UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
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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
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
26 Pearl Street, Norwalk, CT 06850-1647
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(Address of Registrant's principal executive offices) (Zip code)
Registrant's telephone number, including area code: (203) 853-4321
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Common Stock, $1.00 par value NYSE Amex
8 1/4% Limited Convertible Senior
Subordinated Notes due 2012 NYSE Amex
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes No X
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Indicate by check mark if the Registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes No X
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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
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CONTINUED
TRANS-LUX CORPORATION
2008 Form 10-K Cover Page Continued
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company.
Large accelerated filer Accelerated filer Non-accelerated filer
--- --- ---
Smaller reporting company X
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Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes No X
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The aggregate market value of the Registrant's Common and Class B Stock held by
non-affiliates of the Registrant based upon the last sale price of the
Registrant's Common Stock reported on the NYSE Amex on June 30, 2008, was
approximately $9,238,000. (The value of a share of Common Stock is used as the
value for a share of Class B Stock, as there is no established market for Class
B Stock, which is convertible into Common Stock on a share-for-share basis.)
As of the close of business on April 14, 2009, there were outstanding 2,020,090
shares of the Registrant's Common Stock and 286,814 shares of its Class B Stock.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's definitive Proxy Statement for the Annual Meeting
of Stockholders, to be filed with the Commission within 120 days of the
Registrant's fiscal year end (the "Proxy Statement"), are incorporated by
reference into Part III, Items 10-14 of this Form 10-K to the extent stated
herein.
TRANS-LUX CORPORATION
2008 Form 10-K Annual Report
Table of Contents
PART I
Page
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ITEM 1. Business 1
ITEM 1A. Risk Factors 5
ITEM 1B. Unresolved Staff Comments 7
ITEM 2. Properties 7
ITEM 3. Legal Proceedings 7
ITEM 4. Submission of Matters to a Vote of Security Holders 7
PART II
ITEM 5. Market for the Registrant's Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities 7
ITEM 6. Selected Financial Data 8
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 8
ITEM 8. Financial Statements and Supplementary Data 8
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 8
ITEM 9A. Controls and Procedures 8
ITEM 9B. Other Information 8
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance 9
ITEM 11. Executive Compensation 9
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters 9
ITEM 13. Certain Relationships and Related Transactions, and
Director Independence 9
ITEM 14. Principal Accounting Fees and Services 10
PART IV
ITEM 15. Exhibits and Financial Statement Schedules 10
Signatures 12
PART I
ITEM 1. BUSINESS
Unless the context otherwise requires, the term "Company" as used herein refers
to Trans-Lux Corporation and its subsidiaries. The Company is a full-service
provider of integrated multimedia systems for today's communications
environments. The essential elements of these systems are the real-time,
programmable electronic information displays the Company manufactures,
distributes and services. These display systems utilize LED (light emitting
diode) technologies. Designed to meet the evolving communications needs of both
the indoor and outdoor markets, these display products include text, graphic and
video displays for stock and commodity exchanges, financial institutions,
college and high school sports stadiums, schools, casinos, convention centers,
corporate applications, government applications, theatres, retail sites,
airports, billboard sites and numerous other applications. In addition to its
core display business, the Company also owns an income-producing real estate
property.
On June 26, 2008, the Board of Directors approved the sale of substantially all
of the assets of the Entertainment Division, which was consummated on July 15,
2008 for a purchase price of $24.5 million, of which $7.4 million was paid in
cash, $0.4 million is in escrow and $16.7 million of debt was assumed, including
$0.3 million of debt of the joint venture, MetroLux Theatres. The Entertainment
Division operated motion picture theatres in the western Mountain States. The
Company has accounted for the Entertainment Division as discontinued operations
in the accompanying financial statements.
The following provides information of our continuing businesses.
ELECTRONIC INFORMATION DISPLAY PRODUCTS
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The Company's high performance electronic information displays are used to
communicate messages and information in a variety of indoor and outdoor
applications. The Company's product line encompasses a wide range of
state-of-the-art electronic displays in various size and color configurations.
Most of the Company's display products include hardware components and
sophisticated software. In both the indoor and outdoor markets in which the
Company serves, the Company adapts basic product types and technologies for
specific use in various niche market applications. The Company also operates a
direct service network throughout the United States and parts of Canada, which
performs on-site project management, installation, service and maintenance for
its customers and others.
