-----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, DcHg9K9ZiR4RdcyfiU2bbyiCP8SdNPwO3ici1oR9cmo+sfgDQGFbrF3LjRDtV5iC JrQYbO9zVHz+a347Ouv4kw== 0000061004-99-000016.txt : 19990630 0000061004-99-000016.hdr.sgml : 19990630 ACCESSION NUMBER: 0000061004-99-000016 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990629 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: 99655754 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, 1998 [ ] 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 Lynch Corporation 401(k) Savings Plan Audited Financial Statements and Supplemental Schedules Years ended December 31, 1998 and 1997
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.................4 Notes to Financial Statements..............................................6 Supplemental Schedules Line 27a-Schedule of Assets Held for Investment Purposes..................11 Line 27d-Schedule of Reportable Transactions..............................12
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, 1998 and 1997, 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, 1998 and 1997, 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 financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1998, and reportable transactions for the year then ended, are presented for purposes of additional analysis and are not a required part of the financial statements but are 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. These supplemental schedules are the responsibility of the Plan's management. 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 the changes in net assets available for benefits of each fund. The supplemental schedules and Fund Information have been subjected to auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Ernst & Young LLP Stamford, Connecticut June 21, 1999 Lynch Corporation 401(k) Savings Plan Statement of Net Assets Available for Benefits, With Fund Information December 31, 1998
Fund Information -------------------------------------------------------------- Galaxy Hancock Stable U.S. Mutual Mutual Value Fund Treasury Qualified Discovery Fund Fund Fund -------------------------------------------------------------- Assets Investments at contract value: John Hancock Mutual Life Insurance Company: Unallocated Guaranteed Investment Contracts ......................... $ 49,027 Investments at fair value: Fleet Investment Management: Fleet Stable Asset Fund ............. 936,886 Mutual Qualified Fund ............... $ 1,077,224 Galaxy U.S. Treasury Fund ........... $ 322,504 Mutual Discovery Fund ............... $ 229,831 Lynch Corporation Common Stock ...... East/West Communications Inc. Class A Common Stock ...................... Participant notes receivable ......... Short-term investments ................ 34,785 ---------- ---------- ---------- ---------- Total investments ...................... 1,020,698 322,504 1,077,224 229,831 Receivables: Participants' contributions ......... 627 516 1,166 59 Employer's contribution ............. 1,390 873 2,266 233 Other ............................... 5,647 -- 113 -- ---------- ---------- ---------- ---------- Total receivables ...................... 7,664 1,389 3,545 292 ---------- ---------- ---------- ---------- Total assets ........................... 1,028,362 323,893 1,080,769 230,123 ---------- ---------- ---------- ---------- Liabilities Excess contributions payable ........... (2,165) (591) (2,426) (576) Other liabilities ...................... (372) -- -- -- ---------- ---------- ---------- ---------- Total liabilities ...................... (2,537) (591) (2,426) (576) ---------- ---------- ---------- ---------- Net assets available for benefits ...... $ 1,025,825 $ 323,302 $ 1,078,343 $ 229,547 =========== =========== =========== =========== Lynch Corporation 401(k) Savings Plan Statement of Net Assets Available for Benefits, With Fund Information December 31, 1998 (Continued) Fund Information -------------------------------------------- Lynch Corporation Loan Stock Fund Fund Total -------------------------------------------- Assets Investments at contract value: John Hancock Mutual Life Insurance Company: Unallocated Guaranteed Investment Contracts ......................... $ 49,027 Investments at fair value: Fleet Investment Management: Fleet Stable Asset Fund ............. 936,886 Mutual Qualified Fund ............... 