SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996
Commission File Number: 33-95452
LANESBOROUGH CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 13-3389799
(State of Incorporation) (I.R.S. employer identification number)
65 East 55th Street
New York, New York 10022
(Address of principal executive offices, including zip code)
(212) 759-6301
(Telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No _____
As of July 31, 1996, the aggregate number of outstanding shares of the
Registrant's Common Stock, $0.01 par value, was 99,911.
<PAGE>
LANESBOROUGH CORPORATION
FORM 10-Q
Quarter Ended June 30, 1996
INDEX
Page
No.
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements:
Consolidated Balance Sheets (unaudited) as of
December 31, 1995 and June 30, 1996 3
Consolidated Statements of Operations (unaudited)
for the three months and six months ended June 30, 1995
and June 30, 1996 4
Consolidated Statements of Cash Flows (unaudited)
for the six months ended June 30, 1995 and
June 30, 1996 5
Notes to Unaudited Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings 14
Item 2 - Change in Securities 14
Item 3 - Defaults Upon Senior Securities 14
Item 4 - Submission of Matters to a Vote of Security Holders 15
Item 5 - Other Information 15
Item 6 - Exhibits and Reports on Form 8-K 15
Signatures 16
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
See pages 3-8
2
<PAGE>
LANESBOROUGH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
(unaudited)
December 31, June 30,
1995 1996
----------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 1,576 $ 711
Accounts receivable (net of allowances
of $142) 9,480 10,912
Inventories 5,382 5,437
Deferred income taxes 1,045 1,038
Other current assets 573 1,057
----------- --------
Total current assets 18,056 19,155
Property, plant and equipment 16,846 16,169
Goodwill 1,957 1,912
Debt financing costs 374 333
Deferred income taxes 4,420 3,741
Other assets 3,435 3,442
---------- ---------
Total assets $ 45,088 $ 44,752
========== =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term debt $ 5,182 $ 5,182
Accounts payable 2,622 3,170
Accrued interest payable 34 26
Accrued liabilities 4,969 4,827
Income taxes payable 482 448
---------- ---------
Total current liabilities 13,289 13,653
Long-term debt 54,096 51,600
Other non-current liabilities 8,040 8,184
---------- ----------
Total liabilities 75,425 73,437
---------- ----------
Commitments and Contingencies (Note 7)
Stockholders' deficit:
Common stock of par value $0.01; 1,000,000 shares
authorized, 99,911 issued and outstanding 1 1
Additional paid-in capital 7,138 7,138
Accumulated deficit ( 35,169) ( 33,517)
Deferred pension cost ( 2,307) ( 2,307)
---------- ---------
Total stockholders' deficit ( 30,337) ( 28,685)
---------- ---------
Total liabilities and stockholders' deficit $ 45,088 $ 44,752
========== =========
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
<TABLE>
LANESBOROUGH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share data)
(unaudited)
<CAPTION>
For the three For the six
months ended months ended
June 30, June 30, June 30, June 30,
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Net sales $ 12,626 $ 13,924 $ 24,899 $ 27,718
Cost of sales 8,437 9,972 16,935 19,580
-------- ------- -------- -------
Gross profit 4,189 3,952 7,964 8,138
Selling and administrative 2,101 2,219 4,397 4,403
Research, development and engineering 213 246 437 464
Amortization of intangible assets 23 23 46 46
-------- -------- --------- --------
Operating profit 1,852 1,464 3,084 3,225
Interest expense 1,154 212 3,011 436
Amortization of debt financing costs 51 20 129 41
Other expense, net 180 89 247 53
------- -------- -------- --------
Income (loss) from continuing
operations before income taxes 467 1,143 ( 303) 2,695
(Benefit of) provision for income taxes ( 4,041) 438 ( 3,943) 1,043
-------- -------- ------- -------
Income from continuing
operations 4,508 705 3,640 1,652
Loss of discontinued operation ( 622) - ( 622) -
------- --------- -------- ----------
Net income $ 3,886 $ 705 $ 3,018 $ 1,652
======== ======= ======== ========
Net income per share:
Continuing operations $ 81.74 $ 7.06 $ 69.87 $ 16.53
Discontinued operations ( 11.28) - ( 11.94) -
-------- -------- --------- ----------
