UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 0-6867
LYNTON GROUP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-2688055
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification
organization) Number)
9 AIRPORT ROAD
MORRISTOWN MUNICIPAL AIRPORT
MORRISTOWN, NEW JERSEY 07960
(Address of principal) (Zip Code)
executive offices)
Registrant's telephone number, including area code:(201) 292-9000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date:
Common, $.30 par value per share: 1,957,177
outstanding as of May 1, 1995
<PAGE>
PART I - FINANCIAL INFORMATION
LYNTON GROUP, INC. AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
PERIOD ENDED MARCH 31, 1995
PAGE
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1995 and September 30, 1994 3-4
Condensed Consolidated Statements of Operations -
For the Three months ended March 31, 1995 and 1994;
For the Six months ended March 31, 1995 and 1994 5
Condensed Consolidated Statements of Cash Flows -
For the Six months ended March 31, 1995 and 1994 6
Notes to Condensed Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-9
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, March 31,
1995 1994
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash $324,430 $143,689
Accounts receivable 2,360,272 2,652,374
Due from affiliates 408,775
Inventories 1,546,482 1,595,933
Aircraft held for resale 1,415,946 1,593,609
Prepaids and other current assets 688,104 287,947
---------- ----------
Total current assets 6,335,234 6,682,327
Property, plant and equipment 19,464,628 20,348,634
Less accumulated depreciation and
amortization 3,454,930 2,991,865
---------- ----------
16,009,698 17,356,769
Due from affiliate 191,308 191,308
Funds held in escrow 150,000 150,000
Long-term ground lease, less accumulated
amortization 2,080,724 2,110,096
Goodwill, less accumulated amortization 4,434,386 4,476,815
Other assets and deferred charges,
less accumulated amortization 735,227 768,967
----------- -----------
$29,936,577 $31,736,282
</TABLE>
See accompanying notes.
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, March 31,
1995 1994
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit facilities $980,884 $1,891,179
Notes payable to affiliate 48,334 67,571
Accounts payable and accrued
liabilities 4,508,414 5,339,989
Advances from customers and deferred
revenue 956,939 880,549
Current portion of capital lease
obligations 55,524 59,003
Current portion of long-term debt 2,686,017 2,234,247
------------ ------------
Total current liabilities 9,236,112 10,472,538
Long-term debt due to HM Holdings, Inc. 6,105,923 6,105,923
Mortgage note due to Connecticut Mutual 8,280,624 8,503,281
Senior subordinated convertible
debentures 2,500,000 2,500,000
Other long-term debt 1,417,221 1,222,842
Deferred income taxes 198,750 197,125
Stockholders' equity:
Series C Preferred 10 10
Series D Preferred 20 20
Common stock 587,153 587,153
Additional paid-in capital 8,321,055 8,321,055
Accumulated deficit (6,621,467) (6,089,708)
Translation adjustment (88,824) (83,957)
------------ ------------
Total stockholders' equity 2,197,947 2,734,573
------------ ------------
$29,936,577 $31,736,282
</TABLE>
See accompanying notes.
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
---------------------- -----------------------
1995 1994 1995 1994
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Net revenues $7,546,416 $8,064,977 $15,736,797 $15,758,573
Expenses:
Direct costs 6,619,407 7,035,954 12,876,744 13,449,259
Selling, general and
administrative 885,066 859,786 1,783,418 1,510,454
Depreciation 223,093 252,440 465,719 463,545
Amortization of goodwill
and ground lease 44,894 47,812 91,393 80,022
---------- ---------- ---------- ----------
Operating income (loss) (226,044) (131,015) 519,523 255,293
Amortization of debt discount
and issuance costs 34,868 36,999 69,712 58,998
Interest 435,818 328,689 881,136 591,499
---------- ---------- ---------- ----------
Loss before provision for income
taxes (696,730) (496,703) (431,325) (395,204)
Income tax provision - - - -
---------- ---------- ---------- ----------
Net loss $(696,730) $(496,703) $(431,325) $(395,204)
Divedends on Preferred Stock $(52,487) $(43,399) $(100,434) $(87,686)
---------- ---------- ---------- ----------
Net loss attributable to
Common Stock $(749,217) $(540,102) $(531,759) $(482,890)
========== ========== ========== ==========
Net loss per share of Common Stock
Primary and fully diluted
earnings per share $(0.38) $(0.26) $(0.27) $(0.23)
========== ========== ========== ==========
</TABLE>
See accompanying notes.
