SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
AMENDMENT NO. 1
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 1, 1997
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TRANS-LUX CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-2257 13-1394750
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
110 Richards Avenue, Norwalk, CT 06856-5090
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 853-4321
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(Former name or former address, if changed since last report.)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(a) Financial Statements of Businesses Acquired
1 - Independent Auditors' Report, Statements of Net Assets Sold as of
March 31, 1997 and 1996, Statements of Operations and Divisional
(Deficit) Equity for the years ended March 31, 1997 and 1996,
Statements of Cash Flows for the years ended March 31, 1997 and
1996 and Notes to Financial Statements.
(b) Pro Forma Financial Information
1 - Unaudited Pro Forma Balance Sheet as of March 31, 1997, Unaudited
Pro Forma Income Statements for the year ended December 31, 1996
and for the three months ended March 31, 1997 and Notes to Pro
Forma Financial Information.
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 hereunto duly authorized.
TRANS-LUX CORPORATION
By: /s/ Angela D. Toppi
-------------------------
Angela D. Toppi
Chief Financial Officer
Dated: July 15, 1997
FAIR-PLAY (a division of
Fairtron Corporation)
Financial Statements as of March 31, 1997
and 1996 and for the Years Then Ended and
Independent Auditors' Report
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Fairtron Corporation:
We have audited the accompanying statements of net assets sold of Fair-Play
(a division of Fairtron Corporation) as of March 31, 1997 and 1996, and the
related statements of operations and divisional (deficit) equity, and cash
flows for the years then ended. These financial statements are the
responsibility of Fairtron Corporation's management. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets sold of Fair-Play as of March 31, 1997 and 1996,
and the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
As discussed in Note 2 to the financial statements, Trans-Lux Midwest
Corporation purchased substantially all assets and assumed substantially
all liabilities of Fair-Play effective May 1, 1997.
/s/ Deloitte & Touche LLP
Des Moines, Iowa
May 2, 1997
<PAGE>
<TABLE>
<CAPTION>
FAIR-PLAY (a division of Fairtron Corporation)
STATEMENTS OF NET ASSETS SOLD
MARCH 31, 1997 AND 1996 (IN THOUSANDS)
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<S> <C> <C>
1997 1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $1,548
Receivables 1,946 $2,205
Inventories 2,026 3,020
Prepaid expenses and other current assets 52 171
----- -----
Total current assets 5,572 5,396
PROPERTY, PLANT AND EQUIPMENT, NET 1,122 1,397
CONTRACTS RECEIVABLE 122 181
ADVERTISING RIGHTS 17 119
OTHER ASSETS 67 169
----- -----
TOTAL ASSETS $6,900 $7,262
===== =====
LIABILITIES AND DIVISIONAL (DEFICIT) EQUITY
CURRENT LIABILITIES:
Checks in excess of bank balances $ 115
Notes payable $2,758 2,758
Notes payable to related parties 363
Current portion of long-term debt 60 93
Accounts payable 1,850 1,870
Accrued expenses 1,210 863
----- -----
Total current liabilities 6,241 5,699
LONG-TERM DEBT 689 750
NOTES PAYABLE TO RELATED PARTIES 267
OTHER LONG-TERM LIABILITIES 382 206
----- -----
Total liabilities 7,312 6,922
----- -----
DIVISIONAL (DEFICIT) EQUITY (412) 340
----- -----
TOTAL LIABILITIES AND
DIVISIONAL (DEFICIT) EQUITY $6,900 $7,262
===== =====
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FAIR-PLAY (a division of Fairtron Corporation)
STATEMENTS OF OPERATIONS AND DIVISIONAL (DEFICIT) EQUITY
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996 (IN THOUSANDS)
-------------------------------------------------------------------------
<S> <C> <C>
1997 1996
NET SALES $14,571 $13,722
COST OF GOODS SOLD 12,260 11,335
------ ------
Gross profit 2,311 2,387
SERVICE, SALES AND
ADMINISTRATIVE EXPENSES 2,952 2,980
------ ------
Operating loss (641) (593)
OTHER INCOME (EXPENSE):
Other income (expense) 15 (59)
Interest expense (450) (413)
------ ------
