-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, WrM87CLxho87Apc7sHEEePf8ICrvv+l6m3VUHzOFVT6OaaexANAZcHx7zL2bqn43 ui6HDx7DkIVeyYiQ/8R47g== 0000061004-95-000009.txt : 19950814 0000061004-95-000009.hdr.sgml : 19950814 ACCESSION NUMBER: 0000061004-95-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: LYNCH CORP CENTRAL INDEX KEY: 0000061004 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 381799862 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00106 FILM NUMBER: 95561396 BUSINESS ADDRESS: STREET 1: 8 SOUND SHORE DR STE 290 CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2036293333 MAIL ADDRESS: STREET 1: 8 SOUND SHORE DRIVE STREET 2: SUITE 290 CITY: GREENWICH STATE: CT ZIP: 06830 10-Q 1 2ND QTR 10Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) of the SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 1-106 LYNCH CORPORATION (Exact name of Registrant as specified in its charter) Indiana 38-1799862 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 8 Sound Shore Drive, Suite 290, Greenwich, Connecticut 06830 (Address of principal executive offices) (Zip code) (203) 629-3333 Registrant's 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 Indicate the number of shares outstanding of each of the Registrant's classes of Common Stock, as of the latest practical date. Class Outstanding at August 1, 1995 Common Stock, no par value 1,378,658 INDEX LYNCH CORPORATION AND SUBSIDIARIES PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed Consolidated Statements of Operations: - Three months ended June 30, 1995 and 1994 - Six months ended June 30, 1995 and 1994 Condensed Consolidated Balance Sheets: - June 30, 1995 - December 31, 1994 (Audited) Condensed Consolidated Statements of Cash Flows: - Six months ended June 30, 1995 and 1994 Notes to Condensed Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES Part I - Financial Information Item 1 - Financial Statements LYNCH CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In Thousands, Except Share Amounts)
Three Months Six Months Ended June 30 Ended June 30 ------------------ ------------------- 1995 1994 1995 1994 -------- -------- -------- --------- SALES AND REVENUES: Multimedia $ 5,916 $ 4,839 $ 11,601 $ 9,720 Services 31,555 25,777 58,358 48,733 Manufacturing 39,403 9,062 76,703 17,293 --------- -------- --------- --------- 76,874 39,678 146,662 75,746 -------- -------- --------- --------- COSTS AND EXPENSES: Multimedia 4,386 3,329 8,611 6,627 Services 28,388 23,259 52,621 44,237 Manufacturing 31,098 6,048 61,334 11,889 Selling and Administrative 8,724 4,691 15,784 8,902 --------- --------- --------- --------- OPERATING PROFIT 4,278 2,351 8,312 4,091 OTHER INCOME(EXPENSE): Investment Income 735 541 1,619 1,118 Interest Expense (2,235) (1,436) (4,439) (2,802) Share of Operations of Affiliated Companies 76 (326) 6 (320) Gain on Sale of Subsidiary Stock 59 40 59 190 --------- --------- --------- --------- (1,365) (1,181) (2,755) (1,814) --------- --------- --------- --------- INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS 2,913 1,170 5,557 2,277 PROVISION FOR INCOME TAXES (1,160) (579) (2,256) (965) MINORITY INTERESTS (597) (385) (1,020) (465) --------- --------- --------- --------- NET INCOME $ 1,156 $ 206 $ 2,281 $ 847 ========= ========= ========= ========= WEIGHTED AVERAGE SHARES OUTSTANDING 1,407,000 1,330,000 1,404,000 1,316,000 --------- --------- --------- --------- NET INCOME PER SHARE $ 0.82 $ 0.15 $ 1.62 $ 0.64 ========= ========= ========= ========= INCOME PER SHARE ASSUMING FULL DILUTION $ 0.82 $ 0.15 $ 1.62 $ 0.62 ========= ========= ========= =========
See Notes to Condensed Consolidated Financial Statements LYNCH CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands)
June 30 December 31 1995 1994 (Unaudited) (A) ASSETS --------- --------- CURRENT ASSETS: Cash and Cash Equivalents $ 15,556 $ 18,010 Marketable Securities and Short-Term Investments 12,136 13,511 Receivables, Less Allowances of $574 and $737 42,771 36,454 Inventories 24,331 18,955 Deferred Income Tax Benefits 2,872 2,872 Other Current Assets 5,415 4,083 --------- --------- Total Current Assets 103,081 93,885 PROPERTY, PLANT AND EQUIPMENT: Land 1,893 1,893 Buildings & Improvements 12,855 11,713 Machinery & Equipment 85,266 79,290 --------- --------- 100,014 92,896 Less Accumulated Depreciation 35,636 31,451 --------- --------- Net Property, Plant & Equipment 64,378 61,445 INVESTMENT IN & ADVANCES TO AFFILIATED COMPANIES 3,562 3,503 ACQUISITION INTANGIBLES 25,273 23,518 OTHER ASSETS 4,084 3,559 --------- --------- Total Assets $200,378 $185,910 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes