SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A(7)
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 4, 1995
LYNCH CORPORATION
Indiana 1-106 38-1799862
(State or other jurisdiction (Commission (IRS Employer
of Corporation) file Number) Identification No.)
8 Sound Shore Drive, Suite 290, Greenwich, Connecticut 06830
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 629-3333
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements and Exhibits
This amends Form 8-K/A(1) filed by the Registrant on January 4, 1996,
and filed by the Registrant with respect to an event occurring on October 4,
1995. The following pro forma financial information are contained herein:
(b) PRO FORMA UNAUDITED FINANCIAL INFORMATION
1. Pro forma Combined Condensed Balance Sheet as of September 30,
1995
2. Notes to Pro Forma Combined Condensed Balance Sheet
- Spinnaker Industries, Inc.
3. Pro Forma Combined Condensed Statements of Income for the Nine
Months ended September 30, 1995 and the Year Ended December 31,
1995
4. Notes to Pro Forma Combined Condensed Statements of Income
- Spinnaker Industries, Inc.
- Lynch Corporation
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 hereunto duly authorized.
Lynch Corporation
S/ROBERT E. DOLAN
ROBERT E. DOLAN
Date: May 14, 1996
<PAGE>
LYNCH CORPORATION
PROFORMA FORMA COMBINED CONDENSED BALANCE SHEET AND STATEMENTS OF INCOME
The following unaudited pro forma combined condensed balance sheet and
statements of income have been prepared from the historical results of the
operations of both Lynch Corporation ("Lynch"), Spinnaker Industries, Inc.
("Spinnaker"), as of January 4, 1996, its 83.2% owned subsidiary and Central
Products Company ("CPC"), a business unit of Unisource Worldwide, Inc. The
pro forma balance is presented as if the acquisition occurred as of September
30, 1995. The pro forma statements of income reflect the combined revenues
and expenses of Lynch and CPC as if the acquisitions had been consummated at
the beginning of the period presented. The pro forma statement of income for
the nine months ended September 30, 1995, includes the results of operations
of Central Products Company for the period from January 1, 1995 to September
30, 1995. The allocations of purchase price to assets acquired and
liabilities assumed, including related amortization, are based on preliminary
estimates and may be adjusted when the final fair value allocations are
determined. Included in the operations of Lynch for the year ended December
31, 1994 are the pro forma results of Brown-Bridge Industries, Inc.,
Spinnaker's 81% owned subsidiary, acquired on September 19, 1994, and
USTC-Kansas, Inc., Lynch's wholly owned subsidiary, acquired on September 26,
1994 as if these acquisitions occurred as of January 1, 1994.
These statement should be read in conjunction with the historical financial
statements of CPC included in the Form 8-K/A(1) on January 4, 1996, the
historical financial statements of Lynch, included in its forms 10-K and 10-Q
filed on March 30, 1995 and November 14, 1995, respectively, including the
notes thereto, the historical financial statements of Brown-Bridge, the pro
forma financial statements of Lynch giving effect to the Brown-Bridge
acquisition included in Lynch's Form 8-K/A(1) as of September 19, 1994, and
the notes to these unaudited pro forma combined condensed balance sheet and
statements of income and the historical financial statements of USTC-Kansas
Inc. acquisition included in Lynch's Form 8-K/A(2) of September 26, 1994.
The pro forma combined results are not necessarily indicative of the combined
results of future operations.
