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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K/A
AMENDMENT NO. 2
X Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934
For the Fiscal Year Ended March 31, 1996 Commission File Number 0-8138
OR
Transition Report Pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
TRITON GROUP LTD.
Incorporated in Delaware IRS Employer Identification No: 33-0318116
Principal Executive Offices: Telephone: (619) 231-1818
550 West C Street, Suite 1880
San Diego, California 92101
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF CLASS EXCHANGE ON WHICH REGISTERED
- --------------------------------- ------------------------------
Common Stock, $.0001 Par Value American Stock Exchange
Warrants American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K.
-----
The aggregate market value of voting stock held by non-affiliates of the
Registrant as of June 21, 1996 (based on the closing price of such stock as
reported by the American Stock Exchange on such date) was $10,305,766.
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
----- -----
The number of shares of the Registrant's $.0001 par value common stock
outstanding as of June 21, 1996 was 21,451,502.
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PART 1
ITEM 1. BUSINESS
Triton Group Ltd. ("Triton" or the "Company") is an operating/holding
company which has historically done business through a number of operating
subsidiaries in various industries. Triton emerged from Chapter 11 bankruptcy
proceedings in June 1993 with operating control of six subsidiaries and a
significant equity interest in a seventh company. The Company announced in
August 1993 a plan to realize value for its stockholders over a relatively short
period of time in the form of either cash or securities which, in the opinion of
Management, would be liquid and fairly valued given the underlying assets. A
number of transactions have occurred since 1993 consistent with this strategy.
At the beginning of fiscal 1996, Triton owned and operated a turbine engine
services business, National Airmotive Corporation ("National Airmotive") and a
fabricated metal products business ("Western Metal"), in addition to having
unconsolidated operations in lawn and garden equipment and sporting goods,
through 25% owned The Actava Group Inc. ("Actava"), and unconsolidated real
estate operations through 49% owned Mission West Properties ("Mission West").
Triton completed the sale of National Airmotive in June 1995 and sold
Western Metal in November 1995. The Company also sold 3.1 million shares of
common stock of Actava (of the 4.4 million shares then owned by the Company)
in October 1995 and repaid the balance of its secured indebtedness owed
Actava. All of these sale transactions were to unaffiliated third parties,
except for the sale of 59,384 common shares of Actava to Grace Brothers,
Ltd., ("Grace"), the holder at the time of such sale of approximately 6.9% of
the Triton common stock (for a further discussion of this transaction, see
"-Sale of Actava Common Stock" and "Item 14. Certain Relationships and
Related Transactions"). In December 1995, the Company completed a
significant special distribution to its stockholders consisting of $32
million in cash ($1.57 per outstanding share of Triton common stock) and 1.3
million shares of common stock of Metromedia International Group, Inc.
("Metromedia"), the successor company to Actava following a four-way merger
completed in November 1995. The value of the Metromedia shares distributed
amounted to $19.6 million ($.97 per outstanding share of Triton common stock).
At March 31, 1996 the Company had no consolidated operations but owned 49%
of Mission West, had $7.9 million in cash and held certain other miscellaneous
assets and liabilities. Triton announced in December 1995 that it had retained
an investment banking firm to assist the Company in developing and evaluating
proposals for potential acquirors, acquisition candidates or merger partners.
At the same time, the Company is continuing to pursue alternatives to realize
the value of its remaining investments and other assets.
MAJOR DEVELOPMENTS DURING FISCAL 1996
During the year ended March 31, 1996, a number of material business
transactions or events occurred as described below.
SALE OF NATIONAL AIRMOTIVE CORPORATION
In June 1995, Triton completed the sale of National Airmotive to First
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Aviation Services, Inc., an affiliate of First Equity Development Incorporated,
an investment banking firm specializing in the aerospace industry, for cash of
$11.3 million plus assumption by the buyer of all of National Airmotive's debt.
Triton recorded a net loss on the sale of National Airmotive of $13.6 million in
fiscal 1995. The operations of National Airmotive prior to the sale have been
reclassified as a discontinued operation in the consolidated financial
statements for all periods presented.
SALE OF WESTERN METAL LATH
In November 1995, Triton sold Western Metal to Marubeni America Corporation
for cash of $3 million ($2.6 million, net of transaction costs) and the
assumption of Western Metal's debt by the buyer. The Company recognized a gain
on the sale of $2.6 million for accounting purposes in fiscal 1996. As a result
of the sale, the operating results of Western Metal for all periods presented
have been reclassified as a discontinued operation in the consolidated financial
statements.
SALE OF ACTAVA COMMON STOCK
In October 1995, Triton consummated the sale in a block transaction of
three million common shares of Actava owned by the Company pursuant to a
registration statement on Form S-3. The proceeds of the sale amounted to
approximately $49.5 million of which approximately $18 million was used to
repay in full the outstanding loan balance that Triton owed Actava which was
secured by a portion of the Actava common shares owned by Triton. Also in
October 1995, Triton completed the sale of an additional 59,384 common shares
of Actava to Grace, the holder at the time of such sale of approximately 6.9%
of the Common Stock of Triton, for net cash proceeds of approximately $1
million. Triton's management believes that this transaction was on terms no
less favorable than could have been received from an unaffiliated third
party. Triton recognized an accounting gain on the sales of the Actava
common shares of approximately $39.6 million after transaction expenses.
The sale of the three million common shares of Actava was pursuant to an
earlier agreement between Triton and Actava whereby Actava agreed to register
three million of the common shares of Actava owned by Triton on a Form S-3
registration statement. Upon filing of the Form S-3 by Actava, Triton delivered
to Actava proxies in blank executed by Triton covering all 4,413,598 common
shares of Actava owned by Triton, which enabled Actava's proxy holders to vote
these shares in favor of the proposed merger of Actava with Orion Pictures
Corporation ("Orion"), MCEG Sterling Incorporated ("MCEG") and Metromedia
International Telecommunications Inc. ("MITI"). In connection with this
agreement, Triton further agreed to waive the provisions of its Amended and
Restated Stockholder Agreement with Actava which previously required that the
Board of Directors of Actava consist of nine members and entitled Triton to
designate up to two Directors of Actava. Triton and Actava also agreed that the
net proceeds of sales pursuant to the Form S-3 registration statement would be
first used to repay in full all obligations of Triton to Actava under the
Amended and Restated Loan Agreement.
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In November 1995, Actava completed its four-party merger with Orion, MITI
and MCEG and renamed the newly combined company, Metromedia International Group,
Inc. ("Metromedia"). Following the merger, the common shares of Metromedia
began trading on the American Stock Exchange under the trading symbol MMG. In
December 1995, Triton completed the distribution of the remaining 1,342,621
common shares of Metromedia owned by the Company to its stockholders as part of
a special distribution.
DISTRIBUTION TO STOCKHOLDERS
On November 1, 1995, the Board of Directors of the Company declared a
special distribution of $1.57 in cash and .066 of a share of common stock of
Metromedia for each outstanding share of Triton common stock. The special
distribution was completed on December 8, 1995 to stockholders of record on
November 17, 1995. Cash was paid in lieu of any fractional shares of
Metromedia's common stock that would otherwise have been distributed in the
special distribution. Based on the closing price of Metromedia's common stock
on December 8, 1995 of $14.625 per share, the total value of the distribution on
such date amounted to approximately $52 million, or $2.54 per share of Triton
common stock.
FINANCIAL REORGANIZATION PURSUANT TO CHAPTER 11 OF THE UNITED STATES
BANKRUPTCY CODE
On October 19, 1992 ("Petition Date"), Triton and its former parent
Intermark, Inc. ("Intermark" and together with Triton, the "Companies") filed
separate voluntary petitions in the United States Bankruptcy Court (the
"Bankruptcy Court") for the Southern District of California (San Diego) seeking
protection under Chapter 11 of the U.S. Bankruptcy Code. The Chapter 11
proceedings were jointly administered by the Bankruptcy Court, while the
Companies operated their businesses as debtors-in-possession, subject to
Bankruptcy Court approval for certain transactions.
On March 25, 1993, the Bankruptcy Court approved the Second Amended
Disclosure Statement and Joint Plan of Reorganization (the "Joint Plan") which
provided for the reorganization and continuation of the Companies through a
conversion of a majority of the prepetition unsecured debt of the Companies,
principally the subordinated notes and debentures discussed below, to common
stock, and the extension of payments under the Companies' secured debt
arrangements and certain other claims over a period of years. The Joint Plan
was approved by the former creditors of Triton and Intermark and the former
stockholders of Intermark in May 1993, was confirmed by the Bankruptcy Court on
June 4, 1993 ("Confirmation Date") and became effective on June 25, 1993 (the
"Effective Date"). The principal terms of the Joint Plan were as follows:
(1) Triton and Intermark were merged into a single
surviving entity, Triton Group Ltd.
(2) The unsecured debt of Triton and Intermark
(approximately 95% of which was owed to holders of
subordinated notes and debentures) was exchanged for
new common stock of Triton.
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(3) The holders of the unsecured debt received 99% of the
new Triton common stock, 87% to former Triton creditors
and 12% to former Intermark creditors, and the
remaining 1% was distributed to the former common and
preferred stockholders of Intermark.
(4) Secured debt totalling approximately $35 million was
restructured and remained outstanding, with the
majority of such debt to mature in April 1997. The
restructured secured debt accrued interest at rates
ranging from prime plus 2% to prime plus 2.5% and
interest was payable monthly or quarterly.
(5) Cash on hand, cash received from the operations of
Triton's operating companies and/or cash received on
the strategic sale of assets would be used to pay
general and administrative expenses and make principal
and interest payments on the restructured secured debt.
In general, all pre-petition claims against Triton and Intermark have been
discharged and have been accorded the treatment provided under the Joint Plan.
The Company completed its distributions under the Joint Plan in December 1994.
NARRATIVE DESCRIPTION OF BUSINESS
The Company currently does not consolidate any businesses but has
unconsolidated real estate operations through 49%-owned Mission West.
Mission West is a real estate company which presently owns and manages ten
commercial projects, including an executive aircraft center and related
leaseholds, two office projects and a multi-tenant industrial project in
Carlsbad, California, two business center projects and an office plaza in San
Diego, California, an office and industrial building in Riverside, California,
and an office/distribution center in Chandler, Arizona. Mission West also has
one undeveloped land parcel. Mission West completed its most recent development
projects in 1991 and, since that time, the company has principally focused on
managing its existing real estate properties. Mission West's shares are traded
on the American Stock Exchange ("AMEX") and Pacific Stock Exchange ("PSE") under
the trading symbol MSW. Mission West had 8 employees at March 31, 1996, none of
whom is represented by a union.
The real estate environment in which Mission West operates is very
sensitive to general and local economic conditions. Real estate sales are
generally dependent upon availability of financing at a reasonable cost.
Competition among sellers of properties is based upon price, terms and the
particular attributes of the properties. Real estate leasing is dependent on,
among other things, absorption in the markets in which Mission West competes,
rental rates, property amenities and professional management services. Mission
West devotes a significant amount of its resources to renewing leases with
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existing tenants and/or replacing tenants that vacate at lease maturity (or
sooner in the case of tenant business failures).
Mission West continues to evaluate its future strategic course and intends
to pursue all viable growth or other opportunities, which may include the sale
or redeployment of certain assets currently held in the real estate portfolio.
Mission West has no projects under development and none specifically planned.
Three stabilized properties currently held have been reviewed as possible sale
candidates; acquisition candidates would be considered in light of property
sales or other available resources.
EMPLOYEES
Triton had two employees at its corporate headquarters at March 31, 1996.
Additionally, Triton's two senior executives, Michael M. Earley, Triton's
President and Chief Executive Officer, and Mark G. Foletta, Triton's Senior Vice
President and Chief Financial Officer, are providing services to Triton pursuant
to month-to-month consulting arrangements. The services provided by these
executives relate to the ongoing management of the business affairs of Triton
and include (a) the review of alternatives to maximize the value of the
remaining assets of Triton, (b) the management of the liabilities and contingent
liabilities of Triton, (c) the direction of Triton's efforts to identify
potential merger candidates and the due diligence efforts with respect to such
candidates, and (d) the coordination of Triton's financial reporting
responsibilities as a public company.
ITEM 2. PROPERTIES
The Company currently leases approximately two thousand square feet of
office space in San Diego, California which is believed to be suitable and
adequate to support its operations.
ITEM 3. LEGAL PROCEEDINGS
Triton is party to certain lawsuits arising out of its ordinary business
activities. It is Management's opinion that the outcome of such litigation will
not have a materially adverse effect on the Company's financial position or its
results of operations.
In March 1995, a number of the Company's stockholders commenced actions
against the Company and its Board of Directors in the Chancery Court of the
State of Delaware, entitled MOISE KATZ V. JOHN C. STISKA, ET AL. (C.A. No.
14132), MARVE CAMP V. JOHN C. STISKA, ET AL. (C.A. No. 14133), JOSEPH ZOIMEN V.
JOHN C. STISKA, ET AL.) (C.A. No. 14134) and FORD V. STISKA, ET AL. (C.A. No.
14139), respectively. The claims of the plaintiffs in these four class action
complaints were substantially similar, with each plaintiff alleging, among other
things, that the Company's Board of Directors had breached its fiduciary and
other common law duties by failing to exercise independent business judgment
with respect to a tender offer by TAC, Inc. to acquire all of the outstanding
stock of the
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Company and by failing to take all necessary actions to maximize stockholder
value for the stockholders' shares. These lawsuits were all dismissed without
prejudice in January 1996.
In May 1995, a stockholder of Ridgewood Properties, Inc. ("Ridgewood")
commenced a derivative and class action lawsuit in Delaware Chancery Court
against Ridgewood, its directors and the Company entitled STRASSBURGER V.
EARLEY, ET AL. (C.A. No. 14267). The lawsuit attacks a transaction entered into
in August 1994 in which Ridgewood purchased from the Company all of the
Ridgewood common stock then owned by the Company (which consisted of
approximately 75% of Ridgewood's then outstanding common stock) for $8 million
in cash and newly-issued Ridgewood preferred stock with a face value of $3.6
million. The complaint alleges that such transaction constituted a corporate
waste and a breach by the Company of its alleged duties of loyalty and good
faith as a majority stockholder to Ridgewood's other stockholders. The
complaint seeks a rescission of the transaction and other unspecified monetary
relief. Triton intends to defend vigorously against this lawsuit. It is the
opinion of Management that the ultimate resolution of such litigation will not
have a material adverse effect on the Company's financial position, results of
operations or cash flows.
THE CHAPTER 11 PROCEEDINGS
As described previously, under "Item 1, Financial Reorganization Pursuant
to Chapter 11 of the United States Bankruptcy Code," which information is
incorporated herein by reference, the Company and its former parent, Intermark,
each filed voluntary petitions for bankruptcy under Chapter 11 of the United
States Bankruptcy Code with the Bankruptcy Court on October 19, 1992. The
following discussion is intended to illustrate certain aspects of the Company's
Chapter 11 bankruptcy proceedings regarding the discharge of certain claims and
debts, and is not a complete summary of such proceedings, the Bankruptcy Code or
applicable case law.
The Bankruptcy Court entered a bar date order establishing January 20,
1993, as the date by which claimants or interest holders were required to have
filed a proof of claim or interest in the Bankruptcy Cases, setting forth the
nature and amount of that claim or interest. Substantial claims were filed
through the bar date in respect of the Debtors' bankruptcy estates. Generally,
claims against Triton and Intermark fell into four categories: priority and
administrative claims, secured claims, unsecured claims (including certain
contingent or unliquidated claims) and equity claims.
As a result of the confirmation and consummation of the Plan, pursuant to
the Bankruptcy Code, in accordance with Section 1141(d) of the Bankruptcy Code,
Triton has been discharged of and from each and every Debt (as the term "Debt"
is defined in the Bankruptcy Code) and Claim (as such term is defined in the
Plan) that arose against Triton or Intermark before the Effective Date of the
plan, including without limitation, any Debt and Claim of a kind specified in
Section 502(g) or 502(i) of the Bankruptcy Code, whether or not (i) a proof of
claim based on such Debt or Claim was filed or deemed filed under Section 501 of
the Bankruptcy Code, (ii) such Claim is allowed under Section 506 of the
Bankruptcy Code, or (iii) the holder of such Claim has accepted the Plan. In
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general, all pre-petition claims against Triton and Intermark have been
discharged and have been accorded the treatment provided under the Joint Plan.
