000 or 33.1% in 1999, mainly due to the higher volume and the acquisition of two theatres in Wyoming in May 1999. The cost of theatre receipts and other represented 81.3% of related revenues for the three months ended June 30, 1999 compared to 86.3% in 1998. Total general and administrative expenses increased $525,000 or 12.0%. The corporate general and administrative expenses increased 25.4%, primarily attributable to the special litigation charge. (See Note 7.) The indoor display general and administrative expenses decreased 3.3%, primarily due to control of certain administrative costs. The outdoor display general and administrative expenses increased 17.3%, primarily due to expanded sales and marketing efforts related to the sports sector. The entertainment and real estate general and administrative expenses remained level. Interest income decreased $26,000, primarily attributable to the utilization of investments to construct new theatres and manufacture new equipment for rental. Interest expense decreased $58,000, primarily due to capitalization of interest during construction of theatre projects. Accounting Standards The Company will adopt the provisions of Statement of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133) and No.137 (which defers the effective date of SFAS 133) effective January 1, 2001. The standard requires companies to recognize all 8 derivatives as either assets or liabilities and measure those instruments at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The Company does not expect the adoption of SFAS 133 to have a material impact on its consolidated financial statements. Liquidity and Capital Resources The regular quarterly cash dividend for the second quarter of 1999 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 May 27, 1999 payable to stockholders of record as of July 5, 1999 and was paid July 16, 1999. The Company has a $15.0 million revolving credit facility with its bank, which is available to June 2001, at which time the outstanding balance would convert into a five-year term loan. At June 30, 1999 the Company had $10.6 million borrowing capacity available under such facility. The Company believes that cash generated from operations together with the cash and cash equivalents on hand and the availability under the revolving credit facility will be sufficient to fund its anticipated near term cash requirements. Cash and cash equivalents increased $723,000 for the six months ended June 30, 1999 compared to a decrease of $725,000 in 1998. The increase in 1999 is primarily attributable to $6.8 million in construction or real estate mortgages utilized for construction and acquisition of theatres and purchases of equipment, and refinancing of a mortgage. In June 1999, the Company received $4.8 million in proceeds from an industrial revenue bond financing for the construction of a new 55,000 square foot manufacturing facility in Logan, Utah, the proceeds are reflected in the long-term assets section of the Consolidated Balance Sheets as Construction Funds. The decrease in 1998 was primarily attributable to an increase in receivables, which primarily related to a certain significant contract being recorded on the percentage of completion basis and cash utilized for the manufacturing of equipment for rental. The Company utilizes its revolving credit facility to finance the expansion of its theatre operations until long-term financing is in place. The $12.7 million proceeds from long-term obligations relates primarily to the construction of new theatres and the new manufacturing and office facility. The Company has limited involvement with derivative financial instruments and does not use them for trading purposes; they are only used to manage and fix well-defined interest rate risks. The Company has two interest rate swap agreements having a notional value of $8.7 million to reduce exposure to interest fluctuations. Year 2000 Considerations Many currently installed computer systems and software products are coded to accept only two-digit entries in the date code field and cannot distinguish 21st century dates from 20th century dates. These date code fields will need to distinguish 21st century dates from 20th century dates and, as a result, many companies' software and computer systems may need to be upgraded or replaced in order to comply with such Year 2000 requirements. For the Company, the Year 2000 process involved modifying or replacing certain hardware and software. The Company utilized both internal and external resources to reprogram, replace and 9 test all of its software for Year 2000 compliance. The Company has completed its mission