1,077,224 Galaxy U.S. Treasury Fund ........... 322,504 Mutual Discovery Fund ............... 229,831 Lynch Corporation Common Stock ...... $ 355,179 355,179 East/West Communications Inc. Class A Common Stock ...................... 7,557 7,557 Participant notes receivable .......... $ 79,909 79,909 Short-term investments ................ 57,360 92,145 ---------- ---------- ---------- Total investments ...................... 420,096 79,909 3,150,262 ---------- ---------- ---------- Receivables: Participants' contributions ......... 162 -- 2,530 Employer's contribution ............. 517 -- 5,279 Other ............................... 80 -- 5,840 --------- ---------- ---------- Total receivables ...................... 759 -- 13,649 --------- ---------- ---------- Total assets ........................... 420,855 79,909 3,163,911 --------- ---------- ---------- Liabilities Excess contributions payable ........... (1,678) -- (7,436) Other liabilities ...................... -- -- (372) --------- ---------- ---------- Total liabilities ...................... (1,678) -- (7,808) --------- ---------- ---------- Net assets available for benefits ...... $ 419,177 $ 79,909 $3,156,103 ========= ========== ==========
See accompanying notes. Lynch Corporation 401(k) Savings Plan Statement of Net Assets Available for Benefits, With Fund Information December 31, 1997
Fund Information --------------------------------------------------------------- Hancock Stable Galaxy Value Fund U.S. Mutual Mutual Treasury Qualified Discovery Fund --------------------------------------------------------------- Assets Investments at contract value: John Hancock Mutual Life Insurance Company: Unallocated Guaranteed Investment Contracts $ 262,826 Invewtment at fair value: Fleet Investment Management: Fleet Stable Asset Fund ................... 723,344 Mutual Qualified Fund ..................... $1,023,054 Galaxy U.S. Treasury Fund ................. $ 329,610 Mutual Discovery Fund ..................... $ 145,473 Lynch Corporation Common Stock ............ Participant notes receivable ................ Short-term investments ...................... 21,820 ---------- ---------- ---------- ---------- Total investments ............................ 1,007,990 329,610 1,023,054 145,473 Receivables: Participants' contributions ............... 4,001 597 5,644 737 Employer's contribution ................... 6,979 3,557 7,693 1,304 Other ..................................... -- -- -- -- ---------- ---------- ---------- ---------- Total receivables ............................ 10,980 4,154 13,337 2,041 ---------- ---------- ---------- ---------- Total assets ................................. 1,018,970 333,764 1,036,391 147,514 ---------- ---------- ---------- ---------- Liabilities Excess contributions payable ................. (17) -- (644) -- Other liabilities ............................ (173) -- -- -- ---------- ---------- ---------- ---------- Total liabilities ............................ (190) -- (644) -- ---------- ---------- ---------- ---------- Net assets available for benefits ............ $ 1,018,780 $ 333,764 $ 1,035,747 $ 147,514 ========== ========== ========== ========== Lynch Corporation 401(k) Savings Plan Statement of Net Assets Available for Benefits, With Fund Information December 31, 1997 (Continued) Fund Information -------------------------------------------- Lynch Corporation Loan Stock Fund Fund Total -------------------------------------------- Assets Investments at contract value: John Hancock Mutual Life Insurance Company: Unallocated Guaranteed Investment Contracts: $ 262,826 Invewtment at fair value: Fleet Investment Management: Fleet Stable Asset Fund ................... 723,344 Mutual Qualified Fund ..................... 1,023,054 Galaxy U.S. Treasury Fund ................. 329,610 Mutual Discovery Fund ..................... 145,473 Lynch Corporation Common Stock ............ $ 418,154 418,154 Participant notes receivable ................ $ 90,118 90,118 Short-term investments ...................... 12,119 33,939 ---------- ---------- ---------- Total investments ............................ 430,273 90,118 3,026,518 Receivables: Participants' contributions ............... 1,333 -- 12,312 Employer's contribution ................... 1,953 -- 21,486 Other ..................................... 4,729 -- 4,729 ---------- ---------- ---------- Total receivables ............................ 8,015 -- 38,527 ---------- ---------- ---------- Total assets ................................. 438,288 90,118 3,065,045 ---------- ---------- ---------- Liabilities Excess contributions payable ................. (72) -- (733) Other liabilities ............................ -- -- (173) ---------- ---------- ---------- Total liabilities ............................ (72) -- (906) ---------- ---------- ---------- Net assets available for benefits ............ $ 438,216 $ 90,118 $3,064,139 ========== ========== ==========
