-----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, NP/Ecv6SyXRs0laNPeWlKbBLY20G2kcmjkXpBQbMyONUSwdjwSFYklWwRJziglz3 Tx+6Qx5zTCgHms1KGVdBkA== 0000061004-98-000021.txt : 19981211 0000061004-98-000021.hdr.sgml : 19981211 ACCESSION NUMBER: 0000061004-98-000021 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19981210 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: 11-K SEC ACT: SEC FILE NUMBER: 001-00106 FILM NUMBER: 98766909 BUSINESS ADDRESS: STREET 1: 401 THEODORE FREMD AVENUE CITY: RYE STATE: NY ZIP: 10580 BUSINESS PHONE: 914-921-7601 MAIL ADDRESS: STREET 1: 401 THEODORE FREMD AVENUE CITY: RYE STATE: NY ZIP: 10580 11-K 1 LYNCH CORPORATION 401-K SAVINGS PLAN SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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, 1995 [ ] 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 Schedules Lynch Corporation 401(k) Savings Plan Years ended December 31, 1996, 1995 and 1994 with Report of Independent Auditors Lynch Corporation 401(k) Savings Plan Audited Financial Statements and Supplemental Schedules Years ended December 31, 1996, 1995 and 1994 Contents Report of Independent Auditors..............................................1 Audited Financial Statements Statement of Net Assets Available for Benefits..............................2 Statement of Changes in Net Assets Available for Benefits...................5 Notes to the Financial Statements...........................................8 Supplemental Schedules Schedules of Assets Held for Investment Purposes...........................14 Schedules of Reportable Transactions.......................................16 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, 1996, 1995 and 1994, 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 generally accepted auditing standards. 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, 1996, 1995 and 1994, and the changes in its net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1996 and 1995, and reportable transactions for the years then ended, are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The Fund Information in the statements of net assets available for benefits and the statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Ernst & Young LLP September 30, 1998 Lynch Corporation 401(k) Savings Plan Statement of Net Assets Available for Benefits, With Fund Information December 31, 1996
Fund Information -------------------------------------------------------------------- Vanguard Vanguard Tweedy Hancock Stable U.S. Convertible Mutual Brown Value Fund Treasury Securities Qualified Global Fund Fund Fund Value Fund -------------------------------------------------------------------- Assets Investments: John Hancock Mutual Life Insurance Company: Unallocated Guaranteed Investment Contracts $ 580,962 - - - - Fleet Investment Management: Fleet Stable Return Fund .................. 372,274 - - - - Mutual Qualified Fund ..................... $ 980,660 Vanguard U.S. Treasury Fund ............... - $ 382,210 - - - Vanguard Convertible Securities Fund ...... - - $ 57,683 - - Tweedy Browne Global Value Fund ........... - - - - $ 64,744 Lynch Corporation Stock Fund .............. - - - - - Participant notes receivable ............... - - - - - Short-term investments ...................... (18,348) - - - - -------- -------- -------- -------- -------- Total investments ............................ 934,888 382,210 57,683 980,660 64,744 Receivables: Participants' contributions ............... 189 599 94 928 758 Employer's contribution ................... 3,197 1,205 301 2,991 217 Other ..................................... 3,152 - 54 942 72 -------- -------- -------- -------- ------- Total assets ................................. 941,426 384,014 58,132 985,521 65,791 Liabilities Excess contributions payable ................. (808) (810) (9) (24,866) (3,586) Other liabilities ............................ (543) (841) - (108) - -------- -------- -------- -------- -------- Total liabilities ............................ (1,351) (1,651) (9) (24,974) (3,586) -------- -------- -------- -------- -------- Net assets available for benefits ............ $ 940,075 $ 382,363 $ 58,123 $ 960,547 $ 62,205 ========= ========= ======== ========= ========
