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, 1997
-------------
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
- -------- ------------------------------- ------------------
08/11/97 Common Stock - $1.00 Par Value 985,121
08/11/97 Class B Stock - $1.00 Par Value 298,640
(Immediately convertible into a
like number of shares of Common
Stock.)
<PAGE>
TRANS-LUX CORPORATION AND SUBSIDIARIES
Index
Part I - Financial Information Page No.
Consolidated Balance Sheets - June 30, 1997 (unaudited)
and December 31, 1996 1
Consolidated Statements of Stockholders' Equity -
June 30, 1997 (unaudited) and December 31, 1996 2
Consolidated Statements of Income - Three and Six
Months Ended June 30, 1997 and 1996 (unaudited) 3
Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1997 and 1996 (unaudited) 4
Notes to Consolidated Financial Statements (unaudited) 5
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 10
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 11
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Part I - FINANCIAL INFORMATION
------------------------------
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TRANS-LUX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30 December 31
ASSETS 1997 1996
------ ---------- -----------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 529,000 $19,274,000
Available-for-sale securities 13,252,000 600,000
Receivables 7,255,000 4,173,000
Unbilled receivables 542,000 2,401,000
Inventories 4,524,000 1,775,000
Prepaids and other current assets 389,000 348,000
---------- ----------
Total current assets 26,491,000 28,571,000
---------- ----------
Rental equipment 58,007,000 52,417,000
Less accumulated depreciation 20,745,000 18,465,000
---------- ----------
37,262,000 33,952,000
---------- ----------
Property, plant and equipment 24,334,000 21,655,000
Less accumulated depreciation and amortization 7,665,000 6,973,000
---------- ----------
16,669,000 14,682,000
Prepaids, intangibles and other 5,646,000 4,772,000
Maintenance contracts, net 1,138,000 1,270,000
Note receivable, joint venture (excludes $94,000
current portion) 737,000 784,000
---------- ----------
$87,943,000 $84,031,000
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable and accruals $ 6,413,000 $ 6,175,000
Income taxes payable 149,000 105,000
Current portion of long-term debt 1,055,000 203,000
---------- ----------
Total current liabilities 7,617,000 6,483,000
---------- ----------
Long-term debt:
9% convertible subordinated debentures due 2005 ---- 4,811,000
9.5% subordinated debentures due 2012 1,057,000 1,057,000
7.5% convertible subordinated notes due 2006 31,625,000 27,500,000
Notes payable 17,109,000 14,744,000
---------- ----------
49,791,000 48,112,000
Deferred revenue, deposits and other 3,528,000 3,029,000
Deferred income taxes 3,614,000 3,745,000
Stockholders' equity 23,393,000 22,662,000
---------- ----------
$87,943,000 $84,031,000
========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
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1
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<TABLE>
<CAPTION>
TRANS-LUX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
June 30 December 31
1997 1996
------------ -----------
(unaudited)
<S> <C> <C>
Capital stock:
Preferred - $1.00 par value
Authorized - 500,000 shares
Issued - none
Common - $1.00 par value
Authorized - 5,500,000 shares
Issued - 2,441,765 shares in 1997 and 2,441,765 in 1996 $ 2,442,000 $ 2,442,000
Class B - $1.00 par value
Authorized - 1,000,000 shares
Issued - 298,640 shares in 1997 and 298,640 in 1996 298,000 298,000
Class A - $1.00 par value
Authorized - 3,000,000 shares
Issued - none
Additional paid-in capital 13,907,000 13,818,000
Retained earnings 18,458,000 17,964,000
Other (69,000) (58,000)
---------- ----------
35,036,000 34,464,000
Less treasury stock - at cost
1,456,656 shares in 1997 and 1,476,552 in 1996
(excludes additional 298,640 shares held in 1997 and 298,640 in
1996 for conversion of Class B stock) 11,643,000 11,802,000
---------- ----------
Total stockholders' equity $23,393,000 $22,662,000
========== ==========
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<CAPTION>
THE CHANGES IN CONSOLIDATED STOCKHOLDERS'
EQUITY ARE AS FOLLOWS:
Additional
Common Class Paid-in Retained Treasury
Stock B Stock Capital Earnings Other Stock
------ ------- ---------- -------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1996 $2,442,000 $298,000 $13,818,000 $17,964,000 ($58,000) ($11,802,000)
1/1/97 - 6/30/97: (unaudited)
Net income 581,000
Cash dividends (87,000)
Unrealized holding losses (11,000)
9% debentures conversion 89,000 151,000
Exercise of stock options 8,000
--------- ------- ---------- ---------- ------ ----------
June 30, 1997 $2,442,000 $298,000 $13,907,000 $18,458,000 ($69,000) ($11,643,000)
========= ======= ========== ========== ====== ==========
The accompanying notes are an integral part of these consolidated financial statements.
