SECURITIES & EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the quarterly period ended March 31, 2001

                                       or


[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(D) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from            to

Commission File No. 1-106


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


      Indiana                                                   38-1799862
      -------                                                   ----------
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)


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

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


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No ___

Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock, as of the latest practical date.

            Class                                    Outstanding at May 12, 2001

Common Stock, no par value                                   1,510,183


<PAGE>





                                      INDEX

                       LYNCH CORPORATION AND SUBSIDIARIES


PART I.     FINANCIAL INFORMATION


Item 1.  Financial Statements (Unaudited)

                  Condensed Consolidated Balance Sheets:
                    -      March 31, 2001
                    -      December 31, 2000

                  Condensed Consolidated Statements of Operations:
                    -      Three months ended March 31, 2001 and 2000

                  Condensed Consolidated Statements of Cash Flows:
                    -      Three months ended March 31, 2001 and 2000

                  Notes to Condensed Consolidated Financial Statements:

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations


Item 3.  Quantitative and Qualitative Disclosure About Market Risk


PART II.    OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K


SIGNATURES














<TABLE>


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

<CAPTION>

                                                               March 31 December 31
                                                                2001       2000
                                                              (unaudited)   (A)
                                                               ---------- ---------
ASSETS
CURRENT ASSETS:
<S>                                                          <C>          <C>
   Cash and cash equivalents .............................   $  12,379    $  10,543
   Restricted cash .......................................       5,896        6,500
   Receivables, less allowances of $1,317 and $1,582 .....      31,001       35,019
   Inventories ...........................................      34,440       35,139
   Deferred income tax benefits ..........................       6,600        7,624
   Other current assets ..................................       2,117        1,807
                                                                 -----        -----

   TOTAL CURRENT ASSETS ..................................      92,433       96,632

PROPERTY, PLANT AND EQUIPMENT:
   Land ..................................................         672          797
   Buildings and improvements ............................      11,050       11,076
   Machinery and equipment ...............................      42,399       56,951
                                                                ------       ------

                                                                54,121       68,824
Accumulated Depreciation .................................     (29,118)     (27,713)
                                                               -------      -------
                                                                25,003       41,111

EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED, NET         572       21,589
OTHER ASSETS .............................................       3,490        3,488
                                                                 -----        -----
   TOTAL ASSETS ..........................................   $ 121,498    $ 162,820
                                                             =========    =========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
   Notes payable to banks ................................   $  32,640    $  30,288
   Trade accounts payable ................................      18,224       19,251
   Accrued interest payable ..............................       2,549        1,185
   Accrued liabilities ...................................      12,531       15,234
   Customer advances .....................................       2,914        3,916
   Current maturities of long-term debt ..................       1,362        1,376
                                                                 -----        -----

   TOTAL CURRENT LIABILITIES .............................      70,220       71,250

LONG-TERM DEBT ...........................................      61,537       61,350
DEFERRED INCOME TAXES ....................................       6,049        6,752
OTHER LONG-TERM LIABILITIES ..............................       4,331        4,223
MINORITY INTERESTS .......................................           -        3,813

SHAREHOLDERS' EQUITY (Deficit)
   COMMON STOCK, NO PAR VALUE - 10,000,000 SHARES
    AUTHORIZED; 1,513,191 shares issued ..................       5,139        5,139
   ADDITIONAL PAID-IN CAPITAL ............................      10,403       10,403
   RETAINED EARNINGS (ACCUMULATED DEFICIT) ...............     (35,666)         405
   OFFICER'S NOTE RECEIVABLE .............................        (382)        (382)
   ACCUMULATED OTHER COMPREHENSIVE (LOSS) ................         (71)         (71)
   TREASURY STOCK OF 3,008 SHARES, AT COST ...............         (62)         (62)
                                                                ------       ------

TOTAL SHAREHOLDERS' EQUITY (DEFICIT) .....................     (20,639)      15,432
                                                               -------       ------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ...............   $ 121,498    $ 162,820
                                                             =========    =========
<FN>

(A)The  Balance  Sheet at  December  31,  2000  been  derived  from the  audited
financial  statements at that date, but does not include all of the  information
and footnotes required by generally accepted accounting  principles for complete
financial statements.
</FN>