Fund Information ------------------------------------------ Lynch Corporation Loan Stock Fund Fund Total ------------------------------------------ Assets Investments: John Hancock Mutual Life Insurance Company: Unallocated Guaranteed Investment Contracts - - $ 580,962 Fleet Investment Management: Fleet Stable Return Fund .................. - - 372,274 Mutual Qualified Fund ..................... - - 980,660 Vanguard U.S. Treasury Fund ............... - - 382,210 Vanguard Convertible Securities Fund ...... - - 57,683 Tweedy Browne Global Value Fund ........... - - 64,744 Lynch Corporation Stock Fund .............. $ 338,823 - 338,823 Participant notes receivable ............... - $ 71,887 71,887 Short-term investments ...................... 24,997 - 6,649 -------- -------- ---------- Total investments ............................ 363,820 71,887 2,855,892 Receivables: Participants' contributions ............... 171 - 2,739 Employer's contribution ................... 677 - 8,588 Other ..................................... 4,942 - 9,162 -------- -------- ---------- Total assets ................................. 369,610 71,887 2,876,381 Liabilities Excess contributions payable ................. (651) - (30,730) Other liabilities ............................ - - (1,492) -------- -------- ---------- Total liabilities ............................ (651) - (32,222) -------- -------- ---------- Net assets available for benefits ............ $ 368,959 $ 71,887 $ 2,844,159 ========= ======== ===========
See accompanying notes. Lynch Corporation 401(k) Savings Plan Statement of Net Assets Available for Benefits, With Fund Information December 31, 1995
Fund Information ------------------------------------------------------------------- Vanguard Vanguard Hancock U.S. Convertible Mutual Stable Value Equities Treasury Securities Qualified Fund Fund Fund Fund Fund ------------------------------------------------------------------- Assets Investments: John Hancock Mutual Life Insurance Company: Unallocated Guaranteed Investment Contracts $ 1,167,424 - - - - Fleet Investment Management: Fleet Stable Return Fund .................. 113,034 - - - - Clipper Fund, Inc. ........................ - $ 468,971 - - - Mutual Qualified Fund ..................... - 474,928 - - $ 120,186 Vanguard U.S. Treasury Fund ............... - - $ 21,206 - - Vanguard Convertible Securities Fund ...... - - - $15,637 - Tweedy Browne Global Value Fund ........... - - - - - Lynch Corporation Stock Fund .............. - - - - - Short-term investments ....................... 3,881 3,368 756 1,306 6,016 ---------- --------- --------- -------- --------- Total investments ............................ 1,284,339 947,267 21,962 16,943 126,202 Receivables: Participants' contributions ............... 16,730 - 1,627 1,216 9,970 Employer's contribution ................... 12,833 - 3,217 1,475 8,925 Other ..................................... 39 708 - 7 - ---------- --------- -------- -------- --------- Total assets ................................. 1,313,941 947,975 26,806 19,641 145,097 Liabilities Excess contributions payable ................. (4,373) - - - (4,321) Other liabilities ............................ (2,289) (1,313) (45) - (100) --------- --------- -------- ------- --------- Total liabilities ............................ (6,662) (1,313) (45) - (4,421) --------- --------- -------- ------- --------- Net assets available for benefits ............ $ 1,307,279 $ 946,662 $ 26,761 $19,641 $ 140,676 =========== ========= ======== ======= =========
Fund Information --------------------------------------- Tweedy Browne Lynch Global Corporation Value Fund Stock Fund Total --------------------------------------- Assets Investments: John Hancock Mutual Life Insurance Company: Unallocated Guaranteed Investment Contracts - - $ 1,167,424 Fleet Investment Management: Fleet Stable Return Fund .................. - - 113,034 Clipper Fund, Inc. ........................ - - 468,971 Mutual Qualified Fund ..................... - - 595,114 Vanguard U.S. Treasury Fund ............... - - 21,206 Vanguard Convertible Securities Fund ...... - - 15,637 Tweedy Browne Global Value Fund ........... $13,282 - 13,282 Lynch Corporation Stock Fund .............. - $ 262,840 262,840 Short-term investments ....................... 917 3,854 20,098 -------- --------- ----------- Total investments ............................ 14,199 266,694 2,677,606 Receivables: Participants' contributions ............... 749 1,537 31,829 Employer's contribution ................... 832 2,734 30,016 Other ..................................... - - 754 -------- --------- ----------- Total assets ................................. 15,780 270,965 2,740,205 Liabilities Excess contributions payable ................. - (71) (8,765) Other liabilities ............................ - - (3,747) -------- --------- ----------- Total liabilities ............................ - (71) (12,512) -------- --------- ----------- Net assets available for benefits ............ $15,780 $ 270,894 2,727,693 ======= ========= =========
See accompanying notes. Lynch Corporation 401(k) Savings Plan Statement of Net Assets Available for Benefits, With Fund Information December 31, 1994