Net income per share $ 70.46 $ 7.06 $ 57.93 $ 16.53
======== ======= ======== ========
Weighted average number of
common shares outstanding 55,154 99,911 52,094 99,911
======== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
LANESBOROUGH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
For the six months ended
June 30, June 30,
1995 1996
---------- -----
Cash flows from operating activities:
Net income $ 3,018 $ 1,652
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,238 1,151
Deferred income taxes 26 686
Net increase in receivable and
inventory reserves 271 107
Increase in accounts receivable ( 140) ( 1,432)
Decrease (increase) in inventories 14 ( 162)
Net decrease (increase) in other assets 1,127 ( 492)
(Decrease) increase in accounts payable ( 1,376) 436
Net (decrease) increase in accrued liabilities
and income taxes payable ( 2,395) 1,030
Net decrease in other non-current obligations ( 129) ( 751)
Net increase in net liabilities of
discontinued operation 622 -
--------- --------
Net cash provided by operating activities 2,276 2,225
--------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment ( 319) ( 429)
--------- --------
Net cash used in investing activities ( 319) ( 429)
--------- --------
Cash flows from financing activities:
Repayments under term loan ( 950) ( 800)
Repayment of secured notes to parent ( 1,519) -
Reduction in long-term debt - ( 1,861)
--------- ---------
Net cash used in financing activities ( 2,469) ( 2,661)
--------- --------
Net decrease in cash and
cash equivalents ( 512) ( 865)
Cash and cash equivalents at beginning of period 1,144 1,576
--------- ---------
Cash and cash equivalents at end of period $ 632 $ 711
========= =========
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
LANESBOROUGH CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Lanesborough Corporation
Lanesborough Corporation (formerly, Sherborne Group Incorporated
and herein referred to as "Lanesborough") is a holding company whose assets
consist principally of the common stock of its wholly-owned subsidiary Buffalo
Color Corporation ("BCC"). For financial statement purposes Lanesborough and
its subsidiaries (collectively "the Company") operate in one business segment:
the manufacture and sale of synthetic organic chemicals.
Note 2 - Basis of Presentation
The consolidated financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission for reporting on Form 10-Q. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. In addition,
certain reclassifications have been made to the prior year financial statements
to conform to the current year's presentation. The statements should be read in
conjunction with the Company's report on Form 10-K for the year ended December
31, 1995 and the Audited Consolidated Financial Statements included therein.
In the opinion of management, the financial statements herein reflect
all adjustments, consisting only of normal recurring accruals, necessary for a
fair presentation of financial position, results of operations and cash flows
for the interim periods presented. The results of operations for the three and
six month periods ended June 30, 1996 are not necessarily indicative of the
results to be expected for the full year.
Note 3 - Net Income Per Share
Net income per common share for the three and six month periods ended
June 30, 1995 and 1996 is calculated by dividing net income by the weighted
average number of common shares outstanding during the respective periods.
Note 4 - Supplemental Schedule of Cash Flow Information
Cash payments for interest and income taxes from continuing operations
were as follows:
Six Months Ended
June 30,
1995 1996
------------ -------
(dollars in thousands)
Interest $ 239 $2,132
Income Taxes 51 430
6
<PAGE>
LANESBOROUGH CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Supplemental Schedule of Cash Flow Information (cont'd)
Included in the cash interest payments for the six months ended June 30,
1996 is an interest payment of $2.0 million on the Company's 10% Senior Notes.
Of this amount, $1.9 million has been recorded as a reduction in the carrying
value of these notes and, accordingly, has been reflected on the Company's
Statement of Cash Flows as a reduction in long-term debt.