ENVIRONMENTAL MATTERS RELATING TO CERTAIN OF TRITON'S FORMER DIVISIONS AND
SUBSIDIARIES
In the past, Triton, through certain divisions and wholly-owned
subsidiaries, has owned and operated businesses that conducted operations that
included the use, generation and disposal of hazardous waste and hazardous
substances. Certain potential environmental liabilities exist associated with
these former operations, including potential contamination at, or migrating
from, certain properties historically owned or operated by these former
divisions and subsidiaries. Triton also has limited contractual indemnification
obligations relating to certain of these matters. With respect to these
potential environmental liabilities, Triton believes that most of these
liabilities were discharged in its bankruptcy proceedings. Historically, these
environmental matters have not had a material adverse effect on Triton's
financial condition and, although there can be no assurance, Triton management
does not expect such matters to have a material adverse effect on Triton's
financial condition in the future.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Registrant's security holders
during the quarter ended March 31, 1996.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDING
MATTERS
(A) MARKET INFORMATION
Triton's common stock and warrants are both listed on the American Stock
Exchange (the "AMEX") using the trading symbols of "TGL" and "TGLW",
respectively. The following table summarizes the high and low closing market
prices as reported by the AMEX for Triton Common Stock and Triton Warrants, by
quarter, for the two years ended March 31, 1996:
Market Price of Common Stock
------------------------------------------
1996 1995
----------------- ----------------
Quarters Ended High Low High Low
- -------------- ------ -------- ------ -------
1st Quarter $ 2-1/4 $ 1-13/16 $ 1-5/8 $ 1-1/4
2nd Quarter 3-1/8 2 2-1/8 1-5/16
3rd Quarter 3-3/16 5/16(1) 1-7/8 1-3/8
4th Quarter 9/16 3/8 2-1/8 1-5/16
Market Price of Warrants
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1996 1995
--------------- ---------------
Quarters Ended High Low High Low
- -------------- ------ ------ ------ -------
1st Quarter $ 1/4 $ 1/16 $ 7/16 $ 5/16
2nd Quarter 1/2 1/8 15/16 5/16
3rd Quarter 9/16 1/8 5/8 1/2
4th Quarter 1/4 1/8 1/2 3/16
(1) Triton completed a substantial distribution to its stockholders on
December 8, 1995 which was valued at that time at approximately $2.54
per share of common stock of the Company.
(B) HOLDERS
At June 19, 1996, there were approximately 1,443 holders of record of the
Registrant's common stock.
(C) DIVIDENDS
The Registrant completed a special distribution to its stockholders on
December 8, 1995 of $1.57 in cash and .066 of a share of common stock of
Metromedia (formerly Actava) for each outstanding share of common stock of the
Company.
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Predecessor Company
-------------------------
Nine Three
Years Ended Months Months Years Ended
March 31 Ended Ended March 31
----------------- March 31, June 25, ---------------
1996 1995 1994 1993 (a) 1993 1992
-------- ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data: (in thousands, except share amounts)
||
Revenues........................ $6,633 || $ 1,735 $ 6,836 $ 19,355
Operating income (loss).........$(5,427) $ (2,722) 421 || (312) (3,381) (18,649)
Income (loss) from continuing ||
operations.................... 25,072 (10,663) (14,199) || (14,027) (26,748) (153,455)
Income (loss) from discontinued ||
operations.................... 2,514 (13,604) (961) || (1,134) (14,355) (18,902)
Extraordinary items............. || 177,903 4,622 4,304
Net income (loss)............... 27,586 (24,267) (15,160) || 162,742 (36,481) (168,053)
||
Per Share Data (b): ||
Income (loss) from continuing ||
operations................... 1.22 (.53) (.71) ||
Income (loss) from discontinued ||
operations................... .12 (.68) (.05) ||
Net income (loss)............. $1.34 $(1.21) $(.76) ||
||
Shares outstanding at year end.. 21,451 19,978 19,978 ||
Average shares, including ||
common stock equivalents....... 20,612 19,978 19,978 ||
At March 31 At At March 31
--------------------------- June 25, ------------------
1996 1995 1994 1993 (a) 1993 1992
-------- -------- -------- -------- -------- --------
Balance Sheet Data: ||
Total assets (c).......... $14,883 $55,430 $182,181 $199,201 || $254,675 $325,210
Long-term debt (c)........ 915 25,837 89,478 94,116 || 104,852 351,737
Other liabilities......... 2,887 5,716 9,200 12,329 || 7,227 25,285
Liabilities subject ||
to compromise........... || 235,541
Minority interest in ||
subsidiaries............ 13,209 13,612 || 13,573 15,084
Stockholders' equity ||
(deficit)............... 9,935 17,806 41,895 57,715 || (161,461) (127,214)
</TABLE>
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(a) Financial data as of and for the three months ended June 25, 1993 gives
effect to the consummation of the Joint Plan.
(b) Per share data for periods prior to June 25, 1993 is not presented because
of the change in the capital structure on that date as a result of the
consummation of the Joint Plan.
(c) The Company generally does not restate its consolidated balance sheet to
remove the assets, liabilities, and minority interests of discontinued
operations. Consequently, balance sheet data includes the assets and
liabilities of Liquor Barn, Inc., National Airmotive, Ridgewood Properties
and Western Metal prior to their respective dispositions. However, the
consolidated balance sheet as of March 31, 1995 reflects the net assets and
liabilities of National Airmotive as a single amount, despite the
disposition date of June 2, 1995, because Triton entered into a contract to
sell National Airmotive in March 1995.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
BACKGROUND AND CORPORATE DIRECTION
When used in this discussion, the words "believe", "anticipated" and
similar expresions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those projected. Readers are cautioned
not to place undue reliance on these forward-looking statements which speak only
as of the date hereof. The Company undertakes no obligation to republish
revised forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events. Readers are
also urged to carefully review and consider the various disclosures made by the
Company which attempt to advise interested parties of the factors which affect
the Company's business, as well as the Company's other periodic reports on Form
10-K, 10-Q and 8-K filed with the Securities and Exchange Commission.
Triton is an operating/holding company which has historically done business
through a number of operating subsidiaries in various industries. Triton
emerged from Chapter 11 bankruptcy proceedings in June 1993 with operating
control of six subsidiaries and a significant equity interest in a seventh
company. The Company announced in August 1993 a plan to realize value for its
stockholders over a relatively short period of time in the form of either cash
or securities which, in the opinion of Management, would be liquid and fairly
valued given the underlying assets. Refer to the Business Developments section
below which details the progress that the Company has made toward its goal since
the emergence from Chapter 11 in 1993. At March 31, 1996, Triton owned 49% of
Mission West, had $7.9 million of cash and held certain other assets and
liabilities. Triton announced in December 1995 that it had retained an
investment banking firm to assist the Company in developing and evaluating
proposals for potential acquirors, acquisition candidates or merger partners.
The Company is actively pursuing alternatives to realize value for its remaining
investments and other assets. Due to uncertainty surrounding the timing of such
realization, the accompanying consolidated financial statements have been
prepared on a going concern basis assuming continuity of operations, realization
of assets and liquidation of liabilities in the ordinary course of business.
FINANCIAL REORGANIZATION AND BASIS FOR PREPARATION OF FINANCIAL STATEMENTS
As a result of the financial reorganization completed by the Company in
June 1993, Triton's consolidated financial statements have been prepared
utilizing the principles outlined in Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization under the Bankruptcy Code," ("SOP 90-7")
issued in November 1990 by the American Institute of Certified Public
Accountants. Under the provisions of SOP 90-7, Triton was required to adopt
fresh start reporting as of June 25, 1993, the Effective Date of the Joint Plan
of Reorganization, since the reorganization value (approximate fair value of the
net assets at the Effective Date) was less than the total of all prepetition
liabilities and the former stockholders of the Predecessor Company received less
than 50% of the voting shares of the emerged entity. Accordingly, the financial
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statements of Triton subsequent to the Effective Date reflect the effects of the
forgiveness of debt resulting from the confirmation of the Joint Plan and the
effects of the adjustments to restate assets and liabilities of Triton to fair
value pursuant to SOP 90-7. The Predecessor Company had already ceased accruing
interest on its unsecured debt as of the Petition Date.
The accumulated deficit of the Predecessor Company was eliminated and the
Company's capital structure was recast in conformity with the Joint Plan. The
consolidated financial statements subsequent to the Effective Date represent the
results and financial position of Reorganized Triton which, in effect, is a new
entity for financial reporting purposes with assets, liabilities, capital
structure, cash flows and operating results that are not comparable with prior
periods. Accordingly, in the accompanying consolidated financial statements,
the results of Triton have been segregated from the results of the Predecessor
Company by a solid double line to reflect the significant change in reporting
entity.
Despite the change in reporting entity, the reorganization had no effect on
the financial reporting of the Company's remaining operating subsidiaries at
that time. The operating subsidiaries were not a part of the Chapter 11
proceedings and their operations, financial position and capital structures were
unaffected by the reorganization.
BUSINESS DEVELOPMENTS
During the three fiscal years ended March 31, 1996 the following corporate
changes or significant events took place:
FISCAL 1994
- The Company emerged from Chapter 11 as Triton Group Ltd. on June 25,
1993.
- National Airmotive amended its credit facility and repaid $7.1 million
of intercompany debt to Triton, the majority of which was used to
reduce holding company level debt.
- Triton, along with Liquor Barn, Inc.'s ("Liquor Barn's") management
and Liquor Barn's Creditors Committee, determined that an orderly
liquidation of Liquor Barn's assets was in the best interest of all of
that company's creditors. Liquor Barn's bankruptcy plan was confirmed
in May 1994.
- Triton sold its remaining interest in WSI Holdings, Inc. ("Western
Sizzlin") for $400,000.
- Triton liquidated certain miscellaneous assets generating cash of
approximately $2.8 million.
FISCAL 1995
- Ridgewood completed the sale of certain of its real estate holdings
including two apartment buildings for $4.1 million in March 1994 and
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its entire portfolio of mobile home parks and inventory for
approximately $15 million in June 1994.
- Triton sold its interest in Ridgewood to Ridgewood for consideration
consisting of $8 million cash and 450,000 shares of newly issued
Ridgewood preferred stock with a face value of $3.6 million.
- Triton entered into an agreement to sell its entire ownership interest
in National Airmotive in March 1995. In June 1995, the Company
completed the sale of National Airmotive for cash proceeds of $11.3
million and the assumption of National Airmotive's debt by the buyer.
- Actava, then 25.5% owned by Triton, completed the sale of its interest
in Qualex and exchanged its interest in its four sporting goods
subsidiaries to Roadmaster Industries, a NYSE sporting goods company,
for 39% of the outstanding shares of Roadmaster.
- Actava signed a definitive agreement to merge with Orion, Sterling and
MITI, with the combined new company to be called Metromedia
International Group, Inc. The merger was subject to successful
refinancing of the Orion debt, Actava and Orion stockholder approval,
and other customary approvals and conditions.
- Triton delivered 100,000 shares of common stock of Mission West to
Mission West in exchange for a revised lease agreement for the
facility leased by Mission West to the Company's then wholly owned
subsidiary, Western Metal. This event caused Triton's ownership in
Mission West to decline to 49.4%, below the required level for
consolidation in Triton's consolidated financial statements.
FISCAL 1996
- Triton completed the sale of its entire equity interest in Western
Metal for net cash proceeds of $2.6 million and the assumption of
Western Metal's debt by the buyer.
- Triton consummated the sale of 3.1 million shares of Actava for net
cash proceeds of approximately $49.5 million, $18 million of which was
used to repay the balance of its secured indebtedness to Actava.
- Triton received $2.5 million in cash in an initial distribution
pursuant to Liquor Barn's bankruptcy plan of liquidation.
- Actava completed its merger with Orion, Sterling and MITI and the
combined entity was renamed Metromedia International Group, Inc.
- Triton completed a special distribution to its stockholders consisting
of $1.57 in cash and .066 of a share of common stock of Metromedia for
each outstanding share of Triton common stock. The value of the
distribution at that time was $2.54 per Triton common share.
14
<PAGE>
- Triton announced that it had retained an investment banking firm to
assist the Company in developing and evaluating proposals for
potential acquirors, acquisition candidates or merger partners.
As a result of the Liquor Barn bankruptcy liquidation plan, and the sales
of Ridgewood, National Airmotive and Western Metal, the operations of Liquor
Barn, Ridgewood, National Airmotive and Western Metal have been classified as
discontinued operations in the consolidated statements of operations and cash
flows for all periods presented prior to their respective sale dates in the
accompanying consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES
The Company's assets consist of cash and its remaining investments and
other assets. At March 31, 1996, Triton held cash and cash equivalents of $7.9
million.
Triton's only remaining subsidiary is 49%-owned Mission West, whose common
shares are publicly traded on the AMEX. At March 31, 1996, Mission West had a
total market capitalization of approximately $7 million and the common stock of
Mission West owned by Triton based on the closing prices for such stock as of
such date, had a market value of $3.5 million. On June 24, 1996, the common
shares of Mission West owned by Triton based on the closing prices for such
stock as of such date, had a quoted market value of $4.6 million. Triton's
ability to realize this value on a short-term basis is limited by, among other
things, market conditions and securities law restrictions.
The Company also has certain other assets, including claims in the Liquor
Barn Chapter 11 proceedings, an interest in Ridgewood Series A preferred stock
and an investment in an insurance captive. Triton has valued its remaining
Liquor Barn claims at $.5 million and expects to realize this value in calendar
1996.
Triton's interest in the Ridgewood preferred stock has a face value of $3.6
million (450,000 shares with a redemption price of $8 per share) and is carried
in the Company's consolidated financial statements at a value of $2 million.
Triton receives a quarterly dividend of $45,000 on this investment and the
preferred stock is redeemable at any time by Ridgewood at its face value plus
accrued dividends. If the stock is not redeemed by Ridgewood by August 1996,
Triton may either elect to receive an increased quarterly dividend of $90,000 or
to convert the preferred stock into 1,350,000 Ridgewood common shares, which
would represent approximately 55% of the Ridgewood common shares outstanding, or
41% fully diluted.
Prior to 1993, La Jolla Insurance Co. Ltd. ("La Jolla"), provided certain
insurance coverage for its parent corporation and Triton's predecessor,
Intermark, and certain of Intermark's subsidiaries, including workers'
compensation and D&O insurance. In October 1992, Triton and Intermark filed for
15
<PAGE>
reorganization under Chapter 11 of the United States Bankruptcy Code. At that
time, the total liabilities of La Jolla (including reserves established for the
risks inherent in these policies) exceeded its assets by approximately $0.5
million. As a result of the La Jolla insolvency and the Chapter 11 filings of
Triton and Intermark, La Jolla was placed into a voluntary liquidation
proceeding in Bermuda to be managed by a liquidator for the benefit of its
creditors, and therefore was deconsolidated from Triton's consolidated financial
statements. In 1993, the remaining risks under the workers' compensation
policies were reinsured with a commercial insurance carrier and the only
remaining policy was a $3 million D&O insurance policy which expired in April
1993. At March 31, 1996 and 1995 Triton's investment in La Jolla is carried
at no value in the consolidated balance sheet.
At March 31, 1996, La Jolla had assets of approximately $3.3 million and
statutory reserves totalling $3 million. As a result of the current solvent
financial position of La Jolla, the Company is in the process of removing the
captive from the liquidation proceedings. Upon termination of the liquidation
proceedings, the assets of La Jolla would be available to Triton, subject to any
remaining statutory reserves. Management is currently pursuing alternatives to
maximize the value of the net assets of La Jolla.
Triton's current quarterly cash requirements include approximately $.3
million of corporate level general and administrative expenses, which is
partially offset by quarterly investment earnings of approximately $.1 million.
Triton no longer has any secured debt but has certain prepetition tax
liabilities totalling approximately $1.3 million which the Company is paying in
semi-annual principal and interest installments through June 1998. This amount
accrues interest at prime plus 1%. Management believes that its current
financial resources are sufficient to cover its operating requirements. Triton
does not have any material capital requirements or other commitments for capital
in the next year.