Payable to Banks $ 7,796 $ 5,904 Trade Accounts Payable 15,391 11,999 Accrued Liabilities 25,168 23,724 Current Maturities of Long-Term Debt 24,523 29,545 --------- --------- Total Current Liabilities 72,878 71,172 LONG-TERM DEBT 72,513 62,745 DEFERRED INCOME TAXES 10,397 10,397 MINORITY INTERESTS 11,709 11,065 SHAREHOLDERS' EQUITY: Common Stock, No Par Value-10,000,000 Shares Authorized; 1,471,191 Issued (At Stated Value) 5,139 5,139 Additional Pain-in Capital 8,106 8,037 Retained Earnings 20,912 18,631 Treasury Stock of 92,533 Shares, at Cost (1,276) (1,276) --------- --------- Total Shareholders' Equity 32,881 30,531 --------- --------- Total Liabilities & Shareholders' Equity $200,378 $185,910 ========= ========= (A) The Balance Sheet at December 31, 1994 has been derived from the Audited Financial Statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See Notes to Condensed Consolidated Financial Statements.
LYNCH CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands)
Six Months Ended June 30 ------------------- 1995 1994 --------- --------- OPERATING ACTIVITIES Net Income $ 2,281 $ 847 Adjustments to Reconcile Net Income to Net Cash From Operating Activities: Depreciation and Amortization 5,144 3,620 Share of Operations of Affiliated Companies (6) 320 Minority Interests 1,020 465 Net Effect of Purchases and Sales of Trading in Marketable Securities 1,375 7,380 Changes in Operating Assets and Liabilities: Receivables (6,317) (4,446) Inventories (5,376) (1,026) Accounts Payable and Accrued Liabilities 4,836 6,166 Other (1,912) (129) --------- --------- NET CASH FROM OPERATING ACTIVITIES 1,045 13,197 --------- --------- INVESTING ACTIVITIES Capital Expenditures (7,314) (4,484) Investment in Capital Communications, Inc. 0 (2,560) --------- --------- NET CASH FROM (USED IN) INVESTING ACTIVITIES (7,314) (7,044) --------- --------- FINANCING ACTIVITIES Issuance (Repayments) of Debt, Net 4,122 (1,309) Sale of Treasury Stock 0 2,288 Other (307) 0 --------- --------- NET CASH FROM FINANCING ACTIVITIES 3,815 979 --------- --------- Net Increase(Decrease) in Cash and Cash Equivalents (2,454) 7,132 Cash and Cash Equivalents at Beginning of Period 18,010 24,548 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 15,556 $ 31,680 ========= ========= See Notes to Condensed Consolidated Financial Statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS A. Subsidiaries of the Registrant The present operating subsidiaries of the Registrant are as follows: Lynch Multimedia Corporation Lynch Telecommunications Corporation Lynch Telephone Corporation (80.1% owned) Western New Mexico Telephone Company, Inc. WNM Communications Corporation Lynch Telephone Corporation II (83.0% owned) Inter-Community Telephone Company Lynch Telephone Corporation III (81% owned) Cuba City Telephone Exchange Company Belmont Telephone Company Lafayette County Satellite TV, Inc. Brighton Communications Corporation Lynch Telephone Corporation IV Bretton Woods Telephone Company Lynch Telephone Corporation VI (98% owned) J.B.N. Telephone Company, Inc. J.B.N. Finance Corporation Lynch Telephone Corporation VII USTC Kansas Inc. Haviland Telephone Company Haviland Finance Corporation Global Television Inc. Lynch Entertainment Corporation Coronet Communications Company (20% owned) Lynch Entertainment Corporation II Capital Communications Corporation (49% owned) The Morgan Group, Inc. (equity ownership 47% - voting ownership 64%) Morgan Drive Away, Inc. Transport Services Unlimited, Inc. Interstate Indemnity Inc. Morgan Finance, Inc. Lynch Capital Corporation Lynch Manufacturing Corporation Lynch Machinery, Inc. (90% owned) Tri-Can International, Ltd. M-tron Industries, Inc. (94% owned) M-tron Industries, Ltd. Spinnaker Industries, Inc. (83% owned) Brown-Bridge Industries, Inc. (80.6% owned) Entoleter, Inc. Lynch International Exports, Inc. B. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended June 30, 1995 are not necessarily indicative of the results that may be expected for the year ended December 31, 1995. For further information, refer to the consolidated financial statements and footnotes thereto included in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994. C. Acquisitions On September 26, 1994, Lynch Telephone Corporation VII, a wholly owned subsidiary of Lynch, acquired all of the outstanding shares of Haviland Telephone Company, Inc. from InterDigital Communications Corporation. The total cost of this transaction was $13.4 million. The transaction was accounted for as a purchase, and, accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair market value. As a result of this transaction, the