Trans Lux Corp – ‘424B1’ on 12/20/96

As of:  Friday, 12/20/96   ·   Accession #:  950123-96-7507   ·   File #:  333-15481

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Prospectus   —   Rule 424(b)(1)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Prospectus Dated December 19, 1996                    75    451K 

Document Table of Contents

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$27,500,000 

LOGO                                  LOGO                                      

7 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2006
------------------------

   The Notes offered hereby (the "Offering") will be convertible into Common
Stock, $1.00 par value per share (the "Common Stock"), of Trans-Lux Corporation 
("Trans-Lux" or the "Company") at any time after 60 days following the date of  
initial issuance thereof and prior to maturity, unless previously redeemed, at a
conversion price of $14.013 per share, subject to adjustment under certain      
conditions. See "Description of Notes -- Conversion Rights" for a description of
events which may cause an adjustment to the conversion price. The Common Stock  
of the Company is traded on the American Stock Exchange (the "AMEX") under the  
symbol "TLX." On December 19, 1996, the last reported sale price of the Common  
Stock on the AMEX was $11 7/8 per share. See "Price Range of Common Stock and   
Dividend Policy."                                                               

 Interest on the Notes is payable on June 1 and December 1 of each year,
commencing June 1, 1997. The Notes are redeemable, in whole or in part, at the  
option of the Company at any time on or after December 1, 2001, at the          
redemption prices set forth herein, plus accrued interest, if any, to the       
redemption date. If a Repurchase Event (as defined herein) occurs, each Holder  
of the Notes will have the right, subject to certain conditions and             
restrictions, to require the Company to repurchase all outstanding Notes, in    
whole or in part, owned by such Holder at 100% of their principal amount plus   
accrued interest, if any, to the date of repurchase. The Notes are subordinated 
to all existing and future Senior Indebtedness (as defined herein) of the       
Company and will be effectively subordinated to all indebtedness and other      
liabilities of the Company's subsidiaries. At September 30, 1996, the Company   
had approximately $23.2 million of outstanding Senior Indebtedness and the      
Company's subsidiaries had indebtedness and other liabilities of approximately  
$4.8 million. The Indenture governing the Notes permits the Company to incur    
certain additional indebtedness, including Senior Indebtedness. See "Description
of Notes" for a more complete discussion of the Indenture's provisions.         

The Notes have been approved for inclusion on the AMEX upon notice of 
issuance.                                                                       

    SEE "RISK FACTORS" ON PAGES 7 TO 10 FOR A DISCUSSION OF CERTAIN MATERIAL
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE NOTES.       

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND    
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE      
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES        
COMMISSION                                                        
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY  
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.   
--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]
                                                                                               
--------------------------------------------------------------------------------               
                                              PRICE TO        UNDERWRITING      PROCEEDS TO    
                                             PUBLIC(1)        DISCOUNTS(2)       COMPANY(3)    
-----------------------------------------------------------------------------------------------
Per Note.................................      100.00%           4.50%             95.50%      
-----------------------------------------------------------------------------------------------
Total(4).................................    $27,500,000       $1,237,500       $26,262,500    
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------

(1) Plus accrued interest, if any, from the date of initial issuance.           

(2) See "Underwriting" for information concerning indemnification of the        
Underwriter and other matters.                                          

(3) Before deducting expenses payable by the Company, estimated to be $400,000. 

(4) The Company has granted the Underwriter a 30-day over-allotment option to   
  purchase up to an additional $4,125,000 of the Notes on the same terms and
conditions set forth above. If the Underwriter exercises this option in 
full, the total Price to Public, Underwriting Discounts and Proceeds to 
  Company will be $31,625,000, $1,423,125 and $30,201,875, respectively. See
"Underwriting."                                                         
------------------------

The Notes offered by this Prospectus are offered by the Underwriter,  
subject to prior sale, when, as and if delivered to and accepted by it and      
subject to certain conditions. It is expected that delivery of certificates     
representing the Notes will be made at the office of Southcoast Capital         
Corporation, 277 Park Avenue, New York, New York, on or about December 26, 1996.
------------------------

SOUTHCOAST CAPITAL
CORPORATION   

The date of this Prospectus is December 19, 1996. 

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TRANS-LUX 

TRANS-LUX IS A SUPPLIER OF
LARGE-SCALE, MULTI-COLOR
ELECTRONIC INFORMATION DISPLAYS 

FOR INDOOR AND OUTDOOR USE. 

IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT 
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED 
HEREBY AND THE COMMON STOCK OF THE COMPANY AT LEVELS ABOVE THOSE THAT WHICH 
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON
THE AMERICAN STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME. 

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PROSPECTUS SUMMARY

 The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus or  
incorporated herein by reference. Except as otherwise noted, all information in 
this Prospectus assumes no exercise of the Underwriter's over-allotment option. 

THE COMPANY 

  The Company is a manufacturer, distributor, and servicer of large-scale,
real-time electronic information displays for both indoor and outdoor use. These
display systems utilize light emitting diode ("LED") and light bulb technologies
to display real-time information entered by the user or via a third party       
information supplier. The Company provides high quality, reliable display       
products configured to suit its customers' needs, and offers extensive on-site  
service and maintenance coverage. The Company's display products include data,  
graphics, and picture displays for stock and commodity exchanges, financial     
institutions, airports, casinos, sports venues, convention centers, corporate,  
theatres, retail, and numerous other applications. In addition to the core      
display business, the Company also operates a small chain of motion picture     
theatres in the southwestern U.S. In 1995, the Company derived approximately 89%
of its revenue from its indoor and outdoor information display business.        

    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 shape, size and color           
configurations. Most of the Company's display products include hardware         
components and sophisticated software. In both the indoor and outdoor markets,  
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 U.S. and Canada which performs on-site service and       
maintenance for its customers, further distinguishing the Company from many of  
its competitors.                                                                

  In the indoor market, the Company's high performance electronic displays
are used to communicate messages in the financial, gaming, transportation,      
entertainment and retail industries, among others. In the financial industry,   
the Company's products display news and market information, interest rates,     
up-to-the-second stock and commodity prices, and other financial product        
information for stock and commodity exchanges, brokerage firms, banks, mutual   
fund companies, and other financial institutions. In the gaming industry, the   
Company's products transmit racing and pari-mutuel betting odds and results,    
sports scores, statistics, slot machine jackpots and other wagering information.
In the transportation industry, the Company's products are used to display      
arrival and departure information and gate and baggage claim information for    
airports and other transportation facilities. While the securities and          
commodities industries continue to represent a significant portion of the       
Company's customer base, the Company has a strong presence in the gaming        
industry through its race and sports book displays and also markets its displays
to such users as banks, corporations, transportation facilities, the military,  
racetracks, restaurants, pharmacies, theatres, hotels and convention centers.   

   Over the past four years, the Company has utilized its strong position in
the indoor display market combined with several acquisitions to establish a     
growing presence in the outdoor display market. Trans-Lux outdoor displays are  
installed in amusement parks, entertainment facilities, professional and college
sports stadiums, military installations, bridges and other roadway              
installations, automobile dealerships, banks and other financial institutions.  

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   The Company has made three acquisitions over the past four years in order
to establish and enhance its presence in the outdoor market. In August 1992,    
after first managing the portfolio for approximately 15 months, the Company     
acquired a portfolio of outdoor electric and electronic equipment displays from 
American Electronic Displays, L.P. In August 1993, the Company expanded its     
presence in the outdoor display market by acquiring a portfolio of outdoor      
lease, maintenance and other contracts from Indicator Maintenance Corporation.  
In January 1995, the Company acquired all of the capital stock of Integrated    
Systems Engineering, Inc. ("ISE"), a manufacturer of outdoor electronic         
displays.                                                                       

The Company's principal executive offices are located at 110 Richards 
Avenue, Norwalk, Connecticut 06856-5090. The Company's telephone number is (203)
853-4321.                                                                       

THE OFFERING

Securities Offered........ $27.5 million aggregate principal amount of 7 1/2%   
                  Convertible Subordinated Notes due 2006 (the
"Notes").                 

Interest Payment Dates.... June 1 and December 1, commencing June 1, 1997.      

Maturity.................. December 1, 2006.                                    

Conversion................ The Notes are convertible into the Company's Common  
                           Stock at any time after 60 days following the date of
                     initial issuance thereof and prior to maturity,
                          unless previously redeemed, at a conversion price of
                    $14.013 per share, subject to adjustment under
certain conditions.       

Redemption at Option of                                                         
  Company................. The Notes are redeemable, in whole or in part, at the
                    option of the Company, at any time on or after
                           December 1, 2001, at the redemption prices (expressed
                        as a percentage of the principal amount) set forth
                           below for the 12-month period beginning December 1 of
the years indicated:      

                                                                [Download Table]
                                                     
2001.......................................  103.750%
2002.......................................  102.813 
2003.......................................  101.875 
2004.......................................  100.938 

                      thereafter and at maturity at 100% of principal,
                      together in the case of any such redemption with
              accrued interest to the redemption date.

Repurchase at Option of                                                         
Holders................. If a Repurchase Event occurs, each Holder of the   
                   Notes will have the right, subject to certain
                         conditions and restrictions, to require the Company
                         to repurchase all outstanding Notes, in whole or in
                           part, owned by such holder at 100% of their principal
                          amount plus accrued interest, if any, to the date of
                      repurchase. If a Repurchase Event were to occur,
                       there is no assurance that the Company would have
                          sufficient funds to pay the repurchase price for all
                    the Notes tendered by the Holders thereof. The
                    Company's ability to make such payments may be
                       limited by its leverage and the terms of its then
                  existing borrowing and other agreements. See
                      "Description of Notes -- Repurchase at Option of
                          Holders Upon a Repurchase Event" for a more complete
                           discussion of the rights of Holders of the Notes upon
           the occurrence of a Repurchase Event.

Certain Covenants......... The Indenture contains certain covenants that, among 
                        other things, limit the ability of the Company and
                      its subsidiaries to make restricted payments, to
                     incur Indebtedness, to issue preferred stock of
Subsidiaries, and to enter

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                           into merger and similar transactions. These covenants
             are subject to important exceptions and
                     qualifications. See "Description of the Notes."

Subordination............. The Notes are subordinated to all existing and future
                    Senior Indebtedness of the Company and will be
                      effectively subordinated to all indebtedness and
                         other liabilities of the Company's subsidiaries. At
                       September 30, 1996, the Company had approximately
                          $23.2 million of outstanding Senior Indebtedness and
                           the Company's subsidiaries had indebtedness and other
                    liabilities of approximately $4.8 million. The
                          Indenture governing the Notes permits the Company to
                      incur certain additional indebtedness, including
Senior Indebtedness.      

Use of Proceeds........... The Proceeds of the Offering will be used to finance 
                     the Company's expansion program and for general
                    corporate purposes, including the repayment of
                   certain outstanding indebtedness. See "Use of
Proceeds."                

Listing................... The Notes have been approved for inclusion on the    
                        AMEX upon notice of issuance and the Notes will be
                          listed under the symbol "TLX.N." The Common Stock is
                listed on the AMEX under the symbol "TLX."

RISK FACTORS

   For a discussion of certain material factors that should be considered by
prospective purchasers of the Notes, see "Risk Factors."                        

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SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The summary data below has been derived from the audited financial    
statements, the unaudited financial statements and other records of the Company.
The following summary data should be read in conjunction with the financial     
statements of the Company and the notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."                     

                                                        [Enlarge/Download Table]

                                                                                                    NINE MONTHS ENDED  
                                                         YEAR ENDED DECEMBER 31,                      SEPTEMBER 30,    
                                         -------------------------------------------------------   ------------------- 
                                          1991        1992        1993        1994        1995      1995        1996   
                                         -------     -------     -------     -------     -------   -------     ------- 
                                            (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                           
                                                                                                                       
STATEMENT OF OPERATIONS DATA:                                                                                          
  Total revenues........................ $22,133     $24,130     $35,799     $33,742     $37,791   $28,881     $32,871 
  Operating expenses....................  14,127      15,299      21,554      19,413      22,406    16,914      20,165 
  Gross profit from operations..........   8,006       8,831      14,245      14,329      15,385    11,967      12,706 
  General and administrative expenses...   7,151       7,384      10,202      11,023      11,494     9,210       9,442 
  Interest expense, net.................     570         893       2,380(1)    1,242(2)    2,144     1,565       1,669 
  Income before income taxes............     542         741       1,663(1)    2,064(2)    1,839     1,262       1,498 
  Provision for income taxes............     280         469       1,174(1)      750(2)      773       530         629 
  Net income............................     262         272         489(1)    1,314(2)    1,066       732         869 
OTHER DATA:                                                                                                            
  EBITDA(3)............................. $ 5,201     $ 6,670     $10,385     $ 9,819     $10,884   $ 7,961     $ 8,444 
  Net cash provided by operating                                                                                       
    activities..........................   4,379       7,002       7,509      10,229       6,605     3,909       2,178 
  Net cash (used in) investing                                                                                         
    activities..........................  (1,253)    (18,571)     (7,183)     (7,915)     (9,372)   (8,028)     (7,009)
  Net cash provided by (used in)                                                                                       
    financing activities................  (2,364)     11,157        (378)     (1,107)      1,097     2,276       4,220 
  Ratio of earnings to fixed                                                                                           
    charges(4)..........................     1.4         1.5         1.6         2.3         1.8       1.7         1.7 
  Net rental equipment.................. $13,550     $29,995     $29,039     $29,653     $30,778   $30,142     $32,594 
  Net book value per share.............. $ 14.59     $ 15.35     $ 15.60     $ 16.29     $ 17.08   $ 16.85     $ 17.39 

                                                        [Enlarge/Download Table]

                                                                         AS OF SEPTEMBER 30, 
                                                                                1996         
                                                                        ---------------------
                                                                                      AS     
                                                                        ACTUAL    ADJUSTED(5)
                                                                        -------   -----------
                                                                                             
BALANCE SHEET DATA:                                                                          
  Cash and cash equivalents............................................ $    54     $14,906  
  Total assets.........................................................  63,045      79,421  
  Long-term debt, including current portion............................  29,084      45,573  
  Stockholders' equity.................................................  22,308      22,242  

---------------                                                                 
(1) 1993 reflects the impact of an assessment of income taxes and related       
    interest expense incurred resulting from a prior year state income tax audit
of approximately $600,000.                                              

(2) 1994 reflects the positive impact of a settlement of approximately $360,000 
related to the 1993 assessment described in footnote No. 1 above.       

(3) EBITDA is defined as income before effect of changes of accounting plus     
  interest, income taxes, depreciation and amortization. EBITDA is presented
here because it is a widely accepted financial indicator of a company's 
   ability to service and/or incur indebtedness. However, EBITDA should not be
considered as an alternative to net income or cash flow data prepared in
   accordance with generally accepted accounting principles or as a measure of
   a company's profitability or liquidity. The Company's measure of EBITDA may
   not be comparable to similarly titled measures reported by other companies.

(4) Earnings used in computing the ratio of earnings to fixed charges consist of
income before income taxes, fixed charges and extraordinary items. Fixed
    charges consist of interest expense, including amounts capitalized, and that
portion of rent expense which management deems to be attributable to    
interest costs.                                                         

(5) Adjusted to reflect the sale of $27,500,000 of the Notes offered by the     
   Company hereby, the receipt of the estimated net proceeds therefrom and the
repayment of certain outstanding indebtedness. See "Use of Proceeds" and
"Capitalization."                                                       

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RISK FACTORS

LEVERAGE                                                                        

     As of September 30, 1996, as adjusted for the issuance of the Notes and the
application of the proceeds therefrom the Company's total long-term debt        
(including current portion) would have been $45.6 million. The Company expects  
it will incur indebtedness in addition to the Notes in connection with the      
implementation of its growth strategy. The Indenture governing the Notes permits
the Company or its subsidiaries to incur certain additional indebtedness,       
including Senior Indebtedness. Additional indebtedness of the Company may rank  
senior or pari passu with the Notes in certain circumstances, while additional  
indebtedness of the Company's subsidiaries will rank effectively senior to the  
Notes. See "Description of Notes." The Company's ability to satisfy its         
obligations will be dependent upon its future performance, which is subject to  
prevailing economic conditions and financial, business and other factors,       
including factors beyond the Company's control. There can be no assurance that  
the Company's operating cash flows will be sufficient to meet its debt service  
requirements or to repay the Notes at maturity or that the Company will be able 
to refinance the Notes or other indebtedness at maturity. See "Management's     
Discussion and Analysis of Financial Condition and Results of                   
Operations -- Liquidity and Capital Resources."                                 

SUBORDINATION                                                                   

 The Notes will be unsecured subordinated obligations of the Company and
will be subordinated in right of payment to all present and future Senior       
Indebtedness and other liabilities of the Company and will be effectively       
subordinated to all indebtedness and other liabilities of the Company's         
subsidiaries. In the event of bankruptcy, liquidation or reorganization of the  
Company, the assets of the Company will be available to pay obligations on the  
Notes only after all Senior Indebtedness has been paid in full, and there may   
not be sufficient assets remaining to pay amounts due on any or all of the Notes
then outstanding. The Holders of any indebtedness of the Company's subsidiaries 
will be entitled to payment of the indebtedness from the assets of the          
subsidiaries prior to the holders of any general unsecured obligations of the   
Company, including the Notes. At September 30, 1996, the Company had            
approximately $23.2 million of outstanding Senior Indebtedness and the Company's
subsidiaries had indebtedness and other liabilities of approximately $4.8       
million. In the event of a payment default with respect to Senior Indebtedness, 
no payments may be made on account of the Notes until such default no longer    
exists with respect to Senior Indebtedness of the Company. See "Description of  
Notes" and "Management's Discussion and Analysis of Financial Condition and     
Results of Operations -- Liquidity and Capital Resources."                      

RISKS RELATED TO A REPURCHASE EVENT                                             

 Upon the occurrence of a Repurchase Event, each Holder of the Notes may
require the Company to repurchase all or a portion of such Holder's Notes. If a 
Repurchase Event were to occur, there can be no assurance that the Company would
have sufficient financial resources, or would be able to arrange financing, to  
pay the repurchase price for all the Notes tendered by Holders thereof. In      
addition, the occurrence of certain Repurchase Events would constitute an event 
of default under certain of the Company's current debt agreements, and the      
Company's repurchase of the Notes as a result of the occurrence of a Repurchase 
Event may be prohibited or limited by, or create an event of default under, the 
terms of future agreements relating to borrowings of the Company, including     
agreements relating to Senior Indebtedness. In the event a Repurchase Event     
occurs at a time when the Company is prohibited from purchasing the Notes, the  
Company could seek the consent of its lenders to purchase the Notes or could    
attempt to refinance the borrowings that contain such prohibition. If the       
Company does not obtain such a consent or repay such borrowings, the Company    
would remain prohibited from purchasing the Notes. In such case, the Company's  
failure to purchase tendered Notes would constitute an Event of Default under   
the Indenture which would, in turn, constitute a further default under certain  
of the Company's existing debt agreements and may constitute a default under the
terms of other indebtedness that the Company may incur from time to time. In    
such circumstances, the subordination provisions in the Indenture would prohibit
payments to the Holders of the Notes. See "Description of Notes -- Repurchase at
Option of Holders Upon a Repurchase Event."                                     

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RELIANCE ON KEY SUPPLIERS                                                       

    The Company designs certain of its materials to match components furnished
by suppliers. If such suppliers were unable or unwilling to provide the Company 
with those components, the Company would have to obtain replacement sources. In 
particular, the Company purchases almost all of the LED module blocks used in   
its electronic displays from a single supplier. The Company does not have a     
long-term supply contract with this supplier. 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. The        
Company's 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 which
could have a materially adverse effect on the business and results of operations
of the Company.                                                                 

COMPETITION                                                                     

The Company's electronic information displays compete with a number of
companies, both larger and smaller than itself, 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. The Company's
success is somewhat dependent upon its 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 the Company's products or which, because of pricing strategies, 
render the products currently sold by the Company less marketable or otherwise  
adversely affect the Company's operating margins. The Company's motion picture  
theatres are subject to varying degrees of competition in the geographic areas  
in which they operate. In some areas, theatres operated by national circuits    
compete with the Company's theatres. The Company's theatres also face           
competition from all other forms of entertainment competing for the public's    
leisure time and disposable income.                                             

NATURE OF LEASING AND MAINTENANCE REVENUES                                      

The Company derives a substantial percentage of its revenues from the 
leasing of its electronic information display products, generally pursuant to   
leases which have an average term of less than three years. Consequently, the   
Company's future success is at least partly dependent on its ability to obtain  
the renewal of existing leases or to enter into new leases as existing leases   
expire. The Company also derives a significant percentage of its revenues from  
maintenance agreements relating to its display products. The average term of    
such agreements is generally three to five years. A portion of the maintenance  
agreements are cancellable upon 30 days notice. There can be no assurance that  
the Company 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.                             

DEPENDENCE ON KEY PERSONNEL                                                     

   The Company believes that its Chairman, Mr. Richard Brandt, and President
and Chief Executive Officer, Mr. Victor Liss, play a significant role in the    
success of the Company and the loss of the services of either 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 either Mr. Brandt or Mr. Liss. The   
Company has an employment agreement with Mr. Brandt which expires in 2002 and an
employment agreement with Mr. Liss which, if not extended, expires in December  
1997. The Company believes that in addition to the above referenced key         
personnel, there is a core group of executives which also plays a significant   
role in the success of the Company. See "Executive Compensation and Transactions
with Management -- Employment Agreements."                                      

EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS AND CONTROL BY EXISTING STOCKHOLDERS 

The Company's 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 the Company. Such provisions could limit the price that certain      
investors might be willing                                                      

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to pay in the future for shares of the Company's Common Stock, thus making it   
less likely that a stockholder will receive a premium on any sale of shares.    
Under the Company's Restated Certificate of Incorporation, the Company has 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 the merger, consolidation and    
certain other significant transactions. See "Description of Capital             
Stock -- Common Stock" and "Class B Stock." Moreover, the Company's 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  
the Company's Board. The Company has also adopted a provision for its Restated  
Certificate of Incorporation which requires a four-fifths vote on any merger,   
consolidation or sale of assets with or to an "Interested Person" or "Acquiring 
Person."                                                                        

Additionally, the Company is authorized to issue 500,000 shares of    
Preferred Stock containing such rights, preferences, privileges and restrictions
as may be fixed by the Company's 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. See "Description of Capital Stock -- Preferred
Stock." The Board of Directors of the Company 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. See  
"Description of Capital Stock -- Class A Stock."                                

 Twelve stockholders, who are executive officers and/or directors of the
Company beneficially own approximately 71.5% of the Company's outstanding Class 
B Stock, 17.8% of all classes and 54.3% of the voting power. As a result, these 
stockholders collectively will continue to have the ability to elect all of the 
Company's 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 the Company's Common Stock that could give stockholders of the       
Company the opportunity to realize a premium over the then prevailing market    
price for their shares of Common Stock.                                         

ABSENCE OF PUBLIC MARKET FOR THE NOTES                                          

 The Notes are a new issue of securities for which there is currently no
public market. Although the Notes have been approved for inclusion on the AMEX, 
there is no assurance as to the liquidity of the market for the Notes that may  
develop, the ability of the holders to sell their Notes or the prices at which  
holders of the Notes would be able to sell their Notes. If a market for the     
Notes does develop, the Notes may trade at a discount from their initial public 
offering price, depending on prevailing interest rates, the market for similar  
securities, the performance of the Company, the market price of the Company's   
Common Stock and other factors. There is no assurance that an active trading    
market will develop or be maintained for the Notes. See "Underwriting."         

LIMITED TRADING VOLUME AND VOLATILITY OF STOCK PRICE                            

     The Company's Common Stock is not widely held and the volume of trading has
been 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 the Company's 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 following the Offering by
current stockholders of the Company could adversely affect the market price for 
the Common Stock. Upon expiration of lock-up                                    

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agreements with the Underwriter 90 days after the date of this Prospectus, or   
earlier upon the written consent of Southcoast Capital Corporation ("Southcoast 
Capital"), 225,590 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. Following the Offering, 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 the Common Stock.                                                      

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USE OF PROCEEDS 

     The net proceeds to the Company (after deducting underwriting discounts and
estimated offering expenses) from the sale of the Notes offered hereby are      
estimated to be approximately $25.9 million ($29.8 million if the Underwriter's 
over-allotment option is exercised in full). The Company will repay             
approximately $6.2 million of debt currently outstanding under its revolving    
credit facility which currently bears interest at the effective rate of 7.49%   
and has a final maturity of June 2003 and will call and retire approximately    
$4.8 million of the Company's 9% Convertible Subordinated Debentures. The       
Company will call these Debentures within 45 days of the completion of the      
Offering. The remaining net proceeds will be used to finance the expansion of   
the Company's leased equipment base, fund product development and marketing     
efforts aimed at expanding the Company's position in both the indoor and outdoor
information display markets and for general working capital purposes. The       
Company may also use a portion of the net proceeds for acquisitions; however no 
agreement with respect to any such acquisition currently exists and the Company 
is not currently involved in any negotiations with respect to any acquisitions. 
The Company may also use a portion of the net proceeds for the development of   
additional theatres. Pending use of the net proceeds for the above purposes, the
Company intends to invest such funds in U.S. government securities or other     
investment-grade securities. See "Management's Discussion and Analysis of       
Financial Condition and Results of Operations -- Liquidity and Capital          
Resources."                                                                     

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY 

The Common Stock is traded on the AMEX under the symbol "TLX." The    
following table sets forth the high and low closing sales prices of the Common  
Stock for the periods indicated, as reported on the AMEX.                       

                                                        [Enlarge/Download Table]

                               PERIOD                                  HIGH     LOW     
---------------------------------------------------------------------  ----     ---     
                                                                                        
1994                                                                                    
  First Quarter......................................................  $ 9 5/8  $ 83/8  
  Second Quarter.....................................................   10        83/4  
  Third Quarter......................................................   10 1/8    75/8  
  Fourth Quarter.....................................................    9 3/8    71/4  
1995                                                                                    
  First Quarter......................................................  $10      $ 87/8  
  Second Quarter.....................................................    9 1/8    7  /16
  Third Quarter......................................................    9 1/4    7  /16
  Fourth Quarter.....................................................    9        8     
1996                                                                                    
  First Quarter......................................................  $ 9 5/8  $ 81/8  
  Second Quarter.....................................................   16 1/2    85/8  
  Third Quarter......................................................   14 7/8   101/2  
  Fourth Quarter (through December 19, 1996).........................   13 3/4   111/2  

    On December 19, 1996, the last reported sale price for the Common Stock on
the AMEX was $11 7/8 per share. As of September 30, 1996, there were 965,002 and
298,882 shares of Common Stock and Class B Stock outstanding and 847 and 68     
holders of Common Stock and Class B Stock, respectively.                        

   Commencing with the fourth quarter of 1993, the Company's dividend policy
has been to pay a regular quarterly dividend of $.035 per share on the Common   
Stock and $.0315 per share on the Class B Stock. The declaration or payment by  
the Company of dividends, if any, on its Common Stock and Class B Stock in the  
future is subject to the discretion of the Board of Directors and will depend on
the Company's earnings, financial condition, capital requirements and other     
relevant factors. The Company's present credit facility and the Indenture       
restrict the payment of dividends to no more than an aggregate $750,000 per     
year. See "Management's Discussion and Analysis of Financial Condition and      
Results of Operations -- Liquidity and Capital Resources."                      

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CAPITALIZATION

The following table sets forth the consolidated capitalization of the 
Company as of September 30, 1996, and as adjusted to give effect to (i) the     
consummation of the Offering of the Notes and (ii) the application of the net   
proceeds therefrom as described in "Use of Proceeds" (assuming no exercise of   
the Underwriter's over-allotment option). This information should be read in    
conjunction with Selected Financial Data and the related notes and other        
financial information included elsewhere in this Prospectus.                    