Fund Information ------------------------------------------------------------ Guaranteed Lynch Investment Contract Equities Corporation Fund Fund Stock Fund Total ------------------------------------------------------------ Assets Investments: John Hancock Mutual Life Insurance Company: Unallocated Guaranteed Investment Contracts.. $ 999,256 -- -- $ 999,256 Clipper Fund, Inc. ........................ -- $ 325,143 -- 325,143 Mutual Qualified Fund ..................... -- 325,298 -- 325,298 Lynch Corporation Stock Fund .............. -- -- $ 111,990 111,990 Short-term investments ...................... 31,465 20,947 1,514 53,926 -------- -------- -------- -------- Total investments .............................. 1,030,721 671,388 113,504 1,815,613 Receivables: Other .......................................... 9 1,158 2,703 3,870 -------- -------- ------- -------- Total assets ................................... 1,030,730 672,546 116,207 1,819,483 Liabilities Other liabilities .............................. (12,042) (3,935) (1,923) (17,900) ------- ------ ------ ------- Total liabilities .............................. (12,042) (3,935) (1,923) (17,900) Interfund transfers ............................ (48,571) 35,135 13,436 -- ------- ------- ------- -------- Net assets available for benefits .............. $ 970,117 $ 703,746 $ 127,720 $ 1,801,583 =========== =========== =========== ===========
See accompanying notes. Lynch Corporation 401(k) Savings Plan Statement of Changes in Net Assets Available for Benefits, With Fund Information Year ended December 31, 1996
Fund Information -------------------------------------------------------------------------- Vanguard Vanguard Hancock U.S. Convertible Mutual Stable Value Equities Treasury Securities Qualified Fund Fund Fund Fund Fund -------------------------------------------------------------------------- Additions to net assets attributed to: Investment income Net appreciation (depreciation) in fair value of investments ........ $ -- $ 5,929 $ -- $ (1,676) $ 122,000 Interest ........................... 53,490 -- -- -- -- Dividends .......................... 17,120 -- 2,084 7,016 92,295 ------ ------ ----- ----- ------ Total investment income .............. 70,610 5,929 2,084 5,340 214,295 Contributions: Participants ....................... 84,737 28 24,026 22,345 147,404 Employer ........................... 6,718 -- 2,275 1,208 7,424 ------ ------ ----- ----- ----- Total contributions .................. 91,455 28 26,301 23,553 154,828 ------ ------ ------ ------ ------- Total additions ......................... 162,065 5,957 28,385 28,893 369,123 Deductions from net assets attributed to: Benefits paid to participants ........ (194,494) (54,850) (4,509) (1,599) (148,355) Excess contributions and related investment income .................. (106) -- (810) (9) (22,167) Transfer to the Entoleter, Inc. 401(k) plan (92,825) (16,600) (480) (1,126) (30,292) ------- ------- ---- ------ ------- Total deductions ........................ (287,425) (71,450) (5,799) (2,734) (200,814) Net increase (decrease) prior to interfund transfers .................. (125,360) (65,493) 22,586 26,159 168,309 Interfund transfers (net) ............... (241,844) (881,169) 333,016 12,323 651,562 -------- -------- ------- ------ ------- Net increase (decrease) ................. (367,204) (946,662) 355,602 38,482 819,871 Net assets available for benefits at beginning of year .................... 1,307,279 946,662 26,761 19,641 140,676 --------- ------- ------ ------ ------- Net assets available for benefits at end of year .............................. $ 940,075 -- $ 382,363 $ 58,123 $ 960,547 =========== ========= =========== =========== ===========
Fund Information -------------------------------------------------------------- Tweedy Browne Lynch Global Corporation Loan Value Fund Stock Fund Fund Total -------------------------------------------------------------- Additions to net assets attributed to: Investment income Net appreciation (depreciation) in fair value of investments ........ $ 1,251 $ 63,130 $ -- $ 190,634 Interest ........................... -- 199 2,411 56,100 Dividends .......................... 4,667 -- -- 123,182 --------- --------- --------- ---------- Total investment income .............. 5,918 63,329 2,411 369,916 Contributions: Participants ....................... 27,486 37,488 -- 343,514 Employer ........................... 1,114 1,937 -- 20,676 --------- --------- --------- --------- Total contributions .................. 28,600 39,425 -- 364,190 --------- --------- --------- -------- Total additions ......................... 34,518 102,754 2,411 734,106 Deductions from net assets attributed to: Benefits paid to participants ........ (2,083) (36,037) (920) (442,847) Excess contributions and related investment income .................. (3,586) (579) -- (27,257) Transfer to the Entoleter, Inc. 401(k) plan (420) (5,793) -- (147,536) --------- -------- --------- ---------- Total deductions ........................ (6,089) (42,409) (920) (617,640) Net increase (decrease) prior to interfund transfers .................. 28,429 60,345 1,491 116,466 Interfund transfers (net) ............... 17,996 37,720 70,396 -- -------- -------- -------- -------- Net increase (decrease) ................. 46,425 98,065 71,887 116,466 Net assets available for benefits at beginning of year .................... 15,780 270,894 -- 2,727,693 -------- --------- -------- --------- Net assets available for benefits at end of year .............................. $ 62,205 $ 368,959 $ 71,887 $ 2,844,159 =========== =========== =========== ===========