Company recorded $8.2 million in goodwill which is being amortized over 25 years. On September 19, 1994, Brown-Bridge Industries, Inc. an 80.1%-owned subsidiary of Spinnaker Industries, Inc., (an 83%-owned subsidiary of Lynch) acquired from Kimberly-Clark Corporation the net assets associated with its Brown-Bridge operation, a manufacturer of adhesive-coated stock for labels and related applications. The cost of the transaction was $29.1 million, plus $6.9 million in current liabilities were assumed. The transaction was accounted for as a purchase, and, accordingly, the assets and liabilities were recorded at their estimated fair market value. On March 1, 1994, Capital Communications Corporation, 49% owned by the Registrant, acquired certain assets associated with the operations of Station WOI-TV from Iowa State University. Station WOI is an ABC affiliate serving the Des Moines, Iowa market. The total cost of the transaction was $13.0 million. The transaction was accounted for as a purchase, and, accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair market value. Lynch is recording the results of Capital operations on an equity basis. The operating results of the acquired companies are included in the consolidated statements of operations from their respective acquisition dates. The following combined proforma information shows the results of the Registrant's operations presented as through the purchases of Haviland, Brown-Bridge and Station WOI-TV had been made at the beginning of 1994. Three Months Ended Six Months Ended June 30 June 30 1995 1994 1995 1994 (In thousands, except per share data) Sales and Revenues $ 76,874 $ 59,781 $146,662 $122,637 Earnings Before Interest Depreciation, Taxes and Amortization 6,782 5,881 13,275 10,953 Net Income 1,156 477 2,281 1,089 Net Income per Share 0.82 0.36 1.62 0.82 D. Inventories Inventories are stated at the lower of cost or market value. At June 30, 1995, inventories were valued by three methods: specific identification - 62%, last-in, first-out (LIFO) - 32%, and first-in, first-out (FIFO) - 6%. At December 31, 1994, the respective percentages were 68%, 23%, and 9%. In Thousands 6-30-95 12-31-94 Raw materials and supplies $ 6,324 $ 5,560 Work in process 9,590 7,745 Finished goods 8,417 5,650 TOTAL INVENTORIES $24,331 $18,955 E. Indebtedness Long-term debt consists of (all stated interest rates are weighted averages at June 30, 1995): In Thousands 6-30-95 12- 30-94 Rural Utilities Service and Rural Telephone Bank notes payable in equal quarterly installments through 2023 at fixed interest rates (3.4%) $24,799 $24,283 Bank credit facilities utilized by certain telephone and telephone holding companies at both 9.5% fixed and 9.0% variable interest rates 23,962 24,158 Unsecured notes at fixed interest rates (10%) issued in connection with telephone company acquisitions 16,207 16,266 Bank debt associated with Brown-Bridge at variable rates 10.25%: Revolving line of credit 13,015 13,180 Term loan 8,548 9,000 Other at variable and fixed interest rates 10,505 5,402 97,036 92,290 Current Maturities (24,523) (29,545) $72,513 $62,745 These credit facilities are secured by property, plant and equipment, inventory, receivables and common stock of certain subsidiaries and contain certain covenants restricting distributions to the Registrant. The Company also maintains short-term lines of credit with banks which aggregate $34.7 million, of which $20.3 was available at June 30, 1995. These lines are secured by operating assets of the related subsidiaries and the common stock of The Morgan Group, Inc. The line of credit agreements expire in 1995 and 1996, are renewable annually, and are at interest rates of prime minus 1/4% to prime plus 1%. The weighted average interest rate at June 30, 1995 of outstanding borrowings under the lines was 9.0%. The Company had outstanding under these lines of credit standby letters of credit totaling approximately $6.9 million, securing various insurance obligations and customer advances. Several of the credit agreements contain covenants restricting distributions. The subsidiaries of Spinnaker maintain long-term revolving credit and/or letter of credit arrangements with combined maximum availability of $21.5 million. Credit availability under their revolving credit arrangements is subject to certain variables, such as the amount of inventory and receivables eligible to be included in the borrowing base. These arrangements are at interest rates of prime plus 1.25% to prime plus 2.5%. At June 30, 1995, the weighted average interest rate of outstanding borrowing under these arrangements was 10.3% and there