The Company employs a modular engineering design strategy, allowing basic
'building blocks' of electronic modules to be easily combined and configured in
order to meet the broad application requirements of the industries it serves.
This approach ensures product flexibility, reliability, ease of service and
minimum spare parts requirements.
The Company's electronic information display market is broken down into two
distinct segments: the Indoor division and the Outdoor division. Electronic
information displays are used by financial institutions, including brokerage
firms, banks, energy companies, insurance companies and mutual fund companies;
sports stadiums and venues; educational institutions; outdoor advertising
companies; corporate and government communication centers; retail outlets;
casinos, race tracks and other gaming establishments; airports, train stations,
bus terminals and other transportation facilities; movie theatres; health
maintenance organizations and in various other applications.
Indoor Division: The indoor electronic display market is currently dominated by
three categories of users: financial, government/private sector and gaming.
The financial sector, which includes trading floors, exchanges, brokerage firms,
banks, mutual fund companies and energy companies, has long been a user of
electronic information displays due to the need for real-time dissemination of
data. The major stock and commodity exchanges depend on reliable information
displays to post stock and commodity prices, trading volumes, interest rates and
other financial data. Brokerage firms use electronic ticker displays for both
customers and brokers; they have also installed other larger displays to post
major headline news events in their brokerage offices to enable their sales
force to stay up-to-date on events affecting general market conditions and
specific stocks. Banks and other financial institutions also use information
displays to advertise product offerings to consumers. The Indoor division has a
product line of advanced last sale price displays, tri-color LED tickers and
graphic displays.
The government/private sector includes applications found in major corporations,
public utilities and government agencies for the display of real-time, critical
data in command/control centers, data centers, help desks, visitor centers,
lobbies, inbound/outbound telemarketing centers, retail applications to attract
customers and for employee communications.
1
Electronic displays have found acceptance in applications for the healthcare
industry such as outpatient pharmacies, military hospitals and HMOs to
automatically post patient names when prescriptions are ready for pick up.
Theatres use electronic displays to post current box office and ticket
information, directional information and promote concession sales. Information
displays are consistently used in airports, bus terminals and train stations to
post arrival and departure, gate and baggage claim information, all of which
help to guide passengers through these facilities.
The gaming sector includes casinos, Indian gaming establishments and racetracks.
These establishments generally use large information displays to post odds for
race and sporting events and to display timely information such as results,
track conditions, jockey weights and scratches. Casinos and racetracks also use
electronic displays throughout their facilities to advertise to and attract
gaming patrons. Equipment for the Indoor display segment generally has a
lead-time of 30 to 120 days depending on the size and type of equipment ordered
and material availability.
Outdoor Division: The outdoor electronic display market is even more diverse
than the Indoor division. Displays are being used by schools, sports stadiums,
sports venues, gas stations, highway departments and outdoor advertisers, such
as digital billboards, attempting to capture the attention of passers-by. The
Outdoor division has a product line of LED message centers, scoreboards and
video displays available in monochrome and full color. The Company has utilized
its strong position in the Indoor display market combined with several
acquisitions to enhance its presence in the Outdoor display market. Outdoor
displays are installed in amusement parks, entertainment facilities, high
schools, college sports stadiums, city park and recreational facilities,
churches, racetracks, military installations, automobile dealerships, banks and
other financial institutions. This division generally sells through dealers and
distributors. Equipment for the Outdoor display segment generally has a
lead-time of 10 to 120 days depending on the size and type of equipment ordered
and material availability.
Sales Order Backlog (excluding leases): The amount of sales order backlog at
December 31, 2008 and 2007 was approximately $3.9 million and $4.5 million,
respectively. The December 31, 2008 backlog is expected to be recognized in
2009. These amounts include only the sale of products; they do not include new
lease orders or renewals of existing lease agreements that may be presently
in-house.
ENGINEERING AND PRODUCT DEVELOPMENT
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The Company's ability to compete and operate successfully depends on its ability
to anticipate and respond to the changing technological and product needs of its
customers, among other factors. For this reason, the Company continually
develops enhancements to its existing product line and examines and tests new
display technologies.
