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 DECEMBER 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 of (I.R.S. Employer
incorporation or organization) Identification Number)
9 AIRPORT ROAD
MORRISTOWN MUNICIPAL AIRPORT 07960
MORRISTOWN, NEW JERSEY (Zip Code)
(Address of principal 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: 1,962,177
Outstanding as of February 1, 1996
<PAGE>
Part 1 - FINANCIAL INFORMATION
LYNTON GROUP, INC. AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
PERIOD ENDED DECEMBER 31, 1995
ITEM PAGE
Item 1 - Financial Statements:
Condensed Consolidated Balance Sheets -
December 31, 1995 and September 30, 1995 3
Condensed Consolidated Statements of Operations -
For the Three months ended December 31, 1995 and 1994 4
Condensed Consolidated Statements of Cash Flows -
For the Three months ended December 31, 1995 and 1994 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and results of operations 7-8
2
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1995
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH $240,504 $137,322
ACCOUNTS RECEIVABLE 1,792,275 1,948,368
DUE FROM AFFILIATES - 156,396
INVENTORIES 962,785 1,019,810
PREPAIDS AND OTHER CURRENT ASSETS 399,445 299,181
TOTAL CURRENT ASSETS 3,395,009 3,561,077
PROPERTY, PLANT AND EQUIPMENT 17,126,171 17,280,678
LESS ACCUMULATED DEPRECIATION AND
AMORTIZATION 3,528,284 3,453,387
13,597,887 13,827,291
DUE FROM AFFILIATE 191,308 191,308
FUNDS HELD IN ESCROW 150,000 150,000
INVESTMENT IN JOINTLY-OWNED COMPANY 999,079 1,201,248
LONG-TERM GROUND LEASE, LESS 2,036,665 2,051,351
ACCUMULATED AMORTIZATION
GOODWILL, LESS ACCUMULATED 2,262,137 2,284,408
AMORTIZATION
OTHER ASSETS AND DEFERRED CHARGES, 630,388 656,257
LESS ACCUMULATED AMORTIZATION
$23,262,473 $23,922,940
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES:
REVOLVING CREDIT FACILITIES $420,019 $240,533
DUE TO AFFILIATES 92,281 -
ACCOUNTS PAYABLE AND ACCRUED 3,690,287 3,949,928
LIABILITIES
ADVANCES FROM CUSTOMERS AND DEFERRED 924,798 1,167,103
REVENUE
CURRENT PORTION OF CAPITAL LEASE 24,809 26,701
OBLIGATIONS
CURRENT PORTION OF LONG-TERM DEBT 1,740,694 924,580
TOTAL CURRENT LIABILITIES 6,892,888 6,308,845
LONG-TERM DEBT DUE TO HM HOLDINGS, 6,605,923 6,605,923
INC.
MORTGAGE NOTE DUE TO CONNECTICUT 7,870,151 8,009,310
MUTUAL
SENIOR SUBORDINATED CONVERTIBLE 1,666,667 2,500,000
DEBENTURES
OTHER LONG-TERM DEBT 275,829 295,618
STOCKHOLDERS' EQUITY:
SERIES C PREFERRED 10 10
SERIES D PREFERRED 20 20
COMMON STOCK 588,653 587,153
ADDITIONAL PAID-IN CAPITAL 8,324,555 8,321,055
ACCUMULATED DEFICIT (8,869,115) (8,624,285)
TRANSLATION ADJUSTMENT (93,108) (80,709)
TOTAL STOCKHOLDERS' EQUITY (48,985) 203,244
$23,262,473 $23,922,940
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
NET REVENUES $6,353,289 $8,190,381
EXPENSES:
DIRECT COSTS 5,030,559 6,257,337
SELLING, GENERAL AND ADMINISTRATIVE 695,607 898,352
DEPRECIATION 166,892 242,626
AMORTIZATION OF GOODWILL AND GROUND 31,405 46,499
LEASE
OPERATING INCOME 428,826 745,567
AMORTIZATION OF DEBT DISCOUNT AND 34,869 34,844
ISSUANCE COSTS
INTEREST 389,869 445,318
EQUITY IN LOSS OF JOINTLY-OWNED 176,878 -
COMPANY
(LOSS) INCOME BEFORE PROVISION FOR (172,790) 265,405
INCOME TAXES
INCOME TAX PROVISION - -
NET (LOSS) INCOME (172,790) 265,405
LESS DIVIDENDS ON PREFERRED STOCK - (47,947)
NET (LOSS) INCOME ATTRIBUTABLE TO ($172,790) $217,458
COMMON STOCK
NET (LOSS) INCOME PER SHARE OF
COMMON STOCK
PRIMARY ($0.09) $0.11
FULLY-DILUTED ($0.07) $0.09
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
NET (LOSS) INCOME ($172,790) $265,405
ADJUSTMENTS TO RECONCILE NET (LOSS)
INCOME TO CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 233,165 323,969
EQUITY LOSS IN JOINTLY-OWNED COMPANY 176,878 -
CHANGE IN CERTAIN ASSETS AND
LIABILITIES:
ACCOUNTS RECEIVABLE 125,649 98,331
DUE FROM/TO AFFILIATES (NET) 277,561 288,259