See accompanying notes
</TABLE>

<TABLE>


                       LYNCH CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In Thousands, except share amounts)
<CAPTION>

                                                                   Three Months Ended
                                                                       March 31
                                                                  2001           2000
                                                                  ----           ----

<S>                                                         <C>            <C>
SALES ...................................................   $    53,548    $    52,474

Costs and expenses:
   Manufacturing cost of sales ..........................        48,553         46,327
   Selling and administrative ...........................         5,604          5,756
   Asset impairment and restructuring charges ...........        36,484            533
                                                                 ------         ------

OPERATING LOSS ..........................................       (37,093)          (142)

Other income (expense):
   Investment income ....................................           179            688
   Interest expense .....................................        (2,704)        (3,450)
                                                                 ------         ------
                                                                 (2,525)        (2,762)
                                                                 ------         ------

LOSS BEFORE INCOME TAXES, MINORITY INTERESTS AND
   EXTRAORDINARY ITEM ...................................       (39,618)        (2,904)

(Provision) benefit from income taxes ...................          (570)         1,064
Minority interests ......................................         4,118          1,082
                                                                  -----          -----

LOSS BEFORE EXTRAORDINARY ITEM ..........................       (36,070)          (758)

EXTRAORDINARY ITEM
   Gain on early extinguishments of debt (less income tax
   provision of $1,577 and minority interest of $1,381) .           --           1,254
                                                                 ------          -----

NET INCOME (LOSS)........................................      ($36,070)          $496
                                                               ========        =======

   Weighted average shares outstanding ..................     1,510,000      1,433,000

Basic and diluted earnings (loss) per share:
   Loss before extraordinary item ......................      ($ 23.89)      ($  0.53)
   Extraordinary item ...................................           --            0.88
                                                               -------          ------

NET INCOME (LOSS)........................................      ($ 23.89)       $  0.35
                                                               ========       ========

See accompanying notes
</TABLE>




<PAGE>

<TABLE>





                       LYNCH CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)
<CAPTION>

                                                                      Three Months Ended
                                                                          March 31
                                                                      2001          2000
                                                                      ----          ----
OPERATING ACTIVITIES
<S>                                                                  <C>         <C>
Net income (loss) ................................................   ($36,070)   $    496
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
  Extraordinary item .............................................       --        (1,254)
  Depreciation ...................................................      1,426       1,326
  Amortization of goodwill and other assets ......................        262         198
  Amortization of deferred financing charges .....................        225         278
  Impairment of assets ...........................................     36,053        --
  Deferred taxes .................................................        321        --
  Minority interests .............................................     (4,118)     (1,082)
  Changes in operating assets and liabilities:
    Receivables ..................................................      4,018      (3,505)
    Inventories ..................................................        699         723
    Accounts payable and accrued liabilities .....................     (3,368)      6,438
    Other ........................................................       (309)       (438)
                                                                         ----        ----
Cash provided by (used in) operating activities ..................       (861)      3,180
                                                                         ----       -----

INVESTING ACTIVITIES

Capital expenditures .............................................       (561)       (796)
Restricted cash ..................................................        604      35,119
Other ............................................................         22         (53)
                                                                         ----        ----

Cash provided by investing activities ............................         65      34,270
                                                                        -----      ------

FINANCING ACTIVITIES

Change in notes payable ..........................................      2,525        (708)
Repayment & buy back of long-term debt ...........................       --       (30,659)
Deferred financing costs .........................................       --           (69)
Sale of common stock .............................................       --         3,000
Other ............................................................        107       1,423
                                                                          ---       -----

Cash provided by (used in) financing activities ..................      2,632     (27,013)
                                                                        -----     -------

Net increase in cash and cash equivalents ........................      1,836      10,437
Cash and cash equivalents at beginning of period .................     10,543      13,106
                                                                       ------      ------

Cash and cash equivalents at end of period .......................   $ 12,379    $ 23,543
                                                                     ========    ========