Mission West finances its own operations and debt covenants impose
restrictions on the transfer of funds to Triton. Triton does not guarantee any
of Mission West's debt.
RESULTS OF OPERATIONS
BUSINESS SEGMENTS. The Company no longer operates in any business
segments; however, the Company had consolidated real estate operations prior to
fiscal 1995 and had various unconsolidated operations during the three years
ended March 31, 1996. A business description of Triton's operations is included
in Item 1.
REAL ESTATE
As a result of the sale of Ridgewood in August 1994, the operating results
of Ridgewood have been reclassified as a discontinued operation for all periods
presented. Additionally, Triton's interest in Mission West declined to 49.4% in
1995, and accordingly, Mission West has been reflected as an equity investment
in the consolidated financial statements effective as of the beginning of 1995.
Accordingly, the operating results of the Real Estate segment included in the
16
<PAGE>
consolidated results of operations include only the operating results of Mission
West for the year ended March 31, 1994.
Revenues of Mission West consist primarily of rental income as Mission West
had no property sales in either 1993 or 1994. Mission West's revenues in 1994
of $8.4 million compared to revenues of $6.8 million in the prior year due
primarily to a litigation settlement of $1.5 million in 1994, which was recorded
as revenue, relating to a property sold by Mission West in 1986. Mission West's
operating profit improved to $2.6 million in 1994 from $1.6 million in 1993
primarily due to the litigation settlement discussed above.
EQUITY IN EARNINGS OF UNCONSOLIDATED SUBSIDIARIES
ACTAVA
Prior to the sale of 3.1 million shares of Actava in October 1995, Triton
recorded the results of Actava on a three-month delayed basis such that Actava's
calendar year results were recorded within Triton's fiscal year which ends on
March 31. Equity losses from Actava amounted to $11.2 million in fiscal year
1994, $7.1 million in fiscal 1995, and $12.1 million in 1996, which included
Triton's share of Actava's results through September 1995. Actava's loss in
calendar 1993 reflected operating losses at Actava's Snapper Power Equipment
Division ("Snapper") and to a lesser extent reduced operating profits at the
sporting goods group of companies. Actava attributed the Snapper losses to
manufacturing problems associated with newly introduced products as well as
increased product related expenses such as warranty. Actava attributed the
reduced operating earnings at the sporting goods companies to Diversified
Products, acquired by Actava in June 1993, which recorded losses for the period
due to a cautious retail environment as well as production problems caused by
the late delivery of certain product components. The improvement in Actava's
calendar 1994 results, recorded by Triton in fiscal 1995, reflects reduced
operating losses at Snapper resulting from higher sales volume, a change in
product mix and improved manufacturing costs.
The increased losses recorded by Actava during the nine months ended
September 30, 1995, recorded by Triton in fiscal 1996, were attributed to
reduced operating profits at Snapper due to reduced sales caused by the
continuance of a dealer direct sales program which resulted in repurchases of
certain finished goods inventory from Snapper's distributors. The losses were
also attributed to increased selling and administrative expenses at Snapper and
the elimination of the operating profit of the sporting goods companies sold in
December 1994.
MISSION WEST
Mission West's operating results were fully consolidated in Triton's
consolidated statement of operations prior to fiscal 1995. Effective as of the
beginning of fiscal 1995, Triton has reflected its investment in Mission West as
an equity investment and the Company recorded equity in earnings from Mission
West of $154,000 in 1995 and $51,000 in 1996.
17
<PAGE>
WESTERN SIZZLIN
Prior to 1993, Triton owned 67% of Western Sizzlin, a franchisor of steak
restaurants, and Western Sizzlin's results were consolidated in Triton's
consolidated financial statements. Western Sizzlin filed a Chapter 11 petition
in October 1992 and Triton determined that its ownership level in the
reorganized entity would likely fall below 50%. Accordingly, Triton's interest
in Western Sizzlin was reflected as an equity investment as of the beginning of
fiscal 1993. Prior to Triton's sale of Western Sizzlin in 1994, Triton recorded
equity in earnings from Western Sizzlin of approximately $.3 million.
CONSOLIDATED OPERATIONS
THREE MONTHS ENDED JUNE 25, 1993. Revenues for the three months ended
June 25, 1993 of $1.7 million were level with revenues for the same period in
the prior year. The consolidated operating loss of $.3 million for the three
months ended June 25, 1993 compared to an operating loss of $1.4 million in the
prior year, reflecting primarily reduced corporate level general and
administrative expenses in 1993.
The consolidated loss from continuing operations of $14 million for the
three-month period ended June 25, 1993 compared to a loss of $8.6 million for
the same period in the prior year. The 1993 three-month period included $10.7
million of reorganization costs, $1.5 million of increased equity losses from
Actava and a $1.8 million reduction in investment and other income. Partially
offsetting these reductions were the improved operating results of $1.1 million
discussed above, a $6.8 million reduction in interest expense, principally due
to the curtailment of interest accruing on the Companies' subordinated
debentures subsequent to the date of the Chapter 11 petitions, and improved
equity earnings of Western Sizzlin of $.7 million.
Net income of $162.7 million for the three-month period ended June 25, 1993
compared to a net loss of $5.1 million for the same period in the prior year.
The 1993 three-month period included an extraordinary gain of $178 million
associated with the conversion of substantially all of the unsecured debt of the
Predecessor Company to equity pursuant to the Joint Plan. The same period in
the prior year included a $4.6 million extraordinary gain associated with the
repurchase of subordinated debentures at prices below the face amount of the
debt. The three-month period ended June 25, 1993 included a $1.1 million loss
from discontinued operations, reflecting the combined operating results of
Liquor Barn, National Airmotive, Ridgewood and Western Metal, which was level
with the loss from discontinued operations for the same period in the prior
year.
NINE MONTHS ENDED MARCH 31, 1994. Revenues for the nine-month period ended
March 31, 1994 improved by $1.5 million over the same period in the prior year,
as a result of improved revenues at Mission West.
Consolidated operating income of $.4 million for the nine-month period
ended March 31, 1994 compared to an operating loss of $2 million for the same
period in the prior year. The improved results reflected a $1.1 million
operating improvement at Mission West and a $1.3 million reduction in net
18
<PAGE>
corporate expenses.
The loss from continuing operations for the nine-month period ended
March 31, 1994 amounted to $14.2 million compared to a loss of $18.1 million for
the same period in the prior year. In addition to the $2.4 million improvement
in operating results discussed above, other favorable fluctuations resulted from
the reorganization and included an $8.2 million reduction in interest expense
due to the elimination of interest on the subordinated debt of the Predecessor
Company and the fact that the corresponding 1993 period included $18.3 million
of reorganization costs. Partially offsetting these improvements were increased
equity losses from Actava of $12.6 million and a reduced income tax benefit of
$12.4 million.
The net loss for the nine-month period ended March 31, 1994 of $15.2
million compared to a net loss for the same period in the prior year of $31.4
million. The nine-month period ended March 31, 1994 included a loss from
discontinued operations of $1 million reflecting the combined operating results
of National Airmotive, Ridgewood and Western Metal. The comparable period in
fiscal 1993 included $13.2 million of losses from discontinued operations
reflecting the combined losses of Liquor Barn, Ridgewood and Western Metal
offset by the earnings of National Airmotive.
YEAR ENDED MARCH 31, 1995. The consolidated operating loss of $2.7 million
in fiscal 1995 compared to breakeven results in the comparable period in the
prior year. The fiscal 1995 loss reflects primarily the deconsolidation of the
operating results of Mission West at the beginning of fiscal 1995 which
generated operating earnings of $2.6 million in the comparable prior year
period.
The loss from continuing operations of $10.7 million in fiscal 1995
compared to a loss in the comparable prior year period of $28.2 million. The
significant reduction in the loss from continuing operations as compared to the
prior year, despite the $2.7 million increased operating loss discussed above,
is a result of several factors including $10.7 million of reorganization costs
recorded in the prior year, reduced equity losses of Actava of $4.1 million in
fiscal 1995, reduced interest expense of $3.7 million and reduced combined other
expenses of approximately $1.7 million. The reduction in interest expense
reflects primarily the deconsolidation of Mission West's operating results in
fiscal 1995.
The fiscal 1995 net loss of $24.3 million compared to net income of $147.6
million in the comparable prior year period. The prior year included an
extraordinary gain of $178 million associated with the conversion of
substantially all of the unsecured debt of the Predecessor Company to equity
pursuant to the Joint Plan. Fiscal 1995 included a loss from discontinued
operations of $13.6 million, reflecting primarily the loss on the sale of
National Airmotive. The comparable prior year period included a loss from
discontinued operations of $2.1 million reflecting the combined operating
results of National Airmotive, Ridgewood, Liquor Barn and Western Metal.
YEAR ENDED MARCH 31, 1996. The operating loss in fiscal 1996 of $5.4
million compares to an operating loss of $2.7 million in the prior year. In
both years the losses consist solely of corporate level expenses. The increased
19
<PAGE>
current year expenses include $1.8 million of bonuses and severance payments and
$1.4 million ($.7 million of which was non-cash) of stock option and warrant
compensation. Effective January 2, 1996 the Executive Officers of the Company
were terminated as employees. Two of the three Executives terminated in January
are continuing to provide services to Triton on a consulting basis. In
connection with their terminations, the Executives received one-year severance
payments pursuant to employment agreements with the Company. The stock option
and warrant compensation was recognized in connection with the participation in
the special distribution to stockholders in December 1995 of the Executive
Officers, Directors and certain financial consultants who held options and
warrants to purchase common stock of the Company. Partially offsetting the non-
recurring expenses described above was a $.5 million reduction in the recurring
corporate level expenses.
The income from continuing operations in fiscal 1996 of $25.1 million
compared to a loss of $10.7 million in the prior year. The improvement in the
current year, despite the increased operating expenses of $2.7 million described
above, reflects a $39.6 million gain on the sale of 3.1 million common shares of
Actava, a $1.2 million reduction in interest expense due to the repayment of the
majority of the secured debt in October 1995 and a $3.1 million improvement in
interest, dividends and other income. The increase in other income reflects
primarily the effect of a binding arbitration award received by the Company in
connection with a litigation matter combined with the adjustment of certain
reserves based upon revised estimates of certain contingencies. Partially
offsetting these improvements were increased equity losses of Actava of $5
million recorded by Triton prior to the sale of the 3.1 million common shares of
Actava in October 1995 and a $.4 million reduction in the income tax benefit.
Net income in the current year of $27.6 million compared to a net loss of
$24.3 million in the prior year. The current year included income from
discontinued operations of $2.5 million reflecting principally the gain on the
sale of Western Metal. The prior year included a loss from discontinued
operations of $13.6 million reflecting primarily the loss on the sale of
National Airmotive.
20
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Triton Group, Ltd.
In our opinion, based upon our audits and the report of other auditors, the
consolidated financial statements listed in the index appearing under Item 14(a)
(1) and (2 i) on page 62 present fairly, in all material respects, the financial
position of Triton Group Ltd. and its subsidiaries (the Company) at March 31,
1996 and 1995, and the results of their operations and their cash flows for the
years ended March 31, 1996 and 1995, and the nine months ended March 31, 1994,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of The Actava Group Inc.,
(Actava) in which the Company had a 25.5% interest as of March 31, 1995.
Actava's financial statements as of and for the years ended December 31, 1994
and 1993, were audited by other auditors whose report thereon has been furnished
to us, and our opinion expressed herein, insofar as it relates to the amounts
reported by Actava, before adjustment for the determination of the Company's
share of Actava's net loss for the year ended December 31, 1994 and for the nine
months ended December 31, 1993, is based solely on the report of the other
auditors. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits and the report of other auditors provide a reasonable
basis for the opinion expressed above.
As discussed in Notes 1 and 10 to the financial statements, on June 4, 1993 the
United States Bankruptcy Court for the Southern District of California confirmed
the Company's Plan of Reorganization (the "Plan"). Confirmation of the Plan
resulted in the discharge of all claims against the Company that arose before
October 19, 1992 and substantially alters all rights and interests of equity and
debt security holders as provided for in the Plan. The Plan was substantially
consummated on June 25, 1993 and the Company emerged from bankruptcy. In
connection with its emergence from bankruptcy, the Company adopted fresh start
reporting as of June 25, 1993.
PRICE WATERHOUSE LLP
San Diego, California
May 23, 1996
21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Triton Group, Ltd.
In our opinion, based upon our audits and the reports of other auditors, the
consolidated financial statements listed in the index appearing under Item 14(a)
(1) and (2 i) on page 62 present fairly, in all material respects, the results
of operations and cash flows of Triton Group Ltd. and its subsidiaries (the
Company) for the three months ended June 25, 1993, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
financial statements of The Actava Group Inc., (Actava) in which the Company had
a 25.0% interest as of June 25, 1993. Actava's financial statements as of and
for the year ended December 31, 1993 were audited by other auditors whose
reports thereon have been furnished to us, and our opinion expressed herein,
insofar as it relates to the amounts reported by Actava, before adjustment for
the determination of the Company's share of Actava's net loss for the three
months ended June 25, 1993, is based solely on the reports of the other
auditors. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits and the report of other auditors provide a reasonable
basis for the opinion expressed above.
As discussed in Notes 1 and 10, on October 19, 1992 the Company filed a petition
with the United States Bankruptcy Court for the Southern District of California
for reorganization under the provisions of Chapter 11 of the Bankruptcy Code.
The Company's Plan of Reorganization was substantially consummated on June 25,
1993 and the Company emerged from bankruptcy. In connection with its emergence
from bankruptcy, the Company adopted fresh start reporting.
PRICE WATERHOUSE LLP
San Diego, California
June 27, 1994
22
<PAGE>
TRITON GROUP LTD.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
At March 31
------------------
1996 1995
ASSETS -------- --------
Current assets:
Cash and cash equivalents......................... $7,934 $974
Accounts receivable, less allowance for doubtful
accounts: 1995-$386............................ 4,273
Inventories....................................... 2,622
Federal income taxes receivable................... 1,100
Net assets of discontinued operation.............. 11,135
Other current assets.............................. 248 214
-------- --------
Total current assets......................... 9,282 19,218
Property, plant and equipment, net.................. 839
Investments in unconsolidated subsidiaries:
The Actava Group................................. 26,456
Mission West Properties.......................... 2,973 2,929
Other............................................... 2,628 5,988
-------- --------
$14,883 $55,430
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt:
Note payable to The Actava Group................ $5,000
Other........................................... $915 4,134
State income taxes payable........................ 700
Accrued liabilities............................... 446 6,071
-------- --------
Total current liabilities.................... 2,061 15,205
-------- --------
Long-term debt:
Note payable to The Actava Group.................. 15,476
Other............................................. 1,227
Other liabilities................................... 2,887 5,716
Commitments and contingencies (Note 6)..............
Stockholders' equity:
Common stock, $.0001 par value
Shares issued and outstanding:
1996 - 21,451, 1995 - 19,978.................... 2 2
Additional paid-in capital........................ 21,774 57,231
Accumulated deficit............................... (11,841) (39,427)
-------- --------
Total stockholders' equity 9,935 17,806
-------- --------
$14,883 $55,430
======== ========
See notes to consolidated financial statements.