INVENTORIES 38,873 178,080
AIRCRAFT HELD FOR RESALE - 94,915
PREPAIDS AND OTHER ASSETS (106,357) (294,276)
ACCOUNTS PAYABLE AND ACCRUED (290,695) (846,042)
EXPENSES
ADVANCES FROM CUSTOMERS AND DEFERRED (222,154) 423,601
REVENUES
NET CASH PROVIDED BY OPERATING 60,130 532,242
ACTIVITIES
CASH FLOW FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (NET) 21,321 (3,160)
NET CASH PROVIDED (USED) BY 21,321 (3,160)
INVESTING ACTIVITIES
CASH FLOW FROM FINANCING ACTIVITIES:
CAPITAL LEASE OBLIGATIONS (NET) (6,645) 27,387
DIVIDENDS PAID ON PREFERRED STOCK - (47,947)
PROCEEDS FROM ISSUANCE OF COMMON 5,000 -
STOCK
PROCEEDS OF BORROWINGS FROM HM - 500,000
HOLDINGS, INC.
PROCEEDS (REPAYMENTS) OF REVOLVING 186,097 (511,112)
CREDIT FACILITIES
REPAYMENT OF NOTES PAYABLE AND LONG- (162,721) (410,261)
TERM DEBT
NET CASH PROVIDED (USED) BY 21,731 (441,933)
FINANCING ACTIVITIES
EFFECT OF EXCHANGE RATE CHANGES ON - -
CASH
INCREASE IN CASH 103,182 87,149
CASH, BEGINNING OF PERIOD 137,322 143,689
CASH, END OF PERIOD $240,504 $230,838
SUPPLEMENTAL INFORMATION
INTEREST PAID $391,542 $424,685
TAXES PAID $- $-
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
December 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 three month period ended December 31,
1995 are not necessarily indicative of the
results that may be expected for the year
ending September 30, 1996. The balances as of
September 30, 1995 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,
1995.
6
<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 months ended
December 31, 1995 decreased to $6,353,000
from revenues of $8,190,000 for the
comparable fiscal 1995 period, a decrease of
$1,837,000 or 22.4%. On August 31, 1995 the
Company tranferred substantially all the
business, assets and liabilities of Dollar
Air and Black Isle to PDG, for 50% of the
capital stock of PDG. Operating results prior
to August 31, 1995 reflect full consolidation
of Dollar Air and Black Isle while subsequent
to this date the Company's proportionate
share of the results of operations of PDG are
reflected under the equity method of
accounting. Accordingly, a decrease of
$1,317,000 in revenues and $1,220,000 in
operating expenses from the same period last
year is attributable to the effects of this
transfer.
For the three months ended December 31,
1995, the Company experienced a decrease of
$440,000 in volume of aircraft sales
transactions as compared to a particularly
high level of such sales in the three months
ended December 31, 1994.
Operating income for the three months
ended December 31, 1995 decreased to $429,000
compared to operating income of $746,000 for
the three months ended December 31, 1994, a
decrease of $317,000. This decrease
primarily consists of a decrease in operating
income from aircraft sales operations of
approximately $440,000, partly offset by
reduced levels of selling, general and
administrative expenses as compared to the
same period last year.
INTEREST
Interest expense for the three months
ended December 31, 1995 decreased to $390,000
compared to interest expense of $445,000 for
the three months ended December 31, 1994, a
decrease of $55,000 This decrease results
from lower levels of borrowing at the
Company's UK operations.
EQUITY IN LOSS OF JOINTLY-OWNED COMPANY
For the three months ended December 31,
1995 the Company recorded a loss in equity of
jointly-owned company of $177,000 with no
comparable amount for the three months ended
December 31, 1994. Operating results for PDG
for the period reflect the seasonal nature of
helicopter operations in Scotland, with
reduced customer demand for helicopter
services in the winter months. As a
substantial portion of PDG costs are fixed,
the result has been operating losses in these
months and this amount reflects the Company's
proportionate share of these losses.