<TABLE>
<PAGE>
LYNCH CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<CAPTION>
Lynch
Corporation Spinnaker
& Subs CPC Adjustments Pro Forma
---------- ---------- ---------- ----------
CURRENT ASSETS:
<S> <C> <C> <C> <C>
Cash and cash
equivalents $ 16,019 $ 450 $ 16,469
Marketable Securities 11,327 11,327
Receivables, net 45,582 11,611 57,193
Inventories 22,110 13,876 1,943(1) 37,929
Deferred income taxes 2,872 2,872
Other current assets 7,616 1,232 536(2) 9,384
-------- -------- -------- --------
Total Current Assets $105,526 27,169 2,479 135,174
Property, Plant &
Equipment, net 67,441 21,659 15,091(3) 104,191
Investment in & advances to
affiliated companies 3,498 3,498
Acquisition intangibles 25,049 28,865(4) 53,914
Other assets 5,057 213 1,900(5) 7,170
-------- -------- -------- --------
Total Assets $206,571 $49,041 $48,335 $303,947
======== ======== ======== ========
CURRENT LIABILITIES:
Notes payable to banks $ 7,223 $ 7,223
Trade accounts payable 17,725 5,829 23,554
Accrued liabilities 25,755 2,314 700(8) 28,769
Current maturities of
long-term debt 25,528 42,483(7) 68,011
-------- -------- -------- --------
Total current
liabilities 76,231 8,143 43,183 127,557
Long-term debt 73,639 41,250(9) 114,889
Deferred income taxes 10,397 4,800(8) 15,197
Minority interests 12,130 12,130
Shareholders' Equity:
Common stock 5,139 40,898 (40,898)(10) 5,139
Additional paid-
in capital 8,106 8,106
Retained earnings 22,205 22,205
Treasury stock (1,276) (1,276)
-------- -------- -------- --------
Total shareholders'
equity 34,174 40,896 (40,896) 34,174
-------- -------- -------- --------
Total liabilities and
shareholder' equity $206,571 $49,041 $48,335 $303,947
======= ======== ======== ========
</TABLE>
SPINNAKER INDUSTRIES, INC.
NOTES TO PRO FORMA COMBINED
CONDENSED BALANCE SHEET
(1) Inventory valuation adjustment to reflect inventory at estimated fair
value versus historical cost which was based on the last-in, first-out
method.
(2) Purchase price adjustment due from seller.
(3) Valuation adjustment of property, plant and equipment based on
preliminary appraisals. Includes on a pro forma basis a warehouse
facility leased by CPC from seller that is under a separate contract to
be acquired by Spinnaker in January 1996 for $1,750,000.
(4) Excess of purchase price, including estimated acquisition costs of
$700,000, over the estimated fair value of net assets acquired.
(5) Deferred financing costs.
(6) Acquisition costs payable.
(7) Current maturities of debt incurred in connection with acquisition.
Includes $25,000,000 due under subordinated promissory note due to
seller with maturity of December 1999, but which may be put to the
Company four months after the acquisition. (Terms of the acquisition
indebtedness are more fully described in Form 8-K of October 4, 1995.)
(8) Deferred tax liability for differences between the book and tax basis
of acquired assets and assumed liabilities.
(9) Long-term debt incurred to finance acquisition includes $1,750,000 to
be incurred in connection with the acquisition of a warehouse facility
from the seller in January 1996.
(10) Elimination of equity of acquired company.
<TABLE>
<PAGE>
LYNCH CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<CAPTION>
Lynch
Corporation Spinnaker Lynch
& Subs CPC Adjusts. Adjusts. Pro Forma
-------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
SALES AND REVENUES:
Multimedia $ 17,503 $ 17,503
Services 91,608 91,608
Manufacturing 119,097 91,269 210,366
-------- -------- -------- -------- --------
228,208 91,269 0 0 319,477
-------- -------- -------- -------- --------
Costs and Expenses:
Multimedia 13,066 13,066
Services 82,598 82,598
Manufacturing 93,687 75,071 (2,034)(A) 166,724
Selling and
Administrative 25,782 11,731 (1,475)(B) 500(a) 36,038
-------- -------- -------- -------- --------
215,133 86,820 (3,509) 0 298,428
------- -------- -------- -------- --------
Operating profit 13,075 4,467 3,509 0 21,051
Other income
Investment income 2,197 2,197
Interest income (6,726) (6,612) 500 (12,638)