See accompanying notes. Lynch Corporation 401(k) Savings Plan Statement of Changes in Net Assets Available for Benefits, With Fund Information Year ended December 31, 1995
Fund Information ------------------------------------------------------------------------------- Vanguard Vanguard Hancock Stable U.S. Convertible Mutual Value Fund Equities Treasury Securities Qualified Fund Fund Fund Fund ------------------------------------------------------------------------------ Additions to net assets attributed to: Investment income Net appreciation (depreciation) in fair value of investments ................ $ -- $ 143,893 $ -- $ (379) $ (5,941) Interest .............................. 68,015 18,768 -- -- -- Dividends ............................. 1,349 99,892 247 988 13,076 ----- ------ ----- ----- ------ Total investment income ................. 69,364 262,553 247 609 7,135 Contributions: Participants .......................... 185,768 35,083 23,296 17,556 128,937 Employer .............................. 13,233 -- 3,218 1,476 8,925 ------ ----- ----- ----- ----- Total contributions ..................... 199,001 35,083 26,514 19,032 137,862 ------- ------ ------ ------ ------- Total additions ............................ 268,365 297,636 26,761 19,641 144,997 Deductions from net assets attributed to: Benefits paid to participants ........... (9,133) (1,450) -- -- -- Excess contributions and related investment income ................. (4,372) -- -- -- (4,321) ------ ------- ------ ------ ------ Total deductions ........................... (13,505) (1,450) -- -- (4,321) Net increase prior to interfund transfers .. 254,860 296,186 26,761 19,641 140,676 Interfund transfers (net) .................. 82,302 (53,270) -- -- -- ------ ------- ------- ------ ------- Net increase ............................... 337,162 242,916 26,761 19,641 140,676 Net assets available for benefits Beginning of year ....................... 970,117 703,746 -- -- -- ------- ------- ------- ------- ------- End of year ............................. $ 1,307,279 $ 946,662 $ 26,761 $ 19,641 $ 140,676 =========== =========== =========== =========== ===========
Fund Information ------------------------------------------- Tweedy Browne Lynch Global Corporation Value Fund Stock Fund Total ------------------------------------------- Additions to net assets attributed to: Investment income Net appreciation (depreciation) in fair value of investments ................ $ 403 $ 128,869 $ 266,845 Interest .............................. -- 85 86,868 Dividends ............................. 362 -- 115,914 -------- -------- ------- Total investment income ................. 765 128,954 469,627 Contributions: Participants .......................... 14,183 40,887 445,710 Employer .............................. 832 2,733 30,417 ------- ------- ------ Total contributions ..................... 15,015 43,620 476,127 ------- ------- ------- Total additions ............................ 15,780 172,574 945,754 Deductions from net assets attributed to: Benefits paid to participants ........... -- (297) (10,880) Excess contributions and related investment income ................. -- (71) (8,764) ------- ------- ------ Total deductions ........................... -- (368) (19,644) Net increase prior to interfund transfers .. 15,780 172,206 926,110 Interfund transfers (net) .................. -- (29,032) -- ------- -------- ------- Net increase ............................... 15,780 143,174 926,110 Net assets available for benefits Beginning of year ....................... -- 127,720 1,801,583 ------- ------- --------- End of year ............................. $ 15,780 $ 270,894 $ 2,727,693 =========== =========== ===========
See accompanying notes. Lynch Corporation 401(k) Savings Plan Statement of Changes in Net Assets Available for Benefits, With Fund Information Year ended December 31, 1994
Fund Information ----------------------------------------------------------- Guaranteed Lynch Investment Contract Equities Corporation Fund Fund Stock Fund Total ----------------------------------------------------------- Additions to net assets attributed to: Investment income Net appreciation (depreciation) in fair value of investments ................................... $ -- $ (28,913) $ 27,444 $ (1,469) Interest ........................................ 80,727 219 29 80,975 Dividends ....................................... -- 39,759 -- 39,759 ------- ------ -------- ------ Total investment income ........................... 80,727 11,065 27,473 119,265 Contributions: Participants .................................... 169,133 135,923 15,813 320,869 Employer ........................................ 15,623 7,567 835 24,025 ------ ------- ------- ------- Total contributions ............................... 