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, 1998
Fund Information ---------------------------------------------------------- Galaxy Hancock U.S. Mutual Mutual Stable Value Treasury Qualified Discovery Fund Fund Fund Fund ---------------------------------------------------------- Additions: Investment income: Net depreciation in fair value of investments ... $ -- $ -- $ (102,850) $(29,144) Interest ........................................ 8,150 14,176 -- -- Dividends ....................................... 49,768 -- 104,944 16,310 ---------- ---------- ---------- ---------- 57,918 14,176 2,094 (12,834) Contributions: Participants .................................... 73,507 47,275 118,888 24,110 Employer ........................................ 6,761 3,773 7,004 1,327 ---------- ---------- ---------- ---------- 80,268 51,048 125,892 25,437 ---------- ---------- ---------- ---------- Total additions ...................................... 138,186 65,224 127,986 12,603 Deductions: Benefits paid to participants ..................... (92,830) (30,119) (72,211) (10,574) Excess contributions and related investment income (867) (521) (1,293) (576) ---------- ---------- ---------- ---------- Total deductions ..................................... (93,697) (30,640) (73,504) (11,150) ---------- ---------- ---------- ---------- Net increase (decrease) prior to transfers ........... 44,489 34,584 54,482 1,453 Transfers (from) to other funds ...................... (37,444) (45,046) (11,886) 80,580 ---------- ---------- ---------- ---------- Net increase (decrease) .............................. 7,045 (10,462) 42,596 82,033 Net assets available for benefits at beginning of year 1,018,780 333,764 1,035,747 147,514 ---------- ---------- ---------- ---------- Net assets available for benefits at end of year ..... $ 1,025,825 $ 323,302 $ 1,078,343 $ 229,547 ========== ========== ========== ========= Lynch Corporation 401(k) Savings Plan Statement of Changes in Net Assets Available for Benefits, With Fund Information Year ended December 31, 1998 (Continued) Fund Information ---------------------------------------- Lynch Corporation Loan Stock Fund Fund Total ---------------------------------------- Additions: Investment income: Net depreciation in fair value of investments ..... $ (55,922) $ -- $ (187,916) Interest ........................................ 2,962 6,805 32,093 Dividends ....................................... -- -- 171,022 ---------- ---------- ---------- (52,960) 6,805 15,199 Contributions: Participants .................................... 37,027 -- 300,807 Employer ........................................ 1,946 -- 20,811 ---------- ---------- ---------- 38,973 -- 321,618 ---------- ---------- ---------- Total additions ...................................... (13,987) 6,805 336,817 Deductions: Benefits paid to participants ..................... (12,603) (21,815) (240,152) Excess contributions and related investment income (1,444) -- (4,701) ---------- ---------- ---------- Total deductions ..................................... (14,047) (21,815) (244,853) ---------- ---------- ---------- Net increase (decrease) prior to transfers ........... (28,034) (15,010) 91,964 Transfers (from) to other funds ...................... 8,995 4,801 -- ---------- ---------- ---------- Net increase (decrease) .............................. (19,039) (10,209) 91,964 Net assets available for benefits at beginning of year 438,216 90,118 3,064,139 ---------- ---------- ---------- Net assets available for benefits at end of year ..... $ 419,177 $ 79,909 $ 3,156,103 =========== ========== ==========
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, 1997