critical software updates, continues working on its Year 2000 projects and believes that its level of preparedness is appropriate. The total cost for this project is estimated to be $350,000, of which $300,000 will be capitalized. This cost is being funded through operating cash flows and is not expected to have a material impact on the Company's cash flows, results of operations or financial condition. In addition, the Company continues to communicate with others with whom it does significant business to determine their Year 2000 compliance readiness and the extent to which the Company is vulnerable to any third-party Year 2000 issues. Failure by the Company and/or vendors and customers to complete Year 2000 compliance work in a timely manner could have a material adverse effect on certain of the Company's operations. The Company continues to develop contingency plans in the event it does not complete all phases of its Year 2000 project. The costs of this project and the expected completion dates are based on management's best estimates. 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, and interest rate and foreign exchange fluctuations. 10 Part II - Other Information --------------------------- Item 4. Submission of Matters to a Vote of Stockholders - - ------ ----------------------------------------------- The Annual Meeting of Stockholders of Trans-Lux Corporation was held on May 27, 1999 for the purpose of electing directors and approving the appointment of auditors as set forth below. All of management's nominees for directors for a three-year term as listed in the proxy statement were elected by the following vote: For Not For --- ------- Robert Greenes 3,765,090 19,438 Howard S. Modlin 3,765,090 19,438 The following directors are continuing their terms as directors: Richard Brandt, Two-Years Remaining Jean Firstenberg, Two-Years Remaining Gene Jankowski, Two-Years Remaining Victor Liss, Two-Years Remaining Steven Baruch, One-Year Remaining Howard M. Brenner, One-Year Remaining Allan Fromme, One-Year Remaining The recommendation to retain Deloitte & Touche LLP as the independent auditors for the Corporation was approved by the following vote: For Against Abstain --- ------- ------- 3,771,066 10,701 2,761 Item 6. Exhibits and Reports on Form 8-K - - ------- -------------------------------- (a) Exhibits 10 Eighth Amendment Agreement to the Credit Agreement with First Union National Bank dated as of June 3, 1999. 27 Financial Data Schedule, which is submitted electronically to the Securities and Exchange Commission for information only and not filed. (b) No reports on Form 8-K were filed during the quarter covered by this report. 11 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: August 16, 1999 by /s/ Angela D. Toppi ---------------------- Angela D. Toppi Senior Vice President and Chief Financial Officer by /s/ Robert P. Bosworth ------------------------- Robert P. Bosworth Vice President and Chief Accounting Officer EX-10 2 EXHIBIT 10 EIGHTH AMENDMENT AGREEMENT -------------------------- AGREEMENT, made as of June 3, 1999, among TRANS-LUX CORPORATION, a Delaware corporation, TRANS-LUX DISPLAY CORPORATION, a Delaware corporation, TRANS-LUX MONTEZUMA CORPORATION, a New Mexico corporation, INTEGRATED SYSTEMS ENGINEERING, INC., a Utah corporation, and FIRST UNION NATIONAL BANK, a national banking association. Background ---------- A. Capitalized terms not otherwise defined shall have the meanings ascribed to them in the Credit Agreement dated as of August 28, 1995, among Trans-Lux Corporation, Trans-Lux Consulting Corporation, Trans-Lux Sign Corporation, Trans-Lux Montezuma Corporation, Integrated Systems Engineering, Inc., and First Fidelity Bank of Connecticut (predecessor in interest to First Union National Bank) (as amended, modified or supplemented from time to time, the "Credit Agreement"). B. TLX and ISE have entered into the Loan Agreement (the "Bond Loan Agreement") dated as of May 1, 1999 between TLX, ISE and the City of Logan, Utah (the "Issuer") in connection with the issuance of the maximum aggregate amount of $3,385,000 Variable Rate Demand/Fixed Rate Tax-Exempt Revenue Bonds (Integrated Systems Engineering, Inc. Project), Series 1999A (the "Tax-Exempt Bonds") and ISE has entered into an Indenture covering $1,440,000 Taxable Variable Rate Demand/Fixed Rate Revenue Bonds (Integrated Systems Engineering, Inc.), Series 1999B (the "Taxable Bonds" and together with the Tax-Exempt Bonds, the "Bonds"). C. The proceeds of the Bonds will be used to finance the construction of a manufacturing and office facility for ISE in Logan, Utah (the "Project"). D. Pursuant to the Bond