184,756 143,490 16,648 344,894 ----------- Total additions ...................................... 265,483 154,555 44,121 464,159 Deductions from net assets attributed to: Benefits paid to participants ..................... (47,483) (12,821) (3,148) (63,452) Excess contributions and related investment income (852) -- -- (852) Transfer to the Morgan Group 401(k) Plan .......... (385,093) (137,385) (17,088) (539,566) --- -------- -------- ------- -------- Total deductions ..................................... (433,428) (150,206) (20,236) (603,870) Net increase (decrease) prior to interfund transfers . (167,945) 4,349 23,885 (139,711) Interfund transfers (net) ............................ (14,236) 3,652 10,584 -- ------- ------- ------- ------- Net increase (decrease) .............................. (182,181) 8,001 34,469 (139,711) Net assets available for benefits at beginning of year 1,152,298 695,745 93,251 1,941,294 --------- ------- ------ --------- Net assets available for benefits at end of year ..... $ 970,117 $ 703,746 $ 127,720 $ 1,801,583 =========== =========== =========== ===========
See accompanying notes. Lynch Corporation 401(k) Savings Plan Notes to the Financial Statements Years ended December 31, 1996, 1995 and 1994 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 Summary Plan Description 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 1995, Fleet Financial Group and Shawmut National Corporation ("Shawmut") merged, with Fleet Financial Group being the surviving institution. Prior to this merger, Shawmut was the trustee of the Plan. Subsequent to the merger, Fleet National Bank, a division of Fleet Financial Group, became the trustee of the Plan. Additionally, as of April 1, 1995, the Company changed recordkeepers from the John Hancock Mutual Life Insurance Company ("Hancock") to Fleet Investment Management ("Fleet"), also a division of Fleet Financial Group, and concurrently amended the Plan to adopt Fleet's prototype nonstandardized plan. Effective January 1, 1996, one of the Company's subsidiaries, Entoleter, Inc. ("Entoleter") established its own defined contribution 401(k) savings plan. The participant balances attributable to Entoleter employees ($147,536), were transferred from the Plan in May 1996 to the new Entoleter, Inc. 401(k) Savings Plan. Effective January 1, 1994, one of the Company's subsidiaries, The Morgan Group, Inc. ("Morgan"), established its own defined contribution 401(k) savings plan. The participant balances attributable to Morgan employees ($539,566), were transferred from the Plan in August 1994 to the new Morgan Group, Inc. 401(k) Savings Plan. Contributions - ------------- Eligible employees may elect to contribute, on a pre-tax basis, between 1% and 15% (between 1% and 20% prior to April 1, 1995) of their total annual compensation to the Plan up to the maximum allowed under the Internal Revenue Code ($9,500 in 1996; $9,240 in 1995 and 1994). 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, generally on or about the closing date of the Plan year. In addition, the employer 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 1996, 1995 or 1994. Lynch Corporation 401(k) Savings Plan Notes to the Financial Statements (continued) Years ended December 31, 1996, 1995 and 1994 1. Description of Plan (continued) - ---------------------------------- 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. 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 following termination of employment, total 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 their vested account balance. Investment Options - ------------------ Upon enrollment in the Plan, a participant may direct employer and participant contributions in 1% increments of the amount contributed as follows: Prior to April 1, 1995 (three investment elections) Guaranteed Investment Contract Fund - Funds are invested in unallocated guaranteed investment contracts. Equities Fund - Funds are invested in two mutual funds, the Clipper Fund (which invests primarily in common stock, convertible long-term corporate debt obligations, convertible preferred stock and warrants) and the Mutual Qualified Fund (which invests in common stocks, U.S. Government and government agency obligations, bonds, notes of reorganization and other equity securities). Lynch Corporation Stock Fund - Funds are invested in the common stock of the Company. April 1, 1995 and subsequent (six investment elections) Hancock Stable Value Fund (formerly the Guaranteed Investment Contract Fund) - Funds are invested in the following: 1) unallocated guaranteed investment contracts through Hancock and; 2) a pooled account (Fleet Stable Return Fund) which invests primarily in unallocated guaranteed investment contracts. Vanguard U.S. Treasury Fund - Funds are invested in securities backed by the full faith and credit of the U.S. Government. Lynch Corporation 401(k) Savings Plan Notes to the Financial Statements (continued) Years ended December 31, 1996, 1995 and 