Fund Information ---------------------------------------------------------------------- Vanguard Galaxy Vanguard Hancock U.S. U.S. Convertible Mutual Stable Value Treasury Treasury Securities Qualified Fund Fund Fund Fund Fund ------------------------------------------------------------------------ Additions: Investment income: Net appreciation (depreciation) in fair value $ $ $ $ (1,021) $ 106,251 of investments ............. -- -- -- -- Interest ..................... 23,648 -- -- -- -- Dividends .................... 33,667 6,525 12,016 544 102,250 -------- -------- -------- -------- -------- 57,315 6,525 12,016 (477) 208,501 Contributions: Participants ................. 77,746 6,659 34,709 10,682 124,470 Employer ..................... 7,479 -- 3,837 -- 8,463 -------- -------- -------- -------- -------- 85,225 6,659 38,546 10,682 132,933 -------- -------- -------- -------- -------- Total additions ................... 142,540 13,184 50,562 10,205 341,434 Deductions: Benefits paid to participants .. (91,020) (39,554) (42,470) (1,468) (308,678) Excess contributions and related investment income.............. -- -- -- -- (386) -------- -------- -------- -------- -------- Total deductions .................. (91,020) (39,554) (42,470) (1,468) (309,064) -------- -------- -------- -------- -------- Net increase (decrease) prior to transfers ..................... 51,520 (26,370) 8,092 8,737 32,370 Transfers (from) to other funds ... 27,185 (355,993) 325,672 (66,860) 42,830 -------- -------- -------- -------- -------- Net increase (decrease) ........... 78,705 (382,363) 333,764 (58,123) 75,200 Net assets available for benefits at beginning of year ........... 940,075 382,363 -- 58,123 960,547 -------- -------- -------- -------- -------- Net assets available for benefits at end of year ................. $ 1,018,780 $ -- $ 333,764 $ -- $ 1,035,747 ========= ========= ========= ========= ========== Lynch Corporation 401(k) Savings Plan Statement of Changes in Net Assets Available for Benefits, With Fund Information Year ended December 31, 1997 (Continued) Fund Information ---------------------------------------------------------------------- Tweedy Browne Mutual Lynch Global Discovery Corporation Loan Value Fund Fund Stock Fund Fund Total ---------------------------------------------------------------------- Additions: Additions: Investment income: Net appreciation (depreciation) in fair value $ 5,662 $ 3,175 $ 56,541 $ -- $ 170,608 of investments ............. Interest ..................... -- -- 883 6,025 30,556 Dividends .................... -- 14,808 504 -- 170,314 --------- --------- --------- --------- --------- 5,662 17,983 57,928 6,025 371,478 Contributions: Participants ................. 9,873 20,062 39,111 -- 323,312 Employer ..................... -- 1,534 2,373 -- 23,686 --------- --------- --------- --------- --------- 9,873 21,596 41,484 -- 346,998 --------- --------- --------- --------- --------- Total additions ................... 15,535 39,579 99,412 6,025 718,476 Deductions: Benefits paid to participants .. -- (3,780) (8,073) (2,680) (497,723) Excess contributions and related investment income.......... (387) -- -- -- (773) --------- --------- --------- --------- --------- Total deductions .................. (387) (3,780) (8,073) (2,680) (498,496) --------- --------- --------- --------- --------- Net increase (decrease) prior to transfers ..................... 15,148 35,799 91,339 3,345 219,980 Transfers (from) to other funds ... (77,353) 111,715 (22,082) 14,886 -- --------- --------- --------- --------- --------- Net increase (decrease) ........... (62,205) 147,514 69,257 18,231 219,980 --------- --------- --------- --------- --------- Net assets available for benefits at beginning of year ........... 62,205 -- 368,959 71,887 2,844,159 --------- --------- --------- --------- --------- Net assets available for benefits at end of year ................. $ -- $ 147,514 $ 438,216 $ 90,118 $ 3,064,139 =========== =========== =========== =========== ===========