See accompanying notes
</TABLE>







<PAGE>



A.       Subsidiaries of the Registrant

As of March 31, 2001, the Subsidiaries of the Registrant are as follows:
<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. ............   47.6%(O)/60.4%(V)
         Spinnaker Coating-Maine, Inc. ...   47.6%(O)/60.4%(V)

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

B.       Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States for interim  financial  information  and with the  instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the  information  and  footnotes  required by generally  accepted  accounting
principles for complete financial statements.  In the opinion of the management,
all adjustments  (consisting of normal recurring accruals)  considered necessary
for a fair  presentation  have been  included.  Operating  results for the three
month period ended March 31, 2001 are not necessarily  indicative of the results
that  may be  expected  for the year  ending  December  31,  2001.  For  further
information,  refer  to the  consolidated  financial  statements  and  footnotes
thereto  included in the  Registrant's  Annual  Report on Form 10-K for the year
ended December 31, 2000.

C.       Inventories

Inventories  are stated at the lower of cost or market value. At March 31, 2001,
inventories  were  valued by three  methods:  last-in,  first-out  (LIFO) - 26%,
specific identification - 72%, and first-in,  first-out (FIFO) - 2%. At December
31, 2000, the respective percentages were 28%, 71%, and 1%.
<TABLE>
<CAPTION>

(In Thousands)
                           March 31,  December 31,
                             2001      2000
                           ------------------
<S>                         <C>       <C>
Raw material and supplies   $ 8,910   $10,172
Work in process .........     4,616     2,796
Finished goods ..........    20,914    22,171
                            -------   -------
  Total Inventories .....   $34,440   $35,139
</TABLE>
                            =======   =======

D.     Indebtedness

Spinnaker   Industries,   Inc.  maintains  revolving  lines  of  credit  at  its
subsidiaries  which total $40 million,  $35 million at May 15, 2001 (see Note H)
of which $27.8  million was  outstanding  and $3.4  million was  available as of
March 31, 2001. In general, the credit facilities are secured by property, plant
and equipment,  inventory,  receivables and common stock of certain subsidiaries
and contain certain covenants restricting distributions to the Registrant.  Long
term debt consists of:
<TABLE>
<CAPTION>
                                                                       March 31, December 31,
                                                                          2001        2000
                                                                        ------------------


<S>                <C>                                                 <C>         <C>
Spinnaker Industries, Inc. 10.75% Senior
 Secured Notes due 2006 ............................................   $ 51,135    $ 51,135


Spinnaker subordinated note at a fixed interest rate of 14% due 2003      9,464       9,172

Other ..............................................................      2,300       2,419
                                                                       --------    --------
                                                                         62,899      62,726
Current maturities .................................................     (1,362)     (1,376)
                                                                       --------    --------
                                                                       $ 61,537    $ 61,350
                                                                       ========    ========
</TABLE>

E.       Earnings per share
             (deficit)
Basic  earnings  (deficit)  per common  share  amounts  are based on the average
number of common shares outstanding  during each period,  excluding the dilutive
effects of options,  warrants,  and  convertible  securities of which there were
none.

F.       Adoption of SFAS 133/Accounting Change

In June 1988,  the FASB issued  Statement No. 133,  "Accounting  for  Derivative
Instruments  and Hedging  Activities,"  as amended in June 2000 by  Statement of
Financial  Accounting  Standards No. 138 ("SFAS 138"),  "Accounting  for Certain
Derivative  Instruments and Certain Hedging Activities" which requires companies
to recognize  all  derivatives  as either assets or  liabilities  in the balance
sheet and measure  such  instruments  at fair value.  As amended by Statement of
Financial Accounting Standards No. 137 ("SFAS 137"),  "Accounting for Derivative
Instruments  and Hedging  Activities  - Deferral of the  Effective  Date of FASB
133," the  provisions  of SFAS 133 were  adopted by the Company as of January 1,
2001.  Adoption  of SFAS 133,  as amended  by SFAS 138,  did not have a material
impact on the Company's  results of operations or financial  position during the
first quarter of 2001.

