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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-8120
BAIRNCO CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 13-3057520
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2251 Lucien Way, Maitland, Florida 32751
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 875-2222
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange on
Title of each class which registered
Common Stock, par value $.01 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of 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. [ ]
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
On March 9, 1998, the aggregate market value of the Registrant's voting stock
held by non-affiliates was $87,548,579.
On March 9, 1998, there were 8,855,209 shares of Common Stock outstanding,
exclusive of treasury shares or shares held by subsidiaries of the
Registrant.
Parts I, II and IV incorporate information by reference from the Annual
Report to Stockholders for the fiscal year ended December 31, 1997. Part III
incorporates information by reference from the Proxy Statement dated March
18, 1998 in connection with the Registrant's Annual Meeting of Stockholders
to be held on April 24, 1998.
PART I
Item 1. BUSINESS
a. Recent Developments and Description
Bairnco Corporation was incorporated under the laws of the State of
New York on April 9, 1981. Effective September 24, 1991, Bairnco
Corporation changed its state of incorporation from New York to Delaware.
Unless otherwise indicated herein, the terms "Bairnco" and the
"Corporation" refer to Bairnco Corporation and its subsidiaries.
Bairnco's two core businesses are Arlon's Engineered Materials and
Components, and Kasco's Replacement Products and Services.
At December 31, 1997, Bairnco employed 855 persons including 10
Headquarters personnel. Bairnco's operations occupy approximately 649,700
square feet of factory and office space at its principal locations. There
is an additional 45,000 square feet of leased space used as field
warehouses throughout North America.
b. & c. Financial Information About Industry Segments
and Narrative Description of Business
Bairnco Corporation is a diversified multinational company that
operates two business sectors. Engineered materials and components are
designed, manufactured and sold under the Arlon brand identity to
electronic, industrial and commercial markets. These products are based on
common technologies in coating, laminating, polymers and dispersion
chemistry. Replacement products and services are manufactured and
distributed under the Kasco brand identity principally to supermarkets,
meat and deli operations, and meat, poultry and fish processing plants
throughout the United States, Canada and Europe. Kasco also manufactures
small band saw blades for cutting metal and wood, and large band saw blades
for use at lumber mills. In France, in addition to providing its
replacement products, Kasco also distributes equipment to the supermarket
and food processing industries.
Financial data and other information about the Corporation's segments
is set forth in Note 8 to the Consolidated Financial Statements on page 27
and on pages 6 through 11 of Bairnco's 1997 Annual Report to Stockholders
which is incorporated herein by reference. This information should be read
in conjunction with the "Financial History" set forth on page 13 of
Bairnco's 1997 Annual Report to Stockholders, and "Management's Discussion
and Analysis" set forth on pages 14 and 15 of Bairnco's 1997 Annual Report
to Stockholders, which is incorporated herein by reference.
The principal facilities utilized by each segment are detailed on page
9 under "Item 2. PROPERTIES" of this filing.
ENGINEERED MATERIALS AND COMPONENTS (ARLON)
Description of Business
Engineered materials and components are designed, manufactured and
sold under the Arlon brand identity to electronic, industrial and
commercial markets. These products are based on common technology in
coating and laminating, as well as in polymers and dispersion chemistry.
Arlon's principal products include high performance materials for the
printed circuit board industry, cast and calendered vinyl film systems,
custom engineered laminates and pressure sensitive adhesive systems, and
calendered and extruded silicone rubber insulation products used in a broad
range of electrical, industrial, consumer and commercial products.
Arlon Materials for Electronics has an international reputation as the
premier supplier of high technology materials for the printed circuit board
industry. These products are marketed principally to printed circuit board
manufacturers and OEM's by a direct sales force in concert with strong
technical support teams in the US and through distributors and
manufacturers representatives in Europe, the Far East, and South America.
Our Electronic Substrates product line includes high temperature, high
performance thermoset laminates and prepreg bonding plies used in circuit
boards for demanding commercial applications and military electronics.