                                                        [Enlarge/Download Table]

                                                                       AS OF SEPTEMBER 30, 1996    
                                                                   --------------------------------
                                                                    ACTUAL        AS ADJUSTED(1)   
                                                                   --------     -------------------
                                                                        (UNAUDITED, DOLLARS IN     
                                                                              THOUSANDS)           
                                                                                                   
Short-term debt and current portion of long-term debt............  $  1,814          $   1,814     
                                                                   ========           ========     
Long-term debt:                                                                                    
  Revolving credit facility(2)...................................  $  6,200          $      --     
  Notes payable..................................................    15,202             15,202     
  9% Convertible subordinated debentures(3)......................     4,811                 --     
  9 1/2% Subordinated debentures.................................     1,057              1,057     
    % Convertible subordinated notes.............................        --             27,500     
                                                                   --------           --------     
       Total long-term debt......................................  $ 27,270          $  43,759     
                                                                   --------           --------     
Stockholders' equity:                                                                              
  Preferred, $1.00 par value; 500,000 shares authorized; no                                        
     shares issued and outstanding...............................        --                 --     
  Common, $1.00 par value; 4,000,000 shares authorized; 2,441,523                                  
     shares issued and outstanding(4)(6).........................  $  2,441          $   2,441     
  Class B, $1.00 par value; 2,000,000 shares authorized; 298,882                                   
     shares issued and outstanding(5)(6).........................       299                299     
  Additional paid-in capital.....................................    13,828             13,828     
  Retained earnings(3)...........................................    17,626             17,560     
  Other..........................................................       (65)               (65)    
     Less: 1,481,252 treasury shares at cost.....................   (11,821)           (11,821)    
                                                                   --------           --------     
       Total stockholders' equity................................    22,308             22,242     
                                                                   --------           --------     
          Total capitalization...................................  $ 49,578          $  66,001     
                                                                   ========           ========     

---------------                                                                 
(1) Adjusted to reflect the sale of $27,500,000 of the Notes offered by the     
   Company hereby, the receipt of the estimated net proceeds therefrom and the
repayment of certain outstanding indebtedness. See "Use of Proceeds."   

(2) The Company has a revolving credit facility with First Union Bank of        
   Connecticut ("First Union Bank") pursuant to which it may borrow up to $7.0
 million from time to time, available through June 1998, at which time, at
   the option of the Company, amounts outstanding are converted to a five year
   term note with a final maturity of June 2003. The revolving credit facility
bears a variable rate of interest of LIBOR plus 200 basis points. See   
   "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."                           

(3) The Company will record a charge in the first quarter of 1997 to its        
   earnings of approximately $113,000 ($66,000 net of tax) for the unamortized
portion of its financing costs.                                         

(4) Excludes 78,594 shares of Common Stock issuable upon exercise of stock      
 options outstanding at September 30, 1996 at exercise prices ranging from
    $6.31 to $9.69 per share and 378,819 shares upon conversion of the Company's
9% Convertible Subordinated Debentures due 2005 at $12.70 per share.    

(5) Class B Stock has greater voting power. See "Description of Capital Stock." 

(6) Subsequent to September 30, 1996, a certificate of amendment was filed to   
the Company's Restated Certificate of Incorporation increasing the      
authorized shares of Common Stock to 5,500,000 shares, decreasing the   
authorized shares of Class B Stock to 1,000,000 shares and authorizing  
3,000,000 shares of a new non-voting Class A Stock. See "Description of 
Capital Stock."                                                         

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SELECTED FINANCIAL DATA 

     The following selected financial data of the Company at and for each of the
five years ended December 31, 1995 except for Other Data, are derived from and  
are qualified by reference to the Company's financial statements, some of which 
are presented herein. The selected financial data for the nine months ended     
September 30, 1995 and 1996 and the balance sheet data as of September 30, 1995 
and 1996 are derived from unaudited financial statements of the Company which in
management's opinion include all adjustments (consisting only of normal         
recurring adjustments) necessary for the fair presentation of the information   
set forth therein. The results of operations for the nine months ended September
30, 1996 are not necessarily indicative of the results that may be expected for 
the year ending December 31, 1996. This data should be read in conjunction with 
the financial statements and notes thereto and "Management's Discussion and     
Analysis of Financial Condition and Results of Operations."                     

                                                        [Enlarge/Download Table]

                                                                                                           NINE MONTHS ENDED   
                                                              YEAR ENDED DECEMBER 31,                        SEPTEMBER 30,     
                                            -----------------------------------------------------------   -------------------- 
                                             1991         1992         1993         1994         1995      1995         1996   
                                            -------      -------      -------      -------      -------   -------      ------- 
                                                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                              
                                                                                                                               
STATEMENT OF OPERATIONS DATA:                                                                                                  
Revenues:                                                                                                                      
  Equipment rentals and maintenance.......  $10,494      $13,307      $20,824      $21,652      $21,205   $16,509      $16,273 
  Equipment sales.........................    2,949        4,040       11,806        8,498       12,364     9,174       13,276 
  Theatre receipts and other..............    8,690        6,783        3,169        3,592        4,222     3,198        3,322 
                                            -------      -------      -------      -------      -------   -------      ------- 
        Total revenues....................   22,133       24,130       35,799       33,742       37,791    28,881       32,871 
                                            -------      -------      -------      -------      -------   -------      ------- 
Operating expenses:                                                                                                            
  Cost of equipment rentals and                                                                                                
    maintenance...........................    5,360        7,069       11,249       11,929       11,358     8,700        8,883 
  Cost of equipment sales.................    1,587        2,273        7,648        4,620        7,863     5,752        8,753 
  Cost of theatre receipts and other......    7,180        5,957        2,657        2,864        3,185     2,462        2,529 
                                            -------      -------      -------      -------      -------   -------      ------- 
        Total operating expenses..........   14,127       15,299       21,554       19,413       22,406    16,914       20,165 
                                            -------      -------      -------      -------      -------   -------      ------- 
Gross profit from operations..............    8,006        8,831       14,245       14,329       15,385    11,967       12,706 
General and administrative expenses.......    7,151        7,384       10,202       11,023       11,494     9,210        9,442 
                                            -------      -------      -------      -------      -------   -------      ------- 
                                                855        1,447        4,043        3,306        3,891     2,757        3,264 
Interest expense, net.....................      570          893        2,380(1)     1,242(2)     2,144     1,565        1,669 
Other income..............................      257          187           --           --           92        70          (97)
                                            -------      -------      -------      -------      -------   -------      ------- 
Income before income taxes................      542          741        1,663(1)     2,064(2)     1,839     1,262        1,498 
                                            -------      -------      -------      -------      -------   -------      ------- 
Provision for income taxes:                                                                                                    
  Current.................................       95           97          231          407          576       501          521 
  Deferred................................      185          372          943          343          197        29          108 
                                            -------      -------      -------      -------      -------   -------      ------- 
                                                280          469        1,174(1)       750(2)       773       530          629 
                                            -------      -------      -------      -------      -------   -------      ------- 
Net income................................  $   262      $   272      $   489(1)   $ 1,314(2)   $ 1,066   $   732      $   869 
                                            =======      =======      =======      =======      =======   =======      ======= 
PER SHARE DATA:                                                                                                                
Earnings per share:                                                                                                            
  Primary.................................  $  0.20      $  0.22      $  0.39(1)   $  1.04(2)   $  0.85   $  0.58      $  0.68 
  Fully diluted...........................       (3)          (3)          (3)        0.94(2)      0.81        (3)        0.64 
Average common and common equivalent                                                                                           
  shares outstanding:                                                                                                          
  Primary.................................    1,305        1,249        1,249        1,260        1,259     1,258        1,283 
  Fully diluted...........................       (3)          (3)          (3)       1,943        1,643        (3)       1,674 
PRO FORMA PER SHARE DATA(4):                                                                                                   
Earnings (loss) per share:                                                                                                     
  Primary.................................                                                      $ (0.02)               $  0.16 
  Fully diluted...........................                                                           (3)                    (3)
Average common and common equivalent                                                                                           
  shares outstanding:                                                                                                          
  Primary.................................                                                        1,259                  1,283 
  Fully diluted...........................                                                        3,222                  3,255 
OTHER DATA:                                                                                                                    
  EBITDA(5)...............................  $ 5,201      $ 6,670      $10,385      $ 9,819      $10,884   $ 7,961      $ 8,444 
  Net cash provided by operating                                                                                               
    activities............................    4,379        7,002        7,509       10,229        6,605     3,909        2,178 
  Net cash (used in) investing                                                                                                 
    activities............................   (1,253)     (18,571)      (7,183)      (7,915)      (9,372)   (8,028)      (7,009)
  Net cash provided by (used in) financing                                                                                     
    activities............................   (2,364)      11,157         (378)      (1,107)       1,097     2,276        4,220 
  Ratio of earnings to fixed charges(6)...      1.4          1.5          1.6          2.3          1.8       1.7          1.7 
  Net rental equipment....................  $13,550      $29,995      $29,039      $29,653      $30,778   $30,142      $32,594 
  Net book value per share................  $ 14.59      $ 15.35      $ 15.60      $ 16.29      $ 17.08   $ 16.85      $ 17.39 
BALANCE SHEET DATA:                                                                                                            
  Cash and cash equivalents...............  $ 1,592      $ 1,180      $ 1,128      $ 2,335      $   665   $ 4,925      $    54 
  Total assets............................   35,647       50,826       52,138       53,307       57,460    58,453       63,045 
  Long-term debt, including current                                                                                            
    portion...............................   11,648       23,497       23,293       22,353       24,299    24,644       29,084 
  Retained earnings.......................   15,412       14,514       14,850       15,993       16,888    16,597       17,626 
  Stockholders' equity....................   20,062       19,169       19,484       20,524       21,499    21,202       22,308 

(Footnotes provided on the following page.)                                     

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---------------                                                                 
(1) 1993 reflects the impact of an assessment of income taxes and related       
    interest expense incurred resulting from a prior year state income tax audit
of approximately $600,000.                                              

(2) 1994 reflects the positive impact of a settlement of approximately $360,000 
related to the 1993 assessment described in footnote No. 1 above.       

(3) Not dilutive.                                                               

(4) The pro forma earnings per share data assume that the Offering was          
consummated at January 1, 1995, with the Notes bearing interest at the  
    annual rate of 7.50%, an assumed conversion price of $14.013, and the effect
 that the repayment of debt, as indicated in "Use of Proceeds," would have
  assuming the receipt and application of those proceeds to retire such debt
at January 1, 1995.                                                     

(5) EBITDA is defined as income before effect of changes of accounting plus     
  interest, income taxes, depreciation and amortization. EBITDA is presented
here because it is a widely accepted financial indicator of a company's 
   ability to service and/or incur indebtedness. However, EBITDA should not be
considered as an alternative to net income or cash flow data prepared in
   accordance with generally accepted accounting principles or as a measure of
   a company's profitability or liquidity. The Company's measure of EBITDA may
   not be comparable to similarly titled measures reported by other companies.

(6) Earnings used in computing the ratio of earnings to fixed charges consist of
income before income taxes, fixed charges and extraordinary items. Fixed
    charges consist of interest expense, including amounts capitalized, and that
portion of rent expense which management deems to be attributable to    
interest costs.                                                         

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

  The following discussion and analysis should be read in conjunction with
the Company's financial statements and the notes thereto included elsewhere in  
this Prospectus. This Prospectus contains, in addition to historical            
information, forward-looking statements that involve risks and uncertainties.   
The Company's actual results could differ materially. Factors that could cause  
or contribute to such differences include, but are not limited to, those        
discussed in "Risk Factors" as well as those discussed below and elsewhere in   
this Prospectus.                                                                

GENERAL                                                                         

  The Company is a manufacturer, distributor, and servicer of large-scale,
real-time electronic information displays for both indoor and outdoor use. These
display systems utilize LED and light bulb technologies to display real-time    
information entered by the user or via a third party information supplier. The  
Company provides high quality, reliable display products configured to suit its 
customers' needs, and offers extensive on-site service and maintenance coverage.
The Company's display products include data, graphics, and picture displays for 
stock and commodity exchanges, financial institutions, airports, casinos, sports
venues, convention centers, corporate, theatres, retail and numerous other      
applications. In addition to the core display business, the Company also        
operates a small chain of motion picture theatres in the southwestern U.S. In   
1995, the Company derived approximately 89% of its revenue from its indoor and  
outdoor information display business.                                           

RESULTS OF OPERATIONS                                                           

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1995.                                                                           

   The Company's total revenues for the nine months ended September 30, 1996
increased 13.8% to $32.9 million versus $28.9 million for the same period in the
previous year. Revenues from equipment rentals and maintenance decreased from   
$16.5 million in 1995 to $16.3 million in 1996, or 1.4%, primarily due to the   
expected decline in revenues from the outdoor lease and maintenance bases       
previously acquired, although the decline is at a slower rate than originally   
anticipated. This decline in revenues was partially offset by an increase in new
indoor and outdoor display rentals and maintenance contracts. Revenues from     
equipment sales increased 44.7% or $4.1 million in 1996, primarily due to       
increased sales of outdoor displays as a result of the acquisition of ISE in    
January 1995 and certain significant sales which are being recognized on the    
percentage of completion basis. Revenues from theatre receipts and other        
increased by $124,000 or 3.9% in 1996, primarily attributable to increased      
concession sales at the theatres.                                               

  Cost of equipment rentals and maintenance increased by $183,000 or 2.1%,
primarily due to operating expenses of the indoor displays. The cost of         
equipment rentals and maintenance represented 54.6% of related revenues in 1996 
compared to 52.7% in 1995. Cost of equipment sales increased by $3.0 million to 
$8.8 million in 1996 or 52.2%, primarily due to increased sales of outdoor      
displays and certain significant indoor display equipment sales, which due to   
the size of the orders have lower gross profit margins. Due to the nature of the
outdoor display market, the Company anticipates the gross profit margin to      
decline somewhat as it enters new industry segments of the outdoor market. The  
Company does not anticipate the gross profit margin on future significant indoor
display equipment sales to decline. The cost of equipment sales represented     
65.9% of related revenues in 1996 compared to 62.7% in 1995. The cost of theatre
receipts and other increased $67,000 or 2.7%, which was proportional to the     
increase in theatre revenues. The cost of theatre receipts and other represented
76.1% and 77.0% of related revenues in 1996 and 1995, respectively.             

General and administrative expenses increased by $232,000 or 2.5%,    
primarily due to expanded sales efforts and increased payroll and benefits      
costs, partially offset by the favorable adjustment of previously accrued       
expenses.                                                                       

 Interest income decreased by $29,000, primarily attributable to reduced
investments. Interest expense increased by $75,000, primarily due to increased  
bank borrowing for general corporate purposes on the revolving credit line.     

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Other expense of $97,000 in 1996 relates to the loss incurred by the  
theatre joint venture, MetroLux Theatres, which includes start up costs. Other  
income of $70,000 in 1995 was largely due to the sale of a theatre property in  
New Mexico.                                                                     

The effective tax rate at September 30, 1996 and 1995 was 42.0%.      

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994           

    The Company's total revenues for the year ended 1995 increased by 12.0% to
$37.8 million in 1995 from $33.7 million in 1994. In January 1995, the Company  
acquired all the capital stock of ISE, a manufacturer of outdoor electronic     
displays. Operating results for 1995 include a full twelve months from this     
acquisition. Revenues from equipment rentals and maintenance decreased $447,000 
or 2.1% during 1995, primarily due to the expected decline in revenues from the 
two acquisitions of outdoor lease and maintenance base portfolios from $11.7    
million in 1994 to $10.8 million in 1995. Revenues from equipment sales         
increased 45.5% during 1995. The increase was largely attributable to the       
revenues generated from the acquisition of ISE, which contributed $3.6 million  
in revenues during 1995. Revenues from theatre receipts and other increased     
$630,000 during 1995, primarily due to the inclusion of a full year of          
operations at the five-plex theatre in Durango, Colorado which opened in        
mid-1994.                                                                       

 Cost of equipment rentals and maintenance, which includes field service
expenses, plant repair costs and depreciation, decreased $571,000 or 4.8% during
1995, to 53.6% of related revenues from 55.1% in 1994. The decrease is primarily
attributable to a reduction in field service expenses. The cost of equipment    
sales as a percentage of related revenue represented 63.6% in 1995 and 54.4% in 
1994. The increase in costs is primarily due to the expected lower profit       
margins generated by ISE. The cost of theatre receipts and other, which includes
film rental expenses increased $321,000 or 11.2% during 1995, primarily due to a
full year of operations at the five-plex theatre in Durango, Colorado which     
opened in mid-1994. Cost of theatre receipts and other represented 75.4% of     
related revenues in 1995 and 79.7% in 1994.                                     

   General and administrative expenses increased $471,000 or 4.3% from $11.0
million in 1994 to $11.5 million in 1995 primarily due to the acquisition of    
ISE. General and administrative expenses decreased as a percentage of revenue to
30.4% in 1995, compared to 32.7% in 1994, primarily as a result of economies of 
scale.                                                                          

  Interest income decreased $57,000 during 1995, primarily attributable to
reduced investments which were utilized for acquisitions. Interest expense      
increased by $845,000 during 1995, primarily as a result of the additional debt 
incurred relative to the acquisition of ISE, in addition to the lower interest  
expense recorded in 1994 as a result of a settlement of a 1993 assessment of    
interest resulting from a 1986 state income tax audit. The other income of      
$92,000 in 1995 is largely due to the sale of a theatre property in New Mexico. 

YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993           

   The Company's total revenues for the year ended 1994 decreased by 5.7% to
$33.7 million from $35.8 million in 1993. Revenues from equipment rentals and   
maintenance increased $828,000 or 4.0% during 1994. The revenue from the        
acquisition of the lease base portfolio of outdoor displays and maintenance     
contracts which occurred in August 1993 contributed a full year of revenues.    
Revenues from equipment sales decreased $3.3 million or 28.0% during 1994,      
primarily because 1993 included a $4.3 million sale to the Chicago Mercantile   
Exchange (the "CME"), the largest sale in the Company's history. Revenues from  
theatre receipts and other increased by $423,000 in 1994, primarily due to the  
opening of the theatre in Durango, Colorado in mid-1994.                        

     Cost of equipment rentals and maintenance increased $680,000 or 6.0% during
1994, to 55.1% of related revenue from 54.0% in 1993. The increase is primarily 
attributable to a full year of field service expenses relating to the August    
1993 acquisition. The cost of equipment sales decreased $3.0 million or 39.6% in
1994 and represented 54.4% of related revenue compared to 64.8% in 1993,        
primarily due to the sale to the CME in 1993, which due to the size of the order
had a lower gross profit margin. The cost of theatre receipts and other         
increased $207,000 or 7.8% during 1994. Cost of theatre receipts and other      
represented 79.7% of related                                                    

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revenue in 1994 compared to 83.8% in 1993, primarily due to lower film rental   
costs and the opening of the theatre in Durango, Colorado in mid-1994.          

  General and administrative expenses increased by $821,000 or 8.0% during
1994, partially due to the additional expenses incurred in order to maintain the
outdoor lease and maintenance base acquired in August 1993. General and         
administrative expenses increased as a percentage of revenue to 32.7% in 1994   
compared to 28.5% in 1993, which increase was caused by the overall decrease in 
1994 total revenues from the 1993 level, which included the sale to the CME.    

   Interest income decreased $19,000 during 1994. Interest expense decreased
$1.2 million during 1994. The decrease was primarily due to the settlement of a 
1993 assessment of interest resulting from a 1986 state income tax audit, which 
when assessed in 1993 increased interest expense for that year.                 

INCOME TAXES                                                                    

    The effective tax rate was 42.0% in 1996 and 1995, 36.3% in 1994 and 70.6%
in 1993. The increase in the effective tax rate for 1995 was due to a settlement
of a 1986 state income tax audit in 1994, which lowered the effective tax rate  
in 1994 and when assessed in 1993 increased the effective tax rate for that     
year.                                                                           

ACCOUNTING STANDARDS                                                            

 The Company adopted the provisions of Statement of Financial Accounting
Standards No. 121, "Accounting for Impairment of Long-Lived Assets and for      
Long-Lived Assets to be Disposed of " in the first quarter of 1996. In          
accordance with the standard, the Company evaluates the carrying value of its   
long-lived assets and identifiable intangibles, including goodwill, when events 
or changes in circumstances indicate that the carrying amount of such assets may
not be recoverable. The adoption of the standard did not have any effect on the 
Company's consolidated financial position or results of operations.             

The Company also adopted the provisions of Statement of Financial     
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" in the  
first quarter of 1996. As provided for in the standard, the Company continues to
apply Accounting Principals Board Opinion No. 25, "Accounting for Stock Issued  
to Employees" and related interpretations for employee stock compensation       
measurement and will disclose the required pro forma information in the 1996    
Form 10-K.                                                                      

LIQUIDITY AND CAPITAL RESOURCES                                                 

Historically, the Company's primary sources of liquidity and capital  
resources have been cash flow from operations and bank borrowings.              

    The Company believes that cash generated from operations together with the
anticipated net proceeds of the Offering will be sufficient to fund its         
anticipated further cash requirements.                                          

    Cash and cash equivalents decreased by $1.7 million in 1995 compared to an
increase of $1.2 million in 1994 and a decrease of $52,000 in 1993. The decrease
in 1995 is primarily attributable to cash utilized to acquire ISE, repayment of 
its long-term debt and an investment in a theatre joint venture. This was offset
by an increase of $1.1 million in deferred revenue and deposits, primarily due  
to prepayments of annual billings not yet recorded as revenue. During the nine  
months ended September 30, 1996, the Company's cash and cash equivalents        
decreased by $611,000, primarily attributable to cash utilized for investment in
rental equipment, an increase in accounts receivable which is attributable to   
the timing of large equipment sales, unbilled receivables and a decrease in     
deferred revenue and deposits which was primarily due to the timing of recording
the revenues versus billings and the loan to the theatre joint venture, MetroLux
Theatres. The decrease in cash and cash equivalents in 1995 was largely         
attributable to the cash utilized to acquire ISE, repayment of long-term debt   
and the investment in MetroLux Theatres. Inventories, prepaids and intangibles  
increased during 1995 primarily due to the acquisition of ISE. Although         
receivables increased both at December 31, 1995 and September 30, 1996, the     
Company continues to experience a favorable collection cycle on its trade       
receivables.                                                                    

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  The Company entered into a Credit Agreement in August 1995 restructuring
$15.6 million of indebtedness and a $4.0 million revolving credit facility with 
First Union Bank. The revolving credit facility was increased to $7.0 million   
during 1996 and was extended until June 1998. The revolving credit facility was 
subsequently supplemented by a $3.0 million revolving facility available to the 
Company at the discretion of First Union Bank, which expires January 1997. The  
restructuring extended the terms at a variable rate of interest of LIBOR plus   
175 basis points. Simultaneously, the Company entered into an interest rate swap
for three years at a fixed rate of 7.86% for $15.6 million of notional value to 
mitigate the risk of the variable interest rate. The agreement relating to the  
Company's credit facility contains certain financial covenants with which the   
Company must comply, absent a waiver by First Union Bank, on a continuing basis 
including: (1) the Company is required to make rental equipment capital         
expenditures of not less than $3 million per year; (2) the Company may not make 
capital expenditures of more than $12 million per year (excluding capital       
expenditures related to movie theatres); (3) the Company must maintain a        
debt-to-worth ratio of at least 1.25 to 1.0 until September, 1997, 1.2 to 1.0   
between September 1997 and September 1998 and 1.0 to 1.0 after September 1998;  
(4) the Company must maintain a fixed charge coverage ratio of 1.05 to 1.0; (5) 
the Company must maintain consolidated tangible net worth of not less than $18  
million; and (6) the Company may not make any payment in excess of $1 million in
respect of any lease (excluding leases related to movie theatres) during any    
fiscal year. In the event the Company breaches one or more these covenants and  
the Company receives a Default Notice from First Union Bank, no payment may be  
made on account of principal of or premium, if any, or interest on the Notes    
unless certain conditions are met. See "Description of Notes -- Subordination." 
The Company is a guarantor of a $3 million term loan to MetroLux Theatres, the  
theatre joint venture. The owner of the non-related general partner of the joint
venture has guaranteed their pro rata portion of the indebtedness to the        
Company.                                                                        

RESULTS OF OPERATIONS                                                           

The following table sets forth unaudited quarterly financial data:    

                                                        [Enlarge/Download Table]

                    QUARTER ENDED                      MARCH 31     JUNE 30     SEPTEMBER 30     DECEMBER 31
-----------------------------------------------------  --------     -------     ------------     -----------
                                                         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)   
                                                                                                            
1996                                                                                                        
Revenues.............................................  $10,033      $10,591       $ 12,247                  
Gross profit.........................................    3,969        4,080          4,579                  
Income before income taxes...........................      427          467            604                  
Net income...........................................      248          271            350                  
Earnings per share:                                                                                         
  Primary............................................  $  0.20      $  0.21       $   0.27                  
  Fully diluted......................................     0.19         0.20           0.25                  
1995                                                                                                        
Revenues.............................................  $ 9,379      $ 9,861       $  9,641         $ 8,910  
Gross profit.........................................    3,913        4,078          3,976           3,418  
Income before income taxes...........................      340          390            532             577  
Net income...........................................      197          226            309             334  
Earnings per share:                                                                                         
  Primary............................................  $  0.16      $  0.18       $   0.24         $  0.27  
  Fully diluted......................................       (1 )         (1)          0.23            0.24  
1994                                                                                                        
Revenues.............................................  $ 8,343      $ 8,006       $  8,765         $ 8,628  
Gross profit.........................................    3,424        3,485          3,534           3,886  
Income before income taxes...........................      677 (2)      375            437             575  
Net income...........................................      554 (2)      216            241             303  
Earnings per share:                                                                                         
  Primary............................................  $  0.44 (2)  $  0.17       $   0.19         $  0.24  
  Fully diluted......................................     0.34 (2)     0.17           0.18            0.23  

---------------                                                                 
(1) Not dilutive.                                                               

(2) The first quarter of 1994 reflects the positive impact of a settlement of a 
1993 assessment of income taxes and related interest expense incurred   
resulting from a 1986 state income tax audit of approximately $360,000, 
    $0.29 primary earnings per share and $0.18 fully diluted earnings per share.