23
<PAGE>
TRITON GROUP LTD.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Predecessor
Company
-------
Nine Three
Months Months
Years Ended March 31 Ended Ended
------------------- March 31, June 25,
1996 1995 1994 1993
--------- -------- ------ || -------
<S> <C> <C> <C> <C>
Revenues: ||
Real estate sales and rental revenues....... $6,633 || $1,735
||
Costs and expenses: ||
Cost of real estate sales and ||
real estate operations.................... 3,225 || 959
General and administrative expenses......... $4,043 $2,722 2,987 || 1,088
Stock option and warrant compensation....... 1,384 ||
------- ------- ------ || ------
5,427 2,722 6,212 || 2,047
------- ------- ------ || ------
Operating income (loss) (5,427) (2,722) 421 || (312)
||
Other income (expenses): ||
Interest expense: ||
The Actava Group.......................... (1,252) (2,434) (1,729) || (789)
Other..................................... (337) (362) (2,908) || (1,046)
Equity in earnings (losses): ||
The Actava Group.......................... (12,106) (7,083) (9,173) || (2,016)
Mission West Properties................... 51 154 ||
Western Sizzlin........................... 217 || 105
Interest, dividends and other............... 3,905 272 99 || 598
Gain on the sale of The Actava Group........ 39,603 ||
Provision for impairment in value of assets. (500) (1,500) ||
Reorganization costs........................ || (10,736)
------- ------- ------ || ------
Income (loss) before income taxes and ||
minority interest........................... 23,937 (12,175) (14,573) || (14,196)
Income tax benefit............................ 1,135 1,512 668 || 80
Minority interest............................. (294) || 89
------- ------- ------ || ------
Income (loss) from continuing operations...... 25,072 (10,663) (14,199) || (14,027)
Income (loss) from discontinued operations.... 2,514 (13,604) (961) || (1,134)
------- ------- ------ || ------
Income (loss) before extraordinary item....... 27,586 (24,267) (15,160) || (15,161)
Extraordinary credit.......................... || 177,903
------- ------- ------ || ------
Net income (loss)............................. $27,586 $(24,267) $(15,160) || $162,742
======= ======= ====== || =======
Per share:
Income (loss) from continuing operations.... $1.22 $ (.53) $(.71)
Discontinued operations..................... .12 (.68) (.05)
------- ------- ------
Net income (loss)........................ $1.34 $(1.21) $(.76)
======= ======= ======
</TABLE>
See notes to consolidated financial statements.
24
<PAGE>
TRITON GROUP LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Predecessor
Company
--------
Nine Three
Months Months
Years Ended March 31 Ended Ended
-------------------- March 31, June 23,
1996 1995 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash flows from operating activities: ||
Net income (loss) ............................ $27,586 $(24,267) $(15,160)||$162,742
Adjustments to reconcile net income (loss) ||
to net cash flows from operating activities: ||
Gain on extinguishment of debt.............. ||(177,903)
Depreciation and amortization............... 11 11 1,185 || 477
Reorganization items........................ || 10,736
Equity in losses............................ 12,055 6,929 8,956 || 1,911
Stock options and warrant compensation...... 678 ||
Deferred income taxes....................... (1,225)||
Minority interest........................... 294 || (89)
(Gain) loss on sale of subsidiaries, ||
investees and property.................... (42,117) 13,547 (469)||
Provision for impairment in value of assets. 500 1,500 ||
(Increase) decrease in accounts receivable ||
and other current assets.................. 155 (193) 1,209 || 723
Increase (decrease) in accounts ||
payable and accrued liabilities........... (3,493) (1,584) (2,705)|| 3,112
Changes in other assets and other, net...... (1,020) 17 803 || 279
Dividends received from The Actava Group.... 1,184 ||
Discontinued operations..................... (36) (1,923) 976 || 7,943
-------- -------- -------- ||--------
Net cash provided (used) by ||
operating activities.................... (5,681) (7,463) (3,452)|| 9,931
-------- -------- -------- ||--------
Cash flows from investing activities: ||
Capital expenditures.......................... (9) (15)||
Proceeds from the sale of operating ||
subsidiaries................................ 63,295 8,042 ||
Purchase of The Actava Group common stock..... (613)||
Sale of other assets.......................... 2,463 487 1,240 ||
Sale (purchase) of investment securities, net. 2,849 || (84)
Cash decrease from deconsolidation of ||
subsidiaries................................ (2) (2,161) ||
Discontinued operations....................... (2,871) (1,143)|| (1,036)
-------- -------- -------- ||--------
Net cash provided (used) by investing ||
activities.............................. 65,756 3,488 2,318 || (1,120)
-------- -------- -------- ||--------
</TABLE>
(Continued)
25
<PAGE>
TRITON GROUP LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS - CONTINUED
(IN THOUSANDS)
<TABLE>
<CAPTION>
Predecessor
Company
---------
Nine Three
Months Months
Years Ended March 31 Ended Ended
--------------------- March 31, June 23,
1996 1995 1994 1993
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash flows from financing activities: ||
Repayment of long-term debt: ||
The Actava Group............................ (20,476) (5,000) (6,250)||
Other....................................... (1,043) (489) (2,728)|| (197)
Cash distribution to stockholders............. (31,596) ||
Discontinued operations....................... 2,712 4,724 || (10,275)
-------- -------- -------- ||--------
Net cash used by financing activities..... (53,115) (2,777) (4,254)|| (10,472)
-------- -------- --------||--------
Change in cash and cash equivalents............. 6,960 (6,752) (5,388)|| (1,661)
Cash and cash equivalents ||
at beginning of period....................... 974 7,726 13,114 || 14,775
-------- -------- -------- ||--------
Cash and cash equivalents at end of period...... $7,934 $974 $7,726 || $13,114
======== ======== ======== ||========
||
Supplemental disclosure of cash flow information: ||
||
Interest payments............................ $(1,564) $(3,033) $(4,922)|| $(730)
Income tax (payments) refunds................ (1,457) (326) 427 || (34)
||
Non-cash financing activity: ||
||
Distribution of common shares of ||
The Actava Group to stockholders............ $19,636 ||
</TABLE>
See notes to consolidated financial statements.
26
<PAGE>
TRITON GROUP LTD.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Retained
Earnings Unrealized
Common Stock (Accumu- Gain on
Preferred --------------------- Paid-in lated Invest-
Stock Shares Amount Capital Deficit) ments Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PREDECESSOR COMPANY:
BALANCE AT MARCH 31, 1993. $2,709 15,018 $15,018 $88,157 $(267,345) $(161,461)
Subsidiary equity
transactions and other... (704) (704)
Net income................. 162,742 162,742
Elimination of old stock-
holders' interest........ (2,709) (15,018) (15,018) (87,453) 104,603 (577)
Issuance of new shares..... 19,978 2 57,713 57,715
------ ------- ------- ------ ------- -------
SUCCESSOR COMPANY:
BALANCE AT JUNE 25, 1993.. 19,978 2 57,713 57,715
Subsidiary equity
transactions and other... (660) (660)
Net loss................... (15,160) (15,160)
------- ------- ------ ------- -------
BALANCE AT MARCH 31, 1994. 19,978 2 57,053 (15,160) 41,895
Subsidiary equity
transactions and other... 178 178
Net loss................... (24,267) (24,267)
------- ------- ------- ------- -------
BALANCE AT MARCH 31, 1995. 19,978 2 57,231 (39,427) 17,806
Exercise of stock options
and warrants............. 1,473
Subsidiary equity
transactions and other... 657 657
Unrealized gain on
investments.............. 15,152 15,152
Distribution to stockholders (36,114) (15,152) (51,266)
Net income................. 27,586 27,586
------- ------- ------- ------- ------ -------
BALANCE AT MARCH 31, 1996. 21,451 $2 $21,774 $(11,841) $9,935
======= ======= ======= ======= ====== =======
</TABLE>
See notes to consolidated financial statements.
27
<PAGE>
TRITON GROUP LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY AND A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY, BASIS OF PRESENTATION AND CONSOLIDATION: The consolidated
financial statements include the accounts of Triton Group Ltd. ("Triton") and
all majority owned subsidiaries (referred to collectively herein as "the
Company" unless the context requires otherwise). Investments in 20% to 50%-
owned companies are accounted for using the equity method. All companies owned
greater than 20% are referred to as the "Operating Subsidiaries". Businesses
sold are classified as discontinued operations in the consolidated statement of
operations and the consolidated statement of cash flows for all periods
presented. Additionally, the consolidated balance sheet at March 31, 1995
reflects National Airmotive Corporation as a discontinued operation because
Triton entered into a contract to sell National Airmotive in March 1995 and
completed the sale on June 2, 1995. Significant intercompany accounts and
transactions are eliminated.
In August 1993, the Company announced a corporate strategy to return value
to its new stockholders, in the form of cash and/or liquid securities over a
relatively short period of time. During 1994, 1995 and 1996 several
transactions and events have occurred (see Notes 2 and 3) consistent with this
strategy. Triton's remaining holdings as of March 31, 1996 consisted of a 49.4%
interest in Mission West Properties, $7.9 million of cash and certain other non-
operating assets. The Company is actively pursuing alternatives to realize
value for its remaining assets. Due to uncertainty surrounding the timing of
such realization, the consolidated financial statements have been prepared on a
going concern basis assuming continuity of operations and the realization of
assets and liquidation of liabilities in the ordinary course of business.
On December 11, 1995, Triton announced that it had retained an investment
banking firm to assist the Company in developing and evaluating proposals for
potential acquirors, acquisition candidates or merger partners.
The following are the Operating Subsidiaries as of and during the three
years ended March 31, 1996:
Ownership Date of
Operating Subsidiary Percentage (A) Disposition
- -------------------- ---------- -----------
The Actava Group Inc. ("Actava") 26% December 1995
Mission West Properties ("Mission West") 49%(B) -
Western Metal Lath ("Western Metal") 100% November 1995
National Airmotive Corporation
("National Airmotive") 100% June 1995
Ridgewood Properties, Inc. ("Ridgewood") 74% August 1994
Liquor Barn, Inc. ("Liquor Barn") 75% May 1994 (C)
WSI Holdings Corp. ("Western Sizzlin") 66% October 1993
(A) At March 31, 1996 or prior to disposition.
(B) Ownership percentage was 53% prior to February 1995 (see Note 4).
(C) Date Liquor Barn bankruptcy plan was confirmed.
28
<PAGE>
REORGANIZATION PROCEEDINGS: On October 19, 1992, Triton and its former parent,
Intermark, Inc. ("Intermark" and together the "Companies") filed separate
voluntary petitions in the United States Bankruptcy Court (the "Bankruptcy
Court") for the Southern District of California (San Diego) seeking protection
under Chapter 11 of the U.S. Bankruptcy Code. The Chapter 11 proceedings were
jointly administered by the Bankruptcy Court, while the Companies operated their
businesses as debtors-in-possession, subject to Bankruptcy Court approval for
certain transactions. The Chapter 11 proceedings did not include any of the
Companies' subsidiaries. During the Chapter 11 proceedings, the Companies'
developed a Joint Plan of Reorganization ("Joint Plan") which was approved by
the creditors and former stockholders in May 1993, was confirmed by the
Bankruptcy Court on June 4, 1993 ("Confirmation Date") and became effective on
June 25, 1993 (the "Effective Date"). The principal terms of the Joint Plan
provided for the merger of Triton and Intermark, the conversion of the unsecured
debt of Triton and Intermark (approximately 95% of which was owed to holders of
subordinated notes and debentures) into 99% of the new common stock of Triton,
the conversion of the former common and preferred stockholders of Intermark into
1% of the new common stock of Triton and the restructuring of secured debt
totalling approximately $35 million. For more information regarding the
reorganization proceedings, see Note 10.
FINANCIAL STATEMENT PREPARATION: The preparation of financial statements, in
conformity with generally accepted accounting principles, requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS: Cash and cash equivalents consist of cash,
certificates of deposit, time deposits, commercial paper, short-term government
obligations and other money market instruments with a maturity of three months
or less. The Company invests its excess cash in government securities and money
market securities of investment grade companies from a variety of industries
and, therefore, bears minimal risk. Such investments are stated at cost, which
approximates fair value, and are considered cash equivalents for purposes of
reporting cash flows.
INVENTORIES: Inventories were carried at the lower of cost, determined
principally using the first-in, first-out method, or market.
PROPERTY, PLANT AND EQUIPMENT: Depreciation of buildings, equipment and
furniture was computed using the straight-line method over estimated useful
lives of 3 to 30 years. Leasehold improvements were amortized over their useful
lives or over the term of the related lease, if shorter.
EARNINGS PER SHARE: The computation of earnings per share for the years ended
March 31, 1996 and 1995 and the nine-month period ended March 31, 1994 is based
upon the weighted average number of shares outstanding during the applicable
period, including dilutive stock options and warrants, if any. The average
number of common shares and equivalents was 20,611,879 for the year ended
March 31, 1996 and 19,978,476 for the year ended March 31, 1995 and the nine
months ended March 31, 1994. Earnings per share for the Predecessor Company is
29
<PAGE>
not meaningful due to the discharge of debt and the issuance of the new common
shares.
INCOME TAXES: The Company files consolidated tax returns with its subsidiaries
which are greater than 80% owned. The Company uses the liability method in
accounting for income taxes. Under the liability method, deferred tax assets
and liabilities are determined based on differences between the financial
reporting and tax basis of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse.
STOCK-BASED COMPENSATION: In October 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation." SFAS 123 will be adopted by the
Company as required for its fiscal 1997 financial statements and is not expected
to have a material effect on the Company's financial position or results of
operations. Upon adoption of SFAS 123, the Company will continue to measure
compensation expense for its stock-based employee compensation plans using the
intrinsic value method prescribed by APB Opinion No. 25, "Accounting for Stock
Issued to Employees," and will provide pro forma disclosures of net income and
earnings per share as if the fair value-based method prescribed by SFAS 123 had
been applied in measuring compensation expense.
LONG-LIVED ASSETS: In March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of," which the Company will adopt prospectively as required in fiscal 1997.
Pursuant to this Statement, companies are required to investigate potential
impairments of long-lived assets, certain identifiable intangibles, and
associated goodwill when there is evidence that events or changes in
circumstances that indicate that the carrying value may not be recoverable. An
impairment loss would be recognized when the sum of the expected future net cash
flows is less than the carrying amount of the asset. The adoption of SFAS 121
is not expected to have a significant impact on the Company's financial position
or results of operations.
CHANGES IN PRESENTATION: Certain amounts in the 1995 and 1994 financial
statements have been reclassified to conform with the 1996 presentation. These
changes in presentation have no effect on previously reported net income or
loss.
FISCAL YEAR: The Company's fiscal year ends on the Friday nearest March 31. The
results of Operating Subsidiaries having fiscal year ends different from Triton
are reflected through the end of their fiscal year if within 93 days before
March 31 or their most recent four fiscal quarters as follows:
PERIOD INCLUDED IN THE
COMPANY'S CONSOLIDATED
FISCAL FINANCIAL STATEMENTS
OPERATING SUBSIDIARY YEAR END FOR A FISCAL YEAR
-------------------- -------- -----------------
Actava December 31 January - December
Mission West November 30 March - February
30
<PAGE>
NOTE 2 - DISPOSITIONS
WESTERN SIZZLIN
At March 31, 1993, as a result of Western Sizzlin's planned reorganization,
the Predecessor Company determined that its ownership level in Reorganized
Western Sizzlin would likely be less than 50%, the ownership level required for
consolidation. Accordingly, the Company accounted for its investment in Western
Sizzlin using the equity method of accounting effective as of the beginning of
fiscal 1993. Prior to 1993, the Company had consolidated Western Sizzlin and
recorded losses from Western Sizzlin in excess of its cost basis. In connection
with the emergence from its reorganization proceedings in June 1993, the Company
recognized a $10.8 million accounting gain to adjust its investment in Western
Sizzlin to its estimated net realizable value.
In October 1993, Triton sold its debt claims in the Western Sizzlin Chapter
11 proceedings for $400,000 to another creditor of that company that had
proposed a plan of reorganization for Western Sizzlin. This plan of
reorganization was confirmed in late October 1993 and Triton received no
additional value for its equity claims. Triton recognized a $17,000 loss on
this transaction.
LIQUOR BARN
In September 1993, Liquor Barn (75% owned by Triton at that time), Triton
and Liquor Barn's Official Creditors' Committee determined that an orderly
liquidation of the retailer's assets was in the best interests of its creditors.
In addition to its equity ownership, Triton was the single largest creditor of
Liquor Barn. Liquor Barn had been operating its remaining stores as a debtor-
in-possession since its Chapter 11 filing in May 1993 and, along with its
creditors, reviewed various options to maximize the value of the enterprise.
Liquor Barn filed its formal Plan of Liquidation with the Bankruptcy Court in
January 1994 and the Chapter 11 Plan was confirmed in May 1994. The liquidation
of the entity has been substantially completed. In February 1995, the Official
Creditors' Committee of Liquor Barn filed an objection to Triton's claims
asserting that the claims should be equitably subordinated to the other
unsecured claims of Liquor Barn by virtue of Triton's status as an insider of
Liquor Barn. Triton vigorously opposed the Creditor's Committee objection. In
July 1995, Triton and the Creditors' Committee settled the dispute and the
Company reduced its claims against Liquor Barn. Triton received approximately
$2.5 million in November 1995 in connection with Liquor Barn's first
distribution to its creditors and values its claims on Liquor Barn's remaining
assets at approximately $.5 million. The Liquor Barn proceedings are expected
to be completed in calendar 1996.
