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
<PAGE>
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
<TABLE>
<PAGE>
Part I - Financial Information
Item 1 - Financial Statements
LYNCH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Share Amounts)
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
------------------ -------------------
1995 1994 1995 1994
-------- -------- -------- ---------
SALES AND REVENUES:
<S> <C> <C> <C> <C>
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
========= ========= ========= =========
</TABLE>
<TABLE>
See Notes to Condensed Consolidated Financial Statements<PAGE>
LYNCH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<CAPTION>
June 30 December 31
1995 1994
(Unaudited) (A)
ASSETS --------- ---------
CURRENT ASSETS:
<S> <C> <C>
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
========= =========
<FN>
(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. <PAGE>
</TABLE>
<TABLE>
LYNCH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
<CAPTION>
Six Months Ended
June 30
-------------------
1995 1994
--------- ---------
OPERATING ACTIVITIES
<S> <C> <C>
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.<PAGE>
</TABLE>
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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
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0
0
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</TABLE>
