-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pm+O3cmf+yDcF5FZQYrbTnqLgupN/Nzl/GGoVHGj6flk7O+YdXWDHG+SdvRK1S3o 6hUHtjylhZMjBfTxJXgi9Q== /in/edgar/work/20000628/0000061004-00-000024/0000061004-00-000024.txt : 20000920 0000061004-00-000024.hdr.sgml : 20000920 ACCESSION NUMBER: 0000061004-00-000024 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LYNCH CORP CENTRAL INDEX KEY: 0000061004 STANDARD INDUSTRIAL CLASSIFICATION: [4213 ] IRS NUMBER: 381799862 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-00106 FILM NUMBER: 663413 BUSINESS ADDRESS: STREET 1: 401 THEODORE FREMD AVENUE CITY: RYE STATE: NY ZIP: 10580 BUSINESS PHONE: 9149217601 MAIL ADDRESS: STREET 1: 401 THEODORE FREMD AVENUE STREET 2: SUITE 290 CITY: RYE STATE: NY ZIP: 10580 11-K 1 0001.txt FORM 11-K FOR LYNCH CORPORATION SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 -------------- FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to _____________ Commission File Number 1-106 ------------- A. Full title of Plan: LYNCH CORPORATION 401(k) SAVINGS PLAN B. Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office: Lynch Corporation 401 Theodore Fremd Avenue Rye, NY 10580 AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE Lynch Corporation 401(k) Savings Plan Years ended December 31, 1999 and 1998 Lynch Corporation 401(k) Savings Plan Audited Financial Statements and Supplemental Schedule Years ended December 31, 1999 and 1998 Contents Report of Independent Auditors................................................1 Audited Financial Statements Statements of Net Assets Available for Benefits...............................2 Statements of Changes in Net Assets Available for Benefits....................3 Notes to Financial Statements.................................................4 Supplemental Schedule Schedule of Assets Held for Investment Purposes at End of Year................8 Report of Independent Auditors Board of Directors Lynch Corporation We have audited the accompanying statements of net assets available for benefits of the Lynch Corporation 401(k) Savings Plan as of December 31, 1999 and 1998, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1999 and 1998, and the changes in its net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets held for investment purposes at end of year as of December 31, 1999, is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Ernst & Young LLP June 21, 2000 Lynch Corporation 401(k) Savings Plan Statements of Net Assets Available for Benefits
December 31 1999 1998 --------------- ------------- Assets Investments ................................ $ 4,100,781 $ 3,150,262 Contribution receivables: Employer ................................. 4,807 5,279 Participants ............................. -- 2,530 Other .................................... -- 5,840 ----------- ----------- Total receivables .......................... 4,807 13,649 ----------- ----------- Total assets ............................... 4,105,588 3,163,911 Liabilities Excess contributions payable ............... -- (7,436) Other liabilities .......................... (369) (372) ----------- ----------- Total liabilities .......................... (369) (7,808) ----------- ----------- Net Assets Available for Benefits .......... $ 4,105,219 $ 3,156,103 =========== =========== See accompanying notes.
Lynch Corporation 401(k) Savings Plan Statements of Changes in Net Assets Available for Benefits
Year Ended December 31 1999 1998 ----------- ------------ Additions: Investment income: Net appreciation (depreciation) in fair value of investments: Stock funds .................................. $ 510,654 $ (55,922) Mutual funds ................................. 71,501 (131,994) ----------- ----------- 582,155 (187,916) Interest and dividends .......................... 216,316 203,115 ----------- ----------- 798,471 15,199 Contributions: Participants .................................... 357,374 300,807 Employer ........................................ 19,210 20,811 ----------- ----------- 376,584 321,618 ----------- ----------- Total additions ...................................... 1,175,055 336,817 Deductions: Benefits paid directly to participants ............ (224,643) (240,152) Excess contributions and related investment income -- (4,701) Other ............................................. (1,296) -- ----------- ----------- (225,939) (244,853) Net increase ......................................... 949,116 91,964 Net assets available for benefits at beginning of year 3,156,103 3,064,139 ----------- ----------- Net assets available for benefits at end of year ..... $ 4,105,219 $ 3,156,103 =========== =========== See accompanying notes.