In connection with the fresh start accounting adjustments recorded at
June 25, 1993 (see Note 10), Triton determined the value of its interest in
Liquor Barn to be approximately $5 million. This valuation process included the
review of several factors including liquidation analyses prepared by Liquor Barn
management at that time. Liquor Barn revised its liquidation analysis in
connection with the filing of its Plan and Disclosure Statement in March 1994
and estimated at that time that the unsecured creditors would realize
approximately $.53 for each $1.00 of allowed claim. Accordingly, Triton
decreased the carrying value of its Liquor Barn claims to $3.5 million in fiscal
1994. In connection with the settlement described above, the carrying value was
decreased to $3
31
<PAGE>
million in fiscal 1996, of which $2.5 million was received by Triton in November
1995. Other long-term assets includes $3.5 million and $.5 million at March 31,
1995 and 1996, respectively, related to Triton's claims against Liquor Barn. As
a result of Liquor Barn's Liquidation Plan, the consolidated statements of
operations and cash flows were restated for the applicable periods to reflect
Liquor Barn as a discontinued operation. Revenues of Liquor Barn were $14.6
million for the three months ended June 25, 1993.
RIDGEWOOD PROPERTIES
In August 1994, Triton completed the sale of 1,455,280 shares of common
stock of Ridgewood Properties to Ridgewood for $8 per share, the consideration
consisting of $8 million cash and 450,000 shares of newly issued Ridgewood
Series A Preferred Stock. The preferred stock is nonvoting, redeemable by
Ridgewood at $8 per share and pays an annual dividend of $.40 per share. If the
preferred stock is not redeemed by Ridgewood by August 1996, Triton may either
elect to receive an increased quarterly dividend of $90,000 or to convert the
preferred stock into 1,350,000 Ridgewood common shares, which would represent
approximately 55% of the Ridgewood common shares outstanding, or 41% fully
diluted. Triton deferred a gain of approximately $1.6 million on the
transaction until the Company realizes cash value for its remaining interest in
Ridgewood. Accordingly, the carrying value of the preferred stock investment is
$2 million, compared to a face value of $3.6 million, which amount is included
in other long-term assets in the consolidated balance sheet at March 31, 1996
and 1995 and is accounted for using the cost method of accounting. Triton
management estimates the fair value of this investment to be approximately $3.4
million at March 31, 1996, determined using a discounted cash flow analysis.
As a result of this transaction, the operating results of Ridgewood through
the date of disposition have been classified as a discontinued operation in the
consolidated statements of operations and cash flows for all periods presented.
Revenues of Ridgewood through the date of disposition were $1.8 million in 1995,
$9.3 million for the nine months ended March 31, 1994 and $8 million for the
three months ended June 25, 1993.
NATIONAL AIRMOTIVE
On June 2, 1995, Triton completed the sale of National Airmotive for cash
proceeds of $11.3 million plus assumption of National Airmotive's debt by the
buyer. Triton recognized a loss on the sale of approximately $13.6 million. As
a result of the sale, the operating results of National Airmotive prior to the
sale have been classified as a discontinued operation in the consolidated
statements of operations and cash flows. The $11.3 million net proceeds
received by Triton in June 1995 is classified as "Net assets of discontinued
operation" in the consolidated balance sheet at March 31, 1995. Revenues of
National Airmotive were $83.1 million in 1995, $70 million for the nine months
ended March 31, 1994 and $22.6 million for the three months ended June 25, 1993.
WESTERN METAL LATH
On November 7, 1995, Triton completed the sale of Western Metal for cash
consideration of $3 million and the assumption of all of Western Metal's debt by
the buyer. Triton recognized a gain of approximately $2.6 million which is
included in discontinued operations in the consolidated statement of operations
for the year ended March 31, 1996. As a result of the sale, the operating
32
<PAGE>
results of Western Metal have been classified as a discontinued operation in the
consolidated statements of operations and cash flows for all periods presented.
Revenues of Western Metal were $19.3 million through the date of sale in the
current fiscal year, $27.2 million for the year ended March 31, 1995, $20.6
million for the nine months ended March 31, 1994 and $5.9 million for the three
months ended June 25, 1993.
Income (loss) from discontinued operations included in the consolidated
statement of operations consists of the following (in thousands):
Predecessor
Company
---------
Nine Three
Years Ended Months Months
March 31 Ended Ended
----------------- March 31, June 25,
1996 1995 1994 1993
------- ------ ------- ---------
Gain on sale of Western ||
Metal.................. $ 2,564 ||
Loss on sale of National ||
Airmotive.............. $(13,634) ||
Net operating results of: ||
Western Metal.......... (50) (1,066) $(2,979) || $ (124)
National Airmotive..... 631 4,028 || 982
Ridgewood Properties... 465 (2,010) || 363
Liquor Barn............ || (2,355)
------- ------ ------ || ------
Income (loss) from ||
discontinued operations $ 2,514 $(13,604) $ (961) || $ (1,134)
======= ======= ====== =======
The income tax effects of the discontinued operations is not material.
NOTE 3 - INVESTMENT IN THE ACTAVA GROUP INC.
Prior to 1991, Triton accumulated a 20.8% interest in Actava (formerly
Fuqua Industries, Inc.), a consumer products and services company, for
$139.9 million. During 1991, Triton's interest in Actava was increased to 26.3%
through repurchases by Actava of its own common stock. During fiscal 1994 and
fiscal 1995 Triton purchased 75,000 additional Actava shares, and Actava sold
700,000 common shares to its Chief Executive Officer causing Triton's ownership
of Actava prior to October 20, 1995 to become 25.5% (4,413,598 common shares).
On October 20, 1995, Triton consummated the sale in a block transaction of
three million common shares of Actava owned by the Company pursuant to a
registration statement on Form S-3. The proceeds of the sale amounted to
approximately $49.5 million of which approximately $18 million was used to repay
in full the outstanding loan balance that Triton had from Actava secured by a
portion of the Actava shares owned by Triton (see Note 5). On October 25, 1995,
33
<PAGE>
Triton completed the sale of an additional 59,384 common shares of Actava for
net cash proceeds of approximately $1 million. Triton recognized an accounting
gain on the sales of the Actava common shares of approximately $39.6 million
after transaction expenses.
The sale of three million common shares of Actava was pursuant to an
October 12, 1995 agreement between Triton and Actava whereby Actava agreed to
register three million of the common shares of Actava owned by Triton on a Form
S-3 registration statement. Upon filing of the Form S-3 by Actava, Triton
delivered to Actava proxies in blank executed by Triton covering all 4,413,598
common shares of Actava owned by Triton, which enabled Actava's proxy holders to
vote these shares in favor of the proposed mergers of Actava with Orion Pictures
Corporation ("Orion"), MCEG Sterling Incorporated ("MCEG") and Metromedia
International Telecommunications Inc. ("MITI"). In connection with this
agreement, Triton further agreed to waive the provisions of its Amended and
Restated Stockholder Agreement with Actava which previously required that the
Board of Directors of Actava consist of nine members and entitled Triton to
designate up to two Directors of Actava. Triton and Actava also agreed that the
net proceeds of sales pursuant to the Form S-3 registration statement would be
first used to repay in full all obligations of Triton to Actava under the
Amended and Restated Loan Agreement.
On November 1, 1995, Actava completed its four-way merger with Orion, MITI,
and MCEG and renamed the newly combined company, Metromedia International Group,
Inc. ("Metromedia"). The common shares of Metromedia began trading on the
American Stock Exchange on November 2, 1995 under the trading symbol MMG. On
December 8, 1995, Triton completed the distribution of 1,342,621 common shares
of Metromedia to its stockholders as part of a special distribution (see Note
7).
Prior to the sale of Actava common shares in October 1995, Triton accounted
for its investment in Actava using the equity method of accounting and its share
of the earnings (losses) of Actava were recorded on a three-month delayed basis,
enabling Triton to reflect the results of Actava for its fiscal year which ends
December 31 within Triton's fiscal year which ends March 31.
At March 31, 1995, Triton's carrying value of its investment in Actava was
$26.5 million, which was less than its equity in Actava's reported net assets at
December 31, 1994 of $31.9 million. This difference had been accounted for by
Triton as a reduction in its share of the carrying value of Actava's other long-
term assets.
In August 1994 Actava completed the sale of its interest in Qualex, Inc.
("Qualex"), a photofinishing company previously owned equally by Actava and the
Eastman Kodak Company ("Kodak"), to Kodak for cash and short-term notes totaling
$150 million. Actava recorded a loss on the sale of Qualex of approximately $38
million. Actava reported a net loss of $65.8 million, $38 million of which was
attributable to the loss on the sale of Qualex, for the year ended December 31,
1994. Triton's $9.7 million share of the loss on the sale of Qualex was not
recognized as a loss in Triton's 1995 consolidated statement of operations for
the reasons outlined in the following paragraph.
34
<PAGE>
In June 1993, in connection with Triton's required adoption of fresh start
accounting following its reorganization and emergence from bankruptcy, Triton
recorded an adjustment to reduce the carrying value of its investment in Actava
to the quoted market value of the Actava shares at that time, an amount which
was less than the then book value of Actava. Triton reduced its carrying value
of Actava to approximately $17 million less than Triton's share of Actava's net
book value. For purposes of equity method accounting, Triton allocated a
portion of this writedown to the intangible assets on Actava's consolidated
balance sheet at that time, principally attributable to Qualex. Since that
time, in determining its share of Actava's operating results, Triton offset a
portion of the amortization of the intangible assets recorded by Actava. In
connection with the sale of Qualex, Actava eliminated substantially all of its
intangible assets and, as mentioned previously, sustained a loss of
approximately $38 million. Accordingly, Triton's share of the Qualex loss was
not recognized in the consolidated statement of operations because it was
previously recognized by Triton in June 1993.
35
<PAGE>
Summarized consolidated financial information of Actava as of December 31,
1994, the two years then ended and the nine months ended September 30, 1995 is
as follows (in thousands):
CONDENSED CONSOLIDATED BALANCE SHEET At
December 31,
1994
------------
Current assets........................... $ 351,643
Property, plant and equipment, net....... 34,897
Intangibles, net......................... 633
Note receivable from Triton.............. 22,976
Long term investments....................
Investment in Roadmaster Industries, Inc. 68,617
Other assets............................. 15,013
-----------
$ 493,779
===========
Current liabilities....................... $ 202,470
Deferred income taxes..................... 6,911
Long-term debt............................ 2,547
Subordinated debt......................... 157,193
Stockholders' equity...................... 124,658
----------
$ 493,779
==========
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Years Ended
Ended December 31
September 30, -----------------
1995 1994 1993
----------- -------- --------
Net sales......................... $123,912 $551,828 $465,812
Costs and expenses................ 173,058 575,284 518,963
Loss from continuing operations... (49,146) (23,456) (51,716)
Income (loss) from
discontinued operations.......... (40,693) 8,526
Net loss.......................... (49,146) (65,750) (47,594)
36
<PAGE>
NOTE 4 - INVESTMENT IN MISSION WEST PROPERTIES
In February 1995, the Company, Mission West and Western Metal entered into
an agreement whereby Triton delivered 100,000 shares of its Mission West stock
to Mission West in exchange for a reduced rental rate and an extended lease term
for the facility leased by Mission West to Western Metal. Triton recorded no
gain or loss on the transaction but transferred a pro rata portion
(approximately $400,000) of its investment in Mission West to its investment in
Western Metal. Western Metal accounted for this transaction as an equity
contribution and as deferred rent to be amortized to rent expense over the term
of the new lease. As a result of this transaction, Triton's ownership in
Mission West was reduced from 776,050 common shares or 53%, to 676,050 common
shares or 49.4%, below the level required for consolidation in Triton's
consolidated financial statements. Accordingly, Triton has reflected its
investment in Mission West as an equity investment in its consolidated financial
statements as of the beginning of fiscal 1995.
At March 31, 1996, Triton's carrying value of Mission West was $3 million,
which was less than its equity in Mission West's net assets of $7 million. The
majority of this difference was created in June 1993 in connection with Triton's
adoption of fresh start accounting following its reorganization and emergence
from bankruptcy, and has been accounted for by Triton as a reduction in the
value of the real estate investments recorded at Mission West. During 1995,
Mission West recorded a valuation reserve on its real estate investments of $5.2
million. Triton's $2.7 million share of this provision was not recognized as a
loss in the consolidated financial statements, but was offset against the
reserve established in June 1993. The Mission West shares owned by Triton,
based on the closing price of such stock for such date, had a quoted market
value of $3.5 million at March 31, 1996.
37
<PAGE>
Summarized financial information of Mission West as of February 28, 1996,
1995 and 1994 and the three years then ended is as follows (in thousands):
CONDENSED BALANCE SHEET
At February 28
----------------------------
1996 1995 1994
------- -------- -------
Current assets............................ $ 3,347 $ 4,710 $ 5,054
Real estate investments, net.............. 42,861 44,238 49,383
Other assets.............................. 1,032 894 2,455
------- ------- -------
$47,240 $49,842 $56,892
======= ======= =======
Current liabilities....................... $1,310 $1,610 $ 3,487
Notes payable............................. 31,700 34,115 35,684
Stockholders' equity...................... 14,230 14,117 17,721
------- ------- -------
$47,240 $49,842 $56,892
======= ======= =======
CONDENSED STATEMENT OF OPERATIONS
Years Ended February 28
-----------------------------
1996 1995 1994
-------- ------- -------
Net revenues.............................. $7,909 $ 7,854 $ 8,745
-------- ------- -------
Costs and expenses........................ 3,039 3,032 4,052
Depreciation and amortization............. 1,364 1,429 1,690
Provision for estimated losses on
real estate.............................. 5,200 94
-------- ------- -------
4,403 9,661 5,836
-------- ------- -------
Operating income (loss)................... 3,506 (1,807) 2,909
Net income (loss)......................... 103 (3,083) 270
38
<PAGE>
NOTE 5 - LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
At March 31
-----------------------
1996 1995
---------- ---------
Triton Group Ltd.:
Note payable to The Actava Group Inc.............. $ 20,476
Secured bank note payable......................... $915 2,167
--------- ---------
915 22,643
--------- ---------
Operating Subsidiaries:
Revolving credit loans of Western Metal........... 3,091
Capitalized lease and other obligations........... 103
--------- ---------
3,194
--------- ---------
Total consolidated long-term debt................... 915 25,837
Less portion due within one year.................... 915 9,134
--------- ---------
$ - $ 16,703
========= =========
Triton had a secured credit agreement with Actava, the collateral for which
was a portion of the common shares of Actava owned by Triton prior to the sale
and distribution of such shares in October and December 1995 (see Note 3). The
loan was repaid in full in October 1995 in connection with the Company's sale of
three million shares of Actava common stock owned by the Company.
Triton had a secured loan from a bank with a balance of $.9 million on
March 31, 1996, the security for which was the 676,050 shares of Mission West
common stock owned by the Company. The loan accrued interest at prime plus 2%,
which was 10.25% at March 31, 1996. The loan agreement required that Triton
make payments on the first day of each month until maturity comprised of a
principal payment of $100,000 plus accrued interest. The loan was due on
October 1, 1996. In December 1994, Triton secured the release of 100,000 shares
of Mission West common stock previously pledged as collateral in exchange for a
$.3 million principal payment. The collateral maintenance provisions of the
loan agreement provide that the underlying collateral have a 15-day average
market value of at least 73.4% of the outstanding loan balance. Triton repaid
the loan in full in April 1996.
Western Metal Lath had a credit facility of up to $6 million with a bank
and $3.1 million was outstanding at March 31, 1995.
The Company believes the book value of its remaining debt approximates its
market value.
39
<PAGE>
NOTE 6 - COMMITMENTS AND CONTINGENCIES
In December 1995, the Company engaged a financial advisor to assist it in
developing and evaluating proposals for potential acquirors, acquisition
candidates or merger partners. In the event that a transaction were completed
that resulted in a change of control of Triton, the advisor would be entitled to
a fee of up to $.3 million. In connection with this engagement, the financial
advisor was also granted a warrant to purchase 500,000 shares of common stock of
the Company at $.50 per share (see Note 7).