These applications require materials that withstand high continuous
operating temperatures, provide ease of field repairability, are highly
reliable, and improve fabrication yields. Intermediate temperature
laminates, which provide improved product reliability and ease of
manufacture at a lower cost, are also key to the line. The Microwave
Materials product line offers application matched, reinforced PTFE
laminates providing high yields and high performance for temperature and
frequency dependent microwave applications. The applications for this
product line are found in digital cordless telephones, cellular phone
systems, direct broadcast satellite TV systems, personal communications
networks, global positioning satellites, local area networks, collision
avoidance systems, and radar detection systems.
Arlon specialty graphic films are marketed under the Calon brand name
and include cast and calendered vinyl films that are manufactured in a wide
variety of colors, face stocks and adhesive systems. These vinyl films are
used in commercial and electrical signage, point of purchase displays,
highway signage, fleet markings, and other commercial advertising
applications.
Custom engineered laminates and coated products are also manufactured
and marketed under the Arlon brand identity. Typical applications include
insulating foam tapes for thermopane windows, specialty circuit materials,
electrical insulation materials for motors and transformers, thermal
insulation panels for appliances and cars, identification cards and labels,
durable printing stock, and other custom engineered laminates for specific
industrial applications.
A line of silicone rubber based materials, used in a broad range of
consumer, industrial and commercial products, is also manufactured and
marketed under the Arlon brand identity. Typical applications of these
materials include silicone rubber for molding composites, silicone rubber
insulating tape for electric traction motor coil windings, insulation for
industrial flexible heaters, insulating tape for electrical splices, as
well as many thermal and electrical conductivity applications.
Competition
Arlon has numerous competitors ranging in size from small, sole
proprietorships to units of very large, multinational corporations that in
certain instances have far greater market positions and financial resources
than the Corporation's.
The principal method of competition for Arlon's products varies by
product line and type of customer. While competition for established lines
is usually based on one or more of lead time, price, product performance,
technical support and customer service, it may also be based on the ability
to service emerging technologies through the custom design of new products,
or redesign of existing products, and materials for the new applications.
For high performance materials sold to the printed circuit board industry,
the consistent technical performance of the materials supplied in excess of
minimum specified standards can be the critical competitive element. In
addition, Arlon sells a significant portion of its circuit board materials
into the Japanese and European markets where local producers of similar
materials have a competitive advantage related to their geographic
location.
Distribution
Arlon products are marketed by company sales personnel, outside sales
representatives and distributors in the United States, Canada, Europe, the
Far East and several other international markets.
Raw Materials and Purchased Parts
The essential raw materials used in Arlon engineered materials and
components are silicone rubber, fiberglass cloth, pigments, steel and
aluminum parts, copper foil, aluminum foil, polyethylene foam and various
plastic films, special papers and release liners, vinyl resins, various
adhesives and solvents, Teflon(TM) or polytetrafluoroethylene (PTFE) resin,
polyimide resin, epoxy resins, and various chemicals. Generally, these
materials are each available from several qualified suppliers. There are,
however, several raw materials used in Arlon's products that are purchased
from chemical companies and are proprietary in nature. Other raw materials
are purchased from a single approved vendor on a "sole source" basis
although alternative sources could be developed in the future if necessary.
However, the qualification procedure can take up to several months and
could therefore interrupt production if the primary raw material source was
lost unexpectedly.
Due to the number and diversity of Arlon's products it is unlikely
that availability problems with any one raw material would have a material
adverse effect on Arlon. The Corporation is aware that a raw material
supplier will discontinue the sale of a resin system currently used in
certain Arlon products. An alternative resin system is being qualified and
is expected to replace the existing resin system during 1998. There are no
other known limitations to the continued availability of Arlon's raw
materials. Current suppliers are located in the United States, Japan,
Europe and Brazil.