Total other expense (435) (472)
------ ------
LOSS BEFORE INCOME TAX BENEFIT (1,076) (1,065)
INCOME TAX BENEFIT - 164
------ ------
NET LOSS (1,076) (901)
DIVISIONAL EQUITY, BEGINNING OF YEAR 340 1,113
ADVANCES FROM PARENT COMPANY, NET 324 128
------ ------
DIVISIONAL (DEFICIT) EQUITY, END OF YEAR $ (412) $ 340
====== ======
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FAIR-PLAY (a division of Fairtron Corporation)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996 (IN THOUSANDS)
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<S> <C> <C>
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,076) $(901)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 485 348
Loss on sale of fixed assets 73 2
Provision for bad debts 4 20
Changes in:
Receivables 255 476
Inventories 994 32
Prepaid expenses and other current assets 119 19
Contracts receivable 59 (28)
Advertising rights (16) (97)
Other assets (4) 31
Accounts payable (20) 476
Accrued expenses 347 (262)
Other long-term liabilities 176 29
----- ---
Net cash provided by operating activities 1,396 145
----- ---
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment 4
Purchases of property, plant and equipment (59) (426)
----- ---
Net cash used in investing activities (59) (422)
CASH FLOWS FROM FINANCING ACTIVITIES:
Checks in excess of bank balances (115) 115
Proceeds from long-term debt and notes payable 95 14
Principal payments on long-term debt and notes payable (93) (83)
Net activity on line of credit (84)
Advances from Parent Company, net 324 128
----- ---
Net cash provided by financing activities 211 90
----- ---
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,548 (187)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 187
----- ---
CASH AND CASH EQUIVALENTS, END OF YEAR $1,548 $
===== ===
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 428 $426
===== ===
Income taxes $ $ 10
===== ===
See notes to financial statements.
</TABLE>
<PAGE>
FAIR-PLAY (a division of Fairtron Corporation)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996 (IN THOUSANDS)
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1. REPORTING ENTITY
Fair-Play manufactures athletic scoreboards, timers and related
products in its Des Moines, Iowa facilities. Fair-Play is a division
of Fairtron Corporation (Fairtron). Fairtron also has another
division, ATHCO, and an 80% owned subsidiary, Fibrelite.
2. SALE OF COMPANY
Pursuant to the Purchase of Assets Agreement dated as of April 30,
1997, Fairtron sold to Trans-Lux Midwest Corporation (Trans-Lux) the
assets of the Fair-Play division except for the cash value of officer's
life insurance, certain advertising rights, intercompany receivables,
deferred income taxes and certain prepaid assets. In exchange for the
assets, Trans-Lux paid cash of $450 (subject to adjustment based on an
agreed upon formula) and assumed certain liabilities. Additionally,
Trans-Lux will make payments equal to 4% of annual catalog sales in
excess of $8,000 for each of the next five years not to exceed $100 per
year and $250 in the aggregate. The agreement also includes a
consulting noncompete agreement for the next eight years.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies used by
Fair-Play.
Revenue Recognition - Fair-Play sells its products for a predetermined
price or for the right to sell advertising space on the product for a
specified number of years. If the price is predetermined, revenue is
recognized upon shipment. When Fair-Play sells advertising space, the
present value of the revenues and a ratable portion of the related
costs of the scoreboard are recognized currently with the remaining
cost being capitalized and amortized over the period the advertising
rights are held.
Cash and Cash Equivalents - For purposes of the statements of cash
flows, Fair-Play considers demand deposit accounts maintained at
financial institutions and all highly liquid investments purchased with
a maturity of three months or less to be cash and cash equivalents.
Inventories - Raw materials inventory is valued at the lower of cost
(first-in, first-out) or net realizable value. Work in process and
finished product inventories are stated at cost including allocable
production and overhead costs.