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    The following table sets forth unaudited selected financial data stated as
a percentage of the Company's total revenues:                                   

                                                        [Enlarge/Download Table]

                                                          YEAR ENDED                              
                                                         DECEMBER 31,             LATEST TWELVE   
                                                  ---------------------------     MONTHS ENDING   
                                                   1993      1994       1995    SEPTEMBER 30, 1996
                                                  ------     -----     ------   ------------------
                                                                                                  
Revenues:                                                                                         
  Equipment rentals and maintenance..............   58.2%     64.2%      56.1%          50.2%     
  Equipment sales................................   33.0      25.2       32.7           39.4      
  Theatre receipts and other.....................    8.8      10.6       11.2           10.4      
                                                  ------     ------    ------         ------      
          Total revenues.........................  100.0     100.0      100.0          100.0      
                                                  ------     ------    ------         ------      
Operating expenses:                                                                               
  Cost of equipment rentals and maintenance......   31.4      35.3       30.1           27.6      
  Cost of equipment sales........................   21.4      13.7       20.8           26.0      
  Cost of theatre receipts and other.............    7.4       8.5        8.4            7.8      
                                                  ------     ------    ------         ------      
          Total operating expenses...............   60.2      57.5       59.3           61.4      
Income before income taxes.......................    4.6       6.1        4.9            5.0      
Net income.......................................    1.4       3.9        2.8            2.9      

  The following table sets forth the gross profit of each of the Company's
three revenue categories as a percentage of the revenue generated by that       
category.                                                                       

                                                                [Download Table]
                                                                                   
Gross margin analysis:                                                             
  Equipment rentals and maintenance..............   46.0%   44.9%    46.4%    45.0%
  Equipment sales................................   35.2    45.6     36.4     34.0 
  Theatre receipts and other.....................   16.2    20.3     24.6     25.2 
                                                  ------   -----   ------   ------ 
          Total gross margin.....................   39.8    42.5     40.7     38.6 

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BUSINESS

GENERAL                                                                         

  The Company is a manufacturer, distributor, and servicer of large-scale,
real-time electronic information displays for both indoor and outdoor use. These
display systems utilize LED and light bulb technologies to display real-time    
information entered by the user or via a third party information supplier. The  
Company provides high quality, reliable display products configured to suit its 
customers' needs, and offers extensive on-site service and maintenance coverage.
The Company's display products include data, graphics, and picture displays for 
stock and commodity exchanges, financial institutions, airports, casinos, sports
venues, convention centers, corporate, theatres, retail, and numerous other     
applications. In addition to the core display business, the Company also        
operates a small chain of motion picture theatres in the southwestern U.S. In   
1995, the Company derived approximately 89% of its revenue from its indoor and  
outdoor information display business.                                           

 The Company is a Delaware corporation founded in 1920 as a developer of
display products. The Company sold its first large scale moving display product 
in 1923, based on proprietary rear screen projection technology. The Company's  
development of rear screen projection technology also led it into the theatre   
business which at one time represented a significant portion of its revenues.   
Over the years, the Company has focused on the development and examination of   
new technologies in the information display industry. In the late 1960s, the    
Company developed and marketed its first electromechanical display units. These 
products were actively marketed until 1983 when the Company introduced its first
LED-based display systems.                                                      

    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 shape, size and color           
configurations. Most of the Company's display products include hardware         
components and sophisticated software. In both the indoor and outdoor markets,  
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 U.S. and Canada which performs on-site service and       
maintenance for its customers, further distinguishing the Company from many of  
its competitors.                                                                

  In the indoor market, the Company's high performance electronic displays
are used to communicate messages in the financial, gaming, transportation,      
entertainment and retail industries, among others. In the financial industry,   
the Company's products display news and market information, interest rates,     
up-to-the-second stock and commodity prices, and other financial product        
information for stock and commodity exchanges, brokerage firms, banks, mutual   
fund companies, and other financial institutions. In the gaming industry, the   
Company's products transmit racing and pari-mutuel betting odds and results,    
sports scores, statistics, slot machine jackpots and other wagering information.
In the transportation industry, the Company's products are used to display      
arrival and departure information and gate and baggage claim information for    
airports and other transportation facilities. While the securities and          
commodities industries continue to represent a significant portion of the       
Company's customer base, the Company has a strong presence in the gaming        
industry through its race and sports book displays and also markets its displays
to such users as banks, corporations, transportation facilities, the military,  
racetracks, restaurants, pharmacies, theatres, hotels and convention centers.   

   Over the past four years, the Company has utilized its strong position in
the indoor display market combined with several acquisitions to establish a     
growing presence in the outdoor display market. Trans-Lux outdoor displays are  
installed in amusement parks, entertainment facilities, professional and college
sports stadiums, military installations, bridges and other roadway              
installations, automobile dealerships, banks and other financial institutions.  

   The Company has made three acquisitions over the past four years in order
to establish and enhance its presence in the outdoor market. In August 1992,    
after first managing the portfolio for approximately 15 months, the Company     
acquired a portfolio of outdoor electric and electronic equipment displays from 
American Electronic Displays, L.P. In August 1993, the Company expanded its     
presence in the outdoor display market by acquiring a portfolio of outdoor      
lease, maintenance and other contracts from Indicator                           

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Maintenance Corporation. In January 1995, the Company acquired all of the       
capital stock of ISE, a manufacturer of outdoor electronic displays.            

ELECTRONIC INFORMATION DISPLAY MARKET                                           

Accessing information in a timely and efficient manner has become     
increasingly important over the past two decades and has been driven by         
technological improvements in both the telecommunications and computer          
industries. Today, access to either specific information or general news events 
is critical in many aspects of business. As demand for various information      
displays has spread into an increasingly diverse number of applications, an     
equally diverse number of display products has emerged, leaving the industry    
highly fragmented with no single company or group of companies having a dominant
share of the entire industry.                                                   

The electronic information display market can be broken down into two 
distinct markets: the indoor market and the outdoor market. Electronic          
information displays are used by financial institutions, including brokerage    
firms, banks, saving and loans, insurance companies and mutual fund companies;  
by retail outlets; by casinos, race tracks and other gaming establishments; by  
outdoor advertising companies; in airports, train stations and bus terminals,   
and other transportation facilities; on highways and major thoroughfares; and by
movie theatres, and in various other applications. The industry is expected to  
continue to expand as additional applications are added and current applications
are increasingly implemented by businesses attempting to increase information   
flow to current and potential customers.                                        

The Indoor Market:  The indoor electronic display market is currently 
dominated by three categories of users: financial, gaming and corporate. The    
financial market segment, including trading floors, exchanges, brokerage firms  
and mutual fund companies, has long been a user of electronic information       
displays due to the need for the 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 
information. Brokerage firms have increasingly installed electronic ticker      
displays for both customers and brokers, and in the last few years have         
installed larger displays to post major headline news events in their brokerage 
offices to enable their sales force to stay up-to-date on the events affecting  
general market conditions and specific stocks. The changing regulatory          
environment in the financial marketplace has also resulted in the influx of     
banks and other financial institutions into the brokerage business and has      
resulted in these institutions increasingly using information displays to       
advertise product offerings to consumers.                                       

     The proliferation of gaming establishments including casinos, Indian gaming
establishments, and off-track betting parlors, has resulted in the rapid        
expansion of electronic information displays in the gaming industry. 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 also use electronic displays  
throughout their facilities to advertise to and attract gaming patrons. This    
includes using electronic displays in conjunction with slot machines to attract 
customer attention to potential payoffs and thus increase customer play.        

 The corporate market 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, inbound/outbound     
telemarketing centers and for employee communications. Electronic displays have 
found acceptance in applications for the healthcare industry such as out-patient
pharmacies, military hospitals and HMOs which desire 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 to promote concession sales. Information displays are           
consistently used in airports, bus terminals and train stations to post arrival 
and departure information and gate and baggage claim information, which helps to
guide passengers through these facilities.                                      

 The Outdoor Market:  The outdoor electronic display market is even more
diverse than the indoor market with displays being used by banks and other      
financial institutions, gas stations, highway departments, sports stadiums and  
outdoor advertisers attempting to capture the attention of passers-by. In       
addition to traditional uses of outdoor electronic displays, the Company        
believes the outdoor market represents a growth                                 

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opportunity for participants in the indoor electronic information display       
industry. The entire "out-of-home" advertising category, such as traditional    
billboards and roadside displays, has expanded to include displays in shopping  
centers and malls, airports, stadiums, movie theatres and supermarkets. While   
most existing outdoor advertisers do not currently utilize either LED or light  
bulb generated messages, the Company believes a growing number of outdoor       
advertising mediums are beginning to turn to these higher-end technologies in   
order to enhance visibility, recognition and impression on the viewer, and to   
expand the capabilities of the display, which therefore represents a potential  
growth opportunity for participants in the electronics information display      
industry.                                                                       

COMPANY STRATEGY                                                                

The Company's strategy is to leverage its position in the U.S. indoor 
electronic information display market to expand market share in the global      
indoor and outdoor display markets. Trans-Lux has a proven track record for     
providing high quality, innovative information display products in the indoor   
market. The Company supplies many of the electronic information displays to the 
financial services industry and to the race and sports book segment of the      
gaming industry, and has a significant presence in the corporate and            
transportation markets. The Company offers its customers the option of either   
leasing or purchasing its display products and believes this provides a         
competitive advantage over most of its competitors who primarily offer their    
products for sale only. In addition, the Company plans to expand the scope of   
its service force to include the maintenance of other companies' display        
products and related electronic equipment. The Company believes that by         
providing high quality, reliable electronic displays configured to suit their   
customers' needs, combined with offering extensive on-site service and          
maintenance coverage and the opportunity to purchase or lease display products, 
it will be able to continue to expand its market share in the indoor and outdoor
display markets.                                                                

In the indoor market, the Company's growth strategy centers around    
increased marketing efforts, expanded sales coverage and continued product      
developments aimed at capitalizing on the Company's presence in its current     
market segments and expanding into new market segments. Because of the Company's
expertise in and close association with certain market segments, such as the    
financial services industry, it is able to anticipate requirements for new      
products, product enhancements and new technologies before its competitors. The 
Company has increased its engineering staff to accommodate the development of   
new products and enhancements, and will continue to do so as needed. The Company
also plans to continue to penetrate new market segments such as call centers,   
motion picture theatres, outpatient pharmacies and military hospitals through   
increased direct marketing and sales efforts. Additionally, the Company expects 
its new progressive meter and controller systems to provide expanded            
opportunities within the gaming industry. The Company will continue its strategy
of developing partnerships with key data suppliers and software vendors in its  
various market niches, both to add value to the access of the data and to       
increase product exposure via third party distribution channels.                

   The Company's acquisitions in the outdoor market will be enhanced through
focused marketing efforts and expansion of the sales force. The Company will    
continue to increase its presence in the outdoor market by identifying target   
segments in which to become a leading supplier. The Company has identified and  
commenced market development in key outdoor market segments such as sports      
stadiums and arenas, convention centers, theme parks, shopping malls, automobile
dealerships, theatres and highway/transportation applications.                  

The Company expects that its recently completed and planned product   
developments will enhance its outdoor product line and allow it to penetrate new
market segments. The capability of displaying live video, offering lower power  
consumption and other competitive advantages, provides an attractive product    
offering to targeted market segments and paves the way for entry into the       
broader advertising market. Development of a 16 shades of gray outdoor display  
system will enable the Company to capitalize on the growth of its basic message 
center business across all market segments, which will appeal to customers who  
want to utilize animation without the added cost of full color.                 

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   Internationally, the Company anticipates growth in the financial exchange
markets, penetration of the international gaming markets for its meter and      
controller product line and entry into advertising/media applications and other 
outdoor applications. The Company is currently in the process of expanding its  
distributor network in key foreign markets.                                     

INFORMATION DISPLAY PRODUCTS                                                    

    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 shape, size and color           
configurations. Most of the Company's display products include hardware         
components and sophisticated software. In both the indoor and outdoor markets,  
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 U.S. and Canada which performs on-site service and       
maintenance for its customers, further distinguishing the Company from many of  
its competitors.                                                                

   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 markets the Company     
serves. This approach ensures maximum product flexibility, reliability, ease of 
service and minimum spare parts requirements.                                   

Listed below are the Company's major product technologies and a brief 
description of their features and primary market applications:                  

INDOOR MARKET                                                                   

   LED Jet(@): A two line scrolling LED text display which is widely used in
    financial exchanges, brokerage firms and retail investment centers to post
last-sale information on stock trades directly from various exchange  
sources.                                                              

    LED News Jet(TM): A multi-line scrolling LED text display which interfaces
    directly to real-time news services and information services. The News Jet
   is used to provide up-to-the-second critical news to the floor traders in
financial exchanges, brokerage firms and retail investment centers.   

     DataWall(@): A high speed, line- and character-addressable LED text display
which is used in applications that require the posting of frequently  
changing tabular information, such as indices, stocks, bonds, foreign 
exchange and news in the financial markets; race and sports odds and  
    results in the gaming market; and arrival and departure information in the
transportation market.                                                

PictureWall(TM): A full-matrix, tricolor LED display that, via custom 
  software, displays any text and/or graphic images that can be shown on a
     computer monitor. Typical uses for this product include real-time financial
data, graphs and charts for exchanges and brokerage firms, and        
computer-generated data for corporate command centers.                

OUTDOOR MARKET                                                                  

     Time & Temperature Displays: Alternating or full-view models used primarily
by banks to build corporate identity and generate public awareness.   

Message Center Displays: Scrolling message ranging in size from one to
     three lines used by shopping malls, automobile dealerships and other retail
 outlets to promote products and services, generate public awareness and
inform customers.                                                     

   Graphic Displays and Score Boards: Fully populated displays accommodating
     graphics, animation and video used by stadiums, arenas, convention centers,
    casinos and other entertainment venues to welcome fans, promote events and
   advertise products and sponsors. Also used in scoreboards, in conjunction
with Message Centers and scoring displays, to show instant replays and
animated advertising.                                                 

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MARKETING AND DISTRIBUTION                                                      

   The Company markets its indoor and outdoor electronic information display
products primarily through its direct sales force and telemarketers which as of 
September 30, 1996 consisted of 30 direct sales representatives and 8           
telemarketers. The Company divides its domestic sales and marketing efforts into
two categories: (i) renewal of existing product leases and product upgrades; and
(ii) the sale or lease of display products to new customers. In the indoor      
market for leased equipment, the Company attempts to maintain an ongoing        
relationship with its customers to discuss lease renewals. In the outdoor       
market, sales personnel contact existing and potential customers to discuss the 
customer's usage or requirements for display equipment. The Company also uses   
primarily telemarketing personnel to maintain communication with its installed  
base of lease equipment customers contacting them prior to the expiration of    
existing leases in order to discuss lease renewal.                              

   The Company uses a number of different techniques in order to attract new
customers, including direct marketing efforts by its sales force to known or    
potential users of information displays, advertising in industry publications,  
and placing exhibits at approximately 20 domestic and international trade shows 
annually. In the outdoor market, the Company supplements these efforts by using 
a network of independent distributors who market and sell the products of       
several manufacturers. The Company intends to use a portion of the proceeds from
the Offering to expand its marketing and sales efforts.                         

  Internationally, the Company uses a combination of internal sales people
and independent distributors to market its products in Europe, South America,   
Asia and Australia. The Company currently has manufacturing operations, service 
centers and sales offices in New South Wales, Australia and Ontario, Canada. The
Company has existing relationships with approximately 30 independent            
distributors worldwide covering Europe, South America, Asia and Australia.      
Historically, international sales have represented less than 15% of the         
Company's revenues but the Company believes that it is positioned to expand its 
international sales and that such sales will represent an increasing percentage 
of the Company's revenues in the future.                                        

Headquartered in Norwalk, Connecticut, the Company has major sales and
service offices in New York, Chicago, Las Vegas, Torrance, California, Ontario, 
Canada, Logan, Utah and New South Wales, Australia, as well as 58 satellite     
offices in the U.S. and Canada.                                                 

SERVICE AND SUPPORT                                                             

    The Company emphasizes the quality and reliability of its products and the
ability of its field service personnel to provide timely and expert service to  
the Company's installed base. The Company believes that the quality and         
timeliness of its on-site service personnel are important components in the     
Company's success. The Company provides turnkey installation and support for the
products it leases or sells in the U.S., Canada and Australia as part of the    
installation. 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 service to customers who lease   
equipment and offers installation and service to those who purchase equipment.  
In the markets the Company's distributors cover, the distributors offer support 
for the products they sell.                                                     

    Personnel based in regional and satellite service locations throughout the
U.S., Canada and Australia provide high quality and timely on-site service for  
the installed equipment base. Purchasers or lessees of the Company's larger     
products, such as financial exchanges, casinos and sports facilities, often     
retain the Company to provide on-site service through the deployment of a       
service technician who is on-site daily or for the scheduled sporting event. The
Company also maintains a National Technical Services Center in the Atlanta,     
Georgia area which performs off-site equipment repairs and dispatches service   
technicians on a nationwide basis. The Company's field service is augmented by  
various outdoor service companies in the U.S., 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 outdoor displays for reasons that include       
geographic area and unusual height of displays.                                 

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ENGINEERING AND PRODUCT DEVELOPMENT                                             

 The Company's ability to compete and operate successfully depends upon,
among other factors, its ability to anticipate and respond to the changing      
technological and product needs of its customers. As such, the Company          
continually examines and tests new display technologies and develops            
enhancements to its existing products in order to meet the current and          
anticipated future needs of its customers. Product enhancement work continues in
both the indoor and outdoor areas.                                              

Development of new indoor products includes progressive meter and     
controller systems for use in the gaming industry; smaller character displays to
post more information in a comparably sized area; higher speed processors for   
faster data access and improved update speed; integration of blue LEDs to       
provide full color text and graphics displays; a new graphics interface to      
display more data in higher resolutions; and tricolor news displays providing   
the ability to color-code and identify "hot" stories.                           

New outdoor product plans include the development of the Spectra Lens 
System(TM) which will enable the Company to capitalize on full color, full      
matrix indoor applications, particularly in the sports market. Complete         
development of the 16 shades of gray Spectra Lens System should encourage the   
growth of the Company's message center business in all market segments. This    
product will be targeted to customers who want an animated display at a lower   
cost than full color. The Company is also currently developing full color LED   
displays which will have application particularly in the gaming market where    
entertainment value is important to marketing properties and in the sports      
market where enhancing the presentation of live action is of central importance.

  As part of its ongoing development efforts, the Company seeks to package
certain products for specific market segments as well as to continually track   
emerging technologies that can enhance its products. Future technologies under  
consideration are trending toward full color, live video, and digital input. The
Company is currently focused on certain technologies which incorporate these    
features and which are expected to provide a choice of products for the custom  
applications the Company's customers demand.                                    

    The Company maintains a staff of 32 people who are responsible for product
development and support in indoor and outdoor markets. The engineering and      
product enhancement and development efforts are supplemented by outside         
independent engineering consulting organizations where required. Engineering,   
product enhancement and development amounted to $1,315,000, $1,497,000 and      
$2,139,000 in 1993, 1994 and 1995, respectively.                                

MANUFACTURING AND OPERATIONS                                                    

  The Company's production facilities are located in Norwalk, Connecticut,
Logan, Utah, Ontario, Canada and New South Wales, Australia and 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. Equipment orders generally have a lead time of 30 to 90 days   
depending on the size and type of the equipment, and material availability.     

All product lines are design engineered by the Company, and controlled
throughout the manufacturing process. The Company has the ability to produce    
printed circuit board fabrications, very large sheet metal fabrications, plastic
molded parts, cable assemblies, and surface mount and through hole designed     
assemblies. The Company produces more than 100,000 board assemblies annually    
which are tested with the latest state of the art automated test equipment. 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 also has the ability to rapidly modify its product lines. The
Company's displays are designed with versatility in mind, enabling the Company  
to customize its displays to meet different application with a minimum of lead  
time. The Company's automated planning and purchasing department further enables
it to secure raw materials in a timely fashion without maintaining excessive    
inventories. The Company also partners with large distributors via volume       
purchase agreements, giving it the benefit of a third party stocking its        
components ready for delivery on demand. The Company designs certain of its     
materials to match components furnished by suppliers. If such suppliers were    
unable to provide the Company with those                                        

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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 replacement components. The Company
does not acquire a material amount of purchases directly from foreign suppliers,
but components are manufactured by foreign sources. See "Risk                   
Factors -- Reliance on Key Suppliers."                                          

BACKLOG                                                                         

   The amount of sales order backlog was approximately $2.2 million and $2.6
million at September 30, 1995 and 1996, respectively. The September 30, 1996    
backlog will be recognized throughout 1996 and 1997. These amounts do not       
include leases or renewals of leases currently in effect.                       

COMPETITION                                                                     

     The Company supplies many of the large-scale electronic display products to
the financial services industry and the race and sports book segment of the     
gaming industry in the U.S. The Company's offer of short-term leases to         
customers and its nationwide sales, service and installation capabilities are   
major competitive advantages in the display business.                           

    The Company competes with a number of competitors, both larger and smaller
than itself, 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 necessary to develop competitive and   
more sophisticated products in the future.                                      

    In the indoor market, competitors vary according to market segment. In the
financial market, major competitors include Daktronics, Inc., Sunrise Systems,  
Inc., Display Solutions, Inc. and Ferranti Packard Electronics Ltd. Additional  
competitors include Grandwell Industries Inc., Gamma Technologies, Inc. IGG     
Systems Inc. (exchanges only), and Adaptive Micro Systems, Inc. In some         
corporate market applications the Company competes with other technologies (such
as video monitors); in others, Adaptive Micro Systems is a competitor. In the   
race and sports book segment of the gaming market, competitors include          
Daktronics and Display Solutions. In the progressive meter and controller       
segment, the dominant vendor is Mikohn Gaming Corporation; other competitors    
include Casino Data Systems, Daktronics, INFAX, Inc., and AEG Corporation       
compete in the transportation market.                                           

   In the outdoor market, key competitors with direct sales capabilities are
Daktronics, White Way Sign, Fairtron Corporation and Display Solutions. Other   
competitors include local sign companies that distribute other manufacturers'   
equipment and have limited resources.                                           

   Internationally, competitors vary according to market and region. Primary
competitors include Daktronics, IGG and Giantek Technology Corp. (Taiwan). There
are also numerous local and regional competitors.                               

 The Company's motion picture theatres are subject to varying degrees of
competition in the geographic areas in which they operate. In some areas,       
theatres operated by national circuits compete with the Company's theatres. The 
Company's theatres also face competition from all other forms of entertainment  
competing for the public's leisure time and disposable income.                  

THEATRE OPERATIONS                                                              

The Company currently operates 29 screens in eight locations in the   
southwestern U.S. This includes a twelve-plex theatre in Loveland, Colorado     
which was built in late 1995 through a 50% owned joint venture. The Company's   
theatre revenues are generated from box office admissions, theatre concessions, 
theatre rentals and other sales. Theatre revenues are generally seasonal and    
coincide with the release dates of major films during the summer and holiday    
seasons. In 1995, the Company derived approximately 10% of its revenues from    
theatre operations.                                                             

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PROPERTIES                                                                      

   The Company's headquarters and principal executive offices are located at
110 Richards Avenue, Norwalk, Connecticut. The Company owns the 102,000 square  
foot facility located at such site, which it also uses for engineering,         
production and assembly of its indoor displays and outdoor LED display products.

  The Company owns facilities in Ontario, Canada, Torrance, California and
Logan, Utah which it uses for administration, sales and service. The Ontario,   
Canada and Logan, Utah sites are also used as production and assembly           
facilities. In addition, the Company owns a facility in Norcross, Georgia which 
it uses as its National Technical Services Center from which it dispatches the  
Company's service technicians on a nationwide basis. The Company also leases ten
premises throughout North America and in Australia for use as sales, service    
and/or administrative operations. Additionally, the Company owns the buildings  
and land in Santa Fe, New Mexico, Taos, New Mexico, and Durango, Colorado which 
house theatre operations.                                                       

REGULATION                                                                      

    In the U.S. and other countries, various laws and regulations restrict the
installation of outdoor signs and information displays. These regulations may   
impose greater restriction on information displays due to alleged concerns over 
aesthetics or driver safety if a display is located near a road or highway.     

The Company's products are tested to safety standards developed by    
Underwriters Laboratories and Edison Testing Laboratories in the U.S. as well as
similar standards in other countries. The Company designs and produces its      
products in accordance with these standards. The Company's printed circuit board
manufacturing operations must also meet various safety related rules and        
regulations. The Company believes it is in compliance with all applicable       
governmental laws and regulations.                                              

INTELLECTUAL PROPERTY                                                           

The Company owns or licenses a number of patents and holds a number of
trademarks for its communications equipment and theatrical enterprises and      
considers such patents, trademarks and licenses important to its business.      

LITIGATION                                                                      

  The Company is not involved in any litigation other than in the ordinary
course of business, none of which would materially adversely affect the         
financial position, results of operations or cash flows of the Company in the   
event of an adverse judgment.                                                   

EMPLOYEES                                                                       

  The Company has approximately 564 employees as of September 30, 1996, of
which 431 employees are related to the Company's electronics display business.  
Less than 1% of the employees are unionized. The Company believes its employee  
relations are good.                                                             

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MANAGEMENT

                                                        [Enlarge/Download Table]

               NAME                  AGE                       OFFICE                     
-----------------------------------  ---  ------------------------------------------------
                                                                                          
Richard Brandt.....................  69   Chairman of the Board and Director              
Victor Liss........................  59   Vice Chairman of the Board, President, Chief    
                                          Executive Officer and Director                  
Michael R. Mulcahy.................  48   Executive Vice President                        
Frank N. Daniels...................  58   Senior Vice President                           
Karl P. Hirschauer.................  51   Senior Vice President                           
Thomas F. Mahoney..................  49   Senior Vice President                           
Angela D. Toppi....................  41   Senior Vice President, Treasurer, Secretary and 
                                          Chief Financial Officer                         
Steven Baruch......................  58   Director                                        
Jean Firstenberg...................  60   Director                                        
Allan Fromme.......................  81   Director                                        
Robert Greenes.....................  75   Director                                        
Gene Jankowski.....................  62   Director                                        
Howard S. Modlin...................  65   Director                                        

   Richard Brandt has been a director of the Company since 1954, Chairman of
the Board since 1973, President from 1962 to 1980 and Chief Executive Officer   
from 1974 to 1992. He has been an employee of the Company for over 45 years. He 
is a director of Presidential Realty Corporation, a real estate company, Vice   
Chairman and a trustee of the College of Santa Fe, Chairman Emeritus and a      
trustee of the American Film Institute ("AFI") and a trustee of American Theatre
Wing. Mr. Brandt is the brother-in-law of Dr. Allan Fromme.                     

    Victor Liss has been a director of the Company since 1988 and an executive
officer since 1968. He has been Chief Executive Officer of the Company since    
December 1992, and Co-Chief Executive Officer between March 1992 and December   
1992, responsible for overall operations of the Company, including corporate    
direction, long range planning and business development. He has been an employee
for over 28 years. He is a director of Blue Cross & Blue Shield of Connecticut, 
Inc., and a trustee of Norwalk Hospital and Norwalk Community Technical College 
Foundation, Inc.                                                                

   Michael R. Mulcahy was elected Executive Vice President of the Company in
charge of sales, marketing and engineering operations in May 1995. He was Senior
Vice President between December 1993 and May 1995, and a Vice President between 
1989 and December 1993. He has been an employee of the Company for over 29      
years.                                                                          

     Frank N. Daniels was elected Senior Vice President of the Company in charge
of field service and human resources in December 1993 and has been an executive 
officer since 1984. He has been an employee of the Company for over 33 years.   

Karl P. Hirschauer was elected Senior Vice President of the Company in
charge of engineering and product development in December 1993 and was a Vice   
President in charge of engineering between 1984 and December 1993. He has been  
an employee of the Company for over 16 years.                                   

Thomas F. Mahoney was elected Senior Vice President of the Company in 
charge of sales in June 1996. He was a Vice President between 1994 and June 1996
in charge of financial sales and an Assistant Vice President in sales from 1988 
to 1994. He has been an employee of the Company for over 29 years.              

    Angela D. Toppi was elected Senior Vice President of the Company in charge
of finance in September 1995. Ms. Toppi has served as Secretary since July 1992,
Chief Financial Officer since March 1992 and Treasurer since 1988. She has been 
an employee of the Company for over 10 years.                                   

 Steven Baruch has been a director of the Company since 1994. During the
past five years he has been Executive Vice President of Presidential Realty     
Corporation, a real estate company. He has been a producer                      

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of various theatrical productions, among them Driving Miss Daisy, Angels in     
America, Love Letters and the Broadway revivals of Damn Yankees, Smokey Joe's   
Cafe and A Funny Thing Happened on the Way to the Forum.                        

Jean Firstenberg has been a director of the Company since 1989 and is 
Chairperson of its Audit Committee. She is currently Chief Executive Officer of 
the AFI, has been a director of AFI since 1980 and is a trustee of Boston       
University.                                                                     

 Dr. Allan Fromme has been a director of the Company since 1958. He is a
consultant to the Company and Chairman of its Executive Committee. Dr. Fromme is
a psychologist and author.                                                      

  Robert Greenes has been a director of the Company since 1971 and is Vice
Chairman of its Executive Committee. During the past five years he has been     
President of Petroconsult, Inc., a petroleum consulting company and President of
East Coast Energy Council. He previously was President and Chief Executive      
Officer of Public Fuel Service Inc., a fuel marketing and distribution company. 