NET INCOME
Net loss for the three months ended
December 31, 1995 was $173,000 as compared to
net income of $265,000 for the three months
ended December 31, 1994, a decrease of
$438,000. This decrease is primarily the
result of a decrease in aircraft sales
transactions and an equity loss in PDG of
$177,000 for the three month period ended
December 31, 1995.
7
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1995, the Company had a
working capital deficit of $3,498,000 as
compared to a working capital deficit of
$2,748,000 at September 30, 1995, a decrease
in working capital of $750,000. This
reduction in working capital is primarily
attributable to the classification under
current liabilities at December 31, 1995 of
$833,000 being the amount to be provided into
a sinking fund for the retirement of the
Company's senior subordinated convertible
debentures in December, 1996. The Company
currently has no material commitments for
capital expenditures.
8
<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
(a) None.
(b) The Company has 1,000 shares
of Series C Convertible
Preferred Stock and 2,000
shares of Series D Preferred
Stock outstanding. The Series
C Convertible Preferred Stock
pays a semi-annual dividend
payable out of the assets of
the Company legally available
therefor at a rate of $30 per
share, and the Series D
Preferred Stock pays a
quarterly cumulative dividend
out of the assets of the
Company legally available
therefor at a rate equal to
the average interest rate per
annum, borne by the loans
outstanding under the Credit
Agreement, as amended, with HM
Holdings, Inc. As of December 31,
1995, the Company had accrued and
unpaid dividends of $30,000
relating to the Series C
Convertible Preferred Stock and
accrued and unpaid devidends of
$42,041 related to the Series D
Preferred Stock.
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 December 31, 1995:
None.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities and 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.
Dated: By: /S/CHRISTOPHER TENNANT
Christopher Tennant,
President and Chief
Executive Officer
Dated: By: /S/ MANUS O'DONNELL
Manus O'Donnell,
Secretary and Treasurer
(Principal Financial Officer)
10
<PAGE>
Exhibit 11 - Computation of per share earnings
LYNTON GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
WEIGHTED AVERAGE SHARES OF COMMON 1,960,510 1,957,177
STOCK OUTSTANDING
WEIGHTED AVERAGE COMMON STOCK - 39,854
EQUIVALENTS
AVERAGE SHARES OUTSTANDING - PRIMARY 1,960,510 1,997,031
EARNINGS PER SHARE
SERIES C PREFERRED STOCK 677,779 677,779
AVERAGE SHARES OUTSTANDING - FULLY 2,638,289 2,674,810
DILUTED EARNINGS PER SHARE
PRIMARY EARNINGS PER SHARE:
AVERAGE SHARES OUTSTANDING 1,960,510 1,997,031
NET (LOSS) INCOME ($172,790) $265,405
LESS DIVIDEND ON SERIES C & D - (47,947)
PREFERRED STOCK
($172,790) $217,458
PER SHARE AMOUNT ($0.09) $0.11
FULLY-DILUTED EARNINGS PER SHARE:
AVERAGE SHARES OUTSTANDING 2,638,289 2,674,810
NET (LOSS) INCOME ATTRIBUTABLE TO ($172,790) $265,405
COMMON STOCK
LESS DIVIDEND ON SERIES D PREFERRED - (32,947)
STOCK
($172,790) $232,458
PER SHARE AMOUNT ($0.07) $0.09
</TABLE>
11
<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 DECEMBER 31, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-1-1995
<PERIOD-END> DEC-31-1995
<CASH> 240,504
<SECURITIES> 0
<RECEIVABLES> 1,792,275
<ALLOWANCES> 0
<INVENTORY> 962,785
<CURRENT-ASSETS> 3,395,009
<PP&E> 17,126,171
<DEPRECIATION> 3,528,284
<TOTAL-ASSETS> 23,262,473
<CURRENT-LIABILITIES> 6,892,888
<BONDS> 16,418,570
<COMMON> 588,653
0
30
<OTHER-SE> (637,668)
<TOTAL-LIABILITY-AND-EQUITY> 23,262,473
<SALES> 6,353,289
<TOTAL-REVENUES> 6,353,289
<CGS> 5,030,559
<TOTAL-COSTS> 5,924,463
<OTHER-EXPENSES> 211,747
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 389,869
<INCOME-PRETAX> (172,790)
<INCOME-TAX> 0
<INCOME-CONTINUING> (172,790)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (172,790)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.07)
</TABLE>