Employees
As of December 31, 1997, approximately 505 employees were employed by
the operations, which constitute Arlon's engineered materials and
components.
Patents and Trademarks
The Corporation owns several registered trademarks under which certain
Arlon products are sold. The Corporation does not believe that the loss of
any or all of these trademarks would have a material adverse effect on this
segment.
REPLACEMENT PRODUCTS AND SERVICES (KASCO)
Description of Business
Replacement products and services are manufactured and distributed
under the Kasco brand identity principally to supermarkets, meat and deli
operations, and meat, poultry and fish processing plants throughout the
United States, Canada and Europe. These products and services include band
saw blades for cutting meat and fish, grinder plates and knives for
grinding meat, seasoning products, preventive maintenance for equipment in
meat and deli operations, and other related butcher supply products. Kasco
also manufactures small band saw blades for cutting metal and wood, and
large band saw blades for use at lumber mills. Kasco's French operation
also distributes equipment to the supermarket and food processing
industries.
Replacement products and services are sold under a number of brand
names including Kasco in the United States and Canada, Atlantic Service in
the United Kingdom, and Bertram & Graf and Biro in Continental Europe.
Competition and Marketing
Kasco competes with several large and medium-sized national and
regional companies, as well as numerous small local companies. The
principal methods of competition are service, price and product
performance. The performance of meat band saw blades used in cutting meat
or other food items is balanced between minimizing waste and maximizing the
efficiency and productivity of the band saw machine and operator or other
cutting/processing equipment being used
Kasco introduced several new products in 1997. One of the most
exciting is the Predator Series of custom splitter blades. These splitter
blades offer reduced workplace noise, peak high speed cutting performance,
and increased durability with a unique Gold Tooth Hardening process.
The Mealtime Solutions seasoning program continues to be a success as
sales for home meal replacement items within supermarkets increase.
Mealtime Solutions offers a package of seasoning blends, recipes and
instructions which allows a supermarket to present value-added products in
their meat and deli departments. To support this growing market, Kasco has
moved seasoning manufacturing from City of Industry, CA to St. Louis, MO
and built a formulation lab and test kitchen.
In North America, Kasco supplies its products and services directly to
the supermarket and meat cutting industries through a continent-wide
network of service professionals and exclusive distributors. During 1997
Kasco reorganized this network to better serve its customers, and also
designed an extensive training program that will be implemented in 1998.
In addition, Kasco has increased its emphasis on preventive maintenance,
increasing the value-added service its network of professionals provides to
customers.
Raw Materials and Purchased Supplies
High quality carbon steel is the principal raw material used in the
manufacture of band saw blades and is purchased from multiple domestic and
international suppliers. Tool steel is utilized in manufacturing meat
grinder plates and knives and is purchased from qualified suppliers located
in the United States, Europe and Japan. Equipment, replacement parts and
supplies are purchased from a number of manufacturers and distributors,
mostly in the United States and Europe. In France, certain specialty
equipment and other items used in the supermarket industry and in the food
processing industry are purchased and resold under exclusive
distributorship agreements with the equipment manufacturers. All of the
raw materials and purchased products utilized by this sector have been
readily available throughout this last year and it is anticipated that
adequate supplies will continue to be available throughout the coming year.
Employees
As of December 31, 1997, approximately 340 persons were employed in
the replacement products and services segment.
Patents and Trademarks
The Corporation has a number of United States and foreign mechanical
patents related to several of the products manufactured and sold by Kasco,
as well as a number of design patents and registered trademarks. The
Corporation does not believe, however, that the loss of any or all of those
patents would have a material adverse effect on this segment.
d. Foreign Operations
The Corporation has foreign operations located in Canada, the United
Kingdom, France, and Germany. Information on the Corporation's operations
by geographical area for the last three fiscal years is set forth in Note 8
to the Consolidated Financial Statements on page 27 of Bairnco's 1997
Annual Report to Stockholders which is incorporated herein by reference.