   Gene Jankowski has been a director of the Company since 1994. He has been
Chairman of Jankowski Communications System, Inc., a broadcast consulting       
company, since 1990. He previously was President and Chairman of the CBS        
Broadcast Group. He is an Adjunct Professor of Telecommunications for Michigan  
State University, Chairman Emeritus of the AFI, director of The Advertising     
Educational Foundation and the Silvermine Art Center and advisor to the World   
Press Freedom Foundation.                                                       

Howard S. Modlin has been a director of the Company since 1975 and is 
Chairman of its Compensation Committee. He is an attorney and member of the firm
Weisman Celler Spett & Modlin, P.C. which provides legal services to the        
Company. He is a director of Fedders Corporation and General DataComm           
Industries, Inc.                                                                

 The executive officers are elected annually at the meeting of the Board
following the annual meeting of stockholders to serve until their successors are
elected. However, provisions in employment agreements provide for such election 
throughout the term of such respective agreements.                              

The Board of Directors is divided into three classes with the term of 
office of one of the classes of directors expiring each year and with each class
being elected for a three-year term. The term of each of Messrs. Baruch and     
Fromme expires in 1997, the term of each of Messrs. Brandt, Jankowski and Liss  
and Ms. Firstenberg expires in 1998 and the term of each of Messrs. Greenes and 
Modlin expires in 1999.                                                         

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EXECUTIVE COMPENSATION AND TRANSACTIONS WITH MANAGEMENT 

COMPENSATION OF EXECUTIVE OFFICERS                                              

   The following Summary Compensation Table sets forth all cash and non-cash
compensation paid or awarded for the fiscal years ended December 31, 1995, 1994 
and 1993 to the Company's four most highly compensated executive officers and   
the Chairman of the Board whose compensation exceeded $100,000 for the fiscal   
year ended December 31, 1995.                                                   

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                           ANNUAL COMPENSATION             LONG TERM                      
                                  --------------------------------------  COMPENSATION                    
    NAME AND PRINCIPAL                                    OTHER ANNUAL      OPTIONS         ALL OTHER     
         POSITION           YEAR  SALARY($)   BONUS($)   COMPENSATION($)    GRANTED     COMPENSATION($)(1)
--------------------------  ----  ---------   --------   ---------------  ------------  ------------------
                                                                                                          
Richard Brandt............  1995        --     78,618        368,146             --            57,549     
Chairman of the Board,      1994        --     73,491        363,380             --           116,535     
former Chief and Co-Chief   1993        --     57,694        349,242         12,500            96,615     
Executive Officer(2)                                                                                      
Victor Liss...............  1995   228,037    106,230             --          5,000             1,888     
Chief Executive Officer,    1994   196,915    133,753             --         10,000             1,888     
President and Vice                                                                                        
  Chairman                  1993   168,244     67,694             --         10,000             1,958     
Michael R. Mulcahy........  1995   166,593     21,458             --          1,500                --     
Executive Vice President,   1994   130,261     28,124             --          3,500                --     
former Senior Vice                                                                                        
  President                 1993   129,689         --             --            500                --     
and Vice President of                                                                                     
  Sales                                                                                                   
Karl P. Hirschauer........  1995    98,654      5,000             --          1,000                --     
Senior Vice President,      1994    91,212      6,719             --          1,000                --     
former Vice President       1993    91,859         --             --            500                --     
of Engineering                                                                                            

---------------                                                                 
(1) There are no restricted stock awards, stock appreciation rights or deferred 
    long-term incentive payouts. The amounts reflected for Mr. Liss are payments
by the Company for split dollar life insurance premiums.                

(2) The bonuses and other annual compensation for Mr. Brandt constituted        
   consulting fees and other payments under a prior agreement with the Company
which was superseded on August 16, 1996 by a new employment agreement.  

RETIREMENT PLAN AND SUPPLEMENTAL RETIREMENT BENEFITS                            

    There was a cash contribution of $98,816 for the individuals listed in the
Summary Compensation Table and all other eligible employees to the Company's    
retirement plan for 1995. The amounts set forth for All Other Compensation      
include $96,615, $116,535 and $57,549 paid to Mr. Brandt for tax equalization   
payments in 1993, 1994 and 1995, respectively, under a former consulting        
agreement primarily resulting from limitations placed on the Plan by the        
Internal Revenue Code. Under the supplemental retirement arrangement with Mr.   
Liss, $15,000, $95,475 and $43,723 was accrued but not paid in 1993, 1994 and   
1995, respectively.                                                             

 The Company's retirement plan covers all salaried employees over age 21
with at least one year of service who are not covered by a collective bargaining
agreement to which the Company is a party. The following table presents         
estimated retirement benefits payable at normal retirement date, which normally 
is age 65. The amounts shown include estimated Social Security benefits which   
would be deducted in calculating benefits payable under such Plan.              

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                                                        [Enlarge/Download Table]

         FINAL AVERAGE SALARY                  ESTIMATED ANNUAL RETIREMENT BENEFITS          
          FOR HIGHEST FIVE OF                     BASED ON CREDITED SERVICE YEARS            
             THE TEN YEARS               -------------------------------------------------   
         PRECEDING RETIREMENT              10        20        30         35         40      
---------------------------------------  -------   -------   -------   --------   --------   
                                                                                             
$100,000...............................  $15,000   $30,000   $45,000   $ 52,500   $ 60,000   
 125,000...............................   18,750    37,500    56,250     65,625     75,000   
 150,000...............................   22,500    45,000    67,500     78,750     90,000   
 200,000(1)............................   30,000    60,000    90,000    105,000    120,000(2)

    As of January 1, 1996, Messrs. Liss, Mulcahy and Hirschauer had 27, 28 and
16 years of credited service, respectively.                                     
---------------                                                                 
(1) $235,840 is the legislated annual cap on compensation for 1993 and $150,000 
is the limit for subsequent years.                                      

(2) Maximum legislated annual benefits payable from qualified pension plan.     

CERTAIN TRANSACTIONS                                                            

 During the year 1995, $265,000 in fees for legal services rendered were
paid by the Company to the law firm of which Mr. Modlin, a director of the      
Company, is a member.                                                           

A subsidiary of the Company loaned an aggregate of $290,385 during the
years 1989 through 1996 (and has agreed to loan an additional $30,000) to Dr.   
Fromme, Chairman of the Executive Committee, to fully pay the premiums on a     
$500,000 life insurance policy on his life. The Company has received an         
assignment of the policy as collateral for their repayment to the extent the    
proceeds of the policy are in excess of $200,000. The loans plus accrued        
interest are repayable solely from the proceeds of the policy.                  

  Messrs. Matthew Brandt and Thomas Brandt (sons and nephews of Messrs. R.
Brandt and Dr. Fromme, respectively) are Vice Presidents of the Company, and    
each is employed by the Company at annual compensation level of approximately   
$87,500.                                                                        

EMPLOYMENT AGREEMENTS                                                           

     The Company has employment agreements with Messrs. R. Brandt, Liss, Mulcahy
and Hirschauer expiring on December 31, 2002, December 31, 1997, May 31, 1998   
and December 31, 1996, respectively. The agreements provide for annual          
compensation of $356,762 (subject to cost of living adjustments) for Mr. Brandt,
$205,000 in 1996 and $215,000 in 1997 for Mr. Liss, $145,000 through May 1997   
and $155,000 through May 1998 for Mr. Mulcahy, and $100,000 in 1996 for Mr.     
Hirschauer. Each agreement contains graduated bonus provisions based on the     
Company's defined pre-tax consolidated earnings, not to exceed $125,000,        
$150,000, $30,000 and $20,000 in the case of Messrs. R. Brandt, Liss, Mulcahy   
and Hirschauer, respectively. Each agreement also contains varying disability,  
death, and, other than Mr. Hirschauer, insurance benefits. In the case of       
Messrs. R. Brandt and Liss, each of their agreements provide for profit         
participations of 1 1/2% of the Company's defined pre-tax consolidated earnings.
Mr. Mulcahy's agreement also provides for sales override commissions and        
severance benefits. Messrs. Brandt and Liss have the right to cancel their      
agreements if, among other things, in the case of Mr. Liss, the Company fails to
renegotiate the terms of his agreement (which negotiations are in process) and  
elect him to his present positions and, in the case of Mr. Brandt, the Company  
fails to elect him to his present position in which case he has the right to    
receive the payments for the balance of the term of his agreement, including    
certain lump sum payments thereof. The foregoing is a summary of the agreements 
and reference is made to the agreements, each of which has been filed with the  
Securities and Exchange Commission for the full terms thereof.                  

STOCK OPTION PLANS                                                              

The Company has two incentive stock option plans adopted by the       
stockholders in 1992 and 1995 which provide for the grant of incentive stock    
options to purchase Common Stock (and/or Class A Stock under the 1995 Plan) at  
fair market value (or 110% of fair market value if the optionee owns more than  
10% of the                                                                      

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Company's outstanding voting securities) on the date of grant. Options          
outstanding are exercisable during the period one to ten years after the date of
grant and 500 and 76,200 shares remain available for issuance under the 1992 and
1995 Plans, respectively. The following two tables set forth certain information
with respect to (i) the number of options granted to named executive officers in
fiscal 1995 and (ii) the aggregate number and value of options exercisable by   
the named executive officers at December 31, 1995. Except for Mr. Mulcahy, no   
other named executive officer exercised any options in fiscal 1995. In 1996, Mr.
Liss exercised options to purchase 6,906 shares.                                

OPTION GRANTS IN LAST FISCAL YEAR 
INDIVIDUAL GRANTS 

                                                        [Enlarge/Download Table]

                                                                                 POTENTIAL     
                                          % OF                                REALIZABLE VALUE 
                                          TOTAL                                  AT ASSUMED    
                                         OPTIONS                              ANNUAL RATES OF  
                            NUMBER OF    GRANTED                                STOCK PRICE    
                            SECURITIES     TO        EXERCISE                 APPRECIATION FOR 
                            UNDERLYING  EMPLOYEES    OR BASE                    OPTION TERM    
                             OPTIONS    IN FISCAL     PRICE      EXPIRATION  ------------------
           NAME             GRANTED(#)    YEAR     PER SHARE($)     DATE     5% ($)     10% ($)
--------------------------  ----------  ---------  ------------  ----------  ------     -------
                                                                                               
Victor Liss...............     5,000       18.4%       8.125       07/26/05  26,000     65,000 
Michael R. Mulcahy........     1,500        5.5%       8.125       07/26/05   8,000     19,000 
Karl P. Hirschauer........     1,000        3.7%       8.125       07/26/05   5,000     13,000 

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES 

                                                        [Enlarge/Download Table]

                                                                       NUMBER OF                       
                                                                      SECURITIES          VALUE OF     
                                                                      UNDERLYING        UNEXERCISED    
                                                                      UNEXERCISED       IN-THE-MONEY   
                                           OPTION EXERCISES           OPTIONS AT         OPTIONS AT    
                                    ------------------------------  FISCAL YEAR END  FISCAL YEAR END($)
                                       SHARES                       ---------------  ------------------
                                     ACQUIRED ON         VALUE       EXERCISABLE/       EXERCISABLE/   
               NAME                 EXERCISE (#)      REALIZED ($)   UNEXERCISABLE    UNEXERCISABLE(1) 
----------------------------------  -------------     ------------  ---------------  ------------------
                                                                                                       
Richard Brandt....................         --                --          12,500/--          6,250/--   
Victor Liss.......................         --                --       28,000/5,000         17,875/--   
Michael R. Mulcahy................      2,000             2,063        4,000/1,500             --/--   
Karl P. Hirschauer................         --                --        2,000/1,000            844/--   

---------------                                                                 
(1) Market value of underlying securities at fiscal year end, minus the exercise
price.                                                                  

MEETINGS OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES                       

During 1995, the Board of Directors had five meetings. All directors  
attended 75% or more of such meetings and of committees of which they were      
members. Non-employee directors receive an annual fee of $3,500 and $950 for    
each meeting of the Board attended, while employee directors receive an annual  
fee of $2,200 and $450 for each meeting attended.                               

The members of the Executive Committee of the Board of Directors are  
Messrs. R. Brandt, Greenes, Liss, Modlin and Dr. Fromme. The Executive Committee
is authorized to exercise the powers of the Board of Directors during the       
intervals between the meetings of the Board and is from time to time delegated  
certain authorizations by the Board in matters pertaining to the Company. The   
Executive Committee did not hold any formal meetings in 1995. Members of said   
Committee receive a fee of $300 for each meeting of the Committee they attend.  
Dr. Fromme receives an annual fee of $12,000 as Chairman of the Executive       
Committee and for other consulting services. Mr. Greenes receives an annual fee 
of $6,000 as Vice Chairman of the Executive Committee and for other consulting  
services.                                                                       

 The members of the Compensation Committee of the Board of Directors are
Messrs. Modlin, Greenes and Jankowski and Ms. Firstenberg. The Compensation     
Committee reviews compensation and other benefits.                              

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The Compensation Committee had two meetings in 1995. Members of said Committee  
receive a fee of $300 for each meeting of the Committee they attend and the     
Chairman, Mr. Modlin, receives an annual fee of $2,500.                         

The members of the Audit Committee of the Board of Directors are Ms.  
Firstenberg and Messrs. Baruch, Greenes and Modlin. The Audit Committee reviews 
the audit function and material aspects thereof with the Company's independent  
auditors. Such Committee had two meetings in 1995. Members of the Audit         
Committee receive a fee of $300 for each meeting which they attend and the      
Chairperson, Ms. Firstenberg, receives an annual fee of $2,500.                 

On June 20, 1989, the Board of Directors established a Non-Employee   
Director Stock Option Plan as amended, which covers a maximum of 30,000 shares  
for grant. Options are for a period of six years from the date of the grant, are
granted at fair market value on the date of the grant, may be exercised at any  
time after one year from the date of the grant while a director and are based on
years of service, with a minimum of 500 stock options for each director, an     
additional 500 based on five or more years of service, another 500 based on ten 
or more years of service and an additional 1,000 based on twenty or more years  
of service. Additional options are granted upon the expiration or exercise of   
any such option which is no earlier than four years after the date of the grant,
in an amount equal to such exercised or expired options.                        

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DESCRIPTION OF NOTES

   The Notes offered hereby are to be issued under an Indenture, to be dated
as of December 1, 1996, between the Company and Continental Stock Transfer &    
Trust Company, as Trustee (the "Trustee"), a copy of which is filed as an       
exhibit to the Registration Statement of which this Prospectus is a part. The   
following summary of certain provisions of the Indenture do not purport to be   
complete and are subject to, and are qualified in their entirety by reference   
to, all the provisions of the Indenture, including the definitions therein of   
certain terms. Wherever a particular Section, Article or defined term is        
referred to, such Section, Article or defined term refers to the Indenture and  
is incorporated herein by reference.                                            

GENERAL                                                                         

   The Notes will be unsecured subordinated obligations of the Company, will
be limited to an aggregate principal amount of $27,500,000 (subject to increase 
in the event of the exercise of the Underwriter's over-allotment option) and    
will mature on December 1, 2006. The Notes will bear interest at the rate per   
annum shown on the front cover of this Prospectus from the date of initial      
issuance, or from the most recent Interest Payment Date to which interest has   
been paid or provided for, payable semi-annually on June 1 and December 1 of    
each year, commencing June 1, 1997, to the Person in whose name the Notes (or   
any predecessor Notes) are registered at the close of business on the Regular   
Record Date for such interest, which shall be May 15 or November 15 (whether or 
not a Business Day), as the case may be, next preceding such Interest Payment   
Date. Interest on the Notes will be paid on the basis of a 360-day year of      
twelve 30-day months, based on actual days elapsed. (Section 2.04 and 6.01)     

Principal of, and premium, if any, and interest on the Notes will be  
payable, and the transfer of Notes will be registerable, at the office or agency
of the Company maintained for such purposes in the Borough of Manhattan, the    
City of New York. In addition, payment of interest may, at the option of the    
Company, be made by check mailed to the address of the Person entitled thereto  
as it appears in the Note Register. (Sections 2.03, 6.01 and 6.02)              

     The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiples thereof. (Section 2.02) No   
service charge will be made for any registration of transfer or exchange of the 
Notes, but the Company may require payment of a sum sufficient to cover any tax 
or other governmental charge payable in connection therewith. The Company is not
required (i) to issue, register the transfer of or exchange any Note during a   
period beginning at the opening of business 15 days before the mailing of notice
fixed for any redemption and ending at the close of business on such Redemption 
Date or (ii) to register the transfer of or exchange any Notes for redemption in
whole or in part, except the unredeemed portion of the Notes being redeemed in  
part. (Section 2.07)                                                            

   All monies paid by the Company to the Trustee or any Paying Agent for the
payment of principal of and premium, if any, and interest on any Note which     
remains unclaimed for two years after such principal, premium or interest       
becomes due and payable may be repaid to the Company. Thereafter, the Holder of 
such Note may, as an unsecured general creditor, look only to the Company for   
payment thereof. (Section 13.04)                                                

     The Indenture does not contain any provisions that would provide protection
to Holders of the Notes against a sudden and dramatic decline in the credit     
quality of the Company resulting from any takeover, recapitalization or similar 
restructuring, except as described below under "Repurchase at Option of Holders 
Upon a Repurchase Event" and "Consolidation, Merger and Sale of Assets."        

CONVERSION RIGHTS                                                               

   The Notes will be convertible into the Common Stock of the Company at any
time after 60 days following the date of initial issuance thereof and up to and 
including the maturity date (subject to prior redemption by the Company on not  
less than 30 nor more than 60 days' notice to the Trustee) of the principal     
amount thereof, initially at the Conversion Price stated on the cover page of   
this Prospectus (subject to adjustment as described below). The right to convert
the Notes called for redemption or delivered for repurchase will terminate at   
the close of business on the last Trading Day prior to the Redemption Date or   
the                                                                             

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Repurchase Date, unless the Company defaults in making the payment due upon     
redemption or repurchase. (Section 5.01) For information as to notices of       
redemption, see "Optional Redemption."                                          

The Conversion Price will be subject to adjustment in certain events, 
including (i) dividends (and other distributions) payable in Common Stock or any
class of capital stock of the Company, (ii) the issuance to all holders of      
Common Stock of rights, warrants or options entitling them to subscribe for or  
purchase Common Stock at less than the current market price, (iii) subdivisions 
or combinations of Common Stock, (iv) distributions to all holders of Common    
Stock of evidences of indebtedness of the Company, cash or other assets         
(including securities, but excluding those dividends, rights, warrants, options 
and distributions referred to above and excluding dividends and distributions   
paid exclusively in cash), (v) distributions consisting exclusively of cash     
(excluding any cash portion of distributions referred to in (iv) above or cash  
distribution upon a merger or consolidation to which the second succeeding      
paragraph applies) to all holders of Common Stock in an aggregate amount that,  
combined together with (a) all other such all-cash distributions made within the
preceding 12 months in respect to which no adjustment has been made and (b) any 
cash and the fair market value of other consideration paid or payable in respect
of any tender offers by the Company for Common Stock concluding within the      
preceding 12 months in respect of which no adjustment has been made, exceeds    
12.5% of the Company's market capitalization (defined as being the product of   
the current market price of the Common Stock times the number of shares of      
Common Stock then outstanding) on the record date for such distribution, and    
(vi) the purchase of Common Stock pursuant to a tender offer made by the Company
or any of its subsidiaries which involves an aggregate consideration that       
together with (a) any cash and the fair market value of any other consideration 
paid or payable in any other tender offer by the Company or any of its          
subsidiaries of Common Stock expiring within the 12 months preceding the        
expiration of such tender offer in respect of which no adjustment has been made 
and (b) the aggregate amount of any such all-cash distributions referred to in  
(v) above to all holders of Common Stock within the 12 months preceding the     
expiration of such tender offer in respect of which no adjustments have been    
made, exceeds 12.5% of the Company's market capitalization on the expiration of 
such tender offer. No adjustment in the Conversion Price shall be required      
unless such adjustment (plus any adjustments not previously made) would require 
an increase or decrease of at least 1% in such price; provided, however, that   
any adjustments which by reason of this sentence are not required to be made    
shall be carried forward and then taken into account in any subsequent          
adjustment. (Section 5.04)                                                      

    In addition to the foregoing adjustments, the Company will be permitted to
make such reduction in the Conversion Price as it considers to be advisable in  
order that any event treated for Federal income tax purposes as a dividend or   
distribution of stock or stock rights will not be taxable to the holders of the 
Common Stock. (Section 5.04)                                                    

Subject to the rights of Holders of the Notes described below under   
"Repurchase at Option of Holders Upon a Repurchase Event," in case of certain   
consolidations or mergers to which the Company is a party or the transfer of    
substantially all of the assets of the Company, each Note then outstanding      
would, without the consent of any Holders of the Notes, become convertible only 
into the kind and amount of securities, cash and other property receivable upon 
the consolidation, merger or transfer by a holder of the number of shares of    
Common Stock into which such Note might have been converted immediately prior to
such consolidation, merger or transfer (assuming such holder of Common Stock    
failed to exercise any rights of election and received per share the kind and   
amount received per share by a plurality of non-electing shares). (Section 5.10)

    Fractional shares of Common Stock will not be issued upon conversion, but,
in lieu thereof, the Company will pay a cash adjustment based upon market price.
(Section 5.03) Notes surrendered for conversion during the period from the close
of business on any Regular Record Date next preceding any Interest Payment Date 
to the opening of business on such Interest Payment Date (except the Notes      
called for redemption on a Redemption Date within such period) must be          
accompanied by payment of an amount equal to the interest thereon which the     
registered Holder is to receive. In the case of any Note that has been converted
after any Regular Record Date but on or before the next Interest Payment Date,  
interest whose stated maturity is on such Interest Payment Date will be payable 
on such Interest Payment Date notwithstanding such conversion, and such interest
will be paid to the Holder of such Note on such Regular Record Date. Except as  
described                                                                       

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above, no interest on converted Notes will be payable by the Company on any     
Interest Payment Date subsequent to the date of conversion. No other payment or 
adjustment for interest or dividends will be made upon conversion. (Section     
5.02)                                                                           

If at any time the Company makes a distribution of property to its    
stockholders that would be taxable to such stockholders as a dividend for       
Federal income tax purposes (e.g., distributions of evidence of indebtedness or 
assets of the Company, but generally not stock dividends or rights to subscribe 
for Common Stock) and, pursuant to the antidilution provisions of the Indenture,
the Conversion Price of the Notes is reduced, such reduction may be deemed to be
the payment of a taxable dividend to Holders of the Notes. Holders of the Notes 
could, therefore, have taxable income as a result of an event pursuant to which 
they receive no cash or property that could be used to pay the related income   
tax.                                                                            

RESTRICTION ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK       

   The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, issue, assume,   
Guarantee or otherwise become directly or indirectly liable, contingently or    
otherwise, with respect to (collectively, "incur"), after the date of issuance  
of the Notes, any Indebtedness (including Acquired Debt) and the Company will   
not issue any Disqualified Capital Stock and will not permit any of its         
Subsidiaries to issue any shares of preferred stock. Indebtedness consisting of 
reimbursement obligations in respect of a letter of credit will be deemed to be 
incurred when the letter of credit is first issued.                             

The foregoing provisions will not apply to:                           

(i) the incurrence by the Company and its Subsidiaries of Indebtedness
represented by the Notes;                                                       

    (ii) the incurrence by the Company or any of its Subsidiaries of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which are used 
to extend, refinance, renew, replace, defease or refund, Indebtedness that was  
permitted by the Indenture to be incurred (including, without limitation,       
Existing Indebtedness);                                                         

(iii) the incurrence by the Company or any of its Subsidiaries of     
intercompany Indebtedness between or among the Company and any of its           
Subsidiaries;                                                                   

(iv) the incurrence by the Company or any of its Subsidiaries of      
Indebtedness represented by performance bonds, standby letters of credit or     
appeal bonds, in each case to the extent incurred in the ordinary course of     
business of the Company or such Subsidiary; and                                 

     (v) the incurrence by the Company of Indebtedness, which, together with all
other Indebtedness outstanding as of the date of such incurrence, does not      
exceed (a) five times EBITDA for the last four full fiscal quarters ending      
immediately preceding such date plus (b) $5.0 million. (Section 6.12)           

"Acquired Debt" means, with respect to any specified Person, (i)      
Indebtedness of any other Person existing at the time such other Person is      
merged with or into or becomes a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in             
contemplation of, such other Person merging with or into or becoming a          
Subsidiary of such specified Person, and (ii) Indebtedness secured by a lien    
encumbering any asset acquired by such specified Person. "Acquired Debt" shall  
be deemed to be incurred by such Person at the time of such merger, or upon the 
other Person becoming a Subsidiary or upon the acquisition of such asset.       

    "Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.                                                                           

     "Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such    
period, on a consolidated basis, determined in accordance with GAAP; provided   
that (i) the Net Income of any Person that is not a Subsidiary or that is       
accounted for by the equity method of accounting shall be included only to the  
extent of the amount of dividends or                                            

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distributions paid in cash to the referent Person or a wholly-owned Subsidiary  
thereof, (ii) the Net Income of any Subsidiary shall be excluded to the extent  
that the declaration or payment of dividends or similar distributions by that   
Subsidiary of that Net Income is not at the date of determination permitted     
without any prior governmental approval (that has not been obtained) or,        
directly or indirectly, by operation of the terms of its charter or any         
agreement, instrument, judgment, decree, order, statute, rule or governmental   
regulation applicable to that Subsidiary or its stockholders, (iii) the Net     
Income of any Person acquired in a pooling of interests transaction for any     
period prior to the date of such acquisition shall be excluded and (iv) the     
cumulative effect of a change in accounting principles shall be excluded.       

     "Disqualified Capital Stock" means, with respect to any person, any Capital
Stock of such Person that, by its terms (or by the terms of any security into   
which it is convertible or for which it is exercisable, redeemable or           
exchangeable), matures, or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,  
in whole or in part, on or prior to the maturity of the Securities.             

"Existing Indebtedness" means Indebtedness of the Company and its     
Subsidiaries in existence on the date of the Indenture, until such amounts are  
repaid, including all reimbursement obligations with respect to letters of      
credit outstanding as of the date of issuance of the Notes.                     