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2
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<TABLE>
<CAPTION>
TRANS-LUX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
--------------------------- -------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Equipment rentals and maintenance $ 6,110,000 $ 5,535,000 $11,946,000 $10,923,000
Equipment sales 6,229,000 4,061,000 9,733,000 7,680,000
Theatre receipts and other 1,260,000 995,000 2,468,000 2,021,000
---------- ---------- ---------- ----------
Total revenues 13,599,000 10,591,000 24,147,000 20,624,000
---------- ---------- ---------- ----------
Operating expenses:
Cost of equipment rentals and maintenance 3,320,000 3,010,000 6,190,000 5,912,000
Cost of equipment sales 3,909,000 2,705,000 6,094,000 5,032,000
Cost of theatre receipts and other 964,000 751,000 1,839,000 1,553,000
---------- ---------- ---------- ----------
Total operating expenses 8,193,000 6,466,000 14,123,000 12,497,000
---------- ---------- ---------- ----------
Gross profit from operations 5,406,000 4,125,000 10,024,000 8,127,000
General and administrative expenses 4,126,000 3,060,000 7,478,000 6,072,000
---------- ---------- ---------- ----------
1,280,000 1,065,000 2,546,000 2,055,000
Interest income 309,000 26,000 677,000 43,000
Interest expense (1,038,000) (579,000) (2,219,000) (1,126,000)
Other income (expense) (6,000) (45,000) 16,000 (78,000)
---------- ---------- ---------- ----------
Income before income taxes 545,000 467,000 1,020,000 894,000
---------- ---------- ---------- ----------
Provision for income taxes:
Current 210,000 160,000 347,000 303,000
Deferred 25,000 36,000 92,000 72,000
---------- ---------- ---------- ----------
235,000 196,000 439,000 375,000
---------- ---------- ---------- ----------
Net income $ 310,000 $ 271,000 $ 581,000 $ 519,000
========== ========== ========== ==========
Earnings per share:
Primary $ 0.24 $ 0.21 $ 0.45 $ 0.41
Fully diluted $ 0.19 $ 0.20 $ 0.38 $ 0.39
Average common and common equivalent
shares outstanding:
Primary 1,312,000 1,278,000 1,305,000 1,272,000
Fully diluted 3,575,000 1,664,000 3,667,000 1,664,000
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.