In addition, export sales from the Corporation's US based operations
for the years ended December 31, 1997, 1996 and 1995 were $28,770,000,
$28,692,000 and $27,115,000, respectively. Export sales to any particular
country or geographic area did not exceed 10% of consolidated sales during
any of these years.
Item 2. PROPERTIES
The following chart lists for the Corporation as a whole, and by each
of its segments, the principal locations of the Corporation's facilities
and indicates whether the property is owned or leased and if leased, the
lease expiration date.
LEASED OR OWNED
LOCATION SQUARE FEET (LEASE EXPIRATION)
CORPORATION TOTAL 694,700
Headquarters
Maitland, FL 7,700 Leased (Expires 2000)
Engineered Materials and Components (Arlon)
Bear, DE 135,000 Owned
East Providence, RI 68,000 Owned
Rancho Cucamonga, CA 80,000 Owned
Santa Ana, CA 124,000 Leased (Expires 2003)
Replacement Products and Services (Kasco)
City of Industry, CA 15,000 Leased (Expires 1998)
Gwent, Wales, UK 25,000 Owned
Pansdorf, Germany 22,000 Owned
Paris, France 20,000 Leased (Expires 2000)
St. Louis, MO 78,000 Owned
St. Louis, MO 42,000 Leased (Expires 2000)
Toronto, Ontario, Canada 33,000 Owned
Field Warehouses
(Approximately 70 locations
in North America) 45,000 Leased
Item 3. LEGAL PROCEEDINGS
Bairnco has been named as a defendant in a number of personal injury
and wrongful death cases in which it is alleged that Bairnco is
derivatively liable for the asbestos-related claims against its former
subsidiary, Keene Corporation ("Keene"). On December 6, 1993, Keene filed
for protection under Chapter 11 of the Bankruptcy Code. On June 8, 1995,
the Keene Creditors' Committee commenced an adversary proceeding in the
Bankruptcy Court against Bairnco, certain of its present and former
officers and directors, and others alleging that the transfer of assets for
value by Keene to other subsidiaries of Bairnco, and the spin-offs of
certain other subsidiaries by Bairnco, were fraudulent and otherwise
violative of law (the "Transactions Lawsuit") and seeking compensatory
damages of $700 million, plus interest and punitive damages. The complaint
in the Transactions Lawsuit includes a count under the civil RICO statute,
18 U.S.C. Section 1964, pursuant to which compensatory damages are trebled.
Bairnco is party to a separate action brought by Keene in the United
States Bankruptcy Court for the Southern District of New York in which
Keene seeks the exclusive benefit of tax refunds attributable to the
carryback by Keene of certain net operating losses ("NOL Refunds"),
notwithstanding certain provisions of tax sharing agreements between Keene
and Bairnco (the "NOL Lawsuit"). (After filing the NOL Lawsuit, Keene
ceded control of the action to the Creditors' Committee.) Pending
resolution of the NOL Lawsuit, any refunds actually received are to be
placed in escrow. Through December 31, 1997, approximately $28.5 million
of NOL Refunds had been received and placed in escrow. There can be no
assurance whatsoever that resolution of the NOL Lawsuit will result in the
release of any portion of the NOL Refunds to Bairnco.
Keene's plan of reorganization was approved and became effective on
July 31, 1996. The plan, as approved, creates a Creditors Trust that has
succeeded to all of Keene's asbestos liabilities, and also has succeeded to
the right to prosecute both the Transactions Lawsuit and the NOL Lawsuit.
The plan also includes a permanent injunction under which only the
Creditors Trust, and no other entity, can sue Bairnco in connection with
the claims asserted in these lawsuits.