     "EBITDA" means, with respect to any Person for any period, the Consolidated
Net Income of such Person for such period plus (i) an amount equal to any       
extraordinary loss plus any net loss realized in connection with a Sale of      
Assets (to the extent such losses were deducted in computing such Consolidated  
Net Income), plus (ii) provision for taxes based on income or profits of such   
Person and its Subsidiaries for such period, to the extent that such provision  
for taxes was included in computing such Consolidated Net Income, plus (iii) the
Fixed Charges of such Person and its Subsidiaries for such period, to the extent
that such Fixed Charges were deducted in computing such Consolidated Net Income,
plus (iv) depreciation and amortization of such Person and its Subsidiaries for 
such period to the extent that such depreciation and amortization were deducted 
in computing such Consolidated Net Income, in each case, on a consolidated basis
and determined in accordance with GAAP. Notwithstanding the foregoing, the      
provision for taxes on the income or profits of, and the depreciation and       
amortization of a Subsidiary of the referent Person shall be added to           
Consolidated Net Income to compute EBITDA only to the extent (and in the same   
proportion) that the Net Income of such Subsidiary was included in calculating  
the Consolidated Net Income of such Person and only of a corresponding amount   
would be permitted at the date of determination to be dividended to such Person 
by such Subsidiary without prior approval (that has not been obtained), pursuant
to the terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that         
Subsidiary or its stockholders.                                                 

   "Fixed Charges" means, with respect to any Person for any period, the sum
of (i) the consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued (including, without limitation,            
amortization of original issue discount, non-cash interest payments, the        
interest component of any deferred payment obligations, the interest component  
of all payments associated with Capital Lease Obligations, commissions, and     
discounts and other fees and charges incurred in respect of letters of credit or
bankers' acceptance financings, (ii) the consolidated interest expense of such  
Person and its Subsidiaries that was capitalized during such period, (iii) any  
interest expense on Indebtedness of another Person that is Guaranteed by such   
Person or one of its Subsidiaries or secured by a lien on assets of such Person 
or one of its Subsidiaries (whether or not such Guarantee or lien is called     
upon), (iv) the product of (a) all cash dividend payments (and non-cash dividend
payments in the case of a Person that is a Subsidiary) on any series of         
preferred stock of such Person, times (b) a fraction, the numerator of which is 
one and the denominator of which is one minus the then current combined federal,
state and local statutory tax rate of such Person, expressed as a decimal, in   
each case, on a consolidated basis and in accordance with GAAP, and (v) (without
duplication of any of the foregoing) one-third of the aggregate rental          
obligations of such Person and its Subsidiaries for such period, whether paid or
accrued, in respect of leases of real and personal property, whether or not such
obligations are reflected as liabilities on the balance sheet of such Person and
its Subsidiaries.                                                               

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 "Indebtedness" means, with respect to the Company, any of the following
(without duplication): (i)(a) any liability or obligation of the Company for    
borrowed money (including, without limitation, principal and premium, if any,   
interest, fees, penalties, expenses, collection expenses, and other obligations 
in respect thereof, and, to the extent permitted by applicable law, interest    
accruing after the filing of a petition initiating any proceeding under the     
Bankruptcy Code whether or not allowed as a claim in such proceeding),whether or
not evidenced by bonds, debentures, notes or other written instruments, and any 
other liability or obligation evidenced by notes, bonds debentures or similar   
instruments (other than the Notes) whether or not contingent and whether        
outstanding on the date of execution of the Indenture or thereafter created,    
incurred or assumed, (b) any deferred payment obligation of the Company for the 
payment of the purchase price of property or assets evidenced by a note or      
similar instrument (excluding any obligation for trade payables or constituting 
the deferred purchase price of property or assets which is not evidenced by a   
note or similar instrument and which is unsecured),(c) any obligation of the    
Company for the payment of rent or other amounts under a lease of property or   
assets which obligation is required to be classified and accounted for as a     
capitalized lease on the balance sheet of the Company under generally accepted  
accounting principles, (d) all obligations of the Company under interest rate   
and currency swaps, floors, caps, or similar arrangements intended to fix       
interest rate obligations or currency fluctuation risks, (e) all obligations of 
the Company evidenced by a letter of credit or any reimbursement obligation of  
the Company in respect of a letter of credit, (f) all obligations of others     
secured by a lien to which any of the properties or assets of the Company are   
subject (including, without limitation, leasehold interests and any intangible  
property rights), whether or not the obligations secured thereby have been      
assumed by the Company or shall otherwise be the Company's legal obligation and 
(g) all obligations of others of the kinds described in the preceding clauses   
(a),(b),(c),(d) or (e) assumed by or guaranteed by the Company and the          
obligations of the Company under guarantees of any such obligations; and (ii)   
any amendments, renewals, extensions, deferrals, modifications, refinancing and 
refunding of any of the foregoing. "Indebtedness" shall not include; (i) any    
indebtedness of the Company to any Subsidiary or to any Affiliate of the Company
or any of the Subsidiaries, (ii) any indebtedness incurred in connection with   
the purchase of goods, assets, materials or services in the ordinary course of  
business or representing amounts recorded as accounts payable, trade payables   
(which are unsecured), other current liabilities (other than for borrowed money)
or deferred revenue and deposits of the Company on the books of the Company,    
(iii) any indebtedness of or amount owed by the Company to employees for        
services rendered to the Company, and (iv) any liability for Federal, state,    
local or other taxes owing or owed by the Company.                              

  "Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in     
respect of preferred stock dividends, excluding, however, (i) any gain (but not 
loss), together with any related provision for taxes on such gain (but not      
loss), realized in connection with any Sale of Assets and (ii) any extraordinary
or nonrecurring gain (but not loss), together with any related provision for    
taxes on such extraordinary or nonrecurring gain (but not loss).                

    "Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which 
are used solely to extend, refinance, renew, replace, defease or refund, other  
Indebtedness of the Company or any of its Subsidiaries; provided that, except in
the case of Indebtedness of the Company issued in exchange for, or the net      
proceeds of which are used solely to extend, refinance, renew, replace, defease 
or refund, Indebtedness of a Subsidiary of the Company: (i) the principal amount
of such Permitted Refinancing Indebtedness does not exceed the principal amount 
of the Indebtedness so extended, refinanced, renewed, replaced, defeased or     
refunded (plus the amount of any premiums paid and reasonable expenses incurred 
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a    
final maturity date later than the final maturity date of, and has a Weighted   
Average Life to Maturity equal to or greater than the Weighted Average Life to  
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,    
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,     
renewed, replaced, defeased or refunded is subordinated in right of payment to  
the Notes, such Permitted Refinancing Indebtedness has a final maturity date    
later than the final maturity date of, and is subordinated in right of payment  
to, the Notes on terms at least as favorable to the Holders of Notes as those   
contained in the documentation governing the Indebtedness being extended,       
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness 
is incurred either by the Company or by the Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or         
refunded.                                                                       

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RESTRICTED PAYMENTS                                                             

The Indenture provides that the Company shall not make any Restricted 
Payment to any Person and the Company shall not permit any Subsidiary or        
Affiliate to make any Restricted Payment other than to the Company. (Section    
6.11) "Restricted Payment" means, with respect to any Person, (i) the           
declaration or payment of any dividend or the occurrence of any liability to    
make any other payment or distribution of cash or other property or assets in   
respect of such Person's Stock, excluding dividends from one Subsidiary to      
another or to the Company and excluding cash dividends by the Company which do  
not exceed $750,000 in the aggregate in any fiscal year, (ii) except for (A) the
Odd Lot Purchase Program, (B) the purchase of shares of Common Stock of the     
Company in the aggregate amount of up to $750,000 in any fiscal year, and (C) in
respect of the Stock Option Plans, any payment on account of the purchase,      
redemption, defeasance or other retirement of such Person's Stock or any other  
payment or distribution made in respect thereof, either directly or indirectly, 
or (iii) any payment, loan, contribution, or other transfer of funds or other   
property to any Stockholder of such Person in their capacity as Stockholders as 
opposed to employees, directors or consultants; provided, however, that no Event
of Default exists or would be caused by the making of a Restricted Payment.     
(Section 1.01)                                                                  

SUBORDINATION                                                                   

  The payment of the principal of and premium, if any, and interest on the
Notes will, to the extent set forth in the Indenture, be subordinated in right  
of payment to the prior payment in full of all Senior Indebtedness. Upon any    
payment or dissolution of assets to creditors upon any liquidation, dissolution,
winding-up, reorganization, assignment for the benefit of creditors, marshaling 
of assets or any bankruptcy, insolvency or similar proceedings of the Company,  
the holders of all Senior Indebtedness will be first entitled to receive payment
in full of all amounts due or to become due thereon before the Holders of the   
Notes will be entitled to receive any payment in respect of the principal of or 
premium, if any, or interest on the Notes. No payment or distribution of any    
assets of the Company shall be made on account of principal of and premium, if  
any, or interest on the Notes, in the event and during the continuation of (i)  
any default in the payment of principal of or premium, if any, or interest on   
any Senior Indebtedness beyond any applicable grace period with respect thereto 
or (ii) any other event of default with respect to any Senior Indebtedness      
permitting the holders of such Senior Indebtedness (or a trustee or other       
representative on behalf of the holders thereof) to declare such Senior         
Indebtedness due and payable prior to the date on which it would otherwise have 
become due and payable, upon written notice thereof to the Company and the      
Trustee by any holders of Senior Indebtedness (or a trustee or other            
representative on behalf of the holders thereof) (the "Default Notice"), unless 
and until such event of default shall have been cured or waived or ceased to    
exist and such acceleration shall have been rescinded or annulled; provided such
payments may not be prevented under clause (ii) above for more than 179 days    
after an applicable Default Notice has been received by the Trustee unless the  
Senior Indebtedness in respect of which such event of default exists has been   
declared due and payable in its entirety, in which case no such payment may be  
made until such acceleration has been rescinded or annulled or such Senior      
Indebtedness has been paid in full. No event of default which existed or was    
continuing on the date of any Default Notice may be made the basis for the      
giving of a second Default Notice and only one such Default Notice may be given 
in any 365-day period. (Article Four)                                           

   By reason of such subordination, in the event of insolvency, creditors of
the Company who are not holders of Senior Indebtedness or of the Notes may      
recover less, ratably, than holders of Senior Indebtedness and may recover more,
ratably, than the Holders of the Notes.                                         

"Senior Indebtedness" means, with respect to the Company, any of the  
following (without duplication): (i) (a) any liability or obligation of the     
Company for borrowed money (including, without limitation, principal of and     
premium, if any, interest, fees, penalties, expenses, collection expenses, and  
other obligations in respect thereof, and, to the extent permitted by applicable
law, interest accruing after the filing of a petition initiating any proceeding 
under the Bankruptcy Code whether or not allowed as a claim in such proceeding),
whether or not evidenced by bonds, debentures, notes or other written           
instruments, and any other liability or obligation evidenced by notes, bonds,   
debentures or similar instruments (other than the Notes) whether or not         
contingent and whether outstanding on the date of execution of the Indenture or 
thereafter created, incurred                                                    

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or assumed, (b) any deferred payment obligation of the Company for the payment  
of the purchase price of property or assets evidenced by a note or similar      
instrument (excluding any obligation for trade payables or constituting the     
deferred purchase price of property or assets which is not evidenced by a note  
or similar instrument and which is unsecured), (c) any obligation of the Company
for the payment of rent or other amounts under a lease of property or assets    
which obligation is required to be classified and accounted for as a capitalized
lease on the balance sheet of the Company under generally accepted accounting   
principles, (d) all obligations of the Company under interest rate and currency 
swaps, floors, caps, or similar arrangements intended to fix interest rate      
obligations or currency fluctuation risks, (e) all obligations of the Company   
evidenced by a letter of credit or any reimbursement obligation of the Company  
in respect of a letter of credit, (f) all obligations of others secured by a    
lien to which any of the properties or assets of the Company are subject        
(including, without limitation, leasehold interests and any intangible property 
rights), whether or not the obligations secured thereby have been assumed by the
Company or shall otherwise be the Company's legal obligation and (g) all        
obligations of others of the kinds described in the preceding clauses (a), (b), 
(c), (d) or (e) assumed by or guaranteed by the Company and the obligations of  
the Company under guarantees of any such obligations; and (ii) any amendments,  
renewals, extensions, deferrals, modifications, refinancing and refunding of any
of the foregoing. "Senior Indebtedness" shall not include: (i) indebtedness that
by the terms of the instrument or instruments by which such indebtedness was    
created or incurred expressly provides that it (a) is junior in right of payment
to the Notes or (b) ranks pari passu, in right of payment with the Notes, (ii)  
any repurchase, redemption or other obligation in respect of Disqualified       
Capital Stock, (iii) any indebtedness of the Company to any Subsidiary or to any
Affiliate of the Company or any of the Subsidiaries, (iv) any indebtedness      
incurred in connection with the purchase of goods, assets, materials or services
in the ordinary course of business or representing amounts recorded as accounts 
payable, trade payables (which are unsecured) or other current liabilities      
(other than for borrowed money) or deferred revenue and deposits of the Company 
on the books of the Company (other than the current portion of any long-term    
indebtedness of the Company that but for this clause (iv) would constitute      
Senior Indebtedness), (v) any indebtedness of or amount owed by the Company to  
employees for services rendered to the Company, (vi) any liability for Federal, 
state, local or other taxes owing or owed by the Company and (vii) the Company's
9 1/2% Subordinated Debentures due 2012 and 9% Convertible Subordinated         
Debentures due 2005. (Section 1.01)                                             

  The Notes will be effectively subordinated to all indebtedness and other
liabilities and commitments (including trade payables and lease obligations) of 
the Company's subsidiaries. Any right of the Company to receive assets of any   
such subsidiary upon the liquidation or reorganization of any such subsidiary   
(and the consequent right of the Holders of the Notes to participate in those   
assets) will be effectively subordinated to the claims of that subsidiary's     
creditors, except to the extent that the Company is itself recognized as a      
creditor of such subsidiary, in which case the claims of the Company would still
be subordinate to any security in the assets of such subsidiary and any         
indebtedness of such subsidiary senior to that held by the Company.             

  The Indenture permits the incurrence of certain additional Indebtedness,
including Senior Indebtedness. At September 30, 1996 , the Company's Senior     
Indebtedness aggregated approximately $23.2 million, excluding accrued interest 
and the Company's subsidiaries had indebtedness and other liabilities of        
approximately $4.8 million. The Company expects from time to time to incur      
additional indebtedness, including Senior Indebtedness to the extent permitted  
by the Indenture. See Note 9 of "Notes to Consolidated Financial Statements" for
a more detailed description of the Company's outstanding indebtedness. The      
Company's 9% Convertible Subordinated Debentures due 2005 and 9 1/2%            
Subordinated Debentures due 2012 are not Senior Indebtedness.                   

OPTIONAL REDEMPTION                                                             

    The Notes are redeemable at the Company's option, in whole or from time to
time in part, upon not less than 20 nor more than 65 days' notice mailed to each
Holder of the Notes to be redeemed at such Holder's address appearing in the    
Note Register, on any date on or after December 1, 2001 and prior to maturity.  

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   The Redemption Prices (expressed as a percentage of the principal amount)
are as follows for the 12-month period beginning December 1 of the years        
indicated:                                                                      

                                                                [Download Table]

                           YEAR                             PERCENTAGE
                                                            ----------
                                                                      
2001......................................................    103.750%
2002......................................................    102.813 
2003......................................................    101.875 
2004......................................................    100.938 

thereafter and at maturity at 100% of principal, together in the case of any    
such redemption with accrued interest to the Redemption Date (subject to the    
right of Holders of record on the relevant Regular Record Date to receive       
interest due on an Interest Payment Date that is on or prior to the Redemption  
Date).                                                                          

No sinking fund is provided for the Notes.                            

EVENTS OF DEFAULT                                                               

The following will be Events of Default under the Indenture:          

        (i) failure to pay principal of or premium, if any, on any Note when
due, whether or not such payment is prohibited by the subordination   
provisions of the Indenture;                                          

        (ii) failure to pay any interest on any Note when due, continued for
 30 days, whether or not such payment is prohibited by the subordination
provisions of the Indenture;                                          

          (iii) default in the payment of the Repurchase Price in respect of any
Note on the Repurchase Date therefor, whether or not such payment is  
prohibited by the subordination provisions of the Indenture;          

          (iv) failure to perform or breach of any other covenant of the Company
in the Indenture, which continues for 60 days after written notice as 
provided in the Indenture; and                                        

         (v) certain events of bankruptcy, insolvency or reorganization of the
Company or any Significant Subsidiary. (Section 7.01)                 

  Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the Trustee 
will be under no obligation to exercise any of its rights or powers under the   
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable indemnity. (Section 8.01) Subject  
to the Trustee being offered reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by the Trustee, the Holders of 
a majority in aggregate principal amount of the Outstanding Notes will have the 
right by written instruction to the Trustee, to direct the time, method and     
place of conducting any proceeding for any remedy available to the Trustee or   
exercising any trust or power conferred on the Trustee. (Section 7.05)          

     If an Event of Default shall occur and be continuing, either the Trustee or
the Holders of not less than 25% in aggregate principal amount of the           
Outstanding Notes may accelerate the maturity of all Notes; provided, however,  
that after such acceleration, but before a judgment or decree based on          
acceleration, the Holders of a majority in aggregate principal amount of the    
Outstanding Notes may, under certain circumstances, rescind and annul such      
acceleration if all Events of Default, other than the non-payment of accelerated
principal, have been cured or waived as provided in the Indenture. (Section     
7.02) For information as to waiver of defaults, see "Modification and Waiver"   
below.                                                                          

    No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless (i) such Holder   
shall have previously given to the Trustee written notice of a continuing Event 
of Default and unless also the Holders of at least 25% in aggregate principal   
amount of the Outstanding Notes shall have made written request to the Trustee  
to institute proceedings, (ii) such Holder has offered to the Trustee reasonable
indemnity, (iii) the Trustee for 60 days after receipt of such notice has failed
to institute any such proceeding and (iv) no direction inconsistent with such   
request shall have been given to the Trustee during such 60-day period by the   
Holders of a majority in principal amount of the Outstanding Notes. (Section    
7.06) However, such limitations do not apply to a suit instituted by a Holder of
a                                                                               

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Note for enforcement of (a) payment of the principal of and premium, if any, or 
interest on such Note on or after the respective due dates expressed in such    
Note, (b) the right to require repurchase of such Note or (c) the right to      
convert such Note in accordance with the Indenture. (Section 7.07)              

     The Indenture provides that the Company will deliver to the Trustee, within
95 days after the end of each fiscal year, an officers' certificate, stating as 
to each signer thereof that he or she is familiar with the affairs of the       
Company and whether or not to his or her knowledge the Company is in default in 
the performance and observance of any of the Company's obligations under the    
Indenture and if the Company shall be in default, specifying all such defaults  
of which he or she has knowledge and the nature and status thereof. (Section    
6.04)                                                                           

CONSOLIDATION, MERGER AND SALE OF ASSETS                                        

   The Company, without the consent of the Holders of any of the Notes under
the Indenture, may consolidate with or merge into any other Person or convey,   
transfer or lease its assets substantially as an entirety to any Person,        
provided that (i) the successor is a Person organized under the laws of any     
domestic jurisdiction; (ii) the successor Person, if other than the Company,    
assumes the Company's obligations on the Notes and under the Indenture; (iii)   
after giving effect to the transaction no Event of Default, and no event after  
notice or lapse of time, would become an Event of Default, shall have occurred  
and be continuing; (iv) the Company or the surviving person (if other than the  
Company) (A) will have Consolidated Net Worth (immediately after the transaction
but prior to any purchase accounting adjustments resulting from the transaction)
greater than or equal to the Consolidated Net Worth of the Company immediately  
preceding the transaction and (B) will, at the time of such transaction after   
giving pro forma effect thereto as if such transaction had occurred at the      
beginning of the applicable four-quarter period, be permitted to incur at least 
$1.00 of additional Indebtedness pursuant to Section 6.12 of the Indenture and  
(v) the Company has delivered to the Trustee an Officers' Certificate and an    
Opinion of Counsel, each stating that such consolidation, merger, conveyance,   
transfer or lease and, if a supplemental indenture is required in connection    
with such transaction, such supplemental indenture, complies with this covenant 
and that all conditions precedent herein provided for relating to such          
transaction have been complied with. (Section 12.01)                            

    "Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective      
amounts reported on such Person's balance sheet as of such date with respect to 
any series of preferred stock (other than Disqualified Capital Stock).          

MODIFICATION AND WAIVER                                                         

  Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of 66 2/3% in aggregate         
principal amount of the Outstanding Notes; provided, however, that no such      
modification or amendment may, without consent of the Holder of each Outstanding
Note affected thereby, (i) change the stated maturity of the principal of, or   
any installment of interest on any Note; (ii) reduce the principal amount of, or
the premium or interest on any Note; (iii) change the place of payment where, or
currency in which, any Note or any premium or interest thereof is payable; (iv) 
impair the right to institute suit for the enforcement of any payment on or with
respect to any Note; (v) adversely affect the right to convert the Notes; (vi)  
adversely affect the right to cause the Company to repurchase the Notes; (vii)  
modify the subordination provisions in a manner adverse to the Holders of the   
Notes; (viii) reduce the above-stated percentage of Outstanding Notes necessary 
to modify or amend the Indenture; or (ix) reduce the percentage of aggregate    
principal amount of Outstanding Notes necessary for waiver of compliance with   
certain provisions of the Indenture or for waiver of certain defaults. (Section 
11.02)                                                                          

The Holders of a majority in aggregate principal amount of Outstanding
Notes may waive compliance by the Company with certain restrictive provisions of
the Indenture. (Section 7.04) The Holders of a majority in aggregate principal  
amount of the Outstanding Notes may waive any past default or right under the   
Indenture, except (i) a default in payment of principal, premium or interest,   
(ii) the right of a Holder to redeem or convert the Note or (iii) with respect  
to any covenant or provision of the Indenture that requires the consent of the  
Holder of each Outstanding Note affected. (Section 7.04)                        

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REPURCHASE AT OPTION OF HOLDERS UPON A REPURCHASE EVENT                         

The Indenture provides that if a Repurchase Event occurs after initial
issuance of the Notes, each Holder of the Notes shall have the right (which     
right may not be waived by the Board of Directors or the Trustee) at the        
Holder's option, to require the Company to repurchase all of such Holder's      
Notes, or any portion thereof that is an integral multiple of $1,000, on the    
date (the "Repurchase Date") that is 45 calendar days after the date of the     
Company Notice (as defined below), for cash at a price equal to 100% of the     
principal amount of such Notes to be repurchased (the "Repurchase Price"),      
together with accrued interest to the Repurchase Date. (Section 6.09)           

 Within 15 calendar days after the occurrence of a Repurchase Event, the
Company is obligated to mail all Holders of record of the Notes a notice (the   
"Company Notice") of the occurrence of such Repurchase Event and of the         
repurchase right arising thereof. The Company must deliver a copy of the Company
Notice to the Trustee. To exercise the repurchase right, the Holder of such Note
must deliver on or before the fifth day preceding the Repurchase Date           
irrevocable written notice to the Trustee of the Holder's exercise of such right
(except that the right of the Holders to convert such Notes shall continue until
the close of business on the last Trading Day preceding the Repurchase Date),   
together with the Notes with respect to which the right is being exercised, duly
endorsed for transfer to the Company. (Section 6.09)                            

A Repurchase Event will be deemed to have occurred at such time after 
initial issuance of the Notes if:                                               

   (i) any Person (including any syndicate or group deemed to be a
"Person" under Section 13(d)(3)of the Exchange Act), other than the   
Company, any subsidiary of the Company, any existing Person (including
directly or indirectly, the immediate family of any such Person) who  
     currently beneficially owns shares of capital stock with 50% or more of the
voting power as described below, or any current or future employee or 
  director benefit plan of the Company or any subsidiary of the Company or
any entity holding capital stock of the Company for or pursuant to the
terms of such plan, or an underwriter engaged in a firm commitment    
   underwriting in connection with a public offering of capital stock of the
Company, is or becomes the beneficial owner, directly or indirectly,  
  through a purchase, merger or other acquisition transaction or series of
transactions of shares of capital stock of the Company entitling such 
   Person to exercise 50% or more of the total voting power of all shares of
    capital stock of the Company entitled to vote generally in the election of
directors;                                                            

       (ii) the Company sells or transfers all or substantially all of the
assets of the Company to another Person;                              

          (iii) there occurs any consolidation of the Company with, or merger of
   the Company into, any other Person, any merger of another Person into the
Company (other than a merger (a) which does not result in any         
reclassification, conversion, exchange or cancellation of outstanding 
shares of Common Stock, (b) which is effected solely to change the    
jurisdiction of incorporation of the Company and results in a         
  reclassification, conversion or exchange of outstanding shares of Common
     Stock solely into shares of Common Stock, or (c) a transaction in which the
  stockholders of the Company immediately prior to such transaction owned,
    directly or indirectly, immediately following such transaction, at least a
  majority of the combined voting power of the outstanding voting stock of
    the Company resulting from the transaction, such stock to be owned by such
     stockholders in substantially the same proportion as their ownership of the
voting stock of the Company immediately prior to such transaction);   

       (iv) a change in the Board of Directors of the Company in which the
  individuals who constituted the Board of Directors of the Company at the
beginning of the 24-month period immediately preceding such change    
    (together with any other director whose election by the Board of Directors
    of the Company or whose nomination for election by the stockholders of the
     Company was approved by a vote of at least a majority of the directors then
in office either who were directors at the beginning of such period or
     whose election or nomination for election was previously so approved) cease
     for any reason to constitute a majority of the directors then in office; or

       (v) the Common Stock of the Company is the subject of a "Rule 13e-3
transaction" as defined under the Exchange Act.                       

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provided, however, that a Repurchase Event shall not be deemed to have occurred 
if the closing price per share of the Common Stock for any five Trading Days    
within the period of ten consecutive Trading Days ending immediately before a   
Repurchase Event shall equal or exceed 110% of the Conversion Price of such     
Notes in effect on each such Trading Day. A "beneficial owner" shall be         
determined in accordance with Rule 13d-3 promulgated by the Commission under the
Exchange Act, as in effect on the date of execution of the Indenture. (Sections 
1.01 and 6.09)                                                                  

     The right to require the Company to repurchase the Notes as a result of the
occurrence of a Repurchase Event could create an event of default under Senior  
Indebtedness as a result of which any repurchase could, absent a waiver, be     
blocked by the subordination provisions of the Notes. See "Subordination" above.
Failure of the Company to repurchase the Notes when required would result in an 
Event of Default with respect to the Notes whether or not such repurchase is    
permitted by the subordination provisions. The Company's ability to pay cash to 
the Holders of Notes upon a repurchase may be limited by certain financial      
covenants contained in the Company's credit agreement.                          

Rule 13e-4 under the Exchange Act requires, among other things, the   
dissemination of certain information to security holders in the event of any    
issuer tender offer and may apply in the event that the repurchase option       
becomes available to the Holders of the Notes. The Company will comply with this
rule to the extent applicable at that time. (Section 6.09)                      

    The repurchase feature of the Notes may in certain circumstances make more
difficult or discourage a takeover of the Company and the removal of incumbent  
management. The foregoing provisions would not necessarily afford Holders of the
Notes protection in the event of highly leveraged or other transactions         
involving the Company that may adversely affect Holders.                        

     Except as described above with respect to a Repurchase Event, the Indenture
does not contain provisions permitting the Holders of the Notes to require the  
Company to repurchase or redeem the Notes in the event of a takeover,           
recapitalization or similar transaction. Subject to the limitation on mergers   
and consolidations described above, the Company, its management or its          
subsidiaries could, in the future, enter into certain transactions, including   
refinancing, certain recapitalizations, acquisitions, the sale of all or        
substantially all of its assets, the liquidation of the Company or similar      
transactions, that would not constitute a Repurchase Event under the Indenture, 
but that would increase the amount of Senior Indebtedness (or any other         
indebtedness) outstanding at such time or substantially reduce or eliminate the 
Company's assets. There are certain restrictions in the Indenture on the        
creation of Senior Indebtedness (and other Indebtedness), however, under certain
circumstances, the incurrence of significant amounts of additional indebtedness 
could have an adverse effect on the Company's ability to service its            
indebtedness, including the Notes.                                              

     If a Repurchase Event were to occur, there is no assurance that the Company
would have sufficient funds to repurchase all Notes tendered by the Holders     
thereof or to make any principal, premium, if any, or interest payments         
otherwise required by the Notes. At September 30, 1996, the Company had         
outstanding approximately $21.4 million principal amount of indebtedness under  
its existing credit agreement which could be accelerated upon the occurrence of 
certain change of control events.                                               

     As noted above, one of the events that constitutes a Repurchase Event under
the Indenture is a sale or other transfer of all or substantially all of the    
assets of the Company. The Indenture will be governed by New York law, and the  
definition under New York law of "substantially all" of the assets of a         
corporation varies according to the facts and circumstances of the transaction. 
Accordingly, if the Company were to engage in a transaction in which it disposed
of less than all of its assets, a question of interpretation could arise as to  
whether such disposition was of "substantially all" of its assets and whether   
the transaction was a Repurchase Event.                                         

SATISFACTION AND DISCHARGE                                                      

   The Company may, subject to certain conditions, discharge its obligations
under the Indenture while the Notes remain outstanding if (i) all outstanding   
Notes will become due and payable at their scheduled maturity within one year or
(ii) all outstanding Notes are scheduled for redemption within one year, and, in

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either case, the Company has deposited with the Trustee an amount sufficient to 
pay and discharge all outstanding Notes on the date of their scheduled maturity 
or the scheduled date of redemption. (Section 13.01)                            

REPORTS                                                                         

In addition to complying with any applicable legal requirements, the  
Company will deliver to the Holders of record, and to any beneficial owners so  
requesting, annual reports containing audited consolidated financial statements 
with a report thereon by the Company's independent public accountants. (Section 
8.06)                                                                           

GOVERNING LAW                                                                   

     The Indenture and the Notes will be governed by and construed in accordance
with the laws of the State of New York.                                         

INFORMATION CONCERNING THE TRUSTEE                                              

Continental Stock Transfer & Trust Company is the Trustee under the   
Indenture. A successor Trustee may be appointed in accordance with the terms of 
the Indenture.                                                                  

   The Trustee's duties are set forth in the Trust Indenture Act, as amended
(the "Trust Indenture Act"), and in the Indenture. The Trust Indenture Act      
imposes certain limitations on the right of the Trustee, in the event it becomes
a creditor of the Company, to obtain payment of claims in certain cases, or to  
realize on certain property received in respect to any such claim as security or
otherwise. The Trustee will be permitted to engage in other transactions;       
provided, however, it if acquires any conflicting interest within the meaning of
Section 310 of the Trust Indenture Act, it must generally either eliminate such 
conflict or resign.                                                             

  Prior to an Event of Default, the Trustee is responsible to perform only
such duties as are specifically set out in the Indenture. In case an Event of   
Default shall occur (and shall not be cured), the Trust Indenture Act required  
that the Trustee use the degree of care of a prudent person in the conduct of   
its own affairs in the exercise of its powers. Subject to such provisions, the  
Trustee will be under no obligation to exercise any of its rights or powers     
under the Indenture at the request of any of the Holders of Notes, unless they  
shall have offered to the Trustee reasonable indemnity. (Section 8.01)          

     The holders of a majority in principal amount of all outstanding Notes will
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy or power available to the Trustee, provided that such 
direction does not conflict with any rule of law or with the Indenture, is not  
prejudicial to the rights of another Holder or the Trustee, and does not involve
the Trustee in personal liability. (Sections 7.05 and 8.01)                     

The Trustee is also the trustee for the Company's 9% Convertible      
Subordinated Debentures due 2005 and 9 1/2% Subordinated Debentures due 2012.   