Property, Plant, and Equipment - Property, plant, and equipment are
stated at cost of acquisition or, for display boards, at cost to
manufacture. Depreciation is calculated using the straight-line and
accelerated methods over the estimated useful lives of the assets which
range from three to thirty-five years.
Contracts Receivable Sold With Recourse - Fair-Play records the
transfer of contracts receivable with recourse as a sale once they have
surrendered control of the future economic benefits relating to the
receivable, can reasonably estimate their obligation under the recourse
provisions, and have no obligation
<PAGE>
to repurchase the receivables except pursuant to the recourse
provisions in the event of default. Fair-Play maintains a security
interest in the installed scoreboards underlying the original
contracts.
Income Taxes - Fair-Play is included in the consolidated income tax
returns of Fairtron. For financial statement purposes, income tax
benefit is recorded as if Fair-Play filed a separate income tax return.
Income taxes are provided on income reported in the financial
statements.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
4. RECEIVABLES
<TABLE>
<CAPTION>
Receivables are summarized as follows:
1997 1996
<S> <C> <C>
Trade receivables, net of allowance for doubtful
accounts of $41 and $15 at March 31, 1997 and
1996, respectively $1,893 $2,189
Current portion of contracts receivable 65 18
Interest receivable 1
Due to employees (12) (3)
----- -----
$1,946 $2,205
</TABLE> ===== =====
5. INVENTORIES
<TABLE>
<CAPTION>
Inventories are summarized as follows:
1997 1996
<S> <C> <C>
Raw materials and nonprocessed components $1,348 $1,012
Work in process 374 1,394
Finished products 304 614
----- -----
$2,026 $3,020
===== =====
</TABLE>
<PAGE>
6. PROPERTY, PLANT, AND EQUIPMENT
<TABLE>
<CAPTION>
Property, plant, and equipment is summarized as follows:
1997 1996
<S> <C> <C>
Land $ 78 $ 78
Buildings and improvements 1,167 1,167
Machinery, equipment, and fixtures 1,837 1,972
Leasehold improvements 153 155
Equipment under capital leases 235 235
Vehicles 5 5
----- -----
3,475 3,612
Accumulated depreciation and amortization (2,353) (2,215)
----- -----
$1,122 $1,397
===== =====
</TABLE>
Accumulated amortization relating to equipment under capital leases was
approximately $117 and $94 as of March 31, 1997 and 1996, respectively.
Amortization expense recognized on this equipment has been included in
depreciation expense.
7. DEBT
Notes Payable - As of March 31, 1997, Fairtron had a working capital
line of credit that allowed maximum borrowings of $750. The
outstanding balance was $408 at March 31, 1997.
Fairtron also had a revolving term loan which provided maximum
borrowings of $2,350. The outstanding balance was $2,350 as of March
31, 1997. The balance was partially guaranteed by the majority
shareholder of Fairtron and was collateralized by an assignment of a
life insurance policy on the shareholder and substantially all assets
of Fairtron other than mortgaged real estate. The agreements contained
certain covenants including minimum financial ratios, minimum net worth
and net income, capital expenditures, and research and development
expenditures. The revolving term loan agreement limited borrowings to
prescribed percentages of accounts receivable, contracts receivable,
inventory and unencumbered equipment. Interest accrued at the base
rate plus 2% (10.50% as of March 31, 1997) and was payable monthly.
Fairtron was not in compliance with various covenants in these
agreements at March 31, 1997. The line of credit and revolving term
loan were modified on April 1, 1997. The modified agreements extended
the maturity date on the line of credit and the revolving term loan to
May 1, 1997. In connection with the sale of Fair-Play discussed in
Note 2, the above amounts were paid by Trans-Lux.