By order entered April 10, 1997, the Transactions Lawsuit was
transferred from the Bankruptcy Court to the United States District Court
for the Southern District of New York, where it will be litigated. On
September 15, 1997, Bairnco and other defendants filed motions to dismiss
the complaint for failure to state a claim as well as motions for summary
judgment on the grounds that the complaint is time-barred. Briefing on
these motions is complete. Subsequent to year-end, the court issued an
opinion granting the motions to dismiss four of the twenty-one defendants
in the Transactions Lawsuit. The court reserved decision on the motions of
the other defendants. There can be no assurance that the remaining motions
will result in dismissal of the Transactions Lawsuit or any part thereof.
On January 6, 1998, the Creditors Trust filed a motion, to which
Bairnco consented, to have the NOL Lawsuit transferred from the Bankruptcy
Court to the District Court. That motion is pending.
Management believes that Bairnco has meritorious defenses to all
claims or liability purportedly derived from Keene and that it is not
liable, as an alter ego, successor, fraudulent transferee or otherwise, for
the asbestos-related claims against Keene or with respect to Keene
products.
Bairnco Corporation and its subsidiaries are defendants in a number of
other actions. Management of Bairnco believes that the disposition of these
other actions, as well as the actions and proceedings described above, will
not have a material adverse effect on the consolidated results of
operations or the financial position of Bairnco Corporation and its
subsidiaries as of December 31, 1997.
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the
fourth quarter of 1997.
EXECUTIVE OFFICERS OF THE REGISTRANT
The information required with respect to executive officers
of the Corporation is as follows:
Name and Age of Data Pertaining to
Executive Officers Executive Officers
Luke E. Fichthorn III (56) Mr. Fichthorn has
served as Chairman of Bairnco
since May 23, 1990, and on
December 18, 1991, became Chief
Executive Officer of Bairnco.
For over twenty-five years, Mr.
Fichthorn has been a private
investment banker and partner of
Twain Associates, a private
investment banking and
consulting firm. Mr. Fichthorn
served as a director of Keene
Corporation, a former subsidiary
of Bairnco Corporation from
August, 1969 until May, 1981,
and became a director of Bairnco
in January, 1981. Mr. Fichthorn
is also a director of Florida
Rock Industries, Inc. and FRP
Properties, Inc., neither of
which is affiliated with
Bairnco.
J. Robert Wilkinson (63) Mr. Wilkinson was
elected Vice President - Finance
and Treasurer in March 1990.
From September 1986 to September
1989, Mr. Wilkinson was
Bairnco's Vice President -
Controller. From October 1989
to March 1990 he was Executive
Vice President of Shielding
Systems Corporation, a wholly
owned subsidiary of Bairnco.
James W. Lambert (44) Mr. Lambert was
appointed Corporate Controller
of Bairnco on August 11, 1997.
Prior to joining Bairnco, Mr.
Lambert was employed for over 15
years by Air Products and
Chemicals Inc., in a variety of
financial, marketing and product
management capacities.
PART II
Item 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
a. & c. Data regarding market prices of Bairnco's common
stock is included in the "Quarterly Results of Operations" on
page 16 of Bairnco's 1997 Annual Report to Stockholders which is
incorporated herein by reference. Bairnco's common stock is
traded on the New York Stock Exchange under the symbol BZ. Data
on dividends paid is included in the Consolidated Statements of
Income on page 18 of Bairnco's 1997 Annual Report to
Stockholders, which is incorporated herein by reference. The
quarterly cash dividend remained constant at $0.05 per share
during 1997. The Board continues to review the dividend on a
quarterly basis.
b. The approximate number of holders of record of Bairnco
common stock (par value $.01 per share) as of December 31, 1997
was 1,574.
Item 6. SELECTED FINANCIAL DATA
Reference is made to "Financial History" on page 13 of
Bairnco's 1997 Annual Report to Stockholders, which is
incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Reference is made to the "Management's Discussion and
Analysis" on pages 14 and 15 of Bairnco's 1997 Annual Report to
Stockholders which is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the Consolidated Financial Statements
and accompanying Notes included on pages 18 through 28 and the
"Quarterly Results of Operations" on page 16 of Bairnco's 1997
Annual Report to Stockholders which is incorporated herein by
reference. Financial Statement Schedules are included in Part IV
of this filing.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required with respect to directors of Bairnco
is included in the Proxy Statement for the 1998 Annual Meeting of
Stockholders of Bairnco, which will be filed with the Securities
and Exchange Commission and is incorporated herein by reference.
