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<SEC-DOCUMENT>0000061004-01-000001.txt : 20010409
<SEC-HEADER>0000061004-01-000001.hdr.sgml : 20010409
ACCESSION NUMBER:		0000061004-01-000001
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20001231
FILED AS OF DATE:		20010402

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:		10-K
		SEC ACT:		
		SEC FILE NUMBER:	001-00106
		FILM NUMBER:		1592157

	BUSINESS ADDRESS:	
		STREET 1:		401 THEODORE FREMD AVENUE
		CITY:			RYE
		STATE:			NY
		ZIP:			10580
		BUSINESS PHONE:		9149217601

	MAIL ADDRESS:	
		STREET 1:		401 THEODORE FREMD AVENUE
		STREET 2:		SUITE 290
		CITY:			RYE
		STATE:			NY
		ZIP:			10580
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>LYNCH CORPORATION 10-K - DECEMBER 31, 2000
<TEXT>


===============================================================================

                                    FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 [FEE REQUIRED]


For the fiscal year ended December 31, 2000      Commission file number 1-106
                          -----------------                             -----

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ---------------  To ---------------

                                LYNCH CORPORATION
                                -----------------
             (Exact name of Registrant as specified in its charter)

        Indiana                                               38-1799862
        -------                                               ----------

 State of other jurisdiction                                  (I.R.S. Employer
 Incorporation or organization                               Identification No.)

 401 Theodore Fremd Avenue, Rye, NY                                 10580
 ----------------------------------                                 -----
 (Address of principal executive offices)                         (Zip Code)


Registrant's telephone number, including area code (914) 921-7601
                                                   --------------

Securities registered pursuant to Section 12(b) of the Act:

  Title of each class                                   Name of each exchange
  -------------------                                   On which registered
Common Stock, No Par Value                              ---------------------
                                                        American Stock Exchange

Securities registered pursuant to section 12(g) of the Act: None

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  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 by mark if  disclosure  of  delinquent  filers  pursuant to Item 405 of
Regulations S - K is not  contained  herein,  and will not be contained,  to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-K,  or any
amendment to this Form 10-K. [X]

The  aggregate  market  value of  voting  stock  held by  non-affiliates  of the
Registrant (based upon tye closing price of the Registrant's Common Stock on the
American Stock Exchange on March 15, 2001 of $30 per share) was $31,682,460. (In
determining this figure, the Registrant has assumed that all of the Registrant's
directors  and  officers are  affiliates.  This  assumption  shall not be deemed
conclusive for any other purpose.)

The number of outstanding shares of the Registrant's  Common Stock was 1,510,183
as of March 15, 2001.

===============================================================================


<PAGE>



                      DOCUMENTS INCORPORATED BY REFERENCE:

Part III: Certain  portions of Registrant's  Proxy Statement for the 2001 Annual
Meeting of Shareholders.

FORWARD LOOKING INFORMATION

This Form 10-K contains certain forward looking information,  including, without
limitation,  the  exploring of options  with  respect to  Spinnaker  (Item 1.A);
strategic  alternatives  involving  Entoleter  (Item  1.A);  Item 1.B a possible
rights offering and "M-tron  Objectives";  Item 7. "Management's  Discussion and
Analysis of Financial  Condition and Results of Operations,"  including  without
limitation  Liquidity  and Capital  Resources  and Market  Risk;  and,  Notes to
Financial  Statements  (Item 14(a)  below).  It should be  recognized  that such
information  contains  estimates  or forecasts  based upon various  assumptions,
including the matters referred to therein and the cautionary statements and risk
factors in  documents  filed by  Spinnaker  and M-tron with the  Securities  and
Exchange  Commission,  as well as meeting the Registrant's  internal performance
assumptions   regarding   expected   operating   performance  and  the  expected
performance  of the economy  and  financial  markets as it impacts  Registrant's
businesses. As a result, such information is subject to uncertainties, risks and
inaccuracies, which could be material.

                                     PART I

ITEM 1. BUSINESS

The Registrant, Lynch Corporation ("Lynch"), incorporated in 1928 under the laws
of the State of Indiana,  is a  diversified  holding  company with  subsidiaries
engaged in manufacturing.  Lynch's executive offices are located at 401 Theodore
Fremd Avenue, Rye, New York 10580-1430. Its telephone number is 914/921-7601.

Registrant's  business development strategy is to expand its existing operations
through  internal  growth  and  acquisitions.  It may  also,  from time to time,
consider the  acquisition of other assets or businesses  that are not related to
its present  businesses.  As used herein,  the  Registrant  includes  subsidiary
corporations.

On September 1, 1999, Registrant spun off to its shareholders the stock of Lynch
Interactive  Corporation,  which holds the  multimedia  and  service  operations
previously owned by Registrant and which accounted for  approximately 40% of the
Registrant's  1998 revenues and 47.6% of  Registrant's  total assets at December
31, 1998.

A.  Spinnaker Industries, Inc. ("Spinnaker")

Spinnaker's  Common Stock (1/10 vote per share) and Class A Common Stock (1 vote
per share) are listed on the American Stock Exchange under the symbols "SKK" and
"SKK.A.",  respectively.  At March 1, 2001, Registrant owned 1,237,203 shares of
Spinnaker  Common Stock,  approximately  33% of the  outstanding,  and 2,259,063
shares  of Class A Common  Stock,  approximately  63% of the  outstanding.  On a
combined basis, Registrant owns approximately 47.6% of the common equity and has
a 60.4% voting interest.

Spinnaker is a manufacturer and marketer of adhesive-backed material,  primarily
for the pressure  sensitive  label stock market.  Spinnaker has three 100% owned
subsidiaries:  Spinnaker  Coating,  Inc.,  ("Spinnaker  Ohio") acquired in 1994,
Spinnaker  Coating-Maine,  Inc.  ("Spinnaker  Maine"),  acquired  in  1998;  and
Entoleter, Inc. ("Entoleter"), which Spinnaker owned prior to its acquisition by
the Company in 1987.  In 1996,  Spinnaker  acquired the  remaining  19.9% of the
outstanding stock of Spinnaker Ohio (plus management stock options),  which were
owned primarily by the management of Spinnaker  Ohio,  Boyle Fleming & Co., Inc.
and Registrant,  for an immediate payment and a contingent payment made in 2000.
Spinnaker Ohio,  which was founded in 1928 and was formerly called  Brown-Bridge
Industries, Inc., and Spinnaker Maine (which are collectively referred to herein
as "Spinnaker Coating") are in the adhesive-backed label stock industry.

On July 30,  1999,  and August 10,  1999,  Spinnaker  sold its  industrial  tape
operations for approximately  $105 million plus 300,000 warrants to purchase the
common stock of Intertape  Polymer Group,  Inc.  (AMEX:ITP) at $29.50 per share.
The  industrial  tape  operation  generated  $121.8 million of net sales for the
fiscal year ended  December  31,  1998,  and $69.5  million of net sales in 1999
until the  effective  time of  disposition.  Registrant  has  stated  that it is
continuing  to  explore  all  options  with  respect  to  Spinnaker,   including
liquifying and monetizing  its  investment,  although there is no assurance that
any option will be implemented or, if implemented, would be successful.

Spinnaker's  adhesive-backed label stock business is conducted through Spinnaker
Coating.  With the  acquisition of the Spinnaker  Maine assets from S.D.  Warren
Company  ("Warren")  in March  1998,  Spinnaker  Coating  broadened  its product
offerings  and  further   established   itself  as  a  major   manufacturer   of
adhesive-backed  label  stock in the United  States.  Spinnaker  Ohio  primarily
manufactures custom, low-volume,  pressure sensitive products used for specialty
applications,  whereas  Spinnaker  Maine  manufactures  standard,  high  volume,
pressure sensitive products.  As a result,  Spinnaker Coating offers a full line
of more than 2,000  variations of  adhesive-backed  label stock that it sells in
roll and sheet form to over 1,000 printers,  paper  merchants,  industrial users
and major forms  manufacturers  and  distributors.  Customers  convert its label
stock into  labels  used for a broad  range of end use  applications,  including
bar-coding,  mailing and shipping, packaging for pharmaceutical,  food and other
consumer products,  office  identification  and business forms,  postage stamps,
decorative labels and other specialty  industrial uses. Spinnaker Coating is the
largest supplier of pressure  sensitive  postage stamp stock for ultimate use by
the United States  Postal  Service.  In 1995 and again in March 1998,  Spinnaker
Coating was selected to supply exclusively U.S. Paper Corporation of America and
the U.S. Bureau of Engraving and Printing the label stock for pressure-sensitive
postage stamps. The March 1998 contract, a five-year supply contract,  is valued
at approximately $75 million.

The Spinnaker  Maine assets were acquired from Warren for an aggregate  purchase
price of approximately  $51.8 million plus the assumption of certain liabilities
(excluding substantially all trade payables). The purchase price was paid by the
issuance  of a  subordinated  convertible  note (the  "Note") to Warren,  in the
original  principal  amount  of $7.0  million,  and  the  remainder  with  funds
available under Spinnaker's asset-backed working capital revolving credit.

Spinnaker also  manufactures and markets  industrial  process  equipment and air
pollution control scrubbers through Entoleter.  Spinnaker is exploring strategic
alternatives with respect to Entoleter to improve shareholder value, including a
possible  split  off.  There is no  assurance  that such a  transaction  will be
effected, or if effected, would be successful.

Adhesive-backed Label Stock

Spinnaker Coating develops, manufactures and markets adhesive-backed label stock
that is  converted  by printers  and  industrial  users into  products  that are
utilized for marking,  identifying,  labeling and  decorating  applications  and
products.  Spinnaker  Coating's  products  are offered in two  primary  adhesive
categories:  pressure sensitive and water sensitive. Pressure sensitive products
constituted  approximately 97% of Spinnaker's net sales of adhesive-backed label
stock products in 2000. To better concentrate on Coating's  strengths and market
niche, a decision was made by  Spinnaker's  management to reorganize and realign
the  business  in the  fourth  quarter of 2000 and going  forward  in 2001.  The
restructuring  involves the elimination of non-pressure sensitive product lines,
outsourcing  of  non-core  manufacturing  processes  and  termination  of  seven
salaried employees, primarily senior management. During 2000, Spinnaker sold the
assets that had been previously used to manufacture heat sensitive products.

Pressure  Sensitive.  Pressure  sensitive  products,  which are activated by the
application of pressure,  are  manufactured  with a  three-element  construction
consisting of face stock,  adhesive  coating and silicone  coated release liner.
The adhesive  product is sold in roll or sheet form for further  conversion into
products used primarily for marking,  identification  and promotional  labeling.
Spinnaker  Coating's  pressure sensitive products are sold under the trade names
Strip  Tac(R)  and Strip Tac  Plus(R).  Roll  pressure  sensitive  products  are
generally  sold to label  printers  that produce  products  used  primarily  for
informational  labels (shipping  labels,  price labels,  warning labels,  etc.),
product identification and postage stamps. Sheet pressure sensitive products are
sold to commercial  sheet  printers,  who provide  information  labels and other
products (such as laser printer stock).


Water  Sensitive.   Water  sensitive  products,   which  are  activated  by  the
application of water, include a broad range of paper and cloth materials, coated
with a variety of adhesives.  The adhesive  coated  products are sold in roll or
sheet form for further conversion to postage and promotional  stamps,  container
labels,  inventory  control labels,  shipping  labels and splicing,  binding and
stripping  tapes.  The  water  sensitive  line  is sold  under  the  trade  name
Pancake(R)  and consists of three  product  groups:  dry  process,  conventional
gummed and industrial. Dry process is sold primarily for label and business form
uses. Conventional gum products serve many of the same end uses for hand-applied
labels as dry  process  stock.  A major  portion of these  products  is sold for
government postage and promotional stamp uses.  Industrial  products are sold in
several niche markets,  such as electrical and other specialty  markets.  During
1999,  Spinnaker entered into an alliance with Ivex Packaging  Corporation under
which Spinnaker assumed responsibility for the sales and marketing of Ivex's dry
gum  products  and  Ivex  agreed  to  accept  orders  for,  and to  manufacture,
Spinnaker's dry gum and water activated  products.  As  compensation,  Spinnaker
receives a commission on all such sales.

Marketing and Customers

Spinnaker Coating markets its broad range of products to a variety of customers.
Its marketing  strategy  focuses not only on products but also customer  service
and specific customer  applications.  Spinnaker has conducted  business with its
top 10  customers  for  approximately  20 years on  average.  During  2000,  one
customer,  U.S. Paper Corporation of America,  accounted for approximately 13.1%
of Spinnaker's net sales.

Spinnaker   Coating  generally  markets  its  products  through  its  own  sales
representatives to regional and national printers, converters and merchants. The
majority of sales  represent  product sold and shipped from Spinnaker  Coating's
facilities in Troy, Ohio and Westbrook,  Maine.  However,  to broaden its market
penetration,   Spinnaker   Coating  also  contracts  with  regional   processors
throughout the United States,  with whom Spinnaker  Coating stores product until
sold.  Generally,  these  processors  perform  both  slitting  and  distribution
services for Spinnaker Coating.

Manufacturing and Raw Materials

Spinnaker Coating  manufactures its adhesive-backed  label stock products at two
plants in Troy,  Ohio and the  facility in  Westbrook,  Maine  acquired in 1998.
Spinnaker has made approximately $17 million in capital expenditures at the Ohio
facilities over the last five years,  including $4 million for the addition of a
new production line for silicone  coating.  During 1996,  before the addition of
the new production line,  Spinnaker Coating outsourced a portion of its silicone
liner requirements.

Raw materials are the most  significant  cost  component in Spinnaker  Coating's
production process.  The material component accounts for approximately 65-75% of
the total cost of its products,  with the most  important  raw  materials  being
paper  (gumming  kraft and face  stock),  adhesive  materials,  fiberglass,  and
polypropylene  resin.  These materials are currently  readily  available and are
procured  from  numerous  suppliers.  The  cost  of  Spinnaker's  principal  raw
materials  have  generally  remained  stable or  increased  over  recent  years.
Historically,  the increases in raw material costs for Spinnaker's products have
not materially impacted  Spinnaker's gross margin. The future impact of a change
in raw material costs on Spinnaker's  profitability  is based in part on pricing
by Spinnaker's  competitors.  Although  historically  changes in Spinnaker's raw
material costs have not materially impacted Spinnaker's gross margin,  Spinnaker
cannot be assured that future raw material cost  increases can be passed through
to its  customers  or that  such  cost  increases  will  not  negatively  impact
Spinnaker's gross margin.

See Item 2 below for a description of manufacturing and distribution facilities.

Competition

The  adhesive-backed  label stock industry is fragmented and highly competitive.
Spinnaker  Coating competes with several national  manufacturers,  including the
Fasson unit of Avery  Dennison and the MACtac unit of Bemis  Company,  Inc.,  as
well as a number of importers and smaller regional manufacturers. As a result of
the competitive  environment in the markets in which Spinnaker Coating operates,
the company faces (and will continue to face) pricing  pressure on its products.
As a result of such pricing pressure, Spinnaker Coating has experienced, and may
in the future,  experience reductions in the profit margins on its sales, or has
and may be unable to pass future raw material  price  increases to its customers
(which would also reduce profit margins).

Backlog

Spinnaker  Coating's label stock backlog believed to be firm was $8.4 million at
December 31, 2000, as compared to $9.1 million at December 31, 1999.

Industrial Process Equipment Business

Through  Entoleter,  Spinnaker  engineers,  manufactures  and  markets a line of
industrial  process  equipment  and a line of air pollution  control  equipment.
Entoleter's  net sales consist  entirely of sales to commercial  and  industrial
customers.  Entoleter's sales were $5.6 million in 2000 compared to $7.0 million
in 1999.

General

Environmental Regulations

Spinnaker's  operations  are  subject  to  environmental  laws  and  regulations
governing  emissions  to the  air,  discharges  to  waterways,  and  generation,
handling,  storage,  transportation,  treatment and disposal of waste materials.
Spinnaker  is also  subject  to other  federal  and state  laws and  regulations
regarding  health and safety  matters.  Environmental  laws and  regulations are
constantly  evolving and it is  impossible to predict the effect that these laws
and regulations will have on Spinnaker in the future.  While Spinnaker  believes
it is currently in substantial  compliance with all such  environmental laws and
regulations,  there can be no assurance that it will at all times be in complete
compliance with all such requirements.  In addition, although Spinnaker believes
that  any  noncompliance  is  unlikely  to have a  material  adverse  affect  on
Spinnaker, it is possible.  Spinnaker has made, and expects to continue to make,
capital expenditures to comply with environmental  requirements.  As is the case
with manufacturers in general, if a release of hazardous substances occurs on or
from Spinnaker's  properties or any associated offsite disposal location,  or if
contamination  from  prior  activities  is  discovered  at  any  of  Spinnaker's
properties,  Spinnaker may be held liable and the amount of such liability could
be material.

Patents and Trademarks

Patents are held by Spinnaker with respect to the  manufacture of certain of its
products,  but its management  does not consider such patents to be important to
Spinnaker's operations. The patents expire over various lengths of time with the
last patent expiring in about 10 years.  Spinnaker has registered several of its
trade names and trademarks for adhesive-backed materials.

International Sales

Spinnaker's  international  sales were $20.1  million,  $17.5  million and $16.9
million  in 2000,  1999 and 1998,  respectively.  Of the $20.1  million  in 2000
international sales,  approximately 91% were represented by exports of Spinnaker
Coating. The substantial majority of these sales were to Canadian customers and,
consequently,  Spinnaker believes that the risks commonly  associated with doing
business  in  international   countries  are  minimal.   The   profitability  of
international  sales is  substantially  equivalent  to that of  domestic  sales.
Because international sales are transacted in United States dollars, payments in
many cases are secured by irrevocable letters of credit.

Employees

As of December  31,  2000,  Spinnaker  employed  435  persons,  of whom 400 were
Spinnaker Coating employees and 35 were Entoleter employees. Spinnaker Coating's
Troy, Ohio plants have begun negotiating a collective  bargaining agreement with
the Paper, Allied Industrial,  Chemical and Energy Workers  International Union,
AFL-CIO ("PACE") in February 2001. This agreement will cover  approximately  174
hourly  employees.  Spinnaker  Coating's  Westbrook,  Maine facility has a labor
agreement with PACE covering approximately 71 employees,  which expires in 2002.
Entoleter's  approximately  16 hourly  production  employees  are members of the
United  Electrical,  Radio and  Machine  Workers of America  Union.  The current
collective  bargaining  agreement expires in 2002.  Spinnaker  believes that its
relations with its employees are good;  however,  there can be no assurance that
Spinnaker will not experience work stoppages or slowdowns in the future.

Additional Information

For further  information  on  Spinnaker,  reference is made to its Form 10-K and
other filings with the Securities and Exchange Commission.

B.    M-tron Industries, Inc. ("M-tron")

Registrant  currently  owns  all of the  stock of  M-tron.  M-tron  has  filed a
registration  statement with the Securities and Exchange Commission with respect
to a rights offering to Registrant's  shareholders of up to 1,000,000  shares of
its Class A Common Stock at $5 per share.  That  offering has been delayed until
market conditions are more favorable,  and the Company will continue to evaluate
the situation.  Assuming  completion of the rights  offering and the sale of the
entire 1,000,000 shares,  Registrant would own no shares of Class A Common Stock
and  6,500,000   shares  of  Class  B  Common  Stock,   which  would  constitute
approximately  87% of the Common  equity  and,  approximately  97% of the voting
power  of  M-tron.  There  is no  assurance  that the  rights  offering  will be
completed.  The Class A and Class B Common Stock are identical except for voting
rights.  In January 2000,  Robert R. Zylstra  joined M-tron as its new President
and Chief Executive Officer replacing Martin J. Kiousis who retired.

Overview

M-tron is a designer,  manufacturer  and marketer of custom designed  electronic
components  that are used  primarily  to  control  the  frequency  or  timing of
electronic signals in communications  equipment. Its devices, which are commonly
called  frequency  control devices,  crystals or oscillators,  support fixed and
mobile wireless,  copper wire,  coaxial cable and fiber optic systems.  It sells
its  products  to  communications  original  equipment  manufacturers,  contract
manufacturers and to distributors.

M-tron's products are quartz crystal based frequency control devices  consisting
of packaged quartz crystals and oscillators  incorporating  those crystals.  Its
products  enable  communications   equipment  manufacturers  and  communications
service providers to meet the increasing demands of their customers because they
produce an electrical signal that is:

o    accurate - the frequency of the signal does not change significantly over a
     period of time;

o    stable - the frequency of the signal does not vary  significantly  when our
     product is subjected to a range of operating temperatures; and

o    has low electronic noise - the signal does not add interfering signals that
     can degrade the performance of the communications system.

In addition,  M-tron sells crystals and  oscillators  which are used outside the
communications   industry.   These   frequency   control  devices  are  used  in
microprocessor  and  computer  applications.  It  expects  this  portion  of its
business to decline  over time as M-tron  increases  its emphasis on the growing
communications market.

M-tron has over 35 years of experience  designing,  manufacturing  and marketing
crystal based frequency  control  products.  Its customers rely on the skills of
M-tron's  engineering  and  design  team to help them  solve  frequency  control
problems  during all phases of their  product's life cycles,  including  product
design, prototyping, manufacturing and subsequent product improvements.

M-tron Objectives

M-tron's objective is to build on the strength of its core expertise in packaged
quartz crystal and oscillator  technologies  to become the supplier of choice to
original  equipment  manufacturers  who supply  infrastructure  equipment to the
communications industry.

M-tron  intends to increase its  investment  in technical  resources,  including
design  and  engineering  personnel  to enable it to  provide a higher  level of
design and engineering support to its customers. It believes that increasing its
technical  participation with its original equipment  manufacturers customers in
the early stages of their  design  process  will lead to its  frequency  control
devices being designed into their products more regularly.

To increase capacity,  M-tron has committed to expand its manufacturing capacity
at its main  facility in South  Dakota.  It intends to  increase  the use of its
offshore contract  manufacturers who have recently  committed to adding capacity
on its behalf.  In addition,  M-tron's long term objective is to reduce the time
it takes to manufacture  its products which will result in further  increases in
its manufacturing  capacity.  To that end, it has dedicated additional resources
to evaluating its  manufacturing  processes and to identifying and  implementing
process improvements.

M-tron believes that it can significantly enhance its business  opportunities by
acquiring technology, product portfolios and/or customer base. Some of these may
offer immediate sales opportunities while other may meet longer term objectives.
It plans to pursue these  opportunities by making  strategic  acquisitions or by
acquiring or licensing technology.

M-tron  intends to design,  manufacture  and sell devices  that  control  higher
frequencies or greater precision than its current  products.  These devices will
serve  applications  within the  communications  industry  for which it does not
currently provide products.  It intends to achieve this through a combination of
increased  research and  development  and  strategic  acquisitions,  if they are
appropriate

There is no assurance that M-tron can achieve these objectives.