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DESCRIPTION OF CAPITAL STOCK

COMMON STOCK                                                                    

The shares of Common Stock are entitled to one vote per share on all  
matters submitted to stockholders. The holders of Common Stock are entitled to  
vote separately as a class (as are the shares of Class B Stock) on all matters  
requiring an amendment to the Company's Certificate of Incorporation, as well as
on mergers, consolidations and certain other significant transactions for which 
stockholder approval is required under Delaware law. Holders of the Common Stock
do not have preemptive rights or cumulative voting rights.                      

Dividends on the Common Stock will be paid if, and when declared. The 
Common Stock is entitled to cash dividends which are 11.1% higher per share than
the cash dividends which may be paid on the Class B Stock. Except as otherwise  
set forth herein the Common Stock and the Class B Stock rank equally. Stock     
dividends on and stock splits of Common Stock will only be payable or made in   
shares of Common Stock.                                                         

 In the event of liquidation the Common Stock is entitled to receive the
entire net assets of the Company remaining after payment of all debts and other 
claims of creditors and after the holders of each series of Preferred Stock, if 
any, have been paid the preferred liquidating distribution on their shares, if  
any, as fixed by the Board of Directors of the Company. The Common Stock is not 
convertible into shares of any other equity security of the Company.            

  The Common Stock is freely transferable. As of September 30, 1996, there
were 847 holders of record of Common Stock.                                     

CLASS B STOCK                                                                   

The shares of Class B Stock are entitled to ten votes per share on all
matters submitted to stockholders. They are entitled to vote separately as a    
class (as are the shares of Common Stock) on all matters requiring an amendment 
to the Company's Certificate of Incorporation, as well as on mergers,           
consolidations and certain other significant transactions for which stockholder 
approval is required under Delaware law. Holders of the Class B Stock do not    
have preemptive rights or cumulative voting rights.                             

   Dividends on the Class B Stock will be paid only as and when dividends on
the Common Stock are declared and paid. The Class B Stock is entitled to cash   
dividends which are 10% lower per share than the cash dividends which may be    
paid on the Common Stock. Except as otherwise set forth herein the Common Stock 
and the Class B Stock rank equally. Stock dividends on and stock splits of Class
B Stock will only be payable or made in shares of Class B Stock.                

     In the event of liquidation or insolvency, each share of Class B Stock will
be entitled, through conversion into Common Stock, to share ratably with the    
Common Stock in the assets remaining after payment of all debts and other claims
of creditors, subject to the rights of any Preferred Stock which may be issued  
in the future.                                                                  

 Holders of Class B Stock may elect at any time to convert any or all of
such shares into shares of Common Stock on a share-for-share basis. In the event
that the number of outstanding shares of Class B Stock falls below 5% of the    
aggregate number of issued and outstanding shares of Common Stock and Class B   
Stock, or the Board of Directors and a majority of the outstanding shares of    
Class B Stock approve the conversion of all of the Class B Stock into Common    
Stock, then immediately upon the occurrence of either event, the shares of the  
Class B Stock will automatically be converted into shares of Common Stock. In   
the event of such conversion, certificates formerly representing outstanding    
shares of Class B Stock will thereafter be deemed to represent a like number of 
shares of Common Stock.                                                         

    The Class B Stock is not transferable except to certain family members and
related entities. As of September 30, 1996 there were 68 holders of Class B     
Stock.                                                                          

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CLASS A STOCK                                                                   

Each share of Class A Stock has no voting rights except as otherwise  
required by law. Under the Delaware General Corporation Law, holders of Class A 
Stock are entitled to vote on proposals to increase or decrease the number of   
authorized shares of Class A Stock, change the par value of the Class A Stock or
to alter or change the powers, preferences or special rights of the shares of   
Class A Stock which may affect them adversely.                                  

Each outstanding share of Class A Stock is entitled to receive such   
dividends and other distributions in cash, stock or property as may be declared 
by the Board of Directors of the Company, provided that, if at any time a cash  
dividend is paid on the Common Stock, a cash dividend will also be paid on the  
Class A Stock in an amount 10% higher than the amount per share paid on the     
Common Stock and 22.2% higher than that paid on the Class B Stock. In no event  
shall dividends and other distributions be paid on any of the Common Stock,     
Class A Stock or Class B Stock unless the other such classes of stock also      
receive dividends subject to the above provisions for the requirement of the    
respective higher cash dividends for Class A Stock and Common Stock. Dividends  
or other distributions payable in shares of stock shall be made to holders of   
Class A Stock in shares of Class A Stock. The Board can authorize a distribution
of Class A Stock proportionately to holders of Common Stock, Class A Stock and  
Class B Stock. In no event will either Common Stock, Class A Stock or Class B   
Stock be split, divided or combined unless the others are also proportionately  
split, divided or combined.                                                     

   The Class A Stock will convert into Common Stock only at such time as all
of the Class B Stock is converted to Common Stock in accordance with the terms  
of the Certificate of Incorporation. The Certificate of Incorporation provides  
that if the number of shares of Class B Stock falls below 5% of the aggregate   
number of outstanding shares of Common Stock and Class B Stock, or if the Board 
of Directors and a majority of the outstanding shares of Class B Stock approve, 
the outstanding shares of Class B Stock will be converted into Common Stock.    

    Consistent with the terms of the Common Stock and Class B Stock, the Class
A Stock does not carry any preemptive rights enabling a holder to subscribe for 
or receive shares of any class of stock of the Company or any other securities  
convertible into shares of any class of stock of the Company.                   

   The Class A Stock is entitled to receive the same consideration per share
as the Common Stock and Class B Stock in the event of any liquidation,          
dissolution or winding-up of the Company.                                       

Each holder of Class A Stock is entitled to receive the same per share
consideration as the per share consideration, if any, received by any holder of 
the Common Stock and Class B Stock in a merger or consolidation of the Company. 

SPECIAL VOTING REQUIREMENTS                                                     

The Company's Certificate of Incorporation, as presently in effect,   
contains a required four-fifths vote on mergers, consolidations or a sale of    
substantially all of the Company's assets with an "Interested Person," i.e. a   
holder of 10% or more of its common stock, unless such transaction is first     
approved by the Company's Board of Directors. It also contains a "fair price"   
provision requiring all stockholders to receive equal treatment in the event of 
a takeover which may be coercive. Such provision may not be amended except by a 
four-fifths vote of the stockholders and may be considered to have the effect of
discouraging tender offers, takeover attempts, acquisitions or business         
combinations involving the Company. Such provision also requires that business  
combinations involving the Company and certain "Acquiring Persons" (i.e., a     
person or entity which directly or indirectly owns or controls at least 5% of   
the voting stock of the Company) be approved by the holders of four-fifths of   
the Company's outstanding shares entitled to vote (excluding shares held by the 
Acquiring Person) unless such business combination either (1) has been          
authorized by the Board of Directors prior to the time that the Acquiring Person
involved in such business combination became an Acquiring Person, or (2) will   
result in the receipt by the other stockholders of a specified minimum amount   
and form of payment for their shares.                                           

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PREFERRED STOCK                                                                 

  Preferred stock may be issued in one or more series from time to time by
action of the Board of Directors. The shares of any series of Preferred Stock   
may be convertible into Common Stock, may have priority over the Common Stock,  
Class B Stock and Class A Stock in the payment of dividends and as to the       
distribution of assets in the event of liquidation, dissolution or winding-up of
the Company and may have preferential or other voting rights, in each case, to  
the extent, if any, determined by the Board of Directors of the Company at the  
time it creates the series of Preferred Stock. There currently are no shares of 
Preferred Stock outstanding.                                                    

DELAWARE ANTI-TAKEOVER LAW                                                      

  Under Section 203 of the Delaware General Corporation Law (the "Delaware
anti-takeover law"), certain "business combinations" between a Delaware         
corporation whose stock is listed on a national securities exchange or held of  
record by more than 2,000 stockholders, and an "interested stockholder" are     
prohibited for a three-year period following the date that such stockholder     
became an interested stockholder, unless (i) the corporation has elected in its 
certificate of incorporation or bylaws not to be governed by the Delaware       
anti-takeover law (the Company has not made such an election), (ii) the business
combination was approved by the board of directors of the corporation before the
other party to the business combination became an interested stockholder, (iii) 
upon consummation of the transaction that made it an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the commencement of the transaction (excluding voting stock owned
by directors who are also officers or held in employee stock plans in which the 
employees do not have a right to determine confidentially whether to tender or  
vote stock held by the plan), or (iv) the business combination was approved by  
the board of directors of the corporation and ratified by 66 2/3% of the voting 
stock which the interested stockholder did not own. The three year prohibition  
does not apply to certain business combinations proposed by an interested       
stockholder following the announcement or notification of certain extraordinary 
transactions involving the corporation and a person who had not been an         
interested stockholder during the previous three years or who became an         
interested stockholder with the approval of a majority of the corporation's     
directors. The term "business combination" is defined generally to include      
mergers or consolidations between a Delaware corporation and an interested      
stockholder, transactions with an interested stockholder involving the assets or
stock of the corporation or its majority-owned subsidiaries and transactions    
which increase an interested stockholder's percentage ownership of stock. The   
term "interested stockholder" is defined generally as a stockholder who becomes 
the beneficial owner of 15% or more of a Delaware corporation's voting stock.   
The Delaware anti-takeover law could have the effect of delaying, deferring or  
preventing a change in control of the Company.                                  

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS                             

   The Company's Certificate of Incorporation provides that directors of the
Company shall not be personally liable to the Company or its stockholders for   
monetary damages for breach of fiduciary duty as a director, except for         
liability (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve 
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law, relating to prohibited dividends or       
distributions or the repurchase or redemption of stock, or (iv) for any         
transaction from which the director derives an improper personal benefit. The   
provision does not apply to claims against a director for violations of certain 
laws, including federal securities law. If the Delaware General Corporation Law 
is amended to authorize the further elimination or limitation of directors'     
liability, then the liability of directors of the Company shall automatically be
limited to the fullest extent provided by law. The Company's By-laws also       
contain provisions to indemnify the directors, officers, employees or other     
agents to the fullest extent permitted by the Delaware General Corporation Law. 
In addition, the Company has entered into indemnification agreements with its   
current directors and executive officers. These provisions and agreements may   
have the practical effect in certain cases of eliminating the ability of        
stockholders to collect monetary damages from directors. The Company believes   
that these contractual agreements and the provisions in its Certificate of      
Incorporation and By-laws are necessary to attract and retain qualified persons 
as directors and officers.                                                      

TRANSFER AGENT AND REGISTRAR                                                    

The transfer agent and registrar of the Common Stock of the Company is
Continental Stock Transfer & Trust Company, 2 Broadway, New York, New York      
10004.                                                                          

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UNDERWRITING

   The Underwriter, Southcoast Capital, has agreed, subject to the terms and
conditions of the Underwriting Agreement, to purchase from the Company          
$27,500,000 principal amount of the Notes. The Underwriting Agreement provides  
that the obligations of the Underwriter to pay for and accept delivery of the   
Notes are subject to certain conditions precedent, and that the Underwriter is  
committed to purchase all of the Notes if it purchase any of the Notes.         

     The Underwriter has advised the Company that it proposes initially to offer
the Notes to the public on the terms set forth on the cover page of this        
Prospectus. The Underwriter may allow selected dealers a concession of not more 
than 2.25% of the principal amount of the Notes, and the Underwriter may allow, 
and such dealers may reallow, a discount of not more than 0.5% of the principal 
amount of the Notes to other dealers. The public offering price and the         
concession and discount to dealers may be changed by the Underwriter after the  
initial public offering of the Notes. The Notes are offered subject to receipt  
and acceptance by the Underwriter, and to certain other conditions, including   
the right to reject orders in whole or in part.                                 

   The Company has granted the Underwriter an option for 30 days to purchase
up to an additional $4,125,000 principal amount of the Notes solely to cover    
over-allotments, if any, at the same price per Note as the initial principal    
amount of the Notes to be purchased by the Underwriter.                         

 The Underwriting Agreement provides that the Company will indemnify the
Underwriter against certain liabilities, including civil liabilities under the  
Securities Act of 1933, as amended (the "Securities Act"), or will contribute to
payments the Underwriter may be required to make in respect thereof.            

 The Notes are a new issue of securities for which there is currently no
public market. The Notes have been approved for inclusion on the AMEX upon      
notice of issuance. However, no assurance can be given as to the liquidity of or
trading market for the Notes.                                                   

   Directors and executive officers of the Company, who in the aggregate own
approximately 288,590 shares (including options to purchase shares) of Common   
Stock (including Class B Stock if converted into equal amounts of Common Stock),
have agreed not to offer for sale, sell, distribute or otherwise dispose of any 
shares of Common Stock, or any securities convertible into or warrants to       
purchase shares of Common Stock, now owed or hereafter acquired for a period of 
90 days after the date of this Prospectus without prior written consent of      
Southcoast Capital.                                                             

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LEGAL MATTERS 

   The legality of the Notes and the Common Stock offered hereby and certain
other legal matters will be passed upon for the Company by Weisman Celler Spett 
& Modlin, P.C., New York, New York. Certain legal matters in connection with the
offering contemplated hereby will be passed upon for the Underwriter by         
Fulbright & Jaworski L.L.P., New York, New York. As of June 30, 1996, members of
the firm of Weisman Celler Spett & Modlin, P.C. beneficially owned 2,812 shares 
of the Class B Stock of the Company. Howard S. Modlin, a member of such firm, is
a director of the Company.                                                      

EXPERTS 

   The financial statements as of December 31, 1995 and 1994 and for each of
the three years in the period ended December 31, 1995 of the Company included   
and incorporated by reference in this Prospectus from the Company's Annual      
Report on Form 10-K for the year ended December 31, 1995 have been audited by   
Deloitte & Touche LLP, independent auditors, as stated in their report which is 
included and incorporated by reference herein, and have been so included and    
incorporated in reliance upon the reports of such firm given upon their         
authority as experts in accounting and auditing.                                

AVAILABLE INFORMATION 

    The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 the ("Exchange Act") and, in accordance therewith, files   
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other         
information filed by the Company can be inspected and copied at the public      
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549; and at the Commission's regional
offices located at Northwestern Atrium Center, Suite 1400, 500 West Madison     
Street, Chicago, Illinois 60661; and Seven World Trade Center, 13th Floor, New  
York, New York 10048. Copies of such material can be obtained at prescribed     
rates by writing the Public Reference Section of the Commission, Judiciary      
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also      
maintains a web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the       
Commission, including the Company at http://www.sec.gov. The Common Stock is    
listed on the AMEX and reports, proxy statements and other information          
concerning the Company can be inspected at such Exchange's office located at 86 
Trinity Place, New York, New York 10006.                                        

This Prospectus forms a part of a registration statement on Form S-2  
(herein, together with all exhibits thereto, referred to as the "Registration   
Statement") filed by the Company with the Commission under the Securities Act of
1933 (the "Securities Act") with respect to the Notes offered hereby. This      
Prospectus does not contain all the information set forth in the Registration   
Statement, certain parts of which have been omitted in accordance with the rules
and regulations of the Commission. Statements contained herein concerning the   
provisions of certain documents are not necessarily complete and, in each       
instance, reference is made to the copy of such document filed as an exhibit to 
the Registration Statement or otherwise filed with the Commission. Each such    
statement is qualified in its entirety by such reference. The Registration      
Statement and the exhibits thereto can be inspected and copied at the public    
reference facilities and regional offices referred to above.                    

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 

The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act (File No. 1-2257), are hereby           
incorporated by reference in and made a part of this Prospectus:                

          (1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, (filed April 1, 1996).                             

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     (2) The Company's Quarterly Reports on Form 10-Q for the quarters
    ended March 31, 1996, June 30, 1996, and September 30, 1996 (filed May 14,
1996, August 14, 1996, and November 12, 1996 respectively).           

Any statement contained in a document incorporated or deemed to be    
incorporated herein by reference shall be deemed to be modified or superseded   
for the purposes of this Prospectus to the extent that a statement contained    
herein modifies or supersedes such statement. Any statement so modified or      
superseded shall not be deemed, except as so modified or superseded, to         
constitute a part of this Prospectus.                                           

     The Company will provide without charge to each person to whom a Prospectus
is delivered, upon the written or oral request of any such person, a copy of any
of or all the documents referred to above which have been or may be incorporated
in this Prospectus by reference, other than exhibits to such documents which are
not specifically incorporated by reference into such documents. Requests for    
such copies should be directed to Angela Toppi, Chief Financial Officer,        
Trans-Lux Corporation, 110 Richards Avenue, Norwalk, Connecticut 06856-5090,    
telephone number (203) 853-4321.                                                

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TRANS-LUX CORPORATION 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                        [Enlarge/Download Table]

                                                                                        PAGE
                                                                                        ----
                                                                                            
Independent Auditors' Report..........................................................   F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995..........................   F-3
Consolidated Statements of Income for the years ended December 31, 1993, 1994 and           
  1995................................................................................   F-4
Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994 and       
  1995................................................................................   F-5
Notes to Consolidated Financial Statements............................................   F-6
Consolidated Balance Sheets as of December 31, 1995 and September 30, 1996                  
  (Unaudited).........................................................................  F-20
Consolidated Statements of Income for the nine months ended September 30, 1995 and          
  1996 (Unaudited)....................................................................  F-21
Consolidated Statements of Cash Flows for the nine months ended September 30, 1995 and      
  1996                                                                                      
  (Unaudited).........................................................................  F-22
Notes to Consolidated Financial Statements (Unaudited)................................  F-23

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INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of                                   
Trans-Lux Corporation:                                                          

   We have audited the accompanying consolidated balance sheets of Trans-Lux
Corporation and subsidiaries as of December 31, 1995 and 1994 and the related   
consolidated statements of income and cash flows for each of the three years in 
the period ended December 31, 1995. These consolidated financial statements are 
the responsibility of the Company'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 consolidated financial statements present fairly, in
all material respects, the financial position of the Company and its            
subsidiaries at December 31, 1995 and 1994 and the results of their operations  
and their cash flows for each of the three years in the period ended December   
31, 1995 in conformity with generally accepted accounting principles.           

Deloitte & Touche LLP                                                           

Stamford, Connecticut                                                           
February 28, 1996                                                               

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TRANS-LUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                                                    DECEMBER 31,         
                                                                             --------------------------- 
                                                                                1994            1995     
                                                                             -----------     ----------- 
                                                                                                         
ASSETS                                                                                                   
  Current assets:                                                                                        
    Cash and cash equivalents............................................... $ 2,335,000     $   665,000 
    Available-for-sale securities...........................................   1,603,000         576,000 
    Receivables.............................................................   1,403,000       2,403,000 
    Inventories.............................................................     517,000       1,900,000 
    Prepaids and other current assets.......................................     104,000         466,000 
    Current deferred taxes..................................................     192,000              -- 
                                                                             -----------     ----------- 
         Total current assets...............................................   6,154,000       6,010,000 
                                                                             -----------     ----------- 
  Rental equipment..........................................................  43,807,000      47,043,000 
    Less accumulated depreciation...........................................  14,154,000      16,265,000 
                                                                             -----------     ----------- 
                                                                              29,653,000      30,778,000 
                                                                             -----------     ----------- 
  Property, plant and equipment.............................................  18,313,000      20,913,000 
    Less accumulated depreciation and amortization..........................   5,070,000       5,921,000 
                                                                             -----------     ----------- 
                                                                              13,243,000      14,992,000 
  Prepaids, intangibles and other...........................................   2,295,000       4,081,000 
  Maintenance contracts, net................................................   1,962,000       1,599,000 
                                                                             -----------     ----------- 
                                                                             $53,307,000     $57,460,000 
                                                                             ===========     =========== 
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                     
  Current liabilities:                                                                                   
    Accounts payable and accruals........................................... $ 5,379,000     $ 4,804,000 
    Income taxes payable....................................................     198,000         136,000 
    Short-term borrowings...................................................          --         500,000 
    Current portion of long-term debt.......................................   2,660,000       1,804,000 
                                                                             -----------     ----------- 
         Total current liabilities..........................................   8,237,000       7,244,000 
                                                                             -----------     ----------- 
  Long-term debt:                                                                                        
    9% convertible subordinated debentures due 2005.........................   4,874,000       4,874,000 
    9 1/2% subordinated debentures due 2012.................................   1,057,000       1,057,000 
    Notes payable...........................................................  13,762,000      16,564,000 
                                                                             -----------     ----------- 
                                                                              19,693,000      22,495,000 
  Deferred revenue and deposits.............................................   1,550,000       2,621,000 
  Deferred income taxes.....................................................   3,282,000       3,600,000 
  Minority interest.........................................................      21,000           1,000 
                                                                             -----------     ----------- 
  Stockholders' equity:                                                                                  
    Capital stock                                                                                        
    Preferred -- $1 par value -- 500,000 shares authorized..................                             
    Common -- $1 par value -- 4,000,000 shares authorized                                                
      2,435,046 shares issued in 1994 and 2,436,268 in 1995.................   2,435,000       2,436,000 
    Class B -- $1 par value -- 2,000,000 shares authorized                                               
      305,359 shares issued in 1994 and 304,137 in 1995.....................     305,000         304,000 
    Additional paid-in capital..............................................  13,809,000      13,806,000 
    Retained earnings.......................................................  15,993,000      16,888,000 
    Other...................................................................    (107,000)        (71,000)
                                                                             -----------     ----------- 
                                                                              32,435,000      33,363,000 
  Less treasury stock -- at cost -- 1,492,581 shares in 1994 and 1,488,837                               
    in 1995 (excludes additional 305,359 shares held in 1994 and 304,137 in                              
    1995 for conversion of Class B stock)...................................  11,911,000      11,864,000 
                                                                             -----------     ----------- 
         Total stockholders' equity.........................................  20,524,000      21,499,000 
                                                                             -----------     ----------- 
                                                                             $53,307,000     $57,460,000 
                                                                             ===========     =========== 

The accompanying notes are an integral part of these consolidated financial 
statements. 

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TRANS-LUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME 

                                                        [Enlarge/Download Table]

                                                              YEARS ENDED DECEMBER 31,           
                                                     ------------------------------------------- 
                                                        1993            1994            1995     
                                                     -----------     -----------     ----------- 
                                                                                                 
GROSS REVENUES:                                                                                  
  Equipment rentals and maintenance................. $20,824,000     $21,652,000     $21,205,000 
  Equipment sales...................................  11,806,000       8,498,000      12,364,000 
  Theatre receipts and other........................   3,169,000       3,592,000       4,222,000 
                                                     -----------     -----------     ----------- 
                                                      35,799,000      33,742,000      37,791,000 
                                                     -----------     -----------     ----------- 
OPERATING EXPENSES:                                                                              
  Cost of equipment rentals and maintenance.........  11,249,000      11,929,000      11,358,000 
  Cost of equipment sales...........................   7,648,000       4,620,000       7,863,000 
  Cost of theatre receipts and other................   2,657,000       2,864,000       3,185,000 
                                                     -----------     -----------     ----------- 
                                                      21,554,000      19,413,000      22,406,000 
                                                     -----------     -----------     ----------- 
GROSS PROFIT FROM OPERATIONS........................  14,245,000      14,329,000      15,385,000 
General and administrative expenses.................  10,202,000      11,023,000      11,494,000 
                                                     -----------     -----------     ----------- 
                                                       4,043,000       3,306,000       3,891,000 
Interest income.....................................     223,000         204,000         147,000 
Interest expense....................................  (2,603,000)     (1,446,000)     (2,291,000)
Other income........................................          --              --          92,000 
                                                     -----------     -----------     ----------- 
INCOME BEFORE INCOME TAXES..........................   1,663,000       2,064,000       1,839,000 
                                                     -----------     -----------     ----------- 
Provision for income taxes:                                                                      
  Current...........................................     231,000         407,000         576,000 
  Deferred..........................................     943,000         343,000         197,000 
                                                     -----------     -----------     ----------- 
                                                       1,174,000         750,000         773,000 
                                                     -----------     -----------     ----------- 
NET INCOME.......................................... $   489,000     $ 1,314,000     $ 1,066,000 
                                                     ===========     ===========     =========== 
Earnings per share:                                                                              
  Primary........................................... $      0.39     $      1.04     $      0.85 
  Fully diluted.....................................           *     $      0.94     $      0.81 
Average common and common equivalent shares                                                      
  outstanding:                                                                                   
  Primary...........................................   1,249,000       1,260,000       1,259,000 
  Fully diluted.....................................          --       1,943,000       1,643,000 

---------------                                                                 
* not dilutive                                                                  

The accompanying notes are an integral part of these consolidated financial 
statements. 