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3
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<CAPTION>
TRANS-LUX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) FOR THE SIX MONTHS
ENDED JUNE 30
1997 1996
-----------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 581,000 $ 519,000
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,522,000 3,544,000
Net (income) loss of joint venture (16,000) 78,000
Deferred income taxes (120,000) 13,000
Changes in operating assets and liabilities:
Receivables (997,000) (1,361,000)
Unbilled receivables 1,859,000 ----
Inventories (712,000) 52,000
Prepaids and other current assets (20,000) 195,000
Prepaids, intangibles and other (306,000) 221,000
Accounts payable and accruals (2,828,000) 378,000
Income taxes payable 44,000 (124,000)
Deferred revenue, deposits and other 280,000 (1,595,000)
---------------------------
Net cash provided by operating activities 1,287,000 1,920,000
---------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of rental equipment (5,590,000) (3,770,000)
Purchases of property, plant and equipment (261,000) (553,000)
Payments for acquisitions (net) (763,000) ----
Proceeds from (investment in) joint venture 47,000 (120,000)
Loan to joint venture ---- (941,000)
Purchases of securities (14,846,000) ----
Redemption of securities 2,172,000 ----
---------------------------
Net cash (used in) investing activities (19,241,000) (5,384,000)
---------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 6,725,000 4,100,000
Repayment of long-term debt (2,864,000) (901,000)
Redemption of Company's 9% convertible subordinated debentures (4,573,000) ----
Proceeds from exercise of stock options 8,000 4,000
Cash dividends (87,000) (87,000)
---------------------------
Net cash provided by financing activities (791,000) 3,116,000
---------------------------
Net decrease in cash and cash equivalents (18,745,000) (348,000)
Cash and cash equivalents at beginning of year 19,274,000 665,000
---------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 529,000 $ 317,000
===========================
Interest paid $ 2,096,000 $ 740,000
Interest received 446,000 61,000
Income taxes paid 504,000 392,000
---------------------------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
4
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TRANS-LUX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
(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, 1997 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, 1996. Certain
reclassifications of prior years' amounts have been made to conform to the
current year's presentation.
The Company has only limited involvement with derivative financial instruments
and does not use them for trading purposes, they are used to manage
well-defined interest rate risks. From time to time the Company enters into
interest swap agreements to reduce its exposure to interest rate fluctuations.
The net gain or loss from the exchange of interest rate payments is included in
interest expense in the consolidated statements of income and in interest paid
in the consolidated statements of cash flows.
Note 2 - Accounting for Income Taxes
The provision for income tax expense for the three months ended June 30, 1997
was $235,000 of which $210,000 and $25,000 are current and deferred tax
expense, respectively. The provision for income tax expense for the six months
ended June 30, 1997 was $439,000 of which $347,000 and $92,000 are current and
deferred tax expense, respectively. There was no change in the valuation
allowance during the six months ended June 30, 1997.
Note 3 - Prepaids, Intangibles and Other
Prepaids, intangibles and other consist of the following:
June 30, December 31,
1997 1996
---------- ----------
Prepaids and other $ 947,000 $ 719,000
Deferred debenture and note costs 1,837,000 1,836,000
Deferred financing costs 329,000 395,000
Acquisition costs 88,000 91,000
Deposits and advances 104,000 76,000
Patents 228,000 259,000
Goodwill and noncompete agreements 1,570,000 890,000
Investment in joint ventures 89,000 73,000
Long-term portion of officers' and employees' loans 454,000 433,000
--------- ---------
$5,646,000 $4,772,000
========= =========
5
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Note 4 - Change in Estimate
The Company reevaluated its previously established estimates of the useful
lives of its indoor and outdoor display rental equipment. Current estimates
based on use and experience indicate that the actual useful lives of the rental
equipment are longer than previously estimated. Accordingly, the Company
increased the depreciable lives of its rental equipment effective January 1,
1997, which had a favorable impact of approximately $250,000 and $500,000 on
income before income taxes during the three and six months ended June 30, 1997,
respectively. There was a favorable impact of $0.11 and $0.22 on primary
earnings per share and $0.04 and $0.08 on fully diluted earnings per share for
the three and six months ended June 30, 1997, respectively, as a result of the
change in estimate.
