SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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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, 1999
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
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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
<PAGE>
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Lynch Corporation 401(k) Savings Plan
Years ended December 31, 1999 and 1998
<PAGE>
Lynch Corporation 401(k) Savings Plan
Audited Financial Statements
and Supplemental Schedule
Years ended December 31, 1999 and 1998
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....................3
Notes to Financial Statements.................................................4
Supplemental Schedule
Schedule of Assets Held for Investment Purposes at End of Year................8
<PAGE>
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, 1999 and 1998,
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 auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
held for investment purposes at end of year as of December 31, 1999, is
presented for purposes of additional analysis and is not a required part of the
financial statements but is 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. The supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
June 21, 2000
<PAGE>
Lynch Corporation 401(k) Savings Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
December 31
1999 1998
--------------- -------------
Assets
<S> <C> <C>
Investments ................................ $ 4,100,781 $ 3,150,262
Contribution receivables:
Employer ................................. 4,807 5,279
Participants ............................. -- 2,530
Other .................................... -- 5,840
----------- -----------
Total receivables .......................... 4,807 13,649
----------- -----------
Total assets ............................... 4,105,588 3,163,911
Liabilities
Excess contributions payable ............... -- (7,436)
Other liabilities .......................... (369) (372)
----------- -----------
Total liabilities .......................... (369) (7,808)
----------- -----------
Net Assets Available for Benefits .......... $ 4,105,219 $ 3,156,103
=========== ===========
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
Lynch Corporation 401(k) Savings Plan
Statements of Changes in Net Assets Available for Benefits
<TABLE>
<CAPTION>
Year Ended December 31
1999 1998
----------- ------------
Additions:
Investment income:
Net appreciation (depreciation) in fair value of investments:
<S> <C> <C>
Stock funds .................................. $ 510,654 $ (55,922)
Mutual funds ................................. 71,501 (131,994)
----------- -----------
582,155 (187,916)
Interest and dividends .......................... 216,316 203,115
----------- -----------
798,471 15,199
Contributions:
Participants .................................... 357,374 300,807
Employer ........................................ 19,210 20,811
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376,584 321,618
----------- -----------
Total additions ...................................... 1,175,055 336,817
Deductions:
Benefits paid directly to participants ............ (224,643) (240,152)
Excess contributions and related investment income -- (4,701)
Other ............................................. (1,296) --
----------- -----------
(225,939) (244,853)
Net increase ......................................... 949,116 91,964
Net assets available for benefits at beginning of year 3,156,103 3,064,139
----------- -----------
Net assets available for benefits at end of year ..... $ 4,105,219 $ 3,156,103
=========== ===========
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
Lynch Corporation 401(k) Savings Plan
Notes to Financial Statements
Years ended December 31, 1999 and 1998
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").
During 1999, for each share of the Company's common stock held in the Lynch
Corporation stock fund, a stock distribution was made equal to one share of
Lynch Interactive Corporation (a wholly-owned subsidiary of the Company) common
stock. The distribution to the Lynch Corporation stock fund was 5,965 common
shares of Lynch Interactive Corporation, which were subsequently transferred to
the Lynch Interactive Corporation stock fund.
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 1999 and 1998). 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 Company 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 1999 or 1998.
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.
<PAGE>
Lynch Corporation 401(k) Savings Plan
Notes to Financial Statements (continued)
Years ended December 31, 1999 and 1998
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.
During 1999, East/West Communications Inc. (an affiliate of the Company which
spun off to its shareholders, its common stock interest in East/West) offered,
at no cost to the shareholders of its Class A common stock, a non-transferable
right to purchase one additional share of its Class A common stock. The right
entitled shareholders to purchase one additional share of Class A common stock
for every four shares of Class A common stock held at $1.50 per share.
Participants in the Plan had the option to participate in this rights offering.
Participant Loans
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. 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.
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 Plan's administrative expenses are paid by the Company.
2. Summary of Accounting Policies
Statement of Position 99-3
The Plan has adopted Statement of Position 99-3, "Accounting for and Reporting
of Certain Defined Contribution Plan Investments and Other Disclosure Matters"
for the presentation of its 1999 and 1998 financial statements. Accordingly,
certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 presentation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
<PAGE>
Lynch Corporation 401(k) Savings Plan
Notes to Financial Statements (continued)
Years Ended December 31, 1999 and 1998
2. Summary of Accounting Policies (continued)
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. Lynch
Corporation, Lynch Interactive 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. The participant loans 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.
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.
3. Investments
Individual investments that represent 5% or more of the Plan's net assets in a
specific year are as follows:
<TABLE>
<CAPTION>
December 31
1999 1998
------------------------
<S> <C> <C>
Fleet Stable Asset Fund ........... $1,184,811 $ 936,886
Mutual Qualified Fund ............. 1,213,772 1,077,224
Mutual Discovery Fund ............. 332,127 229,831
Galaxy U.S. Treasury Fund ......... 449,204 322,504
Lynch Corporation Common Stock Fund -- 355,179
Lynch Interactive Common Stock Fund 565,094 --
</TABLE>
4. Contracts with Insurance Company
During 1999 and 1998, the Plan held unallocated guaranteed investment contracts
with maturities in 1998 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 6.56%. The underlying assets within the contract are restricted solely for
administrative expenses and benefit payments made by the Plan.
<PAGE>
Lynch Corporation 401(k) Savings Plan
Notes to Financial Statements (continued)
Years Ended December 31, 1999 and 1998
5. Income Tax Status
The Plan has applied 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"). However, the Plan Administrator
believes that the Plan is qualified and, therefore, the related trust is exempt
from taxation.
6. Subsequent Event
As a result of Lynch Corporation's spin-off of Lynch Interactive Corporation,
which took place on September 1, 1999, Lynch corporate employees and the
employees of Bretton Woods, a subsidiary of the Company, who participated in the
Plan during 1999, ceased contributing to the Plan as of the spin-off date.
During 2000, Lynch corporate employees transferred their fund balances to the
Lynch Interactive Corporation Plan. Additionally, Bretton Woods' employees
transferred their fundbalances to its own plan. Also, on May 15, 2000, the Lynch
Interactive Corporation Plan merged into the Plan to create a multiple-employer
plan.
<PAGE>
Supplemental Schedule
<PAGE>
Lynch Corporation 401(k) Savings Plan
EIN-38-1799862 Plan-004
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 1999
<TABLE>
<CAPTION>
Identity of Issuer, Borrower, Description of Investment, Including Maturity
Lessor or Similar Party Date, Rate of Interest, Par or Maturity Value Current Value
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
*Fleet National Bank: Fleet Stable Asset Fund, 117,916 shares $1,184,811
Galaxy U.S. Treasury Fund, 449,204 shares 449,204
Mutual Qualified Fund, 71,778 shares 1,213,772
Mutual Discovery Fund, 15,741shares 332,127
Short-term investments, 13,010 shares 13,010
*Lynch Corporation: Lynch Corporation Common Stock, 6,254 shares
161,431
*East/West Communications, East/West Communications Inc. Class A Common
Inc. Stock 1,785 shares 68,703
*Lynch Interactive Corporation Lynch Interactive Common Stock
5,658 shares 565,094
Participant loans Loans bear interest between 7.75%
and 8.5% 112,629
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$4,100,781
==================
<FN>
* Indicates party-in-interest to the Plan.
</FN>
</TABLE>
<PAGE>
SIGNATURE
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 28, 2000