1994 1. Description of Plan (continued) - ---------------------------------- Vanguard Convertible Securities Fund - Funds are primarily invested in convertible securities, but may also be invested in non-convertible corporate debt, U.S. Government debt, common stocks, and money markets. Mutual Qualified Fund - Funds are invested in common stocks, U.S. Government and government agency obligations, bonds, notes of reorganization, and other equity securities. Tweedy Browne Global Value Fund - Funds are invested in domestic and foreign equities, including government and other organization debt. Lynch Corporation Stock Fund - Funds are invested in the common stock of the Company. Participants may change their investment options daily. Participant Notes Receivable - ---------------------------- Effective April 1, 1995, 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. Loan transactions are treated as a transfer between the investment fund and the loan fund. 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 in accordance with Internal Revenue Service (the "IRS") and Department of Labor (the "DOL") regulations. A participant's loan shall immediately become due and payable upon termination of employment or failure to make a principal and/or interest payment as provided in the loan agreement. 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 must distribute the assets to the participants in an amount equal to the fair value of their participants' accounts and pay any related expenses. Expenses - -------- Substantially all of the administrative expenses of the Plan were paid by the Company. 2. Significant Accounting Policies - ---------------------------------- Use of Estimates - ---------------- The preparation of the financial statements in conformity with generally accepted accounting principles 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 the Financial Statements (continued) Years ended December 31, 1996, 1995 and 1994 2. Significant Accounting Policies (continued) - ---------------------------------------------- Investment Valuation - -------------------- Investments, except for the unallocated guaranteed investment contracts, in the Plan 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. The participant notes receivable 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 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. Lynch Corporation common stock is valued at the last reported sales price on the last business day of the year. 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 as earned on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation (depreciation) reflected in the statement of changes in net assets available for benefits includes the change in the difference between fair value and the cost of investments, as well as realized gains and losses associated with the sale of investments. Reclassifications - ----------------- Certain prior year amounts have been reclassified to conform to the current year's financial statement presentation. 3. Investments - -------------- The fair value of individual investments that represent 5% or more of the Plan's net assets are as follows:
December 31 1996 1995 1994 ---------------------------------------- John Hancock Mutual Life Insurance Company Unallocated Guaranteed Investment Contracts $ 580,962 $1,167,424 $ 999,256 Fleet Stable Return Fund .................... 372,274 -- -- Clipper Fund, Inc. .......................... -- 468,971 325,143 Mutual Qualified Fund ....................... 980,660 595,114 325,298 Vanguard U.S. Treasury Fund ................. 382,210 -- -- Lynch Corporation Stock Fund ................ 338,823 262,840 111,990
Lynch Corporation 401(k) Savings Plan Notes to the Financial Statements (continued) Years ended December 31, 1996, 1995 and 1994 3. Investments (continued) - -------------------------- Tremont Advisers, Inc., an affiliate of the Company, provided investment advisory services for the Equities Fund until the dissolution of the Fund in 1996. The fees for such services were paid by the Company. 4. Contracts with Insurance Company - ----------------------------------- During 1996 and 1995, the Plan held unallocated guaranteed investment contracts with maturities in 1996 through 1999 with Hancock. Contributions from the Plan are 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 8.68%. 5. Differences Between Financial Statements and Form 5500 - --------------------------------------------------------- The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
December 31 1996 1995 1994 ----------------------------------------- Net assets available for plan benefits per the financial statements .......................................... $ 2,844,159 $ 2,727,693 $ 1,801,583 Benefits payable to participants ....................... -- (94,977) -- ----------- ----------- ----------- Net assets available for plan benefits per the Form 5500 $ 2,844,159 $ 2,632,716 $ 1,801,583 =========== =========== ===========