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TRANS-LUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                              YEARS ENDED DECEMBER 31,           
                                                     ------------------------------------------- 
                                                        1993            1994            1995     
                                                     -----------     -----------     ----------- 
                                                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES                                                             
Net income.......................................... $   489,000     $ 1,314,000     $ 1,066,000 
Adjustment to reconcile net income to net cash                                                   
  provided by operating activities:                                                              
  Depreciation and amortization.....................   6,342,000       6,513,000       6,901,000 
  Deferred income taxes.............................   1,022,000        (188,000)        475,000 
  Current deferred taxes............................     (31,000)        230,000         192,000 
  Minority interest.................................          --          20,000         (20,000)
  Changes in operating assets and liabilities:                                                   
     Receivables....................................     454,000       1,062,000        (595,000)
     Inventories....................................      73,000          (3,000)       (361,000)
     Prepaids and other current assets..............     226,000          42,000        (309,000)
     Prepaids, intangibles and other................    (256,000)        (85,000)        (78,000)
     Accounts payable and accruals..................   1,409,000         370,000      (1,675,000)
     Income taxes payable...........................      96,000         (48,000)        (62,000)
     Deferred revenue and deposits..................  (2,315,000)      1,002,000       1,071,000 
                                                     -----------     -----------     ----------- 
       Net cash provided by operating activities....   7,509,000      10,229,000       6,605,000 
                                                     -----------     -----------     ----------- 
CASH FLOWS FROM INVESTING ACTIVITIES                                                             
Purchases of rental equipment.......................  (2,972,000)     (5,276,000)     (5,932,000)
Purchases of property, plant and equipment..........    (915,000)     (3,187,000)     (1,749,000)
Payments for acquisitions...........................  (3,274,000)             --      (3,178,000)
Proceeds from acquisition note receivable...........          --              --         658,000 
Sale of assets......................................          --          52,000         221,000 
Investment in joint venture.........................          --         (12,000)       (480,000)
Purchases of securities.............................  (1,110,000)     (3,470,000)       (494,000)
Proceeds from sales of securities...................   1,088,000       3,978,000       1,582,000 
                                                     -----------     -----------     ----------- 
       Net cash (used in) investing activities......  (7,183,000)     (7,915,000)     (9,372,000)
                                                     -----------     -----------     ----------- 
CASH FLOWS FROM FINANCING ACTIVITIES                                                             
Proceeds from long-term debt........................   2,400,000       4,308,000       4,379,000 
Repayment of long-term debt.........................  (2,604,000)     (2,163,000)     (3,655,000)
Proceeds from short-term borrowings.................          --              --         500,000 
Redemption of Company's 9% convertible subordinated                                              
  debentures........................................          --      (3,080,000)             -- 
Proceeds from exercise of stock options and stock                                                
  award.............................................          --              --          45,000 
Purchase of treasury stock..........................     (21,000)         (1,000)         (1,000)
Cash dividends......................................    (153,000)       (171,000)       (171,000)
                                                     -----------     -----------     ----------- 
       Net cash provided by (used in) financing                                                  
          activities................................    (378,000)     (1,107,000)      1,097,000 
                                                     -----------     -----------     ----------- 
Net increase (decrease) in cash and cash                                                         
  equivalents.......................................     (52,000)      1,207,000      (1,670,000)
Cash and cash equivalents at beginning of year......   1,180,000       1,128,000       2,335,000 
                                                     -----------     -----------     ----------- 
CASH AND CASH EQUIVALENTS AT END OF YEAR............ $ 1,128,000     $ 2,335,000     $   665,000 
                                                     ===========     ===========     =========== 
Interest paid....................................... $ 1,767,000     $ 2,135,000     $ 1,851,000 
Interest received...................................     228,000         214,000         176,000 
Income taxes paid...................................     140,000         756,000         661,000 

The accompanying notes are an integral part of these consolidated financial 
statements. 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                   

     Principles of consolidation:  The consolidated financial statements include
the accounts of Trans-Lux Corporation and its majority-owned subsidiaries (the  
"Company"). Investment in a 50% owned joint venture, MetroLux Theatres, is      
reflected under the equity method.                                              

     Cash equivalents:  The Company considers all highly liquid investments with
a maturity of three months or less when purchased to be cash equivalents.       

   Available-for-sale securities:  Available-for-sale securities consists of
U.S. Treasury Notes and common and preferred stock holdings and are stated at   
fair value.                                                                     

Inventories:  Inventories are stated at the lower of cost (first-in,  
first-out method) or market value.                                              

Rental equipment and property, plant and equipment:  These assets are 
stated at cost and are being depreciated over their respective useful lives     
using straight line or 150% declining balance methods. Leaseholds and           
improvements are amortized over the lesser of the useful life or term of the    
lease. The estimated useful lives are as follows:                               

                                                        [Enlarge/Download Table]
                                                                                     
Rental equipment......................................................  5 to 15 years
Buildings and improvements............................................ 10 to 45 years
Machinery, fixtures and theatre equipment.............................  4 to 15 years
Leaseholds and improvements...........................................  2 to 12 years

When rental equipment and property, plant and equipment are fully     
depreciated, retired or otherwise disposed of, the cost and accumulated         
depreciation are eliminated from the accounts.                                  

Maintenance contracts:  These assets are stated at cost and are being 
amortized over their economic lives of eight to 15 years using an accelerated   
method.                                                                         

   Revenue recognition:  Rental income from leasing of equipment and revenue
from maintenance contracts are recognized as they accrue during the term of the 
respective agreement. The Company recognizes revenues on long term equipment    
sales contracts, which require more than three months to complete, using the    
percentage of completion method. Income is recognized based on the percentage of
incurred costs to the estimated total costs. Revenue on equipment sales other   
than long term equipment sales contracts are recognized upon shipment. Theatre  
receipts and other revenues are recognized at the time service is provided.     

   Taxes on income:  Effective January 1, 1993 the Company adopted Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Under 
this Standard, deferred tax assets and liabilities are determined based on the  
difference between financial statement and tax basis of assets and liabilities  
using enacted tax rates in effect for the year in which the differences are     
expected to reverse.                                                            

Earnings per share:  Primary earnings per share of Common and Class B 
shares are based on the weighted average number of Common and Class B shares and
common stock equivalents outstanding computed by the "treasury stock" method.   
Fully diluted earnings per share assumes conversion of dilutive convertible     
debentures and the assumed exercise of all common stock equivalents.            

   Long-lived assets:  The Company will adopt the provisions of Statement of
Financial Accounting Standards No. 121 "Accounting for Impairment of Long-Lived 
Assets and for Long-Lived Assets to be Disposed of" in the first quarter of     
1996. The anticipated effect of adopting this new standard is not expected to   
have a material effect on the Company's consolidated financial position or      
results of operations.                                                          

Stock-based compensation:  The Company will adopt the provisions of   
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (FAS 123) in the first quarter of 1996. The Company, as provided  
for in FAS 123, will continue to apply Accounting Principles Board Opinion No.  
25, "Accounting for Stock Issued to Employees" for employees stock compensation 
measurement, and                                                                

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will disclose the required pro forma effect on net income and earnings per share
based on the fair value of the equity instruments awarded.                      

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.             

     Certain reclassifications have been made to prior years' amounts to conform
to the current year's format.                                                   

2. AVAILABLE-FOR-SALE SECURITIES                                                

    Available-for-sale securities are carried at estimated fair values and the
unrealized holding losses are excluded from earnings and are reported net of    
income taxes in a separate component of stockholders' equity until realized.    
Adjustments of $107,000 and $71,000 were made to equity to reflect the net      
unrealized losses on available-for-sale securities as of December 31, 1994 and  
1995, respectively.                                                             

   Available-for-sale securities consist of the following as of December 31,
1994 and 1995.                                                                  

                                                        [Enlarge/Download Table]

                                                1994                       1995          
                                       -----------------------    -----------------------
                                          FAIR        UNREALIZED    FAIR       UNREALIZED
                                         VALUE          LOSS       VALUE          LOSS   
                                       ----------     --------    --------     ----------
                                                                                         
Equity securities..................... $  610,000     $104,000    $576,000      $ 71,000 
U.S. Treasury securities..............    993,000        3,000          --            -- 
                                         --------      -------    ----------    -------- 
                                       $1,603,000     $107,000    $576,000      $ 71,000 
                                         ========      =======    ==========    ======== 

3. INVENTORIES                                                                  

Inventories consist of the following:                                 

                                                                [Download Table]

                                                                1994         1995   
                                                              --------    ----------
                                                                                    
Raw materials and spare parts................................ $498,000    $1,191,000
Work-in-process..............................................       --       181,000
Finished goods...............................................   19,000       528,000
                                                              ----------    --------
                                                              $517,000    $1,900,000
                                                              ==========    ========

4. PROPERTY, PLANT AND EQUIPMENT                                                

Property, plant and equipment consists of the following:              

                                                                [Download Table]

                                                              1994         1995    
                                                           -----------  -----------
                                                                                   
Land, buildings and improvements.......................... $13,521,000  $14,767,000
Machinery, fixtures and equipment.........................   3,785,000    5,129,000
Leaseholds and improvements...............................   1,007,000    1,017,000
                                                           -----------  -----------
                                                           $18,313,000  $20,913,000
                                                           ===========  ===========

 Land, buildings and equipment having a net book value of $8,049,000 and
$12,292,000 at December 31, 1994 and 1995, respectively, were pledged as        
collateral under borrowing agreements.                                          

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5. PREPAIDS, INTANGIBLES AND OTHER                                              

Prepaids, intangibles and other consists of the following:            

                                                                [Download Table]

                                                                1994        1995   
                                                             ----------  ----------
                                                                                   
Prepaids and other.......................................... $1,145,000  $1,005,000
Deferred debenture expense..................................    168,000     206,000
Deferred financing costs....................................    287,000     480,000
Acquisition costs...........................................    100,000      96,000
Deposits and advances.......................................     89,000      68,000
Long-term note receivable...................................    218,000          --
Patents.....................................................         --     323,000
Goodwill and noncompete agreement...........................         --   1,105,000
Investment in joint ventures................................     38,000     506,000
Long-term portion of officers' and employees' loans.........    250,000     292,000
                                                             ----------  ----------
                                                             $2,295,000  $4,081,000
                                                             ==========  ==========

Deferred debenture expense represents costs attributable to the 9%    
convertible subordinated debenture issue and the 9 1/2% subordinated debenture  
issue being amortized over the respective lives of the issues on a straight line
basis, and are net of accumulated amortization of $652,000 and $670,000, at     
December 31, 1994 and 1995, respectively. Deferred financing costs represent    
costs attributable to financing agreements being amortized over the lives of the
agreements on a straight line basis, and are net of accumulated amortization of 
$182,000 and $349,000 at December 31, 1994 and 1995, respectively. Acquisition  
costs represent the purchase price attributable to intangibles being amortized  
over 30 years on a straight line basis, and are net of accumulated amortization 
of $49,000 and $53,000 at December 31, 1994 and 1995, respectively. Patents     
represent costs attributable to engineering and design costs of outdoor products
being amortized over 14 years on a straight line basis, and is net of           
accumulated amortization of $64,000 at December 31, 1995. Goodwill and          
noncompete agreement costs are attributable to the purchase costs associated    
with the acquisition of ISE in January 1995. (See Note 7 -- Acquisitions.)      
Goodwill is being amortized over 20 years on a straight line basis, and is net  
of accumulated amortization of $35,000 at December 31, 1995. The noncompete     
agreement is being amortized over five years on a straight line basis, the term 
of the agreement, and is net of accumulated amortization of $96,000 at December 
31, 1995. Impairment of intangibles and their associated useful lives are       
evaluated quarterly based on recoverability of unamortized balances from        
expected future cash flows on an undiscounted basis. The investment in joint    
ventures is primarily an investment in MetroLux Theatres, a 12-plex theatre     
located in Loveland, Colorado.                                                  

6. MAINTENANCE CONTRACTS                                                        

    Maintenance contracts represent the present value of contracts the Company
has with customers to service their outdoor display equipment, which were       
acquired during 1993. (See Note 7 -- Acquisitions.) These contracts are being   
amortized over 15 years, on an accelerated method, which contemplates contract  
expiration, fall out and non-renewals and are net of accumulated amortization of
$686,000 and $1,049,000, at December 31, 1994 and 1995, respectively.           

7. ACQUISITIONS                                                                 

During January 1995, the Company acquired all of the capital stock of 
Integrated Systems Engineering, Inc. (ISE), which manufactures outdoor          
electronic signs, for a cash purchase price of approximately $2.7 million plus  
payment of noncompete and consulting fees. The payments for the acquisition are 
shown in the Consolidated Statements of Cash Flows net of $1.9 million of       
liabilities assumed.                                                            

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The acquisition has been accounted for using the purchase method of   
accounting. The purchase price has been allocated on the basis of the fair value
of the assets acquired and liabilities assumed. Assets include land, building,  
machinery and equipment, accounts receivable, inventory and patents. The excess 
of the purchase price over the fair value of the net assets acquired has been   
recorded as goodwill. Pro forma results of operations as if the acquisition had 
occurred as of January 1, 1995 are not presented, as the amounts are not        
materially different from those presented.                                      

     The following pro forma financial information should be read in conjunction
with the Company's consolidated financial statements. The 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, 1994, or to project the Company's results of operations or financial 
position for any future period or at any future date. The results of operations 
have been included in the Company's consolidated financial statements since the 
date of acquisition. The pro forma consolidated balance sheet is not presented  
as the transaction is already reflected in the Company's consolidated balance   
sheet at December 31, 1995.                                                     

                                                                [Download Table]

                                                                            1994    
                                                                         -----------
                                                                          UNAUDITED 
                                                                                    
Gross revenues.......................................................... $38,284,000
                                                                         -----------
Gross profit from operations............................................ $17,046,000
                                                                         -----------
Net income.............................................................. $ 1,439,000
                                                                         -----------
Earnings per share -- primary...........................................       $1.14
                                                                               -----
Earnings per share -- fully diluted.....................................       $1.00
                                                                               -----

     During 1993 the Company, through its subsidiary Trans-Lux Sign Corporation,
purchased certain assets and liabilities of Indicator Maintenance Corporation   
for an aggregate cash price of approximately $3.2 million. The assets acquired  
included a portfolio of leased outdoor electronic signs, a maintenance base and 
other contracts.                                                                

The acquisition has been accounted for using the purchase method of   
accounting. The purchase price has been allocated on the basis of the fair value
of the assets which approximates the acquisition cost.                          

     The following pro forma financial information should be read in conjunction
with the Company's consolidated financial statements. The 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, 1993, or to project the Company's results of operations or financial 
position for any future period or at any future date. The results of operations 
have been included in the Company's consolidated financial statements since the 
date of acquisition.                                                            

                                                                [Download Table]

                                                                            1993    
                                                                         -----------
                                                                          UNAUDITED 
                                                                                    
Gross revenues.......................................................... $39,035,000
                                                                         -----------
Gross profit from operations............................................ $14,752,000
                                                                         -----------
Net income.............................................................. $   505,000
                                                                         -----------
Earnings per share......................................................       $0.40
                                                                               -----

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8. TAXES ON INCOME                                                              

The components of income tax expense are as follows:                  

                                                        [Enlarge/Download Table]

                                                         YEARS ENDED DECEMBER 31,        
                                                   ------------------------------------  
                                                      1993          1994         1995    
                                                   ----------     --------     --------  
                                                                                         
Current:                                                                                 
  Federal......................................... $   76,000     $229,000     $490,000  
  State...........................................    155,000      150,000       86,000  
  Foreign.........................................         --       28,000           --  
                                                     --------     --------     ----------
                                                      231,000      407,000      576,000  
                                                     --------     --------     ----------
Deferred:                                                                                
  Federal.........................................    391,000      311,000      157,000  
  State...........................................    552,000           --       40,000  
  Foreign.........................................         --       32,000           --  
                                                     --------     --------     ----------
                                                      943,000      343,000      197,000  
                                                     --------     --------     ----------
Total income tax expense.......................... $1,174,000     $750,000     $773,000  
                                                     ========     ========     ==========

1994 includes the favorable state tax settlement, which assessment was
recorded in 1993.                                                               

    Income taxes provided differed from the expected federal statutory rate of
34% as follows:                                                                 

                                                                [Download Table]

                                                                1993   1994   1995 
                                                                ----   ----   ---- 
                                                                                   
Statutory federal income tax rate.............................. 34.0%  34.0%  34.0%
State income taxes, net of federal benefit..................... 28.1    8.1    4.5 
Benefit of NOL.................................................  7.3   (6.4)    -- 
Other..........................................................  1.2    0.6    3.5 
                                                                ----   ----   ---- 
     Effective income tax rate................................. 70.6%  36.3%  42.0%
                                                                ====   ====   ==== 

The tax effect of temporary differences giving rise to the Company's  
deferred tax provision are as follows:                                          

                                                                [Download Table]

                                                     1993       1994        1995   
                                                   --------   ---------   -------- 
                                                                                   
Depreciation and amortization..................... $(96,000)  $ 180,000   $ 49,000 
Pension actuarial gain............................   20,000     (30,000)   (14,000)
Supplemental retirement plan......................    7,000    (143,000)   (15,000)
State income taxes................................  211,000     478,000     27,000 
Impact of NOL.....................................  801,000      61,000    191,000 
AMT credit........................................       --    (235,000)   (25,000)
Other.............................................       --      32,000    (16,000)
                                                   ---------  ---------   -------- 
     Net deferred tax provision................... $943,000   $ 343,000   $197,000 
                                                   =========  =========   ======== 

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The tax effects of the items comprising the net deferred tax asset and
liability at December 31, 1994 and 1995 in the Company's statement of financial 
position are as follows:                                                        

                                                        [Enlarge/Download Table]

                                                                 1994         1995    
                                                              ----------   ---------- 
                                                                                      
Current asset                                                                         
  Deferred tax asset:                                                                 
     Operating loss carryforwards...........................  $  192,000           -- 
     Valuation allowance....................................          --           -- 
                                                              ----------   ---------- 
          Net deferred tax asset............................     192,000           -- 
                                                              ==========   ========== 
Long-term liability                                                                   
  Deferred tax asset:                                                                 
     Operating loss carryforwards...........................  $   82,000   $  175,000 
     Excess financial reporting depreciation and                                      
       amortization over tax depreciation and                                         
       amortization.........................................     259,000      331,000 
     Acquisition costs not deducted for tax purposes........      84,000       84,000 
     Net pension cost not deducted for tax purposes.........      36,000       52,000 
     Supplemental retirement plan costs not deducted for tax                          
       purposes.............................................      44,000       61,000 
     Tax credit carryforwards...............................     337,000      397,000 
     Unrealized holding losses not deducted for tax                                   
       purposes.............................................      87,000       58,000 
     Bad debt expense not deducted for tax purposes.........          --       37,000 
     Valuation allowance....................................    (402,000)    (232,000)
                                                              ----------   ---------- 
                                                                 527,000      963,000 
                                                              ----------   ---------- 
  Deferred tax liability:                                                             
     Excess tax depreciation over financial reporting                                 
       depreciation.........................................   2,715,000    3,328,000 
     Gain on purchases of Company's 9% debentures not                                 
       reported for tax purposes............................     439,000      439,000 
     Net pension benefit not reported for tax purposes......     373,000      373,000 
     Foreign exchange gain not reported for tax purposes....      32,000       31,000 
     State income taxes.....................................     250,000      392,000 
                                                              ----------   ---------- 
                                                               3,809,000    4,563,000 
                                                              ----------   ---------- 
          Net deferred tax liability........................  $3,282,000   $3,600,000 
                                                              ==========   ========== 

     The valuation allowance changed by $170,000 for the year ended December 31,
1995. The valuation allowance has been established for the amount of deferred   
tax assets which management estimates will more likely than not expire unused.  

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9. LONG-TERM DEBT                                                               

Long-term debt consists of the following:                             

                                                                [Download Table]

                                                               1994         1995    
                                                            -----------  -----------
                                                                                    
9% convertible subordinated debentures due 2005...........  $ 4,874,000  $ 4,874,000
9 1/2% subordinated debentures due 2012...................    1,057,000    1,057,000
Loan and security agreement -- bank, secured, due in                                
  quarterly installments through 1998.....................    9,855,000           --
Line of credit and security agreement -- bank, secured....    2,989,000           --
Note payable -- banks, secured, due in monthly                                      
  installments through 1998...............................      538,000           --
IRB note payable -- banks, secured, due in quarterly                                
  installments through 1997...............................      733,000           --
Term loans -- bank, secured, due in quarterly installments                          
  through 2002............................................           --   15,177,000
Loan payable -- CDA, due in monthly installments through                            
  2002 at 5.0%............................................           --      517,000
Real estate mortgages -- secured, due in monthly and                                
  quarterly installments through 2015.....................    2,206,000    2,597,000
Capital lease obligation, -- secured, due in monthly                                
  installments through 1999 at 9.5%.......................      101,000       77,000
                                                            -----------             
                                                             22,353,000   24,299,000
Less portion due within one year..........................    2,660,000    1,804,000
                                                            -----------             
                                                            $19,693,000  $22,495,000
                                                            ===========             

Payments of long-term debt due for the next five years are:           

                                                                [Download Table]

   1996           1997           1998           1999           2000   
----------     ----------     ----------     ----------     ----------
                                                                      
$1,804,000     $1,817,000     $2,660,000     $1,792,000     $2,696,000

    During 1985, the Company issued $15 million of 9% convertible subordinated
debentures due 2005. These debentures are redeemable at the option of the       
Company at declining premiums. An annual sinking fund requirement of $1,125,000 
was to commence December 1, 1995; however, at its option, the Company is        
depositing with the Trustee debentures that have been repurchased and receive a 
credit against such required payments. The debentures are redeemable at the     
option of the Company at par. The debentures are currently convertible into     
shares of the Company's Common Stock at a conversion price of $12.70 per share. 

    During 1994, the Company made an Offer to Exchange $1,000 principal amount
of its new 9 1/2% subordinated debentures due 2012 ("New Debentures") for each  
$1,000 principal amount of its 9% convertible subordinated debentures due 2005  
("Old Debentures"). The New Debentures pay an interest rate of 9 1/2%, mature in
2012, are not callable until 1999 and are not convertible into Common Stock. The
Company accepted $1,057,000 of Old Debentures in exchange for $1,057,000 of New 
Debentures. The New Debentures are redeemable at the option of the Company at   
declining premiums. An annual sinking fund requirement of $105,700 will commence
December 1, 2009. Simultaneously with the Offer to Exchange, the Company called 
for redemption of approximately 39% of the Old Debentures at 101.125% on        
December 1, 1994 and redeemed $3,080,000 of the Old Debentures. The Company     
entered into a Line of Credit and Security Agreement for $3,000,000 to finance  
such redemption. The line of credit was converted to a five-year term note on   
January 27, 1995 with an interest rate of 9.04% through January 27, 1998 and at 
prime plus  1/2% thereafter. This loan was part of the restructuring in August  
1995.                                                                           

The Company entered into a Credit Agreement with First Union Bank of  
Connecticut (formerly known as First Fidelity Bank) in August 1995 restructuring
its indebtedness of $15,581,000 and a $4,000,000 line                           

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of credit. The restructuring extends the terms to an average of 11 years at a   
variable rate of interest of LIBOR plus 175 basis points (7.688% at December 31,
1995). Simultaneously, the Company entered into interest rate swap agreements to
reduce the impact of changes in interest rates on its floating rate long-term   
debt. At December 31, 1995, the Company had outstanding two interest rate swap  
agreements with a commercial bank, having a notional value of $15,177,000. The  
resulting gain or loss on the swaps is included in interest expense. The        
agreements effectively change the Company's interest rate exposure on its       
$7,867,000 floating rate installment note due quarterly through October 2002 to 
a fixed rate of 7.86% and its $7,310,000 floating rate installment note due     
quarterly through July 2002 to a fixed rate of 7.86%. The notional value of the 
interest rate swap agreements are reduced quarterly with the installment        
payments on the notes and mature July 1, 1998. The aggregate cost to terminate  
the interest rate swap agreements at December 31, 1995 was $389,000. The Company
is subject to credit loss in the event of nonperformance by other parties to the
interest rate swap agreements. However, the Company does not anticipate         
nonperformance by the counterparties.                                           

  The $4 million line of credit is at a variable rate of interest of LIBOR
plus 200 basis points (7.867% at December 31, 1995) and is available until June 
1997. At December 31, 1995, the Company had $3.5 million available under such   
agreement.                                                                      

     The Company has a first mortgage on a four-plex theatre in Taos, New Mexico
at an interest rate of prime plus 1% (9.5% at December 31, 1995) with a balloon 
payment of $837,000 in 1998 and a first mortgage on a five-plex theatre in      
Durango, Colorado at an interest rate of prime plus 1%, capped at 9% with a     
balloon payment of $920,000 in 2000.                                            

     The fair value of the 9% convertible subordinated debentures and the 9 1/2%
subordinated debentures are $5,166,000 and $1,046,000, respectively at December 
31, 1995. The fair value of the remaining long-term debt approximates the       
carrying value.                                                                 

    The theatrical joint venture, MetroLux Theatres, entered into an agreement
to borrow $3,000,000 for the land and construction of the 12-plex theatre       
located in Loveland, Colorado. The Company is the guarantor of the entire       
indebtedness. However, the owner of the non-related general partner of the joint
venture has guaranteed their prorata portion of the indebtedness to the Company.

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10. STOCKHOLDERS' EQUITY                                                        

  Changes in capital stock, additional paid-in capital, treasury stock and
retained earnings for the three years ended December 31, 1995 are as follows:   

                                                        [Enlarge/Download Table]

                                 COMMON STOCK            CLASS B         ADDITIONAL                    RETAINED   
                            ----------------------  ------------------     PAID-IN       TREASURY      EARNINGS   
                             SHARES       AMOUNT    SHARES     AMOUNT      CAPITAL        STOCK        AND OTHER  
                            ---------   ----------  -------   --------   -----------   ------------   ----------- 
                                                                                                                  
Balance December 31,                                                                                              
  1992....................  2,420,201   $2,420,000  319,811   $320,000   $13,804,000   $(11,889,000)  $14,514,000 
Net income................         --           --       --         --            --             --       489,000 
Cash dividends............         --           --       --         --            --             --      (153,000)
Common stock acquired                                                                                             
  (2,311 shares)..........         --           --       --         --            --        (21,000)           -- 
Class B conversion to                                                                                             
  common stock............     13,264       13,000  (13,264)   (13,000)           --             --            -- 
                            ---------   ----------  -------   --------   -----------   ------------   ----------- 
Balance December 31,                                                                                              
  1993....................  2,433,465    2,433,000  306,547    307,000    13,804,000    (11,910,000)   14,850,000 
Net income................         --           --       --         --            --             --     1,314,000 
Cash dividends............         --           --       --         --            --             --      (171,000)
9% debentures                                                                                                     
  conversion..............        393        1,000       --         --         5,000             --            -- 
Unrealized holding                                                                                                
  losses..................         --           --       --         --            --             --      (107,000)
Common stock acquired (131                                                                                        
  shares).................         --           --       --         --            --         (1,000)           -- 
Class B conversion to                                                                                             
  common stock............      1,188        1,000   (1,188)    (2,000)           --             --            -- 
                            ---------   ----------  -------   --------   -----------   ------------   ----------- 
Balance December 31,                                                                                              
  1994....................  2,435,046    2,435,000  305,359    305,000    13,809,000    (11,911,000)   15,886,000 
Net income................         --           --       --         --            --             --     1,066,000 
Cash dividends............         --           --       --         --            --             --      (171,000)
Unrealized holding gain...         --           --       --         --            --             --        36,000 
Exercise of stock                                                                                                 
  options.................         --           --       --         --        (4,000)        40,000            -- 
Common stock acquired                                                                                             
  (56 shares).............         --           --       --         --            --         (1,000)           -- 
Common stock award........         --           --       --         --         1,000          8,000            -- 
Class B conversion to                                                                                             
  common stock............      1,222        1,000   (1,222)    (1,000)           --             --            -- 
                            ---------   ----------  -------   --------   -----------   ------------   ----------- 
Balance December 31,                                                                                              
  1995....................  2,436,268   $2,436,000  304,137   $304,000   $13,806,000   $(11,864,000)  $16,817,000 
                            =========   ==========  =======   ========   ===========   ============   =========== 

    During 1995, the Board of Directors declared four quarterly cash dividends
of $.035 per share on the Company's Common Stock and $.0315 per share on the    
Company's Class B Stock, which were paid in April, July and October 1995 and    
January 1996. During 1993 the Board authorized an increase of 17% in the        
quarterly cash dividends to its current level. Each share of Class B Stock is   
convertible at any time into one share of Common Stock and has ten votes per    
share, as compared to Common Stock which has one vote per share but receives a  
higher dividend.                                                                

   During 1995, the stockholders approved 3 million shares of a new class of
capital stock designated Class A Stock, $1.00 par value. The stock will have no 
voting rights except as required by law and will receive a 10% higher dividend  
than the Common Stock. A Certificate of Amendment authorizing the Class A shares
and adjusting authorized shares of Common Stock to 5.5 million and Class B Stock
to 1 million will be filed prior to the first issuance of Class A Stock. No     
specific issuance of Class A Stock is presently contemplated.                   

