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 September 30, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-2257
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TRANS-LUX CORPORATION
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(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
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(Registrant's telephone number, including area code)
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(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
- - ---------- ------------------------------ ------------------
11/12/99 Common Stock - $1.00 Par Value 970,970
11/12/99 Class B Stock - $1.00 Par Value 296,005
(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 - September 30, 1999 (unaudited) and
December 31, 1998 1
Consolidated Statements of Income - Three and Nine Months Ended
September 30, 1999 and 1998 (unaudited) 2
Consolidated Statements of Cash Flows - Nine Months Ended
September 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 6. Exhibits and Reports on Form 8-K 11
Signatures 12
<PAGE>
Part 1 - Financial Information
------------------------------
<TABLE>
TRANS-LUX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30 December 31
In thousands, except share data 1999 1998
- - -----------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,159 $ 1,298
Available-for-sale securities 3,734 4,914
Receivables 9,619 7,287
Unbilled receivables 434 374
Inventories 5,278 5,381
Prepaids and other 636 360
------- ------
Total current assets 21,860 19,614
------- ------
Equipment on rental 75,667 70,654
Less accumulated depreciation 32,797 28,289
------- ------
42,870 42,365
------- ------
Property, plant and equipment 38,985 30,816
Less accumulated depreciation and amortization 9,794 8,433
------- ------
29,191 22,383
Prepaids, intangibles and other 5,898 5,986
Maintenance contracts, net 683 798
Construction funds 4,694 --
------- ------
$105,196 $91,146
======= ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accruals $ 8,283 $ 6,167
Income taxes payable -- 275
Current portion of long-term obligations 1,882 258
------ ------
Total current liabilities 10,165 6,700
------ ------
Long-term obligations:
7 1/2% convertible subordinated notes due 2006 30,590 31,625
9 1/2% subordinated debentures due 2012 1,057 1,057
Obligations payable 29,048 16,841
------ ------
60,695 49,523
Deferred revenue, deposits and other 3,497 4,254
Deferred income taxes 4,693 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 21,306 20,821
Accumulated other comprehensive income (loss) (183) --
------ ------
37,764 37,462
Less treasury stock - at cost
1,448,986 shares in 1999 and 1,448,016 in 1998
(excludes additional 296,005 shares in 1999 and 297,286 in
1998 for conversion of Class B stock) 11,618 11,611
------ ------
Total stockholders' equity 26,146 25,851
------- ------
$105,196 $91,146
======= ======
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
1
<PAGE>
<TABLE>
TRANS-LUX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------------- -------------------------
In thousands, except per share data 1999 1998 1999 1998
------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Equipment rentals and maintenance $ 6,065 $ 5,830 $ 17,676 $ 17,623
Equipment sales 9,258 9,034 23,599 26,039
Theatre receipts and other 2,246 1,875 5,782 4,910
------ ------ ------- -------
Total revenues 17,569 16,739 47,057 48,572
------ ------ ------- -------
Operating expenses:
Cost of equipment rentals and maintenance 3,405 3,240 9,859 9,608
Cost of equipment sales 6,199 5,963 15,355 17,151
Cost of theatre receipts and other 1,735 1,502 4,609 4,040
------ ------ ------- -------
Total operating expenses 11,339 10,705 29,823 30,799
------ ------ ------- -------
Gross profit from operations 6,230 6,034 17,234 17,773
General and administrative expenses 4,689 4,348 13,766 13,184
------ ------ ------- -------
1,541 1,686 3,468 4,589
Interest income 112 141 364 472
Interest expense (1,040) (1,061) (3,007) (3,107)
Other income 81 47 297 147
------ ------ ------- -------
Income before income taxes 694 813 1,122 2,101
Provision for income taxes 313 367 505 946
------ ------ ------- -------
Net income $381 $446 $617 $1,155
====== ====== ======= =======
Earnings per share:
Basic $0.30 $0.35 $0.48 $0.90
Diluted $0.21 $0.22 $0.48 $0.60
Average common shares outstanding:
Basic 1,292 1,290 1,292 1,290
Diluted 3,479 3,550 3,518 3,562
Cash dividends per share:
Common stock $0.035 $0.035 $0.105 $0.105
Class B stock $0.0315 $0.0315 $0.0945 $0.0945
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
2
<PAGE>
<TABLE>
TRANS-LUX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
-------------------------
In thousands 1999 1998