During 2008 the Company's Outdoor display division continued to enhance
CaptiVue(R), a line of outdoor full matrix LED message centers. CaptiVue offers
greater design flexibility, modularity and increased clarity at an economical
price. Recent enhancements include the introduction of a high resolution 20mm
full color model. The wireless scoreboard control was updated to incorporate
the newer generation radio systems. In parallel with the new radio system, the
Company introduced the MiScore(TM) and MiTime(TM) handheld, simple to operate
controllers.
The Company supplements its LED product line with third-party LED products to
remain competitive in price, product offerings and performance. The Company
offers the product of a leading provider of advanced LED video display products
that we distribute to the markets we serve. Trans-Lux is marketing these
products for both indoor and outdoor applications under the name
CaptiVision(TM). CaptiVision jumbo video monitors have the capability to
deliver brilliant full motion video and animation in billions of colors to
corporate, financial and entertainment markets where the presentation of
multimedia, live-action, advertising and promotions is of major importance.
The Company continued enhancements to its line of economical full-matrix indoor
graphic display products. GraphixWall(R) fixed size displays and GraphixMax(TM)
tileable displays for larger custom sizes feature versatile functionality at a
lower cost, presenting line art, graphics and variable-sized text. Applications
for GraphixWall and GraphixMax displays include flight information, baggage
claim and way-finding at airports, automatic call directories at contact
centers, order processing support at manufacturing facilities and for posting
prices and promoting products in financial and retail environments. Recent
enhancements include a full color version for additional color flexibility and
impact.
2
Continued development of indoor products includes new monochrome and tri-color
ticker displays utilizing improved LED display technology; curved and flexible
displays; greater integration of blue LEDs to provide full color text and
graphic displays; wireless controlled displays; and a new graphic interface to
display more data at higher resolutions.
As part of its ongoing development efforts, the Company seeks to package certain
products for specific market segments as well as continually tracking emerging
technologies that can enhance its products. Full color, live video and digital
input technologies continue to be enhanced.
The Company maintains a staff of 17 people who are responsible for product
development and support. The engineering, product enhancement and development
efforts are supplemented by outside independent engineering consulting
organizations where required. Engineering expense and product enhancement and
development amounted to $2.0 million, $1.8 million and $2.0 million in 2008,
2007 and 2006, respectively.
MARKETING AND DISTRIBUTION
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The Company markets its indoor and outdoor electronic information display
products in the U.S. and Canada using a combination of distribution channels,
including 14 direct sales representatives, three telemarketers and a network of
independent dealers and distributors. By working with software vendors and
using the internet to expand the quality and quantity of multimedia content that
can be delivered to our electronic displays, we are able to offer customers
relevant, timely information, content management software and display hardware
in the form of turnkey display communications packages.
The Company employs a number of different marketing techniques to attract new
customers, including direct marketing efforts by its sales force to known and
potential users of information displays; internet marketing; advertising in
industry publications; and exhibiting at approximately 15 domestic and
international trade shows annually.
Internationally, the Company uses a combination of internal sales people and
independent distributors to market its products outside the U.S. The Company
has existing relationships with approximately 18 independent distributors
worldwide covering Europe, the Middle East, South and Central America, Africa,
the Far East and Australia. Foreign sales have represented less than 10% of
total revenues in the past three years.
Headquartered in Norwalk, Connecticut, the Company has sales and service offices
in New York, New York; Des Moines, Iowa; Logan, Utah; Toronto, Ontario; and
Burlington, Ontario; as well as approximately 17 satellite offices in the U.S.
The Company's equipment is both leased and sold. A significant portion of the
electronic information display revenues is from equipment rentals with current
lease terms ranging from 30 days to ten years.
The Company's revenues in 2008, 2007 and 2006 did not include any single
customer that accounted for more than 10% of total revenues.
MANUFACTURING AND OPERATIONS
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The Company's production facilities are located in Stratford, Connecticut and
Des Moines, Iowa. The Company relocated from its facility in Norwalk,
Connecticut to Stratford, Connecticut during 2008. The production facilities
consist principally of the manufacturing, assembly and testing of display units
and related components. The Company performs most subassembly and all final
assembly of its products.
All product lines are design engineered by the Company and controlled throughout
the manufacturing process. The Company has the ability to produce very large
sheet metal fabrications, cable assemblies and surface mount and through-hole
designed assemblies. Some of the subassembly processes are outsourced. The
Company's production of many of the subassemblies and all of the final
assemblies gives the Company the control needed for on-time delivery to its
customers.