Note 5 - Inventories
The major components of inventories were as follows:
December 31, June 30,
1995 1996
-------------- -------
(dollars in thousands)
Raw materials $ 912 $ 610
Work in process 812 617
Finished goods 3,658 4,210
--------- --------
$ 5,382 $ 5,437
========= ========
Note 6 - Debt
Long-term debt includes $39.9 million principal amount of 10% Senior
Notes due 2000 (the "Notes") that were issued in an exchange transaction
completed on June 19, 1995 (the "Exchange Transaction"). The Exchange
Transaction involved (a) the exchange of $49.9 million in principal amount of
12 3/8% Senior Subordinated Notes due 1997 (the "Old Notes") (plus all accrued
interest from September 15, 1994 to June 19, 1995) for $37.0 million in
principal amount of the Notes and 50,911 shares of Lanesborough's Common Stock;
(b) the waiver of all interest accrued since October 1, 1994 on intercompany
indebtedness due to Sherborne Holdings Incorporated ("SHI Indebtedness"); (c)
the contribution to the capital of the Company of the balance of the SHI
Indebtedness in excess of $2.9 million in principal amount of Notes received by
Sherborne Holdings Incorporated, amounting to approximately $4.8 million; and
(d) the reduction in management fee charged to the Company from $100,000 per
month to $50,000 per month.
In accordance with Statement of Financial Accounting Standards No. 15,
"Accounting by Debtors and Creditors for Troubled Debt Restructurings", ("SFAS
No. 15"), at the date of the Exchange Transaction the carrying value of the
Notes was adjusted upward to $56.9 million to include substantially all future
interest payments on the Notes to the date of maturity. Capitalized interest
when paid is reported as a reduction in the carrying value of the Notes as
opposed to being expensed.
7
<PAGE>
LANESBOROUGH CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 7 - Commitments and Contingencies
The Company is currently a defendant in lawsuits that have arisen
in the ordinary course of its business. Management does not believe that any
such lawsuits or unasserted claims will have a material adverse effect on the
Company's financial position or results of operations.
BCC is also involved in various stages of investigation and
clean-up activities and other matters related to past operating and disposal
practices. The Company has not accrued any amounts where it has been identified
as a potentially responsible party for offsite contamination because it has
denied liability with respect to such sites and because at present it is not
possible to estimate a probable range of costs which may be incurred by the
Company regarding such matters if liability is established. The Company has not
accrued any amounts to remediate any conditions that might exist at its active
plant site, pending completion of the RCRA facility investigation. The Company
believes that any amounts that it may be required to pay with regard to these
matters will be expended over several years and funded from operating cash
flows. However, the Company is unable to forecast the ultimate amounts that may
be incurred and when specific amounts become known they may be material to the
Company's financial position, results of operation and cash flows.
Note 8 - Income Taxes
As of December 31, 1994, the Company had net operating loss
carryforwards for income tax purposes of $51.3 million expiring in the years
2008 through 2009. The completion of the Exchange Transaction discussed in the
consolidated financial statements for the year ended December 31, 1995 has
substantially limited the Company's net operating loss carryforwards available
to offset taxes on future operating income.
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and
results of operations of the Company should be read in conjunction with the
unaudited Consolidated Financial Statements and related notes included
elsewhere in this report, and the Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's Form 10-K for the year ended December 31,
1995, as filed with the Securities and Exchange Commission (file no.
33-95452) (the "1995 Form 10-K").
This Form 10-Q contains forward-looking statements that involve
risks and uncertainties. The Company's actual results may differ materially
from those anticipated. Important factors that the Company believes might cause
such differences are discussed in cautionary statements contained in this Form
10-Q, including, without limitation, the factors discussed under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
in the Company's 1995 Form 10-K. In assessing forward-looking statements
contained herein, readers are urged to read carefully all cautionary statements
contained in this Form 10-Q and the 1995 Form 10-K.
Overview
The Company manufactures a variety of specialty chemicals for sale
in the United States and abroad, through its principal subsidiary BCC. It is a
leading supplier of synthetic indigo dye for the blue denim market in the
United States and operates the only synthetic indigo dye chemical manufacturing
plant in North America. The Company also produces a range of synthetic organic
"intermediate" chemicals.
The Company's results of operations are highly dependent upon the
sale by BCC of a limited group of chemical products, primarily synthetic indigo
dye to U.S. denim manufacturers. Sales of synthetic indigo dye, which accounted
for 78% of the Company's total net sales for the six month period ended June
30, 1996, are subject to cyclical fluctuations in demand from denim mills. In
addition, the Company's results are affected by competition from foreign
producers of indigo dye in both the U.S. and international markets. In recent
periods, aggressive price competition from foreign producers has particularly
affected net selling prices for indigo dye realized on the Company's export
sales. As discussed below, in 1996 the Company has experienced stronger demand
for its indigo and certain other products which has resulted in improved
operating profit and earnings before interest, taxes, depreciation and
amortization ("EBITDA") of $4.3 million for the six months ended June 30, 1996
compared to EBITDA of $3.9 million for the six months ended June 30, 1995. It
is anticipated that normal cyclical factors may adversely impact the Company's
reported financial results in future periods.