Products

M-tron's products are high quality,  reliable,  technically  advanced  frequency
control   devices,   including   packaged   quartz   crystals  and   oscillators
incorporating those crystals.

M-tron  designs and  produces a range of  packaged  quartz  crystals  and quartz
crystal  based  oscillators.  There are a variety  of  features  in its  product
family.  The  Packaged  Crystal  is a single  crystal in a  hermetically  sealed
package and is used by electronic equipment manufacturers,  along with their own
electronic  circuitry,  to build  oscillators  for  frequency  control  in their
electronic devices. The Clock Oscillator is the simplest of its oscillators.  It
is a self-contained package with a crystal and electronic circuitry that is used
as a  subsystem  by  electronic  equipment  manufacturers  to provide  frequency
control for their devices. The Voltage Controlled Crystal Oscillator (VCXO) is a
variable  frequency  oscillator  whose  frequency  can be changed by varying the
control  voltage  to  the  oscillator.   The  Temperature   Compensated  Crystal
Oscillator   (TCXO)  is  an  oscillator   designed  for  use  over  a  range  of
temperatures.   The  Digitally   Compensated  Crystal  Oscillator  (DCXO)  is  a
temperature  compensated  oscillator in which the  compensation  electronics are
digital  and offer  greater  frequency  stability  than the TCXO over a range of
temperatures.  This variety of features in M-tron's  product  family  offers the
designers  at  electronic  equipment  manufacturers  a range of  options as they
create the needed performance in their products.

Currently,  M-tron's  oscillator products operate at frequencies ranging from 32
kilohertz to 160 megahertz which constitute most of the frequencies that are now
used  in  communications  equipment.  However,  many  of its  products,  through
amplification  or other means, are ultimately  incorporated  into those products
that  operate  at  frequencies  in excess of 160  megahertz.  The prices for its
products  range  from  $0.09 for basic  packaged  crystals  to $98.18 for highly
accurate temperature compensated crystal oscillators.

M-tron's   products   are   employed   in  numerous   applications   within  the
communications  industry,  including  computer and telephone  network  switches,
modems,      wireless      transmitters/receivers,       multiplexers,      data
recovery/regeneration  devices,  repeaters,  data  transceivers,  line interface
devices and base station  controllers.  Its products are  incorporated  into end
products that serve all elements of the communications industry.

The  crystals  and  oscillators  M-tron  sells  for  use  in  non-communications
applications  are used in  industrial  applications  such as  security  systems,
metering  systems and industrial  control systems as well as in various computer
peripheral equipment such as printers,  modems,  monitors, video cards and sound
cards.  These  non-communications  applications  do not  require the quality and
reliability demanded by manufacturers of communications equipment.

Research and Development

At December 31, 2000,  M-tron  employed 11 engineers  and  technicians  in South
Dakota  who  devoted  most of their time to  research  and  development.  M-tron
intends to  significantly  increase the number of engineers and  technicians who
perform  research and development in 2001. Its research and development  expense
was  approximately  $994,000 in 2000,  $856,000 in 1999,  and  $673,000 in 1998.
M-tron intends to increase spending on research and development during 2001.

Customers

M-tron markets and sells its frequency control devices primarily to:

o    original equipment manufacturers of communications equipment;

o    contract manufacturers for original equipment manufacturers; and

o    distributors  who sell to original  equipment  manufacturers  and  contract
     manufacturers.

In 2000, Alcatel accounted for approximately 11% of M-tron's net sales, compared
to 12.4% in 1999. No other  customer  accounted for more than 10% of its 2000 or
1999 revenues.  Sales to its ten largest  customers  accounted for approximately
60% of net sales for 2000, 1999 and 1998.

International Sales

M-tron's  international sales represented  approximately 48%, 43% and 36% of its
net sales for 2000,  1999 and 1998,  respectively.  In 2000,  this  consisted of
approximately 22% from customers in Canada,  12% from customers in Asia, 5% from
customers  in  Western  Europe,  5% from  customers  in Mexico and 3% from other
international customers. M-tron is increasing its international sales efforts by
adding  distributors and  manufacturers'  representatives  in Western Europe and
Asia.

Backlog

M-tron had backlog  order of  approximately  $12.4  million at December 31, 2000
compared  with  approximately  $6.9 million at December 31, 1999. It includes as
backlog  those orders which are subject to specific  production  release  orders
under written contracts,  verbal and written orders from distributors with which
it has had long-standing relationships,  as well as written purchase orders from
sales  representatives.  Its  customers  may  cancel  or  defer  orders  without
significant penalty.

For the nine months ended September 30, 2000 and the three months ended December
31,  2000  M-tron  received  new  orders,  net of  permitted  cancellations,  of
approximately  $4.0 million per month and $3.0 million per month,  respectively.
Monthly  new orders for the first two  months of 2001 were  substantially  lower
than the average monthly orders for the last three months of 2000. If new orders
continue at that recent rate, M-tron will be adversely affected.

Competition

Frequency control devices are sold in a highly competitive  industry.  There are
numerous domestic and  international  manufacturers who are capable of providing
custom designed quartz crystals and oscillator modules comparable in quality and
performance  to its  products.  Competitors  include  Vectron  International  (a
division of Dover  Corporation),  CTS Corporation and Saronix.  Some of M-tron's
competitors  currently offer products that use technologies that it does not use
and that operate at frequencies  ranging up to 622 megahertz.  These frequencies
are increasingly being used in communications equipment. M-tron does not operate
in the same markets as high volume manufacturers of standard products; rather it
focuses on  manufacturing  lower volumes of custom  designed  frequency  control
devices.  Many of its competitors and potential  competitors have  substantially
greater financial,  engineering,  manufacturing and marketing  resources than it
does. M-tron seeks to manufacture custom designed, high performance crystals and
oscillators, which it believes it can sell competitively based upon performance,
quality, order response time and a high level of engineering support.

Manufacturing

M-tron  has  one  manufacturing  facility  in  Yankton,  South  Dakota,  and has
long-term   relationships  with  two  contract  manufacturers  in  Asia.  M-tron
maintains  a  rigorous  quality  control  system  and is an ISO  9001  qualified
manufacturer.

In 1990, M-tron established a working relationship with a contract  manufacturer
located in South Korea, and in 1994, it established a working  relationship with
a contract manufacturer located in the People's Republic of China. While it does
not have  written long term  agreements  with them,  it believes  that it is the
largest  customer for each of these contract  suppliers  and, as such,  believes
that  from  time  to time  it  received  preferential  treatment  on  production
scheduling matters.

M-tron attempts to utilize standard parts and components that are available from
multiple vendors located in the United States or internationally;  however, some
components  used in its products  are  available  from only a limited  number of
sources.

Intellectual Property

M-tron  believes  that  its  technological  position  depends  primarily  on the
technical competence and creative ability of its engineering and technical staff
in areas of product  design and  manufacturing  processes as well as proprietary
know how and information. To the best of its knowledge, M-tron is not infringing
on the intellectual  property rights of others.  However,  intellectual property
rights are uncertain  and involve  complex  legal and factual  questions.  It is
possible that it may  unknowingly  be infringing  on the  intellectual  property
rights of others.

Employees

As of December 31, 2000, M-tron employed 295 people. It also employs independent
contractors and temporary  employees.  None of its employees is represented by a
labor union and it considers its employee relations to be good.

C.    Lynch Systems, Inc.

Lynch Systems,  Inc.  ("LS"),  a 100% owned  subsidiary of Registrant,  designs,
develops,  manufactures and markets a broad range of manufacturing equipment for
the  electronic  display  and  consumer  glass  industries.   LS  also  produces
replacement  parts for various  types of  packaging  and glass  container-making
machines which LS does not manufacture.

At year-end  1998,  LS,  through a  subsidiary,  entered  into a joint  venture,
Lynch-AMAV  LLC,  with AMAV GmbH of  Germany to develop  and  manufacture  glass
manufacturing equipment for the tableware industry. LS has a 75% interest in the
joint  venture.  The joint  venture  designs and  develops  feeders,  shears and
presses, most of which are manufactured for the joint venture by LS. LS believes
that this joint venture has expanded LS's glass  tableware  equipment  business,
particularly in Europe.  In 2000,  Lynch-AMAV had revenues of approximately  $.6
million.

LS  manufactures  glass-forming  presses  and  electronic  controls  to  provide
high-speed  automated  systems to form  different  sizes of face  panels and CRT
display tubes for television screens and computer monitors, including presses to
build large screen televisions for the HDTV (high definition television) market.
LS also  manufactures and installs forming  equipment that sizes, cuts and forms
tableware such as glass tumblers,  plates,  cups, saucers and commercial optical
glass.  Additionally,  LS manufactures  and installs fire polishing,  electronic
controls and retrofit systems for CRT display and consumer glass presses.

The  production of glassware  entails the use of machines  which heat glass and,
using great pressure,  form an item by pressing it into a desired shape. Because
of the high cost of bringing  the machine and  materials  up to  temperature,  a
machine for producing  glassware  must be capable of running 24 hours a day, 365
days a year.

During 1999,  LS,  including  Lynch-AMAV,  rebuilt TV and  consumer  glass press
machines  for  customers,  as well as selling  feeders,  shears and spare parts.
However,  LS did not deliver any large TV glass press machines in either 1999 or
1998,  although it obtained an order for four large glass press  machines in the
second half of 1999.  These four large  machines  were  delivered in 2000 with a
selling price of approximately $14 million.

At December 31, 2000,  LS had orders for $16.2  million for large TV glass press
machines as well as for glass press  machines,  feeders,  shears and spare parts
for the  tableware  market,  all of which are scheduled to be delivered in 2001.
During the first quarter of 2001, LS has obtained a $1.7 million  contract for a
large TV glass press and is in  negotiations to obtain other orders for large TV
glass presses;  however, there can be no assurance that LS will obtain any other
orders.  LS believes  that in the worldwide  pressware  market it is the largest
supplier  to  glass  companies  that  do not  manufacture  their  own  pressware
machines.  Competitors include various companies in Italy, Japan, Korea, Germany
and elsewhere. While several of the largest domestic and international producers
of glass pressware frequently build their own glass-forming machines and produce
spare parts  in-house,  nearly all pressware  producers  have made  purchases of
machines and/or spare parts from LS.

International  Sales. During 2000,  approximately 80% of LS's sales were made to
international   customers  as  compared  to  approximately   75%  in  1999.  The
profitability  of  international  sales is  approximately  equivalent to that of
domestic  sales.  Because many  international  orders  require  partial  advance
deposits,  with the balance often secured by irrevocable  letters of credit from
banks in the foreign  country,  the Registrant  believes that some of the credit
risks  commonly  associated  with doing  business in  international  markets are
minimized.  The Registrant  avoids  currency  exchange risk by transacting  most
international  sales in United States dollars.  The East Asian financial  crisis
had a very  substantial  adverse impact on LS in 1998 and 1999,  particularly on
its large TV press  business,  although  it did  receive an order for 4 large TV
press  machines in the fall of 1999. In 2000, LS received  orders for 4 large TV
press machines.

Backlog.  LS had an order backlog of approximately $13.5 million at December 31,
2000,  compared  with  approximately  $19.4  million at December  31,  1999.  LS
includes as backlog those orders which are subject to written contract,  written
purchase orders and telephone  orders from long standing  customers who maintain
satisfactory  credit  ratings.  In 1998,  LS received $2.4 million in connection
with the  cancellation  of a $16  million  order for large TV glass  presses and
parts,  which amount can be used by the customer as a credit for future  orders.
The $2.4 million amount is not included in backlog.

Raw Materials.
- -------------

Raw materials are generally  available to LS in adequate supply from a number of
suppliers.


Employees.
- ---------

Lynch Systems  employs  approximately  85 employees at its  Bainbridge,  Georgia
facility, none of whom belong to a union.


IV.   OTHER INFORMATION

While the Registrant  holds  licenses and patents of various  types,  Registrant
does not believe they are critical to its overall operations.

The Registrant conducts product  development  activities with respect to each of
its major lines of business. Currently, such activities are directed principally
toward the  improvement of existing  products,  the  development of new products
and/or diversification.  The cost of such activities (excluding costs associated
with Spinnaker's tape division,  which was sold in 1999), which have been funded
entirely by the Registrant, amounted to approximately $609,000 in 2000, $571,000
in 1999 and $1,030,000 in 1998.

The capital  expenditures,  earnings and competitive position of Registrant have
not been materially affected to date by compliance with current federal,  state,
and local laws and  regulations  relating to the protection of the  environment;
however,  Registrant  cannot predict the effect of future laws and  regulations.
The  Registrant  has not  experienced  difficulties  relative  to fuel or energy
shortages.  See also "Environmental  Regulations" under Item 1. Business A. - A.
Spinnaker Industries, Inc. for more information with respect to Spinnaker.

No portion of the business of the Registrant is regarded as seasonal.

There  were  no  customers  in  2000  or  1999  that  represent  10% or  more of
consolidated  revenues.  The Registrant does not believe that it is dependent on
any single customer.

Additional  information  with  respect  to each  of the  Registrant's  lines  of
business  is  included  in  Note  15 to the  Consolidated  Financial  Statements
included as Item 14(a) below.

V.   EXECUTIVE OFFICERS OF THE REGISTRANT

Pursuant  to General  Instruction  G (3) of Form  10-K,  the  following  list of
executive officers of the Registrant is included in Part I of this Annual Report
on Form  10-K in lieu of being  included  in the  Proxy  Statement  for the 2000
Annual Meeting of  Shareholders.  Such list sets forth the names and ages of all
executive  officers of Registrant  indicating all positions and offices with the
Registrant held by each such person and each such person's principal occupations
or employment during the past five years.

<TABLE>
<CAPTION>

             Name                                  Offices and Positions Held                         Age

<S>                              <C>                                                                 <C>
Mario J. Gabelli                 Chairman   (since   1986)   and   Chief    Executive    Officer      58
                                 (1986-January  2000);  Chairman and Chief Executive  Officer of
                                 Lynch Interactive  Corporation (since September 1999); Chairman
                                 and Chief  Executive  Officer  (since  March  1980) of  Gabelli
                                 Funds,  Inc., a private company which makes investments for its
                                 own  account;  and  Chairman  and Chief  Executive  Officer  of
                                 Gabelli  Asset  Management  Inc.  (since  2000),  a NYSE listed
                                 holding company for subsidiaries  engaged in various aspects of
                                 the securities business.


Anthony J. Castor, III           Vice  Chairman  (since  February  2000);  President  and  Chief      49
                                 Executive  Officer of  Spinnaker  (February  2001 to  present);
                                 President  and Chief  Executive  Officer of The  Morgan  Group,
                                 Inc., a subsidiary of Lynch  Interactive  Corporation  (January
                                 2000 to  present);  President  and Chief  Executive  Officer of
                                 Precision   Industrial   Corporation   (197-1999)  and  Hayward
                                 Industries, Inc. (1993-1997).


Louis A. Guzzetti, Jr.           President and Chief  Executive  Officer  (since  January 2000);      62
                                 President and Chief Executive  Officer of Envirosource,  Inc. a
                                 NASDAQ listed  company  (1986-2000).  Effective  April 1, 2001,
                                 he will cease to be an officer  and  employee of Lynch and will
                                 become  an  employee  of  Spinnaker   Industries,   Inc.  while
                                 remaining a director of Registrant.

George E. Fuehrer                Vice  President-Business   Development  (since  January  2000);      52
                                 Senior Vice  President  of Planning  and  Business  Development
                                 (1997-2000) and  President/Executive  Vice President of Imsamet
                                 Division  (1994-1997) of Envirosource,  Inc.).  Effective April
                                 1, 2001,  will cease to be an officer and employee of Lynch and
                                 will become an employee of Spinnaker Industries, Inc.

Roger J. Dexter                  Controller  and Chief  Financial  Officer  (since  March 2000);      57
                                 Financial  Consultant  (1995-2000),   including  consulting  to
                                 Registrant,  Lynch  Interactive  Corporation and Gabelli Funds,
                                 Inc.
</TABLE>


The executive  officers of the Registrant  are elected  annually by the Board of
Directors  at its  organizational  meeting  in May and  hold  office  until  the
organizational  meeting in the next year and until their  respective  successors
are chosen and qualified.

ITEM 2. PROPERTIES

Registrant   and  Lynch   Interactive   Corporation   share   space   containing
approximately  [5,000]  square  feet  in Rye,  New  York,  for use as  executive
offices.

During 2000 Spinnaker  moved its corporate  headquarters  from Dallas,  Texas to
Troy, Ohio, where it has major facilities.

Spinnaker Coating owns two manufacturing facilities, Plant One and Plant Two, in
Troy, Ohio. Plant One is a 200,000 square foot complex and Plant Two is a 98,000
square  foot  facility.  Spinnaker  Coating  also  leases a 58,000  square  foot
facility  in Troy,  Ohio,  on a month  to  month  basis.  The  facilities  house
manufacturing, administrative and shipping operations.

In connection with Spinnaker Coating's acquisition of the Spinnaker Maine assets
from S.D.  Warren in March 1998,  the parties  entered into a site lease,  which
provides for Warren's  lease of a portion of its  Westbrook,  Maine  facility to
Spinnaker.  Such lease is for a term of 99 years,  provides  for nominal rent of
$1.00 per year,  with an option to purchase  for $1.00.  The  facility  contains
approximately 151,000 square feet. Spinnaker Coating also leases a 15,000 square
foot facility (expiring April 2004) in Westbrook. Spinnaker's plants are subject
to security interests relating to its indebtedness.

Entoleter owns a manufacturing  plant  containing  72,000 square feet located on
approximately 5 acres of land in Hamden, Connecticut.  The land and building are
subject to a mortgage and security agreement executed in support of a bank loan.
Entoleter  also  owns  approximately  6  unimproved  acres  located  in  Hamden,
Connecticut adjacent to its property.

LS's operations are housed in two adjacent  buildings  situated on 3.19 acres of
land in Bainbridge,  Georgia.  In January 1997, LS completed an expansion of its
manufacturing  capacity at this site,  which added  approximately  15,000 square
feet, bringing total  manufacturing  space to approximately  73,000 square feet.
Finished  office area in the two buildings  totals  approximately  17,000 square
feet. All such properties are subject to security deeds relating to loans.

M-tron's  operations  are housed in two separate  facilities  in Yankton,  South
Dakota.  These  facilities  contain  approximately  51,000  square  feet  in the
aggregate.  One facility owned by M-tron  contains  approximately  35,000 square
feet and is situated on  approximately  5 acres of land.  This land and building
are subject to a mortgage  executed in support of a bank loan. The other Yankton
facility  containing  approximately  16,000  square feet is leased,  which lease
expires on September 30, 2003, with options to extend the lease to 2006.

During  2000 and 1999,  Registrant's  manufacturing  facilities  operated in the
aggregate at a relatively high level of capacity utilization.

It is  Registrant's  opinion that the  facilities  referred to above are in good
operating condition and suitable and adequate for present uses.

ITEM 3.    LEGAL PROCEEDINGS

In the normal course of business  subsidiaries  of the Registrant are defendants
in certain product  liability,  worker claims and other  litigation in which the
amounts being sought may exceed  insurance  coverage  levels.  The resolution of
these  matters  is  not  expected  to  have a  material  adverse  effect  on the
Registrant's consolidated financial condition or operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

                                     PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
          STOCKHOLDER MATTERS

The Common Stock of Lynch  Corporation  is traded on the American Stock Exchange
under the symbol "LGL." The market price highs and lows in consolidated  trading
of the Common Stock during the two years ended December 31, 2000 and 1999 are as
follows:
<TABLE>
<CAPTION>
                                          Three Months Ended
2000                               March 31       June 30    September 30  December 31
- ----                               --------       -------    ------------  -----------
<S>                                <C>            <C>         <C>          <C>
High .......................         33 1/2       32 7/8      51           50
Low ........................         25 1/4       25 1/2      31 7/8       43
</TABLE>


<TABLE>
<CAPTION>
1999                               March 31      June 30       September 30      December 31
- ----                               --------      -------      ------------       -----------
<S>                                <C>           <C>           <C>    <C>        <C>
High ......................        85 1/2        84            87     34 1/4     26 1/2
Low .......................        70 1/2        69            78     26 1/8     18 7/8


At March 15, 2001, the Company had 865 shareholders of record.
</TABLE>

On  September  1, 1999,  the  Company  spun off the shares of Lynch  Interactive
Corporation to its shareholders. As a result, stock prices before and after that
date are not comparable. The high and low sales prices of Lynch Interactive from
September 1, 1999 to December 31, 1999, were $120 and $42, respectively, and the
closing price at December 31, 1999, was $99 7/8.


The Board of  Directors  has  adopted a policy of not paying cash  dividends,  a
policy which is reviewed annually.  This policy takes into account the long term
growth   objectives  of  the  Company,   especially  its  acquisition   program,
shareholders'  desire for capital appreciation of their holdings and the current
tax law disincentives for corporate dividend distributions. Accordingly, no cash
dividends have been paid since January 30, 1989 and none are expected to be paid
in 2001.




<PAGE>



ITEM 6. SELECTED FINANCIAL DATA
<TABLE>

                                           LYNCH CORPORATION AND SUBSIDIARIES
                                          CONSOLIDATED SELECTED FINANCIAL DATA
               (Adjusted to Reflect Discontinued Operations and Spin Off of Lynch Interactive Corporation)
                                        (In thousands, except per share amounts)

<CAPTION>
                                                                        Year Ended December 31 (a)
                                                       2000           1999         1998          1997         1996
                                                       ---------------------------------------------------------------

<S>                                                    <C>          <C>          <C>          <C>          <C>
Revenues ...........................................   $ 219,196    $ 194,222    $ 187,644    $ 153,735    $ 166,976
Operating profit (loss) (b) ........................      (4,977)          85        4,074        6,730        8,473
Net financial activities ...........................     (12,751)      (9,528)      (8,392)      (4,884)      (5,166)
Gain on sale of subsidiary stock
 and other operating Assets ........................        --           --          2,090          (91)       5,072
                                                       ---------    ---------    ---------    ---------    ---------
Income  (loss)  from  continuing
  operations  bminorityncome  taxes,
  interests, discontinued operations and
  extraordinary items ..............................     (17,728)      (9,443)      (2,228)       1,755        8,379
(Provision) benefit for income taxes ...............       2,793        2,544        1,408         (301)      (3,571)
Minority interests .................................       9,252        2,647        1,107         (121)        (119)
                                                       ---------    ---------    ---------    ---------    ---------
Income(loss) from continuing operations before
  discontinued operations and extraordinary items ..      (5,683)      (4,252)         287        1,333        4,689
Operations of Lynch Interactive Corporation (f) ....        --         (7,493)       4,929       (3,349)        (818)
Discontinued operations (c) ........................        --           (572)      (1,859)        (862)         173
                                                       ---------    ---------    ---------    ---------    ---------
Gain on sale of Spinnaker's industrial tape
  segment ..........................................        --         10,431         --           --           --
Extraordinary items (d) ............................       2,245          303         --           --         (1,348)
                                                       ---------    ---------    ---------    ---------    ---------

Net income (loss) ..................................   $  (3,438)   $  (1,583)   $   3,357    $  (2,878)   $   2,696
                                                       =========    =========    =========    =========    =========
Per Common Share:(e)
  Income (loss) from continuing  operations before
    discontinued  operations and
  extraordinary items:
    Basic ..........................................   $   (3.81)   $   (3.00)   $     .20    $     .94    $    3.38
    Diluted ........................................       (3.81)       (3.00)         .20          .94         3.34

  Net income (loss):
    Basic ..........................................       (2.31)       (1.12)        2.37        (2.03)        1.94
    Diluted ........................................       (2.31)       (1.12)        2.37        (2.03)        1.92
Cash, securities and short-term investments ........   $  10,543    $  13,106    $   1,132    $   6,499    $  10,561
Restricted cash (h) ................................       6,500       56,026         --           --           --
Total assets (net of discontinued operations) (c)(f)     162,820      211,192      251,658      183,720      144,417
Long-term debt (g) .................................      61,350      116,765      126,976      115,159       96,577
Shareholders' equity (f) ...........................      15,432       15,991       11,441       14,464       (6,083)
<FN>
Notes:

(a)  The data  presented  herein  reflect  the  spin  off of  Lynch  Interactive
     Corporation  (Interactive)  from  the  Company  and the  sale by  Spinnaker
     Industries,  Inc. (Spinnaker), a 47.6% owned consolidated subsidiary of the
     Company,  of its industrial tape units, all of which transactions  occurred
     in the third quarter of 1999.  Accordingly,  the operating  results of both
     Interactive  and the  industrial  tape  segment have been  segregated  from
     continuing  operations  of the  Company and are  reported as separate  line
     items.  The data presented also includes  results of the business  acquired
     from S.D. Warren (name changed  Spinnaker  Coating-Maine,  Inc.) from March
     17, 1998.