Share of operations
of Affiliated
Companies (60) (60)
Gain on sales
of subsidiary
and Affiliate stock 59 59
-------- -------- -------- -------- --------
INCOME BEFORE INCOME
TAXES AND MINORITY
INTERESTS 8,545 4,467 (3,103) 500 10,409
Provision for
income taxes (3,383) (1,768) 1,209(10) (170)(b) (4,112)
Minority interests (1,588) (135)(c) (1,723)
-------- -------- -------- -------- --------
NET INCOME 3,674 2,699 (1,894) 195 4,574
======== ======== ======== ======== ========
Weighted average
shares and share
equivalents 1,409,000 1,409,000
Earnings per share $ 2.54 $ 3.25
(A) Adjustment Number: 3 (1,425)
4 (425)
5 (184)
------
(2,034)
======
(B) Adjustment Number: 3 (975)
5 (32)
6 865
7 (1,333)
------
(1,475)
======
(C) Adjustment Number: 8 (500)
9 (6,112)
------
(6,612)
======
</TABLE>
<TABLE>
LYNCH CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<CAPTION>
Pro forma
Lynch
Corporation Spinnaker Lynch
& Subs(d) CPC Adjusts. Adjusts. Pro Forma
-------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
SALES AND REVENUES:
Multimedia $ 22,518 $ 22,518
Services 101,880 101,880
Manufacturing 131,148 108,842 239,990
-------- -------- -------- -------- --------
255,546 108,842 0 0 364,388
-------- -------- -------- -------- --------
Costs and Expenses:
Multimedia 16,453 16,453
Services 92,155 92,155
Manufacturing 108,097 90,239 (2,137)(A) 196,199
Selling and
Administrative 24,292 13,924 (2,584)(B) 35,632
-------- -------- -------- -------- --------
240,997 104,163 (4,721) 0 340,439
-------- -------- -------- -------- --------
14,549 4,679 4,721 0 23,949
OPERATING PROFIT
Other income (expense):
Investment income 2,332 2,332
Interest expense (8,799) (8,322)(C) 500(a) (16,621)
Share of operations
of Affiliated
Companies (301) (301)
Gain on sales of
subsidiary and
affiliate stock 190 190
-------- -------- -------- -------- --------
INCOME BEFORE INCOME
TAXES, MINORITY
INTERESTS AND EXTRA-
ORDINARY ITEM 7,971 4,679 (3,601) 500 9,549
Provision for
income taxes (3,124) (1,825) 1,334 (10) (170)(b) (3,785)
Minority interests (1,685) (99)(c) (1,784)
-------- -------- -------- -------- --------
INCOME BEFORE EXTRA-
ORDINARY ITEM 3,162 2,854 (2,267) 231 3,980
======== ======== ======== ======== ========
Weighted average
shares and share
equivalents 1,337,000 1,337,000
Income before extra-
ordinary item:
Primary E.P.S. $ 2.37 $ 2.98
Fully diluted E.P.S. $ 2.22 $ 2.72
(A) Adjustment Number: 3 (1,900)
4 236
5 (473)
------
(2,137)
======
(B) Adjustment Number: 3 (1,300)
5 (83)
6 1,150
7 (2,351)
------
(2,584)
======
(C) Adjustment Number: 8 (500)
9 (7,822)
------
(8,322)
======
</TABLE>
SPINNAKER INDUSTRIES, INC.
NOTES TO PRO FORMA COMBINED STATEMENTS OF INCOME
(1) The historical financial statement of Spinnaker for the year ended
December 31, 1994 include on a pro forma basis, the results of
operation of Spinnaker's 81% owned subsidiary, Brown-Bridge Industries,
Inc., for The period from January 1, 1994 through September 19, 1994
(date of acquisition of Brown-Bridge) as if it were acquired as of
January 1, 1994. Included in Spinnaker's results of operations, are
$84,470,000 of net sales and $909,000 of net income related to Brown-
Bridge for such period on a pro form basis.
(2) The pro forma income statements for the year ended December 31, 1994
reflect historical financial statement of CPC for its fiscal year ended
September 30, 1994. The pro forma income statement for the nine months
period ended September 30,1995, reflect the results of CPC for the
period ended January 1, 1995 to September 30, 1995.
(3) Operating cost of Linden plant which was closed by seller in 1995 and
was not acquired. Sales previously supplied by the Linden plant will
be fulfilled from the acquired facilities.
(4) Adoption of the first-in, first-out method of inventory valuation from
The last-in, first-out (LIFO) method.
(5) Depreciation adjustment on accrued plant, property and equipment,
including depreciation of The leased facility to be purchased from
seller.
(6) Amortization of good will over a period of 25 years.