G.     Segment Information

The  Company is engaged  in the  manufacture  of  adhesive-backed  label  stock,
frequency  control  devices  and  other  manufacturing.   The  Company  measures
performance of its segments  primarily by revenues,  operating profit and EBITDA
(operating profit before income taxes, depreciation,  amortization and allocated
corporate  expenses).  Identifiable  assets  of each  segment  have not  changed
materially since December 31, 2000,  except for the impairment of certain assets
as discussed in Note H.

EBITDA for  operating  segments is equal to operating  profit  before  interest,
taxes,  depreciation,  amortization.  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
interest    and    income    taxes.
<TABLE>
<CAPTION>

                                                              Three Months Ended
                                                                  March 31,
                                                              2001        2000
                                                              ------------------
Sales
<S>                                                          <C>         <C>
     Adhesive backed label stock .........................   $ 37,133    $ 40,286
     Frequency control devices ...........................     10,042       8,410
     Other manufacturing .................................      6,373       3,778
                                                             --------    --------
     Consolidated Total ..................................   $ 53,548    $ 52,474
                                                             ========    ========

EBITDA
     Adhesive backed label stock .........................   ($   258)   $  1,807
     Frequency control devices ...........................        998       1,184
     Other manufacturing .................................      1,024        (151)
     Corporate manufacturing expenses ....................       (300)       (548)
                                                             --------    --------
     Total Manufacturing .................................      1,464       2,292

     Corporate expenses ..................................       (386)       (377)
     Restructuring charge - Spinnaker ....................       (431)       (533)
                                                             --------    --------
     Consolidated Total ..................................   $    647    $  1,382
                                                             ========    ========

Operating Profit (Loss)
     Adhesive backed label stock .........................   ($ 1,576)   $    711
     Frequency control devices ...........................        792       1,020
     Other manufacturing .................................        863        (284)
     Corporate manufacturing expenses ....................       (300)       (604)
                                                             --------    --------
     Total Manufacturing .................................       (221)        843

     Unallocated corporate expenses ......................       (388)       (452)
     Asset impairment and restructuring charge - Spinnaker    (36,484)       (533)
                                                             --------    --------
     Consolidated Total ..................................   ($37,093)   ($   142)
                                                             --------    --------

Total operating loss for reportable segments .............   ($37,093)   ($   142)
Other profit or loss
     Investment Income ...................................        179         688
     Interest expense ....................................     (2,704)     (3,450)
                                                             --------    --------

Income
     before income taxes, minority interest
     and extraordinary items .............................   $(39,618)   $ (2,904)
                                                             ========    ========
</TABLE>


H.       Asset Impairment/Subsequent Events

On May 15, 2001,  Spinnaker  Industries,  Inc., a 48% owned subsidiary announced
that it intends to cease operations of and close its Spinnaker  Coating - Maine,
Inc. ("Coating - Maine") facility in Westbrook, Maine. Spinnaker's plan to cease
operations was due to Coating - Maine's first quarter  operating  losses and the
additional new capacity in the industry,  which made it uneconomical to continue
to operate this  facility.  Spinnaker  will focus its efforts on its Troy,  Ohio
operations where it principally  manufacturers  specialty  coated  products.  In
connection  with the  closing,  Spinnaker  has  recorded  as of March 31,  2001,
writedowns of $36 million (non-cash) to reflect the significantly  reduced value
of the related  long-lived  assets. In a separate  announcement on May 15, 2001,
Spinnaker  stated that it had sold selected  assets from its Maine facility to a
division of Avery Dennison Corporation.

The asset impairments  resulted from the writedown to fair market value of fixed
assets to be taken out of service and held for sale or disposal. The majority of
this  charge  related  to  the  impairment  of  goodwill   associated  with  the
acquisition  of Coating - Maine in 1998.  As of March 31, 2001,  the  impairment
amount caused a reduction to the carrying  value of goodwill and fixed assets by
approximately $20.8 million and $15.2 million, respectively. In conjunction with
the Main  closing,  Spinnaker  expects to incur  severence  and related costs in
subsequent  quarters.  Also, on May 15, 2001 the Company  amended its Refinanced
Credit Facility and the aggregate  amount of credit available under the facility
was decreased from $40 million to $35 million.

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

Sales

Revenues for the first quarter of 2001 increased by $1.1 million or 2%, to $53.5
million, from the first quarter of 2000.