9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Product Classes
The Company, through its subsidiary, BCC, operates in a single
business segment: the manufacture and sale of synthetic organic chemicals. The
following table sets forth for the periods ended June 30, 1995 and 1996 the
percentage of net sales attributable to each of the Company's principal classes
of similar products:
Six Months Ended
Product Classes June 30,
1995 1996
------ -----
Indigo Dye 75.0% 77.6%
Alkylanilines 12.3 11.4
Anhydrides 12.7 11.0
Results of Operations for the Three Months and Six Months Ended June 30, 1995
and 1996
Net Sales. Net sales increased from $12.6 million in the second
quarter of 1995 to $13.9 million in the second quarter of 1996 (an increase of
10.3%), and from $24.9 million in the first six months of 1995 to $27.7 million
in the first six months of 1996 (an increase of 11.3%). These increases are
primarily due to 1996 sales volume increases of 12.4% in indigo and 8.8% in
alkylanilines and improved pricing in indigo, offset, in part by a decline in
anhydride sales volumes.
Gross Profit. Gross profit as a percentage of net sales decreased
from 33.2% in the second quarter of 1995 to 28.4% in the second quarter of 1996
and from 32.0% in the first six months of 1995 to 29.4% in the first six months
of 1996. The decline is due to an increase in the Company's export indigo sales
which typically yield lower margins and net selling prices, and higher fuel
costs.
Other Operating Expenses. Other operating expenses, consisting of
selling and administrative expenses, research, development and engineering
expenses and amortization of intangible assets, were virtually unchanged for
the three and six month periods ended June 30, 1995 and 1996.
Interest Expense. Interest expense for the three months ended June
30, 1995 decreased $0.9 million compared to the three months ended June 30,
1996 and $2.6 million for the six months ended June 30, 1995 compared to the
six months ended June 30, 1996. This decline is a direct result of the effects
of the Exchange Transaction which was accounted for in accordance with SFAS No.
15. Substantially all cash interest payable on the Notes in future periods has
been capitalized as a component of the carrying value of the Notes. Capitalized
interest when paid is being recorded as a reduction in the carrying amount of
the Notes as opposed to being expensed.
10
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations for the Three Months and Six Months Ended June 30, 1995
and 1996 (cont'd)
Amortization of Debt Financing Costs. The reduction in
amortization of debt financing costs for the three and six month periods ended
June 30, 1995 compared to the same periods in 1996 is a direct result of the
effects of the Exchange Transaction. The 1996 amounts reflect periodic
amortization of financing costs over the remaining terms of the Notes.
Income From Continuing Operations. The Company reported income
from continuing operations before income taxes of $0.5 million in the second
quarter of 1995, compared to $1.1 million in the second quarter of 1996, and
income (loss) from continuing operations before income taxes of ($0.3) million
in the first six months of 1995, compared to $2.7 million in the first six
months of 1996. The improvement is due to increased sales levels and reduced
operating and interest expense discussed above.
Other Expense, Net. The decline in other expense, net is a direct
result of a reduction from $100,000 to $50,000 in monthly management fees paid
by the Company pursuant to the Exchange Transaction.
(Benefit of) Provision for Income Taxes. The (benefit of) income
taxes of $4.0 million and $3.9 million for the three and six months ended June
30, 1995, respectively, is primarily attributable to the change in valuation
allowance pertaining to the Company's net operating loss carryforwards. The
provision for income taxes of $0.4 million and $1.0 million for the three and
six months ended June 30, 1996, respectively, consists primarily of federal and
state taxes on BCC's income which is not sheltered by Lanesborough's net
operating losses.
Loss of Discontinued Operation. The Company ceased to control a
non-recourse subsidiary that had filed for bankruptcy protection in 1993, once
its plan had been approved in 1994 and consummated in early 1995. The Company
expects no further gains or losses attributable to this former subsidiary.