Note 5 - Earnings per Share
The Company will adopt the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings per Share" in the fourth quarter of 1997. The
standard specifies the computation, presentation and disclosure requirements
for earnings per share. As required by the standard, the Company will restate
all prior period earnings per share data presented. The pro forma earnings per
share for the three and six months ended June 30, 1997 are as follows:
For the Three Months For the Six Months
Ended June 30, 1997 Ended June 30, 1997
-------------------- -------------------
Basic $0.24 $0.45
Diluted $0.18 $0.37
Note 6 - Acquisition
On May 1, 1997, the Company, through its subsidiary Trans-Lux Midwest
Corporation, acquired the catalog and custom scoreboard sign business segment
of Fairtron Corporation ("Fairtron"), an Iowa corporation located in Des
Moines, Iowa, for a cash purchase price of approximately $104,000 (after
adjustments), noncompete and consulting fees and assumption of certain debt for
an approximate total purchase price of $7.0 million. Additionally, there is a
contingent additional purchase price of $250,000, based on future sales. The
Company retired approximately $2.8 million of the assumed debt of Fairtron.
The purchase was financed by working capital and assumption of certain debt.
Fairtron was a manufacturer of custom and catalog scoreboards and related
signs. Trans-Lux Midwest Corporation plans to continue the catalog scoreboard
activities and certain of the custom scoreboard business. The acquisition has
been accounted for using the purchase method of accounting. The $7.0 million
total purchase price included current assets, net of cash received, of
approximately $4.1 million net book value of accounts receivable and
inventories; fixed assets of land, building, leasehold, machinery and
equipment; and intellectual property. The excess of the purchase price over
the fair value of the net assets acquired has been recorded as goodwill, which
is being amortized over 20 years on a straight line basis. The purchase price
allocation used in the preliminary pro forma information is based on estimated
fair values and is subject to change as additional information becomes known
for the fair value of the property, plant and equipment.
The historical financial results of Fairtron included both the catalog and
custom scoreboard sign businesses. The historical financial results of
Fairtron also included certain expenses which are not expected to continue.
Just prior to the acquisition, Fairtron reduced head count by approximately
33%. The Company, accordingly, is operating at a substantial reduction in
6
<PAGE>
personnel compared to Fairtron's historical operations. The Company has also
taken actions which it believes will reduce operating expenses through the
consolidation of facilities and other cost saving measures. In addition, the
Company's operation of the custom scoreboard business portion is anticipated to
be at a lower level of activity because the Company does not expect to continue
to manufacture certain scoreboards that produce lower profit margins. The
effects of such actions are not included in the pro forma financial statements.
The Company's pro forma financial results are presented to provide information
on the impact of the acquisition of Fairtron to the results of operations of
the Company for the six months ended June 30, 1997 and 1996. The historical
results of Fairtron included both the catalog and custom scoreboard businesses.
The historical results of Fairtron for the six months ended June 30, 1996 were
for the six months ended September 30, 1996 which represented the first two
quarters of their fiscal year. The pro forma financial information reflects
the Company's preliminary pro forma results of operations as if the acquisition
had occurred as of January 1, 1996 for the six months ended June 30, 1996 and
as of January 1, 1997 for the six months ended June 30, 1997.
The following pro forma financial information should be read in conjunction
with the Company's consolidated financial statements. The preliminary pro
forma information does not purport to represent what the Company's results of
operations or financial position would have been if the acquisition, in fact,
had occurred on January 1, 1996 and January 1, 1997 or to project the Company's
results of operations or financial position for any future period or at any
future date. The results of operations have been included in the Company's
consolidated financial statements since May 1, 1997, the date of acquisition.
The pro forma consolidated balance sheet is not presented as the transaction is
already reflected in the Company's consolidated balance sheet at June 30, 1997.
