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, 1997
[ ] 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: 6,394,872
Outstanding as of May 7, 1997
<PAGE>
Part 1 - FINANCIAL INFORMATION
LYNTON GROUP, INC. AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
PERIOD ENDED MARCH 31, 1997
ITEM PAGE
Item 1 - Financial Statements:
Condensed Consolidated Balance Sheets -
March 31, 1997 and September 30, 1996 3
Condensed Consolidated Statements of Operations -
For the Three and Six months ended March 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows -
For the Six months ended March 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial Condition
and results of operations 7
2
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1997 1996
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH $637,022 $1,268,475
ACCOUNTS RECEIVABLE 1,723,571 2,336,549
INVENTORIES 790,129 822,339
PREPAIDS AND OTHER CURRENT ASSETS 163,632 396,605
TOTAL CURRENT ASSETS 3,314,354 4,823,968
PROPERTY, PLANT AND EQUIPMENT 17,717,978 17,386,419
LESS ACCUMULATED DEPRECIATION
AND AMORTIZATION 4,339,980 3,977,517
13,377,998 13,408,902
FUNDS HELD IN ESCROW 150,000 150,000
INVESTMENT IN JOINTLY-OWNED COMPANY
HELD FOR RESALE 1,233,609 1,182,376
LONG-TERM GROUND LEASE, LESS
ACCUMULATED AMORTIZATION 1,963,233 1,992,606
GOODWILL, LESS ACCUMULATED AMORTIZATION 2,190,852 2,213,635
OTHER ASSETS AND DEFERRED CHARGES,
LESS ACCUMULATED AMORTIZATION 559,255 601,690
$22,789,301 $24,373,177
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES $2,847,047 $4,249,476
ADVANCES FROM CUSTOMERS AND
DEFERRED REVENUE 1,623,630 1,713,217
CURRENT PORTION OF CAPITAL LEASE
OBLIGATIONS 36,478 34,225
CURRENT PORTION OF LONG-TERM DEBT 1,127,100 986,506
TOTAL CURRENT LIABILITIES 5,634,255 6,983,424
MORTGAGE NOTE DUE TO MASSACHUSETTS MUTUAL 7,143,037 7,441,711
LONG-TERM DEBT DUE TO FINOVA CAPITAL 3,704,939 3,839,198
SENIOR SUBORDINATED CONVERTIBLE DEBENTURES 833,333 895,000
DEFERRED REVENUE 840,000 960,000
OTHER LONG-TERM DEBT 740,774 854,974
STOCKHOLDERS' EQUITY:
COMMON STOCK 1,918,462 1,918,462
ADDITIONAL PAID-IN CAPITAL 9,779,823 9,779,823
ACCUMULATED DEFICIT (7,786,958) (8,233,475)
TRANSLATION ADJUSTMENT (7,016) (54,592)
3,904,311 3,410,218
COMMON STOCK HELD IN TREASURY (11,348) (11,348)
TOTAL STOCKHOLDERS' EQUITY 3,892,963 3,398,870
$22,789,301 $24,373,177
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31 MARCH 31
1997 1996 1997 1996
<S> <C> <C> <C> <C>
NET REVENUES $6,211,691 $4,745,160 $12,083,282 $10,452,280
EXPENSES:
DIRECT COSTS 4,657,558 3,792,886 9,261,435 8,230,899
SELLING, GENERAL
AND ADMINISTRATIVE 755,290 630,858 1,414,205 1,272,842
DEPRECIATION 172,181 163,198 343,195 330,090
AMORTIZATION OF GOODWILL
AND GROUND LEASE 31,913 31,371 63,837 62,776
OPERATING INCOME 594,749 126,847 1,000,610 555,673
AMORTIZATION OF DEBT
DISCOUNT AND ISSUANCE
COSTS 19,337 34,868 38,674 69,737
INTEREST 274,310 391,648 515,419 781,517
EQUITY IN LOSS OF
JOINTLY-OWNED COMPANY - 50,263 - 227,141
INCOME (LOSS) BEFORE
PROVISION FOR INCOME
TAXES 301,102 (349,932) 446,517 (522,722)
INCOME TAX PROVISION - - - -
NET INCOME (LOSS) $301,102 ($349,932) $446,517 ($522,722)
LESS DIVIDENDS ON
PREFERRED STOCK - (41,813) - (113,854)
NET (LOSS) INCOME
ATTRIBUTABLE TO
COMMON STOCK $301,102 ($391,745) $446,517 ($636,576)
NET INCOME (LOSS) PER
SHARE OF COMMON STOCK
PRIMARY $0.05 ($0.20) $0.07 ($0.32)
FULLY-DILUTED $0.05 ($0.20) $0.07 ($0.32)
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $446,517 ($522,722)
ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO CASH PROVIDED BY OPERATING
ACTIVITIES:
DEPRECIATION AND AMORTIZATION 445,706 462,603
EQUITY LOSS IN JOINTLY-OWNED COMPANY - 227,141
CHANGE IN CERTAIN ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE 700,288 484,651
DUE FROM/TO AFFILIATES (NET) (24,108) 182,348
INVENTORIES 60,216 54,903
PREPAIDS AND OTHER ASSETS 242,604 (68,399)
ACCOUNTS PAYABLE AND ACCRUED EXPENSE (1,520,275) (286,882)
ADVANCES FROM CUSTOMERS AND DEFERRED
REVENUES (263,658) (345,367)
NET CASH PROVIDED BY OPERATING ACTIVITIES 87,290 188,276