Loan Agreement, ISE is obligated to pay principal and interest on the Tax-Exempt Bonds and TLX and ISE have arranged for the issuance by First Union National Bank of certain letters of credit (the "Bond L/Cs") for the account of TLX and ISE, and for the benefit of the Trustee, to provide for payments in connection with the Bonds. E. The Borrowers have requested that the Lender amend certain covenants and conditions contained in the Credit Agreement to allow for the Obligations of the Borrowers in connection with the issuance of the Bonds. Agreement --------- In consideration of the foregoing Background, which is incorporated by reference, the parties, intending to be legally bound, agree as follows: 1. Modifications to Credit Agreement. All of the terms and provisions of the Credit Agreement and the other Loan Documents shall remain in full force and effect except as follows: (a) The following definition of "Bonds" is hereby added to Annex "A" to the Credit Agreement following the definition of "Base Rate": "Bonds" shall mean the Tax-Exempt Bonds and the Taxable Bonds. (b) The following definition of Indenture is hereby added to Annex A to the Credit Agreement following the definition of "Indemnified Person": "Indentures" shall mean the Tax-Exempt Indenture and the Taxable Indenture. (c) The definition of "Obligations" contained in Annex A to the Credit Agreement is deleted and the following is substituted therefor: "Obligations" shall mean all loans, advances, debts, liabilities and obligations for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or amounts are liquidated or determinable) owing by Borrowers to Lender, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement or other instrument, arising under any of the Loan Documents or arising under the Reimbursement Agreement in connection with the Bonds issued pursuant to the Indentures and shall include, without limitation, all principal, interest (including, without limitation, interest which accrues after the commencement of any case or proceeding referred to in Section 8.01(g) or (h)), all Fees, Charges (paid by Lender), expenses, attorneys' fees and any other sum chargeable to Borrowers under any of the Loan Documents and all obligations under a "swap agreement" (as that term is defined in 11 U.S.C. S101(ss)), including, without limitation, the Swap Agreement. (d) The following definition of "Reimbursement Agreement" is hereby added to Annex A to the Credit Agreement following the definition of "Regulatory Change": "Reimbursement Agreement" shall mean the Reimbursement Agreement dated as of June 3, 1999 between each of TLX and ISE and the Lender. (e) The following definitions are added to Annex A to the Credit Agreement following the definition of "Taxes": "Tax-Exempt Bonds" shall mean the Variable Rate Demand/Fixed Rate Tax-Exempt Revenue Bonds (Integrated Systems Engineering, Inc. Project) Series 1999A, issued by the City of Logan, Utah pursuant to the Tax-Exempt Indenture. "Tax-Exempt Indenture" shall mean the Indenture of Trust dated as of May 1, 1999, between the City of Logan, Utah and Lender, as trustee, pursuant to which the Tax- Exempt Bonds were issued. "Taxable Bonds" shall mean the Taxable Variable Rate Demand/Fixed Rate Revenue Bonds (Integrated Systems Engineering, Inc. Project) Series 1999B, issued by ISE pursuant to the Taxable Indenture. "Taxable Indenture" shall mean the Indenture of Trust dated as of May 1, 1999, between ISE and Lender, as trustee, pursuant to which the Taxable Bonds were issued. (f) Annex D to the Credit Agreement is deleted and Annex D attached hereto is substituted therefor. 2. Conditions Precedent. The obligation of the Lender under this Agreement is subject to the receipt and review, to the satisfaction of the Lender, of the following: (a) Amendment Agreement. This Agreement duly executed by the parties hereto; and (b) Other. Such other agreements as the Lender shall require. 4. Reaffirmation by the Borrowers. The Borrowers acknowledge that each is legally, validly and enforceably jointly and severally indebted to the Lender under the Notes, and each of TLX and ISE is legally, validly and enforceably jointly and severally indebted to the Lender under the Reimbursement Agreement, without defense, counterclaim or offset, and that each, as the case may be, is legally, validly and enforceably liable to the Lender for all costs and expenses of collection and reasonable attorneys' fees related to or in any way arising out of this Agreement, the Notes, the Credit Agreement, the Reimbursement Agreement and the other Loan Documents. The Borrowers hereby restate and agree to be bound by all covenants