<PAGE>
Long-Term Debt - As of March 31, 1997, long-term debt consisted of the
following:
Mortgage loan with monthly payments of principal and interest at
8.25% through March 1, 2004. The loan is collateralized by a first
mortgage on certain land and buildings. The agreement includes
certain covenants including, among others, maintenance of escrow
deposits for taxes and other charges. $726
Obligation under capital lease (Note 8) 23
---
749
Current portion 60
---
$689
===
Maturities of long-term debt and notes payable are as follows:
Years Ending March 31,
1997 $60
1998 40
1999 44
2000 47
2001 51
Thereafter 507
---
$749
===
8. LEASES
Fairtron leases certain equipment and business property under operating
leases which expire over the next four years. The following is a
schedule of future minimum lease payments required under operating
leases that have initial or remaining noncancelable lease terms in
excess of one year as of March 31, 1997:
Year Ending March 31,
1998 $220
1999 112
2000 66
2001 38
---
Total minimum lease payments $436
===
Rent expense on operating leases for the years ended March 31, 1997 and
1996 was approximately $233 and $146, respectively.
Fair-Play leases certain equipment under a capital lease. The final
payment on the capital lease of $23 is due April 1, 1997.
<PAGE>
9. INCOME TAXES
<TABLE>
<CAPTION>
The components of income tax benefit are as follows:
1997 1996
<S> <C> <C>
Current $ - $164
Deferred - -
--- ---
$ - $164
=== ===
</TABLE>
The difference between the recorded income tax benefit and the amounts
computed at the federal statutory income tax rate are as follows for
the years ended March 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C> <C> <C>
Loss before income taxes at the Federal
statutory income tax rate $366 34.0 % $362 34.0 %
Net operating loss carryforwards (286) (26.6) (131) (12.4)
Meals and entertainment (18) (1.7) (25) (2.3)
State income taxes, net of federal benefit 21 2.0 21 2.0
Other (1) (0.1) (3) (0.3)
Deferred taxes for temporary bases
differences (82) (7.6) (60) (5.6)
--- ---- --- ----
Income tax benefit $ - - % $164 15.4 %
=== ==== === ====
</TABLE>
As discussed in Note 2, Trans-Lux did not acquire deferred income
taxes; therefore, the tax effect of changes in bases differences for
financial reporting and income tax return purposes are included as a
reconciling item between income taxes at the Federal statutory rate and
the income tax benefit in the statement of operations.
10. DEFINED CONTRIBUTION RETIREMENT PLAN
Fairtron has a contributory 401(k) plan covering substantially all
employees of Fair-Play. Employees may make elective deferral
contributions up to 15% of wages. Fairtron makes matching
contributions of 100% of the first 5% of wages. Contributions for the
years ended March 31, 1997 and 1996 were approximately $180 and $152,
respectively.
11. RELATED PARTY TRANSACTIONS
At March 31, 1997 and 1996, respectively, Fair-Play had notes payable
to stockholders, relatives and employees of approximately $363 and
$267. The notes payable accrued interest at 11% and were due April 1,
1997. Interest expense on these notes was approximately $30 and $29
for the years ended March 31, 1997 and 1996, respectively. In
connection with the sale of Fair-Play discussed in Note 2, the above
amounts were repaid by Trans-Lux.
<PAGE>
12. COMMITMENTS AND CONTINGENCIES
During the year ended March 31, 1996, approximately $773 of contracts
receivable were sold with recourse to a financial institution. No
contracts were sold with recourse to a financial institution during
1997. As of March 31, 1997, Fairtron was partially or fully
contingently liable for $870 of contracts receivable. In accordance
with the Purchase of Assets agreement, Fairtron retained liability for
the recourse provisions.
* * * * * *
<PAGE>
TRANS-LUX CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA FINANCIAL INFORMATION
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 $250,000
(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 $3.1 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
$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 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 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 year ended December 31, 1996 and for the
three months ended March 31, 1997. Pro forma financial results presented
for the fiscal year ended December 31, 1996 included the fiscal year ended
December 31, 1996 for the Company and the fiscal year ended March 31, 1997
for Fairtron. The historical results of Fairtron included both the catalog
and entire custom scoreboard sign businesses. The historical revenues and
net loss for the three months ended March 31, 1997 for Fairtron, which were
included in both the fiscal year ended December 31, 1996 and for the three
months ended March 31, 1997, were $3.4 million and $21,000, respectively.