The Company has the ability to rapidly modify its product lines. The Company's
displays are designed with flexibility in mind, enabling the Company to
customize its displays to meet different applications with a minimum of
lead-time. The Company designs certain of its materials to match components
furnished by suppliers. If such suppliers were unable to provide the Company
with those components, the Company would have to contract with other suppliers
to obtain replacement sources. Such replacement might result in engineering
design changes, as well as delays in obtaining such
3
replacement components. The Company believes it maintains suitable inventory
and has contracts providing for delivery of sufficient quantities of such
components to meet its needs. The Company also believes there presently are
other qualified vendors of these components. The Company does not acquire
significant amount of purchases directly from foreign suppliers, but certain key
components such as the LEDs and LED modules are manufactured by foreign sources.
The Company's products are third-party certified as complying with applicable
safety, electromagnetic emissions and susceptibility requirements worldwide.
SERVICE AND SUPPORT
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The Company emphasizes the quality and reliability of its products and the
ability of its field service personnel and third-party agents to provide timely
and expert service to the Company's rental equipment and maintenance bases and
other types of customer-owned equipment. The Company believes that the quality
and timeliness of its on-site service personnel are important components in the
Company's ongoing and future success. The Company provides turnkey installation
and support for the products it leases and sells in the United States and
Canada. The Company provides training to end-users and provides ongoing support
to users who have questions regarding operating procedures, equipment problems
or other issues. The Company provides installation and service to those who
purchase and lease equipment. The Company's dealers and distributors offer
support for the products they sell in the market segment they cover.
Personnel based in regional and satellite service locations throughout the
United States and Canada provide high quality and timely on-site service for the
installed rental equipment and maintenance base and other types of
customer-owned equipment. Purchasers or lessees of the Company's larger
products, such as financial exchanges, casinos and sports stadiums, often retain
the Company to provide on-site service through the deployment of a service
technician who is on-site daily for scheduled events. The Company operates its
National Technical Services and Repair Center from its Des Moines, Iowa
facility. Equipment repairs are performed in Des Moines and service technicians
are dispatched nationwide from the Des Moines facility. The Company's field
service is augmented by various service companies in the United States, Canada
and overseas. From time to time the Company uses various third-party service
agents to install, service and/or assist in the service of certain displays for
reasons that include geographic area, size and height of displays.
COMPETITION
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The Company's offers of short and long-term leases to customers and its
nationwide sales, service and installation capabilities are major competitive
advantages in the display business. The Company believes that it is the largest
supplier of large-scale stock, commodity, sports and race book gaming displays
in the United States, as well as one of the larger outdoor electronic display
and service organizations in the country.
The Company competes with a number of competitors, both larger and smaller than
itself, with products based on different forms of technology. There are several
companies whose current products utilize similar technology and who possess the
resources necessary to develop competitive and more sophisticated products in
the future.
REAL ESTATE RENTAL OPERATIONS
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The Company owns an income-producing real estate property located in Santa Fe,
New Mexico, which currently has a 81% occupancy rate. This property has been
placed on the market for sale because it does not directly relate to our core
business.
INTELLECTUAL PROPERTY
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The Company owns or licenses a number of patents and holds a number of
trademarks for its display equipment and considers such patents, licenses and
trademarks important to its business.
EMPLOYEES
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The Company has approximately 224 employees as of March 2, 2009. Approximately
21% of the employees are unionized. The Company believes its employee relations
are good.
4
ITEM 1A. RISK FACTORS
THE CURRENT GLOBAL ECONOMIC CRISIS COULD NEGATIVELY IMPACT OUR BUSINESS
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The current global economic crisis could adversely affect our customers and our
suppliers and businesses such as ours. As a result, it could have a variety
of negative effects on the Company such as reduction in revenues, increased
costs, lower gross margin percentages, increased allowances for uncollectable
accounts receivable and/or write-offs of accounts receivable, impair our ability
to access credit markets and finance our operations and could otherwise have
material adverse effects on our business, results of operations, financial
condition and cash flows.
LEVERAGE
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As of December 31, 2008, the Company's total long-term debt (including current
portion) was $22.6 million. We expect we will incur indebtedness in connection
with new rental equipment leases and working capital. Our ability to satisfy
our obligations will be dependent upon our future performance, which is subject
to prevailing economic conditions and financial, business and other factors,
including factors beyond our control. There can be no assurance that our
operating cash flows will be sufficient to meet our long-term debt service
requirements or that we will be able to refinance indebtedness at maturity. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources."