Six months ended Six months ended
June 30, 1997 June 30, 1996
---------------- ----------------
Revenues $28,600,000 $28,157,000
========== ==========
Net income $635,000 $239,000
======= =======
Earnings per share - primary $0.49 $0.19
==== ====
Earnings per share - fully diluted $0.40 *
==== ====
* Not dilutive
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996
The Company's total revenues for the six months ended June 30, 1997 increased
17.1% to $24.1 million from $20.6 million for the same period in the previous
year. Revenues from equipment rentals and maintenance increased $1,023,000 or
9.4% in 1997, primarily due to the increase in new indoor display rentals and
maintenance contracts. Revenues from equipment sales increased $2,053,000 or
26.7% in 1997, primarily due to the acquisition of the Fairtron catalog and
custom scoreboard sign business in May 1997. Revenues from theatre receipts
and other increased $447,000 or 22.1% in 1997, primarily attributable to
increased attendance at the theatres and the acquisition of the Gaslight
Cinemas in March 1997.
7
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Cost of equipment rentals and maintenance, which includes field service
expenses, plant repair and maintenance and depreciation, increased by $278,000
or 4.7% in 1997, primarily due to increased field service costs related to the
installation of indoor displays, offset by the favorable impact of $500,000 as
a result of the change in the estimate of the useful lives of the rental
equipment from eight to ten years for the indoor rental equipment and from ten
to 15 years for the outdoor rental equipment. The cost of equipment rentals
and maintenance represented 51.8% of related revenues for the six months ended
June 30, 1997 compared to 54.1% in 1996. Cost of equipment sales increased
$1,062,000 or 21.1% in 1997, primarily due to the Fairtron acquisition. The
cost of equipment sales represented 62.6% of related revenues for the six
months ended June 30, 1997 compared to 65.5% in 1996. Cost of theatre receipts
and other, which includes film rental expenses, increased $286,000 or 18.4% in
1997, primarily due to increased film rental costs resulting from increased box
office receipts, and the Gaslight Cinemas acquisition. The cost of theatre
receipts and other represented 74.5% of related revenues for the six months
ended June 30, 1997 compared to 76.8% in 1996.
General and administrative expenses increased by $1,406,000 or 23.2%, primarily
due to expanded sales efforts, increased payroll and benefits costs, the
Fairtron acquisition and the negative impact of the effect of foreign currency
exchange rates.
Interest income increased by $634,000, primarily attributable to additional
investments as a result of the issuance of the 7 1/2% Convertible Subordinated
Notes due 2006 ("7 1/2% Notes"). Interest expense increased by $1,093,000,
primarily due to the issuance of the 7 1/2% Notes and a special one-time charge
of approximately $113,000 for the unamortized portion of the financing costs
pertaining to the call of the 9% Convertible Subordinated Debentures. Other
income/expense relates to the operations of the theatre joint venture, MetroLux
Theatres.
The effective tax rate at June 30, 1997 and 1996 was 43.0% and 42.0%,
respectively
Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996
The Company's total revenues for the three months ended June 30, 1997 increased
28.4% to $13.6 million from $10.6 million for the same period in the previous
year. Revenues from equipment rentals and maintenance increased $575,000 or
10.4% in 1997, primarily due to the increase in new indoor display rentals and
maintenance contracts. Revenues from equipment sales increased $2,168,000 or
53.4% in 1997, primarily due to the Fairtron acquisition in May 1997. Revenues
from theatre receipts and other increased $265,000 or 26.6% in 1997, primarily
attributable to increased attendance at the theatres and the Gaslight Cinemas
acquisition in March 1997.
Cost of equipment rentals and maintenance increased by $310,000 or 10.3% in
1997, primarily due to increased field service costs related to the
installation of indoor displays, offset by a favorable impact of $250,000 as a
result of the change in the estimate of the useful lives of the rental
equipment. The cost of equipment rentals and maintenance represented 54.3% of
related revenues for the three months ended June 30, 1997 compared to 54.4% in
1996. Cost of equipment sales increased $1,204,000 or 44.5% in 1997, primarily
due to the Fairtron acquisition. The cost of equipment sales represented 62.8%
of related revenues for the three months ended June 30, 1997 compared to 66.6%
in 1996. Cost of theatre receipts and other increased $213,000 or 28.4% in
1997, primarily due to increased film rental costs resulting from increased box
office receipts and the Gaslight Cinemas acquisition. The cost of theatre
receipts and other represented 76.5% of related revenues for the three months
ended June 30, 1997 compared to 75.5% in 1996.