(b)  Operating  profit is  revenues  less  operating  expenses,  which  excludes
     investment  income,   interest  expense,   extraordinary  items,   minority
     interests and taxes.

(c)  Discontinued  operations  of  the  industrial  tape  segment  of  Spinnaker
     Corporation  and  Lynch  Tri-Can  International  in  1996.  (See  Note 3 to
     Financial Statements).

(d)  Gain (loss) on early extinguishments of debt at Spinnaker in 2000, 1999 and
     1996.

(e)  Based on weighted average number of common shares outstanding.

(f)  No cash  dividends  have been  declared  over the period.  In 1999 for each
     share of Lynch  Common  Stock,  shareholders  received  one  share of Lynch
     Interactive  Corporation in a Spin Off of the multimedia and transportation
     business (See Note 4 to Financial  Statements).  In 1997, for each share of
     Lynch  Common   Stock,   shareholders   received  one  share  of  East/West
     Communications,  Inc.,  an F block PCS licensee  with  licenses  covering a
     population of 20 million.

(g)  Includes  $58.1  million of  long-term  debt at December  31, 2000 of 47.6%
     owned Spinnaker Industries.

(h)  See  discussion of Restricted  Cash in Note 6 - Notes Payable and Long-Term
     Debt.
</FN>
</TABLE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

          AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

YEAR 2000 COMPARED TO 1999

Net Sales

Revenues for the year ended December 31, 2000 were $219.2  million,  an increase
of $25.0 million from the  comparable  1999 period.  Spinnaker's  2000 net sales
were $155.7  million,  compared to $162.1  million in 1999.  The decrease in net
sales for 2000 is  attributed  to entering into a joint venture to outsource the
manufacturing  and sales of non-pressure  sensitive  product lines in the fourth
quarter of 1999 and lower sales  volumes of general  purpose  pressure-sensitive
products.  Net sales were also  impacted  by lower  prices  from  intense  price
competition in the general purpose and other  pressure-sensitive  product lines.
Offsetting  these  declines were  increased  sales of  pressure-sensitive  sheet
products.

Additionally,  net sales at  Spinnaker's  Entoleter  business  declined  by $1.4
million due to continued  lower unit  pricing.  Revenues at M-tron  increased by
$13.4 million due to increased demand from the  telecommunications  industry and
increased  sales of new products.  Lynch  Systems'  revenues  increased by $18.0
million due to increased order flow and sales of glass press machines.

Operating Loss

Operating loss for 2000 was $5.0 million  compared to an operating profit of $.1
million  in  1999.  Spinnaker's  operating  loss was $9.5  million  compared  to
operating  profit  of  $1.6  million  in  1999.  Spinnaker's  operating  results
primarily   reflect  lower  operating   margins,   increased   depreciation  and
amortization  associated  with capital  expenditures  used in the  manufacturing
process,  lower product volumes,  and an increase in product  development costs.
Spinnaker recognized certain restructuring charges,  affiliated with its Coating
business,  during the fourth quarter 2000 of approximately  $2.2 million and had
previously  recorded  approximately $.5 million in the first quarter of 2000. To
better  concentrate  on Coating's  strengths and market niche,  the decision was
made by  Spinnaker  management  to  reorganize  and realign the  business in the
fourth quarter of 2000 and going forward in 2001. The restructuring involved the
elimination of product lines and related manufacturing  operations,  outsourcing
of non core  manufacturing  processes  and the  termination  of  seven  salaried
employees,  primarily senior  management.  Spinnaker expects to incur additional
restructuring  charges in 2001 as its management  continues to further  evaluate
and improve on its business strategies.

M-tron's  operating  profit  increased  by $1.4  million to $3.3  million due to
increased volume and increased margins. Lynch Systems operating profit increased
by $4.9 million to $2.7 million due to increased  order volume and a significant
increase in margins over 1999 depressed levels.

Other Income/Expense

Investment  income decreased by $.6 million due to the utilization of restricted
cash from the 1999 sale of  Spinnaker's  industrial  tape units to buy back debt
which reduced the funds available for short-term investments.

Interest  expense was $11.4  million and decreased by $.4 million from the prior
year  primarily  due  to  the  reduction  of  Spinnaker's  Senior  Notes  by the
repurchase  mentioned above,  offset by interest costs for short term borrowings
at various subsidiaries.

In addition,  Spinnaker  recognized  an  impairment  loss of $2.8 million in its
investment in certain  warrants as a result of the decline  during the third and
fourth quarter of 2000 in the underlying value of the stock associated with such
warrants. (see Item 7a)

The income tax benefit includes  federal,  as well as state and local taxes. The
tax benefit for the year ended December 31, 2000, and 1999, represents effective
tax rates of 16% for 2000 and 27% for 1999.  The  differences  from the  federal
statutory rate are principally due to the effect of state income taxes,  foreign
sales  amortization  of  non-deductible  goodwill  and a valuation  allowance on
Spinnaker's  deferred  tax  assets  (see  Note  11  to  Condolidated   Financial
Statements).  Spinnaker has  approximately  $14.6 million of net operating  loss
carry forwards  (NOL's)  available to offset future taxable income.  These NOL's
expire in years beginning 2008 through 2020.

Minority  interests  contribution  to the net income  (loss)  increased  by $6.6
million  for the year  from the  prior  year due to the  increased  losses  from
continuing operations at Spinnaker.

Net loss for the year ended December 31, 2000, was $3.4 million,  or ($2.31) per
share, which compares to the net loss of $1.6 million, or ($1.12) per share, for
the same period of 1999, due primarily to the operating  losses mentioned above,
offset by Spinnaker's gain on repurchase of its Senior Notes ($2.2 million after
income taxes and minority interest).

Total backlog of  manufactured  products at December 31, 2000 was $34.5 million,
which  represents  an increase of $1.4 million from the backlog of $32.9 million
at December  31,  1999.  Not  included in this  backlog is $2.2 million and $2.4
million at December 31, 2000 and 1999 respectively,  representing a payment from
a  customer  for an  earlier  glass  press  order at  Lynch  Systems  which  was
subsequently cancelled.  The customer can use this amount for future orders and,
if not  utilized,  will be  forfeited  to Lynch  Systems.  The  backlog at Lynch
Systems has dropped  from $17.0  million to $13.5  million  while the backlog at
M-tron has increased by $5.5 to $12.4 million.  The backlog at Spinnaker dropped
by $.3 million to $8.6 million.

YEAR 1999 COMPARED TO 1998

The accompanying audited consolidated  financial statements reflect the Spin Off
of Lynch Interactive  Corporation  (Interactive) from Lynch Corporation  (Lynch)
that  occurred  in the  third  quarter  of 1999 and  also the sale by  Spinnaker
Industries,  Inc. (Spinnaker),  a consolidated subsidiary of the Company, of its
two industrial tape units,  Central Products  Company and Spinnaker  Electrical,
that also  occurred in the third  quarter of 1999.  Accordingly,  the  operating
results of both Interactive and the industrial tape segment have been segregated
from  continuing  operations  of the Company and are  reported as separate  line
items on the financial  statements as discontinued  operations.  The comparative
amounts for 1998 have also been restated to reflect the above transactions.  The
ensuing narrative  considers these changes and only includes  discussions of the
Company as it is currently composed.  EBITDA is presented because it is a widely
accepted  financial  indicator  of value and ability to incur and service  debt.
EBITDA is not a substitute  for  operating  income or cash flows from  operating
activities in accordance with generally accepted accounting principles.

Revenues for the year ended December 31, 1999 were $194.2  million,  an increase
of $6.6 million from the comparable 1998 period. Spinnaker's 1999 net sales were
$162.1 million,  compared to $159.1 million in 1998. The growth in net sales for
1999  is  attributed  to  approximately  $7.6  million  in net  sales  from  the
acquisition of Coating-Maine  and higher unit sales of certain label stocks from
1998,  which were offset by increased  domestic  capacity and the  disruption of
business  at  Entoleter  from a  mid-summer  labor  dispute.  Revenues at M-tron
increased by $3.7 million due to  increased  demand from the  telecommunications
industry and  increased  sales of new  products.  Lynch  Systems'  revenues were
essentially flat.

Operating  profit for 1999 declined by $4.0 million from the operating profit in
the  prior  year.   Spinnaker's   operating  profit  declined  by  $3.7  million
principally  due to lower gross margins as a result of the lower pricing and the
impact of the  Entoleter  labor  dispute,  partially  offset by gains on sale of
fixed assets and lower selling,  general and administrative  expenses.  M-tron's
operating profit increased by $.4 million due to increased volume.

Subsequent to the spin off of Interactive,  the Company, with the concurrence of
the  holders  of all  outstanding  SAR units,  terminated  its SAR  program  for
corporate management, including all outstanding units, thus eliminating possible
future profit and loss and cash flow distortions associated with the program. As
a result of the  termination,  the Company  recorded  approximately  $700,000 of
related corporate expense.

Investment  income  increased due to the investment in short term  securities of
approximately $75 million in proceeds  remaining,  after payment of certain debt
obligations,  from the sale by Spinnaker of its Central  Products and Electrical
Tape businesses.

Interest  expense was $11.9 million and increased from the prior year due to the
allocation of a portion of the interest  associated  with the  Spinnaker  10.75%
Senior Secured Notes Due 2006 (the Senior Notes) to the discontinued  industrial
tape segment that ceased at the time of their sale in the third quarter of 1999.
Interest  expense  also  increased  due to higher  debt  levels  resulting  from
Spinnaker's acquisition of the Warren assets.

Interest  expense  from  continuing  operations  is subject  to certain  matters
associated  with the use of the net  proceeds  from the sales of the  industrial
tape units of  Spinnaker,  including  retirement  of senior  debt or  "permitted
investments" as defined under the Indenture.

The income tax benefit includes  federal,  as well as state and local taxes. The
tax benefit for the year ended December 31, 1999, and 1998, represents effective
tax rates of 27% for 1999 and 63% for 1998.  The  differences  from the  federal
statutory  rate  are  principally  due to the  effect  of  state  income  taxes,
operating losses of subsidiaries and amortization of non-deductible goodwill.

Minority  interests  contribution  to the net income  (loss)  increased  by $1.5
million  for the year  from the  prior  year due to the  increased  losses  from
continuing operations at Spinnaker and the January 1, 1999, repurchase of M-tron
minority interest.

On August 12, 1999,  the Board of Directors  approved a plan to  distribute  the
stock  of  Lynch  Interactive  Corporation  on  a  one  for  one  basis  to  the
shareholders of Lynch  Corporation ( the spin off). Lynch completed the spin off
of Lynch Interactive Corporation on September 1, 1999, to stockholders of record
on August 23, 1999.  Pursuant to the spin off, each Lynch  shareholder  received
one share of Interactive stock for each share of Lynch owned. Lynch had received
a private  letter  ruling from the  Internal  Revenue  Service that the spin off
would be tax free to Lynch shareholders. Interactive has listed its stock on the
American Stock Exchange. (LIC)

Interactive owns all of what was Lynch's multimedia and service businesses while
Lynch  retains the  manufacturing  businesses.  Interactive  owns the  telephone
companies,  television  interests and PCS  interests,  as well as the 55% equity
interest of the Morgan Group, Inc. In addition,  Interactive owns a 13.6% equity
interest  in  Spinnaker  Industries,  Inc.  Lynch owns a 48% equity  interest in
Spinnaker  after the spin  off,  as well as M-tron  Industries,  Inc.  and Lynch
Systems, Inc.

As a result of the spin off, the Company's  multimedia and services segments are
being reported as operations  distributed to  shareholders  in the  accompanying
consolidated  financial  statements.  Accordingly,  operating  results  of Lynch
Interactive  Corporation  have been segregated  from  continuing  operations and
reported  as a separate  line item on the  statement  of  operations.  Lynch has
restated its prior year financial statements to present the operating results of
Lynch  Interactive on a comparable  basis.  Interactive's  net sales were $204.6
million for the year ended  December  31,  1999,  and $205.1  million and $194.1
million for the fiscal years ended December 31, 1998 and 1997, respectively.

Prior to the spin off,  Lynch  Interactive  recorded a $15.4  million  valuation
reserve  due to the  decline  in  market  value of its  investment  in  personal
communications  licenses.  As a result,  Lynch Interactive reported an operating
loss for the first eight months of 1999.

In the third  quarter of 1999,  Spinnaker  sold its two  industrial  tape units,
Central Products Company and Spinnaker Electrical, which comprise its industrial
tape segment. Accordingly, operating results of the industrial tape segment have
been  segregated  from  continuing  operations  and reported  separately  in the
statement of operations. Lynch has restated its prior years financial statements
to  present  the  operating   results  of  the  industrial  tape  segment  as  a
discontinued operation. The industrial tape segment's net sales, up to the point
of its sale, were $69.5 million for the year ended December 31, 1999, and $121.8
million and $119.7  million for the fiscal  years  ended  December  31, 1998 and
1997, respectively.

Net loss for the year ended December 31, 1999, was $1.6 million,  or ($1.12) per
share, which compares to the net income of $3.4 million, or $2.37 per share, for
the same period of 1998 due primarily to the operating  losses  mentioned  above
and the loss incurred by Interactive,  offset by Spinnaker's gain on sale of its
industrial tape units ($10.4 million after income taxes and minority interest).

Total backlog of  manufactured  products at December 31, 1999 was $32.9 million,
which  represents  an increase of $25.5 million from the backlog of $7.4 million
at December 31, 1998.  All  operating  units  contributed  significantly  to the
increase in backlog at December 31, 1999.  Not included in this backlog for both
periods is a $2.4 million  payment  from a customer  for an earlier  glass press
order at Lynch Systems which was  subsequently  cancelled.  The customer can use
this amount for future orders and, if not  utilized,  will be forfeited to Lynch
Systems.  Included in the backlog at December 31, 1999,  is a $14 million  order
for large glass press machines at Lynch Systems.  In connection with this order,
Lynch Systems has obtained a substantial  credit facility to protect advances by
the customer and for working capital.



<PAGE>



LIQUIDITY AND CAPITAL RESOURCES

At December  31,  2000,  the Company  had  current  assets of $96.6  million and
current  liabilities  of $71.2  million.  Working  capital was  therefore  $25.4
million as compared to $23.2 million at December 31, 1999.

Cash  used in  operating  activities  was  approximately  $3.4  million  in 2000
compared to approximately $9.1 million used in operations in 1999.

Capital expenditures were $4.3 million in 2000 and $3.8 million in 1999. Overall
2001 capital  expenditures are expected to be approximately  35% higher than the
2000 level with the increases primarily at Lynch Systems and M-tron. The Company
anticipates that it will have sufficient cash flow from operations and borrowing
availability  under various credit  facilities at the  subsidiaries to fund such
capital expenditure plans.

At December 31, 2000, total debt was $93.0 million, which was $48.6 million less
than the $141.6  million at the end of 1999.  The reduction in debt is primarily
due to  principal  repayments  and the  repurchase  of debt by  Spinnaker  which
yielded a gain to the Company of $2.2 million  (after  income tax  provision and
minority  interest).  Debt at year  end 2000  included  $63.2  million  of fixed
interest rate debt, at an average  interest rate of 11.0%,  and $29.8 million of
variable  interest rate debt at an average interest rate of 9.5%.  Additionally,
the Company had $5.8 million in unused lines of credit at December 31, 2000,  of
which $4.0 million was attributed to Spinnaker ($3.7 million at March 26, 2001).
Spinnaker  also has $7.0  million of cash from the sale of the  Industrial  tape
unit  after  the  repurchase  of Senior  Notes in 2000 and  other  uses and $6.5
million of restricted cash for the paydown of the Spinnaker Credit Facility. The
Spinnaker  Credit  Facility is available  to support  periodic  fluctuations  in
working  capital.  Credit  availability  under the Spinnaker  Credit Facility is
subject to certain variables,  such as inventory and receivables  eligible to be
included in the  borrowing  base.  The  Company is charged an unused  credit fee
every  month of 0.375%  per  annum.  Outstanding  borrowings  bear  interest  at
variable  rates  primarily  related to LIBOR.  The  Company  anticipates  having
sufficient  availability  under the Spinnaker  Credit  Facility  along with cash
balances to meet its interest  obligations  for 2001. In January of 2001,  Lynch
Systems  entered into an  agreement  with a bank for a $4 million line of credit
for working capital  purposes.  Also in January of 2001, M-tron amended its line
of credit agreement with its bank to increase the line from $3.7 million to $6.0
million.

In connection with the Spinnaker Coating-Maine  acquisition,  Spinnaker issued a
promissory  note ("Warren Note") to Warren  (sellers) in the original  principal
amount of $7,000.  Subsequent to December 31, 2000,  the Warren Note was amended
to have the maturity date extended to January 31, 2003 and interest to accrue at
a rate of 14% commencing 2001.  Additionally,  at the option of the holder,  the
Warren Note may be  converted  into  Spinnaker's  Common Stock on a basis of 250
shares per $1,000 of outstanding  principal amount of the Warren Note (or $4 per
share). Payments of principal and interest are subject to restrictions contained
in,  and in any event are  junior and  subordinate  in right of payment  to, the
payment of  indebtedness  outstanding  under the Spinnaker  Credit  Facility and
Senior Notes.  The Warren Note matures on January 31, 2003,  however,  it can be
prepaid earlier.

Since 1987,  the Board of Directors of Lynch has  authorized  the  repurchase of
400,000 common shares. At December 31, 2000, Lynch's remaining  authorization is
to repurchase an additional  161,000 shares of common stock. In 2000, there were
no shares purchased for treasury.

Lynch  Corporation  has had an  active  acquisition  program  and has  generally
financed each acquisition with a significant component of debt. This acquisition
debt contains  restrictions on the amount of readily available funds that can be
transferred  to the  parent  company  from its  subsidiaries.  As the  result of
acquisitions,  Lynch  consolidated  and Spinnaker have  relatively  high debt to
equity  ratios.  In  addition,  Spinnaker's  financial  position  has also  been
adversely affected by the continuation of depressed  business  conditions in the
coating business.

The  Company  has a need for  resources  to fund the  operations  of the holding
company and future growth. There currently is no credit facility in place at the
Lynch corporate level, and the Company from time to time considers  various long
and short term financing  arrangements.  In January 2001,  Lynch received a cash
dividend of $1.5 million from M-tron

The  Company is  exploring  all options  with  respect to  Spinnaker,  including
liquifying and monetizing its  investment,  and is searching for ways to provide
the Company with a more financially  visible  investment with respect to M-tron.
In the fall of 2000,  M-tron filed a  registration  statement  with respect to a
rights  offering to the Company's  shareholders.  The offering was delayed until
market conditions are more favorable.  The Company will continue to evaluate the
situation but there is no assurance that any transaction will be implemented.

In March,  2000, the Company completed the previously  announced sale of 100,000
shares of its common  stock to its  Chairman  at $30 per share,  or $3  million.
These funds are available for general corporate purposes.

The Board of  Directors  has  adopted a policy of not paying cash  dividends,  a
policy which is reviewed annually.  This policy takes into account the long term
growth   objectives  of  the  Company,   especially  its  acquisition   program,
shareholders'  desire for capital appreciation of their holdings and the current
tax law disincentives for corporate dividend distributions. Accordingly, no cash
dividends have been paid since January 30, 1989 and none are expected to be paid
in 2001.

MARKET RISK

The Company is exposed to market risk  relating to changes in the general  level
of U.S. interest rates. Changes in interest rates affect the amounts of interest
earned  on  the  Company's  cash  equivalents  and  short-term  investments  and
restricted  cash.  The  Company  generally  finances  the  debt  portion  of the
acquisition  of long-term  assets with fixed rate,  long-term  debt. The Company
generally  maintains  the majority of its debt as fixed rate in nature either by
borrowing  on a fixed  long-term  basis or, on a limited  basis,  entering  into
interest rate swap  agreements.  The Company does not use  derivative  financial
instruments for trading or speculative purposes. Management does not foresee any
significant  changes in the strategies  used to manage interest rate risk in the
near future,  although the strategies  may be  reevaluated as market  conditions
dictate.  The Financial  Accounting  Standards Board issued Statement (SFAS) No.
133,  "Accounting for Derivative  Instruments and Hedging Activities" as amended
in 2000 by SFAS #138 "Accounting for Certain Derivative  Instruments and Certain
Hedging   Activities."  The  new  standards  require  that  all  derivatives  be
recognized as assets or liabilities  in the statement of financial  position and
measured at fair value. Gains or losses resulting from changes in fair value are
required to be recognized in current earnings unless specific hedge criteria are
set. These standards became effective for the Company beginning January 1, 2001.

The Company has determined the effect of this new standard, with the only impact
being the value of the warrants  obtained through the sale of Central  Products.
At December 31,  2000,  the warrants  were valued at  approximately  $.2 million
(fair value) using the  Black-Scholes  option pricing model and were recorded at
that value.  Accordingly,  Spinnaker  recognized a loss of $2.8 million  after a
write-down of these warrants to fair value during 2000.