Lynch Corporation 401(k) Savings Plan Notes to Financial Statements Years ended December 31, 1999 and 1998 1. Description of Plan The following description of the Lynch Corporation (the "Company") 401(k) Savings Plan (the "Plan") provides only general information. For a more complete description of the Plan's provisions, participants should refer to the Plan Agreement which is available from the Company. General The Plan is a defined contribution plan covering substantially all non-union employees of the Company and the employees of certain of its subsidiaries who are at least 18 years of age and who have completed 1,000 hours of service during a consecutive twelve-month period. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). During 1999, for each share of the Company's common stock held in the Lynch Corporation stock fund, a stock distribution was made equal to one share of Lynch Interactive Corporation (a wholly-owned subsidiary of the Company) common stock. The distribution to the Lynch Corporation stock fund was 5,965 common shares of Lynch Interactive Corporation, which were subsequently transferred to the Lynch Interactive Corporation stock fund. Contributions Eligible employees may elect to contribute, on a pre-tax basis, between 1% and 15% of their total annual compensation to the Plan up to the maximum allowed under the Internal Revenue Code ($10,000 in 1999 and 1998). An annual mandatory employer matching contribution is made to each participant's account equal to 25% of the first $800 of the participant's contribution, as defined in the Plan agreement, generally on or about the closing date of the Plan year. In addition, the Company may make a discretionary matching contribution of up to 75% of the first $800 of the participant's contribution. No such discretionary contribution was made in 1999 or 1998. Participants' Accounts Each participant's account is credited with the participant's contributions, Company's contributions and Plan earnings. Allocations are based on participant earnings or account balances, as defined in the Plan agreement. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. Vesting Participants are vested immediately in all contributions to their accounts, including the Company's matching contributions (mandatory and discretionary, if any) and investment earnings. Payment of Benefits Participant benefits are paid as soon as practicable in accordance with the terms of the Plan agreement following termination of employment, permanent disability, retirement, death or upon termination of the Plan. All benefit payments are made in lump sum payments for an amount equal to the fair value of the participants' vested account balance. Lynch Corporation 401(k) Savings Plan Notes to Financial Statements (continued) Years ended December 31, 1999 and 1998 1. Description of Plan (continued) Investment Options Upon enrollment in the Plan, a participant may direct employer and participant contributions in 1% increments to any of the Plan's investment options. Participants may change their investment options daily. During 1999, East/West Communications Inc. (an affiliate of the Company which spun off to its shareholders, its common stock interest in East/West) offered, at no cost to the shareholders of its Class A common stock, a non-transferable right to purchase one additional share of its Class A common stock. The right entitled shareholders to purchase one additional share of Class A common stock for every four shares of Class A common stock held at $1.50 per share. Participants in the Plan had the option to participate in this rights offering. Participant Loans Participants may borrow from their fund accounts a minimum of $1,000 or up to 50% of their account balance (not to exceed $50,000). All loans must, by their terms, require repayment over a period not to exceed five years, unless for the purchase of the participant's primary residence for which the term shall be determined by the Company. The loans are secured by 50% of the balance in the participant's account and bear interest at a reasonable rate as determined by the Plan administrator. Plan Termination Although it has not expressed any intent to do so, the Company has the right under the Plan to change or discontinue its contributions at any time and to terminate the Plan, subject to the provisions of ERISA. In the event of Plan termination, or if contributions to the Plan cease, the Plan will distribute the assets to the participants in an amount equal to the fair value of their accounts and pay any related expenses. Expenses Substantially all of the Plan's administrative expenses are paid by the Company. 