CASH FLOW FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (NET) (234,195) (38,445)
NET CASH USED BY INVESTING ACTIVITIES (234,195) (38,445)
CASH FLOW FROM FINANCING ACTIVITIES:
CAPITAL LEASE OBLIGATIONS (NET) 54,647 (13,293)
PROCEEDS FROM ISSUANCE OF COMMON STOCK - 5,000
PROCEEDS OF REVOLVING CREDIT FACILITIES - 223,893
REPAYMENT OF NOTES PAYABLE AND
LONG-TERM DEBT (569,577) (368,316)
NET CASH USED BY FINANCING ACTIVITIES (514,930) (152,716)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 30,382 -
DECREASE IN CASH (631,453) (2,885)
CASH, BEGINNING OF PERIOD 1,268,475 137,322
CASH, END OF PERIOD $637,022 $134,437
SUPPLEMENTAL INFORMATION
INTEREST PAID $512,576 $785,199
TAXES PAID $90,000 $-
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
March 31, 1997
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, 1997 are not necessarily indicative of the results
that may be expected for the year ending September 30, 1997.
The balances as of September 30, 1996 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,
1996.
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 and six months ended March 31,
1997 increased to $6,212,000 and $12,084,000 from revenues
of $4,745,000 and $10,452,000 for the comparable fiscal 1996
periods, an increase of $1,467,000 and $1,632,000, or 30.9%
and 15.6% respectively. This increase is primarily
attributable to an increase in fuel sales volume and tenant
occupancy at the Company's fixed base operations along with
increased revenues from maintenance operations in the UK.
Operating income for the three and six months ended
March 31, 1997 increased to $595,000 and $1,001,000 compared
to operating income of $127,000 and $556,000 for the
comparable fiscal 1996 periods, an increase of $468,000 and
$445,000, respectively. This increase is primarily
attributable to increased operating income from the
Company's fixed base operations along with increased
operating income from charter and maintenance operations in
the UK.
INTEREST
Interest expense for the three and six months ended
March 31, 1997 decreased to $274,000 and $515,000 from
interest expense of $392,000 and $782,000 for the comparable
fiscal 1996 periods, a decrease of $118,000 and $267,000,
respectively. This decrease results from lower levels of
borrowings specifically due to the repayment of debt to HM
Holdings in fiscal 1996.
EQUITY IN LOSS OF JOINTLY-OWNED COMPANY
For the three and six months ended March 31, 1997, no
gain or loss in the Company's equity of jointly-owned
company was recorded. This asset was reclassified as
investment in jointly-owned company held for resale in
fiscal 1996, and therefore, the Company's share of the gain
or loss in the jointly-owned company will no longer be
recognized under the equity method of accounting. For the
three and six months ended March 31, 1996, the Company
recorded a loss in equity of jointly-owned company of
$50,000 and $227,000.
NET INCOME
Net income for the three and six months ended March
31, 1997 was $301,000 and $447,000, compared to a net loss
of $350,000 and $523,000 for the comparable fiscal 1996
periods, an increase of $651,000 and $970,000, respectively.
This increase is primarily the result of increased operating
income, decreased interest expense from reduced levels of
borrowings, along with no gain or loss in equity of jointly-
owned company being recorded, as discussed above.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had a working capital
deficit of $2,320,000 as compared to a working capital
deficit of $2,159,000 at September 30, 1996, a decrease in
working capital of $161,000. This reduction in working
capital is primarily attributable to the classification
under current liabilities at March 31, 1997 of $140,000 for
increased principal payments on the Company's borrowings
which includes $61,667 being the amount to be provided into
a sinking fund for the retirement of the Company's senior
subordinated convertible debentures in December 1997.
7
<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 Company.