(7) Reduction of management and royalty fees and warehouse rentals paid by
CPC to its parent.
(8) Guaranty fee payable to Spinnaker's parent (Lynch Corporation) in
connection with acquisition indebtedness. Lynch owns 83% of
Spinnaker's outstanding stock and has agreed to guarantee a $25 million
note payable to Alco for a four month period at .5% of The principal
amount per month ($125,000 per month).
(9) Interest expense and amortization of deferred financing fees on deb
incurred in connection with the acquisition. Approximately $52 million
of The debt bears interest at a floating rate. A 1% change in The
index would increase (decrease) interest expense $520,000 on an
annualized basis.
(10) Tax effect on a pro forma combined earnings at Spinnaker's effective
rate.
<PAGE>
LYNCH CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA
COMBINED CONDENSED
STATEMENT OF INCOME
(a) To reverse guarantee fee recorded by Spinnaker.
(b) To recorded tax effect on (a).
(c) To record a minority interest effect of pro forma adjustments to
Spinnaker's Financial Statements.
(d) The historical financial statements of Lynch Corporation for the year
ended December 31,1994, included on a pro forma basis of the results of
operations of Brown-Bridge Industries for the period from January 1,
1994 through September 19, 1994 (date of acquisition of Brown-Bridge)
and USTC-Kansas, Inc. for the period from January 1, 1994 through
September 26, 1994 (date of acquisition of USTA-Kansas, Inc.)as if they
were acquired on January 1, 1994. See attached Pro Forma Combined
Condensed Statement of Income.
<TABLE>
<PAGE>
LYNCH CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED STATEMENT ON INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<CAPTION>
ProForma
Lynch Note(1) Note (1) Note(1) Note(2) Lynch
Corp. Brown- Spinnaker Lynch USTA Note(2) Corp.
& Subs Bridge Adjusts. Adjusts. Kansas Adjusts. & Subs
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
SALES AND REVENUES:
Multimedia $20,144 $2,374 $22,518
Services 101,880 101,880
Manufacturing 66,678 $64,470 131,148
------- ------- ------- ------- ------- ------- -------
188,702 64,470 0 0 2,374 0 255,546
Costs and Expenses:
Multimedia 14,259 2,111 83 16,453
Services 92,155 92,155
Manufacturing 50,044 58,779 (726) 108,097
Selling and
administrative 21,449 3,443 (600) 24,292
------- ------- ------- ------- ------- ------ -------
177,907 62,222 (1,326) 0 2,111 83 240,997
------- ------- ------- ------- ------- ------ -------
OPERATING PROFIT 10,795 2,248 1,326 0 263 (83) 14,549
Other income
(expense):
Investment income 2,446 (93) (35) 75 (61) 2,332
Interest expense (6,526) (1,666) 126 (660) (73) (8,799)
Share of operations
of affiliated
companies (301) (301)
Gain on sales of
subsidiary and
affiliate stock 190 190
------- ------- ------- ------- ------- ------ -------
INCOME BEFORE INCOME TAXES,
MINORITY INTERESTS
AND EXTRA-
ORDINARY ITEM 6,604 2,248 (433) 91 (322) (217) 7,971
Provision for
income taxes (2,652) (917) 260 (31) 216 (3,124)
Minority interests (1,360) (249) (76) (1,685)
------- ------- ------- ------- ------- ------- -------
INCOME BEFORE EXTRA-
ORDINARY ITEM $2,592 $1,331 ($422) ($16) ($322) ($1) $3,162
Weighted average
shares and share
equivalents 1,337,000 1,337,000
Income before extra-
ordinary item:
Primary E.P.S. $ 1.94 $2.37
Fully diluted
E.P.S. $ 1.88 $2.22
</TABLE>
NOTES:
(1) The results of Brown-Bridge Industries Inc. and associated adjustments
for Spinnaker and Lynch were filed in a Form 8-K/A(1) on December 2,
1994, amending a Form 8-K which was originally filed on October 3,
1994.
(2) The results of USTC-Kansas Inc. and associated adjustments were file
in a Form 8-K/A(2) on January 5, 1995, amending a Form 8-K which was
originally filed on October 7, 1994.