General and administrative expenses increased by $1,066,000 or 34.8%, primarily
due to expanded sales efforts, increased payroll and benefits costs, the
Fairtron acquisition and the negative impact of the effect of foreign currency
exchange rates.
8
<PAGE>
Interest income increased by $283,000, primarily attributable to additional
investments as a result of the issuance of the 7 1/2% Notes. Interest
expense increased by $459,000, primarily due to the issuance of the 7 1/2%
Notes. Other income/expense relates to the operations of the theatre joint
venture, MetroLux Theatres.
Accounting Standards
The Company will adopt the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings per Share" in the fourth quarter of 1997. The
standard specifies the computation, presentation and disclosure requirements
for earnings per share. As required by the standard, the Company will restate
all prior period earnings per share data presented. The adoption of the new
standard is not expected to have a material effect on the computation of
earnings per share.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 130, "Reporting Comprehensive Income". The
standard requires that all items that meet the definition of components of
comprehensive income be reported in a financial statement for the period in
which they are recognized. The standard is effective for fiscal years
beginning after December 15, 1997.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 131, "Disclosure about Segments of an
Enterprise and Related Information". The standard requires certain information
be reported about operating segments, products and services, the geographic
areas in which they operate and about major customers. The standard is
effective for fiscal years beginning after December 15, 1997.
Liquidity and Capital Resources
Historically, the Company's primary sources of liquidity and capital resources
have been cash flow from operations and bank borrowings. During late 1996, the
Company issued $27.5 million of the 7 1/2% Notes. On January 14, 1997 the
Underwriter exercised its over-allotment option, bringing the total amount
outstanding to $31.6 million.
The Company believes that cash generated from operations together with the
proceeds from the issuance of the 7 1/2% Notes will be sufficient to fund its
anticipated further cash requirements. The Company also has a $5.0 million
revolving credit facility accessible through June 1998, of which $2.4 million
is available as of June 30, 1997. The revolving credit facility was reduced to
$5.0 million from $7.0 million at January 31, 1997 at the Company's request.
The net proceeds of the 7 1/2% Notes were used, in part, to pay down certain of
the Company's debt, which included prepayment of the 1997 principal amounts due
under a bank credit facility, payment of the balance outstanding under the
revolving credit facility at that time and to call and retire the 9%
Convertible Subordinated Debentures.
Cash and cash equivalents decreased by $18.7 million for the six months ended
June 30, 1997 compared to a decrease of $348,000 in 1996. The decrease in 1997
is primarily attributable to the net investment of $12.7 million of the net
proceeds of the 7 1/2% Notes in available-for-sale securities, cash utilized
for investment in rental equipment and cash utilized in connection with the
Fairtron acquisition offset by an increase in unbilled receivables related to
certain significant contracts being recognized on the percentage of completion
basis. The decrease in cash and cash equivalents for the six months ended June
30, 1996 was primarily attributable to cash utilized for investment in rental
equipment, an increase in accounts receivable which was attributable to the
timing of large equipment sales, a decrease in deferred revenue, deposits and
other which was primarily due to the timing of recording the revenues versus
the billing and the loan to the theatre joint venture, MetroLux Theatres.
9
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The regular quarterly cash dividend for the second quarter of 1997 of $0.035
per share on the Company's Common Stock and $0.315 per share on the Company's
Class B Stock was declared by the Board of Directors on May 22, 1997 payable to
stockholders of record as of July 7, 1997 and was paid July 18, 1997.