contained in the Credit Agreement, the Reimbursement Agreement and the other Loan Documents and reaffirm that all of the representations and warranties contained in the Credit Agreement, the Reimbursement Agreement and the other Loan Documents remain true and correct in all material respects with the exception that the financial statements described therein are deemed true as of the date made. The Borrowers represent that except as set forth in the Credit Agreement, the Reimbursement Agreement and the other Loan Documents, there are no pending, or to each Borrower's knowledge threatened, legal proceedings to which any of the Borrowers or any of the Guarantors is a party which materially and adversely affect the transactions contemplated by this Agreement or the ability of the Borrowers or any of the Guarantors to conduct its business on a consolidated basis. The Borrowers and the Guarantors acknowledge and represent that the resolutions of each dated July 27, 1995 (except for resolutions of Trans-Lux Midwest Corporation which are dated February 13, 1997) and the resolutions of TLX and ISE dated May 27, 1999, remain in full force and effect and have not been modified, amended, rescinded or otherwise abrogated. 5. Reaffirmation by the Guarantors. The Guarantors acknowledge that each is legally and validly indebted to the Lender under the Guaranty of each without defense, counterclaim or offset, and affirms that each Guaranty remains in full force and effect and includes, without limitation, the indebtedness, liabilities and obligations arising under or in any way connected with the Loans, the Reimbursement Agreement, this Agreement and the other Loan Documents, whether now existing or hereafter arising. 6. Reaffirmation re: Collateral. The Borrowers and the Guarantors reaffirm the liens, security interests and pledges granted to the Lender pursuant to the Loan Documents to secure the obligations of each thereunder. 7. Other Representations by Borrower and Guarantors. Each of the Borrowers and the Guarantors represents and confirms that (a) no Event of Default has occurred and is continuing and that the Lender has not given its consent to or waived any Default or Event of Default and (b) the Credit Agreement and the other Loan Documents are in full force and effect and enforceable against the Borrowers and the Guarantors in accordance with the terms thereof. Each of the Borrowers and Guarantors represents and confirms that as of the date hereof, each has no claim or defense (and each of the Borrowers and the Guarantors hereby waives every claim and defense as of the date hereof) against the Lender arising out of or relating to the Credit Agreement, this Agreement and the other Loan Documents or the making, administration or enforcement of the Loans and the remedies provided for under the Loan Documents. 8. No Waiver by Lender. Each of the Borrowers and the Guarantors acknowledges that (a) by execution of this Agreement, the Lender is not waiving any Default, whether now existing or hereafter occurring, disclosed or undisclosed, by the Borrower or the Guarantors under the Loan Documents and (b) the Lender reserves all rights and remedies available to it under the Loan Documents and otherwise. 9. Prejudgment Remedy Waiver; Waivers. EACH OF THE BORROWERS AND THE GUARANTORS ACKNOWLEDGES THAT THE LOANS AND THE TRANSACTIONS EVIDENCED BY THE NOTES, THE CREDIT AGREEMENT, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ARE COMMERCIAL TRANSACTIONS AND EACH WAIVES ITS RIGHTS TO NOTICE AND HEARING PRIOR TO THE ISSUANCE OF ANY PREJUDGMENT REMEDY, OR AS OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE LENDER MAY DESIRE TO USE, AND FURTHER WAIVES DILIGENCE, DEMAND, PRESENTMENT FOR PAYMENT, NOTICE OF NONPAYMENT, PROTEST AND NOTICE OF ANY RENEWALS OR EXTENSIONS. EACH OF THE BORROWERS AND THE GUARANTORS ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY, WILLINGLY, VOLUNTARILY AND WITHOUT DURESS, AND ONLY AFTER CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS. 10. Jury Trial Waiver. EACH OF THE BORROWERS AND THE GUARANTORS WAIVES TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH, OR IN ANY WAY RELATED TO, THE FINANCING TRANSACTIONS OF WHICH THE NOTES, THE CREDIT AGREEMENT, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS IS A PART OR THE ENFORCEMENT OF ANY OF THE LENDER'S RIGHTS. EACH OF THE BORROWERS AND THE GUARANTORS ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY, WILLINGLY, VOLUNTARILY AND WITHOUT DURESS, AND ONLY AFTER CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS. 11. Miscellaneous. (a) This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. (b) This