At December 31, 1995, shares of Common Stock were reserved for:       

                                                                [Download Table]
                                                                                   
Conversion of 9% convertible subordinated debentures....................... 782,000
Stock options.............................................................. 124,000

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11. LEASES                                                                      

The Company occupies theatre and other premises under operating leases
expiring at varying dates through 2006. Certain of the leases provide for the   
payment of real estate taxes and other occupancy costs. In addition, the Company
has a long-term lease for a telephone system, which is classified as a capital  
lease.                                                                          

The following is a summary of future minimum lease payments due under 
capital and operating leases at December 31, 1995:                              

                                                                [Download Table]

                                                                CAPITAL  OPERATING 
                             YEAR                                LEASE     LEASES  
--------------------------------------------------------------  -------  ----------
                                                                                   
1996..........................................................  $30,000  $  248,000
1997..........................................................   30,000     188,000
1998..........................................................   30,000     160,000
1999..........................................................    7,000     129,000
2000..........................................................       --     107,000
Thereafter....................................................       --     668,000
                                                                -------  ----------
Total future minimum lease payments...........................  $97,000  $1,500,000
                                                                         ==========
Amount representing interest..................................   20,000            
                                                                -------            
Present value of net minimum lease payments...................   77,000            
Current portion...............................................   24,000            
                                                                -------            
Long-term portion.............................................  $53,000            
                                                                =======            

     Total rent expense for all operating leases amounted to $308,000, $267,000,
and $238,000 in 1993, 1994 and 1995, respectively. At December 31, 1995,        
sublease income of $110,000 is to be received on non-cancelable leases through  
2000.                                                                           

12. ENGINEERING DEVELOPMENT EXPENSE                                             

 Engineering development expense was $108,000, $238,000 and $172,000 for
1993, 1994 and 1995, respectively.                                              

13. PENSION PLAN                                                                

     All eligible salaried employees of Trans-Lux Corporation and certain of its
subsidiaries are covered by a non-contributory pension plan. Pension benefits   
vest after five years of service and are based on years of service and final    
average salary. The Company's funding policy is to contribute annually an amount
that can be deducted for Federal income tax purposes. Contributions are intended
to provide not only for benefits based on service to date, but also for those   
benefits expected to be earned in the future.                                   

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     The funded status of the plan at December 31, 1994 and 1995 are as follows:

                                                        [Enlarge/Download Table]

                                                                1994         1995    
                                                             ----------   ---------- 
                                                                                     
Fair value of plan assets, invested in insurance company                             
  funds..................................................... $3,893,000   $4,172,000 
                                                             ----------   ---------- 
Actuarial present value of benefits for service rendered to                          
  date:                                                                              
  Accumulated benefits based on salaries to date, including                          
     vested benefits of $1,902,000 and $2,879,000 for 1994                           
     and 1995, respectively.................................  1,998,000    2,985,000 
  Additional benefits based on estimated future salary                               
     levels.................................................  1,016,000    1,286,000 
                                                             ----------   ---------- 
Projected benefit obligation (PBO)..........................  3,014,000    4,271,000 
                                                             ----------   ---------- 
Plan assets (less than) in excess of PBO....................    879,000      (99,000)
Unrecognized prior service cost.............................     24,000       22,000 
Unrecognized net loss from past experience different from                            
  that assumed..............................................     53,000      952,000 
Unrecognized net asset on January 1, 1985 being recognized                           
  over 13.38 years..........................................   (132,000)     (92,000)
                                                             ----------   ---------- 
Prepaid pension cost........................................ $  824,000   $  783,000 
                                                             ==========   ========== 

The following items are components of the net pension cost for 1995:  

                                                                [Download Table]
                                                                                    
Present value of benefits earned during the period........................ $273,000 
Interest cost on projected benefit obligation.............................  278,000 
Actual return on plan assets.............................................. (372,000)
Net amortization and deferral.............................................  (38,000)
                                                                           -------- 
Net pension cost.......................................................... $141,000 
                                                                           ======== 

The weighted average discount rate used in determining the actuarial  
present value of the PBO was 8.5% in 1994 and 7.5% in 1995. The rate of increase
in future compensation levels used in determining the actuarial present value of
the PBO was 4.25% in 1994 and 4.0% in 1995. The expected long-term rate of      
return on assets was 9.5 percent for 1994 and 1995.                             

The Company provides supplemental retirement benefits for the Chief   
Executive Officer, during 1995, the Company accrued $43,000 for such benefits.  
At December 31, 1994 and 1995, respectively, the total liability accrued was    
$110,000 and $153,000.                                                          

  The Company's pension and supplemental pension costs for the years ended
December 31, 1993, 1994 and 1995 were $241,000, $226,000 and $183,000,          
respectively.                                                                   

The Company does not offer any postretirement benefits other than the 
pension and the supplemental retirement benefits described herein.              

As of January 1, 1994, the Company adopted SFAS No. 112, "Employers'  
Accounting for Postemployment Benefits." This statement requires the accrual of 
estimated costs of benefits to former or inactive employees after employment but
before retirement. The adoption of this standard did not have a material effect 
on the Company's consolidated financial statements. The Company did not accrue  
any liability for such benefits during 1995.                                    

14. STOCK OPTION PLANS                                                          

     The Company has five stock option plans. The 1995 Stock Option Plan and the
1992 Stock Option Plan each reserved 50,000 shares of Common Stock for issue to 
key employees. Stock Option Plan II terminated, and accordingly, additional     
shares cannot be granted under such plan, which originally reserved 50,000      
shares of Common Stock (before giving effect for stock dividends). The          
Non-Employee Director Stock Option Plan                                         

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reserved 15,000 shares of Common Stock for grant. The Non-Statutory Stock Option
Plan Agreement reserved 12,500 shares of Common Stock for issue to the Chairman 
of the Board.                                                                   

Changes in the stock option plans are as follows:                     

                                                        [Enlarge/Download Table]

                                                                NUMBER OF SHARES           
                                                      ------------------------------------ 
                                                      AUTHORIZED     GRANTED     AVAILABLE 
                                                      ----------     -------     --------- 
                                                                                           
Balance December 31, 1992............................   111,900       95,100        16,800 
Additional authorized shares.........................    12,500           --        12,500 
Terminated...........................................   (22,500)     (42,500)       20,000 
Granted..............................................        --       27,900       (27,900)
                                                        -------      -------        ------ 
Balance December 31, 1993............................   101,900       80,500        21,400 
Terminated...........................................    (3,500)      (8,000)        4,500 
Granted..............................................        --       17,000       (17,000)
                                                        -------      -------        ------ 
Balance December 31, 1994............................    98,400       89,500         8,900 
Additional authorized shares.........................    50,000           --        50,000 
Terminated...........................................   (19,700)     (25,200)        5,500 
Granted..............................................        --       28,200       (28,200)
Exercised............................................    (5,000)      (5,000)           -- 
                                                        -------      -------        ------ 
Balance December 31, 1995............................   123,700       87,500        36,200 
                                                        =======      =======        ====== 

 Under the 1995 Stock Option Plan and the 1992 Stock Option Plan, option
prices must be at least 100% of the market value of the Common Stock at the time
of the grant. Exercise periods are for ten years from date of the grant (five   
years if the optionee owns more than 10% of the voting power) and terminate at a
stipulated period of time after an employee's termination of employment. At     
December 31, 1995, under the 1995 Plan, options for 23,800 shares (granted in   
1995) with an exercise price of $8.125 per share were outstanding. No shares    
were exercisable or were exercised during 1995. At December 31, 1995, under the 
1992 Plan, options for 48,700 shares (granted in 1992, 1993, 1994 and 1995) with
exercise prices ranging from $6.3125 to $9.6875 per share were outstanding, of  
which 45,300 shares were exercisable. Options for 1,300 shares (granted in 1992)
with an exercise price of $6.3125 per share were exercised in 1995. During 1995,
options for 1,000 shares expired. No options were exercised during 1993 and     
1994.                                                                           

Under Stock Option Plan II, option prices must be at least 100% of the
market value of the Common Stock at the time of the grant. Exercise periods are 
for six years from date of the grant (five years if the optionee owns more than 
10% of the voting power) and terminate at a stipulated period of time after an  
employee's termination of employment. At December 31, 1995, all 19,700 options  
under the plan have terminated. Options for 2,200 shares (granted in 1989) with 
an exercise price of $7.625 per share were exercised in 1995. No options were   
exercised during 1993 and 1994.                                                 

     Under the Non-Employee Director Stock Option Plan, options must be at least
100% of the market value of the Common Stock at the time of the grant. No option
may be exercised prior to one year after the date of the grant and the optionee 
must be a director of the Company at the time of exercise, except in certain    
cases as permitted by the Compensation Committee. Exercise periods are for six  
years from date of the grant and options terminate at a stipulated period of    
time after an optionee ceases to be a director. At December 31, 1995, options   
for 2,500 shares (granted in 1994 and 1995) with exercise prices ranging from   
$8.625 to $9.6875 per share were outstanding, all of which were exercisable.    
During 1995, options for 1,500 shares (granted in 1989) with an option price of 
$7.4375 per share were exercised. During 1995, options for 4,500 shares expired.
No options were exercised during 1993 and 1994.                                 

     Under the Non-Statutory Stock Option Agreement, the option must be at least
100% of the market value of the Common Stock at the time of the grant. The      
exercise period is for ten years from the date of the grant.                    

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At December 31, 1995, an option for 12,500 shares (granted in 1993) with an     
exercise price of $7.50 per share was outstanding, which is exercisable. No     
options were exercised during 1993, 1994 and 1995.                              

15. COMMITMENTS AND CONTINGENCIES                                               

   The Company has employment/consulting agreements with certain current and
former executive officers which expire at various dates through December 2002.  
The aggregate commitment for future salaries/consulting fees at December 31,    
1995, excluding bonuses, is approximately $3,404,000.                           

   The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount of    
ultimate liability with respect to these actions will not have a material       
adverse affect on the consolidated financial statements of the Company.         

16. BUSINESS SEGMENT DATA                                                       

   The Company's operations have been classified into two business segments.
The Communications Division designs, produces, leases, sells and services       
large-scale, multi-color, real-time electronic information displays for both    
indoor and outdoor use. The Entertainment and Real Estate Division owns a chain 
of motion picture theatres in the Southwestern United States and owns real      
estate used for both corporate and income-producing purposes in the United      
States and Canada.                                                              

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     Information about the Company's operations in its two business segments for
the three years ended December 31, 1995 is as follows:                          

                                                        [Enlarge/Download Table]

                                                        1993          1994          1995     
                                                     -----------   -----------   ----------- 
                                                                                             
GROSS REVENUE                                                                                
  Communications.................................... $32,630,000   $30,150,000   $33,569,000 
  Entertainment and real estate.....................   3,169,000     3,592,000     4,222,000 
                                                     ------------  ------------  ------------
                                                     $35,799,000   $33,742,000   $37,791,000 
                                                     ============  ============  ============
OPERATING INCOME                                                                             
  Communications.................................... $ 9,431,000   $ 8,881,000   $ 9,500,000 
  Entertainment and real estate.....................     142,000       204,000       548,000 
                                                     ------------  ------------  ------------
                                                       9,573,000     9,085,000    10,048,000 
Other income........................................          --            --        92,000 
General and administrative expenses.................  (5,530,000)   (5,779,000)   (6,157,000)
Interest expense -- net.............................  (2,380,000)   (1,242,000)   (2,144,000)
                                                     ------------  ------------  ------------
Income before taxes................................. $ 1,663,000   $ 2,064,000   $ 1,839,000 
                                                     ============  ============  ============
ASSETS                                                                                       
  Communications.................................... $43,743,000   $42,684,000   $49,565,000 
  Entertainment and real estate.....................   4,955,000     6,685,000     6,654,000 
                                                     ------------  ------------  ------------
Total identifiable assets...........................  48,698,000    49,369,000    56,219,000 
Cash and available-for-sale securities..............   3,440,000     3,938,000     1,241,000 
                                                     ------------  ------------  ------------
                                                     $52,138,000   $53,307,000   $57,460,000 
                                                     ============  ============  ============
DEPRECIATION AND AMORTIZATION                                                                
  Communications.................................... $ 5,988,000   $ 5,951,000   $ 6,403,000 
  Entertainment and real estate.....................     215,000       264,000       301,000 
  General corporate.................................     139,000       298,000       197,000 
                                                     ------------  ------------  ------------
                                                     $ 6,342,000   $ 6,513,000   $ 6,901,000 
                                                     ============  ============  ============
CAPITAL EXPENDITURES                                                                         
  Communications.................................... $ 3,768,000   $ 6,240,000   $ 7,461,000 
  Entertainment and real estate.....................     119,000     2,223,000       220,000 
                                                     ------------  ------------  ------------
                                                     $ 3,887,000   $ 8,463,000   $ 7,681,000 
                                                     ============  ============  ============

   General and administrative expenses consist of general corporate expenses
not deemed to be operating expenses and have therefore not been allocated.      

    No single customer accounted for 10% or more of total revenues in 1994 and
1995. During 1993, the Company recorded revenues of approximately $4.3 million  
from a single customer.                                                         

 Foreign revenues were less than 10% of consolidated revenue in 1993 and
1995 and were approximately 15% in 1994.                                        

17. ACCOUNTS PAYABLE AND ACCRUALS                                               

Accounts payable and accruals includes $1,361,000 and $1,730,000 for  
accounts payable, $135,000 and $368,000 for accrued interest payable, and       
$466,000 and $518,000 for taxes payable for 1994 and 1995, respectively.        

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CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                                              DECEMBER                  
                                                                                 31,                    
                                                                                1995                    
                                                                             -----------   SEPTEMBER 30,
                                                                                               1996     
                                                                                           -------------
                                                                                            (UNAUDITED) 
                                                                                                        
ASSETS                                                                                                  
  Current assets:                                                                                       
    Cash and cash equivalents..............................................  $   665,000    $    54,000 
    Available-for-sale securities..........................................      576,000        586,000 
    Receivables............................................................    2,403,000      5,434,000 
    Unbilled receivables...................................................           --      1,632,000 
    Inventories............................................................    1,900,000      1,778,000 
    Prepaids and other current assets......................................      466,000        332,000 
                                                                             -----------    ----------- 
      Total current assets.................................................    6,010,000      9,816,000 
                                                                             -----------    ----------- 
    Rental equipment.......................................................   47,043,000     52,574,000 
      Less accumulated depreciation........................................   16,265,000     19,980,000 
                                                                             -----------    ----------- 
                                                                              30,778,000     32,594,000 
                                                                             -----------    ----------- 
    Property, plant and equipment..........................................   20,913,000     21,795,000 
      Less accumulated depreciation and amortization.......................    5,921,000      6,960,000 
                                                                             -----------    ----------- 
                                                                              14,992,000     14,835,000 
    Prepaids, intangibles and other........................................    4,081,000      3,640,000 
    Maintenance contracts, net.............................................    1,599,000      1,352,000 
    Note receivable, MetroLux Theatres (excludes $94,000 current                                        
     portion)..............................................................           --        808,000 
                                                                             -----------    ----------- 
                                                                             $57,460,000    $63,045,000 
                                                                             ===========    =========== 
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                    
  Current liabilities:                                                                                  
    Accounts payable and accruals..........................................  $ 4,804,000    $ 6,436,000 
    Income taxes payable...................................................      136,000         55,000 
    Short-term borrowings..................................................      500,000             -- 
    Current portion of long-term debt......................................    1,804,000      1,184,000 
                                                                             -----------    ----------- 
      Total current liabilities............................................    7,244,000      8,305,000 
                                                                             -----------    ----------- 
    Long-term debt:                                                                                     
      9% convertible subordinated debentures due 2005......................    4,874,000      4,811,000 
      9 1/2% subordinated debentures due 2012..............................    1,057,000      1,057,000 
      Notes payable........................................................   16,564,000     21,402,000 
                                                                             -----------    ----------- 
                                                                              22,495,000     27,270,000 
    Deferred revenue and deposits..........................................    2,621,000      1,513,000 
    Deferred income taxes..................................................    3,600,000      3,648,000 
    Minority interest......................................................        1,000          1,000 
                                                                             -----------    ----------- 
    Stockholders' equity:                                                                               
      Capital stock                                                                                     
         Preferred -- $1 par value -- 500,000 shares authorized............                             
         Common -- $1 par value -- 4,000,000 shares authorized                                          
           2,436,268 shares issued in 1995 and 2,441,523 in 1996...........    2,436,000      2,441,000 
         Class B -- $1 par value -- 2,000,000 shares authorized                                         
           304,137 shares issued in 1995 and 298,882 in 1996...............      304,000        299,000 
      Additional paid-in capital...........................................   13,806,000     13,828,000 
      Retained earnings....................................................   16,888,000     17,626,000 
      Other................................................................      (71,000)       (65,000)
                                                                             -----------    ----------- 
                                                                              33,363,000     34,129,000 
    Less treasury stock -- at cost -- 1,488,837 shares in 1995 and                                      
     1,481,258 in 1996 (excludes additional 304,137 shares held in 1995 and                             
     298,882 in 1996 for conversion of Class B stock)......................   11,864,000     11,821,000 
                                                                             -----------    ----------- 
         Total stockholders' equity........................................   21,499,000     22,308,000 
                                                                             -----------    ----------- 
                                                                             $57,460,000    $63,045,000 
                                                                             ===========    =========== 

The accompanying notes are an integral part of these consolidated financial 
statements. 

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TRANS-LUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME 

                                                        [Enlarge/Download Table]

                                                                  NINE MONTHS ENDED SEPTEMBER  
                                                                              30,              
                                                                 ----------------------------- 
                                                                    1995              1996     
                                                                 -----------       ----------- 
                                                                          (UNAUDITED)          
                                                                                               
REVENUES:                                                                                      
  Equipment rentals and maintenance............................. $16,509,000       $16,273,000 
  Equipment sales...............................................   9,174,000        13,276,000 
  Theatre receipts and other....................................   3,198,000         3,322,000 
                                                                 -----------       ----------- 
     Total revenues.............................................  28,881,000        32,871,000 
                                                                 -----------       ----------- 
OPERATING EXPENSES:                                                                            
  Cost of equipment rentals and maintenance.....................   8,700,000         8,883,000 
  Cost of equipment sales.......................................   5,752,000         8,753,000 
  Cost of theatre receipts and other............................   2,462,000         2,529,000 
                                                                 -----------       ----------- 
     Total operating expenses...................................  16,914,000        20,165,000 
                                                                 -----------       ----------- 
GROSS PROFIT FROM OPERATIONS....................................  11,967,000        12,706,000 
General and administrative expenses.............................   9,210,000         9,442,000 
                                                                 -----------       ----------- 
                                                                   2,757,000         3,264,000 
                                                                 -----------       ----------- 
Interest income.................................................     124,000            95,000 
Interest expense................................................  (1,689,000)       (1,764,000)
Other income (expense)..........................................      70,000           (97,000)
                                                                 -----------       ----------- 
INCOME BEFORE INCOME TAXES......................................   1,262,000         1,498,000 
                                                                 -----------       ----------- 
Provision for income taxes:                                                                    
  Current.......................................................     501,000           521,000 
  Deferred......................................................      29,000           108,000 
                                                                 -----------       ----------- 
                                                                     530,000           629,000 
                                                                 -----------       ----------- 
NET INCOME...................................................... $   732,000       $   869,000 
                                                                 ===========       =========== 
Earnings per share:                                                                            
  Primary....................................................... $      0.58       $      0.68 
  Fully diluted.................................................           *       $      0.64 
Average common and common equivalent shares outstanding:                                       
  Primary.......................................................   1,258,000         1,283,000 
  Fully diluted.................................................           *         1,674,000 
Cash dividends per share:                                                                      
  Common stock.................................................. $     0.105       $     0.105 
  Class B stock................................................. $    0.0945       $    0.0945 

---------------                                                                 
* not dilutive                                                                  

The accompanying notes are an integral part of these consolidated financial 
statements. 

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TRANS-LUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                                  NINE MONTHS ENDED SEPTEMBER  
                                                                              30,              
                                                                 ----------------------------- 
                                                                    1995              1996     
                                                                 -----------       ----------- 
                                                                          (UNAUDITED)          
                                                                                               
CASH FLOWS FROM OPERATING ACTIVITIES                                                           
Net income...................................................... $   732,000       $   869,000 
  Adjustment to reconcile net income to net cash provided by                                   
     operating activities:                                                                     
     Depreciation and amortization..............................   5,134,000         5,277,000 
     Net loss of joint venture..................................          --            97,000 
     Deferred income taxes......................................     531,000            44,000 
     Minority interest..........................................      (8,000)               -- 
     Changes in operating assets and liabilities:                                              
       Receivables..............................................  (1,386,000)       (3,031,000)
       Unbilled receivables.....................................          --        (1,632,000)
       Inventories..............................................    (307,000)          122,000 
       Prepaids and other current assets........................    (113,000)          228,000 
       Prepaids, intangibles and other..........................     (82,000)         (239,000)
       Accounts payable and accruals............................     117,000         1,632,000 
       Income taxes payable.....................................      87,000           (81,000)
       Deferred revenue and deposits............................    (796,000)       (1,108,000)
                                                                 -----------       ----------- 
          Net cash provided by operating activities.............   3,909,000         2,178,000 
                                                                 -----------       ----------- 
CASH FLOWS FROM INVESTING ACTIVITIES                                                           
Purchases of rental equipment...................................  (4,112,000)       (5,531,000)
Purchases of property, plant and equipment......................  (1,389,000)         (882,000)
Payments for an acquisition.....................................  (3,178,000)               -- 
Proceeds from acquisition note receivable.......................     658,000                -- 
Sale of assets..................................................     209,000                -- 
Investment in joint venture.....................................  (1,304,000)          345,000 
Loan to joint venture...........................................          --          (941,000)
Purchases of securities.........................................    (494,000)               -- 
Proceeds from sales of securities...............................   1,582,000                -- 
                                                                 -----------       ----------- 
          Net cash (used in) investing activities...............  (8,028,000)       (7,009,000)
                                                                 -----------       ----------- 
CASH FLOWS FROM FINANCING ACTIVITIES                                                           
Proceeds from long-term debt....................................   4,275,000         5,700,000 
Repayment of long-term debt.....................................  (3,206,000)       (1,352,000)
Proceeds from short-term borrowings.............................   1,300,000                -- 
Proceeds from exercise of stock options.........................      36,000             4,000 
Purchase of treasury stock......................................      (1,000)           (1,000)
Cash dividends..................................................    (128,000)         (131,000)
                                                                 -----------       ----------- 
          Net cash provided by financing activities.............   2,276,000         4,220,000 
                                                                 -----------       ----------- 
Net (decrease) in cash and cash equivalents.....................  (1,843,000)         (611,000)
Cash and cash equivalents at beginning of year..................   2,335,000           665,000 
                                                                 -----------       ----------- 
CASH AND CASH EQUIVALENTS AT END OF PERIOD...................... $   492,000       $    54,000 
                                                                 ===========       =========== 
Interest paid................................................... $ 1,366,000       $ 1,452,000 
Interest received...............................................     132,000           101,000 
Income taxes paid...............................................     376,000           542,000 

The accompanying notes are an integral part of these consolidated financial 
statements. 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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. Certain             
reclassifications have been made to prior year's amounts to conform to the      
current year's format. It is suggested that the September 30, 1995 and 1996     
consolidated financial statements be read in conjunction with the consolidated  
financial statements and notes included in the Company's Annual Report on Form  
10-K for the year ended December 31, 1995.                                      

 The Company adopted the provisions of Statement of Financial Accounting
Standards No. 121, "Accounting for Impairment of Long-Lived Assets and for      
Long-Lived Assets to be Disposed of " in the first quarter of 1996. In          
accordance with the standard, the Company evaluates the carrying value of its   
long-lived assets and identifiable intangibles, including goodwill, when events 
or changes in circumstances indicate that the carrying amount of such assets may
not be recoverable. The adoption of the standard did not have any effect on the 
Company's consolidated financial position or results of operations.             

 The Company adopted the provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" in the first       
quarter of 1996. As provided for in the standard, the Company continues to apply
Accounting Principals Board Opinion No. 25, "Accounting for Stock Issued to     
Employees" and related interpretations for employee stock compensation          
measurement and will disclose the required pro forma information in the 1996    
Form 10-K.                                                                      

2. ACCOUNTING FOR INCOME TAXES                                                  

   The effective tax rate at September 30, 1996 was 42%. There was no change
in the valuation allowance during the nine months ended September 30, 1996.     

3. PREPAIDS, INTANGIBLES AND OTHER                                              

Prepaid, intangibles and other consists of the following:             

                                                                [Download Table]

                                                        DECEMBER 31   SEPTEMBER 30
                                                            1995          1996    
                                                        ------------  ------------
                                                                                  
Prepaids and other.....................................  $1,005,000    $1,048,000 
Deferred debenture expense.............................     206,000       193,000 
Deferred financing costs...............................     480,000       421,000 
Acquisition costs......................................      96,000        92,000 
Deposits and advances..................................      68,000        76,000 
Patents................................................     323,000       275,000 
Goodwill and noncompete agreement......................   1,105,000     1,003,000 
Investment in joint venture............................     506,000       128,000 
Long-term portion of officers' and employees' loans....     292,000       404,000 
                                                         ----------    ---------- 
                                                         $4,081,000    $3,640,000 
                                                         ==========    ========== 

4. ACCOUNTS PAYABLE AND ACCRUALS                                                

Accounts payable and accruals includes $1,730,000 and $2,415,000 for  
accounts payable, $368,000 and $569,000 for accrued interest payable, and       
$518,000 and $632,000 for taxes payable at December 31, 1995 and September 30,  
1996, respectively.                                                             

F-23

424B1
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY     
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS   
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITER. NEITHER THE DELIVERY OF THIS   
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY 
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE   
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT        
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT      
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR    
SOLICITATION.                                                                   

------------------------

TABLE OF CONTENTS 

                                                                [Download Table]

                                        PAGE
                                        ----
                                            
Prospectus Summary....................    3 
Risk Factors..........................    7 
Use of Proceeds.......................   11 
Price Range of Common Stock and             
  Dividend Policy.....................   11 
Capitalization........................   12 
Selected Financial Data...............   13 
Management's Discussion and Analysis        
  of Financial Condition and Results        
  of Operations.......................   15 
Business..............................   20 
Management............................   28 
Executive Compensation and                  
  Transactions with Management........   30 
Description of Notes..................   34 
Description of Capital Stock..........   46 
Underwriting..........................   49 
Legal Matters.........................   50 
Experts...............................   50 
Available Information.................   50 
Incorporation of Certain Documents by       
  Reference...........................   50 
Index to Consolidated Financial             
  Statements..........................  F-1 

------------------------------------------------------                          
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------------------------------------------------------                          
------------------------------------------------------                          
$27,500,000 
LOGO
LOGO

7 1/2% CONVERTIBLE
SUBORDINATED NOTES
DUE 2006
------------------------
PROSPECTUS
------------------------

SOUTHCOAST CAPITAL
CORPORATION                                           

DECEMBER 19, 1996 

------------------------------------------------------
------------------------------------------------------

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B1’ Filing		Date		First		Last			Other Filings
		12/1/09		63					10-K/A,  10-Q/A,  SC 13D/A
		12/1/06		4		34
		12/31/02		31					10-K,  10-K/A
		12/1/01		1		40
		7/1/98		64
		5/31/98		31
		1/27/98		63
		12/31/97		31					10-K
		6/1/97		1		34
		12/31/96		13		31			10-K
		12/26/96		1
Filed on:		12/20/96
		12/19/96		1		75			S-2/A
		12/1/96		34
		11/12/96		51					10-Q
		9/30/96		1		74			10-Q
		8/16/96		30
		8/14/96		51					10-Q
		6/30/96		50		51			10-Q
		5/14/96		51					10-Q
		4/1/96		50					10-K
		3/31/96		51					10-Q
		2/28/96		53
		1/1/96		31
		12/31/95		13		74			10-K
		12/1/95		63
		9/30/95		13		74			10-Q
		1/27/95		63
		1/1/95		14		60
		12/31/94		16		68
		12/1/94		63
		1/1/94		60		67
		12/31/93		16		68
		1/1/93		57		60
		12/31/92		65		68
									List all Filings