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, 1996
[ ] 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 February 7, 1997
<PAGE>
Part 1 - FINANCIAL INFORMATION
LYNTON GROUP, INC. AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
PERIOD ENDED DECEMBER 31, 1996
ITEM PAGE
Item 1 - Financial Statements:
Condensed Consolidated Balance Sheets -
December 31, 1996 and September 30, 1996 3
Condensed Consolidated Statements of Operations -
For the Three months ended December 31, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows -
For the Three months ended December 31, 1996 and 1995 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>
DECEMBER 31, SEPTEMBER 30,
1996 1995
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH $1,197,385 $1,268,475
ACCOUNTS RECEIVABLE 1,730,700 2,336,549
INVENTORIES 921,116 822,339
PREPAIDS AND OTHER CURRENT ASSETS 205,147 396,605
TOTAL CURRENT ASSETS 4,054,348 4,823,968
PROPERTY, PLANT AND EQUIPMENT 17,761,437 17,386,419
LESS ACCUMULATED DEPRECIATION
AND AMORTIZATION 4,256,778 3,977,517
13,504,659 13,408,902
FUNDS HELD IN ESCROW 150,000 150,000
INVESTMENT IN JOINTLY-OWNED COMPANY
HELD FOR RESALE 1,284,615 1,182,376
LONG-TERM GROUND LEASE, LESS
ACCUMULATED AMORTIZATION 1,977,920 1,992,606
GOODWILL, LESS ACCUMULATED AMORTIZATION 2,218,331 2,213,635
OTHER ASSETS AND DEFERRED CHARGES,
LESS ACCUMULATED AMORTIZATION 578,591 601,690
$23,768,464 $24,373,177
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES $3,385,715 $4,249,476
ADVANCES FROM CUSTOMERS AND DEFERRED
REVENUE 1,920,418 1,713,217
CURRENT PORTION OF CAPITAL LEASE
OBLIGATIONS 31,886 34,225
CURRENT PORTION OF LONG-TERM DEBT 1,139,081 986,506
TOTAL CURRENT LIABILITIES 6,477,100 6,983,424
MORTGAGE NOTE DUE TO MASSACHUSETTS
MUTUAL 7,295,668 7,441,711
LONG-TERM DEBT DUE TO FINOVA CAPITAL 3,763,502 3,839,198
SENIOR SUBORDINATED CONVERTIBLE
DEBENTURES 833,333 895,000
DEFERRED REVENUE 900,000 960,000
OTHER LONG-TERM DEBT 851,410 854,974
STOCKHOLDERS' EQUITY:
COMMON STOCK 1,918,462 1,918,462
ADDITIONAL PAID-IN CAPITAL 9,779,823 9,779,823
ACCUMULATED DEFICIT (8,088,060) (8,233,475)
TRANSLATION ADJUSTMENT 48,574 (54,592)
3,658,799 3,410,218
COMMON STOCK HELD IN TREASURY (11,348) (11,348)
TOTAL STOCKHOLDERS' EQUITY 3,647,451 3,398,870
$23,768,464 $24,373,177
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
NET REVENUES $5,871,591 $5,707,120
EXPENSES:
DIRECT COSTS 4,603,877 4,438,013
SELLING, GENERAL AND ADMINISTRATIVE 658,915 641,984
DEPRECIATION 171,014 166,892
AMORTIZATION OF GOODWILL AND GROUND LEASE 31,924 31,405
OPERATING INCOME 405,861 428,826
AMORTIZATION OF DEBT DISCOUNT AND
ISSUANCE COSTS 19,337 34,869
INTEREST 241,109 389,869
EQUITY IN LOSS OF JOINTLY-OWNED COMPANY - 176,878
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES 145,415 (172,790)
INCOME TAX PROVISION - -
NET INCOME (LOSS) 145,415 (172,790)
LESS DIVIDENDS ON PREFERRED STOCK - (72,041)
NET (LOSS) INCOME ATTRIBUTABLE TO
COMMON STOCK $145,415 ($244,831)
NET INCOME (LOSS) PER SHARE OF COMMON STOCK
PRIMARY $0.02 ($0.12)
FULLY-DILUTED $0.02 ($0.12)
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $145,415 ($172,790)
ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO CASH PROVIDED BY OPERATING
ACTIVITIES:
DEPRECIATION AND AMORTIZATION 222,275 233,165
EQUITY LOSS IN JOINTLY-OWNED COMPANY - 176,878