was $6.7 million of available capacity. In July 1986, the Registrant issued $23 million principal amount of 8% Convertible Subordinated Debentures. The Debentures were redeemable at the option of the Registrant, subject to certain restrictions, in whole or in part, at 108.0% of principal amount initially, declining annually to 100% on or after July 15, 1996. Through September 21, 1994, the Registrant had either purchased on the open market or redeemed $11,165,000 of the original issuance. At that date, in accordance with the terms of the debenture indenture, the Registrant called for redemption all of the remaining debentures outstanding at 101.6% of their face amount plus accrued interest. The redemption was completed on October 24, 1994, and $10,195,000 of the debentures were redeemed and $1,640,000 were converted into 52,881 shares of the Registrant's Common Stock at $31 per share. F. Income Taxes The income tax provision includes federal, as well as state and local taxes. The tax provisions for the three months ending June 30, 1995 and 1994 represent effective tax rates of 39.8% and 49.5%, respectively. The rates differ from the federal statutory rate principally due to the effect of state income taxes, amortization of goodwill, no provision required on the Registrant's gain in 1994 from the sale of certain securities and a valuation reserve provided on the benefit associated with the Registrant's equity in losses of Capital Communications Corporation. G. Capital Stock In 1987 and 1992, the Board of Directors authorized the purchase of up to a total of 300,000 shares of Common Stock of the Registrant. These shares will be retained as treasury stock for future use as required. Through June 30, 1995, the Registrant had purchased 230,861 shares of Common Stock at an average price of $13.15. H. Earnings Per Share Earnings per common and common equivalent share amounts are based on the average number of common shares outstanding during each period, assuming the exercise of all stock options having an exercise price less than the average market price of the common stock using the treasury stock method. Fully diluted earnings per share reflect the effect, where dilutive, of converting any outstanding convertible debentures and the exercise of all outstanding stock options having an exercise price less than the closing market price at the end of the period of the Common Stock of the Registrant using the treasury stock method. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Sales and Revenues Revenues for the second quarter of 1995 increased by $37.2 million, or 94%, from the second quarter of the prior year predominantly due to: $24.8 million in revenues from the Brown-Bridge operation, which was acquired on September 19, 1994; $3.5 million in incremental revenues from Lynch Machinery due to production activity associated with the manufacture of several extra-large glass press machines (Note: In December 1994, Lynch Machinery adopted percentage-of- completion method of accounting for its long term contracts, which it had previously accounted for on a completed contract basis, and 1994's results have been restated to reflect this change); and $5.8 million in incremental revenues from Morgan due to increased industry shipments of manufactured housing units and an increased market share at Morgan coupled with the acquisition of Transfer Drivers Inc. ("TDI") in May 22, 1995, which contributed $1.3 million in revenues to the second quarter. For the six months ended June 30, 1995, revenues increased by $70.9 million, or 92%, over the first half of 1994. The same factors that contributed to the second quarter increase also resulted in the first half increase. Specifically, Brown-Bridge reported revenues of $48.7 million, Lynch Machinery's revenues increased by $7.8 million and Morgan's revenues increased by $9.6 million. On a prospective basis, the inclusion of the Brown-Bridge operation and increased shipments at Lynch Machinery (see below) are expected to result in increased reported revenues by the Registrant in the third quarter of 1995 versus the respective prior year period. Operating Profit Operating profit for the second quarter of 1995 increased by $1.9 million, or 132% from the second quarter in the prior year. The contribution of the manufacturing segment increased by $1.6 million between the two periods, of which $1.3 million was due to the acquisition of Brown-Bridge. In addition, both Lynch Machinery's and M-tron's contributions increased by approximately $250,000 each. These increases were offset, in part, by higher manufacturing segment administration expenses. Operating