2. Summary of Accounting Policies Statement of Position 99-3 The Plan has adopted Statement of Position 99-3, "Accounting for and Reporting of Certain Defined Contribution Plan Investments and Other Disclosure Matters" for the presentation of its 1999 and 1998 financial statements. Accordingly, certain amounts in the 1998 financial statements have been reclassified to conform to the 1999 presentation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Lynch Corporation 401(k) Savings Plan Notes to Financial Statements (continued) Years Ended December 31, 1999 and 1998 2. Summary of Accounting Policies (continued) Investment Valuation Except for the unallocated guaranteed investment contracts, the Plan's investments are stated at fair value. The shares of registered investment companies (i.e., mutual funds) are valued at quoted market prices which represent the net asset values of shares held by the Plan at year-end. Lynch Corporation, Lynch Interactive Corporation and East/West Communications Inc. Class A common stock are valued at the last reported sales price on the last business day of the year. The participant loans are valued at their outstanding balances, which approximate fair value. The unallocated guaranteed investment contracts are valued at contract value which approximates fair value as estimated by the John Hancock Mutual Life Insurance Company ("Hancock"). Contract value represents contributions made under the contract, plus interest at the contract rate, less funds used to pay retirement benefits and certain administrative expenses. Purchases and sales of securities are recorded on a trade-date basis. Historical cost of the Plan's investments are determined by the weighed average method. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. 3. Investments Individual investments that represent 5% or more of the Plan's net assets in a specific year are as follows:
December 31 1999 1998 ------------------------ Fleet Stable Asset Fund ........... $1,184,811 $ 936,886 Mutual Qualified Fund ............. 1,213,772 1,077,224 Mutual Discovery Fund ............. 332,127 229,831 Galaxy U.S. Treasury Fund ......... 449,204 322,504 Lynch Corporation Common Stock Fund -- 355,179 Lynch Interactive Common Stock Fund 565,094 --
4. Contracts with Insurance Company During 1999 and 1998, the Plan held unallocated guaranteed investment contracts with maturities in 1998 through 1999 with Hancock. Contributions from the Plan were accepted by Hancock throughout the first year of each contract and interest is earned over the contract lives at guaranteed annual rates ranging from 5.39% to 6.56%. The underlying assets within the contract are restricted solely for administrative expenses and benefit payments made by the Plan. Lynch Corporation 401(k) Savings Plan Notes to Financial Statements (continued) Years Ended December 31, 1999 and 1998 5. Income Tax Status The Plan has applied for but has not received a determination letter from the Internal Revenue Service stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the "Code"). However, the Plan Administrator believes that the Plan is qualified and, therefore, the related trust is exempt from taxation. 6. Subsequent Event As a result of Lynch Corporation's spin-off of Lynch Interactive Corporation, which took place on September 1, 1999, Lynch corporate employees and the employees of Bretton Woods, a subsidiary of the Company, who participated in the Plan during 1999, ceased contributing to the Plan as of the spin-off date. During 2000, Lynch corporate employees transferred their fund balances to the Lynch Interactive Corporation Plan. Additionally, Bretton Woods' employees transferred their fundbalances to its own plan. Also, on May 15, 2000, the Lynch Interactive Corporation Plan merged into the Plan to create a multiple-employer plan. Supplemental Schedule Lynch Corporation 401(k) Savings Plan EIN-38-1799862 Plan-004 Schedule of Assets Held for Investment Purposes at End of Year December 31, 1999
Identity of Issuer, Borrower, Description of Investment, Including Maturity Lessor or Similar Party Date, Rate of Interest, Par or Maturity Value Current Value - ---------------------------------------------------------------------------------------------------------- *Fleet National Bank: Fleet Stable Asset Fund, 117,916 shares $1,184,811 Galaxy U.S. Treasury Fund, 449,204 shares 449,204 Mutual Qualified Fund, 71,778 shares 1,213,772 Mutual Discovery Fund, 15,741shares 332,127 Short-term investments, 13,010 shares 13,010 *Lynch Corporation: Lynch Corporation Common Stock, 6,254 shares 161,431 *East/West Communications, East/West Communications Inc. Class A Common Inc. Stock 1,785 shares 68,703 *Lynch Interactive Corporation Lynch Interactive Common Stock 5,658 shares 565,094 Participant loans Loans bear interest between 7.75% and 8.5% 112,629 ------------------ $4,100,781 ================== * Indicates party-in-interest to the Plan.
SIGNATURE The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the 401(k) Plan Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. LYNCH CORPORATION 401(k) SAVINGS PLAN By: /s/ Robert E. Dolan ------------------------------------------- Robert E. Dolan Member of the 401(k) Plan Committee Dated: June 28, 2000 EX-23 2 0002.txt CONSENT FROM ERNST & YOUNG Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-46953) pertaining to the Lynch Corporation 401(k) Savings Plan of our report dated June 21, 2000, with respect to the financial statements and schedule of the Lynch Corporation 401(k) Savings Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1999. /s/ Ernst & Young LLP Stamford, Connecticut June 26, 2000 -----END PRIVACY-ENHANCED MESSAGE-----