See accompanying notes. Lynch Corporation 401(k) Savings Plan Notes to Financial Statements Years ended December 31, 1998 and 1997 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"). 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 1998 and $9,500 in 1997). 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 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 1998 or 1997. 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, 1998 and 1997 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. Effective April 11, 1997, the Fleet Stable Return Fund changed its name to the Fleet Stable Asset Fund (part of the Hancock Stable Value Fund investment option). In connection with the name change, the assets of the Fleet Stable Return Fund were sold and repurchased into the Fleet Stable Asset Fund. In April 1997, funds invested by participants in the Vanguard U.S. Treasury Fund and the Vanguard Convertible Securities Fund were transferred to the Galaxy U.S. Treasury Fund and all funds invested in the Tweedy Browne Global Value Fund were transferred to the Mutual Discovery Fund. During 1997, for each share of Lynch Corporation common stock held by the Lynch Corporation Stock Fund, a stock dividend equal to one share of East/West Communications Inc. (an affiliate of the Company) Class A Common Stock was declared and issued. The total stock dividend paid to the Lynch Corporation Stock Fund was 5,038 shares. Participant Notes Receivable 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 the Internal Revenue Service (the "IRS") and Department of Labor ("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 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 administrative expenses of the Plan were paid by the Company. Lynch Corporation 401(k) Savings Plan Notes to Financial Statements (continued) Years ended December 31, 1998 and 1997 2. Significant Accounting Policies Use of Estimates The preparation of 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. Reclassifications Certain prior year amounts were reclassified to conform to current year presentation. 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. 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 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. Lynch 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. 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. 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 the realized gains and losses associated with the sale of investments. Lynch Corporation 401(k) Savings Plan Notes to Financial Statements (continued) Years ended December 31, 1998 and 1997 3. Investments The fair value of individual investments that represent 5% or more of the Plan's net assets are as follows:
December 31 1998 1997 ------------------------------------- John Hancock Mutual Life Insurance Company: Unallocated Guaranteed Investment Contracts ................... -- $ 262,826 Fleet Stable Asset Fund ................... $ 936,886 723,344 Mutual Qualified Fund ..................... 1,077,224 1,023,054 Mutual Discovery Fund ..................... 229,831 Galaxy U.S. Treasury Fund ................. 322,504 329,610 Lynch Corporation Common Stock ............ 355,179 418,154
4. Contracts with Insurance Company During 1998 and 1997, the Plan held unallocated guaranteed investment contracts with maturities in 1997 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 7.52%. The underlying assets within the contract are restricted solely for administrative expense and benefit payments made by the Plan. 5. Income Tax Status The Plan intends to apply 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"). The Plan Administrator has indicated that it will take the necessary steps, if any, to maintain the Plan's qualified status. Lynch Corporation 401(k) Savings Plan Notes to Financial Statements (continued) Years ended December 31, 1998 and 1997 6. Year 2000 Issue (unaudited) The Company has determined that it will be necessary to take certain steps in order to ensure that the Plan's information systems are prepared to handle year 2000 dates. The Company's focus will include both internal systems and third party service providers. With regard to internal systems that must be modified or replaced to function properly, both internal and external resources are being utilized to replace or modify existing software applications, and test the software and equipment for the year 2000 modifications. The Company has substantially completed this effort. Costs associated with modifying software and equipment are not significant and will be paid by the Company. In addition, Plan management established formal communications with its third party service providers to determine that they have developed plans to address their own year 2000 problems as they relate to the Plan's operations. All third party service providers have indicated that they will be year 2000 compliant. If modification of data processing systems of either the Plan, the Company, or its service providers are not completed timely, the year 2000 problem could have a material impact on the operations of the Plan. Plan management has not developed a contingency plan, because they are confident that all systems will be year 2000 ready. Supplemental Schedules Lynch Corporation 401(k) Savings Plan EIN-38-1799862 Plan-004 Line 27a-Schedule of Assets Held for Investment Purposes December 31, 1998