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
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 22,
1997 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 with the following vote:
For Not For
--------- -------
Steven Baruch 3,616,837 18,626
Howard Brenner 3,616,837 18,626
Allan Fromme 3,616,241 19,222
The following directors are continuing their terms as directors:
Robert Greenes, Two-Years Remaining
Howard S. Modlin, Two-Years Remaining
Richard Brandt, One-Year Remaining
Jean Firstenberg, One-Year Remaining
Gene Jankowski, One-Year Remaining
Victor Liss, One-Year Remaining
The recommendation to retain Deloitte & Touche LLP as the independent auditors
for the Corporation was approved with the following vote:
For Against Abstain
--------- ------- -------
3,630,832 2,905 1,726
10
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits
11 Computation of Earnings Per Share.
27 Financial Data Schedule, which is submitted electronically
to the Securities and Exchange Commission for information
only and not filed.
(b) A report on Form 8-K dated May 15, 1997 and Form 8-K/A dated
July 15, 1997 were filed reporting the acquisition of the
catalog and custom scoreboard sign business segment of Fairtron
Corporation.
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 13, 1997
by /s/ Angela D. Toppi
-------------------------
Angela D. Toppi
Senior Vice President and
Chief Financial Officer
by /s/ Robert A. Carroll
-------------------------
Robert A. Carroll
Chief Accounting Officer
11
<TABLE>
<CAPTION>
TRANS-LUX CORPORATION AND SUBSIDIARIES EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
-------------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary:
--------
Net income $310,000 $271,000 $581,000 $519,000
======= ======= ======= =======
Average common shares outstanding 1,283,000 1,255,000 1,277,000 1,255,000
Assumes exercise of options reduced by
the number of shares which could have
been purchased with the proceeds from
exercise of such options 29,000 23,000 28,000 17,000
--------- --------- --------- ---------
Average common and common equivalent
shares outstanding 1,312,000 1,278,000 1,305,000 1,272,000
========= ========= ========= =========
Primary earnings per share $0.24 $0.21 $0.45 $0.41
========= ========= ========= =========
Fully diluted:
--------------
Net income $310,000 $271,000 $ 581,000 $519,000
Add after tax interest expense applicable
to 9% convertible subordinated debentures (3,000) 66,000 102,000 131,000
Add after tax interest expense applicable to
7 1/2% convertible subordinated notes 364,000 ---- 722,000 ----
------- ------- --------- -------
Adjusted net income $671,000 $337,000 $1,405,000 $650,000
======= ======= ========= =======
Average common shares outstanding 1,283,000 1,255,000 1,277,000 1,255,000
Assumes exercise of options reduced by
the number of shares which could have
been purchased with the proceeds from
exercise of such options 35,000 26,000 35,000 26,000
Assumes conversion of 9% convertible
subordinated debentures ---- 383,000 119,000 383,000
Assumes conversion of 7 1/2% convertible
subordinated notes 2,257,000 ---- 2,236,000 ----
--------- --------- --------- ---------
Average common and common equivalent 3,575,000 1,664,000 3,667,000 1,664,000
shares outstanding ========= ========= ========= =========
Fully diluted earnings per share $0.19 $0.20 $0.38 $0.39
========= ========= ========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 529
<SECURITIES> 13,252
<RECEIVABLES> 7,797
<ALLOWANCES> 0
<INVENTORY> 4,524
<CURRENT-ASSETS> 26,491
<PP&E> 82,341
<DEPRECIATION> 28,410
<TOTAL-ASSETS> 87,943
<CURRENT-LIABILITIES> 7,617
<BONDS> 32,682
<COMMON> 2,740
0
0
<OTHER-SE> 20,653
<TOTAL-LIABILITY-AND-EQUITY> 87,943
<SALES> 9,733
<TOTAL-REVENUES> 24,147
<CGS> 6,094
<TOTAL-COSTS> 14,123
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,219
<INCOME-PRETAX> 1,020
<INCOME-TAX> 439
<INCOME-CONTINUING> 581
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 581
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.38
</TABLE>