Net Income. Net income decreased from $3.9 million in the second
quarter of 1995 to $0.7 million in the second quarter of 1996 (a decrease of
81.9%), and from $3.0 million in the first six months of 1995 to $1.7 million
in the first six months of 1996 (a decrease of 45.3%). These decreases are
primarily attributable to the recognition of tax benefits of the Company's net
operating loss in 1995.
Liquidity and Capital Resources
The operations of BCC for the six months ended June 30, 1996
generated net cash of $2.0 million, consistent with the comparable period ended
June 30,1995. This result is primarily attributable to improved sales volumes
and pricing for indigo in U.S. and foreign markets being offset by an increase
in foreign trade accounts receivable which caused a reduction of cash and cash
equivalents from year-end levels.
11
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (cont'd)
In recent months, inventories at certain domestic denim mills have
reached relatively high levels. Partially in response to this condition, most
U.S. mills slowed or stopped denim production during the July 4th holiday week.
If their inventory levels do not decline, some mills may temporarily reduce
production rates during the second half of 1996. Depending upon denim shades
and styles this may effect indigo consumption. Consequently, indigo sales
volumes are expected to meet budgeted levels but may be less than that realized
in the first half of 1996.
The Exchange Transaction has reduced the Company's annual interest
expenditure from approximately $6.6 million to $4.4 million. The Exchange
Transaction has been accounted for in accordance with SFAS No. 15 "Accounting
by Debtors and Creditors for Troubled Debt Restructurings". Capitalized
interest on the Notes when paid is reported as a reduction in the carrying
amount of the Notes as opposed to being expensed. A decline in operating
performance of BCC will adversely impact the Company's ability to meet its debt
service obligations, because, even after the Exchange Transaction, the Company
remains highly leveraged.
The Company has budgeted $2.5 million of capital expenditures in
1996, up from $1.5 million incurred in 1995. Such budgeted expenditures include
$1.1 million for pollution control, reflecting in part anticipated one-time
costs of installing additional air emission control equipment at the BCC
facility. In the period ended June 30, 1996, the Company incurred capital
expenditures of $0.4 million. The Company currently expects that foreseeable
capital expenditures will be funded out of internally generated funds. However,
environmental regulations are becoming increasingly stringent and there can be
no assurance that the Company's capital expenditures will not exceed current
estimates.
The Company is engaged in various environmental investigation,
remediation and monitoring activities at its manufacturing facility and has
been named a PRP, and in certain instances is being sued, with respect to
various proceedings relating to other sites. The Company has not accrued any
amounts where it has been identified as a PRP for offsite contamination because
it has denied liability with respect to such sites and because it is not
possible to estimate a probable range of costs which may be incurred by the
Company regarding such matters if liability is established. The Company has not
accrued any amounts to remediate any conditions that might exist at its active
plant site, pending completion of the RCRA facility investigation. The Company
believes that any amounts that it may be required to pay with regard to these
matters will be expended over several years and funded from operating cash
flow. However, the Company is unable to forecast the ultimate amounts that may
be incurred, and when specific amounts become known, they may be material to
the Company's financial position, results of operations and cash flow.
BCC is currently negotiating a new working capital facility that
would replace the bank term loan and provide additional funds for working
capital purposes. There can be no assurance that BCC will reach agreement on a
new facility, and any new credit facility would be subject to the Company's
indenture which limits the amount of working capital indebtedness its
subsidiaries may incur to $8.0 million in the aggregate.
12
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (cont'd)
In connection with the Exchange Transaction, the Company's Board
of Directors commenced a review of the Company's strategic direction in light
of current operations and future business prospects, and retained an investment
banking firm to explore a possible sale of BCC. The Company has received
non-binding letters of potential interest to acquire BCC from a number of
parties, but none of these offers have been accepted. Accordingly, the Company
has discontinued its efforts to sell BCC. The Company may seek to obtain
additional equity capital and to obtain additional working capital financing in
order to expand its existing business and to pursue other growth opportunities.
However, there can be no assurance that such funding will be available to it.
If business conditions were to deteriorate due to cyclical factors or for other
reasons, the Company might be required to restructure its indebtedness or to
take other actions to enable it to meet its ongoing commitments.
