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 JUNE 30, 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 August 10, 1995
<PAGE>
PART I - FINANCIAL INFORMATION
LYNTON GROUP, INC. AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
PERIOD ENDED JUNE 30, 1995
PAGE
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets -
June 30, 1995 and September 30, 1994 3-4
Condensed Consolidated Statements of Operations -
For the Three months ended June 30, 1995 and 1994;
For the Nine months ended June 30, 1995 and 1994 5
Condensed Consolidated Statements of Cash Flows -
For the Nine months ended June 30, 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>
June 30, September 30,
1995 1994
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash $141,137 $143,689
Accounts receivable 2,339,541 2,652,374
Due from affiliates - 408,775
Inventories 1,303,590 1,595,933
Aircraft held for resale - 1,593,609
Prepaids and other current assets 598,757 287,947
---------- ----------
Total current assets 4,383,025 6,682,327
Property, plant and equipment 19,563,905 20,348,634
Less accumulated depreciation and
amortization 3,630,299 2,991,865
---------- ----------
15,933,606 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 2,066,037 2,110,096
Goodwill, less accumulated amortization 4,214,553 4,476,815
Other assets and deferred charges,
less accumulated amortization 708,995 768,967
----------- -----------
$27,647,524 $31,736,282
=========== ===========
</TABLE>
See accompanying notes.
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, September 30,
1995 1994
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit facilities $1,073,576 $1,891,179
Notes payable to affiliate 40,405 67,571
Accounts payable and accrued
liabilities 4,401,841 5,339,989
Advances from customers and deferred
revenue 690,845 880,549
Current portion of capital lease
obligations 50,994 59,003
Current portion of long-term debt 1,556,712 2,234,247
------------ ------------
Total current liabilities 7,814,373 10,472,538
Long-term debt due to HM Holdings, Inc. 6,105,923 6,105,923
Mortgage note due to Connecticut Mutual 8,146,074 8,503,281
Senior subordinated convertible
debentures 2,500,000 2,500,000
Other long-term debt 1,292,181 1,222,842
Deferred income taxes - 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 (7,026,702) (6,089,708)
Translation adjustment (92,563) (83,957)
------------ ------------
Total stockholders' equity 1,788,973 2,734,573
----------- -----------
$27,647,524 $31,736,282
=========== ===========
</TABLE>
See accompanying notes.
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
---------------------- -----------------------
1995 1994 1995 1994
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Net revenues $8,191,211 $8,508,771 $23,928,008 $24,267,344
Expenses:
Direct costs 6,701,509 6,537,400 19,578,253 19,986,659
Selling, general and
administrative 1,009,541 1,251,949 2,792,959 2,762,403
Depreciation 262,496 305,897 728,215 769,442
Amortization of goodwill
and ground lease 46,888 52,247 138,281 132,269
---------- ---------- ---------- ----------
Operating income 170,777 361,278 690,300 616,571
Amortization of debt discount
and issuance costs 34,869 36,023 104,581 95,021
Interest 470,099 354,386 1,351,235 945,885
---------- ---------- ---------- ----------
Loss before provision for
income taxes (334,191) (29,131) (765,516) (424,335)
Income tax provision - - - -
---------- ---------- ---------- ----------
Net loss $(334,191) $ (29,131) $(765,516) $(424,335)
Divedends on Preferred Stock $ (71,044) $ (55,012) $(171,478) $(142,698)
---------- ---------- ---------- ----------
Net loss attributable to
Common Stock $(405,235) $ (84,143) $(936,994) $(567,033)
========== ========== ========== ==========
Net loss per share of Common Stock
Primary and fully diluted
earnings per share $(0.21) $(0.04) $(0.48) $(0.29)
========== ========== ========== ==========
</TABLE>
See accompanying notes.
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Cash flow from operating activities:
Net loss $(765,516) $(424,335)
Adjustments to reconcile net loss
to cash provided by (used in)
operating activities:
Depreciation and amortization 971,077 996,732
Gain on disposal of fixed assets (455,264) -
Loss on sale of aircraft held
for resale 310,226 -
Change in certain assets and
liabilities:
Accounts receivable 337,802 (627,594)
Due from affiliates 352,257 302,878
Inventories 308,131 302,390
Aircraft held for resale 1,289,750 -
Prepaids and other assets (315,058) (337,722)
Accounts payable and accrued
expenses (978,790) (656,031)
Advances from customers and
deferred revenues (196,564) (327,088)
----------- -----------
Net cash provided by (used in) operating
activities 858,051 (770,770)
Cash flow from investing activities:
Cash paid for shares of Dollar Air Services
Limited and related acquisition costs - (1,045,062)
Proceeds from disposal of fixed assets 1,391,953 -
Capital expenditures (net) (197,280) (374,620)
----------- -----------
Net cash provided by (used in) investing
activities 1,194,673 (1,419,682)
Cash flow from financing activities:
Change in capital lease obligations (net) (22,230) (91,277)
Dividends paid on preferred stock (171,478) (142,698)
Proceeds from issuance of Senior
Subordinated Convertible Debt,
net of issuance costs - 2,201,880
Proceeds from issuance of 6.9% Mortgage
Note, net of issuance costs - 8,465,574
Repayment of notes payable and
long-term debt (net) (1,861,568) (8,214,608)
----------- -----------
Net cash (used in) provided by financing
activities (2,055,276) 2,218,871
Effect of exchange rate changes on cash - -
----------- -----------
(Decrease) increase in cash (2,552) 28,419
Cash, beginning of period 143,689 266,741
----------- -----------
Cash, end of period $141,137 $295,160
=========== ===========
Supplemental Information:
Interest Paid $1,337,960 $1,329,744
=========== ===========
Taxes Paid $- $-
=========== ===========
</TABLE>
See accompanying notes.