Item 2. CHANGES IN SECURITIES
None except for information previously disclosed
in the Quarterly Report on Form 10-Q for the period
ended December 31, 1996.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
On March 12, 1997, an annual meeting of
stockholders was held to elect five directors
to serve as the Board of Directors of the Company
until the next annual meeting of stockholders and
until their successors shall be elected and shall
qualify. At such meeting, Christopher Tennant,
Richard Hambro, James G. Niven, Paul R. Dupee, Jr.
and Nigel D. Pilkington, each an incumbent director,
were duly elected as directors of the Company.
Christopher Tennant received 5,790,207 affirmative
votes and 8,369 negative votes, and each of Richard
Hambro, James G. Niven, Paul R. Dupee, Jr. and Nigel
D. Pilkington received 5,790,241 affirmative votes
and 8,335 negative votes.
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, 1997:
None.
8
<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:MAY 12, 1997 By: /S/ CHRISTOPHER TENNANT
Christopher Tennant, President
and Chief Executive Officer
Dated:MAY 12, 1997 By:/S/ PAUL BOYD
Paul Boyd, Principal Financial Officer
9
<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, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING 6,394,872 1,961,344 6,394,872 1,961,344
WEIGHTED AVERAGE COMMON
STOCK EQUIVALENTS (1) - - - -
AVERAGE SHARES OUTSTANDING -
PRIMARY EARNINGS PER SHARE 6,394,872 1,961,344 6,394,872 1,961,344
PER SHARE
SERIES C PREFERRED STOCK (1) - - - -
AVERAGE SHARES OUTSTANDING -
FULLY-DILUTED EARNINGS
PER SHARE 6,394,872 1,961,344 6,394,872 1,961,344
PRIMARY & FULLY-DILUTED EARNINGS PER SHARE (1)
AVERAGE SHARES OUTSTANDING 6,394,872 1,961,344 6,394,872 1,961,344
NET INCOME (LOSS) $301,102 ($349,932) $446,517 ($522,722)
LESS DIVIDEND ON SERIES C &
D PREFERRED STOCK - (41,813) - (113,854)
$301,102 ($391,745) $446,517 ($636,576)
PER SHARE AMOUNT (1) $0.05 ($0.20) $0.07 ($0.32)
</TABLE>
(1) The options, to purchase shares of Common Stock of the Company, have
an exercise price in excess of the fair value of common stock, for the
three and six months ending March 31, 1997 and 1996, had an
anti-dilutive effect on earnings per share and are, therefore, excluded
in the computation of earnings per share for these periods.
The warrants, to purchase shares of Common Stock of the Company, had an
exercise price in excess of the fair value of common stock, for the
three and six months ending March 31, 1996, had an anti-dilutive effect
on earnings per share and are, therefore, excluded in the computation
of earnings per share for that period. All of the warrants issued to HM
Holdings were surrendered to the Company in fiscal 1996 and therefore,
have no effect on the computation of earnings per share for the three
and six months ending March 31, 1997. All the other remaining warrants,
had an exercise price in excess of the fair value of common stock, for
the three and six months ending March 31, 1997, had an anti-dilutive
effect on earnings per share and are, therefore, excluded in the
computation of earnings per share for that period.
The convertible Series C Preferred Stock and the related dividend effect
had an anti-dilutive effect on earnings per share for the three and six
months ending March 31, 1996 and are, therefore, excluded in the
computation of earnings per share for that period. All of the
convertible Series C Preferred Stock were converted to Common Stock of
the Company in fiscal 1996 and therefore, have no effect on the
computation of earnings per share for the three and six months ending
March 31, 1997.
10
<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 MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-1-1996
<PERIOD-END> MAR-31-1997
<CASH> 637,022
<SECURITIES> 0
<RECEIVABLES> 1,723,571
<ALLOWANCES> 0
<INVENTORY> 790,129
<CURRENT-ASSETS> 3,314,354
<PP&E> 17,717,978
<DEPRECIATION> 4,339,980
<TOTAL-ASSETS> 22,789,301
<CURRENT-LIABILITIES> 5,634,255
<BONDS> 12,422,083
<COMMON> 1,918,462
0
0
<OTHER-SE> 1,974,501
<TOTAL-LIABILITY-AND-EQUITY> 22,789,301
<SALES> 12,083,282
<TOTAL-REVENUES> 12,083,282
<CGS> 9,261,435
<TOTAL-COSTS> 11,082,672
<OTHER-EXPENSES> 38,674
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 515,419
<INCOME-PRETAX> 446,517
<INCOME-TAX> 0
<INCOME-CONTINUING> 446,517
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 446,517
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