At December 31,  2000,  approximately  $29.8  million,  or 32% of the  Company's
long-term debt and notes payable bears interest at variable rates.  Accordingly,
the Company's earnings and cash flows are affected by changes in interest rates.
Assuming the current level of  borrowings  for variable rate debt and assuming a
one  percentage  point  change in the 2000  average  interest  rate under  these
borrowings,  it is estimated that the Company's  2000 and 1999 interest  expense
would have changed by $.3 million and $.2 million, respectively. In the event of
an adverse  change in interest  rates,  management  would likely take actions to
further  mitigate its exposure.  However,  due to the uncertainty of the actions
that would be taken and their  possible  effects,  the analysis  assumes no such
actions.  Further,  the analysis  does not consider the effects of the change in
the level of overall economic activity that could exist in such an environment.

CONCENTRATIONS OF CREDIT RISK

Financial  instruments  that  potentially  subject  the  Company to  significant
concentrations of credit risk consist  principally of cash,  investments,  trade
accounts receivable, and derivatives.

The  Company  maintains  cash and  cash  equivalents  and  short  and  long-term
investments with various financial  institutions.  These financial  institutions
are located throughout the country and the Company's policy is designed to limit
exposure to any one institution.  The Company performs  periodic  evaluations of
the relative credit standing of those financial institutions that are considered
in the Company's  investment  strategy.  Other than certain accounts receivable,
the Company  does not require  collateral  on these  financial  instruments.  In
relation to export sales, the Company  requires  letters of credit  supporting a
significant  portion of the sales price prior to production to limit exposure to
credit risk.  Certain  subsidiaries  and business  segments have credit sales to
industries that are subject to cyclical economic changes.  The Company maintains
an  allowance  for  doubtful  accounts  at a level that  management  believes is
sufficient to cover potential credit losses.

The  excess  of cost  over  fair  value  of net  assets  of  companies  acquired
(goodwill) is being amortized over amoritization  periods ranging from twenty to
forty  years.  Management  continues  to believe  the  methods  and  periods are
appropriate (see Note 1 to Consolidated Financial Statements).

PROSPECTIVE INFORMATION

Certain  subsidiaries  and business  segments of the Company sell to  industries
that are subject to cyclical  economic  changes.  Any  downturns in the economic
environment (as it appears, we are now experiencing) would have financial impact
on the  Company and its  consolidated  subsidiaries  and may cause the  reported
financial  information  herein not to be indicative of future operating results,
financial condition or cash flows.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The  information  required by this Item 7A is included under the caption "Market
Risk" in  "Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations" in Item 7.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See Item 14(a).

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
        AND FINANCIAL DISCLOSURE

Not applicable.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The  information  required  by  this  Item  10 is  included  under  the  caption
"Executive  Officers of the  Registrant" in Item 1 hereof and included under the
captions  "Election of Directors" and "Section 16(a)  Reporting" in Registrant's
Proxy  Statement  for  its  Annual  Meeting  of  Shareholders  for  2001,  which
information is incorporated herein by reference.


ITEM 11.  EXECUTIVE COMPENSATION

The  information  required  by  this  Item 11 is  included  under  the  captions
"Compensation of Directors," "Executive  Compensation,"  "Executive Compensation
and Benefits Committee Report on Executive Compensation" and "Performance Graph"
in Registrant's Proxy Statement for its Annual Meeting of Shareholders for 2001,
which information is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this Item 12 is included under the caption "Security
Ownership of Certain  Beneficial  Owners and  Management,"  in the  Registrant's
Proxy  Statement  for  its  Annual  Meeting  of  Shareholders  for  2001,  which
information is included herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  information  required  by  this  Item  13 is  included  under  the  caption
"Executive Compensation",  and "Transactions with Certain Affiliated Persons" in
the  Registrant's  Proxy  Statement for its Annual Meeting of  Shareholders  for
2001, which information is included herein by reference.

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES
          AND REPORTS ON FORM 8-K

(a)  The following documents are filed as part of this Form 10-K Annual Report:

     (1)  Financial Statements:

                  The  Report  of   Independent   Auditors  and  the   following
                  Consolidated  Financial Statements of the Company are included
                  herein:

                  Consolidated Balance Sheets at December 31, 2000 and 1999

                  Consolidated Statements of Operations - Years ended December
                  31, 2000, 1999 and 1998

                  Consolidated  Statements of Shareholders' Equity - Years ended
                  December 31, 2000, 1999, and 1998

                  Consolidated Statements of Cash Flows - Years ended December
                  31, 2000, 1999, and 1998

                  Notes to Consolidated Financial Statements

     (2)  Financial Statement Schedules as of December 31, 2000 and 1999 and for
          the three years ended December 31, 2000:

                  Schedule I - Condensed Financial Information of Registrant

                  Schedule II - Valuation and Qualifying Accounts

                  All  other  schedules  for  which  provision  is  made  in the
applicable  accounting  regulation of the Securities and Exchange Commission are
not required under the related instructions, or are inapplicable,  and therefore
have been omitted.

     (3)  Exhibits: See the Exhibit Index beginning on page 49 of this Form 10-K
          Annual Report.

         See Page 2 above re Forward Looking Information.

(b)      Reports on Form 8-K:  None

(c)  The following Exhibits listed in the Exhibit Index are filed with this Form
     10-K Annual Report:

         10(v)    -        Promissory Note from Louis A. Guzzetti, Jr. to
                           Registrant

         21       -        Subsidiaries of the Registrant

         23       -        Consent of Ernst & Young LLP

         24       -        Powers of Attorney

(d)      Financial Statement Schedules:

         Financial Statement Schedules are listed in response to Item 14(a)(2)


<PAGE>



                         REPORT OF INDEPENDENT AUDITORS

Shareholders and Board of Directors
Lynch Corporation

We  have  audited  the  accompanying   consolidated   balance  sheets  of  Lynch
Corporation  and  subsidiaries  ("Lynch  Corporation"  or the  "Company")  as of
December  31,  2000  and  1999,  and  the  related  consolidated  statements  of
operations,  shareholders' equity, and cash flows for each of the three years in
the period  ended  December  31, 2000.  Our audits also  included the  financial
statement  schedules  listed  in  the  index  at  Item  14(a).  These  financial
statements and schedules are the responsibility of the Company's management. Our
responsibility  is to  express  an opinion  on these  financial  statements  and
schedules 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 consolidated financial position of Lynch Corporation
and subsidiaries at December 31, 2000 and 1999 and the  consolidated  results of
their  operations and their cash flows for each of the three years in the period
ended  December 31, 2000, in conformity  with  accounting  principles  generally
accepted in the United  States.  Also,  in our  opinion,  the related  financial
statements  schedules,  when  considered  in  relation  to the  basic  financial
statements  taken as a whole,  present  fairly  in all  material  respects,  the
information set forth therein.




                                                  /s/ ERNST & YOUNG LLP
Stamford, Connecticut
March 30, 2001


<PAGE>

<TABLE>


LYNCH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

<CAPTION>
                                                               December 31,      December 31,
                                                                  2000              1999
                                                               -----------------------------
ASSETS
CURRENT ASSETS:
<S>                                                                <C>          <C>
Cash and cash equivalents ....................................     $  10,543    $  13,106
Restricted cash ..............................................         6,500         --
Trade accounts receivables, less allowances of $1,582 and $361        35,019       24,642
Inventories ..................................................        35,139       31,680
Deferred income taxes ........................................         7,624        8,943
Prepaid expense .............................................          1,807        1,303
                                                                   ---------    ---------

TOTAL CURRENT ASSETS ...........................................      96,632       79,674

Restricted Cash ................................................        --         56,026

PROPERTY, PLANT AND EQUIPMENT, Net:
  Land .........................................................         797          672
  Buildings and improvements ...................................      11,076       11,015
  Machinery and equipment ......................................      56,951       54,529
                                                                   ---------    ---------
                                                                      68,824       66,216

  Less:  Accumulated depreciation ..............................     (27,713)     (22,137)
                                                                   ---------    ---------
                                                                      41,111       44,079

EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED, NET .....      21,589       22,020
OTHER ASSETS ...................................................       3,488        9,393
                                                                   ---------    ---------
TOTAL ASSETS ...................................................   $ 162,820    $ 211,192
                                                                   =========    =========

See accompanying notes
</TABLE>



<PAGE>



<TABLE>


LYNCH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
<CAPTION>
                                                                               DECEMBER 31,     DECEMBER 31,
                                                                                   2000             1999
                                                                                -----------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
<S>                                                                                <C>          <C>
  Notes payable to banks .......................................................   $  30,288    $  23,178
  Trade accounts payable .......................................................      19,251       14,404
  Accrued interest payable .....................................................       1,185        2,426
  Accrued liabilities ..........................................................      15,234       13,956
  Customer advances ............................................................       3,916          860
  Current maturities of long-term debt .........................................       1,376        1,636
                                                                                   ---------    ---------
TOTAL CURRENT LIABILITIES ......................................................      71,250       56,460

LONG-TERM DEBT .................................................................      61,350      116,765
DEFERRED INCOME TAXES ..........................................................       6,752        6,225
OTHER LONG-TERM LIABILITIES ....................................................       4,223        4,866
MINORITY INTERESTS .............................................................       3,813       10,885

SHAREHOLDERS' EQUITY
  COMMON STOCK, NO PAR OR STATED VALUE - 10,000,000 SHARES AUTHORIZED; 1,513,191
  and 1,471,191 shares issued and outstanding of
  1,510,183 and 1,410,183 ......................................................       5,139        5,139
  ADDITIONAL PAID-IN CAPITAL ...................................................      10,403        8,302
  RETAINED EARNINGS ............................................................         405        3,843
  OFFICER'S NOTE RECEIVABLE ....................................................        (382)        --
  ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ................................         (71)         (40)
  TREASURY STOCK OF 3,008 and 61,008 SHARES AT COST ............................         (62)      (1,253)
                                                                                   ---------    ---------
TOTAL SHAREHOLDERS' EQUITY .....................................................      15,432       15,991
                                                                                   ---------    ---------
TOTAL LIABILITIES AND SHAREHOLDERS EQUTY .......................................   $ 162,820    $ 211,192
                                                                                   =========    =========

See accompanying notes
</TABLE>


<PAGE>


<TABLE>
                                           LYNCH CORPORATION AND SUBSIDIARIES
                                         CONSOLIDATED STATEMENTS OF OPERATIONS
                                          (In thousands, except share amounts)

<CAPTION>

                                                                 Years ended December 31,
                                                        ------------------------------------------
                                                            2000           1999           1998
                                                        ------------------------------------------
<S>                                                      <C>            <C>            <C>
 SALES AND REVENUES ..................................   $   219,196    $   194,222    $   187,644

Costs and expenses:
  Manufacturing cost of sales .......................       192,980        172,567        162,735
  Selling and administrative ........................        28,485         21,120         20,835
  Restructuring charge ..............................         2,708            450           --
                                                        -----------    -----------    -----------

OPERATING PROFIT (LOSS)- ............................        (4,977)            85          4,074

Other income (expense):
  Investment income .................................         1,481          2,354            199
  Interest expense ..................................       (11,432)       (11,882)        (8,591)
  Impairment of Spinnaker's investment in warrants ..        (2,800)          --             --
  Gain on sale of stock by subsidiary ...............          --             --            2,090
                                                        -----------    -----------    -----------
                                                            (12,751)        (9,528)        (6,302)
                                                        -----------    -----------    -----------
LOSS FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES, MINORITY INTERESTS, DISCONTINUED
OPERATIONS AND EXTRAORDINARY ITEM
                                                            (17,728)        (9,443)        (2,228)

Benefit  for income taxes ...........................         2,793          2,544          1,408
Minority interests ..................................         9,252          2,647          1,107
                                                        -----------    -----------    -----------
(LOSS) INCOME  FROM CONTINUING OPERATIONS
BEFORE DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEM        (5,683)        (4,252)           287

DISCONTINUED OPERATIONS:
Income (Loss) from operations of Lynch  Interactive
Corporation  distributed to shareholders (less income
tax (provision)  benefit of $3,068 and ($5,012),  and
minority interests of $578 and $1,226) ..............          --           (7,493)         4,929

Loss from  discontinued  operations  of  industrial
tape  segment of  Spinnaker Industries (less
applicable income tax (provision) benefit of $308
and $2,192, and minority interests of $558 and ......          --             (572)        (1,859)
                                                                                      $     1,429)

Gain on sale of Spinnaker's industrial tape
operations (less income tax provision of $6,495
and minority interest of $7,013) ....................          --           10,431           --

EXTRAORDINARY ITEM
Gain on early extinguishments of debt (less income
tax provision of $2,612 and $355 and minority
interest of $2,472 and $300) ........................         2,245            303           --

                                                        -----------    -----------    -----------

NET INCOME (LOSS) ...................................   $    (3,438)   $    (1,583)   $     3,357
                                                        ===========    ===========    ===========

Weighted average shares outstanding .................     1,491,000      1,415,000      1,418,000

Basic and diluted earnings (loss) per share:
  Income (loss) from continuing operations
  before discontinued operation .....................   ($     3.81)   ($     3.00)   $       .20
  Income (loss) from Lynch Interactive Corporation ..          --            (5.30)          3.48
  Income (loss) from discontinued operations ........          --             6.97          (1.31)
  Extraordinary item ................................          1.51            .21           --
                                                        -----------    -----------    -----------
NET INCOME (LOSS) ...................................   ($     2.31)   ($     1.12)   $      2.37
                                                        ===========    ===========    ===========

See accompanying notes
</TABLE>




<PAGE>

<TABLE>


                       LYNCH CORPORATION AND SUBSIDIARIES
                 Consolidated Statements of Shareholders' Equity
                   For the Three Years Ended December 31, 2000


                                            (In thousands except for shares of common stock)
<CAPTION>
                                 Shares of                                  Officer's  Accumulated
                               Common Stock                 Additional        Note      Other
                                Outstanding   Common    Paid-In  Retained     Receiv-   Comprehen-siveTreasury
                                                Stock   Capital  Earnings     able       Income       Stock        Total
                               -------------- --------  --------- --------- ---------- ------------- ---------- -----------

<S>                            <C>          <C>        <C>       <C>           <C>         <C>      <C>        <C>
BALANCE AT DEC. 31, 1997 ....  1,417,048    $  5,139   $  8,644  $   23,414    $    0       --      $  (746)   $   36,451
  Issuance of Treasury Stock       1,200         --          74        --          --       --           16            90
  Capital transactions of The      --            --        (164)       --          --       --          --           (164)
     Morgan Group, Inc. .....
 Net income (loss) for year        --            --         --        3,357        --       --          --          3,357
  Other comprehensive income       --            --         --         --          --         59        --             59

                                ---------   ----------  ---------- ----------  -------- ---------- ----------   - -------
BALANCE AT DEC. 31, 1998 ....  1,418,248       5,139      8,554      26,771    $    0         59       (730)       39,793
  Purchase of Treasury Stock      (8,065)        --         --         --          --       --         (523)         (523)
  Capital transactions of The
    Morgan Group, Inc. ......      --            --        (252)       --          --       --          --           (252)
  Dividend of Lynch
Interactive .................      --            --         --      (21,345)       --        (59)       --        (21,404)
    Corporation
  Net income (loss) for yea        --            --         --       (1,583)       --       --          --         (1,583)
  Other comprehensive income       --            --         --         --          --        (40)       --            (40)
                               ----------   ---------   ---------- ----------  ---------- --------  ----------    --------
BALANCE AT DEC. 31, 1999 ....  1,410,183      5,139       8,302       3,843    $    0        (40)    (1,253)       15,991
  Issuance of Treasury Stock     100,000         --       1,809        --          --        --       1,191          3,000
  Capital transactions of
Lynch .......................      --            --         292        --          --         --       --             292
    Systems
  Net income (loss) for year       --            --         --       (3,438)       --         --       --          (3,438)
  Other comprehensive income       --            --         --         --          --        (31)      --             (31)
  Loan to Officer to buy
   common stock .............      --            --         --         --         (382)       --       --            (382)
                             ----------   ----------   ----------   ---------  ---------- ---------- ----------  ---------

BALANCE AT DEC. 31, 2000 ....1,510,183    $   5,139   $   10,403     $   405    ($   382)  $  (71)   $     (62)   $ 15,432
                             =========    =========    =========    ========== ========== ========== ==========  =========

See accompanying notes.

</TABLE>


<PAGE>

<TABLE>


LYNCH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
(In Thousands)                                                           Years Ended December 31,
                                                                    -----------------------------------
                                                                        2000       1999       1998
                                                                    -----------------------------------

OPERATING ACTIVITIES
<S>                                                                  <C>          <C>          <C>
Net income (loss) ................................................   $  (3,438)   $  (1,583)   $   3,357
Adjustments to reconcile net income (loss) to net
   cash provided by operating activities of continuing operations:
Adjustment from discontinued operations:
   (Income) loss from operations of Lynch Interactive Corporation         --          7,493       (4,929)
   Loss from operations of industrial tape segment ...............        --            572        1,859
   Gain on sale of industrial tape segment .......................        --        (10,431)        --
Extraordinary item ...............................................      (2,245)        (303)        --
Depreciation .....................................................       6,734        5,147        4,548
Amortization of goodwill and other assets ........................       1,001        1,087          617
Amortization of deferred financing charges .......................         876          786          771
Gain on sale of stock by subsidiary corporation ..................         --           --        (4,778)
Deferred taxes ...................................................       1,846       (2,719)      (1,488)
Minority interests ...............................................      (7,072)      (2,636)      (2,536)
Gain on sale of fixed assets .....................................          --         (854)          --
Impairment of Spinnaker's investment in warrants .................       2,800            0            0
Changes in operating assets and liabilities:
       Receivables ...............................................     (10,377)         678        2,560
       Inventories ...............................................      (3,459)      (3,284)       2,270
       Accounts payable and accrued liabilities ..................      10,112       (3,949)       8,317
       Other .....................................................        (212)         864         (728)
                                                                      ----------    ---------   ---------

Cash provided by (used in) operating
  activities of continuing operations ............................      (3,434)      (9,132)       9,840
                                                                     ----------    ---------   ---------
INVESTING ACTIVITIES

Capital Expenditures .............................................      (4,323)      (3,795)      (3,297)
Restricted Cash ..................................................      49,526      (56,026)       --
Investment in Spinnaker Coating - Maine ..........................          --          --      (47,933)
Proceeds from sale of industrial tape segment ....................          --       104,450       --
Proceeds from sale of fixed assets ...............................          --         2,403      2,696
Other ............................................................        (767)          509       (128)
                                                                        ----------    ---------   ---------
Cash provided by (used in) investing activities of
   continuing operations .........................................      44,436        47,541    (48,662)
                                                                       ----------    ---------   ---------
FINANCING ACTIVITIES

Net borrowings (repayments) of notes payable .....................       7,110      (36,127)      42,268
Issuance of long-term debt .......................................        --           --          6,025
Repayment of long-term debt ......................................     (53,433)     (10,937)      (1,954)
Deferred financing costs .........................................        (125)        (580)        (726)
(Purchase) sale of treasury stock ................................       1,191         (523)          90
Issuance of common stock .........................................       1,809         --           --
Other.............................................................        (117)        --           (841)
                                                                       ----------    ---------   ---------
Cash provided by (used in) financing activities of
   continuing operations .........................................     (43,565)     (48,167)      44,862
                                                                        ---------    ---------   ---------
Net increase (decrease) in cash and cash equivalents .............      (2,563)      (9,758)       6,040
Cash provided by (used by) Lynch Interactive Corporation .........        --         15,987       (1,880)
Cash provided by (used by) industrial tape segment ...............        --          5,745       (7,025)
                                                                        ---------    ---------   ---------
Increase (decrease) in cash and cash equivalents .................      (2,563)      11,974       (2,865)
Cash and cash equivalents at beginning of period .................      13,106        1,132        3,997
                                                                        ---------    ---------   ---------
Cash and cash equivalents at end of period........................      $10,543     $13,106    $   1,132
                                                                        =========    =========    =========

See accompanying notes.
</TABLE>

<PAGE>



LYNCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000

1.       Accounting and Reporting Policies

Principles of Consolidation

The consolidated  financial statements include the accounts of Lynch Corporation
(the  "Company"  or "Lynch")  and  entities in which Lynch has  majority  voting
control.  All  material   intercompany   transactions  and  accounts  have  been
eliminated  in  consolidation.  See Note 4 for  details of the spin off of Lynch
Interactive Corporation which occurred on September 1, 1999

Organization

Lynch Corporation is a diversified holding company with subsidiaries  engaged in
manufacturing  primarily  in the United  States.  Information  on the  Company's
operations  by segment  and  geographic  area is  included  in Note 15 - Segment
Information.

Uses of Estimates

The  preparation  of  consolidated   financial  statements  in  conformity  with
accounting   principles   generally  accepted  in  the  United  States  requires
management to make estimates and assumptions that affect the amounts reported in
the financial  statements and  accompanying  notes.  Actual results could differ
from those estimates.

Cash Equivalents

Cash  equivalents  consist of highly liquid  investments with a maturity of less
than three months when purchased.

At December 31, 2000 and 1999,  assets of $8.7 million and $1.1  million,  which
are  classified  as cash and cash  equivalents,  are  invested in United  States
Treasury  money  market  funds  for which  affiliates  of the  Company  serve as
investment managers to the respective funds.

Restricted Cash

At December 31, 2000 and 1999 the Company had $6.5 and $56 million of Restricted
Cash. See discussion of Restricted  Cash in Note 6 - Notes Payable and Long-Term
Debt.

Accounts Receivable

Accounts  receivable on a consolidated basis consist  principally of amounts due
from  both  domestic  and  foreign  customers.  Credit is  extended  based on an
evaluation of the customer's financial condition and collateral is not generally
required except at Lynch Systems (See Accounting for Long Term  Contracts).  The
Company  considers  concentrations  of  credit  risk  to be  minimal  due to the
Company's   diverse  customer  base.  One  Spinnaker   customer   accounted  for
approximately  13% of its net sales in 2000,  and  approximately  11% of its net
sales of  continuing  operations  in 1999 and 1998. In relation to export sales,
the Company requires letters of credit  supporting a significant  portion of the
sales price  prior to  production  to limit  exposure  to credit  risk.  Certain
subsidiaries  and business  segments  have credit sales to  industries  that are
subject to cyclical  economic  changes.  The Company  maintains an allowance for
doubtful  accounts at a level that  management  believes is  sufficient to cover
potential credit losses.

Property, Plant and Equipment, Net

Property,  plant and equipment are recorded at cost and include expenditures for
additions  and major  improvements.  Maintenance  and  repairs  are  charged  to
operations  as  incurred.  Depreciation  is  computed  for  financial  reporting
purposes using the  straight-line  method over the estimated useful lives of the
assets,  which  range  from 3  years  to 35  years.  For  income  tax  purposes,
accelerated depreciation methods are used.