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Cash flow from operating activities:
Net loss $(431,325) $(395,204)
Adjustments to reconcile net loss
to cash provided by operating
activities:
Depreciation and amortization 626,824 602,566
Gain on disposal of fixed assets (398,265) -
Translation adjustment - (18,865)
Change in certain assets and
liabilities:
Accounts receivable 309,756 (41,568)
Due from affiliates 392,320 474,162
Inventories 61,058 (230,762)
Aircraft held for resale 189,996 -
Prepaids and other assets (430,394 (373,167)
Accounts payable and accrued
expenses (860,335) (625,449)
Advances from customers and
deferred revenues 70,361 (1,859)
----------- -----------
Net cash used by operating activities (470,004) (610,146)
Cash flow from investing activities:
Cash paid for shares of Dollar Air Services
Limited and related acquisition costs (774,319)
Proceeds from disposal of fixed assets 1,391,953 -
Capital expenditures (net) (80,500) (270,324)
---------- -----------
Net cash provided (used) by investing
activities 1,311,453 (1,044,643)
Cash flow from financing activities:
Change in capital lease obligations (net) (7,404) 245,014
Dividends paid on preferred stock (100,434) (87,686)
Proceeds from issuance of Senior
Subordinated Convertible Debt,
net of issuance costs 2,258,464
Repayment of notes payable and
long-term debt (net) (552,870) (910,988)
---------- -----------
Net cash provided (used) by financing
activities (660,708) 1,504,804
Effect of exchange rate changes on cash - -
---------- -----------
Increase in cash 180,741 (149,985)
Cash, beginning of period 143,689 266,741
---------- -----------
Cash, end of period $324,430 $116,756
========== ===========
Supplemental Information:
Interest Paid $872,489 $591,499
Taxes Paid $- $-
</TABLE>
See accompanying notes.
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
MARCH 31, 1995
Note 1. BASIS OF PRESENTATION
The accompanying unaudited condensed
consolidated financial statements have been prepared
in accordance with generally accepted accounting
principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally
accepted accounting principles for complete financial
statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included. Operating results for the six month period
ended March 31, 1995 are not necessarily indicative of
the results that may be expected for the year ended
September 30, 1995. The balances as of September 30,
1994 in the accompanying balance sheets, have been
derived from the audited financial statements as of
such date. For further information, refer to the
consolidated financial statements and footnotes
thereto included in the Lynton Group, Inc. (the
"Company") Annual Report on Form 10-K for the year
ended September 30, 1994.
Note 2. UNAUDITED PRO FORMA FINANCIAL INFORMATION
The table below sets forth the unaudited pro
forma results of operations for the six months ended
March 31, 1994 assuming consummation of the purchase
of Dollar Air and the issuance of the 10% Senior
Subordinated Convertible Debentures as of the
beginning of the period (000's except earnings per
share data):
Revenue $17,153
Net loss $(993)
Net loss per common share $(.51)
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- - - - - - - - - - ---------------------
REVENUES & OPERATING INCOME
Revenues for the three and six months ended
March 31, 1995 decreased to $7,546,000 and to
$15,737,000 from revenues of $8,065,000 and
$15,759,000 for the comparable fiscal 1994 periods, a
decrease of $519,000 and $22,000, or 6.4% and 0.1%
respectively. The decrease in revenues for the three
months ended March 31, 1995 as compared to the three
months ended March 31, 1994 is primarily attributable
to reduced revenues from the Company's flight
operations. The decrease in revenues for the six
months ended March 31, 1995 as compared to March 31,
1994 is primarily attributable to a reduction in
revenues from aircraft sales operations, partially
offset by increased revenues from Dollar Air resulting
from the inclusion of six months of revenues from
Dollar Air in fiscal 1995 as compared to the inclusion
of revenues from Dollar Air for the period from
January 13, 1994 (Date of Acquisition) to March 31,
1994 in fiscal 1994.
Operating loss for the three months ended March
31, 1995 increased to $226,000 as compared to an
operating loss for the three months ended March 31,
1994 of $131,000, an increase in operating loss of
$95,000. This increased loss primarily consists of
increased operating losses from Dollar Air and a
provision of $192,000 related to the writedown of an
aircraft held for resale, partially offset by improved
performance of maintenance operations.
Operating income for the six months ended March
31, 1995 increased to $520,000 as compared to
operating income for the six months ended March 31,
1994 of $255,000, an increase of $265,000. This
increase consists of improved performance from fixed
base operations and aircraft sales, partially offset
by increased operating losses from Dollar Air.