- - -----------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 617 $ 1,155
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,441 5,866
Net income of joint venture (152) (100)
Deferred income taxes (69) (144)
Gain on sale of securities -- (47)
Gain on purchase of Company's 7 1/2% (148) --
convertible subordinated notes
Changes in operating assets and liabilities:
Receivables (2,332) (2,910)
Unbilled receivables (60) 281
Inventories 103 11
Prepaids and other (554) (11)
Accounts payable and accruals 2,001 514
Income taxes payable (275) 321
Deferred revenue, deposits and other (757) 558
------ ------
Net cash provided by operating activities 4,815 5,494
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES
Equipment manufactured for rental (5,013) (6,369)
Purchases of property, plant and equipment (7,016) (2,722)
Increase in construction funds (4,694) --
Payments for acquisitions (net) (1,163) --
Proceeds from joint venture 71 70
Redemption of available-for-sale securities 1,056 1,728
------ ------
Net cash used in investing activities (16,759) (7,293)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term obligations 14,696 1,500
Repayment of long-term obligations (865) (484)
Purchase of Company's 7 1/2% (887) --
convertible subordinated notes
Purchase of treasury stock (7) --
Proceeds from exercise of stock options -- 9
Cash dividends (132) (132)
------ ------
Net cash provided by financing activities 12,805 893
------ ------
Net increase (decrease) in cash and cash equivalents 861 (906)
Cash and cash equivalents at beginning of year 1,298 1,843
------ ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,159 $ $937
====== ======
- - -----------------------------------------------------------------------------------------------
Interest paid $ 2,486 $ 2,100
Interest received 412 535
Income taxes paid 782 318
- - -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
3
<PAGE>
TRANS-LUX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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
September 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
<TABLE>
Inventories consist of the following:
<CAPTION>
September 30 December 31
In thousands 1999 1998
- - ----------------------------------------------------------------------------
<S> <C> <C>
Raw materials and spare parts $3,083 $3,230
Work-in-progress 1,129 1,218
Finished goods 1,066 933
------ ------
$5,278 $5,381
====== ======
</TABLE>
Note 3 - Long-Term Obligations
At September 30, 1999, long-term obligations included $7.0 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 September
30, 1999 such interest rates ranged from 7.12% to 8.25%. 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 September 30, 1999 such interest rate ranged
from 3.95% to 5.45%.
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 $341,000 and $471,000 for the
three months ended September 30, 1999 and 1998, respectively; and a gain of
$471,000 and $1,167,000 for the nine months ended September 30, 1999 and 1998,
respectively.
4
<PAGE>
Note 5 - Earnings Per Share
<TABLE>
The following table represents the computation of basic and diluted earnings per
common share.
<CAPTION>
Three months ended September 30 Nine months ended September 30
In thousands, except per share data 1999 1998 1999 1998
- - -----------------------------------------------------------------------------------------------------------------------------
Basic earnings per share computation:
<S> <C> <C> <C> <C>
Net income (1) $ 381 $ 446 $ 617 $ 1,155
Weighted average common shares outstanding 1,292 1,290 1,292 1,290
----- ----- ----- -----
Basic earnings per common share (1) $ 0.30 $ 0.35 $ 0.48 $ 0.90
===== ===== ===== =====
- - -----------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share computation:
Net income (1) $ 381 $ 446 $ 617 $ 1,155
Add: After tax interest expense applicable to convertible
debt 344 353 1,055 1,057
Add: After tax changes to income applicable to assumed
conversion -- (15) -- (74)
----- ----- ------ -------
Adjusted net income $ 725 $ 784 $ 1,672 $ 2,138
===== ===== ====== ======
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 1 3 33 15
Assumes conversion of 7 1/2% convertible subordinated notes 2,186 2,257 2,193 2,257
----- ----- ----- -----
Total weighted average common shares 3,479 3,550 3,518 3,562
===== ===== ===== =====
Diluted earnings per common share (1) (2) $ 0.21 $ 0.22 $ 0.48 $ 0.60
===== ===== ===== =====
(1) The 1999 income before the special litigation charge was $808,000. Excluding the special litigation charge, which was recorded
in the second quarter, net income for the nine months ended September 30, 1999 was $808,000. ($0.63 per share, basic and
$0.53 per share, diluted).