RELIANCE ON KEY SUPPLIERS
-------------------------
We design certain of our materials to match components furnished by suppliers.
If such suppliers were unable or unwilling to provide us with those components,
we would have to contract with other suppliers to obtain replacement sources.
In particular, we purchase almost all of the LED module blocks used in our
electronic information displays from three suppliers. We do not have long-term
supply contracts with these suppliers. A change in suppliers of either LED
module blocks or certain other components may result in engineering design
changes, as well as delays in obtaining such replacement components. We believe
there are presently other qualified vendors of these components. Our inability
to obtain sufficient quantities of certain components as required, or to develop
alternative sources at acceptable prices and within a reasonable time, could
result in delays or reductions in product shipments that could have a materially
adverse effect on our business and results of operations.
COMPETITION
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Our electronic information displays compete with a number of competitors, both
larger and smaller than us, and with products based on different forms of
technology. In addition, there are several companies whose current products
utilize similar technology and who possess the resources to develop competitive
and more sophisticated products in the future. Our success is somewhat
dependent upon our ability to anticipate technological changes in the industry
and to successfully identify, obtain, develop and market new products that
satisfy evolving industry requirements. There can be no assurance that
competitors will not market new products which have perceived advantages over
our products or which, because of pricing strategies, render the products
currently sold by us less marketable or otherwise adversely affect our operating
margins.
NATURE OF LEASING AND MAINTENANCE REVENUES
------------------------------------------
We derive a substantial percentage of our revenues from the leasing of our
electronic information displays, generally pursuant to leases that have an
average term of one to five years. Consequently, our future success is at least
partly dependent on our ability to obtain the renewal of existing leases or to
enter into new leases as existing leases expire. We also derive a significant
percentage of our revenues from maintenance agreements relating to our display
products. The average term of such agreements is generally one to five years.
A portion of the maintenance agreements is cancelable upon 30 days notice.
There can be no assurance that we will be successful in obtaining renewal of
existing leases or maintenance agreements, obtaining replacement leases or
realizing the value of assets currently under leases that are not renewed. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Results of Operations."
5
DEPENDENCE ON KEY PERSONNEL
---------------------------
We believe that our President and Chief Executive Officer, Michael R. Mulcahy,
plays a significant role in the success of the Company and the loss of his
services could have an adverse effect on the Company. There can be no assurance
that the Company would be able to find a suitable replacement for Mr. Mulcahy.
The Company has an employment agreement with Mr. Mulcahy that expires in 2010,
which may be extended by the employee in case of a change-in-control approved by
the present Board of Directors. The Company believes that in addition to the
above referenced key personnel, there is a core group of executives that also
plays a significant role in the success of the Company.
EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS AND CONTROL BY EXISTING STOCKHOLDERS
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Our Restated Certificate of Incorporation contains certain provisions that could
have the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire control of us. Such
provisions could limit the price that certain investors might be willing to pay
in the future for shares of our Common Stock, thus making it less likely that a
stockholder will receive a premium on any sale of shares. Under our Restated
Certificate of Incorporation, we have two classes of common stock outstanding,
Common Stock and Class B Stock, each with its own rights and preferences. Each
share of Class B Stock receives ten votes per share on all matters submitted to
a vote of the stockholders versus the one vote received for each share of Common
Stock. The Class B Stock is entitled to vote separately as a class on any
proposal for merger, consolidation and certain other significant transactions.
Moreover, our Board of Directors is divided into three classes, each of which
serves for a staggered three-year term, making it more difficult for a third
party to gain control of our Board. Our Restated Certificate of Incorporation
also has a provision that requires a four-fifths vote on any merger,
consolidation or sale of assets with or to an "Interested Person" or "Acquiring
Person."
Additionally, we are authorized to issue 500,000 shares of Preferred Stock
containing such rights, preferences, privileges and restrictions as may be fixed
by our Board of Directors, which may adversely affect the voting power or other
rights of the holders of Common Stock or delay, defer or prevent a change in
control of the Company, or discourage bids for the Common Stock at a premium
over its market price or otherwise adversely affect the market price of the
Common Stock. Our Board of Directors is also authorized to issue 3,000,000
shares of Class A Stock, which is identical to the Common Stock but is non-
voting and is entitled to a 10% higher dividend than the Common Stock.
