SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
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CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) September 1, 1999
LYNCH CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Indiana 1-106 38-1799862
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(State of other (Commission File (IRS Employer
Jurisdiction of Number) Identification)
Incorporation)
401 Theodore Fremd Avenue, Rye, NY 10580
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(Address of Principal Executive Offices Zip Code
Registrant's Telephone Number, Including Area Code: 914/921-7601
<PAGE>
Item 2. Acquisition or Disposition of Assets.
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On September 1, 1999, Registrant spun off to its shareholders all of the stock
of Lynch Interactive Corporation ("LIC"). Each shareholder of record of
Registrant as of the close of business on August 23, 1999, the record date,
received one share of common stock of LIC for each share of common stock of
Lynch. The Board of Directors of Registrant authorized the spin off.
At the time of the spin off, LIC held all of the multimedia and services
businesses, plus 1,000,000 shares of Common Stock of Spinnaker Industries, Inc.
("Spinnaker") (AMEX:SKK and SKK.A), previously owned by Registrant. For further
information on LIC, reference is made to LIC's Form 10A-1, dated August 18,
1999, filed with the Securities and Exchange Commission ("SEC") and to LIC's
Information Statement, dated August 23, 1999 (the "Information Statement")
contained as Exhibit 99.1 to the Form 10A-1.
After the spin off, Registrant owns (i) 1,237,203 share of Common Stock and
2,259,063 share of Class A Common Stock of Spinnaker (which collectively
constitutes approximately 48% of the equity and 59% of the voting interest of
Spinnaker, (ii) 100% pf the stock of M-tron Industries, Inc. ("M-tron") and
(iii) 91% of the stock of Lynch Systems, Inc. ("LS"). For a description of
Spinnaker, M-tron and LS, reference is made to Registrant's Form 10-K for the
year ended December 31, 1998, and other filings by Registrant with the SEC and
Spinnaker's Form 10-K for the year ended December 31, 1998 and other filings by
Spinnaker with the SEC.
In connection with the spin off, Messrs. Paul J. Evanson, John C. Ferrara, David
C. Mitchell and Salvatore Muoio, who became directors of LIC, ceased to be
directors of Registrant. The current directors of Registrant are Mario J.
Gabelli (Chairman), E. Val Cerutti and Ralph R. Papitto. Messrs. Gabelli and
Papitto are also directors of LIC. There is no change to the officers of
Registrant as a result of the spin off, and the officers of Registrant became
the officers of LIC as well. However, prior to the third anniversary of the spin
off, the officers of Registrant and LIC must be different persons, although
Mario J. Gabelli may continue to be Chairman of the Board of the company of
which he is not chief executive officer.
At the spin off, the employees of the corporate office of Registrant became
employees of LIC and LIC will provide corporate management services to
Registrant. With respect to the relationship Registrant and LIC after the spin
off, reference is made to "Relationship Between Lynch and Interactive After the
Spin Off" and "Corporation Expense" in the Information Statement, which is
incorporated herein by reference. Registrant and LIC are parties to a Separation
Agreement described in the Information Statement and included as an Exhibit
hereto. Any arrangements between Registrant and LIC, including without
limitation the provision of management services and the allocation of overhead
expense, are subject to modification or cancellation.
This Form 8-K contains certain forward looking information, which is based upon
certain estimates, projections and/or assumptions. As a result, such information
is subject to uncertainties, risks and inaccuracies that could be material.
<PAGE>
Item 7. Financial Statements and Exhibits
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(b) Pro Forma Financial Information. Unaudited pro forma
balance sheet of the Registrant as of June 30, 1999
and statement of operations for the six month period
ended June 30, 1999. Unaudited pro forma statement of
operations for the year ended December 31, 1998.
(c) Exhibits
2(a) Information Statement of LIC (incorporated by
reference to Exhibit 99.1 to LIC's Form 10A-1, dated
August 18, 1999)
2(b) Separation Agreement, dated as of August 31, 1999,
between Registrant and LIC (incorporated by reference
to Exhibit 2 to LIC's Form 10A-1, dated August 18,
1999.
Pursuant to the requirement of the Securities and Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Lynch Corporation
By:/s/Robert E. Dolan
Robert E. Dolan
Chief Financial Officer
Date: September 16, 1999
<PAGE>
LYNCH CORPORATION
UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial information of the
Registrant is based on the historical consolidated financial statements of the
Registrant adjusted for intervening transactions for which the Registrant has
filed Form 8- K's on July 30, 1999, and has been prepared to illustrate the
effects of the spin off as though it had occurred as of the beginning of the
periods presented for the pro forma statements of operations and as if it had
occurred on June 30, 1999 for the pro forma balance sheet. Defined terms herein
have the meanings given to them in the Form 8-K of which this is a part.