profit grew by $4.2 million, or 103% from the first half of 1994 to the first half of 1995. The manufacturing group's contribution increased by $3.7 million, $2.4 million of which resulted from the inclusion of Brown- Bridge and $1.2 million from an increase at Lynch Machinery. Morgan's operating profit grew by $568,000 between the two periods due to the higher revenues. Multimedia's operating profit fell by $202,000 from the first half of 1994 to the first half of 1995, as the inclusion of Haviland Telephone Company, acquired on September 26, 1994, was offset by higher depreciation expense at the other telephone operations. On a prospective basis, the inclusion of Brown-Bridge and the backlog at Lynch Machinery (see below) is expected to result in increased reported operating profit by the Registrant in the third quarter of 1995 versus the respective prior year period. Other Income (Expense), Net Investment income in the second quarter of 1995 was $194,000 higher than the second quarter of the previous year due to increased net marketable securities gains which more than offset lower investments in securities generating current investment income. These factors also resulted to the first half increase of $501,000. Interest expense in the second quarter of 1995 was $799,000 higher than the second quarter of the previous year predominantly due to $853,000 of interest expense associated with the acquisitions of Brown-Bridge and Haviland. Offsetting this increase was a $247,000 decrease in interest expense associated with the redemption and conversion on October 24, 1994 of $11.8 million of the Company's 8% Convertible Subordinated Debentures. These factors also contributed to the first half increase of $1.6 million. The share of operations of affiliated companies resulted in income of $76,000 in the second quarter of 1995 versus a loss of $326,000 in the second quarter of 1994. The variance resulted from improved operating results at both Stations WHBF-TV and WOI-TV plus a significant reduction of amortization of acquisition intangibles at Station WOI-TV. On March 1, 1994, Lynch acquired a 49% equity interest in Station WOI-TV and an accelerated level of amortization expense was recorded in the first twelve months of operation. Tax Provision The income tax provision includes federal, as well as state and local taxes. The tax provisions for the three months ending June 30, 1995 and 1994, represent effective tax rates of 39.8% and 49.5%, respectively. The rates differ from the federal statutory rate principally due to the effect of state income taxes, amortization of goodwill, no provision required on the Registrant's gain in 1994 from the sale of certain securities, and a valuation reserve provided on the benefit associated on the Registrant's equity in losses in Capital Communications Corporation (Station WOI-TV). Net Income (Loss) Net income for the three months ended June 30, 1995 was $1.2 million, or $0.82 per share, in comparison to net income for the three months ended March 31, 1994 of $206,000, or $0.15 per share. The predominant factors that accounted for the improvement in both the second quarter and first half results were: the acquisition of Brown-Bridge; increased production activity at Lynch Machinery; higher investment income and interest expense in 1995 and reduced amortization expense at Station WOI-TV. Backlog/New Orders Total backlog of manufactured products at June 30, 1995 was $37.0 million ($21.9 million relates to Lynch Machinery), which represents a decrease from the backlog of $38.8 million at December 31, 1994. Since December 31, 1994, M-tron Industries backlog increased by $7.7 million to $11.2 million due to increased market demand by the industries that M-tron serves and new product introductions. This increase was offset by production activity that reduced Lynch Machinery's backlog by $7.0 million. Liquidity/Capital Resources At June 30, 1995, the Registrant had $27.7 million in cash and short-term investments, which was $3.8 million lower than the $31.5 million reported at December 31, 1994. This was predominantly due to the acquisition of TDI, and capital spending and working capital requirements. Working capital at June 30, 1995 was $30.2 million as compared to $22.7 million at December 31, 1994. The predominant reason for the increase in working capital was the reclassification from short-term to long-term of an $11.5 million bank credit facility, previously due on April 15, 1995, which was extended on April 14, 1995. This was offset by an increase in percentage-of-completion receivables at Lynch Machinery. The Registrant and consolidated