As of December 31, 2008, 13 stockholders who are executive officers and/or
directors of the Company beneficially own approximately 81.96% of our
outstanding Class B Stock, 10.19% of all classes and 49.21% of the voting power.
So long as the Class B stock is outstanding, these stockholders collectively
will continue to have the ability to elect all of our directors and to veto
major transactions for which a stockholder vote is required under Delaware law,
including mergers, consolidations and certain other significant transactions.
These stockholders could also block tender offers for our Common Stock that
could give stockholders the opportunity to realize a premium over the then
prevailing market price for their shares of Common Stock.
LIMITED TRADING VOLUME AND VOLATILITY OF STOCK PRICE
----------------------------------------------------
Our Common Stock is not widely held and the volume of trading has been
relatively low and sporadic. Accordingly, the Common Stock is subject to
increased price volatility and reduced liquidity. There can be no assurance a
more active trading market for the Common Stock will develop or be sustained if
it does develop. The limited public float of our Common Stock could cause the
market price for the Common Stock to fluctuate substantially. In addition,
stock markets have experienced wide price and volume fluctuations in recent
periods and these fluctuations often have been unrelated to the operating
performance of the specific companies affected. Any of these factors could
adversely affect the market price of the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE
-------------------------------
Future sales of Common Stock in the public market by current stockholders of the
Company could adversely affect the market price for the Common Stock. 289,785
shares of Common Stock (including Class B Stock if converted into equal amounts
of Common Stock) may be sold in the public market by executive officers and
directors, subject to the limitations contained in Rule 144 under the Securities
Act of 1933, as amended. Sales of substantial amounts of the shares of Common
Stock in the public market, or even the potential for such sales, could
adversely affect the prevailing market price of our Common Stock.
6
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
In June 2008, the Company relocated its headquarters and principal executive
offices to a leased facility at 26 Pearl Street, Norwalk, Connecticut, which is
used for administration and sales, and relocated its engineering, manufacturing
and assembly of its indoor display products to a leased facility in Stratford,
Connecticut. Prior to relocating the Company was located at 110 Richards
Avenue, Norwalk, Connecticut. The Company owns a facility in Des Moines, Iowa
where its outdoor operations are maintained.
In addition, the Company owns an income-producing real estate property in Santa
Fe, New Mexico and land in Silver City, New Mexico. Both of these properties
have been placed on the market for sale because they do not directly relate to
our core business. The Company leases six other premises throughout North
America for use as sales, service and/or administrative operations. The
aggregate rental expense was $773,000, $662,000 and $781,000 for the years ended
December 31, 2008, 2007 and 2006, respectively.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims, which arise in the
ordinary course of its business and/or which are covered by insurance. The
Company and four of its directors are party to a pending legal proceeding
entitled Gabelli Funds, LLC v. Brandt et al, 09 Civ. 0830 (KMK), beneficial
owners of forty-three percent of the common stock of the Company. The
proceeding, which is in the process of possibly being settled, is not expected
to have an adverse impact on the consolidated financial position or operations
of the Company.
The Company is also party to other pending legal proceedings and claims, which
are covered by insurance, that it believes will not have a material adverse
effect on the consolidated financial position or operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
(a) The Company's Common Stock is traded on the NYSE Amex under the symbol
"TLX." Sales prices are set forth in (d) below.
(b) The Company had approximately 594 holders of record of its Common Stock
and approximately 59 holders of record of its Class B Stock as of April
14, 2009.
(c) The Board of Directors did not declare any cash dividends for Common
Stock and Class B Stock during 2008 in order to conserve cash and pay
down debt. Management and the Board of Directors will continue to
review payment of quarterly cash dividends.
7
(d) The range of Common Stock prices on the NYSE Amex are set forth in the
quarterly financial data table below in Item 6(b).
(e) The Company did not purchase any of its equity securities during any
month of the fourth fiscal quarter of 2008.
ITEM 6. SELECTED FINANCIAL DATA
(a) Not applicable.