The pro forma adjustments include, in the opinion of management, all
adjustments necessary to give pro forma effect to the Spin Off as though such
transaction had occurred as of the beginning of the period presented for the pro
forma statement of operations and as if it had occurred on June 30, 1999 for the
pro forma balance sheet.
The unaudited pro forma financial information is not necessarily
indicative of how the Registrant's balance sheet and results of operations would
have been presented had the Spin Off actually been consummated at the assumed
date, nor is it necessarily indicative of presentation of the Registrant's
balance sheet and results of operations for any future period. The unaudited pro
forma financial information should be read in conjunction with the historical
consolidated financial statements and related notes thereto included in the
Registrant's Annual Report on Form 10-K for the period ended December 31, 1998,
Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 1999,
and the Registrant's Current Report on Form 8-K filed on July 30, 1999.
The pro forma adjustments are based upon available information. These
adjustments are directly attributable to the Spin Off and are expected to have a
continuing impact on the Registrant's business, results of operations, and
financial position.
<PAGE>
<TABLE>
LYNCH CORPORATION
Unaudited Pro Forma Consolidated Balance Sheet
(Dollars inThousands)
<CAPTION>
June 30, 1999 Disposition
Per 8K of Lynch Pro Forma Pro Forma
filed 7/30/99 Interactive Adjustments June 30, 1999 Notes
------------- ------------ ----------- ------------- -------
<S> <C> <C> <C> <C> <C>
CASH & EQUIVALENTS .......................... $ 75,657 $ -- $ -- $ 75,657
RECEIVABLES ................................. 24,309 -- -- 24,309
INVENTORIES ................................. 31,477 -- -- 31,477
DEFERRED INCOME TAX BENEFITS ................ 8,717 -- -- 8,717
OTHER CURRENT ASSETS ........................ 809 -- -- 809
CURRENT ASSETS. OF SUBS TO BE DISTRB'D TO S/H 50,304 (50,304) -- --
------ ------- ------- --------
191,273 (50,304) -- 140,969
------- ------- ------- -------
PROPERTY, PLANT & EQUIP-NET ................. 44,992 -- -- 44,992
GOODWILL .................................... 22,472 -- -- 22,472
OTHER ASSETS ................................ 9,415 -- -- 9,415
NON CURR ASSETS OF SUBS TO BE DIST'D TO S/H . 151,677 (151,677) -- 0
NON CURR ASSETS OF DISCONTINUED OPS ......... -- -- -- 0
------- ------- ------- -------
$ 419,829 ($201,981) $ -- $ 217,848
========= ======== ======== ========
NOTES PAYABLE BANKS AND OTHERS .............. $ 27,983 $ -- ($ 7,300) $ 20,683 (2)
ACCOUNTS PAYABLE ............................ 19,392 -- -- 19,392
ACCRUED INTEREST PAYABLE .................... 2,590 -- -- 2,590
ACCRUED LIABILITIES ......................... 2,454 -- -- 2,454
CUSTOMER ADVANCES ........................... 2,714 -- -- 2,714
CURRENT PORTION OF LTD ...................... 1,055 -- -- 1,055
CURRENT LIABS. OF SUBS TO BE DISTRB'D TO S/H 36,272 (36,272) -- --
CURRENT LIABS OF DISCONTINUED OPS ........... -- -- -- --
--------- -------- -------- --------
TOTAL CURRENT LIABILITIES ................... 92,460 (36,272) (7,300) 48,888
--------- -------- -------- --------
LONG TERM DEBT .............................. 122,630 -- -- 122,630
LONG TERM LIABILITIES ....................... 1,901 -- -- 1,901
DEFERRED TAXES .............................. 16,582 -- -- 16,582
MINORITY INTEREST ........................... 10,345 -- 2,826 13,171 (1)
NON CURR LIABS OF SUBS TO BE DIST'D TO S/H .. 139,682 (139,682) -- --
NON CURR LIABS OF DISCONTINUED OPS .......... -- -- -- --
--------- -------- -------- --------
TOTAL LIABILITIES ....................... 383,600 (175,954) (4,474) 203,172
--------- -------- -------- --------
SHAREHOLDERS EQUITY
COMMON STOCK ................................ 5,139 -- -- 5,139
ADDITIONAL PAID IN CAPITAL .................. 8,298 -- -- 8,298
RETAINED EARNINGS ........................... 23,785 (26,027) 4,474 2,232
ACCUMULATED OTHER COMPREHENSIVE INCOME ...... 211 -- -- 211
TREASURY STOCK .............................. (1,204) -- -- (1,204)
--------- -------- -------- --------
TOTAL LIABILITIES & EQUITY .............. $ 419,829 ($201,981) $ -- $ 217,848
========= ======== ========= =========
</TABLE>
<PAGE>
<TABLE>
LYNCH CORPORATION
Unaudited Pro Form Consolidated Statement of Opertions
(Dollars in Thousands, Except for Per Share Amounts)
<CAPTION>