The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500:
December 31 1996 1995 ----------------------- Benefits paid to participants per the financial statements $ 442,847 $ 10,880 Add: Benefits payable to participants at December 31, 1996 and 1995, respectively .................... -- 94,977 Deduct: Benefits payable to participants at December 31, 1995 and 1994, respectively ........................ (94,977) -- --------- --------- Benefits paid to participants per the Form 5500 .......... $ 347,870 $ 105,857 ========= =========
Amounts allocated to withdrawn participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to year-end but not yet paid. Lynch Corporation 401(k) Savings Plan Notes to the Financial Statements (continued) Years ended December 31, 1996, 1995 and 1994 6. Income Tax Status - -------------------- On April 1, 1995, the Company implemented a prototype nonstandardized plan developed by Fleet. The Fleet prototype plan has secured a favorable opinion letter from the Internal Revenue Service ("IRS") stating that the form of the underlying prototype plan document is qualified under Section 401(a) of the Internal Revenue Code ("Code"). The Company intends to file for a determination letter. The Plan is required to operate in conformity with the Code to be a qualified plan under Section 401(a) of the Code. The Plan Administrator and management of the Company plan to take the necessary steps, if any, to maintain the Plan's qualified status. 7. Year 2000 (Unaudited) - ------------------------ The Company has developed a plan to modify its internal information technology to be ready for the year 2000 and has begun converting critical data processing systems. The project also includes determining whether third party service providers have reasonable plans in place to become year 2000 compliant. The Company currently expects the project to be substantially complete by early 1999. The Company does not expect this project to have a significant effect on operations. Supplemental Schedules ---------------------- Lynch Corporation 401(k) Savings Plan Schedule of Assets Held for Investment Purposes December 31, 1996
Description of Investment, Including Current or Identity of Issue, Borrower, Maturity Date, Rate of Interest, Par or Contract Lessor or Similar Party Maturity Value Cost Value - --------------------------------------------------------------------------------------------------------------------------------- Hancock Stable Value Fund: John Hancock Mutual Life Insurance Company Unallocated Guaranteed Group Annuity Contract Number 4551 Investment Contracts Association 239, 7.52% due May 30, 1997 $332,057 $332,057 Association 287, 5.39% due May 29, 1998 205,729 205,729 Group Annuity Contract Number 9008, 6.56% due June 30, 1999 43,176 43,176 Fleet Stable Return Fund ................... 372,274 shares 372,274 372,274 Vanguard U.S. Treasury Fund ................... 382,210 shares 382,210 382,210 Vanguard Convertible Securities Fund .......... 4,960 shares 59,999 57,683 Mutual Qualified Fund ......................... 30,202 shares 892,659 980,660 Tweedy Browne Global Value Fund ............... 4,481 shares 63,325 64,744 Lynch Corporation Stock Fund: Lynch Corporation Common Stock*............. 4,806 shares 169,125 338,823 Participant notes receivable................... Loans bear interest at 8.25% -- 71,887 Short-term investments ....................... 6,649 6,649 ----- ----- $2,527,203 $2,855,892 ========== ==========
* Indicates party-in-interest to the Plan. Lynch Corporation 401(k) Savings Plan Schedule of Assets Held for Investment Purposes December 31, 1995
Description of Investment, Including Current or Identity of Issue, Borrower, Maturity Date, Rate of Interest, Par or Contract Lessor or Similar Party Maturity Value Cost Value - --------------------------------------------------------------------------------------------------------------------------------- Hancock Stable Value Fund: John Hancock Mutual Life Insurance Company Unallocated Guaranteed Investment Contracts Group Annuity Contract Number 4551 Association 181, 8.68% due May 31, 1996 $ 513,787 $ 513,787 Association 239, 7.52% due May 30, 1997 310,277 310,277 Association 287, 5.39% due May 29, 1998 195,207 195,207 Group Annuity Contract Number 9008, 6.56% due June 30, 1999 148,153 148,153 Fleet Stable Return Fund ...................... 113,034 shares 113,034 113,034 Equities Fund: Clipper Fund, Inc. ............................ 7,721 shares 388,127 468,971 Mutual Qualified Fund ......................... 15,969 shares 411,301 474,928 Vanguard U.S. Treasury Fund....................... 21,206 shares 21,206 21,206 Vanguard Convertible Securities Fund ............. 1,346 shares 16,016 15,637 Mutual Qualified Fund ............................ 4,041 shares 126,127 120,186 Tweedy Browne Global Value Fund .................. 1,026 shares 12,879 13,282 Lynch Corporation Stock Fund: Lynch Corporation Common Stock* ............... 4,493 shares 119,681 262,840 Short-term investments .......................... 20,098 20,098 ------ ------ $2,395,893 $2,677,606