(b) To be filed by amendment to this Form 10-K by April 30, 2009.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
To be filed by amendment to this Form 10-K by April 30, 2009.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is subject to interest rate risk on its long-term debt. The Company
manages its exposure to changes in interest rates by the use of variable and
fixed interest rate debt. The fair value of the Company's fixed rate long-term
debt is disclosed in Note 11 to the consolidated financial statements. A
one percentage point change in interest rates would result in an annual interest
expense fluctuation of approximately $111,000. In addition, the Company is
exposed to foreign currency exchange rate risk mainly as a result of investment
in its Canadian subsidiary. A 10% change in the Canadian dollar relative to the
U.S. dollar would result in a currency exchange expense fluctuation of
approximately $5,000, based on dealer quotes, considering current exchange
rates. The Company does not enter into derivatives for trading or speculative
purposes and did not hold any derivative financial instruments at December 31,
2008.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
To be filed by amendment to this Form 10-K by April 30, 2009.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A(T). CONTROLS AND PROCEDURES
To be filed by amendment to this Form 10-K by April 30, 2009.
ITEM 9B. OTHER INFORMATION
All information required to be reported in a report on Form 8-K during the
fourth quarter covered by this Form 10-K has been reported.
8
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
(a) The information required by this Item with respect to directors is
incorporated herein by reference to the Section entitled "Election of
Directors" in the Company's Proxy Statement.
(b) The following executive officers were elected by the Board of
Directors for the ensuing year and until their respective successors
are elected:
Name Office Age
------------------ ------------------------------------- ---
Michael R. Mulcahy President and Chief Executive Officer 60
Angela D. Toppi Executive Vice President, Treasurer, 53
Secretary and Chief Financial Officer
Al L. Miller Executive Vice President 63
Karl P. Hirschauer Senior Vice President 61
Thomas F. Mahoney Senior Vice President 61
Messrs. Mulcahy, Miller, Hirschauer, Mahoney and Ms. Toppi have each been
associated in an executive capacity with the Company for more than five
years.
(c) The information required by Items 405, 406 and 407 of Regulation S-K
is incorporated herein by reference to the Sections entitled
"Compliance with Section 16(a) of the Securities Exchange Act of
1934," "Code of Ethics" and "Corporate Governance" in the Company's
Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to the
Section entitled "Executive Compensation and Transactions with Management" in
the Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this Item is incorporated herein by reference to the
Section entitled "Security Ownership of Certain Beneficial Owners, Directors and
Executive Officers" in the Company's Proxy Statement.
Equity Compensation Plan Information
------------------------------------
Securities Weighted Securities
to be issued average available for
December 31, 2008 upon exercise exercise price future issuance
-----------------------------------------------------------------------------------------------------
Equity compensation plans approved by stockholders 23,500 $5.72 10,500
Equity compensation plans not approved by stockholders 10,000 4.03 -
------ ------
Total 33,500 5.22 10,500
-----------------------------------------------------------------------------------------------------
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by this Item is incorporated herein by reference to the
Section entitled "Executive Compensation and Transactions with Management" in
the Company's Proxy Statement.
9
ITEM 14. PRINCIPAL ACCOUNTING FIRM FEES AND SERVICES
The information required by this Item is incorporated herein by reference to the
Section entitled "Ratification of the Selection of Independent Registered
Accounting Firm" in the Company's Proxy Statement.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this report:
1 Consolidated Financial Statements of Trans-Lux Corporation:
To be filed by amendment to this Form 10-K by April 30, 2009.
2 Financial Statement Schedules: None.
3 Exhibits:
3(a) Form of Restated Certificate of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.1 of
Registration No. 333-15481).
(b) By-Laws of the Registrant (incorporated by reference to Exhibit
3(b) of Form 10-K for the year ended December 31, 2001).
4(a) Indenture dated as of December 1, 1994 (form of said indenture
is incorporated by reference to Exhibit 6 of Schedule 13E-4
Amendment No. 2 dated December 23, 1994).
(b) Indenture dated as of March 1, 2004 (form of said indenture is
incorporated by reference to Exhibit 12(d) of Schedule TO dated
March 2, 2004).
10.1 Form of Indemnity Agreement - Directors (form of said agreement
is incorporated by reference to Exhibit 10.1 of Registration No.
333-15481).
10.2 Form of Indemnity Agreement - Officers (form of said agreement is
incorporated by reference to Exhibit 10.2 of Registration No.
333-15481).