Agreement and the rights and obligations of the parties hereunder shall be governed by and construed in accordance with, the law of the State of Connecticut. (c) This Agreement shall be deemed a Loan Document under the Credit Agreement for all purposes. The parties have executed this Agreement as of the date first written above. BORROWERS: --------- TRANS-LUX CORPORATION By /s/ Victor Liss -------------------------------------- Victor Liss Title: President By /s/ Angela Toppi -------------------------------------- Angela Toppi Title: Senior Vice President and Chief Financial Officer TRANS-LUX DISPLAY CORPORATION By /s/ Victor Liss -------------------------------------- Victor Liss Title: President By /s/ Angela Toppi -------------------------------------- Angela Toppi Title: Senior Vice President and Chief Financial Officer TRANS-LUX MONTEZUMA CORPORATION By /s/ Victor Liss -------------------------------------- Victor Liss Title: President By /s/ Angela Toppi -------------------------------------- Angela Toppi Title: Senior Vice President and Chief Financial Officer INTEGRATED SYSTEMS ENGINEERING, INC. By /s/ Victor Liss -------------------------------------- Victor Liss Title: President By /s/ Angela Toppi -------------------------------------- Angela Toppi Title: Senior Vice President and Chief Financial Officer GUARANTORS: TRANS-LUX DISPLAY CORPORATION TRANS-LUX CANADA, LTD. TRANS-LUX COCTEAU CORPORATION TRANS-LUX COLORADO CORPORATION TRANS-LUX DURANGO CORPORATION TRANS-LUX EXPERIENCE CORPORATION TRANS-LUX HIGH FIVE CORPORATION TRANS-LUX INVESTMENT CORPORATION TRANS-LUX LOMA CORPORATION TRANS-LUX LOVELAND CORPORATION TRANS-LUX MIDWEST CORPORATION TRANS-LUX MONTEZUMA CORPORATION TRANS-LUX MULTIMEDIA CORPORATION TRANS-LUX PENNSYLVANIA CORPORATION TRANS-LUX PTY, LTD. TRANS-LUX SEAPORT CORPORATION TRANS-LUX SERVICE CORPORATION TRANS-LUX SOUTHWEST CORPORATION TRANS-LUX STORYTELLER CORPORATION TRANS-LUX SYNDICATED PROGRAMS CORPORATION TRANS-LUX TAOS CORPORATION TRANS-LUX THEATRES CORPORATION INTEGRATED SYSTEMS ENGINEERING, INC. SAUNDERS REALTY CORPORATION By /s/ Victor Liss -------------------------------------- Victor Liss Title: President By /s/ Angela Toppi -------------------------------------- Angela Toppi Title: Senior Vice President and Chief Financial Officer LENDER: ------ FIRST UNION NATIONAL BANK By /s/ James J. McKenna --------------------------------------- James J. McKenna Title: Executive Vice President ANNEX D to CREDIT AGREEMENT Dated as of August 28, 1995 FINANCIAL STATEMENTS, PROJECTIONS AND NOTICES --------------------------------------------- (a) Promptly upon filing thereof, a copy of the Report on Form 10-Q from TLX together with a certificate of the Chief Financial Officer of the Borrowers that such financial statements contained therein and present fairly in accordance with GAAP the consolidated financial position and the consolidated results of operations and the consolidated statements of cash flow of the Borrowers as at the end of such Fiscal Quarter and for the period then ended, and that there was no Default in existence as of such time. (b) Promptly upon filing thereof, a copy of the Report of Form 10-K together with (i) a statement in reasonable detail showing the calculations used in determining the Applicants' compliance with the financial covenants set forth in Section 6.11, (ii) a certification of the Chief Executive Officer or Chief Financial Officer of the Applicants, in the form of "Rider 1" hereto that all such financial statements present fairly in accordance with GAAP the cash flows, the results of operations and the balance sheet of the Borrowers and their Subsidiaries as at the end of such Fiscal Year and for the period then ended and that, to their knowledge, there was no Default in existence as of such time. (c) As soon as practicable, but in any event within five (5) Business Days after the Borrowers become aware of the existence of any Default, or any development or other information which would have a Material Adverse Effect, telephonic or telegraphic notice specifying the nature of such Default or development or information, including the anticipated effect thereof, which notice shall be promptly confirmed in writing within five (5) days. (d) Upon the Lender's request, copies of all federal, state, local and foreign tax returns, information returns and reports in respect of income, franchise or other taxes on or measured by income (excluding sales, use or like taxes) filed by the Borrowers or any Subsidiary thereof. (e) Promptly upon the issuance thereof, copies of all reports to the Securities and Exchange Commission or any other governmental