Sales from  Spinnaker's  operations  decreased by $3.9  million  between the two
quarters.  Spinnaker's net sales for the quarter ended March 31, 2001 were $38.0
million,  compared  to $41.8  million  in the  corresponding  2000  period.  The
decrease in net sales for 2001 is  attributed  to lower sales volumes and prices
in most pressure-sensitive adhesive backed products.  Spinnaker's sales declines
were partially offset by a sales volume increase in pressure  sensitive  postage
products.  Revenues at M-tron  increased  by $1.6  million  for the  three-month
period to $10.0  million due to  increased  demand  from the  telecommunications
industry  and  increased  sales of new product but were lower than  anticipated.
Current  sales  trends,  order  activity  and  expectations  are also lower then
anticipated  as the  infrastructure  segment of the  communications  industry is
experiencing  both a cyclical and economy related  slowing down.  Lynch Systems'
revenues for the quarter  increased by $3.3 million to $5.5 million,  reflecting
increased  production activity on recently received orders for large glass press
machines.  Current sales trends, ordering activity and backlogs are indicating a
much greater than anticipated sales outlook for the balance of 2001 and beyond.

Operating Loss

Operating  (loss) for the first quarter 2001 increased by $37.0 million from the
operating (loss) in the prior year's first quarter.  Spinnaker's  operating loss
increased by $38.2  million due to an  impairment  charge of  approximately  $36
million  related to certain  long-lived  assets  associated  with closing of the
Coating - Maine facility (see discussion at Note H to the condensed consolidated
financial  statements).  Additionally,  the  2001  operating  results  primarily
reflect  lower  operating  margins,   offset  by  a  reduction  in  selling  and
administrative  costs  primarily  the  result of closing  the  Dallas  corporate
office. Additionally,  the first quarter 2000 selling and administrative amounts
included a one-time  charge of $350,000,  primarily  severance  and  termination
benefits  associated  with  the  Dallas  office  closing.  As  discussed  in the
Spinnaker  Annual  Report on Form 10-K for the year  ended  December  31,  2000,
Spinnaker recognized certain  restructuring  charges,  primarily affiliated with
its  Spinnaker  Coating  and  Spinnaker   Coating-Maine   business.   To  better
concentrate  on Coating's  strengths  and market  niche,  a decision was made by
Spinnaker  management  to  reorganize  and  realign  the  business in the fourth
quarter of 2000 and going forward in 2001. For the quarter ended March 31, 2001,
Spinnaker incurred additional severance costs of approximately  $431,000.  These
restructuring   charges   involved  the   elimination  of  ten  employees.   The
restructuring reserve was composed of the following:
<TABLE>
<CAPTION>

                                 Balance at       Severance    Restructuring      Balance at
($000's)                     December 31, 2000    Payments       Charges        December 31, 2001
                            ----------------------------------------------------------------------
<S>                             <C>               <C>              <C>             <C>
Severance and related costs     $1,125            $ (217)          $  431          $1,339
</TABLE>

There  was a $.4  million  restructuring  charge in the  first  quarter  of 2000
related to Spinnaker's  moving its corporate  headquarters.  M-tron's  operating
profit  decreased by $0.2 million  reflecting a slowing down of capital spending
for  infrastructure  equipment in the  communications  industry from anticipated
levels and a change in production and sales mix to lower margin products.  Lynch
Systems'  operating  profit  increased  during the first quarter by $1.4 million
from a negative $.4 million in 2000 due to increased sales mentioned above.

Other Income/Expense

Interest  expense was $2.7 million for the quarter and  decreased by $.7 million
primarily due to Spinnaker's repurchase of its Senior Notes.

Tax Provision

The income tax provision  (benefit) includes federal, as well as state and local
taxes. Because of Spinnaker's losses, a valuation allowance of approximately $14
million was  established  to offset the income tax benefit for the quarter ended
March 31, 2001. For financial  reporting  purposes,  the valuation allowance has
been recognized to offset the deferred tax assets  generated  during the quarter
ended March 31, 2001.  Spinnaker has  approximately $56 million of net operating
loss  carryforwards  available to offset future taxable income,  which expire in
years 2008 and 2020.