Six Months
Ended
June 30, 1999 Pro Forma
Per 8K Pro Forma Six Months Ended
filed 7/30/99 Adjustments June 30, 1999 Notes
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<S> <C> <C> <C> <C>
SALES AND REVENUES
MANUFACTURING ............................ $ 93,774 $ -- $ 93,774
----------- ----------- -----------
TOTAL SALES & REVENUE ....................... 93,774 -- 93,774
----------- ----------- -----------
COSTS & EXPENSES
MANUFACTURING ............................ 82,785 -- 82,785
SELLING & ADMIN .......................... 10,594 -- 10,594
----------- ----------- -----------
OPERATING PROFIT ............................ 395 -- 395
----------- ----------- -----------
INVESTMENT INCOME ........................... 1,819 -- 1,819
INTEREST (EXPENSE) .......................... (8,026) -- (8,026)
----------- ----------- -----------
NET OTHER INC.(EXP.) ...................... (6,207) -- (6,207)
----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND MINORITY INTERESTS (5,812) -- (5,812)
BENEFIT (PROVISION) FOR INCOME TAXES ........ 2,311 -- 2,311
MINORITY INTERESTS .......................... 1,672 451 2,123 (1)
----------- ----------- -----------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS ($ 1,829) $ 451 ($ 1,378)
=========== =========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING ......... 1,417,000 -- 1,417,000
Basic and diluted earnings per share:
NET INCOME (LOSS) FROM CONTINUING OPERATIONS ($ 1.29) -- ($ 0.97)
</TABLE>
<PAGE>
<TABLE>
LYNCH CORPORATION
Unaudited Pro Forma Consolidated Statement of Operations
(Dollars in Thousands, Except Per Share Amounts)
<CAPTION>
Distribution of
Lynch Interactive
Corporation to Pro Forma
Year Ended Lynch Corporation Pro Forma Year Ended
December 31, 1998 Shareholders Adjustments December 31, 1998 Notes
----------------- ------------ ----------- ----------------- -----
<S> <C> <C> <C> <C> <C>
SALES
MULTIMEDIA .............................. $54,622 $54,622 $ -- $ --
SERVICES ................................ 150,454 150,454 -- --
MANUFACTURING ........................... 187,644 -- -- 187,644
------- ------- ------- -------
TOTAL SALES & REVENUE ...................... 392,720 205,076 -- 187,644
COSTS & EXPENSES
MULTIMEDIA .............................. 38,176 38,176 -- --
SERVICES ................................ 138,193 138,193 -- --
MANUFACTURING ........................... 162,735 -- -- 162,735
SELLING & ADMIN ......................... 32,864 12,050 -- 20,814
------- ------- ------- -------
OPERATING PROFIT ........................... 20,752 16,657 -- 4,095
INVESTMENT INCOME .......................... 5,689 1,865 -- 3,824
INTEREST (EXPENSE) ......................... (25,877) (10,383) -- (15,494)
EQUITY IN EARNINGS OF AFFIL COS ............ 317 317 -- --
GAIN ON SALES OF SUBS STOCK & OTHER ASSETS . 4,778 2,709 -- 2,069
------- ------- ------- -------
NET OTHER INC.(EXP.) ..................... (15,093) (5,492) -- (9,601)
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES & MINORITY INTERESTS 5,659 11,165 -- (5,506)
BENEFIT (PROVISION) FOR INCOME TAXES ....... (2,293) (5,012) -- 2,719
MINORITY INTERESTS ......................... 311 (1,224) 668 2,203 (1)
------- ------- ------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS .. $ 3,677 $ 4,929 $ 668 ($ 584)
======== ======== ======== =======
WEIGHTED AVERAGE SHARES OUTSTANDING ........ 1,418,000 -- -- 1,418,000
Basic and diluted earnings per share:
NET INCOME (LOSS) FROM CONTINUING OPERATIONS $ 2.59 -- -- ($ 0.41)
</TABLE>
<PAGE>
LYNCH CORPORATION
NOTES TO UNAUDITED PRO FORMA FINANCIAL
INFORMATION (Dollars in thousands, except per
share amounts)
The Registrant's unaudited pro forma statement of operations for the
six months ended June 30, 1999 and for the year ended December 31, 1998 and the
Registrant's unaudited pro forma consolidated balance sheet at June 30, 1999 are
based on the unaudited pro forma consolidated statements of operations at June
30, 1999 and December 31, 1998 and the unaudited pro forma balance sheet at June
30, 1999 filed on Form 8-K as of July 30, 1999, which reflects the disposition
of the industrial tape businesses of Spinnaker Industries, Inc.
(1) Represents the change in minority interests based on the
transfer of one million shares of Spinnaker Industries, Inc.
common stock to Lynch Interactive Corporation.
(2) Represents the transfer of two lines of credit facilities from
the Registrant to Lynch Interactive Corporation.