* Indicates party-in-interest to the Plan. Lynch Corporation 401(k) Savings Plan Schedule of Reportable Transactions Year ended December 31, 1996
Current Value of Asset on Purchase Selling Cost of Transaction Net Gain/ Identity of Party Involved Description of Assets Price Price Asset Date (Loss) - ----------------------------------------------------------------------------------------------------------------------------------- Category (i)--A single transaction in excess of 5% of plan assets John Hancock Mutual Life Insurance Company Guaranteed Investment Contracts 530,645 shares ............. $530,645 $ -- $530,645 $530,645 $ -- Fleet Investment Management Vanguard U.S. Treasury Fund 306,391 shares ............. 306,391 -- 306,391 306,391 -- Short-term investments 365,546 shares ............. 365,546 -- 365,546 365,546 -- 176,500 shares ............. 176,500 -- 176,500 176,500 -- 314,574 shares ............. 314,574 -- 314,574 314,574 -- 365,811 shares ............. -- 365,811 365,811 365,811 -- 323,916 shares ............. -- 323,916 323,916 323,916 -- 199,305 shares ............. -- 199,305 199,305 199,305 -- Category (iii)--A series of transactions in excess of 5% of plan assets John Hancock Mutual Life Insurance Company Guaranteed Investment Contracts 52,872 shares .............. 52,872 -- 52,872 52,872 -- 639,334 shares ............. -- 639,334 639,334 639,334 -- Fleet Stable Return Fund Fleet Investment Management 432,273 shares ............. 432,273 -- 432,273 432,273 -- 173,033 shares ............. -- 173,033 173,033 173,033 --
Lynch Corporation 401(k) Savings Plan Schedule of Reportable Transactions (continued) Year ended December 31, 1996
Current Value of Asset on Identity of Purchase Selling Cost of Transaction Net Gain/ Party Involved Description of Assets Price Price Asset Date (Loss) - ----------------------------------------------------------------------------------------------------------- Category (iii)--A series of transactions in excess of 5% of plan assets (continued) Fleet Investment Management (continued) Clipper Fund, Inc. 2 shares ................ $ 121 $ - $ 121 $ 121 $ - 7,723 shares ............ - 538,647 388,248 538,647 150,399 Mutual Qualified Fund 14,553 shares ........... 470,220 - 470,220 470,220 - 7,281 shares ............ - 234,789 206,731 234,789 28,058 Vanguard U.S. Treasury Fund 366,419 shares .......... 366,419 - 366,419 366,419 - 5,415 shares ............ - 5,415 5,415 5,415 - Lynch Corporation Stock Fund 1,205 shares ............ 80,502 - 80,502 80,502 - 892 shares .............. - 67,649 31,058 67,649 36,591 Short-term investments 1,633,947 shares ........ 1,633,947 - 1,633,947 1,633,947 - 1,677,396 shares ........ - 1,677,396 1,677,396 1,677,396 -
There were no Category (ii) or (iv) reportable transactions during 1996. "Lease Rental" and "Expenses Incurred with Transaction" columns were not applicable during 1996. Lynch Corporation 401(k) Savings Plan Schedule of Reportable Transactions Year ended December 31, 1995
Current Value of Asset on Purchase Selling Cost of Transaction Net Gain/ Identity of Party Involved Description of Assets Price Price Asset Date (Loss) - ----------------------------------------------------------------------------------------------------------------------------------- Category (i)--A single transaction in excess of 5% of plan assets Fleet Investment Management ............... Short-term investments 115,621 shares ............ $ - 115,621 115,621 115,621 $ - Category (iii)--A series of transactions in excess of 5% of plan assets John Hancock Mutual Life Insurance Company Guaranteed Investment Contracts 181,078 shares ............. 181,078 - 181,078 181,078 - 12,910 shares .............. - 12,910 12,910 12,910 - Fleet Investment Management Fleet Stable Return Fund 113,034 shares ............. 113,034 - 113,034 113,034 - Equities Fund: Mutual Qualified Fund 3,795 shares ............ 109,131 - 109,131 109,131 - 23 shares ............... - 758 595 758 163 Mutual Qualified Fund 4,048 shares ............... 126,348 - 126,348 126,348 - 7 shares ................... - 221 221 221 - Short-term investments 548,944 shares ............. 548,944 - 548,944 548,944 - 582,772 shares ............. - 582,772 582,772 582,772 -
There were no Category (ii) or (iv) reportable transactions during 1995. "Lease Rental" and "Expenses Incurred with Transaction" columns were not applicable during 1995. SIGNATURES 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: December 10, 1998 EX-23 2 CONSENT OF INDEPENDENT AUDITORS 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 September 30, 1998, with respect to the financial statements and schedules of the Lynch Corporation 401(k) Savings Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1995. /s/ ERNST & YOUNG LLP Stamford, Connecticut December 4, 1998 -----END PRIVACY-ENHANCED MESSAGE-----