(2) Earnings per share is computed independently for each of the periods presented. Accordingly, the sum of the quarterly diluted
earnings per share amounts do not equal the total for the year in 1999.
</TABLE>
5
<PAGE>
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.
<TABLE>
Information about the Company's operations in its three business segments is
as follows:
<CAPTION>
Three months ended September 30 Nine months ended September 30
In thousands 1999 1998 1999 1998
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Indoor display $ 5,884 $ 5,786 $ 17,442 $ 20,385
Outdoor display 9,439 9,078 23,833 23,277
Entertainment and real estate 2,246 1,875 5,782 4,910
------ ------- ------- -------
Total revenues $ 17,569 $ 16,739 $ 47,057 $ 48,572
------ ------ ------ ------
Operating income:
Indoor display $ 1,912 $ 1,619 $ 5,411 $ 5,872
Outdoor display 894 1,316 2,277 2,918
Entertainment and real estate 368 213 682 347
------ ------- ------- -------
$ 3,174 $ 3,148 $ 8,370 $ 9,137
Other income -- -- 145 47
Corporate general and administrative expenses (1,552) (1,415) (4,750) (4,448)
Interest expense-net (928) (920) (2,643) (2,635)
------ ------- ------- -------
Income before income taxes $ 694 $ 813 $ 1,122 $ 2,101
====== ====== ====== ======
</TABLE>
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 second quarter to cover such matters. Certain of the
amounts are subject to insurance recoveries.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Nine Months Ended September 30, 1999 Compared to Nine Months
Ended September 30, 1998
The Company's total revenues for the nine months ended September 30, 1999
decreased 3.1% to $47.1 million from $48.6 million for the nine months ended
September 30, 1998. Revenues from equipment rentals and maintenance remained
level. Indoor display rental and maintenance revenues increased $636,000 or
6.0%, which was offset by the 8.3% continued expected revenue decline in the
outdoor rental and maintenance bases previously acquired, however such decline
was less than originally expected. Revenues from equipment sales decreased $2.4
million or 9.4% in 1999. This decrease was primarily in the indoor display
segment. Last year included a multi-million dollar order from a major exchange,
which did not recur this year. Revenues from outdoor displays increased $1.1
million in 1999 or 7.0% from 1998, primarily in the outdoor sports division.
Revenues from theatre receipts and other increased $872,000 or 17.8% in 1999,
primarily due to the acquisition of two theatres in Wyoming in May 1999, the
opening of a six-plex theatre in Dillon, Colorado in August 1999 and film
product.
Gross profit as a percentage of revenues remained level at 36.6% in 1999 and
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 55.8% of related revenues for the nine
months ended September 30, 1999 compared to 54.5% in 1998. Cost of equipment
sales decreased $1.8 million or 10.5%. The indoor display cost of equipment
sales decreased 42.9%, primarily due to a large indoor sale in 1998 which did
not recur in 1999. The outdoor display cost of equipment sales increased 3.8%,
primarily due to a receivable settlement with a customer. The cost of equipment
sales represented 65.1% of related revenues for the nine months ended September
30, 1999 compared to 65.9% in 1998. Cost of theatre receipts and other, which
includes film rental costs, increased $569,000 or 14.1% in 1999, mainly due to
higher volume. The cost of theatre receipts and other represented 79.7% of
related revenues for the nine months ended September 30, 1999 compared to 82.3%
in 1998.
Total general and administrative expenses increased $582,000 or 4.4%. The
corporate general and administrative expenses increased 6.8%, primarily
attributable to the special litigation charge in the second quarter of $408,000
on a retaliatory discharge claim. (See Note 7 - Litigation.) The indoor display
general and administrative expenses decreased 9.0%, primarily due to control of
certain administrative costs. The outdoor display general and administrative
expenses increased 18.3%, 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 $108,000, primarily attributable to the utilization of
investments to construct new theatres and manufacture equipment for rental.