Minority Interest

Minority  interests  contribution  to the net income  (loss)  increased  by $3.0
million  for the  quarter,  from  the  prior  year  quarter  of 2000  due to the
increased losses from operations at Spinnaker. This minority interest allocation
reflects the complete elimination of the minority interest equity.

Net Income/Loss

Net loss for the quarter ended March 31, 2001 was $36.1  million,  or $23.89 per
share,  as  compared  to a net income of $.5  million,  or $.35 per share in the
quarter  ended March 31, 2000.  The  significant  swing is primarily  due to the
Spinnaker impairment writedown of assets.



<PAGE>



FINANCIAL CONDITION

Liquidity/Capital Resources

As of March 31,  2001,  the  Company  had  current  assets of $92.4  million and
current  liabilities  of $70.2  million.  Working  capital was  therefore  $22.2
million as  compared to $25.4  million at December  31,  2000.  The  decrease is
primarily due to the short-term bank borrowings by Spinnaker.

First quarter capital  expenditures  were $.6 million in 2001 and $.8 million in
2000.

At March 31,  2001,  total debt was $95.5  million,  which was $2.5 million more
than the  $93.0  million  at year  end 2000  primarily  due to  short-term  bank
borrowings  by  Spinnaker.  Long  term debt at March 31,  2001,  included  $62.5
million of fixed  interest  rate debt, at an average cash interest rate of 11.2%
and $.4 million of variable  interest  rate debt at an average  interest rate of
9.8%.  Additionally,  the Company had unused lines of credit facilities of which
the Spinnaker Credit Facility is a major portion.  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 related
to the prime interest rate or LIBOR.  At March 31, 2001, the combined  effective
interest rate was 8%. In conjunction  with the industrial tape sale in 1999, the
Spinnaker  Credit  Facility  was  refinanced  and  the  aggregate  facility  was
decreased from $60 million to $40 million.  The Refinanced  Credit Facility will
expire July 31, 2002.  As of March 31, 2001,  aggregate  availability  under the
Refinanced   Credit  Facility  was   approximately   $31.2  million,   of  which
approximately  $27.8 million was outstanding.  Spinnaker  amended its Refinanced
Credit  Facility  as of  March  31,  2001 and was  then in  compliance  with all
covenants. As part of this most recent amendment, the aggregate amount of credit
available under the facility was decreased from $40 million to $35 million. This
change is not expected to reduce the Company's  credit  availability.  Spinnaker
anticipates it will require additional covenant relief during 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
(approximately  $18.3 million at March 31, 2001). 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 by borrowing on a fixed long-term  basis.  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.

At March  31,  2001,  approximately  $33.0  million,  or 34.5% 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 2001  average  interest  rate under  these
borrowings,  it is estimated  that the  Company's  first  quarter 2001  interest
expense would have changed by less than $0.1 million. 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.

Forward Looking Information

Included in this Management  Discussion and Analysis of Financial  Condition and
Results  of  Operations  are  certain  forward   looking   financial  and  other
information,  including  without  limitation  matters  relating to Spinnaker and
Market Risk.  It should be recognized  that such  information  are  projections,
estimates  or  forecasts  based  on  various   assumptions,   including  without
limitation, meeting its assumptions regarding expected operating performance and
other matters specifically set forth, as well as the expected performance of the
economy as it impacts the  Registrant's  businesses,  government  and regulatory
actions and approvals, and tax consequences, and the risk factors and cautionary
statements  set forth in reports  filed by  Registrant  and  Spinnaker  with the
Securities and Exchange Commission.  As a result, such information is subject to
uncertainties, risks and inaccuracies, which could be material.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

                  See "Market Risk" under Item 2 above.

PART II OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

             (a)   Exhibits - None

            (b)   Reports on Form 8-K

                  No reports on Form 8-K were filed during the quarter ended
March 31, 2001


                                   SIGNATURES


Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                              LYNCH CORPORATION
                                                (Registrant)

                                              By: s/Roger J. Dexter
                                                    Roger J. Dexter
                                                     Chief Financial Officer
May 15, 2001