Triton's wholly owned insurance captive, La Jolla Insurance Co., Ltd. ("La
Jolla"), incorporated in Bermuda, was placed into insolvent liquidation in
October 1992 due to a capital deficiency. Since 1982, La Jolla had underwritten
certain of the Predecessor Company's insurance policies, primarily directors and
officers liability and workers' compensation insurance. No policies are
currently active, however, notice of potential claims are outstanding for
certain previous policy years. Since 1992, La Jolla has been managed by a
liquidator in Bermuda for the benefit of its creditors. As a result of the 1992
insolvency and the Company's resulting loss of control, La Jolla was
deconsolidated from the consolidated financial statements in fiscal 1993 and is
carried at no value. At March 31, 1996, La Jolla had assets of approximately
$3.3 million and statutory reserves totalling $3 million. As a result of the
current favorable financial position of La Jolla, the Company is in the process
of removing the captive from the liquidation proceedings. Upon termination of
the liquidation proceedings, the assets of La Jolla would be available to
Triton, subject to any remaining statutory reserves.
In May 1995, a stockholder of Ridgewood, commenced a derivative and class
action in Delaware Chancery Court against Ridgewood, its directors and the
Company. The lawsuit attacks a transaction entered into in August 1994 in which
Ridgewood purchased from the Company all of the Ridgewood common stock then
owned by the Company (which consisted of approximately 75% of Ridgewood's then
outstanding common stock) for $8 million in cash and newly-issued Ridgewood
preferred stock with a face value of $3.6 million. The complaint alleges that
such transaction constituted a corporate waste and a breach by the Company of
its alleged duties of loyalty and good faith as a majority stockholder to
Ridgewood's other stockholders. The complaint seeks a rescission of the
transaction and other unspecified monetary relief. The Company believes these
allegations are without merit and intends to defend vigorously against them.
Although there can be no absolute assurances as to the outcome of this matter,
it is the opinion of management that the ultimate resolution of such litigation
will not have a material adverse effect on the Company's financial position,
results of operations or cash flows.
Various other claims, lawsuits and other actions against the Company are
pending. It is the opinion of management that the ultimate resolution of such
claims and/or litigation will not have a material adverse effect on the
Company's financial position, results of operations or cash flows.
40
<PAGE>
NOTE 7 - STOCKHOLDERS' EQUITY
DISTRIBUTION OF CASH AND COMMON SHARES OF METROMEDIA TO TRITON
STOCKHOLDERS: On November 1, 1995, the Board of Directors of the Company
declared a special distribution of $1.57 in cash and .066 of a share of common
stock of Metromedia (formerly Actava) for each outstanding share of Triton
common stock. The special distribution was completed on December 8, 1995 to
stockholders of record on November 17, 1995. Cash was paid in lieu of any
fractional shares of Metromedia's common stock that would otherwise have been
distributed in the special distribution. Based on the closing price of
Metromedia's common stock on December 8, 1995 of $14.625 per share, the total
value of the distribution on such date amounted to approximately $52 million, or
$2.54 per share of Triton common stock.
PREDECESSOR COMPANY: All common stock and preferred stock of the
Predecessor Company outstanding at the Effective Date were exchanged for 200,000
shares of common stock of the Company. All stock options of the Predecessor
Company were canceled as of the Effective Date.
STOCK OPTIONS: In July 1993, the Company adopted the 1993 Directors Stock
Option Plan. The Plan provides for the issuance of up to 300,000 options to
purchase common stock of the Company to non-employee directors of the Company.
The option price shall not be less than the fair market value of the shares on
the date of the grant. Options issued under the plan were fully exercisable
when granted and were to expire in 5 years. During fiscal 1994, 150,000 options
were granted under the Plan to acquire the same number of shares of common stock
of the Company at $2.00 per share, which exceeded the quoted market value of the
Company's common stock at that time. At March 31, 1996, 178,000 shares of
common stock were reserved for future issuance under the plan.
In August 1993, the Company granted 1.2 million non-qualified options to
certain key employees to acquire the same number of shares of common stock of
the Company at $2.00 per share, which exceeded the quoted market value of the
Company's common stock at that time. These options were fully exercisable when
granted and were to expire in five years.
In October 1993, the Company granted 75,000 options to acquire the same
number of common shares of the Company at $2.00 per share, which exceeded the
quoted market value of the Company's common stock at that time, to its financial
advisor on the same terms as those issued to the non-employee directors of the
Company. The Company determined that the value of these options was not
material.
WARRANTS TO PURCHASE COMMON STOCK: In connection with the retention of a
financial advisory firm by the Company in October 1993, the Company issued
450,000 warrants to purchase the same number of shares of common stock of the
Company at $2.00 per share. The warrants were to expire in five years and were
exercisable as follows: 150,000 on or after the date of the agreement; 150,000
on or after the first date that the average stock price of the Company for ten
consecutive trading days equals or exceeds $4.00 per share; and 150,000 on or
after the first date that the average stock price of the Company for ten
consecutive days equals or exceeds $5.00 per share. Similar to the stock
41
<PAGE>
options, the warrants provided for a reduction in the exercise price to the
extent cash dividends or other distributions were made to existing holders of
common stock of the Company. The Company determined that the value of these
warrants at the date of issuance was not material. Pursuant to the terms of the
Warrant Agreement, the exercise price of 150,000 of these warrants was reduced
to the par value of the common stock to be issued, or $.0001 per share.
Following the special distribution, the financial advisor and the Company agreed
to cancel the remaining 300,000 warrants.
Pursuant to its Joint Plan of Reorganization in 1993, Triton issued 782,400
warrants to purchase the same number of Triton common shares to certain former
creditors and the former stockholders of the Predecessor Company. Each warrant
entitled the holder to purchase a share of common stock at $3.75 per share and
expires in June 1998. In connection with the special distribution and pursuant
to the terms of the Warrant Agreement, the exercise price of each warrant was
adjusted to $2.04 and, upon exercise of a single warrant, the warrant holder
would receive 1.84 shares of common stock of the Company.
In December 1995, the Company retained the same financial advisory firm for
a new engagement (see Note 6). In connection with this retention, the Company
issued 500,000 warrants to purchase the same number of shares of common stock of
the Company at $.50 per share. The warrants expire in 5 years. The Company
determined that the value of these warrants at the date of issuance was not
material.
EXERCISE OF STOCK OPTIONS AND WARRANTS: All of the options and certain of
the warrants described above provided for a reduction in the exercise price to
the extent cash dividends or other distributions are made to existing holders of
the common stock of the Company. As a result of the special distribution, the
exercise price for all of these stock options and warrants was reduced to the
par value of the common shares to be issued, or $.0001 per share. Additionally,
the Company entered into agreements with the option and warrant holders whereby
the option and warrant holders participated in the special distribution to the
extent that the value of the distribution exceeded the pre-distribution $2.00
per share exercise price. As a result, the Company recognized compensation
expense of $1.4 million ($.7 million of which was a non-cash charge) related to
the option and warrant holders' participation in the special distribution. In
February 1996, 1,323,000 of the options and 150,000 of the warrants were
exercised and at March 31, 1996, 102,000 of the stock options remained
outstanding and were exercisable at an option price of $.0001 per share.
COMMON STOCK PURCHASE RIGHTS: In March 1995, the Company's Board of
Directors adopted an Interim Rights Plan, whereby the Board declared a dividend
of one common stock purchase right (a "Right") for each share of the Company's
outstanding common stock on April 3, 1995. Each Right entitled the holder to
purchase from the Company a calculated number of common shares at $.20 per share
in the event that a person or affiliated group of persons acquired ownership of
15% or more of the outstanding common shares of the Company. The Rights were
redeemed by the Board of Directors on December 8, 1995 in connection with the
special distribution at a price of $.001 per Right.
42
<PAGE>
SUBSIDIARY EQUITY TRANSACTIONS: Equity transactions by the Company's
subsidiaries and investees and other transactions resulted in a net increase in
stockholders equity of $657,000 and $178,000 during the years ended March 31,
1996 and 1995, respectively, and a decrease of $660,000 during the nine months
ended March 31, 1994.
NOTE 8 - INCOME TAXES
The income tax benefit from continuing operations consists of the following
(in thousands):
Nine Three
Years Ended Months Months
March 31 Ended Ended
----------------- March 31, June 25,
1996 1995 1994 1993
--------- ------- --------- --------
FEDERAL: ||
Current............... $1,515 $ 479 || $ 94
Deferred.............. 252 ||
--------- ------ --------- || --------
1,515 731 || 94
--------- ------ --------- || --------
STATE: ||
Current............... $1,135 (3) (153)|| (14)
Deferred.............. 90 ||
--------- ------ --------- || --------
1,135 (3) (63)|| (14)
--------- ------ --------- || --------
$1,135 $1,512 $ 668 || $ 80
========= ======= ========= || ========
43
<PAGE>
The difference between total income tax expense and an amount computed by
applying the statutory federal income tax rate (35%) to income from continuing
operations is reconciled as follows (in thousands):
Nine Three
Years Ended Months Months
March 31 Ended Ended
---------------- March 31, June 25,
1996 1995 1994 1993
-------- ------- --------- --------
Benefit (tax) computed at ||
Federal statutory rate.... $(8,378) $4,634 $5,680 || $4,498
Basis differences on ||
investments sold.......... 13,862 ||
Alternative minimum tax.... (575) ||
Reorganization costs....... (57)|| (754)
Reversal of prior year ||
estimate................. 1,715 1,515 ||
Losses for which no current ||
benefits are available... (5,495) (4,802) (5,406)|| (3,801)
Other, net................. 6 165 451 || 137
-------- ------- --------- || --------
$ 1,135 $1,512 $ 668 || $ 80
======== ======= ========= || ========
Significant components of the Company's deferred income tax assets and
liabilities as of March 31, 1996 and 1995 are as follows:
March 31, 1996 March 31, 1995
-------------------- --------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
--------- --------- --------- ---------
Investments in less than
80% subsidiaries........... $ 334 $50,600 $128
Net operating, capital and
built-in loss carryforwards 11,594 39,879
Other investments............ 2,363 23,661
Alternative minimum tax
credits carryforward...... 4,395 3,595
Other nondeductible accruals. 2,821 2,439
Pension benefits............. 132
Other........................ 32
--------- --------- ---------
Subtotal..................... 21,507 120,174 292
Valuation adjustments........ 21,507 119,882
--------- --------- ---------
Total deferred taxes......... $ - $292 $292
========= ========= =========
Net deferred taxes........... $ -- $ --
========= =========
44
<PAGE>
Certain of the assets included in the above table relate to net operating,
capital and built-in loss carryforwards of Triton and are subject to an annual
limitation due to the ownership change of Triton in June 1993 resulting from the
Company's reorganization. At March 31, 1996, the table includes only those net
operating and capital and built-in loss carryforwards that could be realized by
the Company during the carryforward period considering this Company's annual
limitation.
At March 31, 1996, Triton had net operating loss ("NOL") carryforwards for
Federal tax purposes of approximately $47 million and capital loss carryforwards
of approximately $123 million. Due to the change in ownership requirements of
the Internal Revenue Code, all but approximately $10 million of these loss
carryforwards are "pre-ownership change" and are subject to an annual combined
limitation of approximately $2.4 million. The capital loss carryforward is
limited to use against future capital gains only. If the full amount of the
limitation is not used in any year, the amount not used increases the allowable
limit in the subsequent year. In fiscal 1996, Triton fully utilized its
cumulative annual limitation for alternative minimum tax purposes. These loss
carryforwards expire between 2006 and 2010 if not used.
The Company has not recognized a financial statement benefit for its tax
loss carryforwards or any other deferred tax assets due to the uncertainty of
realizing the benefit of such assets in the future.
Pursuant to the Joint Plan (see Note 1), the Company is repaying certain
agreed upon prepetition income tax liabilities of the Predecessor Company in
semi-annual payments through June 1999. The amounts accrue interest at the
prime rate plus 1%. At March 31, 1996, the consolidated balance sheet included
$1 million in other long-term liabilities and $.3 million in accrued expenses
related to Predecessor Company income tax liabilities.
NOTE 9 - ADDITIONAL FINANCIAL STATEMENT INFORMATION
Inventories consisted of the following at March 31, 1995 (in thousands):
Finished products and retail inventories.......... $ 1,535
Work in process................................... 23
Raw materials..................................... 1,064
-------
$ 2,622
=======
Property, plant and equipment consisted of the following at March 31, 1995
(in thousands):
Buildings and improvements........................ $ 119
Equipment and furniture........................... 825
-------
944
Accumulated depreciation.......................... 105
-------
$ 839
=======
45
<PAGE>
Other long-term assets consists of the following (in thousands):
At March 31
-----------------
1996 1995
------- -------
Liquor Barn receivable............................ $ 537 $ 3,500
Investment in Ridgewood Series A Preferred Stock 2,009 2,009
Other............................................. 82 479
------- -------
$ 2,628 $ 5,988
======= =======
Accrued liabilities consist of the following (in thousands):
At March 31
-----------------
1996 1995
------- -------
Accounts payable.................................. $ 35 $ 4,447
Accrued compensation and other employee benefits.. 8 444
Prepetition income taxes.......................... 326 326
Other............................................. 77 854
------- -------
$ 446 $ 6,071
======= =======
Other liabilities consist of the following (in thousands):
At March 31
-----------------
1996 1995
------- -------
Prepetition income taxes.......................... $ 978 $ 1,304
Other............................................. 1,909 4,412
------- -------
$ 2,887 $ 5,716
======= =======
The Company had Post-Employment Consulting Agreements with three Executive
Officer's which provided for severance payments in an amount equal to each
Executive Officer's annual salary, which aggregated approximately $.7 million.
Effective January 2, 1996, the Executive Officers of the Company were terminated
as employees of Triton. Two of the three individuals are continuing to provide
services to Triton on a consulting basis. In connection with their termination,
the executives were paid one-year of severance pursuant to the agreements
described above.
46
<PAGE>
NOTE 10 - REORGANIZATION PROCEEDINGS AND FRESH START REPORTING
As discussed in Note 1, on October 19, 1992 ("Petition Date"), Triton and
its former parent, Intermark, filed separate voluntary petitions in the United
States Bankruptcy Court for the Southern District of California (San Diego)
seeking protection under Chapter 11 of the U.S. Bankruptcy Code. Pursuant to
the Joint Plan of Reorganization, the Companies were merged and emerged from
bankruptcy on June 25, 1993 (the "Effective Date").
In general, all pre-petition claims against Triton and Intermark have been
discharged and have been accorded the treatment provided under the Joint Plan.
The Company completed its distributions under the Joint Plan in December 1994.
Beginning on the Petition Date, the Companies accounted for transactions
related to the reorganization proceedings in accordance with Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code," issued by the American Institute of Certified Public
Accountants in November 1990 ("SOP 90-7"). Expenses relating to the
reorganization proceedings, primarily professional fees and the write-off of
certain unamortized costs associated with certain of the prepetition
liabilities, are presented in the consolidated statement of operations as
reorganization costs. Contractual interest amounting to $5.8 million for the
three months ended June 25, 1993 on certain unsecured debt subsequent to the
Petition Date was relieved from payment as a result of the Chapter 11
proceedings and was not accrued.
Under the provisions of SOP 90-7, the Company was required to adopt the
"fresh start" reporting principles described therein as of June 25, 1993, since
the pre-reorganization stockholders of Intermark received less than 50% of the
new common stock and the reorganization value of the assets of the reorganized
company was less than the total of all of the valid claims against the Companies
determined in connection with the Chapter 11 proceedings. These fresh start
principles required that all assets and liabilities be recorded at their
estimated fair values.