subsidiaries had $27.0 million of unused short-term credit facilities at June 30, 1995, $6.5 million of which relates to the Registrant. Total debt of the Registrant increased from $98.2 million at December 31, 1994 to $104.8 million at June 30, 1995. Lynch Corporation and its subsidiaries maintain active acquisition programs (see Part II - Item 5 of this document) and generally finance each acquisition with a significant component of debt. This acquisition debt typically contains restrictions on cash distributions to the parent company. Short-term and long-term financing arrangements are being considered at both the parent company and subsidiaries to fund future acquisitions. Spinnaker Industries, Inc. has engaged an investment banking firm to assist it in exploring various financing alternatives in order to provide additional capital for acquisitions, working capital and other corporate purposes. Spinnaker is actively pursuing financing alternatives and any such financing may involve the issuance of debt and additional equity securities of Spinnaker. As of the date of this filing, Spinnaker has not entered into any definitive agreements or arrangements regarding the terms of any financing, and there can be no assurance that such financing will be available on terms acceptable to Spinnaker. A substantial portion of any consummated financing will be required for the acquisition discussed in Part II - Item 5 of this document. In addition, the Registrant is structuring arrangements in order to participate in 1995 in the Federal Communications Commission's auction of Broadband Personal Communications Spectrum. Participation in this auction and subsequent development of the Spectrum could require a significant financial commitment and materially impact future earnings of the Registrant. PART II OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders At the Annual Meeting of Stockholders of the Registrant held on May 18,1995, the following directors were reelected as directors with the following votes: Name Votes For Votes Withheld Bradley J. Bell 1,228,042 7,171 Morris Berkowitz 1,228,042 7,171 Richard J. Boyle 1,228,042 7,171 E. Val Cerutti 1,228,017 7,196 Paul J. Evanson 1,228,037 7,176 Mario J. Gabelli 1,227,960 7,253 Paul P. Woolard 1,228,042 7,171 Item 5. Other Information On June 20, 1995, Spinnaker announced an agreement in principal to acquire the assets and stock of Central Products Company ("Central Products"), a wholly-owned subsidiary of Alco Standard Corporation. Central Products, which manufacturers and markets a wide variety of carton sealing tapes, is the second largest U.S. carton sealing tape manufacturer. Central Products is headquartered in Monasha, Wisconsin, next to its 175,000 square foot manufacturing facility, which manufactures water-activated tape. Central Products also maintains a 200,000 square-foot manufacturing facility in Brighton, Colorado, where it manufactures pressure-sensitive tape. Spinnaker is currently negotiating the terms of the definitive agreement. It is anticipated that the definitive agreement will contain several significant conditions to the obligations of both parties to consummate the transaction. On July 20, 1995, the Registrant announced that a subsidiary had entered into a letter of intent for the acquisition of Dunkirk & Fredonia Telephone Company and its subsidiaries, Cassadaga Telephone Corporation, Comantel, Inc., and D&F Cellular Telephone Inc. Dunkirk & Fredonia Telephone Co. serves approximately 10,700 access lines in western New York including the community of Fredonia, the Village of Cassadaga and the Hamlet of Stockton. Dunkirk & Fredonia also owns and operates other telecommunications businesses, including long distance resale and sales and servicing of telecommunications equipment and security operations. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 27-Financial Data Schedule (b) Reports on Form 8-K There were no Reports on Form 8-K filed by the Registrant during the three months ended June 30, 1995. SIGNATURE 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. LYNCH CORPORATION (Registrant) BY:s/Robert E. Dolan Robert E. Dolan Chief Financial Officer August 11, 1995 EX-27 2
5 This schedule contains summary financial information extracted from the Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets and is qualified in its entirety by reference to such Form 10-Q. 3-MOS DEC-31-1995 JUN-30-1995 15,556 12,136 42,771 574 24,331 103,081 100,014 35,636 200,378 72,878 72,513 5,139 0 0 27,742 200,378 76,874 76,874 63,872 72,596 0 0 2,235 2,913 1,160 1,156 0 0 0 1,156 .82 .82
-----END PRIVACY-ENHANCED MESSAGE-----