INTEREST
Interest expense for the three and six months
ended March 31, 1995 increased to $436,000 and
$881,000 from interest expense for the three and six
months ended March 31, 1994 of $329,000 and $592,000,
an increase of $107,000 and $289,000, respectively.
These increases result from additional interest costs
related to the Debentures issued by the Company in
December 1993 and increased costs related to higher
interest rates on the Company's borrowings with HM
Holdings, Inc.
NET INCOME
The net losses for the three and six months
ended March 31, 1995 increased to $697,000 and
$431,000 as compared to net losses for the three and
six months ended March 31, 1994 of $497,000 and
$395,000, an increase of $200,000 and $36,000,
respectively. These increased losses resulted from
increased operating losses and increased interest
costs.
LIQUIDITY AND CAPITAL RESOURCES
- - - - - - - - - - -------------------------------
At March 31, 1995, the Company had a working
capital deficit of $2,901,000 as compared to a working
capital deficit of $3,790,000 at September 30, 1994,
an increase in working capital of $889,000. This
improvement in working capital is primarily
attributable to cash provided from the disposal of two
operating aircraft. The Company currently has no
material commitments for capital expenditures.
Dollar Air's flight operations revenues are
generally lower in the winter months because of
reduced market demand. Due primarily to this factor,
material operating losses have been sustained by
Dollar Air in this period. Should these losses
continue, the resources of the Company, at present,
would be inadequate to meet its debt service
requirements during the next twelve months. The
Company is evaluating several alternatives to address
this situation, including a potential joint venture
with another company in Dollar Air's market which
Management believes could improve operating results.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
At the present time, there is no material
litigation pending or, to management's
knowledge, threatened against the Registrant.
Item 2. CHANGES IN SECURITIES
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
On March 8, 1995, an annual meeting of
stockholders was held for the following
purposes (I) to elect five directors to serve
as the Board of Directors of the Registrant
until the next annual meeting of stockholders
and until their successors shall be elected and
shall qualify; (ii) to ratify the selection of
Ernst & Young LLP as the Registrant's
independent auditors for the fiscal year ending
September 30, 1995.
At such annual meeting, Christopher Tennant,
Richard Hambro, Nicholas R.H. Toms, James G.
Niven and Mark A. Alexander, each an incumbent
director, were duly elected as directors of the
Registrant. Each of Christopher Tennant,
Richard Hambro, Nicholas R.H. Toms, James G.
Niven and Mark A. Alexander received 2,058,763
affirmative votes and 703 negative votes.
Proposal 2 was duly approved with 2,058,772
affirmative votes, 479 negative votes and 215
abstentions.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
11.0 Statement re Computation of Per Share
Earnings.
(B) Reports on Form 8-K.
Listed below are reports on Form 8-K filed
during the fiscal quarter ended March 31, 1995:
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has
duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
LYNTON GROUP, INC.
(Registrant)
Dated: MAY 12, 1995 By: /S/CHRISTOPHER TENNANT
Christopher Tennant,
President and
Chief Executive Officer
Dated: MAY 12, 1995 By: /S/MANUS O'DONNELL
Manus O'Donnell,
Secretary and Treasurer
(Principal Financial Officer)
<PAGE>
INDEX TO EXHIBITS
PAGE
11.0 Statement re Computation of Per Share Earnings. 13
<PAGE>
Exhibit 11 - Computation of per share earnings
LYNTON GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
--------------------- ----------------------
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Weighted average shares of
Common Stock outstanding 1,957,177 1,941,010 1,957,177 1,913,232
Weighted average Common
Stock equivalents - - - -
---------- ---------- ---------- ----------
1,957,177 1,941,010 1,957,177 1,913,232
Series C Preferred Stock - - - -
Average shares outstanding
Fully diluted earnings
per share 1,957,177 1,941,010 1,957,177 1,913,232
========= ========= ========= =========
Net loss attributable
to common stock $(696,730) $(496,703) $(431,325) $(395,204)
Dividend on Series C & D
Preferred Stock (52,487) (43,399) (100,434) (87,866)
---------- ---------- ---------- ----------
$(749,217) $(540,102) $(531,759) $(482,890)
========== ========== ========== ==========
Primary & fully diluted
earnings per share $(0.38) $(0.28) $(0.27) $(0.25)
========== ========== ========== ==========
</TABLE>