13
<PAGE>
PART II. OTHER INFORMATION
Item 1 Legal Proceedings
The Company is a defendant in lawsuits that have arisen in the
ordinary course of its business. The Company does not believe
that any of such lawsuits in which it is a defendant will have a
material adverse effect on the Company's financial position or
results of operations.
In addition, the Company is also subject to significant
governmental regulation in nearly all areas of its operations.
The Occupational Safety and Health Administration, the
Environmental Protection Agency and the New York State
Department of Environmental Conservation exercise broad control
over conditions at the Company's manufacturing facility.
The Company is required to comply with complex regulations
relating to the discharge of hazardous materials into the
environment. These include the Clean Water Act, the Clean Air
Act, the Resource Conservation & Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the
Emergency Planning and Community Right to Know Act and the Toxic
Substances Control Act. The Company has in the past incurred,
and expects to continue to incur, substantial costs for
remediation of prior operating and disposal activities and to
comply with environmental laws and regulations.
The Company has been named as a potentially responsible party
("PRP"), and in certain instances is being sued, with respect to
various sites in the western New York State area where it is
alleged that the Company arranged for the disposal of hazardous
materials. The Company has denied such allegations and intends
to vigorously defend itself in such litigation. In addition,
because of the uncertainty as to various aspects of
environmental matters, including the degree of contamination or
environmental damage, the selection of an appropriate
remediation technique and the allocation of costs among PRPs, it
is not possible for the Company to estimate with a reasonable
degree of certainty a range of costs that may be incurred by the
Company with respect to these sites. The Company believes that
any amounts that it may be required to pay with regard to the
remediation of its facilities and off-site locations will be
expended over several years and funded from operating cash flow.
However the Company is unable to forecast the ultimate amounts
that may be incurred and when specific amounts become known,
they may be material to the Company's financial position,
results of operations and cash flow. For further information
concerning legal proceedings affecting the Company see "Legal
Proceedings" and "Governmental Regulations" in the 1995 Form
10-K.
The Company's manufacturing facility includes modern pollution
control equipment and facilities, and the Company believes it is
operating generally in compliance with applicable environmental
requirements. However, environmental regulations applicable to
the chemical industry are frequently changed and are becoming
increasingly stringent. Compliance with environmental
requirements has in the past and can in the future be expected
to impose substantial costs upon the Company.
Item 2 Changes in Securities
Not applicable
Item 3 Defaults upon Senior Securities
Not applicable
14
<PAGE>
Item 4 Submission of Matters to a Vote of Security
Holders
Not applicable
Item 5 Other Information
Not applicable
Item 6(a) Exhibits
Exhibit
Number Description
11.1 Computation of earnings (loss) per share
Item 6(b) Reports on Form 8-K
Not applicable
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LANESBOROUGH CORPORATION
Date: August 8, 1996 /s/ Craig L. McKibben
-------------- -------------------------
Craig L. McKibben
Chairman and Chief Executive
Officer
Date: August 8, 1996 /s/ William O. Fields, Jr.
-------------- -----------------------------
William O. Fields, Jr.
Secretary and Treasurer
16
<PAGE>
LANESBOROUGH CORPORATION
FORM 10-Q for the Quarter Ended
June 30, 1996
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
11.1 Computation of Earnings (Loss) per Share
<PAGE>
EXHIBIT 11.1
<TABLE>
LANESBOROUGH CORPORATION
COMPUTATION OF EARNINGS (LOSS) PER SHARE
(dollars in thousands, except share and per share data)
(unaudited)
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------- -----------------
1995 1996 1995 1996
-------- -------- -------- ------
<S> <C> <C> <C> <C>
Income from continuing
operations $ 4,508 $ 705 $ 3,640 $ 1,652
Loss of discontinued
operation ( 622) - ( 622) -
--------- ---------- --------- ----------
Net income $ 3,886 $ 705 $ 3,018 $ 1,652
======== ======== ======== ========
Weighted average number of
common shares outstanding 55,154 99,911 52,094 99,911
Income per share from
continuing operations $ 81.74 $ 7.06 $ 69.87 $ 16.53
Loss per share of discontinued
operation ( 11.28) - ( 11.94) -
-------- ---------- -------- ----------
Net income per share $ 70.46 $ 7.06 $ 57.93 $ 16.53
======== ======== ======== ========
</TABLE>