Interest expense decreased $100,000, 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 and the operations of the
theatre joint venture, MetroLux Theatres.
The effective tax rate at September 30, 1999 and 1998 was 45.0%.
7
<PAGE>
Three Months Ended September 30, 1999 Compared to Three Months
Ended September 30, 1998
The Company's total revenues for the three months ended September 30, 1999
increased slightly to $17.6 million from $16.7 million for the three months
ended September 30, 1998. Revenues from equipment rentals and maintenance
increased 4.0% in 1999. Indoor display rental and maintenance revenues
increased $459,000 or 13.3%, which was offset by 9.5% from the continued
expected revenue decline in the outdoor rental and maintenance bases previously
acquired. Revenues from equipment sales increased slightly in 1999. Revenues
from indoor displays decreased $361,000 or 15.5% in 1999, primarily in the
indoor financial division. Revenues from outdoor displays sales increased
$586,000 in 1999 or 8.7% in 1999, primarily in the outdoor sports division.
Revenues from theatre receipts and other increased $371,000 or 19.8% in 1999,
principally due to the acquisition of two theatres in Wyoming in May 1999, the
opening of a six-plex theatre in Dillon, Colorado in August 1999 and film
product.
Gross profit as a percentage of revenues was 35.5% in 1999 compared to 36.0% in
1998.The indoor display cost of rentals and maintenance increased by $118,000 or
7.5%, principally due to increased depreciation expense. The outdoor display
cost of rentals and maintenance remained level. The cost of equipment rentals
and maintenance represented 56.1% of related revenues for the three months ended
September 30, 1999 compared to 55.6% in 1998. Cost of equipment sales increased
slightly. The indoor display cost of equipment sales decreased 18.8%, primarily
as a result of a large indoor sale in 1998 which did not recur in 1999. The
outdoor display cost of equipment sales increased 9.4%, primarily due to a
receivable settlement with a customer. The cost of equipment sales represented
67.0% of related revenues for the three months ended September 30, 1999 compared
to 66.0% in 1998. Cost of theatre receipts and other increased $233,000 or
15.5% in 1999, mainly due to higher volume. The cost of theatre receipts and
other represented 77.3% of related revenues for the three months ended September
30, 1999 compared to 80.1% in 1998.
Total general and administrative expenses increased $341,000 or 7.8%. The
corporate general and administrative expenses increased $138,000 or 9.8%,
primarily due to increased costs of information technology infrastructure and
increased legal costs. The indoor display general and administrative expenses
decreased 6.6%, primarily due to control of certain administrative costs. The
outdoor display general and administrative expenses increased 22.0%, 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 $29,000, primarily attributable to the utilization of
investments to construct new theatres and manufacture new equipment for rental.
Interest expense decreased $21,000, primarily due to capitalization of interest
during construction of theatre projects. Other income relates to the operations
of the theatre joint venture, MetroLux Theatres.
8
<PAGE>
Accounting Standards
The Company expects to adopt the provisions of Statement of Financial Accounting
Standards No. 133 "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133) effective January 1, 2001. The standard requires
companies to recognize all 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 third 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 September 23, 1999 payable to
stockholders of record as of October 8, 1999 and was paid October 20, 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 September 30, 1999 the Company had $9.8 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 $861,000 for the nine months ended September
30, 1999 compared to a decrease of $906,000 in 1998. The increase in 1999 is
primarily attributable to $9.9 million in construction or real estate mortgages
utilized for construction and acquisition of theatres and purchases of
equipment, and refinancing of a mortgage offset by additions to equipment
manufactured for rental and construction and acquisition of theatre properties.
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. Also affecting cash flow in 1999 was an increase in receivables offset
by an increase in accounts payable and accruals primarily due to the increase of
sales and related cost of sales in the outdoor sports division. 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 equipment manufactured 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 $14.7 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.
9
<PAGE>
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
test all of its software for Year 2000 compliance. The Company has completed
its mission critical software updates, continues working on its non-critical
Year 2000 projects and believes that its level of preparedness is appropriate.
The total cost for this project is approximately $350,000, of which $300,000 has
been 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, but not limited to, 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
<PAGE>
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
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
<PAGE>
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: November 15, 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
12
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
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0
0
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