10.3 Amended and Restated Pension Plan dated January 1, 2001 and
Amendment No. 1 dated as of April 1, 2002 (incorporated by
reference to Exhibit 10.3 of Form 10-K for the year ended
December 31, 2001). Amendment No. 2 dated as of December 31,
2002 (incorporated by reference to Exhibit 10.3 of Form 10-K for
the year ended December 31, 2002). Amendment No. 3 dated as of
December 31, 2003 (incorporated by reference to Exhibit 10.3 of
Form 10-K for the year ended December 31, 2003). Amendment No. 4
dated as of December 31, 2008 filed herewith.
10.4 Supplemental Executive Retirement Plan dated January 1, 2009
(incorporated by reference to Exhibit 10.1 of Form 8-K dated
January 6, 2009).
10.5(a) 1989 Non-Employee Director Stock Option Plan, as amended
(incorporated by reference to Exhibit 10.4(a) of Form 10-K for
the year ended December 31, 1999).
(b) 1995 Stock Option Plan, as amended (incorporated by reference to
Proxy Statement dated April 7, 2000).
10
10.6 Amended and Restated Commercial Loan and Security Agreement with
People's Bank dated December 23, 2004 (incorporated by reference
to Exhibit 10(a) of Form 8-K filed December 28, 2004). Amendment
No. 1 dated as of December 31, 2005 (incorporated by reference
to Exhibit 10.2 of Form 10-Q for the quarter ended March 31,
2006). Letter amendments dated as of September 30, 2006 and
December 31, 2006 (incorporated by reference to Exhibit 10.5 of
Form 10-K for the year ended December 31, 2006). Amendment No.
5 dated August 9, 2007 (incorporated by reference to Exhibit 10.1
of Form 10-Q for the quarter ended June 30, 2007). Amendment No.
9 dated July 15, 2008 (incorporated by reference to Exhibit 10.1
of Form 10-Q for the quarter ended June 30, 2008).
10.7 Consulting Agreement with Moving Images, LLC dated as of December
1, 2004 and termination letter with Richard Brandt (incorporated
by reference to Exhibit 10.6 of Form 10-K for the year ended
December 31, 2004). Amendment dated December 7, 2005
(incorporated by reference to Exhibit 10.6 of Form 10-K for the
year ended December 31, 2005). Amendment dated as of March 28,
2007 (incorporated by reference to Exhibit 10.1 of Form 10-Q for
the quarter ended March 31, 2007). Amendment dated December 31,
2008 (incorporated by reference to Exhibit 10.4 of Form 8-K dated
January 6, 2009).
10.8 Amended and Restated Employment Agreement with Michael R.
Mulcahy dated January 1, 2009 (incorporated by reference to
Exhibit 10.2 of Form 8-K dated January 6, 2009).
10.9 Employment Agreement with Angela D. Toppi dated as of April 1,
2005 (incorporated by reference to Exhibit 10.9 of Form 10-K for
the year ended December 31, 2004).
10.10 Amended and Restated Employment Agreement with Al Miller dated
January 1, 2009 (incorporated by reference to Exhibit 10.3 of
Form 8-K dated January 6, 2009).
10.11 Employment Agreement with Karl Hirschauer dated as of April 1,
2008 (incorporated by reference to Exhibit 10.1 of Form 10-Q for
the quarter ended March 31, 2008).
21 List of Subsidiaries filed herewith.
11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
by: /s/ Angela D. Toppi
----------------------------
Angela D. Toppi
Executive Vice President and
Chief Financial Officer
Dated: April 15, 2009
12
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated:
/s/ Gene F. Jankowski April 15, 2009
----------------------------------------
Gene F. Jankowski, Chairman of the Board
/s/ Victor Liss April 15, 2009
----------------------------------------
Victor Liss, Vice Chairman of the Board
/s/ Matthew Brandt April 15, 2009
----------------------------------------
Matthew Brandt, Director
/s/ Richard Brandt April 15, 2009
----------------------------------------
Richard Brandt, Director
/s/ Thomas Brandt April 15, 2009
----------------------------------------
Thomas Brandt, Director
April 15, 2009
----------------------------------------
Howard M. Brenner, Director
/s/ Jean Firstenberg April 15, 2009
----------------------------------------
Jean Firstenberg, Director
/s/ Howard S. Modlin April 15, 2009
----------------------------------------
Howard S. Modlin, Director
/s/ Michael R. Mulcahy April 15, 2009
----------------------------------------
Michael R. Mulcahy, President, Chief
Executive Officer and Director
13