See the information regarding executive officers of the
Corporation on page 12 of this Annual Report on Form 10-K.
Item 11. EXECUTIVE COMPENSATION
The information required by Item 11 is included in the Proxy
Statement for the 1998 Annual Meeting of Stockholders of Bairnco,
which will be filed with the Securities and Exchange Commission
and is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is included in the Proxy
Statement for the 1998 Annual Meeting of Stockholders of Bairnco,
which will be filed with the Securities and Exchange Commission
and is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is included in the Proxy
Statement for the 1998 Annual Meeting of Stockholders of Bairnco,
which will be filed with the Securities and Exchange Commission
and is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
a) 1. Financial Statements
Included in the 1997 Annual Report to Stockholders which
is included as Exhibit 13 to this Annual Report on Form
10-K:
Report of Independent Certified Public Accountants;
Consolidated Statements of Income for the years ended
December 31, 1997, 1996 and 1995;
Consolidated Balance Sheets as of December 31, 1997
and 1996;
Consolidated Statements of Cash Flows for the years
ended December 31, 1997, 1996 and 1995;
Consolidated Statements of Stockholders' Investment
for the years ended December 31, 1997, 1996 and 1995;
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
Included in Part IV of this Annual Report on Form 10-K:
Report of Independent Certified Public Accountants on
Financial Statement Schedules on page 19 of this
Annual Report on Form 10-K;
Financial Statement Schedules for the years ended
December 31, 1997, 1996 and 1995:
Schedule II - Valuation and Qualifying Accounts
on page 20 of this Annual Report on Form 10-K;
All other schedules and notes are omitted because they
are either not applicable, not required or the
information called for therein appears in the
Consolidated Financial Statements or Notes thereto.
3. See Index to Exhibits on pages 22 through 24 of this
Annual Report on Form 10-K.
b) Reports on Form 8-K - None for fiscal year 1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(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.
BAIRNCO CORPORATION
(Registrant)
Date: March 23, 1998 By: /s/ J. Robert Wilkinson
J. Robert Wilkinson
Vice President - Finance
and Treasurer
(Principal Financial Officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Report has been executed below by the following
persons on behalf of the Registrant and in the capacities and on
the date indicated above.
/s/ Luke E. Fichthorn III
Luke E. Fichthorn III - Chairman and CEO
/s/ Richard A. Shantz
Richard A. Shantz - Director
/s/ Charles T. Foley
Charles T. Foley - Director
/s/ William F. Yelverton
William F. Yelverton - Director
/s/ J. Robert Wilkinson
J. Robert Wilkinson - Vice President-Finance
and Treasurer
(Principal Financial Officer)
/s/ James W. Lambert
James W. Lambert - Controller
(Principal Accounting Officer)
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
TO BAIRNCO CORPORATION:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in
Bairnco Corporation's Annual Report to Stockholders incorporated
by reference in this Form 10-K, and have issued our report
thereon dated January 22, 1998. Our audits were made for the
purpose of forming an opinion on those statements taken as a
whole. The schedule listed in Item 14(a) 2 is the responsibility
of the company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and
is not part of the basic consolidated financial statements. This
schedule has been subjected to the auditing procedures applied in
the audits of the basic consolidated financial statements and, in
our opinion, fairly states in all material respects the financial
data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
Orlando, Florida
January 22, 1998
Arthur Andersen LLP
BAIRNCO CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Balance Balance
Year Ended Beginning Deductions End
December 31, of Year Expenses (a) of Year
1997 - Reserve
for Doubtful
Accounts $ 822,000 $365,000 $(244,000) $943,000
1996 - Reserve
for Doubtful
Accounts $ 763,000 $300,000 $(241,000) $822,000
1995 - Reserve
for Doubtful
Accounts $1,097,000 $202,000 $(536,000) $763,000
(a) Actual charges incurred in connection with the purpose for
which the reserves were established.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission File No.: 1-8120
BAIRNCO CORPORATION
(Exact name of registrant as specified in the charter)
INDEX TO EXHIBITS
Description Incorporated Herein By Reference To
Certificate of Incorporation, as Exhibit 3 to Bairnco's Annual
amended through September 24, 1991. Report on Form 10-K for fiscal
year ended December 31, 1991.