Excess of Cost over Fair Value of Net Assets Acquired, Net

Excess of cost over fair value of net assets of companies acquired (goodwill) is
being  amortized on a  straight-line  basis over periods  ranging from twenty to
forty years. The Company periodically reviews goodwill to assess recoverability,
and  impairments  would  be  recognized  in  operating  results  if a  permanent
diminution in value were to occur. The Company measures the potential impairment
of recorded goodwill by the undiscounted  value of expected future cash flows in
relation to its net capital  investment in the subsidiary.  Based on its review,
the Company does not believe that an  impairment  of its goodwill has  occurred.
Excess of cost over fair value of net assets acquired is $23.9 million and $23.4
million,  net of  accumulated  amortization  of $2.3 million and $1.4 million at
December 31, 2000 and 1999, respectively.

Revenue Recognition

Revenues, with the exception of certain long-term contracts discussed below, are
recognized on shipment. Shipping costs are included in manufacturing expenses.

Research and Development Costs

Research and development costs are charged to operations as incurred. Such costs
were   $1,603,000,   $1,386,000  and   $1,658,000  in  2000,   1999,  and  1998,
respectively.

Advertising Expense

The cost of advertising is expensed as incurred.  The Company incurred $472,000,
$340,000  and  $466,000  in  advertising  costs  during  2000,  1999  and  1998,
respectively.


Earnings Per Share

In 1997, the Company  adopted  Financial  Accounting  Standards  Board Statement
("SFAS") No. 128, "Earnings Per Share". SFAS No. 128 replaced the calculation of
primary and fully diluted earnings per share with basic and diluted earnings per
share.  Unlike primary earnings per share, basic earnings per share excludes any
dilutive  effects of options,  warrants,  and  convertible  securities.  Diluted
earnings per share are very similar to the  previously  reported  fully  diluted
earnings  per share.  The  Company's  basic and diluted  earnings  per share are
equivalent as the Company has no dilutive securities.

Segment Information

Effective  December 1998, the Company adopted SFAS No. 131,  "Disclosures  About
Segments of an Enterprise and Related Information". SFAS No. 131 superseded SFAS
No. 14, "Financial  Reporting for Segments of a Business  Enterprise".  SFAS No.
131  establishes  new  standards  for  reporting   information  about  operating
segments. SFAS No. 131 requires disclosure of selected financial and descriptive
information  for  each  operating   segment  based  on   management's   internal
organizational decision-making structure.  Additional information is required on
a  company-wide  basis  for  revenues  by  product  or  service,   revenues  and
identifiable  assets by geographic  location and information  about  significant
customers.  The adoption of SFAS No. 131 did not affect results of operations or
financial position, but did affect the disclosure of segment information.  Prior
year amounts have been  reclassified to conform to the  requirements of SFAS No.
131. See Note 15.

Pension and Other Post-Retirement Benefits

In February 1998,  the FASB issued SFAS No. 132,  "Employers  Disclosures  About
Pensions  and Other  Post-Retirement  Benefits",  which is an  amendment to SFAS
No.'s 87, 88, and 106. This SFAS revises  employers'  disclosures  about pension
and other  post-retirement  benefits plans. It did not change the measurement or
recognition of those plans - See Note 13.

Accounting for Long-Term Contracts

Lynch  Systems,  Inc., a 100% owned  subsidiary of the Company is engaged in the
manufacture   and   marketing  of   glass-forming   machines   and   specialized
manufacturing  machines.  Certain  sales  contracts  require an advance  payment
(usually  30% of the  contract  price)  which  is  accounted  for as a  customer
advance.  The contractual  sales prices are paid either (i) as the manufacturing
process  reaches  specified  levels of  completion or (ii) based on the shipment
date. Guarantees by letter of credit from a qualifying financial institution are
required for most sales  contracts.  Because of the specialized  nature of these
machines  and the period of time needed to  complete  production  and  shipping,
Lynch Systems  accounts for these contracts  using the  percentage-of-completion
accounting  method as costs are incurred  (cost to cost basis).  At December 31,
2000 and 1999, costs and estimated  earnings in excess of billings  (included in
accounts receivable) were $2.7 million and $.1 million, respectively.

Impairments

The Company accounts for impairments of long-lived assets in accordance with the
provisions of SFAS No. 121,  "Accounting for the Impairment of Long-Lived Assets
and  Assets to be  Disposed  Of".  The  Company  periodically  assesses  the net
realizable  value  of its  long-lived  assets  and  evaluates  such  assets  for
impairment  whenever  events or changes in  circumstances  indicate the carrying
amount  of an asset  may not be  recoverable.  For  assets  to be held and used,
impairment is determined  to exist if estimated  undiscounted  future cash flows
are less than the carrying amount.  For assets to be disposed of,  impairment is
determined  to exist if the  estimated  net  realizable  value is less  than the
carrying amount.

Stock Based Compensation

The Company  grants stock options for a fixed number of shares to employees with
an  exercise  price  equal to the fair value of the shares at the date of grant.
The Company  accounts for stock option grants in accordance with APB Opinion No.
25,   Accounting   for  Stock   Issued  to   Employees   (APB  25)  and  related
Interpretations   because  the  Company  believes  the  alternative  fair  value
accounting provided for under FASB Statement No. 123, Accounting for Stock-Based
Compensation,  (FAS 123) requires the use of option  valuation  models that were
not developed for use in valuing  employee stock options.  Under APB 25, because
the exercise price of Spinnaker's employee stock options equals the market price
of the  underlying  stock on the  date of  grant,  no  compensation  expense  is
recognized.

Financial Instruments

Cash and cash equivalents,  trade accounts  receivable,  short-term  borrowings,
trade  accounts  payable  and  accrued  liabilities  are  carried  at cost which
approximates fair value due to the short-term maturity of these instruments. The
carrying account of the Company's borrowings under its revolving lines of credit
approximates  fair value, as the  obligations  bear interest at a floating rate.
The  fair  value of  other  long-term  obligations  approximates  cost  based on
borrowing  rates for similar  instruments,  excluding the Spinnaker  Industries,
Inc. ("Spinnaker") senior-secured debt with a carrying value of $51.1 million at
December 31, 2000 and $108.6 million at December 31, 1999 and a fair value based
on market  quotes  between 40% and 50% was between  $$20.5 and $25.6 million and
between $87.8 and $92.3 million, respectively at December 31, 2000 and 1999.

Financial  instruments  that  potentially  subject  the  Company to  significant
concentrations of credit risk consist  principally of cash,  investments,  trade
accounts receivable, and derivatives.

The  Company  maintains  cash and  cash  equivalents  and  short  and  long-term
investments with various financial  institutions.  These financial  institutions
are located throughout the country and the Company's policy is designed to limit
exposure to any one institution.  The Company performs  periodic  evaluations of
the relative credit standing of those financial institutions that are considered
in the Company's  investment  strategy.  Other than certain accounts receivable,
the Company does not require collateral on these financial instruments.

Issuance of Stock by Subsidiaries and Investees

Changes  in the  Company's  equity  in a  subsidiary  or an  investee  caused by
issuance of the  subsidiary's or investees'  stock are accounted for as gains or
losses  where such  issuance is not part of a broader  reorganization  (see Note
10).

Reclassifications

The consolidated  financial statements reflect the spin off of Lynch Interactive
Corporation  (Interactive)  from Lynch  Corporation  that  occurred in the third
quarter of 1999 and also the sale by Spinnaker Industries,  Inc. (Spinnaker), of
its two industrial tape units, Central Products Company and Spinnaker Electrical
that also  occurred in the third  quarter of 1999.  Accordingly,  the  operating
results of both Interactive and the industrial tape segment have been segregated
from  continuing  operations  of the Company and are  reported as separate  line
items on the financial  statements as discontinued  operations.  The comparative
amounts for 1998 have also been restated to reflect the above transactions.

Certain other amounts in the 1999 financial statements have been reclassified to
conform to the 2000 presentation.  These other  reclassifications are immaterial
to the consolidated financial statements taken as a whole.

Recent Accounting Pronouncements

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting for Derivative  Instruments and Hedging  Activities",  as amended in
2000 by SFAS No 138 "Accounting for Certain  Derivative  Instruments and Certain
Hedging  Activities",  which is required to be adopted in years  beginning after
June 15, 2000. SFAS No. 133 requires the Company to recognize all derivatives on
the  balance  sheet  at fair  value.  Derivatives  that are not  hedges  must be
adjusted to fair value through income.  If the derivative is a hedge,  depending
on the nature of the hedge,  changes in fair value are either offset against the
changes in fair value of assets and liabilities  through  earnings or recognized
in other  comprehensive  income until the hedged item is recognized in earnings.
The Company has  determined  the effect of this new standard  requires  that all
derivatives be recognized as assets or liabilities in the statement of financial
position and measured at fair value.  Gains or losses  resulting from changes in
fair value are required to be recognized  in current  earnings  unless  specific
hedge  criteria  are met.  SFAS No. 133 will  become  effective  for the Company
beginning in the first quarter of fiscal year 2001.  The Company has  determined
the effect of this new standard,  with the only impact being the  requirement to
mark-to-market  through the Statement of  Operations  the change in the value of
the warrants  obtained  through the sale of Central  Products.  This adoption of
SFAS No.  133 is not  expected  to have a  material  impact on the  consolidated
financial statements.

Acquisitions

On July 31, 1998,  the  Company's  subsidiary,  Spinnaker,  acquired  tesa tape,
Inc.'s  pressure-sensitive  electrical tape product line and its Carbondale,  IL
manufacturing plant (the "Spinnaker Electrical Acquisition"). The purchase price
totaled $10.7  million,  comprised of 200,000  shares of Spinnaker  common stock
(subject to adjustment) valued at $3.7 million,  $4.5 million in term debt, $2.0
million in cash, and a $0.5 million  subordinated  note.  The acquired  business
produces  electrical  tape for insulating  motors,  coils and  transformers  for
customers  in Europe,  Canada and the U.S.  This company was  subsequently  sold
within the industrial tape segment. See Note 3 - Discontinued Operations.

On March 17, 1998, Spinnaker  Coating-Maine,  Inc., a wholly owned subsidiary of
Spinnaker,  acquired the assets of the pressure-sensitive  adhesive-backed label
stock  business of S. D. Warren (the "S.D.  Warren  Acquisition").  The purchase
price  was  approximately   $51.8  million,   plus  the  assumption  of  certain
liabilities  and  transaction  costs,  and was  funded by  issuing  the seller a
convertible  subordinated  note of $7.0  million  with the  remainder  funded by
Spinnaker's  revolving credit  facility.  As a result of this  transaction,  the
Company  recorded  approximately  $23.1  million  in  goodwill  which  is  being
amortized over 30 years.

All of the above acquisitions were accounted for as purchases,  and accordingly,
the assets  acquired and  liabilities  assumed were recorded at their  estimated
fair market  values on their  respective  dates of  acquisition.  The  operating
results of the acquired companies are included in the Consolidated Statements of
Operations  from their  respective  acquisition  dates  except for the tesa tape
acquisition, which is included in discontinued operations.

The following  unaudited pro forma  information  for the year ended December 31,
1998,  shows the results of the Company's  operations  presented as if the S. D.
Warren  Acquisition  was made at the beginning of 1998.  The unaudited pro forma
information  is not  necessarily  indicative of the results of  operations  that
would  have  occurred  had the  transactions  been  made at that  date nor is it
necessarily  indicative of future results of operations.  (In thousands,  except
per share amounts.)

<TABLE>
<S>                                          <C>
Sales ....................................   $ 199,758
                                             =========
Income (loss) from continuing operations .   $  (3,053)
                                             =========

Net income (loss) ........................   $   3,197
                                             =========
Basic and diluted earnings per share:
  Income (loss) from continuing operations   $   (2.15)
                                             =========

  Net income (loss) ......................   $    2.25
                                             =========
</TABLE>





<PAGE>




3.       Discontinued Operations

On April 9, 1999,  Spinnaker  entered  into a  definitive  agreement to sell its
industrial  tape  segment  to  Intertape  for  approximately  $105  million  and
five-year  warrants to purchase  300,000  shares of Intertape  common stock (New
York Stock Exchange  Symbol "ITP") at an exercise price of $29.50 per share.  At
the time,  the warrants  were valued at  approximately  $3.0  million  using the
Black-Scholes  option pricing model. At December 31, 2000, the fair value of the
warrants was approximately $.2 million, accordingly, in accordance with SFAS No.
121, Spinnaker  recognized an impairment loss of $2.8 million as a result of the
decline during the third and fourth  quarters of 2000 in the market value of the
stock associated with the warrants which are recorded in other assets.

The sale of the two  industrial  tape  businesses  closed on August 10, 1999 and
July 30, 1999.  Accordingly,  operating  results of the industrial  tape segment
have been segregated from continuing  operations and reported as a separate line
item on the statement of operations.  The Company  recorded gains totaling $17.4
million, net of applicable income taxes of approximately $6.5 million. Spinnaker
offset the cash tax liability by utilizing net operating loss carry forwards.

The Company has restated its prior financial statements to present the operating
results  of  the  industrial  tape  segment  as a  discontinued  operation.  The
industrial  tape segment net sales were $69.5 million and $121.8 million for the
periods  ended   December  31,  1999  (through  the  date  of  sale)  and  1998,
respectively.

General  corporate  office  expenses  related  to  finance  and   administrative
functions  including  public  company  compliance  reporting,  bank and investor
relations,   taxes  other  than  income  taxes  and  holding  company   payroll,
historically  allocated and charged to the industrial tape segment were reversed
and allocated back to continuing operations.  These expenses were not considered
to be  directly  attributed  to  discontinued  operations.  Historical  expenses
allocated back to continuing  operations  totaled $1.0 million,  $1.5 million in
the periods ended December 31, 1999 and 1998, respectively.

Interest expense  attributed to the Senior Notes and related deferred  financing
has  historically  been allocated based on the pro rata share of subsidiary debt
obligations  retired with the proceeds from the issuance of the Senior Notes, to
total debt obligations retired. The Senior Note proceeds were used to extinguish
certain  outstanding  term and revolver  obligations  in October 1996.  Interest
expenses  charged to the  discontinued  industrial  tape  segment  totaled  $5.2
million  and $8.5  million  for the period  ended  December  31,  1999 and 1998,
respectively.

4.           Spin Off

On August 12, 1999,  the Board of Directors  approved a plan to  distribute  the
stock  of  Lynch  Interactive  Corporation  on  a  one  for  one  basis  to  the
shareholders of Lynch Corporation  ("spin off"). Lynch completed the spin off of
Lynch  Interactive   Corporation   ("Interactive")  on  September  1,  1999,  to
stockholders of record on August 23, 1999.  Pursuant to the spin off, each Lynch
shareholder  received  one share of  Interactive  common stock for each share of
Lynch  owned.  Lynch had  received a private  letter  ruling  from the  Internal
Revenue  Service  that  the spin  off  would be tax free to Lynch  shareholders.
Interactive is listed on the American Stock Exchange under the symbol "LIC".

Interactive  owns all of what were  Lynch's  multimedia  and service  businesses
while  Lynch  retained  the  manufacturing  businesses.   Interactive  owns  the
telephone companies,  television interests and PCS interests, as well as the 55%
equity interest of The Morgan Group, Inc. In addition,  Interactive owns a 13.6%
equity interest in Spinnaker Industries, Inc. Lynch owns a 47.6% equity interest
in Spinnaker (60.4% of voting interest),  as well as 100% of M-tron  Industries,
Inc. and 100% of Lynch Systems, Inc.

As a result,  the Company's  multimedia and services segments are being reported
as operations  distributed  to  shareholders  in the  accompanying  consolidated
financial  statements.  Accordingly,  operating  results  of  Lynch  Interactive
Corporation  have been segregated  from continuing  operations and reported as a
separate line item on the statements of operations.

Lynch has restated its prior year financial  statements to present the operating
results of the Company on a  comparable  basis.  Interactive's  net sales were $
204.6  million and $205.2  million for the fiscal years ended  December 31, 1999
and 1998, respectively.

In the third  quarter of 1999,  Lynch  acquired  by merger,  all of the stock of
Central Scott Telephone  Company.  This company became part of Lynch Interactive
and was included in the spin off.

Lynch  Interactive  and Lynch have  entered into  certain  agreements  governing
various ongoing relationships, including the provision of support services and a
tax  allocation  agreement.  The  tax  allocation  agreement  provides  for  the
allocation of tax  attributes  to each company as if it had actually  filed with
the respective  tax  authority.  At the spin off, the employees of the corporate
office  of  Lynch   Corporation   became  the  employees  of  Lynch  Interactive
Corporation and Lynch  Interactive  Corporation  began providing certain support
services to Lynch.  The Company was charged a management  fee for these services
amounting to approximately $265,000 in 2000 and $200,000 in 1999.

The net assets distributed to interactive were estimated to be $ 22.6 million at
September 1, 1999. Such amount was subsequently  decreased in the fourth quarter
by $1.6 million to reflect revised estimates of liabilities distributed.

5.           Inventories

Inventories are stated at the lower of cost or market value.  Inventories valued
using the last-in,  first-out (LIFO) method comprised  approximately 28% and 12%
of  consolidated  inventories  at  December  31,  2000 and  1999,  respectively.
Inventories  at Spinnaker  Coating,  71% and 80% of  inventories at December 31,
2000 and  1999,  respectively,  are  valued  using the  specific  identification
method.  The  balance of  inventories  are valued  using the  first-in-first-out
(FIFO) method.

<TABLE>
<CAPTION>
                                December 31,
                             2000         1999
                          -------------------------
                               (In Thousands)
<S>                          <C>       <C>
Raw materials and supplies   $10,172   $10,407
Work in progress .........     2,796     2,114
Finished goods ...........    22,171    19,159
                             -------   -------
  Total ..................   $35,139   $31,680
                             =======   =======
</TABLE>

Current cost exceeded the LIFO value of  inventories by $966,000 and $829,000 at
December 31, 2000 and 1999, respectively.

6.           Notes Payable and Long-term Debt

Long-term debt consists of (all interest rates are at December 31, 2000):

<TABLE>
<CAPTION>
                                               December 31,
                                            2000         1999
                                        ------------ ------------
                                             (In Thousands)
<S>                                        <C>          <C>
Spinnaker Industries, Inc. 10.75% Senior
  Secured Notes due 2006 ...............   $  51,135    $ 108,585
Spinnaker subordinated note at a fixed
 interest rate of 14% due 2003 .........       9,172        7,000
Other ..................................       2,419        2,816
                                           ---------    ---------
                                              62,726      118,401

Current maturities .....................      (1,376)      (1,636)
                                           ---------    ---------
                                           $  61,350    $ 116,765
                                           =========    =========
</TABLE>

On October 23, 1996,  Spinnaker completed the issuance of $115,000,000 of 10.75%
senior-secured  debt  due  2006.  The  debt  proceeds  were  used to  extinguish
substantially  all  existing  bank  debt,  bridge  loans  and lines of credit at
Spinnaker  and  its two  major  operating  subsidiaries,  Central  Products  and
Spinnaker  Coating.  Financing  costs were incurred by Spinnaker in  conjunction
with the  issuance  of the  10.75%  senior  secured  notes and  other  financing
activities.  These  financing  costs are deferred and amortized over the term of
the related debt.  Unamortized  financing costs of $2.2 million and $5.4 million
at December 31, 2000 and 1999, respectively, are included in other assets.

The notes are redeemable,  in whole or in part, at the option of Spinnaker on or
after  October 15,  2001,  at  redemption  prices  beginning  at 105.375% of the
principal  amount declining to 100% of the principal amount on October 15, 2005,
plus  accrued and unpaid  interest.  The notes are  unconditionally  guaranteed,
jointly and severally, by Spinnaker's subsidiaries, Spinnaker Coating, Inc., and
Entoleter, Inc.

During the first half of 2000, Spinnaker utilized certain restricted proceeds as
defined  by the  indenture  from  the sale of its  industrial  tape  segment  to
purchase  approximately $63.9 million (par value) of outstanding Senior Notes on
the open market at an average price of 82.9%,  plus accrued and unpaid interest.
The  restricted  proceeds were fully  utilized for the Senior Note purchases and
capital  expenditures,  and all  obligations  under the Indenture were satisfied
relating to the use of sale proceeds.  The purchase of the Senior Notes resulted
in an  extraordinary  gain, net of applicable taxes and minority  interests,  of
approximately  $2.2  million,  for the  difference  between  par  value  and the
discounted  purchase  price  offset  by the  write-off  of  applicable  deferred
financing fees  associated  with the issuance of the original  Senior Notes.  In
addition,  Spinnaker  purchased  all of the Senior Note  holdings  of  Spinnaker
Electrical at 81.5% of par value, plus accrued interest,  representing Spinnaker
Electrical's cost basis.

In conjunction with Spinnaker's acquisition of Coating - Maine, Spinnaker issued
a Note to the  Seller  with a  balance  at  December  31,  2000 of $9.2  million
including  payment-in-kind  ("PIK")  interest  of $2.2  million.  Subsequent  to
December 31, 2000,  this note was amended to have the maturity  date extended to
January  31,  2003 and  interest  to  accrue at a rate of 14%  commencing  2001.
Additionally,  at the option of the holder, the note is convertible to shares of
Spinnaker's common stock on a basis of 250 shares per $1,000 principal amount of
the note (or $4 per share).  The note and remaining  unpaid interest will mature
on January 31, 2003.

On a consolidated  basis, at December 31, 2000,  Lynch maintains  short-term and
long-term  line  of  credit  facilities   totaling  $48.7  million  (subject  to
limitations  that  reduce  the  availability  to $36.1  million),  of which $5.8
million  was  available  for  future  borrowings.   Spinnaker  Industries,  Inc.
maintains lines of credit at its subsidiaries which in the aggregate total $40.0
million  (subject to limitations that reduce the availability to $30.4 million),
of which $4.0 million was available at December 31, 2000. These  facilities,  as
well as facilities at other  subsidiaries  of Lynch,  generally limit the credit
available  under the lines of credit to certain  variables,  such as inventories
and receivables,  and are secured by the operating assets of the subsidiary, and
include  various  financial  covenants.  At December  31, 2000, $ 8.7 million of
these total  facilities  expire within one year. The weighted  average  interest
rate for short-term borrowings at December 31, 2000 and 1999 was 9.5% and 8.05%,
respectively.  The  Company  pays fees  ranging  from 0% to 0.375% on its unused
lines of credit. In January 2001, Lynch Systems entered into a $4.0 million line
of credit agreement with a bank for working capital purposes. Also in January of
2001,  M-tron amended its line of credit agreement with its bank to increase the
line from $3.7 million to $6.0 million.

In general,  the long-term debt facilities are secured by  substantially  all of
the borrowing entity's property, land and equipment, inventory,  receivables and
common  stock of certain  of its  subsidiaries  and  contain  certain  covenants
restricting   distributions   to  Lynch.   At  December  31,  2000,   and  1999,
substantially all the subsidiaries' net assets are restricted.

Cash  payments for interest were $10.4  million,  $10.3 million and $6.7 million
for the years ended December 31, 2000, 1999 and 1998, respectively.