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 and the preliminary pro forma balance sheet as if the
acquisition had occurred as of March 31, 1997.
The 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, or to project the Company's results
of operations or financial position for any future period or at any future
date. Reference is made to Note No. 2 - Management Actions for cost
saving measures implemented, the effects of which are not included in the
pro forma financial statements.
<PAGE>
<TABLE>
<CAPTION>
Trans-Lux Corporation and Subsidiaries
Preliminary Pro Forma Balance Sheet
March 31, 1997 (Unaudited)
--------------------------
PRO FORMA ADJUSTMENTS
HISTORICAL PRO FORMA PRO FORMA
HISTORICAL FAIRTRON ADJUSTMENT RESULTS
---------- -------- ---------- -------
<S> <C> <C> <C> <C>
Assets
------
Current assets:
Cash and cash equivalents $3,575,000 $1,548,000 ($3,492,000) $1,631,000
Available-for-sale securities 15,183,000 - - 15,183,000
Receivables 5,043,000 1,946,000 - 6,989,000
Unbilled receivables 783,000 - - 783,000
Inventories 1,848,000 2,026,000 40,000 3,914,000
Prepaids and other current assets 313,000 52,000 19,000 384,000
---------- --------- --------- ----------
Total current assets 26,745,000 5,572,000 (3,433,000) 28,884,000
---------- --------- --------- ----------
Rental equipment 55,760,000 - - 55,760,000
Less accumulated depreciation 19,620,000 - - 19,620,000
---------- --------- --------- ----------
36,140,000 - - 36,140,000
---------- --------- --------- ----------
Property, plant and equipment 22,279,000 3,475,000 (1,556,000) 24,198,000
Less accumulated depreciation and amortization 7,313,000 2,353,000 (2,353,000) 7,313,000
---------- --------- --------- ----------
14,966,000 1,122,000 797,000 16,885,000
---------- --------- --------- ----------
Prepaids, intangibles and other 4,742,000 206,000 78,000 5,026,000
Maintenance contracts, net 1,204,000 - - 1,204,000
Note Receivable, joint venture
(excludes $94,000 current portion) 761,000 - - 761,000
---------- --------- --------- ----------
$84,558,000 $6,900,000 ($2,558,000) $88,900,000
========== ========= ========= ==========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable and accruals $6,071,000 $3,060,000 $76,000 $9,207,000
Income taxes payable 23,000 - - 23,000
Notes payable - 3,121,000 (3,121,000) -
Current portion of long-term debt 611,000 60,000 - 671,000
---------- ---------- --------- ----------
Total current liabilities 6,705,000 6,241,000 (3,045,000) 9,901,000
---------- ---------- --------- ----------
Long-term debt:
9.5% subordinated debentures due 2012 1,057,000 - - 1,057,000
7.5% convertible subordinated notes due 2006 31,625,000 - - 31,625,000
Notes payable 14,287,000 689,000 - 14,976,000
---------- ---------- --------- ----------
46,969,000 689,000 - 47,658,000
Deferred revenue and deposits 4,410,000 382,000 75,000 4,867,000
Deferred income taxes 3,487,000 - - 3,487,000
Minority interest 1,000 - - 1,000
Stockholders' equity 22,986,000 (412,000) 412,000 22,986,000
---------- ---------- --------- ----------
Total liabilities and stockholders' equity $84,558,000 $6,900,000 ($2,558,000) $88,900,000
========== ========= ========= ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Trans-Lux Corporation and Subsidiaries
Preliminary Pro Forma Income Statement
Year Ended December 31, 1996 (Unaudited)
----------------------------------------
PRO FORMA ADJUSTMENTS
HISTORICAL PRO FORMA PRO FORMA
HISTORICAL FAIRTRON ADJUSTMENT RESULTS
---------- -------- ---------- -------
<S> <C> <C> <C> <C>
Revenues $45,285,000 $14,571,000 - $59,856,000
Operating expenses 27,505,000 12,260,000 ($65,000) 39,700,000
---------- ---------- ------- ----------
Gross profit from operations 17,780,000 2,311,000 65,000 20,156,000
General and administrative expenses 13,184,000 2,952,000 (192,000) 15,944,000
Interest and other (income) expense 2,393,000 435,000 (107,000) 2,721,000
---------- ---------- ------- ----------