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 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 nine month period ended June 30, 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 nine months ended June 30, 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 $ 25,662
Net loss $(1,022)
Net loss per common share $ (.55)
<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 nine months ended June 30, 1995 increased
to $8,191,000 and $23,928,000, respectively from revenues of $8,509,000 and
$24,267,000 for the comparable fiscal 1994 periods, a decrease of $318,000
and $339,000, or 4% and 1%, respectively. The decrease in revenues for the
three months ended June 30, 1995 is primarily attributable to a reduced
level of operations by Dollar Air in overseas locations. The decrease in
revenues for the nine months ended June 30, 1995 is primarily attributable
to a reduced level of operations by Dollar Air in overseas locations and a
reduction in revenues from the Company's aircraft sales operations.
Operating income for the three months ended June 30, 1995 decreased
to $171,000 as compared to $361,000 for the same period last year, a
decrease of $190,000 or 53%. This decrease primarily consists of reduced
operating income from Dollar Air. Operating income for the nine months
ended June 30, 1995, increased to $690,000 as compared to $617,000 for the
same period last year, an increase of $73,000, or 12%. This increase
primarily consists of an increase in operating income from aircraft sales
operations, increased operating income from charter and management
operations, partially offset by operating losses for Dollar Air.
INTEREST
Interest expense for the three and nine months ended June 30, 1995
increased to $470,000 and $1,351,000, respectively from interest expense of
$354,000 and $946,000 for the three and nine months ended June 30, 1994, an
increase of $116,000 and $405,000, respectively. These increases consists
of additional interest costs related to the Debentures issued by the
Company in December 1993 and increased costs resulting from higher interest
rates on the Company's borrowings with HM Holdings, Inc.
NET INCOME
Net losses for the three and nine months ended June 30, 1995
increased to $334,000 and $766,000, respectively from net losses of $29,000
and $424,000 for the three and nine months ended June 30, 1994, an increase
of $305,000 and $341,000, respectively. These losses are the result of
increased operating losses and increased interest costs.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At June 30, 1995, the Company had a working capital deficit of
$3,431,000 as compared to a working capital deficit of $3,790,000 at
September 30, 1994, an increase in working capital of $359,000. This
improvement in working capital is primarily attributable to net proceeds
from the disposal of two operating aircraft. The Company currently has no
material commitments for capital expenditures.
Material operating losses have been sustained by Dollar Air in this
reporting period. Should these losses continue, the resources of the
Company, at present, would be inadequate to meet its debt service
<PAGE>
requirements during the next twelve months. To address this situation, the
Company is in the process of negotiating with a major competitor of Dollar
Air to enter into a joint venture transaction. The Company anticipates this
transaction will be consummated in the fourth quarter of fiscal 1995.
However, no assurance can be given that this transaction will be completed.
<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
None.
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 June 30, 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: AUGUST 11, 1995 By: /S/CHRISTOPHER TENNANT
----------------- ----------------------
Christopher Tennant, President
and Chief Executive Officer
Dated: AUGUST 11, 1995 By: /S/MANUS O'DONNELL
---------------- ----------------------
Manus O'Donnell, Secretary and
Treasurer (Principal Financial
Officer)
<PAGE>
Exhibit 11 - Computation of per share earnings
LYNTON GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
--------------------- ----------------------
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Weighted average shares of
Common Stock outstanding 1,957,177 1,952,121 1,957,177 1,926,689
Weighted average Common
Stock equivalents - - - -
---------- ---------- ---------- ----------
1,957,177 1,952,121 1,957,177 1,926,689
Series C Preferred Stock - - - -
Average shares outstanding
Fully diluted earnings
per share 1,957,177 1,952,121 1,957,177 1,926,689
========== ========== ========== ==========
Net loss $(334,191) $ (29,131) $(765,516) $(424,335)
Dividend on Series C & D
Preferred Stock (71,044) (55,012) (171,478) (142,698)
---------- ---------- ---------- ----------
Net loss attributable to
Common Stock $(405,235) $ (84,143) $(936,994) $(567,033)
========== ========== ========== ==========
Primary & fully diluted
earnings per share $(0.21) $(0.04) $(0.48) $(0.29)
========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM LYNTON
GROUP, INC.'S QUARTERLY REPORT FOR THE QUARTER ENDED JUNE 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Sep-30-1994
<PERIOD-START> Oct-01-1994
<PERIOD-END> Jun-30-1995
<CASH> 141,137
<SECURITIES> 0
<RECEIVABLES> 2,339,541
<ALLOWANCES> 0
<INVENTORY> 1,303,590
<CURRENT-ASSETS> 4,383,025
<PP&E> 19,563,905
<DEPRECIATION> 3,630,299
<TOTAL-ASSETS> 27,647,524
<CURRENT-LIABILITIES> 7,814,373
<BONDS> 18,044,178
<COMMON> 587,153
0
30
<OTHER-SE> 1,201,790
<TOTAL-LIABILITY-AND-EQUITY> 27,647,524
<SALES> 23,928,008
<TOTAL-REVENUES> 23,928,008
<CGS> 19,578,253
<TOTAL-COSTS> 19,578,253
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,378,235
<INCOME-PRETAX> (765,516)
<INCOME-TAX> 0
<INCOME-CONTINUING> (765,516)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (765,516)
<EPS-PRIMARY> (.48)
<EPS-DILUTED> (.48)
</TABLE>