Aggregate principal maturities of long-term debt for each of the next five years
are as  follows:  2001 ---- $1.4  million;  2002 -- $.5  million;  2003 -- $ 9.7
million; 2004 -- $0 million and 2005 -- $0 million.

7.        Minority Interests and Related Party Transactions

Pursuant to a subscription agreement entered into on March 11, 2000, the Company
sold  100,000  shares of its Common Stock to Mario J.  Gabelli,  Chairman of the
Company for $30 per share, in cash, or $3 million in total,  which represented a
premium of 14.6%  above the  closing  price of $26.125 per share of the stock on
the American  Stock Exchange on March 9, 2000, the date said sale was authorized
by the Board of Directors.

The sale was exempt  from  registration  under the  Securities  Act of 1933,  as
amended,  pursuant to Section 4(2)  thereof.  The proceeds  were  available  for
general  corporate  purposes,  including  possible  acquisitions.  The  sale was
ratified by the  shareholders  of the Company at its Annual  Meeting held on May
11, 2000.

In order to  assist  the  Lynch  President,  Mr.  Guzzetti,  in  purchasing  the
Corporation's  stock in the open market,  the  Corporation  loaned Mr.  Guzzetti
$309,500  on June 5, 2000 and  $61,000 on  September  20,  2000.  The loans bear
interest at 6% per annum (with accrued interest of $11,656 at December 31, 2000)
and are payable when Mr.  Guzzetti  ceases to be an employee of the Company or a
subsidiary.  To assist the Corporation in funding said loans, Mr. Gabelli loaned
the Corporation  $371,000 at an initial interest rate of 7.5% per annum adjusted
prospectively  on each interest payment date to two points below the prime rate,
which loan is payable upon demand.

On July 31, 1998,  Spinnaker  completed the  acquisition of the electrical  tape
division of tesa tape,  inc.  (see Note 2). A portion of the purchase  price was
200,000  newly  issued  shares of  Spinnaker  Class A common  stock  (subject to
certain  adjustments).  In accordance with the Company's  policy, as a result of
this  issuance,  the Company  recorded a pre-tax gain on the sale of  subsidiary
stock of $2.1 million in 1998.

On June 13, 1994,  Spinnaker  entered into a  management  agreement  with Boyle,
Fleming & Co.,  Inc.  ("BF"),  of which a former  Director  of the  Company is a
principal, to assume the management of Spinnaker. Effective August 31, 1996, the
Management  Agreement  was  terminated  at which time Messrs.  Boyle and Fleming
became  employees  of  Spinnaker.  Spinnaker  and BF also entered into a Warrant
Purchase  Agreement in 1994,  pursuant to which BF received warrants to purchase
common  stock of  Spinnaker  (equating  to a 20%  ownership of Spinnaker at that
time) at any time on or before June 30, 2000,  subject to certain  restrictions.
The remaining warrants were exercised in January 1998.

In October  1996,  Spinnaker  acquired  all of the  approximately  25%  minority
interest in its Spinnaker  Coating  subsidiary held by such  subsidiary's  other
shareholders.   The  terms  of  the  acquisition  involved  a  cash  payment  of
approximately  $2.3 million and the issuance of 9,613 shares of Common Stock. As
additional  consideration  for he shares of capital stock of Spinnaker  Coating,
the  minority   shareholders   received  the  right  to  a  contingent   payment
("Contingent Value Rights") or "CVR's").  On May 4, 2000,  Spinnaker  Electrical
Tape,  a  Spinnaker  subsidiary,  acquired  all of the CVR's  held by the former
minority ownership group of Spinnaker Coating for $500,000 in cash. Accordingly,
the contingent payment was recorded as an addition to goodwill during the second
quarter of 2000.

8.       Restructuring Charge

Spinnaker recognized certain  restructuring  charges,  primarily affiliated with
its  Spinnaker  Coating and  Spinnaker  Coating - Maine  businesses,  in 2000 of
approximately  $2.7 million.  To better  concentrate on Coating's  strengths and
market niche,  a decision was made by  Spinnaker's  management to reorganize and
realign the  business in the fourth  quarter of 2000 and going  forward in 2001.
The  restructuring  involved the elimination of non-pressure  sensitive  product
lines,  outsourcing of non-core manufacturing processes and termination of seven
salaried employees,  primarily senior management. As part of this restructuring,
certain  machinery and equipment was written down to net realizable  value.  The
restructuring charge was composed of the following:
<TABLE>
<CAPTION>

                                     Total      2000      Balance at
                                     Charge   Activity   December 31, 2000
                                    --------------------------------------

<S>                                  <C>       <C>        <C>
Machinery and equipment write-down   $ 1,115   $(1,115)   $  --
Severance and other costs ........     1,593      (468)     1,125
                                     -------   -------    -------
Total restructuring charge .......   $ 2,708   $(1,583)   $ 1,125
                                     =======   =======    =======
</TABLE>


Spinnaker  expects  to  incur  additional   restructuring  charges  in  2001  as
management  continues to further  evaluate and improve upon  Coating's  business
strategies.

9.    Stock Option Plans

Spinnaker  has two plans under which  stock  options for the  purchase of common
shares can be granted.,  The Spinnaker  Directors' Stock Option Plan (Directors'
Plan) provides for the granting of options to directors who are not employees of
Spinnaker.  All options were granted at an option price equal to the fair market
value of a share on the date of grant.  The  options  vest over three years with
33% of the  options  becoming  exercisable  one year  after  grant  date and the
remaining  66%  becoming  exercisable  two years after  grant date.  The options
expire at the  earlier  of five  years  after  grant  date or 30 days  after the
individual  ceases to be a director.  All  outstanding  options issued under the
Directors'  Plan enable the  director to  purchase  one share each of  Spinnaker
Class A Common Stock and Spinnaker Common Stock.

The Spinnaker  Stock Incentive Plan provides for the granting of options for the
purchase  of  Spinnaker  Class A Common  Stock to key  employees  of  Spinnaker.
Options  awarded  under the plan may not be granted at an option price less than
the fair  market  value of a share on the date the  option is  granted,  and the
maximum  term of an option  may not  exceed ten  years.  All  options  currently
granted under the plan are exercisable one year after the date of the grant.

Information  regarding  Spinnaker's  stock  option  plans  for the  years  ended
December 31, 2000, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                              Number of   Weighted Average
                                              Shares .     Exercise Price
                                            Outstanding
                                               ------         -------
<S>                                          <C>          <C>
Balance at January 1, 1998 ..............    80,000       $  36.75
  Granted ...............................      --             --
  Exercised .............................      --             --
  Cancelled .............................      --             --
                                              -------       ------
Balance at December 31, 1998 ............    80,000       $  36.75
  Granted ...............................    52,000          13.38
  Exercised .............................      --             --
  Cancelled .............................   (40,000)      $  33.50
                                             -------        ------
Balance at December 31, 1999 ............    92,000       $  24.95
  Granted ...............................     8,000       $   9.06
  Exercised .............................      --             --
  Cancelled .............................   (18,000)      $  20.94
                                             -------        ------
Balance at December 31, 2000 ............    82,000       $  21.53
                                             ======         ======
</TABLE>
<TABLE>
<CAPTION>

                            Options Outstanding                  Options Exercisable
                            Weighted
Rang of                     Remaining      Weighted-Average         Weighted-Average
Exercise Prices    Number Contractual Life  Exercise Price  Number   Exercise Price

<S>                <C>      <C>             <C>             <C>       <C>
$900 to $14.00     52,000   3.8 years       $  12.71        14,669    $  13.375
$27.00 to $40.00   30,000   0.2 years       $  35.67        30,000    $  35,670
                   ------                  ----------     ----------  ---------
                   82,000                   $   21.53       44,669    $  28.350
                   ======                  ==========     ==========  =========
</TABLE>

Spinnaker has elected to adopt the  disclosure-only  provisions of SFAS No. 123,
"Accounting for  Stock-Based  Compensation,"  and continues to apply  Accounting
Principles  Board Opinion No. 25 and related  interpretations  in accounting for
its stock option plans.  Accordingly,  no compensation  cost has been recognized
related to Spinnaker's  stock option plans. For purposes of pro forma disclosure
required by SFAS No. 12, the estimated fair value of the options is amortized to
expense over the options' vesting period.

The pro forma effect on Lynch's 2000, 1999 and 1998 operations is as follows (in
thousands, except for per share amounts):
<TABLE>
<CAPTION>

As reported: ......        2000         1999         1998
                           -----        -----        -----

<S>                       <C>           <C>          <C>
Net income (loss) .       $(3,438)      $(1,583)     $3,357
  Per share:
    Basic .........       $(2.31)       $(1.12)      $ 2.37
    Diluted .......        (2.31)        (1.12)        2.37
Pro forma:
  Net income (loss)       $(3,464)      $(2,832)     $3,326
  Per share:
    Basic .........       $(2.32)       $(2.00)$       2.35
    Diluted .......        (2.32)        (2.00)        2.35
</TABLE>

The fair value of each option grant was estimated as of the grant date using the
Black-Scholes option-pricing model with the following assumptions:
<TABLE>
<CAPTION>

                                         2000      1999        1998
                                         -----     -----       ----
<S>                                      <C>        <C>        <C>
Expected volatility .............        50.00%     50.00%     50.00%
Dividend yield ..................         0.00%      0.00%      0.00%
Expected life of options in years         3.00       3.00       3.00
Risk-free interest rates ........         6.00%      6.09%      5.58%
</TABLE>

Option valuation models, such as the Black-Scholes model, were developed for use
in  estimating  the  fair  value  of  traded  options,  which  have  no  vesting
restrictions and are freely transferable.  In addition,  option valuation models
require the input of highly subjective  assumptions including the expected stock
price volatility. Because Spinnaker's options have characteristics significantly
different from those of traded  options,  and because  changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion,  existing  models do not provide a reliable  single measure of the fair
value of its stock options.

10.  Shareholders' Equity

The Board of Directors has  authorized  the purchase of up to 400,000  shares of
Common Stock. Through December 31, 2000, 238,991 shares had been purchased at an
average cost of $14.88 per share.

On  February  1, 1996,  the  Company  adopted a plan to provide a portion of the
compensation  for its directors in common  shares of the Company.  The amount of
common  stock is based upon the market  price at the end of the  previous  year.
Through December 31, 2000, 4,126 shares have been awarded under this program.

On February 29, 1996, the Company  adopted a Stock  Appreciation  Rights program
for  certain  employees.  As of the  third  quarter  of  1999,  43,000  of Stock
Appreciation  Rights  ("SAR") had been granted at prices ranging from $63 to $85
per share  (pre spin off  prices).  Upon the  exercise  of a SAR,  the holder is
entitled  to  receive  an amount in cash equal to the amount by which the market
value of the Company's common stock on the exercise date exceeds the grant price
of the SAR. Effective September 30, 1998, the Company amended the SAR Program so
that the SAR's became  exercisable  only if the market  price for the  Company's
shares  exceeds 200% of the SAR exercise  price within five years from  original
grant date.  This  amendment  eliminated  the  recording  of the profit and loss
effect of the SAR's for  changes in the  market  price in the  Company's  common
stock until it becomes probable that the SAR's will become exercisable.  The net
income (expense)  relating to this program,  prior to the time of the amendment,
was $185,000 in income in 1998.

Subsequent  to the  spin  off of  Interactive  in 1999,  the  Company,  with the
concurrence  of the holders of all  outstanding  SAR units,  terminated  its SAR
program  for  corporate  management,   including  all  outstanding  units,  thus
eliminating possible future profit and loss and cash flow distortions associated
with  the  program.  As a  result  of  the  termination,  the  Company  recorded
approximately  $700,000 of related  corporate  expense in the fourth  quarter of
1999.

11.  Income Taxes

The Company  files  consolidated  federal  income tax returns  which include all
subsidiaries  including  Interactive  through  the  date of the  spin  off,  but
excluding Spinnaker for all periods.

Deferred  income  taxes  for  2000  and  1999  are  provided  for the  temporary
differences  between  the  financial  reporting  basis  and the tax basis of the
Company's  assets  and  liabilities.   Cumulative   temporary   differences  and
carryforwards at December 31, 2000 and 1999 are as follows:


<PAGE>
<TABLE>
<CAPTION>


                                                      December 31, 2000     December 31, 1999
                                                    ----------------------------------------
                                                      Deferred Tax           Deferred Tax
(In Thousands)                                      Asset    Liability     Asset   Liability
                                                    ----------------------------------------

<S>                                               <C>         <C>       <C>         <C>
Inventory  reserve ............................   $    465    $   --     $  1,493   $   --
Fixed assets written up under Purchase
   accounting and tax over book depreciation ..       --         5,249       --        6,782
Basis  difference in  subsidiary  and affiliate
Stock..........................................       --         1,105       --        1,105
Net operating losses of Subsidiaries ..........      6,027        --          850       --
Other reserves and accruals ...................      4,268        --        6,600       --
Other .........................................       --           398       --       (1,662)
                                                    --------   --------  --------   --------
Total deferred income taxes ...................     10,760    $  6,752      8,943   $  6,225
Valuation allowance ...........................     (3,136)       --         --         --
                                                    --------   =======   --------   =========
                                                   $  7,624              $  8,943
                                                   ========              ========
</TABLE>

At  December 31,   2000,  Spinnaker  has federal  and state net  operating  loss
carry-forwards  of approximately  $14.6 million and $13.0 million for income tax
purposes,  respectively.  The  carry-forwards  are  available  to offset  future
taxable  income and expire in years 2008 through 2020.  Credits of $742,000 with
an indefinite  life are also  available to offset  future  taxable  income.  For
financial  reporting  purposes,  a valuation  allowance of $3.1 million has been
recognized to offset the deferred tax assets related to those carry-forwards.

The  provision  (benefit)  for  income  taxes  from  continuing   operations  is
summarized as follows:
<TABLE>
<CAPTION>

(In Thousands)       2000       1999       1998
                    ----------------------------
Current:
<S>                 <C>        <C>        <C>
  Federal .......   $   136    $  (158)   $ 2,048
  State and local      --         --          921
                    -------    -------    -------
                        136       (158)     2,969
                    -------    -------    -------
Deferred:
  Federal .......    (2,731)    (2,386)    (3,435)
 State and local       (198)      --         (942)
                    -------    -------    -------
                     (2,929)    (2,386)    (4,377)
                    -------    -------    -------
                    $(2,793)   $(2,544)   $(1,408)
                    =======    =======    =======
</TABLE>

A  reconciliation  of the provision  (benefit) for income taxes from  continuing
operations and the amount computed by applying the statutory  federal income tax
rate to income before income taxes, minority interest and extraordinary item:
<TABLE>
<CAPTION>

(In Thousands)                                              2000       1999        1998
                                                          --------------------------------
<S>                                                       <C>        <C>        <C>
Tax (benefit) at statutory rate .......................   $(6,028)   $(3,211)   $  (757)
State and local taxes, net of federal benefit .........      (130)      --         (288)
Amortization of goodwill ..............................       111         60         81
Operating losses of subsidiaries ......................      --          164       (546)
Provision for contingencies ...........................      --          338       --

Foreign Sales Corporation .............................      (199)      --         --
Valuation allowance for Spinnaker's deferred tax assets     3,136       --         --
Other .................................................       317        105        102
                                                          -------    -------    -------
                                                          $(2,793)   $(2,544)   $(1,408)
                                                          =======    =======    =======
</TABLE>

Loss before income taxes from foreign operations was $726,000 in 2000,  $582,000
in 1999 and -0- in 1998.

Income tax  payments  were $1.3  million,  $1.2  million and $.3 million for the
years 2000, 1999 and 1998, respectively.

12.      Comprehensive Income

The components of accumulated other comprehensive income, net of related tax, at
December 31, 2000, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>

(In Thousands)                                   2000    1999   1998
                                               -----------------------
<S>                                             <C>     <C>      <C>
Balance beginning of year ...................   $(40)   $ 59     $--
Foreign currency translation ................    (31)    (40)    --
Distribution to Lynch Interactive Corporation    --      (59)    --

Current year unrealized gains on
  available-for-sale securities .............    --      --       59
                                                ----    ----    ----
Accumulated other comprehensive income ......   $(71)   $(40)   $ 59
                                                ====    ====    ====
</TABLE>



13.     Employee Benefit Plans

The  Company,  through  its  operating  subsidiaries,  has  several  and various
employee retirement type plans including defined benefit,  defined contribution,
multi-employer,  profit  sharing,  and 401 (k) plans.  The following  table sets
forth the consolidated expenses for these plans (dollars in thousands):

<TABLE>
<CAPTION>

(In Thousands)          2000   1999   1998
                       --------------------
<S>                     <C>    <C>    <C>
Defined contributions   $373   $561   $643
Defined benefit .....     98    166    150
Multi-employer ......     88    121     80
                        ----   ----   ----
Total ...............   $559   $848   $873
                        ====   ====   ====
</TABLE>

<TABLE>

<CAPTION>
                                                2000     2000      1999     1999   1998     1998
                                               --------------------------------------------------------
                                                Union  Non-Union  Union   Non-Union Union  Non-Union
                                               --------------------------------------------------------
Service Cost - benefits earned during the
<S>                                             <C>      <C>      <C>      <C>      <C>     <C>
 period .....................................   $  85    $ 105    $ 105    $ 137    $  69   $ 100
Interest cost on projected benefit obligation      28       52       21       51       11      50
Expected return on assets ...................     (24)     (29)      (6)      (9)    --      --
Recognized (gains) or losses ................      (1)     (33)       1      (13)    --      --
                                                -----    -----    -----    -----    -----   -----
Net periodic pension cost ...................   $  88    $  95    $ 121    $ 166    $  80   $ 150
                                                =====    =====    =====    =====    =====   =====
</TABLE>

The foregoing measurement of net periodic pension cost is based on the following
assumptions:
<TABLE>

<S>                                                 <C>     <C>     <C>     <C>     <C>     <C>
Weighted-average discount rate ...............      8.00%   8.00%   8.00%   8.00%   7.50%   7.50%
Weighted-average rate of compensation increase        N/A   4.00%     N/A   4.00    %N/A    4.00%
Weighted-average expected long-term rate of
return on plan assets ........................      8.00%   8.00%   8.00%   8.00%   8.00%   8.00%

</TABLE>


<TABLE>
<CAPTION>
                                                2000         2000       1999       1999
                                              -------------------------------------------
                                                 Union       Non-Union   Union    Non-Union
                                              --------------------------------------------
<S>                                             <C>        <C>        <C>        <C>
Benefit obligation at beginning of year .....   $   370    $   763    $   288    $ 1,081
Service cost - benefits earned during the ...        85        105        106        137
period
Interest cost on projected benefit obligation        28         52         21         51
Actuarial (gains) losses ....................       (18)      (106)       (44)      (504)
Benefits paid ...............................        (3)        (9)        (1)        (2)
                                                -------    -------    -------    -------
Ibligation at end of year ...................   $   462    $   805    $   370    $   763
                                                -------    -------    -------    -------
</TABLE>



<PAGE>



<TABLE>
<CAPTION>

                                    2000     2000      1999     1999
                                   --------------------------------------
                                   Union   Non-Union   Union   Non-Union
                                   --------------------------------------
<S>                                <C>      <C>        <C>      <C>
Plan assets at beginning of year   $ 198    $ 282      $--      $--
Actual return on assets ........     (30)     (31)       9       12
Contributions by employer ......     189      146      190      272
Benefits paid ..................      (3)      (9)      (1)      (2)
                                   -----    -----    -----    -----
Plan assets at end of year .....   $ 354    $ 388    $ 198    $ 282
                                   =====    =====    =====     =====
</TABLE>

The following  table sets forth the union and non-union  plans' funded status as
of December 31, 2000 and 1999:
<TABLE>
<CAPTION>
                                       2000     2000      1999      1999
                                      ----------------------------------------
                                       Union   Non-Union  Union   Non-Union
                                      ----------------------------------------

<S>                                     <C>      <C>      <C>      <C>
Funded status .......................   $(109)   $(418)   $(173)   $(481)
Unrecognized actuarial (gains) losses      12     (410)     (25)    (398)
                                        -----    -----    -----    -----
Net amount recognized ...............   $ (97)   $(828)   $(198)   $(879)
                                        -----    -----    -----    -----
</TABLE>

Spinnaker Coating has a defined  contribution plan that covers substantially all
of  its  employees.  Under  the  plan,  Spinnaker  Coating  can  match,  at  its
discretion,  up to  50%  of  employee  contributions  not  exceeding  8% of  the
employee's  compensation.  Amounts  contributed to the plan by Spinnaker Coating
vest 20% per year for five years.  Spinnaker  Coating  recorded  expense for its
contributions under the plan of approximately  $335,000,  $542,000, and $559,000
in 2000, 1999 and 1998, respectively.

Entoleter
Entoleter  has a  defined-benefit  pension plan for all  salaried and  full-time
hourly  employees.  Benefits for the plan are based on compensation and years of
service  with  Entoleter.  Entoleter's  funding  policy is to  contribute  funds
necessary to meet future benefit obligations.

Net periodic  pension cost for the year ended  December 31, 2000,  1999 and 1998
included the following components:
<TABLE>
<CAPTION>
                                                        2000      1999    1998
                                                      ----------------------------
<S>                                                    <C>       <C>       <C>
Service cost - benefits earned during the period ...   $  30     $  30     $  35
Interest cost on projected benefit obligation ......      84        78        78
Expected return on plan assets .....................    (104)     (102)     (106)
Net amortization and deferral ......................      (8)       (8)       (8)
                                                       -----     -----     -----
Net periodic pension cost ..........................   $   2     $  (2)    $  (1)
                                                       =====     =====     =====
The foregoing measurement of net periodic
 pension cost is based on the following assumptions:
Weighted-average discount rate .....................    8.00%     8.00%     7.00%
Weighted-average rate of compensation increase .....    4.00%     4.00%     4.00%
Weighted-average expected long-term rate of
   return on plan assets ...........................    8.00%     8.00%     8.00%

</TABLE>



The  following  table sets forth the benefit  obligation as of December 31, 2000
and 1999:
<TABLE>
<CAPTION>
                                                     2000        1999
                                                    -------     -------
<S>                                                <C>        <C>
Benefit obligation at beginning of year ........   $ 1,090    $ 1,177
Service cost - benefits earned during the period        30         30
Interest cost on projected benefit obligation ..        85         78
Contributions by employees .....................         2          1
Actuarial (gains) losses .......................        13       (130)
Benefits paid ..................................       (91)       (66)
                                                    -------    -------
Benefit obligation at end of year ..............   $ 1,129    $ 1,090
                                                   =======    =======
</TABLE>

The following  table sets forth the fair value of plan assets as of December 31,
2000 and 1999:


<PAGE>
<TABLE>
<CAPTION>
                                   2000          1999
                                   ------------------
<S>                                <C>        <C>
Plan assets at beginning of year   $ 1,316    $ 1,305
Actual return on plan assets ...        25         76
Contributions by employees .....         1          1
Benefits paid ..................       (91)       (66)
                                   -------    -------
Plan assets at end of year .....   $ 1,251    $ 1,316
                                   =======    =======
</TABLE>

The following  table sets forth the plan's funded status as of December 31, 2000
and 1999:
<TABLE>
<CAPTION>
                                         2000       1999
                                        -------    -------
<S>                                      <C>      <C>
Funded status ........................   $ 122    $ 225
Unrecognized actuarial (gain) or loss       49      (44)
Unrecognized net (asset) or obligation      (8)     (16)
                                         -----    -----
Net amount recognized ................   $ 163    $ 165
                                         =====    =====
</TABLE>

14.     Commitments and Contingencies

In the normal course of business  subsidiaries  of the Company are defendants in
certain  product  liability,  worker  claims and other  litigation  in which the
amounts being sought may exceed  insurance  coverage  levels.  The resolution of
these  matters  is not  expected  to have a  material  effect  on the  Company's
financial condition or operations.