CHANGE IN CERTAIN ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE 745,206 125,649
DUE FROM/TO AFFILIATES (NET) (41,955) 277,561
INVENTORIES (41,835) 38,873
PREPAIDS AND OTHER ASSETS 204,919 (106,357)
ACCOUNTS PAYABLE AND ACCRUED
EXPENSES (1,029,585) (290,695)
ADVANCES FROM CUSTOMERS AND
DEFERRED REVENUES 36,366 (222,154)
NET CASH PROVIDED BY OPERATING ACTIVITIES 240,806 60,130
CASH FLOW FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (NET) (113,645) 21,321
NET CASH (USED) PROVIDED BY INVESTING
ACTIVITIES (113,645) 21,321
CASH FLOW FROM FINANCING ACTIVITIES:
CAPITAL LEASE OBLIGATIONS (NET) (9,636) (6,645)
PROCEEDS FROM ISSUANCE OF COMMON STOCK - 5,000
PROCEEDS OF REVOLVING CREDIT FACILITIES - 186,097
REPAYMENT OF NOTES PAYABLE AND
LONG-TERM DEBT (220,823) (162,721)
NET CASH (USED) PROVIDED BY FINANCING
ACTIVITIES (230,459) 21,731
EFFECT OF EXCHANGE RATE CHANGES ON CASH 32,208 -
(DECREASE) INCREASE IN CASH (71,090) 103,182
CASH, BEGINNING OF PERIOD 1,268,475 137,322
CASH, END OF PERIOD $1,197,385 $240,504
SUPPLEMENTAL INFORMATION
INTEREST PAID $237,084 $391,542
TAXES PAID $45,000 $-
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
December 31, 1996
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, 1996 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 months ended December 31, 1996
increased to $5,872,000 from revenues of $5,707,000 for the
comparable fiscal 1996 period, a increase of $165,000 or
2.9%. This increase is primarily attributable to an
increase in fuel sales volume and tenant occupancy at the
Company's fixed base operations.
Operating income for the three months ended December
31, 1996 decreased to $406,000 compared to operating income
of $429,000 for the three months ended December 31, 1995, a
decrease of $23,000. This decrease primarily consists of a
decrease in operating income from aircraft sales operations
of approximately $120,000, partly offset by increased
operating income from charter and maintenance operations in
the UK.
INTEREST
Interest expense for the three months ended December
31, 1996 decreased to $241,000 compared to interest expense
of $390,000 for the three months ended December 31, 1995, a
decrease of $149,000 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 months ended December 31, 1996, 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 months ended
December 31, 1995, the Company recorded a loss in equity of
jointly-owned company of $177,000.
NET INCOME
Net income for the three months ended December 31,
1996 was $145,000 as compared to a net loss of $173,000 for
the three months ended December 31, 1995, a increase of
$318,000. This increase is primarily the result of no gain
or loss in equity of jointly-owned company being recorded,
as discussed above, and decreased interest expense from
reduced levels of borrowings.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1996, the Company had a working
capital deficit of $2,423,000 as compared to a working
capital deficit of $2,159,000 at September 30, 1996, a
decrease in working capital of $264,000. This reduction in
working capital is primarily attributable to the
classification under current liabilities at December 31,
1996 of $68,000 for increased principal payments on the
Company's borrowings, and $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 Registrant.