Income before income taxes 2,203,000 (1,076,000) 364,000 1,491,000
Provision for income taxes 953,000 - (264,000) 689,000
---------- ---------- ------- ----------
Net income $1,250,000 ($1,076,000) $628,000 $802,000
========== ========== ======= ==========
Shares - primary 1,284,000 1,284,000
========== ==========
Earnings per share - primary $0.97 $0.62
========== ==========
Shares - fully diluted 1,697,000 *
==========
Earnings per share - fully diluted $0.90 *
==========
Three Months Ended March 31, 1997 (Unaudited)
Revenues $10,548,000 $3,435,000 - $13,983,000
Operating expenses 5,930,000 2,727,000 ($36,000) 8,621,000
---------- ---------- ------- ----------
Gross profit from operations 4,618,000 708,000 36,000 5,362,000
General and administrative expenses 3,352,000 630,000 (22,000) 3,960,000
Interest and other (income) expense 791,000 99,000 (44,000) 846,000
---------- ---------- ------- ----------
Income before income taxes 475,000 (21,000) 102,000 556,000
Provision for income taxes 204,000 - 25,000 229,000
---------- ---------- ------- ----------
Net income $271,000 ($21,000) $77,000 $327,000
========== ========== ======= ==========
Shares - primary 1,298,000 1,298,000
========== ==========
Earnings per share - primary $0.21 $0.24
========== ==========
Shares - fully diluted 3,755,000 3,755,000
========== ==========
Earnings per share - fully diluted $0.20 $0.21
========== ==========
* anti-dilutive
</TABLE>
<PAGE>
TRANS-LUX CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
-----------
Note 1 - Basis of Presentation
The purchase price of approximately $7.0 million was allocated to accounts
receivable, inventories, land, building, leasehold, and property and
equipment based on the estimated fair value at the date of purchase.
Property, plant and equipment are being depreciated using the straight line
method over their useful lives ranging from five to thirty-nine years. The
noncompete agreement is being amortized using the straight line basis over
eight years. Goodwill is being amortized using the straight line basis
over twenty years. Based on the fair value of net assets at March 31,
1997, no goodwill has been recorded in the pro forma balance sheet.
However, goodwill amortization has been included in the pro forma income
statement as it is anticipated that approximately $575,000 of goodwill will
be recorded based on the estimated fair value of net assets acquired as of
the closing date of the acquisition. Taxes on income are accrued at an
estimated effective rate of 37%.
Additional pro forma adjustments give effect to the payment of
approximately $3.1 million of the assumed debt of Fairtron, and related
interest expense, depreciation of the fair value of assets purchased,
amortization of goodwill and a noncompete agreement and certain costs
relating to contractual agreements.
The preliminary purchase price, book value of assets acquired and purchase
accounting adjustments at March 31, 1997 are as follows:
Preliminary purchase price:
Preliminary purchase price $6,872,000
Fees and expenses 113,000
---------
Total 6,985,000
Preliminary book value of actual assets acquired
at March 31, 1997 6,051,000
---------
Excess of preliminary purchase price over
preliminary book value of assets acquired 934,000
---------
Preliminary purchase accounts adjustments:
Inventories 40,000
Property, plant and equipment 796,000
Other assets 98,000
---------
Total 934,000
---------
Excess of preliminary purchase price over
preliminary book value of assets acquired $0
=========
Note 2 - Management Actions
The historical financial results of Fairtron included both the catalog and
custom scoreboard sign businesses, which included $8.5 million of revenues
from the catalog scoreboard business and $6.1 million of revenues from the
custom scoreboard business for the fiscal year ended March 31, 1997. 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 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.