The table on the following page summarizes the adjustments required to the
consolidated balance sheet of the Predecessor Company to record the
reorganization as of the Effective Date (in thousands):
47
<PAGE>
<TABLE>
<CAPTION>
Adjustments to Record
Preconfir- Confirmation of Plan
mation -----------------------
June 25 Debt Fresh As
1993 Discharge Start Adjusted
-------- -------- -------- --------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..... $ 13,114 $ 13,114
Short-term investments........ 4,630 4,630
Receivables................... 15,903 15,903
Inventories................... 30,313 30,313
Other current assets.......... 3,916 3,916
-------- --------
Total current assets........ 67,876 67,876
Property, plant and
equipment, net................. 199 $ 5,089 (c) 5,288
Investment in The Actava Group.. 63,718 (20,332) (c) 43,386
Investment in Western Sizzlin... 200 (c) 200
Real estate, net................ 74,228 (3,948) (c) 70,280
Net assets of discontinued
operation...................... 3,513 1,487 (c) 5,000
Other........................... 7,671 (500) (c) 7,171
-------- -------- --------
149,329 (18,004) 131,325
-------- --------- -------- --------
$217,205 $(18,004) $199,201
======== ========= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt............... $ 961 $ 961
Accounts payable and accrued
liabilities.................. 27,178 $ (4,500) (a) 22,678
Current portion of long-term
debt......................... 77,932 (31,130) (a) 46,802
-------- --------- --------
Total current liabilities... 106,071 (35,630) 70,441
Long-term debt.................. 16,184 31,130 (a) 47,314
Other liabilities............... 5,119 5,000 (a) 10,119
Minority interest in
subsidiaries................... 13,612 13,612
Accumulated losses of Western
Sizzlin in excess of investment 10,632 $(10,632) (c)
Liabilities subject to compromise 235,541 (235,541) (b)
Stockholders' equity (deficit):
Preferred stock............... 2,709 (2,709) (d)
Common stock - old............ 15,018 (15,018) (d)
Common stock - new............ 2 (b) 2
Additional paid-in capital.... 87,453 57,136 (b) (86,876) (d) 57,713
Accumulated deficit........... (275,134) 177,903 (b) 97,231 (d)
-------- --------- -------- --------
Total stockholders' equity
(deficit)................. (169,954) 235,041 (7,372) 57,715
-------- --------- -------- --------
$217,205 $(18,004) $199,201
======== ========= ======== ========
</TABLE>
48
<PAGE>
(a) This adjustment represents a reclassification of the majority of the
restructured secured debt and income tax liability of the Companies to
long-term pursuant to the terms of the Joint Plan.
(b) Pursuant to the Companies' Joint Plan, $235.5 million of unsecured debt of
the Companies was converted into 99% of the new equity of the Reorganized
Company. The new equity is valued at approximately $57.7 million resulting
in an extraordinary gain on the exchange of new stock for the unsecured
debt of approximately $178 million.
(c) The following were the significant assumptions and principal effects
relative to the application of fresh start reporting.
In connection with the preparation of the Disclosure Statement, the
Predecessor Company, with the assistance of its financial advisor and the
financial advisor for the Triton Official Creditors' Committee, analyzed
the going concern values of all of its assets, particularly its interests
in its operating subsidiaries. This analysis consisted of a review of
several factors including current market prices for the public companies,
the availability of premiums over market prices for control blocks, cash
flow multiples obtained on comparable sales in the marketplace, asset
liquidation values and other pertinent information depending on the
circumstances.
These valuations were compared to the book value of the Companies' assets
and, where appropriate, the differences from book value were allocated to
specific assets of the operating subsidiaries based on an analysis of the
fair value of the assets and liabilities of the individual subsidiaries.
The liabilities of the Reorganized Company, consisting primarily of
restructured secured debt and income taxes, were determined to approximate
fair value at the Effective Date.
49
<PAGE>
The allocation of the fresh start accounting adjustments to the Company's
carrying value of its investments in its subsidiaries and other assets as of the
Effective Date of the Plan were as follows:
Fresh Fresh
Book Start Start
Value Value Adjustment
-------- -------- --------
Actava................... $63,718 $43,386 $(20,332)
National Airmotive....... 23,533 27,500 3,967
Ridgewood Properties..... 12,142 11,600 (542)
Mission West Properties.. 6,200 2,794 (3,406)
Western Metal............ (622) 500 1,122
Western Sizzlin.......... (10,632) 200 10,832
Net assets of
discontinued operation. 3,513 5,000 1,487
Other corporate assets... (500)
--------
$ (7,372)
========
Allocation of fresh start adjustments:
Property, plant and equipment, net...... $ 5,089
Investment in Actava.................... (20,332)
Investment in Western Sizzlin........... 200
Real estate, net........................ (3,948)
Other assets............................ (500)
Net assets of discontinued operation.... 1,487
Accumulated losses of Western Sizzlin
in excess of investment............... 10,632
--------
$ (7,372)
========
(d) These adjustments reflect the elimination of all of the amounts relating to
the old equity, record the valuation adjustments outlined in (c) above and
reflect the elimination of the remaining accumulated deficit.
50
<PAGE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements with the Registrant's accountants on
matters of accounting principles or practices or financial disclosure.
51
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table provides certain information about the Company's
current Directors and Executive Officers:
Name Age Position
---- --- --------
Michael E. Cahr 56 Director, Member of Audit and
Compensation Committees
Richard R. Tartre 58 Director, Member of Audit and
Compensation Committees
Michael M. Earley 41 Director, President and Chief
Executive Officer
Mark G. Foletta 36 Director, Senior Vice
President, Chief Financial
Officer and Corporate
Secretary
MR. CAHR has been a Director since June 1993 and serves as President and
Chief Executive Officer of Allscrips Pharmaceuticals, Inc., a privately-owned
company engaged in the distribution of pharmaceutical products. He has served
in this position since June 1994. He has also served as Venture Group Manager
for Allstate Venture Capital, a division of Allstate Insurance Company between
1987 and June 1994. He is also a director of LifeCell Corporation, Optek
Technologies, Inc., and several privately owned companies.
MR. TARTRE has been a Director since June 1993 and is a consultant and
private investor. He served as President and Chief Executive Officer of Astra
Management Corp. from May 1995 to April 1996. He served as Managing Director of
Eden Financial Group from 1982 to May 1995. He also serves as a director of
Mission West Properties and Burnham Pacific Properties.
MR. EARLEY has served as the President and Chief Executive Officer of the
Company since February 1996 and as a Director since June 1993. Mr. Earley has
served as President and Chief Operating Officer (June 1995 to January 1996) and
Senior Vice President and Chief Financial Officer of the Company and Intermark,
Inc. (1991 to June 1994). He is also a director of Mission West Properties and
Ridgewood Properties, Inc.
MR. FOLETTA has been a Director since February 1996 and has served as
Senior Vice President and Chief Financial Officer since June 1994. He also
served as Vice President and Corporate Controller of the Company and Intermark,
Inc. from 1991 to June 1994 and has served as Corporate Secretary of the Company
52
<PAGE>
since 1992. He is also a director of Mission West Properties.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and persons who own more
than 10% of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission and the American Stock Exchange initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than
10% stockholders are required by the regulations of the Securities and Exchange
Commission to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to the
Company's officers, directors and greater than 10% beneficial owners were
complied with by such persons during the fiscal year ended March 31, 1996.
53
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows the cash compensation paid by the Company and its
subsidiaries as well as certain other compensation paid or accrued to each of
the Executive Officers of the Company in all capacities in which they serve.
The table reflects cash compensation for the years ended March 31, 1996 and
March 31, 1995 and the nine months ended March 31, 1994.
Effective January 2, 1996, the three Executive Officers of the Company were
terminated as employees. Pursuant to existing Employment Agreements, each
Executive received a severance payment equal to their annual salary. These
severance amounts are included in the "All Other Compensation" column in the
table below.
Since the termination, Messrs. Earley and Foletta have provided management
services to the Company on a consulting basis. Under this arrangement, the
Company is not providing any perquisites or typical employee-related benefits.
The Executives serve on a month-to-month basis and have no other contractual
relationship with the Company. The consulting payments after January 2, 1996
are included in the "Other Annual Compensation" column in the table below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term compensation
----------------------
Awards Payouts
------ -------
Other Number of All
Annual Compensation Annual Securities Other
------------------- Compen- Underlying Compen-
Salary Bonus sation Stock LTIP sation
Name and Position Year ($) ($) (4)($) Options Payouts (5)($)-
- ----------------- ----- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
John C. Stiska (1) 1996 304,554 330,000 62,829 0 0 784,389
1995 337,500 95,890 2,580 0 0 0
1994 225,000 45,000 3,038 600,000 0 0
Michael M. Earley, (2) 1996 181,201 330,000 57,453 0 0 485,633
President and Chief 1995 213,750 61,644 655 0 0 0
Executive Officer 1994 136,042 27,000 785 360,000 0 0
Mark G. Foletta, (3) 1996 125,410 250,000 46,375 0 0 325,756
Senior Vice President 1995 146,250 42,466 341 0 0 0
Chief Financial Officer 1994 90,000 18,000 378 240,000 0 0
and Corporate Secretary
</TABLE>
54
<PAGE>
(1) Mr. Stiska resigned his position as Chief Executive Officer and Chairman of
the Board of the Company effective February 1, 1996. Included in the Salary
amount is compensation Mr. Stiska received as a Director of the following
operating subsidiaries during the years ended March 31, 1996 and March 31, 1995
and the nine months ended March 31, 1994, respectively: Ridgewood Properties,
$10,700, $16,400 and $10,100; Mission West Properties, $9,000, $15,000 and
$11,250; and National Airmotive, $1,667, $12,500 and $5,000.
(2) Included in the salary amount is compensation Mr. Earley received as a
Director of the following operating subsidiaries during the years ended March
31, 1996 and March 31, 1995 and the nine months ended March 31, 1994,
respectively: Ridgewood Properties, $10,700, $16,400 and $10,000; Mission West
Properties, $9,000, $15,000 and $11,250; and National Airmotive, $1,667, $12,500
and $5,000.
(3) Included in the salary amount is compensation Mr. Foletta received as a
Director of Mission West Properties of $8,250 during the year ended March 31,
1996, $15,000 during the year ended March 31, 1995 and $11,250 for the nine
months ended March 31, 1994.
(4) The Company provided perquisites and other personal benefits to the
Executive Officers of the Company. Included in these amounts are payments
received for auto allowance, tax and estate planning and life insurance premiums
prior to the respective terminations on January 1, 1996. These amounts also
include consulting payments subsequent to January 2, 1996 to Messrs. Stiska,
Earley and Foletta of $15,000, $45,000 and $35,000, respectively. Additionally,
these amounts include payments of directors fees to Messrs. Earley and Foletta
as Directors of Triton, subsequent to their terminations.
(5) The Company completed a distribution to its stockholders on December 8,
1995 consisting of $1.57 in cash and .066 of a share of common stock of
Metromedia International Group, Inc. ("Metromedia") for each outstanding share
of common stock of the Company. Pursuant to forbearance agreements between the
Company and its Executive Officers, the Company distributed to Messrs. Stiska,
Earley and Foletta $434,389, $260,677 and $170,755, respectively, in cash and
market value of Metromedia common stock, in exchange for their forbearing to
exercise outstanding stock options. These amounts distributed represent the
value of the distribution to stockholders per each share of Company common
stock, in excess of the $2.00 per share exercise price of the stock options
prior to the distribution. Additionally, these amounts include the severance
payments to Messrs. Stiska, Earley and Foletta of $350,000, $225,000 and
$155,000, respectively, pursuant to the terms of their respective employment
agreements with the Company which were terminated effective January 2, 1996.
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STOCK OPTIONS
As mentioned above, on December 8, 1995, the Company completed a special
distribution of $1.57 in cash and .066 of a share of common stock of Metromedia
for each outstanding share of common stock of the Company to shareholders of
record on November 17, 1995. All of the stock options previously granted to the
Executive Officers provided for a reduction in the exercise price to the extent
cash dividends or other distributions are made to existing holders of the common
stock of the Company. As a result of the special distribution discussed above,
the exercise price for all of these stock options was reduced to the par value
of the common shares to be issued or $.0001 per share. Additionally, the
Company entered into agreements with the option holders whereby the option
holders participated in the special distribution to the extent that the value
of the distribution exceeded the $2.00 per share exercise price. Each of the
named Executive Officers exercised all of their stock options during the year
ended March 31, 1996 and there are no unexercised stock options for the named
Executive Officers at March 31, 1996.
The following table sets forth information with respect to the named
Executive Officers concerning the number of securities underlying exercised
options during fiscal year 1996.
AGGREGATED OPTION/SAR EXERCISED IN LAST FISCAL YEAR
AND FY-END OPTIONS/SAR VALUES
Number of
Securities
Underlying Unexercised
Shares Value Unexercised in-the-Money
Acquired on Realized Options at Fiscal Options at Fiscal
Name Exercise ($) Year End Year End
- ---- ---------- -------- ----------------- -----------------
John C Stiska 600,000 262,440 -0- -0-
Michael M. Earley 360,000 134,964 -0- -0-
Mark G. Foletta 240,000 89,976 -0- -0-
At March 31, 1996, there were no outstanding stock options for the
Executive Officers.
PENSION PLANS
Intermark, Inc., Triton's predecessor, had a Pension Plan for its officers
and employees (the "Pension Plan"). The assets of the Pension Plan were held in
a trust for the Officers and employees, and former Officers and employees, and
Intermark made contributions into the trust on an actuarial basis. The Pension
Plan provided for fixed benefits in the event of retirement after a specified
number of years of service. To have been eligible to accrue benefits under the
Pension Plan, an employee was required to (i) have attained age 21, (ii) have
completed one full year of continuous service with Intermark, and (iii) have
been
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hired before age 60. Estimated annual benefits upon retirement under the
Pension Plan equaled 50% of the employee's "final average earnings" which was
defined as the average of the employee's annual earnings for the five highest
consecutive years of the last ten calendar years preceding his or her normal
retirement date, exclusive of any bonuses and expense reimbursement, less 75% of
the employee's estimated annual Social Security Benefit.
Benefit accrual under the Pension Plan was curtailed as of April 3, 1993.
As a result, the annual benefits payable under the Pension Plan were determined
in accordance with the previous paragraph computing "final average earnings"
using earnings for the period prior to the curtailment date. Triton made
contributions to the Pension Plan in order to fund benefits already accrued
thereunder. In October 1994, Triton purchased annuities from a third-party
insurance company to provide benefits to each participant of the Pension Plan.
DIRECTOR'S COMPENSATION
In 1996, each director of the Company who was not employed by the Company
received a monthly retainer of $1,000, plus $1,500 for each meeting of the Board
of Directors which he attended in person and $500 for each meeting of the Board
of Directors in which he participated by conference telephone call.
Additionally, Messrs. Cahr and Tartre each received a $40,000 bonus in January
1996 following the Company's special distribution to its stockholders discussed
above. Directors are also reimbursed for their expenses in attending meetings
and engaging in other business activities for the Company.
Directors who are not employees of the Company also held options to
purchase shares of the Company's Common Stock pursuant to the 1993 Directors'
Stock Option Plan (the "Director Plan") which provided that:
(1) Each non-employee Director of the Company who was first elected
or appointed a Director on or before September 8, 1993 was granted an
option to purchase 75,000 shares of Common Stock at an exercise price of
$2.00. Options granted under the Director Plan are fully exercisable on or
after the date of grant.
(2) Each participating Director who is first elected or appointed a
Director subsequent to September 8, 1993 shall be granted an option for no
fewer than 50,000 shares and no more than 75,000 shares, the specific
number of such shares to be recommended by a committee of disinterested
Directors, and ratified by the entire Board of Directors.
As discussed in "Stock Options" under Executive Compensation, the exercise
price of the Director options was adjusted as a result of the special
distribution completed in December 1995. Each Director elected to exercise his
stock options during the year ended March 31, 1996, except for 28,000 options
for one of the Directors which are held for the benefit of his divorced spouse.
Options granted under the Director Plan have a term of five years, and the
Director Plan itself terminates on July 15, 2003.
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POST EMPLOYMENT AGREEMENTS
The Company was a party to Post Employment Agreements with each of its
Executive Officers. Each agreement provided for certain severance payments to
the Officer upon termination of employment other than for cause, or upon
resignation following a reduction in salary or benefits not shared with all
other employees of the Company or pursuant to the Company's standard retirement
policy, a reduction in corporate title, or a relocation of the officer's place
of work greater than 50 miles from the Company's current headquarters (each a
Qualifying Termination). On March 22, 1995, the Board of Directors of the
Company authorized an amendment to each of the Post Employment Agreements
between the Company and its Executive Officers to provide that a change in
control of the Company constituted a Qualifying Termination event for purposes
of the Post Employment Agreements.