Description of Investment, Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Par or Current or Lessor or Similar Party Maturity Value Cost Contract Value - --------------------------------------------------------------------------------------------------------------------------------- Hancock Stable Value Fund: John Hancock Mutual Life Insurance Company* Unallocated Guaranteed Investment Contracts.................... Group Annuity Contract Number 9008, 6.56% due June 30, 1999 $ 49,027 $ 49,027 Fleet Stable Asset Fund* ...................................... 93,689 shares 936,886 936,886 Galaxy U.S. Treasury Fund ........................................ 322,504 shares 322,504 322,504 Mutual Qualified Fund ............................................ 65,445 shares 1,081,062 1,077,224 Mutual Discovery Fund ............................................ 13,308 shares 254,065 229,831 Lynch Corporation Stock Fund: Lynch Corporation Common Stock* ............................... 5,038 shares 196,421 355,179 East/West Communications Inc. Class A Common Stock* ........... 5,038 shares 504 7,557 Participant notes receivable ..................................... Loans bear interest between 8.25% and 8.5% -- 79,909 Short-term investments .......................................... 92,145 92,145 ----------- ---------- $2,932,614 $3,150,262 =========== ==========
* Indicates party-in-interest to the Plan. Lynch Corporation 401(k) Savings Plan EIN-38-1799862 Plan-004 Line 27d-Schedule of Reportable Transactions Year ended December 31, 1998
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 the current value of plan assets John Hancock Mutual Life Insurance Company* Guaranteed Investment Contracts 220,592 shares ............. -- $220,592 $220,592 $220,592 $ -- Fleet Investment Management* Short-term investments 220,592 shares ............. $220,592 -- 220,592 220,592 -- Short-term investments 221,482 shares ............. -- 221,482 221,482 221,482 -- Fleet Stable Asset Fund 22,148 shares .............. 221,482 -- 221,482 221,482 -- Category (iii)--A series of transactions in excess of 5% of plan assets John Hancock Mutual Life Insurance Company* Guaranteed Investment Contracts 6,793 shares ............... $ 6,793 -- $ 6,793 $ 6,793 $ -- 220,592 shares ............. -- $220,592 220,592 220,592 -- Fleet Investment Management* Fleet Stable Asset Fund 26,590 shares .............. 265,892 -- 265,892 265,892 -- 5,235 shares ............... -- 52,350 52,350 52,350 --
Lynch Corporation 401(k) Savings Plan EIN-38-1799862 Plan-004 Line 27d-Schedule of Reportable Transactions (continued) Year ended December 31, 1998
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 (iii)--A series of transactions in excess of 5% of the current value of plan assets (continued) Fleet Investment Management* (continued) Galaxy U.S. Treasury Fund 97,934 shares ....... $ 97,934 -- $ 97,934 $ 97,934 $ -- 105,040 shares ...... -- $105,040 105,040 105,040 -- Mutual Qualified Fund 16,069 shares ....... 284,159 -- 284,159 284,159 -- 6,898 shares ........ -- 127,139 113,349 127,139 13,790 Mutual Discovery Fund 7,359 shares ........ 144,450 -- 144,450 144,450 -- 1,752 shares ........ -- 30,948 33,794 30,948 (2,846) Short-term investments 415,104 shares ..... 415,104 -- 415,104 415,104 -- 356,898 shares ..... -- 356,898 356,898 356,898 --
There were no Category (ii) or (iv) reportable transactions during 1998. "Lease Rental" and "Expenses Incurred with Transaction" columns were not applicable during 1998. * Indicates party-in-interest to the Plan. 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: June 29, 1999 EX-23 2 CONSENT OF ERNST & YOUNG LLP Exhibit 23 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, 1999, 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, 1998. /s/ ERNST & YOUNG LLP Stamford, Connecticut June 28, 1999 -----END PRIVACY-ENHANCED MESSAGE-----