Future minimum rental payments under long-term  non-cancelable  operating leases
are as follows at December 31, 2000 (in thousands):
<TABLE>

      <S>    <C>
      2001   $  272
      2002      271
      2003      300
      2004      295
      2005      233
Thereafter      220
              -----
             $1,591
             ======
</TABLE>

Rent expense under operating leases was $1,213,000,  $1,222,000 and $952,000 for
the years ended  December 31,  2000,  1999 and 1998,  respectively.  The Company
leases  certain  property and  equipment,  including  warehousing  and sales and
distribution  equipment,  under  operating  leases  that  extend from one to ten
years.  Certain of these leases have renewal options and escalation  provisions.
The Company is party to a lease for its corporate  office for an annual  payment
of approximately $30,000 with an affiliate of its Chairman.

15.     Segment Information

The Company has two reportable  business segments.  The larger of the two is the
manufacture  and sale of  adhesive  backed  label  stock for labels and  related
applications by Spinnaker.  The other reportable segment is M-tron's manufacture
and sale of frequency  control devices (quartz  crystals and  oscillators).  The
Company is also engaged in the manufacture  and sale of glass forming  equipment
by Lynch  Systems,  impact  milling and other  equipment,  and these results are
combined and reported as Other Manufacturing.  Each of the businesses is located
domestically,  and export sales (primarily Canada and China) were  approximately
$54.7 million in 2000,  $31.5 million in 1999 and $33.4 million in 1998. For the
years ended  December 31, 2000,  1999 and 1998 one customer  accounted for $19.5
million, $18.3 million and $17.7 million,  respectively,  of the adhesive-backed
label stock  segment's  net sales.  For the year ended  December 31,  2000,  one
customer  accounted for $13.8 million of the other  manufacturing  segment's net
sales. The Company considers  concentrations of credit risk to be minimal due to
its diverse customer base.

M-tron attempts to utilize standard parts and components that are available from
multiple vendors located in the United States or internationally;  however, some
components  used in its products  are  available  from only a limited  number of
sources.

EBITDA  (before  corporate  allocation)  for  operating  segments  is  equal  to
operating  profit before  depreciation,  amortization  and  allocated  corporate
expenses.  EBITDA  is  presented  because  it  is a  widely  accepted  financial
indicator  of value and  ability  to incur  and  service  debt.  EBITDA is not a
substitute  for  operating  income or cash flows from  operating  activities  in
accordance with generally accepted accounting principles.

Operating profit (loss) is equal to revenues less operating expenses,  excluding
unallocated general corporate  expenses,  interest and income taxes. The Company
allocates a portion of its general corporate expenses to its operating segments.
Such  allocation was $300,000 per year during the years ended December 31, 2000,
1999 and 1998,  respectively.  Identifiable  assets of each industry segment are
the assets used by the segment in its  operations  excluding  general  corporate
assets.  General  corporate  assets are principally  cash and cash  equivalents,
short-term investments and certain other investments and receivables.
<TABLE>
<CAPTION>
                                  Years ended December 31
                                2000      1999        1998
                             ---------------------------------

Revenues
<S>                                                     <C>          <C>          <C>
Adhesive-backed label stock .........................   $ 150,136    $ 155,112    $ 151,561
Frequency control devices ...........................      39,855       26,484       22,798
Other manufacturing .................................      29,205       12,626       13,285
                                                        ---------    ---------    ---------
Consolidated total ..................................   $ 219,196    $ 194,222    $ 187,644
                                                        =========    =========    =========

EBITDA (before corporation allocation)
Adhesive-backed label stock .........................   $      99    $   8,889    $  12,010
Frequency control devices ...........................       4,054        2,640        2,073
Other manufacturing .................................       3,679       (1,188)      (1,411)
Corporate manufacturing expenses ....................      (1,973)      (2,681)      (2,903)
                                                        ---------    ---------    ---------
Total manufacturing .................................       5,859        7,660        9,769
Corporate expenses, gross ...........................      (1,451)      (1,452)        (530)
Restructuring charge - Spinnaker ....................      (1,650)        --           --
                                                        ---------    ---------    ---------
Consolidated total ..................................   $   2,758    $   6,208    $   9,239
                                                        =========    =========    =========

Operating Profit
Adhesive-backed label stock .........................   $  (5,137)   $   4,155    $   8,104
Frequency control devices ...........................       3,345        1,800        1,428
Other manufacturing .................................       3,147       (1,821)      (1,922)
Corporate manufacturing expenses ....................      (1,873)      (2,894)      (3,006)
                                                        ---------    ---------    ---------
Total manufacturing .................................        (518)       1,240        4,604
Unallocated corporate expense .......................      (1,751)      (1,155)        (530)
 Restructuring charge - Spinnaker ....................     (2,708)        --           --
                                                        ---------    ---------    ---------
Consolidated Total ..................................   $  (4,977)   $      85    $   4,074
                                                        =========    =========    =========

Depreciation and Amortization
Adhesive-backed label stock .........................   $   5,236    $   4,785    $   3,906
Frequency control devices ...........................         809          740          645
Other manufacturing .................................         632          528          511
Corporate manufacturing expenses ....................       1,058          967          874
                                                        ---------    ---------    ---------
Consolidated Total ..................................   $   7,735    $   7,020    $   5,936
                                                        =========    =========    =========
Capital expenditures
Adhesive-backed label stock .........................   $   2,631    $   2,625    $   2,219
Frequency control devices ...........................       1,476          804          878
Other manufacturing .................................         216          366          200
                                                        ---------    ---------    ---------
Consolidated Total ..................................   $   4,323    $   3,795    $   3,297
                                                        =========    =========    =========
Total Assets
Adhesive-backed label stock .........................   $ 116,746    $ 105,674    $ 105,759
Frequency control devices ...........................      18,210       10,940        8,898
Other manufacturing .................................      20,193       86,699       19,688
Discontinued Operations:
   Lynch Interactive ................................        --           --        228,342
   Industrial tape business .........................        --           --        110,256
General Corporate ...................................       7,671        7,879        7,353
                                                        ---------    ---------    ---------
Consolidated Total ..................................   $ 162,820    $ 211,192    $ 480,000
                                                        =========    =========    =========

Total operating profit for reportable segments ......   ($  4,977)   $      85    $   4,074
Other profit or loss:
  Investment income .................................       1,481        2,354          199
  Interest expense ..................................     (11,432)     (11,882)      (8,591)
  Impairment of Spinnaker's investment in warrants ..      (2,800)        --           --
  Gain on sales of subsidiary stock .................        --           --          2,090
                                                        ---------    ---------    ---------
   Income (loss) from continuing operations before
   income taxes, minority interests and extraordinary
   items ............................................   ($ 17,728)   $  (9,443)   $  (2,228)
                                                        =========    =========    =========
</TABLE>


16.      Quarterly Results of Operations (unaudited)

The following is a summary of the quarterly  results of operations for the years
ended December 31, 2000 and 1999 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
                                                       2000 Three Months Ended
                                            -----------------------------------------------
                                              Mar.31(a)  June 30(a)  Sep. 30    Dec. 31(b)
                                            -----------------------------------------------
<S>                                          <C>         <C>        <C>        <C>
Sales and revenues .......................   $ 52,474    $ 53,008   $ 56,192   $ 57,522
Gross profit .............................      6,147       7,560      8,266      4,243
Operating profit (loss) ..................       (142)      1,532        508     (6,875)
Income (loss) from continuing
   operations before extraordinary item ..       (758)        140        226     (5,291)
Net income (loss) ........................        496       1,131        226     (5,291)
Basic  and  diluted  earnings  (loss)  per
share:
   Income (loss) from continuing
   operations before extraordinary item ..       (.53)       0.09       0.15      (3.50)

    Net income (loss) ....................        .35        0.75       0.15      (3.50)

</TABLE>

<TABLE>
<CAPTION>

                                                     1999 Three Months Ended
                                            -----------------------------------------------
                                              Mar.31(c) June 30   Sep. 30 (d) Dec. 31 (d)
                                            -----------------------------------------------

<S>                                       <C>         <C>         <C>         <C>
Sales and revenues ....................   $ 46,411    $ 47,363    $ 51,070    $ 49,378
Operating profit (loss) ...............       (312)        701       1,013      (1,317)
Income (loss) from continuing
operations before extraordinary item ..       (975)       (500)       (617)     (2,160)
Net income (loss) .....................    (10,991)        427       7,892       1,089
Basic and diluted earnings (loss) per
share:
   Income (loss) from continuing
   operations before extraordinary item      (0.69)      (0.35)      (0.44)      (1.53)

   Net income (loss) ..................      (7.75)       0.30        5.59        (.77)
<FN>
NOTE:
         a)       Includes gain on early extinguishments of debt of $2.2 million
                  after income taxes and minority interests.
         b)       Includes  restructuring  charge of approximately $2.2 million,
                  deferred  tax asset  valuation  allowance  of $3.1 million and
                  investment write-down of $2.8 million all at Spinnaker.
         c)       Includes write down of PCS licenses of $15.4 million  of
                  Lynch Interactive Corporation
         d)       Includes gain on sale of Industrial Tape Segment of
                  Spinnaker of $10.4 million after income taxes, and
                  minority interest.
</FN>
</TABLE>


<PAGE>

<TABLE>


SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF REGISTRANT
LYNCH CORPORATION
CONDENSED BALANCE SHEET
(In Thousands)
<CAPTION>

ASSETS
                                                        2000      1999
                                                      ------------------
CURRENT ASSETS
<S>                                                   <C>       <C>
  Cash and Cash Equivalents .......................   $ 1,928   $ 1,154
   Marketable Securities and Short Term Investments        --        24
   Dividend Receivable From Subsidiary ............     1,500      --
   Deferred Income Tax Benefits ...................       412       412
   Other Current Assets ...........................       980        81
                                                      -------   -------
                                                        4,820     1,671

OFFICE EQUIPMENT (Net Depreciation) ...............        16      --

OTHER ASSETS ......................................    16,682    16,643
                                                      -------   -------

TOTAL ASSETS ......................................   $21,518   $18,314
                                                      =======   =======

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES ...............................   $ 2,303   $ 2,110

LONG TERM LIABILITIES .............................       158       213

TOTAL SHAREHOLDERS' EQUITY ........................    19,057   $15,991
                                                      -------   -------

Total Liabilities and Shareholders' Equity ........   $21,518   $18,314
                                                      =======   =======

</TABLE>
<PAGE>

<TABLE>

CONDENSED FINANCIAL INFORMATION OF REGISTRANT
LYNCH CORPORATION
CONDENSED STATEMENT OF OPERATIONS

<CAPTION>

(In Thousands)                                                     Year Ended December 31
                                                                 2000        1999        1998
                                                                 ----------------------------
<S>                                                            <C>        <C>        <C>
Interest, Dividends & Gains on Sale of Marketable Securities   $   187    $    17    $   128
Dividend from Subsidiary ...................................     1,500       --         --
Interest & Other Income from Subsidiaries ..................       348         23         35
                                                                -------   -------    -------
TOTAL INCOME ...............................................   $ 2,035         40        163

Costs & Expenses:
Unallocated Corporate Administrative Expense ...............     1,451      1,155      1,371

Interest Expense ...........................................        15          7      1,394

Interest Expense to Subsidiaries ...........................      --           23        830
                                                                -------   -------    -------

TOTAL COST AND EXPENSE .....................................     1,466      1,185      3,595
                                                                -------   -------    -------
LOSS BEFORE INCOME TAXES, AND EQUITY IN
 NET INCOME (LOSS) OF SUBSIDIARIES .........................      (569)    (1,145)    (3,432)

Income Tax Benefit .........................................       215        321      1,648
Equity in Net Income (Loss) of Subsidiaries ................    (1,049)      (759)     5,141
                                                                -------   -------    -------

NET INCOME (LOSS) ..........................................   $(1,403)   ($1,583)   $ 3,357
                                                                =======   =======    =======
</TABLE>
<PAGE>


<TABLE>

CONDENSED FINANCIAL INFORMATION OF REGISTRANT
LYNCH CORPORATION
CONDENSED STATEMENTS OF CASH FLOW
(In Thousands)

<CAPTION>

                                                        Year Ended December 31
                                                   -----------------------------
                                                      2000      1999       1998
                                                   -----------------------------
<S>                                                 <C>        <C>        <C>
Cash provided from (used in) Operating Activities   $(2,210)   $   405    $ 1,049
                                                    ========   ========   ========
INVESTING ACTIVITIES:
Investment in Lynch Manufacturing ...............      --          981      3,000
Investment in and advances to PCS Partnerships ..      --         --        3,692
Other ...........................................      --         --         (176)
                                                    -------    -------    -------
NET CASH PROVIDED FROM (USED IN) INVESTING
   ACTIVITIES ...................................      --          981      6,516
                                                    -------    -------    -------
FINANCING ACTIVITIES:
Net Borrowings ..................................      --         --       (7,564)
Lines of Credit .................................      --         --         --
(Purchase) - Sale of Treasury Stock .............     1,191       (523)      --
Issuance of Common Stock ........................     1,809       --         --
Other ...........................................       (16)      --         --

NET CASH (USED IN) PROVIDED FROM FINANCING          -------    -------    -------
   ACTIVITIES ...................................     2,984       (523)    (7,564)
                                                    -------    -------    -------
TOTAL INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS ..................................       774        863          1

CASH AND CASH EQUIVALENTS AT BEGINNING
   OF YEAR ......................................     1,154        291        290
                                                    -------    -------    -------
CASH AND CASH EQUIVALENTS AT END OF YEAR ........   $ 1,928    $ 1,154    $   291
                                                    =======    =======    =======

<FN>
NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE A - BASIS OF PRESENTATION

In the parent  company's  financial  statements,  the  Company's  investment  in
subsidiaries  is stated at cost plus  equity in  undistributed  earnings  of the
subsidiaries.

NOTE B - SPIN OFF OF LYNCH INTERACTIVE CORPORATION

On August 12, 1999,  the Board of directors  approved a plan to  distribute  the
stock  of  Lynch  Interactive  Corporation  on  a  one  for  one  basis  to  the
shareholders of Lynch Corporation  ("spin off"). Lynch completed the spin off of
Lynch  Interactive   Corporation   ("Interactive")  on  September  1,  1999,  to
stockholders of record on August 23, 1999.  Pursuant to the spin off, each Lynch
shareholder  received  one share of  Interactive  common stock for each share of
Lynch  owned.  Lynch had  received a private  letter  ruling  from the  Internal
Revenue  Service  that  the spin  off  would be tax free to Lynch  shareholders.
Interactive is listed on the American Stock Exchange under the symbol "LIC".

NOTE C - DIVIDENDS FROM SUBSIDIARIES

Dividends  paid  to  Lynch   Corporation  from  the  Registrant's   consolidated
subsidiaries  were  $1,500,000  in 2000,  $0 in 1999 and  $3,060,000 in 1998. No
other dividends were received from subsidiaries or investees.

NOTE D - SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR ADDITIONAL INFORMATION.
</FN>
</TABLE>

<TABLE>


                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                       LYNCH CORPORATION AND SUBSIDIARIES
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998


<CAPTION>
                                    --------------- ---------------------- ------------------ ----------------- --------------
                                       COLUMN A           COLUMN B             COLUMN C        COLUMN D        COLUMN E
                                                                              ADDITIONS                         BALANCE AT
                                      BALANCE AT          ADDITIONS           CHARGED TO                        END OF PERIOD
                                      BEGINNING     CHARGED TO COSTS AND    OTHER ACCOUNTS
                                      OF PERIOD           EXPENSES             DESCRIBE       DEDUCTIONS
DESCRIPTION                                                                                   DESCRIBE (B)

YEAR ENDED DECEMBER 31, 2000
<S>                                    <C>               <C>                      <C>         <C>                  <C>
ALLOWANCE FOR UNCOLLECTIBLE            $361,000          $1,312,000               $ 0         $ 91,000             $1,582,000

YEAR ENDED DECEMBER 31, 1999
ALLOWANCE FOR UNCOLLECTIBLE           $ 395,000           $ 81,000                $ 0         $115,000               $361,000

YEAR ENDED DECEMBER 31, 1998                                                                  $910,000 (A)
ALLOWANCE FOR UNCOLLECTIBLE           $1,448,000          $723,000                $ 0         $866,000               $395,000

<FN>
(A)      ALLOCATION OF VALUATION ACCOUNT TO SEGMENTS SOLD OR SPUN OFF
(B)      UNCOLLECTIBLE ACCOUNTS WRITTEN OFF ARE NET OF RECOVERIES
</FN>
</TABLE>



<PAGE>

Pursuant to the  requirements  of Section 13 or15(d) 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

By:s/LOUIS A. GUZZETTI
- ----------------------------------------
        LOUIS A. GUZZETTI
        Chief Executive Officer (Principal
        Executive Officer)
        March 30, 2001

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

               Signature                                    Capacity                             Date

<S>                                      <C>                                            <C> >
*MARIE J. GABELLI                        Chairman of the board of Directors and
- -----------------
 MARIO J. GABELLI                        Director                                        March 30, 2001

*ANTHONY T. CASTOR, III                  Vice Chairman of the Board and Director         March 30, 2001
- -----------------------
ANTHONY T. CASTOR, III

S/LOUIS A. GUZZETTI, JR.                 Principal Executive Officer and Director        March 30, 2001
- ------------------------
LOUIS A. GUZZETTI, JR.

*E. VAL CERUTTI                          Director                                        March 30, 2001
- ---------------
E. VAL CERUTTI

*AVRUM GRAY                              Director                                        March 30, 2001
- -----------
AVRUM GRAY

*RALPH R. PAPITTO                        Director                                        March 30, 2001
- -----------------
RALPH R. PAPITTO

*ROBERT E. DOLAN                         Director                                        March 30, 2001
- ----------------
ROBERT E. DOLAN

S/ROGER J. DEXTER                        Principal Financial and Accounting Officer      March 30, 2001
- -----------------
ROGER J. DEXTER

By:s/ROGER J. DEXTER                     Attorney in fact
- --------------------
ROGER J. DEXTER
</TABLE>



<PAGE>




                                                EXHIBIT INDEX

Exhibit No.                                                     Description

3    (a) Restated  Articles of  Incorporation  of  Registrant  (incorporated  by
     reference to Exhibit 3(a) of the  registrant's  Annual  Report on Form 10-K
     for the year ended December 31, 1987).

     (b)  By-laws of the Registrant,  (incorporated  by reference to the Exhibit
          3(b) of the Registrant's Annual Report on Form 10-K for the year ended
          December 31, 1987).


4    (a)   Purchase   Agreement,   dated   October  18,   1996  (the   "Purchase
     Agreement")among   Spinnaker  Industries,   Inc.,  a  Delaware  corporation
     ("Spinnaker"),   Brown-Bridge  Industries,  Inc.,  a  Delaware  corporation
     ("Brown-Bridge"),   Central  Products  Company,   a  Delaware   corporation
     ("Central Products"),  and Entoleter, Inc., ("Entoleter") and together with
     Brown-Bridge and Central  Products,  (the  "Guarantors")  and BT Securities
     Corporation (the "Initial Purchaser") (incorporated by reference to Exhibit
     4.1 to Registrant's Form 8-K, dated October 23, 1996).

     (b)  Indenture dated, October 23, 1996, among Spinnaker, the Guarantors and
          the Chase  Manhattan  Bank, as Trustee  (incorporated  by reference to
          Exhibit 4.3 to Registrant's Form 8-K, dated April 19, 1996).

     (b)(i) First  Supplemental  Indenture  dates as of March  17,  1998,  among
          Spinnaker Industries,  Inc., Central Products Company, Entoleter, Inc.
          Spinnaker Coating, Inc., Spinnaker  Coating-Maine,  Inc. and the Chase
          Manhattan Bank, as Trustee  (incorporated by reference by Exhibit 99.6
          to the Form 8-K of Spinnaker  Industries,  Inc.  dated as of March 17,
          1998.)

     (c)  Credit  Agreement (the  "Spinnaker  Credit  Agreement")  amended as of
          December  31,  1997,  among  Central  Products  Company,  Brown-Bridge
          Industries,   Inc.  and  Entoleter,   Inc.  as  Borrowers,   Spinnaker
          Industries,  Inc. as  Guarantor,  each of the  financial  institutions
          listed on Schedule 1 thereto,  BT  Commercial  Corporation,  as Agent,
          Transamerican  Business Credit  Corporation,  as Collateral Agent, and
          Bankers  Trust Company as Issuing Bank  (incorporated  by reference to
          Exhibit 99.1 to Registrant's Form 8-K dated October 23, 1996).

     (c)(i) Fourth Amendment to the Spinnaker Credit Agreement  (incorporated by
          reference to Exhibit 9.3 to the Form 8-K of Spinnaker Industries, Inc.
          dated as of March 17, 1998).

     (c)(ii) Fifth  Amendment to Spinnaker  Credit  Agreement  (incorporated  by
          reference to Exhibit 9.4 to the Form 8-K of Spinnaker Industries, Inc.
          dated as of March 17, 1998).

     (c)(iii) Sixth Amendment to the Spinnaker Credit Agreement (incorporated by
          reference by Exhibit 9.5 to the Form 8-K of Spinnaker Industries, Inc.
          dated as of March 17, 1998).

     (d)  Refinanced Credit Agreement among Spinnaker Coating,  Inc.,  Spinnaker
          Coating-Maine,  Inc.  and  Entoleter,  Inc.  as  Borrowers,  Spinnaker
          Industries,  Inc. as  Guarantor,  each of the  financial  institutions
          listed as Schedule 1 hereto and Transamerica Business Corporation,  as
          Agent, dated August 9, 1999 and the First, Second and Third Amendments
          thereto  (incorporated  by reference to Exhibits 10.5,  10.6, 10.7 and
          10.8 to Spinnaker's Form 10-K for the year ended December 31, 1999).


<PAGE>





     (d)(i) Fourth  Amendment to financed Credit  Agreement dated April 17, 2000
          (incorporated  by reference to Exhibit 10.1 to  Spinnaker's  Form 10-Q
          for the quarter ended March 31, 2000).