agency or any securities exchange located in the United States of America where TLX or any Subsidiary is listed, and all reports, notices or statements sent to its stockholders or to the holders of any Indebtedness or to the Trustee or any other trustee under any indenture under which the same is issued. (f) As soon as possible, and in any event within ten days after the Borrowers know or have reason to believe that any of the events or conditions specified below with respect to any Plan of Multiemployer Plan has occurred or exists with respect to the Borrowers or any of their Subsidiaries, a statement signed by a senior officer of the Borrowers setting forth details respecting such event or condition and the action, if any, that the Applicants, any Subsidiary thereof or any ERISA Affiliate proposes to take with respect thereto (and a copy of any report or notice required to be filed with or given to PBGC by the Applicants, any Subsidiary thereof or any ERISA Affiliate with respect to such event or condition): (i) any reportable event, as defined in Section 4043(b) of ERISA and the regulations issued thereunder, with respect to a Plan, as to which PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event (provided that a failure to meet the minimum funding standard of Section 412 of the IRC or Section 302 of ERISA shall be a reportable event regardless of the issuance of any waivers in accordance with Section 412(d) of the IRC); (ii) the filing under Section 4041 of ERISA of a notice of intent to terminate any Plan or the termination of any Plan; (iii) the institution by PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Applicants, any Subsidiary thereof or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by PBGC with respect to such Multiemployer Plan; (iv) the complete or partial withdrawal by the Applicants, any Subsidiary thereof or any ERISA Affiliate under Section 4201 or 4204 of ERISA from a Multiemployer Plan, or the receipt by the Applicants, any Subsidiary thereof or any ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA; and (v) the institution of a proceeding by a fiduciary or any Multiemployer Plan against the Applicants, any Subsidiary thereof or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed within 30 days. (vi) Such other reports and information respecting the Applicants' business, financial condition or prospects as the Lender may, from time to time, reasonably request. Rider 1 ------- Pursuant to the terms of the Reimbursement Agreement (the "Agreement") dated as of June ___, 1999, between Trans-Lux Corporation and Integrated Systems Engineering, Inc. (the "Borrowers") and First Union National Bank, Inc. (the "Lender"), the Borrowers certify to the Lender as follows: 1. The consolidated financial statements delivered herewith for the period ended ____________ present fairly in accordance with GAAP the consolidated financial position, the consolidated results of operations and the consolidated statements of cash flow of such Borrower as at the end of such period. 2. The representations, warranties and covenants of such Borrower set forth in the Agreement, or which are contained in any certificate, document or financial or other statement furnished pursuant to or in connection with the Agreement, are true and correct in all material respects on and as of the date hereof, except as set forth in the attached Exhibit "A", which contains a full and complete listing, as of the date hereof, of any changes which vary from the above-mentioned representations, warranties and covenants; 3. Immediately prior to and immediately after the date hereof, no Event of Default, as defined in the Agreement, will have occurred and will be continuing under the Agreement or any and all related documentation, and there has occurred no event which would, if uncured or uncorrected, constitute an Event of Default with the giving of notice, passage of time or both; and 4. There are no liquidation or dissolution proceedings pending or to its knowledge threatened against such Borrower, and no other event has occurred affecting or threatening the corporate existence of such Borrower. TRANS-LUX CORPORATION By______________________________________ Name: Title: INTEGRATED SYSTEMS ENGINEERING, INC. By______________________________________ Name: Title: EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS ON FORM 10-Q. 1,000 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 2,021 4,827 7,362 0 5,094 20,290 110,042 40,620 101,334 8,267 31,682 2,740 0 0 23,131 101,334 14,341 29,488 9,156 18,484 0 0 1,967 428 192 236 0 0 0 236 0.18 0.18
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