Under the Post Employment Agreements, the Company would be obligated to
make severance payments in cash within 30 days from the date of occurrence of a
Qualifying Termination in an amount equal to the Executive's annual base salary
immediately prior to the Qualifying Termination. Any options to purchase the
Company's stock held by the officer at the time of termination would be
exercisable in accordance with the terms of the stock option agreements. Post
Employment Agreements did not provide for continued employment with the Company
upon termination.
Effective January 2, 1996, the Executive Officers of the Company were
terminated as employees of Triton. Two of the three individuals are continuing
to provide services on a consulting basis to the Company. In connection with
their termination, the Executives were paid in accordance with the Post
Employment Agreements.
INDEMNIFICATION AGREEMENTS
The Company entered into indemnification agreements (the "Indemnification
Agreements") with each person who was an Officer or Director of the Company in
October 1993. The Indemnification Agreements provide for indemnification of
Directors and Officers to the fullest extent authorized or permitted by Delaware
law. The Indemnification Agreements also provide for (i) advancement by the
Company of expenses incurred by the Director or Officer in defending certain
litigation, (ii) the appointment of an independent legal counsel to determine
whether the Director or Officer is entitled to indemnity after a change in
control, and (iii) the continued maintenance by the Company of the directors'
and officers' liability insurance currently in effect ($1 million of primary
coverage).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
John C. Stiska, former Chairman and Chief Executive Officer of the Company
was also a member of the Board of Directors of Biosafety Systems, Inc. until
December 1995. Richard R. Tartre, member of the Company's compensation
committee, was also the Chairman of the Board of Biosafety Systems until
December 1995. Mr. Tartre was not a compensated executive officer of Biosafety
Systems and was compensated as a non-employee director.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the shares of Common Stock as of July 23, 1996 by (i) each of the
Company's Executive Officers and Directors, (ii) the Company's Executive
Officers and Directors as a group, and (iii) all other stockholders known by the
Company to beneficially own more than five percent of the Common Stock. Unless
otherwise indicated in footnotes, each such individual has sole voting and
investment power with respect to the shares set forth in the table. Unless
otherwise indicated, the address for each of the stockholders listed below is
c/o Triton Group Ltd., 550 West "C" Street, Suite 1880, San Diego, CA 92101.
Amount and Nature Percent
of Beneficial Beneficially
Name and address Ownership Owned (1)
- ---------------- --------- ---------
Morgens Waterfall 2,649,083 (2) 12.35%
10 East 50th Street, 26th floor
New York, NY 10022
Ryback Management Corporation 2,588,200 (3) 12.07%
7711 Carondelet Ave., Box 16900
St. Louis, MO 63105
Grace Brothers, Ltd. 1,487,175 (4) 6.93%
1560 Sherman Ave. #900
Evanston, IL 60201
Federated Investors 1,235,001 (5) 5.76%
1000 Liberty Street-26th Street
Federated Investors Tower
Pittsburgh, PA 15222
Michael M. Earley 369,215 1.72%
Mark G. Foletta 247,755 1.15%
Richard R. Tartre 148,000 *
Michael E. Cahr 75,000 *
All executive officers and directors
as a group (4 persons) 839,970 3.92%
* Less than 1.0%.
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(1) Percentages have been calculated using the outstanding shares of Common
Stock of the Company as of July 23, 1996 of 21,451,502.
(2) Pursuant to Amendment No. 3 to Schedule 13D filed with the Commission on
April 20, 1994 jointly by (a) Phoenix Partners ("Phoenix"), (b) Betje Partners
("Betje"), (c) Phaeton International N.V. ("Phaeton"), (d) Morgens Waterfall
Vintiadis Investments N.V. ("MWV"), (e) Morgens Waterfall Income Partners
("MWIP"), (f) Morgens, Waterfall, Vintiadis & Company, Inc. ("Morgens
Waterfall"), (g) Restart Partners L.P. ("Restart"), (h) Restart Partners II,
L.P. ("Restart II"), (i) Restart Partners III, L.P. ("Restart III"), (j) Restart
Partners IV, L.P. ("Restart IV"), (k) MWV Employee Retirement Plan Group Trust
(the "MWV Plan"), (l) The Common Fund for Non-Profit Organizations (the "Common
Fund"), (m) Edwin H. Morgens ("Morgens"), and (n) Bruce Waterfall ("Waterfall").
Shares indicated as beneficially owned by Morgens Waterfall include 273,806
shares beneficially owned by MWV, 134,623 shares beneficially owned by Betje,
64,765 shares beneficially owned by MWIP, 387,713 shares beneficially owned by
Phoenix, 400,687 shares beneficially owned by Restart, 632,697 shares
beneficially owned by Restart II, 441,260 shares beneficially owned by Restart
III, 211,830 shares beneficially owned by Restart IV, 12,616 shares beneficially
owned by the Common Fund, and 89,083 shares beneficially owned by the MWV Plan.
Each such entity has sole voting and dispositive power over the shares which it
beneficially owns, and disclaims beneficial ownership of any securities owned,
directly or indirectly, by any other entity.
(3) Pursuant to Amendment No. 1 to Schedule 13G filed with the Commission on
January 25, 1996 by Ryback Management Corporation ("Ryback"). Shares indicated
as beneficially owned by Ryback include 2,045,300 shares beneficially owned by
Lindner Growth Fund and 542,900 shares beneficially owned by Ryback. Ryback has
sole voting and dispositive power over all of such 2,588,200 shares.
(4) Pursuant to Schedule 13G filed with the Commission on February 2, 1996 by
Grace Brothers, Ltd. ("Grace"). Grace has sole voting and dispositive power
over all of such shares.
(5) Pursuant to Schedule 13G filed with the Commission on February 14, 1994
by Federated Investors ("Federated"). Shares indicated as beneficially owned by
Federated, over which the Voting Shares Irrevocable Trust has sole voting and
dispositive power and each of John F. Donahue, Rhodora J. Donahue and J.
Christopher Donahue has shared voting and dispositive power, represent shares
beneficially owned by mutual funds advised by subsidiaries of Federated which
have the power to direct investments and vote the securities. For purposes of
the reporting requirements of Regulation 13D of the Exchange Act, Federated, its
principal stockholders and its investment adviser subsidiaries may be deemed to
be beneficial owners of such securities; however, in accordance with Rule 13d-4
under the Exchange Act, Federated, its principal stockholders, and its
investment adviser subsidiaries declare that the filing of the Schedule 13G
disclosing beneficial ownership of the securities should not be construed as an
admission that they are the beneficial owners of such securities, and Federated,
its principal stockholders and its investment adviser subsidiaries expressly
disclaim that they are in fact the beneficial owner of such securities.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 20, 1995, Triton sold to Grace, the holder of approximately 6.9%
of the Triton common stock, 59,384 shares of the common stock of Actava in a
private transaction for $16 7/8 per share, generating net cash proceeds to
Triton of approximately $1.0 million.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) The following consolidated financial statements of Triton Group Ltd.
are included in Item 8:
Reports of Independent Accountants
Consolidated Statements of Operations for the years ended March 31,
1996 and 1995, the nine-month period ended March 31, 1994 and the
three-month period ended June 25, 1993
Consolidated Balance Sheets as of March 31, 1996 and 1995
Consolidated Statements of Cash Flows for the years ended March 31,
1996 and 1995, the nine-month period ended March 31, 1994 and the
three-month period ended June 25, 1993
Consolidated Statements of Stockholders' Equity (Deficit) for the
years ended March 31, 1996 and 1995, the nine-month period ended
March 31, 1994 and the three-month period ended June 25, 1993
Notes to Consolidated Financial Statements
(a)(2) The following is a list of financial statements and financial
statement schedules of the Registrant and subsidiaries which are
filed as part of this report or incorporated by reference:
(i) Consolidated financial statement schedules of Triton Group Ltd.:
Schedule II Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable, or
the required information is shown in the financial statements or the
notes thereto.
(ii) Consolidated financial statements and financial statement schedules
of The Actava Group Inc., and its subsidiaries, as of December 31,
1994 and 1993 and for the three years ended December 31, 1994, which
are incorporated herein by reference to File No. 1-5706, Annual
Report on Form 10-K of The Actava Group Inc. for the year ended
December 31, 1994, as amended by Amendment No. 1 on Form 10-K/A filed
with the Commission on April 28, 1995, and Amendment No. 2 on Form
10-K/A filed with the Commission on July 13, 1995.
Report of Independent Accountants
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(iii) The financial statements and financial statement schedules of Mission
West Properties which are filed as part of this report:
Report of Independent Accountants
Consolidated Balance Sheets of Mission West Properties as of
November 30, 1995 and 1994
Consolidated Statements of Operations of Mission West Properties for
the years ended November 30, 1995, 1994 and 1993
Consolidated Statements of Cash Flows of Mission West Properties for
the years ended November 30, 1995, 1994 and 1993
Consolidated Statements of Stockholders' Equity of Mission West
Properties for the years ended November 30, 1995, 1994 and 1993
Notes to Consolidated Financial Statements of Mission West Properties
- November 30, 1995
Consolidated financial statement schedules of Mission West Properties
as follows:
Schedule XI Real Estate and Accumulated Depreciation
(a)(3) Listing of Exhibits
2.01 Second Amended Joint Plan of Reorganization of Intermark, Inc.,
Triton Group Ltd., the Official Intermark Committee of Unsecured
Creditors and the Official Triton Committee of Unsecured Creditors
(as modified) dated as of June 4, 1993, incorporated herein by
reference to File No. 1-8592 from Exhibit 2 to Intermark's Interim
Report on Form 8-K dated July 12, 1993.
2.02 Agreement and Plan of Merger by and between Triton and Intermark,
dated as of June 25, 1993, incorporated herein by reference to File
No. 1-8592, Amendment No. 1 to Registration Statement on Form 10/A
filed September 10, 1993.
3.01 Amended and Restated Certificate of Incorporation of Triton Group
Ltd., incorporated herein by reference to File No.1-8592, Amendment
No. 1 to Registration Statement on Form 10/A filed September 10,
1993.
3.02 Amended and Restated Bylaws of Triton Group Ltd., incorporated herein
by reference to File No. 1-8592, Amendment No. 1 to Registration
Statement on Form 10/A filed September 10, 1993.
4.01 Warrant Agreement and Form of Warrant, incorporated herein by
reference to File No. 1-8592, Exhibit 4 to Intermark's Interim Report
on Form 8-K dated July 12, 1993.
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4.02 Interim Rights Agreement between Triton Group Ltd. and First
Interstate Bank of California, incorporated herein by reference to
File No. 0-8138, Interim Report on Form 8-K, filed April 5, 1995.
4.03 Warrant Agreement executed by Triton in favor of Patricof & Co.
Capital Corp., dated January 1, 1996. (1).
10.01 Loan Agreement executed by Liquor Barn in favor of Intermark dated
November 27, 1991 and amendments thereto dated January 1, 1992 and
May 1, 1992, incorporated herein by reference to File No. 1-8592,
Amendment No. 1 to Registration Statement on Form 10/A filed
September 10, 1993.
10.02 1993 Non-Employee Directors' Stock Option Plan, incorporated herein
by reference to File No. 1-8592, Amendment No. 1 to Registration
Statement on Form 10/A filed September 10, 1993.
10.03 Amended and Restated Promissory Note between Triton Group Ltd. and
Security Pacific Business Credit, Inc., dated July 1, 1993,
incorporated herein by reference to File No. 0-8138, Annual Report on
Form 10-K for the year ended March 31, 1994.
10.04 Amended and Restated Pledge Agreement between Triton Group Ltd. and
Security Pacific Business Credit, Inc., dated July 1, 1993,
incorporated herein by reference to File No. 0-8138, Annual Report on
Form 10-K for the year ended March 31, 1994.
10.05 Assumption and Guarantor Agreement between Triton Group Ltd. and
Security Pacific Business Credit, Inc., dated July 1, 1993,
incorporated herein by reference to File No. 0-8138, Annual Report on
Form 10-K for the year ended March 31, 1994.
10.06 Amended and Restated Post Employment Agreement between Triton Group
Ltd. and John C. Stiska dated March 22, 1995 incorporated herein by
reference to File No. 0-8138, Annual Report on Form 10-K for the year
ended March 31, 1995.
10.07 Amended and Restated Post Employment Agreement between Triton Group
Ltd. and Michael M. Earley dated March 22, 1995 incorporated herein
by reference to File No. 0-8138, Annual Report on Form 10-K for the
year ended March 31, 1995.
10.08 Amended and Restated Post Employment Agreement between Triton Group
Ltd. and Mark G. Foletta dated March 22, 1995 incorporated herein by
reference to File No. 0-8138, Annual Report on Form 10-K for the year
ended March 31, 1995.
10.09 Stock Purchase Agreement between Ridgewood Properties, Inc. and
Triton Group Ltd., dated August 15, 1994, incorporated herein by
reference to File No. 0-8138, Interim Report on Form 8-K/A, filed
September 2, 1994.
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10.10 Agreement and Plan of Merger by and among First Aviation Services
Inc., FE Acquisition Subsidiary, Triton Group Ltd. and National
Airmotive Corporation, dated March 3, 1995, incorporated herein by
reference to File No. 0-8138, Amendment No. 1 to Interim Report on
Form 8-K/A, filed June 16, 1995.
10.11 Amendment No. 1 to Agreement and Plan of Merger, by and among First
Aviation Services Inc., FE Acquisition Subsidiary, Triton Group Ltd.
and National Airmotive Corporation, dated June 2, 1995, incorporated
herein by reference to File No. 0-8138, Amendment No. 1 to Interim
Report on Form 8-K/A, filed June 16, 1995.
10.12 Letter agreement dated October 12, 1995 between Triton Group Ltd. and
The Actava Group Inc., incorporated herein by reference to File No.
0-8138, Interim Report on Form 8-K, filed November 2, 1995.
10.13 Stock Purchase Agreement dated September 27, 1995 between Marubeni
America Corporation and Triton Group Ltd., incorporated herein by
reference to File No. 0-8138, Interim Report on Form 8-K, filed
November 13, 1995.
10.14 First Amendment to Stock Purchase Agreement between Marubeni America
Corporation and Triton Group Ltd., dated October 31, 1995. (1).
10.15 Option Forbearance Agreement between John C. Stiska and Triton Group
Ltd. dated November 1, 1995, incorporated herein by reference to File
No. 0-8138, Interim Report on Form 10-Q, filed February 13, 1996.
10.16 Option Forbearance Agreement between Michael M. Earley and Triton
Group Ltd. dated November 1, 1995, incorporated herein by reference
to File No. 0-8138, Interim Report on Form 10-Q, filed February 13,
1996.
10.17 Option Forbearance Agreement between Mark G. Foletta and Triton Group
Ltd. dated November 1, 1995, incorporated herein by reference to File
No. 0-8138, Interim Report on Form 10-Q, filed February 13, 1996.
10.18 Option Forbearance Agreement between Richard R. Tartre and Triton
Group Ltd. dated November 1, 1995, incorporated herein by reference
to File No. 0-8138, Interim Report on Form 10-Q, filed February 13,
1996.
10.19 Option Forbearance Agreement between Michael E. Cahr and Triton Group
Ltd. dated November 1, 1995, incorporated herein by reference to File
No. 0-8138, Interim Report on Form 10-Q, filed February 13, 1996.
11.01 Computation of Earnings per Share. (1).
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13.01 Consolidated financial statements and financial statement schedules
of The Actava Group Inc., and its subsidiaries, as of December 31,
1994 and 1993 and for the three years ended December 31, 1994, which
are incorporated herein by reference to File No. 1-5706, Annual
Report on Form 10-K of The Actava Group Inc. for the year ended
December 31, 1994, as amended by Amendment No. 1 on Form 10-K/A filed
with the Commission on April 28, 1995, and Amendment No. 2 on Form
10-K/A filed with the Commission on July 13, 1995.
21.01 Listing of Subsidiaries of Triton. (1).
_____
(1) Previously filed.
(b) There were no interim reports on Form 8-K filed during the fourth
quarter ended March 31, 1996.
(c) Exhibits.
Certain of the exhibits listed in (a)(3) above are attached.
See exhibit index.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
TRITON GROUP LTD.
By: /s/ Mark G. Foletta
------------------------------
Mark G. Foletta
Senior Vice President,
Chief Financial Officer &
Corporate Secretary
Dated: March 12, 1997
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