     (d)(ii) Fifth Amendment to Refinanced  Credit Agreement dated September 30,
          2000  (incorporated  by reference to Exhibit 10.1 to Spinnaker's  Form
          10-Q for the quarter ended September 30, 2000).

     (d)(iv) Sixth  Amendment to Refinanced  Credit  Agreement  dated March 2001
          (incorporated  by reference to Exhibit 10.16 to Spinnaker's  Form 10-K
          for the year ended December 31, 2001).

The  Registrant,  by signing this Form 10-K Annual Report,  agrees to furnish to
the Securities and Exchange  Commission a copy of any long-term debt  instrument
where the  amount of the  securities  authorized  thereunder  does not exceed 10
percent of the total assets of the Registrant on a consolidated basis.

10   *(a) Lynch Corporation 401(k) Savings Plan.

     (b)  Acquisition Agreement between Brown-Bridge Acquisition Corporation and
          `Kimberly-Clark  Corporation,  dated June 15, 1994  (exhibit  omitted)
          (incorporated by reference to Exhibit 10(c) to Registrant's  Form 10-Q
          for the quarter ended June 10, 1994).+

     *(c) Management  Agreement,  dated as of June 10, 1994, by and among Boyle,
          Fleming,  George & Co., Inc. and Safety  Railway  Service  Corporation
          (incorporated  by  reference by Exhibit 7.1 to the  Registrant's  Form
          8-K, dated June 13, 1994).

     (d)  Subscription  Agreement  dated March 9, 2000  between  Registrant  and
          Mario J. Gabelli  (incorporated by reference to Exhibit E to Amendment
          No. 41 to  Schedule  13D of  Registrant  dated March 15, 2000 filed by
          Mario J. Gabelli et. al.).


     (e)  Warrant  Purchase  Agreement  dated as of June 10, 1994,  by and among
          Boyle,  Fleming,  George  &  Co.,  Inc.  and  Safety  Railway  Service
          Corporation   (incorporated   by   reference  by  Exhibit  7.1  t  the
          Registrant's Form 8-K, dated June 13, 1994).


     (f)  A  Warrant,  dated as of June 10,  1994,  executed  by Safety  Railway
          Service  Corporation  (incorporated  by  reference  to Exhibit  7.1 to
          Registrant's Form 8-K, dated June 12, 1994).

     (g)  Asset  Purchase  Agreement,   dated  as  of  June  15,  1994,  between
          Kimberly-Clark   Corporation  and   Brown-Bridge   Acquisition   Corp.
          (Exhibits  omitted)  (incorporated  by reference  to Exhibit  10(c) to
          Registrant's Form 10-Q for the quarter ended June 30, 1994).+

     (h)  Stock Purchase and Loan Program  (incorporated by reference to Exhibit
          10(p) to Registrant's Form 10-K for the year ended December 31, 1994).

     (i)  Shareholders'  and Voting  Agreement,  dated September 16, 1994, among
          Safety Railway Service Corporation,  Brown-Bridge Industries, Inc. and
          the other  stockholders of Brown-Bridge  (incorporated by reference to
          Exhibit 10(q) to  Registrant's  Form 10-K for the year ended  December
          31, 1994).



<PAGE>


     (j)  Put Option  Agreement,  dated September 16, 1994, among Safety Railway
          Service  Corporation,   Brown-Bridge  Industries,   Inc.  and  certain
          stockholders  of  Brown-Bridge  (incorporated  by reference to Exhibit
          10(q) to Registrant's Form 10-K for the year ended December 31, 1994).

     (k)  Directors Stock Plan

     (l)  Amended Phantom Stock Plan (incorporated by reference to Exhibit 10(p)
          to Registrant's Form 10-Q for the year ended September 30, 1998).

     (m)  Stock and Asset Purchase Agreement, dated as of September 27, 1995, by
          and among Central Products Acquisition Corp. Unisource Worldwide, Inc.
          and Alco Standard  Corporation  (incorporated  by reference to Exhibit
          7.1 to Registrant's Form 8-K, dated October 18, 1885).+

     (n)  Agreement and Plan of Merger (Brown-Bridge Minority Interest),  by and
          among  Spinnaker  Industries,  Inc.,  BB  Merger  Corp.,  Brown-Bridge
          Industries,  Inc. and the stockholder of Brown-Bridge Industries, Inc.
          on Exhibit A thereto  (incorporated  by  reference  to Exhibit 99.2 to
          Registrant's Form 8-K, dated April 19, 1996).+


     (o)  Lease   Agreement   between   Registrant  and  Gabelli   Funds,   Inc.
          (incorporated  by reference to Exhibit  10(a)(a) to Registrant's  Form
          10-Q for the Quarter Ended March 31, 1998).

     (p)  Asset  Purchase  Agreement,  dated as of  November  18,  1997,  by and
          between S.D. Warren Company ("Seller") and Spinnaker Industries,  Inc.
          (incorporated by reference to Exhibit 2.1 to the Form 8-K of Spinnaker
          Industries, Inc., dated as of March 17, 1998).

     (p)(i) First Amendment to Asset Purchase  Agreement,  dated March 17, 1998,
          by and between S. D. Warren  Company and  Spinnaker  Industries,  Inc.
          (incorporated by reference by Exhibit 4.2 to the Form 8-K of Spinnaker
          Industries, Inc., dated as of March 17, 1998).+

     (p)(ii)  Subordinated  Note,  dated  March 17,  1998,  issued by  Spinnaker
          Industries,  Inc. to S.D.  Warren  Company in the  original  principal
          amount  of $7  million  bearing  interest  at a rate of 20% per  annum
          (incorporated by reference to Exhibit 4.1 to the Form 8-K of Spinnaker
          Industries, Inc., dated as of March 17,k 1998).

     (p)(iii) Site  Separation  and Service  Agreement  , dated March 17,  1998,
          between  S.D.   Warren   Company  and   Spinnaker   Industries,   Inc.
          (incorporated by reference by Exhibit 99.1 t the Form 8-K of Spinnaker
          Industries, Inc., dated March 17, 1998).

     (p)(iv) Lease Agreement,  dated March 17, 1998, between S.D. Warren Company
          and Spinnaker Industries,  Inc.  (incorporated by reference by Exhibit
          99.2 to the Form 8-K of Spinnaker Industries,  Inc., dated as of March
          17, 1998.)

     (q)  Stock  Purchase  Agreement  between  Spinnaker  Industries,  Inc.  and
          Intertape  Polymer Group,  Inc., dated April 9, 2000  (incorporated by
          reference to Exhibit 2.1 to Spinnaker Industries, Inc. Form 8-K, dated
          August 16, 2000).

     (r)  Asset Purchase Agreement by and among Registrant, Spinnaker Electrical
          Tape Company and Intertape  Polymer Group,  Inc.,  dated April 9, 2000
          (incorporated  by reference  to Exhibit 2.2 to  Spinnaker  Industries,
          Inc. Form 8-K, dated August 16, 2000.


<PAGE>




     (s)  Information Statement of Lynch Interactive Corporation's (incorporated
          by reference to Exhibit 99.1 to Lynch Interactive  Corporation's  Form
          10-A-1, dated August 18, 2000).

     (t)  Separation Agreement,  dated as of August 31, 2000, between Registrant
          and  Lynch  Interactive  Corporation  (incorporated  by  reference  to
          Exhibit 2 to Lynch Interactive  Corporation's Form 10a-1, dated August
          18, 2000).

     *(u) Letter of  Understanding  between  Registrant  and Louis A.  Guzzetti.
          (Incorporated  by reference to Exhibit (u) to  Registrant's  Form 10-K
          for the year ended December 31, 1999).

     (v)  Note from Louis A. Guzzetti, Jr. to Registrant ++

16   Letter Re: Change in Certifying  Accountant  (incorporated  by reference to
     Exhibit 16 to Registrant's Form 8-K, dated March 19, 1996).

21   Subsidiaries of the Registrant. ++

23   Consent of Ernst & Young ++

24   Powers of Attorney ++

  *Management contract or compensatory arrangement.

  + Registrant  agrees to furnish a supplemental copy of any omitted schedule to
  the Securities and Exchange Commission upon request.

  ++ Filed herewith

  The Exhibits  listed above have been filed  separately with the Securities and
  Exchange  Commission  in  conjunction  with this Annual Report on Form 10-K or
  have been  incorporated  by  reference  into this Annual  Report on Form 10-K.
  Lynch  Corporation will furnish to each of its shareholders a copy of any such
  Exhibit  for a fee  equal  to  Lynch  Corporation's  cost in  furnishing  such
  Exhibit.  Requests  should be addressed to the Office of the Secretary,  Lynch
  Corporation, 401 Theodore Fremd Avenue, Rye, New York 10580.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>PROMISSORY NOTE
<TEXT>




                                 PROMISSORY NOTE


         The undersigned,  Louis A. Guzzetti, Jr., hereby promises to pay to the
order of Lynch  Corporation an amount equal to the funds which Lynch Corporation
may loan to the  undersigned  (as  detailed in the  Schedule  set forth  below),
together  with interest at the rate of 6% per annum,  compounded  semi-annually.
The  principal  and  interest  shall be payable on the  thirtieth  day after the
undersigned  shall cease for any reason  (whether  with or without  cause) to be
employed  by  Lynch  Corporation  or an  affiliate  of  Lynch  Corporation.  The
undersigned may prepay this Note at any time without penalty.
Dated: June 6, 2000
                                        ----------------------------------
                                        Louis A. Guzzetti, Jr.
<TABLE>


                                    Schedule
                                    --------
<CAPTION>

            Amount                                       Date
            ------                                       -----

         <S>                                <C>
         $309,495.95                        June 6, 2000
         $ 61,000.00                        September 20, 2000
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>LYNCH CORPORATION SUBSIDIARIES
<TEXT>




Exhibit 21
<TABLE>
<CAPTION>
Subsidiary                                                                         Owned by Lynch

<S>                                                                                <C>
Lynch Display Technologies, Inc.                                                   100.0%
Lynch Systems, Inc.                                                                100.0%
   Lynch International Holding Corporation                                         100.0%
   Lynch-AMAV LLC                                                                  75.0%
   M-tron Industries, Inc.                                                         100.0%
       M-tron Industries, Ltd.                                                     100.0%
   Spinnaker Industries, Inc.                                                      47.6%(O)60.4%(V)
       Entoleter, Inc.                                                             47.6%(O)60.4%(V)
       Spinnaker Coating, Inc.                                                     47.65(O)60.4%(V)
          Spinnaker Coating-Maine, Inc.                                            47.6%(O)60.4%(V)
       Spinnaker Electrical Tape Company                                           47.6%(O)60.4%(V)

<FN>
Notes: (O)=Percentage of equity ownership; (V)=Percentage voting control.
</FN>

</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>E&YCONSENT
<TEXT>


                         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  March  30,  2001,  with  respect  to the  consolidated  financial
statements  and  schedules of Lynch  Corporation  included in this Annual Report
(Form 10-K) for the year ended December 31, 2000.

                                        /s/ ERNST & YOUNG LLP

Stamford, Connecticut
March 30, 2001



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-24
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>POWERS OF ATTORNEY
<TEXT>



                                POWER OF ATTORNEY


           KNOW  ALL MEN BY THESE  PRESENTS,  that  the  undersigned,  Director,
Chairman of the Board and Chief Executive Officer (Principal Executive Officer),
of LYNCH CORPORATION,  an Indiana  corporation,  hereby appoints ROGER J. DEXTER
and MARY J. CARROLL true and lawful  attorneys-in-fact  and agents,  and each of
them  (with  full  power  to  act   without  the  other)  his  true  and  lawful
attorney-in-fact  and agent, with full power of substitution and resubstitution,
for him and in his name,  place and stead, in any and all  capacities,  to sign,
execute, deliver and file with the Securities and Exchange Commission the Annual
Report on Form 10-K of Lynch  Corporation for the fiscal year ended December 31,
2000, including any and all amendments thereto, granting unto said attorneys and
agents,  and each of them,  full  power to do and  perform  every  act and thing
requisite,  necessary or desirable to be done in connection therewith,  as fully
to all intents and purposes as he might or could do in person,  hereby ratifying
and confirming all that said  attorneys-in-fact  and agents,  or any of them, or
their or his  substitutes or substitute,  may lawfully do or cause to be done by
virtue hereof,  and hereby  revoking all prior  appointments  by him, if any, of
attorneys-in-fact  and  agents  to sign and file the  above-described  document,
including any and all amendments thereto.

           IN WITNESS  WHEREOF,  the  undersigned  has hereunto set his hand and
seal on the date set forth below.


DATE: March 15, 2001                            s/ Mario J. Gabelli(L.S.)
                                                   -------------------
                                                   Mario J. Gabelli





<PAGE>





                                POWER OF ATTORNEY


         KNOW ALL MEN BY THESE PRESENTS,  that the undersigned Director of Lynch
Corporation, an Indiana corporation,  hereby appoints LOUIS A. GUZZETTI and MARY
J. CARROLL true and lawful  attorneys-in-fact and agents, and each of them (with
full power to act  without the other) his true and lawful  attorney-in-fact  and
agent,  with full power of substitution and  resubstitution,  for him and in his
name, place and stead, in any and all capacities,  to sign, execute, deliver and
file with the Securities and Exchange  Commission the Annual Report on Form 10-K
of Lynch Corporation for the fiscal year ended December 31, 2000,  including any
and all amendments thereto, granting unto said attorneys and agents, and each of
them, full power to do and perform every act and thing  requisite,  necessary or
desirable  to be done in  connection  therewith,  as  fully to all  intents  and
purposes as he might or could do in person,  hereby ratifying and confirming all
that  said  attorneys-in-fact  and  agents,  or any of  them,  or  their  or his
substitutes or substitute, may lawfully do or cause to be done by virtue hereof,
and hereby revoking all prior appointments by him, if any, of  attorneys-in-fact
and agents to sign and file the above-described document,  including any and all
amendments thereto.

         IN WITNESS WHEREOF,  the undersigned has hereunto set his hand and seal
on the date set forth below.


DATE: March 15, 2001                s/ Ralph R. Papitto        (L.S.)
                                       ---------------------------
                                       Ralph R. Papitto





<PAGE>





                                POWER OF ATTORNEY


         KNOW ALL MEN BY THESE PRESENTS,  that the undersigned Director of Lynch
Corporation, an Indiana corporation,  hereby appoints LOUIS A. GUZZETTI and MARY
J. CARROLL true and lawful  attorneys-in-fact and agents, and each of them (with
full power to act  without the other) his true and lawful  attorney-in-fact  and
agent,  with full power of substitution and  resubstitution,  for him and in his
name, place and stead, in any and all capacities,  to sign, execute, deliver and
file with the Securities and Exchange  Commission the Annual Report on Form 10-K
of Lynch Corporation for the fiscal year ended December 31, 2000,  including any
and all amendments thereto, granting unto said attorneys and agents, and each of
them, full power to do and perform every act and thing  requisite,  necessary or
desirable  to be done in  connection  therewith,  as  fully to all  intents  and
purposes as he might or could do in person,  hereby ratifying and confirming all
that  said  attorneys-in-fact  and  agents,  or any of  them,  or  their  or his
substitutes or substitute, may lawfully do or cause to be done by virtue hereof,
and hereby revoking all prior appointments by him, if any, of  attorneys-in-fact
and agents to sign and file the above-described document,  including any and all
amendments thereto.

         IN WITNESS WHEREOF,  the undersigned has hereunto set his hand and seal
on the date set forth below.


DATE: March 15, 2001                s/ Avrum Gray            (L.S.)
                                    -------------------------
                                       Avrum Gray

<PAGE>





                                POWER OF ATTORNEY


         KNOW ALL MEN BY THESE PRESENTS,  that the undersigned Director of Lynch
Corporation, an Indiana corporation,  hereby appoints LOUIS A. GUZZETTI and MARY
J. CARROLL true and lawful  attorneys-in-fact and agents, and each of them (with
full power to act  without the other) his true and lawful  attorney-in-fact  and
agent,  with full power of substitution and  resubstitution,  for him and in his
name, place and stead, in any and all capacities,  to sign, execute, deliver and
file with the Securities and Exchange  Commission the Annual Report on Form 10-K
of Lynch Corporation for the fiscal year ended December 31, 2000,  including any
and all amendments thereto, granting unto said attorneys and agents, and each of
them, full power to do and perform every act and thing  requisite,  necessary or
desirable  to be done in  connection  therewith,  as  fully to all  intents  and
purposes as he might or could do in person,  hereby ratifying and confirming all
that  said  attorneys-in-fact  and  agents,  or any of  them,  or  their  or his
substitutes or substitute, may lawfully do or cause to be done by virtue hereof,
and hereby revoking all prior appointments by him, if any, of  attorneys-in-fact
and agents to sign and file the above-described document,  including any and all
amendments thereto.

         IN WITNESS WHEREOF,  the undersigned has hereunto set his hand and seal
on the date set forth below.


DATE: March 15, 2001                s/ E. Val Cerutti (L.S.)
                                    ----------------------------
                                       E. Val Cerutti


<PAGE>





                                POWER OF ATTORNEY


         KNOW ALL MEN BY THESE PRESENTS,  that the undersigned Director of Lynch
Corporation, an Indiana corporation,  hereby appoints LOUIS A. GUZZETTI and MARY
J. CARROLL true and lawful  attorneys-in-fact and agents, and each of them (with
full power to act  without the other) his true and lawful  attorney-in-fact  and
agent,  with full power of substitution and  resubstitution,  for him and in his
name, place and stead, in any and all capacities,  to sign, execute, deliver and
file with the Securities and Exchange  Commission the Annual Report on Form 10-K
of Lynch Corporation for the fiscal year ended December 31, 2000,  including any
and all amendments thereto, granting unto said attorneys and agents, and each of
them, full power to do and perform every act and thing  requisite,  necessary or
desirable  to be done in  connection  therewith,  as  fully to all  intents  and
purposes as he might or could do in person,  hereby ratifying and confirming all
that  said  attorneys-in-fact  and  agents,  or any of  them,  or  their  or his
substitutes or substitute, may lawfully do or cause to be done by virtue hereof,
and hereby revoking all prior appointments by him, if any, of  attorneys-in-fact
and agents to sign and file the above-described document,  including any and all
amendments thereto.

         IN WITNESS WHEREOF,  the undersigned has hereunto set his hand and seal
on the date set forth below.


DATE: March 15, 2001       s/ Roger J. Dexter           (L.S.)
                          -----------------------------
                              Roger J. Dexter
<PAGE>





                                POWER OF ATTORNEY


         KNOW ALL MEN BY THESE PRESENTS,  that the undersigned Director of Lynch
Corporation, an Indiana corporation,  hereby appoints LOUIS A. GUZZETTI and MARY
J. CARROLL true and lawful  attorneys-in-fact and agents, and each of them (with
full power to act  without the other) his true and lawful  attorney-in-fact  and
agent,  with full power of substitution and  resubstitution,  for him and in his
name, place and stead, in any and all capacities,  to sign, execute, deliver and
file with the Securities and Exchange  Commission the Annual Report on Form 10-K
of Lynch Corporation for the fiscal year ended December 31, 2000,  including any
and all amendments thereto, granting unto said attorneys and agents, and each of
them, full power to do and perform every act and thing  requisite,  necessary or
desirable  to be done in  connection  therewith,  as  fully to all  intents  and
purposes as he might or could do in person,  hereby ratifying and confirming all
that  said  attorneys-in-fact  and  agents,  or any of  them,  or  their  or his
substitutes or substitute, may lawfully do or cause to be done by virtue hereof,
and hereby revoking all prior appointments by him, if any, of  attorneys-in-fact
and agents to sign and file the above-described document,  including any and all
amendments thereto.

         IN WITNESS WHEREOF,  the undersigned has hereunto set his hand and seal
on the date set forth below.


DATE: March 15, 2001       s/ Louis A. Guzzetti, Jr.   (L.S.)
                           ----------------------------
                              Louis A. Guzzetti, Jr.




<PAGE>




                                POWER OF ATTORNEY


         KNOW ALL MEN BY THESE PRESENTS,  that the undersigned Director of Lynch
Corporation, an Indiana corporation,  hereby appoints LOUIS A. GUZZETTI and MARY
J. CARROLL true and lawful  attorneys-in-fact and agents, and each of them (with
full power to act  without the other) his true and lawful  attorney-in-fact  and
agent,  with full power of substitution and  resubstitution,  for him and in his
name, place and stead, in any and all capacities,  to sign, execute, deliver and
file with the Securities and Exchange  Commission the Annual Report on Form 10-K
of Lynch Corporation for the fiscal year ended December 31, 2000,  including any
and all amendments thereto, granting unto said attorneys and agents, and each of
them, full power to do and perform every act and thing  requisite,  necessary or
desirable  to be done in  connection  therewith,  as  fully to all  intents  and
purposes as he might or could do in person,  hereby ratifying and confirming all
that  said  attorneys-in-fact  and  agents,  or any of  them,  or  their  or his
substitutes or substitute, may lawfully do or cause to be done by virtue hereof,
and hereby revoking all prior appointments by him, if any, of  attorneys-in-fact
and agents to sign and file the above-described document,  including any and all
amendments thereto.

         IN WITNESS WHEREOF,  the undersigned has hereunto set his hand and seal
on the date set forth below.


DATE: March 15, 2001       s/ Anthony T. Castor, III   (L.S.)
                              ----------------------------
                              Anthony T. Castor, III




<PAGE>




                                POWER OF ATTORNEY


         KNOW ALL MEN BY THESE PRESENTS,  that the undersigned Director of Lynch
Corporation, an Indiana corporation,  hereby appoints LOUIS A. GUZZETTI and MARY
J. CARROLL true and lawful  attorneys-in-fact and agents, and each of them (with
full power to act  without the other) his true and lawful  attorney-in-fact  and
agent,  with full power of substitution and  resubstitution,  for him and in his
name, place and stead, in any and all capacities,  to sign, execute, deliver and
file with the Securities and Exchange  Commission the Annual Report on Form 10-K
of Lynch Corporation for the fiscal year ended December 31, 2000,  including any
and all amendments thereto, granting unto said attorneys and agents, and each of
them, full power to do and perform every act and thing  requisite,  necessary or
desirable  to be done in  connection  therewith,  as  fully to all  intents  and
purposes as he might or could do in person,  hereby ratifying and confirming all
that  said  attorneys-in-fact  and  agents,  or any of  them,  or  their  or his
substitutes or substitute, may lawfully do or cause to be done by virtue hereof,
and hereby revoking all prior appointments by him, if any, of  attorneys-in-fact
and agents to sign and file the above-described document,  including any and all
amendments thereto.

         IN WITNESS WHEREOF,  the undersigned has hereunto set his hand and seal
on the date set forth below.


DATE: March 15, 2001       s/ Robert E. Dolan   (L.S.)
                              ---------------------------------
                              Robert E. Dolan



</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