Item 2. CHANGES IN SECURITIES
During the fiscal quarter ended December 31,
1996, the four holders of all the outstanding shares of
Series C Convertible Preferred Stock (the "Series C
Preferred Stock") converted all of the Series C Preferred
Stock into an aggregate of 2,053,876 shares of Common
Stock of the Company (effective retroactively to September
30, 1996). Two such holders are James G. Niven, a
director of the Company, and J.O.Hambro Nominees Limited,
which may be deemed to be controlled by Richard Hambro,
Chairman and a director of the Company. In addition, two
holders of the Company's10% Senior Subordinated Convertible
Debentures (the "Debentures") due December 31,1998 (Paul R.
Dupee, Jr. and Consulta Special Funds Limited) converted the
Debenturesheld by them (in the principal amount of
$1,065,000) into 3,227,273 shares of CommonStock (effective
retroactively to September 30, 1996). Paul R. Dupee, Jr. is
a director of the Company. The shares held by Consulta
Special Funds Limited may be deemed to be beneficially owned
by Nigel D. Pilkington, a director of the Company. Each of the
foregoing issuances were exempt from registration under
provisions of Section 3(a)(9) of the Securities Act of 1933, as
amended (the "Securities Act"), being an exchange by an issuer
with existing security holders, and Section 4(2) of the
Securities Act being a transaction by an issuer not involving
any public offering.
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 December 31, 1996:
<TABLE>
<CAPTION>
ITEMS REPORTED FINANCIAL STATEMENTS FILED DATE OF REPORT
<S> <C> <C>
Other Events - Debt Discharge None November 13, 1996
Transaction; Refinancing of the
Jet Centre Facility
</TABLE>
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:FEBRUARY 10, 1996 By: /S/ CHRISTOPHER TENNANT
Christopher Tennant, President
and Chief Executive Officer
Dated:FEBRUARY 10, 1996 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 MONTHS ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING 6,394,872 1,960,510
WEIGHTED AVERAGE COMMON STOCK EQUIVALENTS - -
AVERAGE SHARES OUTSTANDING - PRIMARY EARNINGS
PER SHARE 6,394,872 1,960,510
SERIES C PREFERRED STOCK - 677,779
AVERAGE SHARES OUTSTANDING - FULLY DILUTED
EARNINGS PER SHARE 6,394,872 2,638,289
PRIMARY EARNINGS PER SHARE:
AVERAGE SHARES OUTSTANDING 6,394,872 1,960,510
NET INCOME (LOSS) $145,415 ($172,790)
LESS DIVIDEND ON SERIES C & D PREFERRED STOCK - (72,041)
$145,415 ($244,831)
PER SHARE AMOUNT $0.02 ($0.12)
FULLY-DILUTED EARNINGS PER SHARE:
AVERAGE SHARES OUTSTANDING 6,394,872 1,960,510
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK $145,415 ($172,790)
LESS DIVIDEND ON SERIES C & D PREFERRED STOCK - (72,041)
$145,415 ($244,831)
</TABLE>
PER SHARE AMOUNT (1) $0.02 ($0.12)
(1) The convertible Series C Preferred Stock and the
related dividend effect had an anti-dilutive
effect on earnings per share for the three months ending
December 31, 1995 and are, therefore, excluded in
the computation of fully-diluted earnings per share for that
period.
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 DECEMBER 31, 1996 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-30-1997
<PERIOD-START> OCT-1-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,197,385
<SECURITIES> 0
<RECEIVABLES> 1,730,700
<ALLOWANCES> 0
<INVENTORY> 921,116
<CURRENT-ASSETS> 4,054,348
<PP&E> 17,761,437
<DEPRECIATION> 4,256,778
<TOTAL-ASSETS> 23,768,464
<CURRENT-LIABILITIES> 6,477,100
<BONDS> 12,743,913
<COMMON> 1,918,462
0
0
<OTHER-SE> 1,728,989
<TOTAL-LIABILITY-AND-EQUITY> 23,768,464
<SALES> 5,871,591
<TOTAL-REVENUES> 5,871,591
<CGS> 4,603,877
<TOTAL-COSTS> 5,465,730
<OTHER-EXPENSES> 19,337
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 241,109
<INCOME-PRETAX> 145,415
<INCOME-TAX> 0
<INCOME-CONTINUING> 145,415
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 145,415
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