By Laws, as amended through December Exhibit 3 to Bairnco's Annual
18, 1991. Report on Form 10-K for fiscal
year ended December 31, 1991.
Amended and Restated Credit Exhibit 3.1 to Bairnco's Annual
Agreement, dated as of December 17, Report on Form 10-K for fiscal
1992, among Bairnco Corporation and year ended December 31, 1992.
certain of its subsidiaries, as
guarantors, and certain Commercial
Lending Institutions and Continental
Bank NA (now Bank of America,
Illinois), as the Agent for Lenders.
Amendment dated as of March 16, 1994 Exhibit 3 to Bairnco's Annual
to Amended and Restated Credit Report on Form 10-K for fiscal
Agreement dated as of December 17, year ended December 31, 1993.
1992, by and among Bairnco
Corporation and certain of its
subsidiaries and certain Commercial
Lending Institutions and Continental
Bank NA (now Bank of America,
Illinois), as the Agent for Lenders.
Promissory note dated as of Exhibit 4 to Bairnco's Annual
September 1, 1989, between Arlon, Report on Form 10-K for fiscal
Inc. and the Delaware Economic year ended December 31, 1989.
Development Authority.
Indenture of Trust, series 1989, Exhibit 4 to Bairnco's Annual
dated as of September 1, 1989, Report on Form 10-K for fiscal
between the Delaware Economic year ended December 31, 1989.
Development Authority and
Manufacturers and Traders Trust
Company, securing variable rate
demand Industrial Development
Refunding Revenue Bonds (Arlon, Inc.
Project), series 1989 of the
Delaware Economic Development
Authority.
Loan Agreement, dated as of Exhibit 4 to Bairnco's Annual
September 1, 1989, between the Report on Form 10-K for fiscal
Delaware Economic Development year ended December 31, 1989.
Authority and Arlon, Inc.
Reimbursement Agreement dated as of Exhibit 4 to Bairnco's Annual
September 1, 1989 by and among Report on Form 10-K for fiscal
Arlon, Inc., Bairnco Corporation and year ended December 31, 1989.
Continental Bank NA (now Bank of
America, Illinois).
Agreement of the Company, dated Exhibit 4(e) to Bairnco's Annual
March 30, 1987, to furnish a copy of Report on Form 10-K for fiscal
any instrument with respect to year ended December 31, 1986.
certain other long-term debt to the
Securities and Exchange Commission
upon its request.
Lease dated December 10, 1991 Exhibit 10 to Bairnco's Annual
between Mattei Corporation and Report on Form 10-K for fiscal
Bairnco Corporation. year ended December 31, 1991.
Lease, dated May 1, 1985, between Exhibit 10 to Bairnco's Annual
John B. Merrill, Joseph S. Weedon Report on Form 10-K for fiscal
and Richard A. Westberg and KASCO year ended December 31, 1986.
Corporation as successor to Atlantic
Service, Inc.
Standard Industrial Lease dated June Exhibit 10 to Bairnco's Annual
30, 1983 between James E. and Nancy Report on Form 10-K for fiscal
S. Welsh, trustees under Welsh year ended December 31, 1983.
Family Trust, dated April 20, 1979
and Arlon, Inc. as successor to
Keene Corporation.
Bairnco Corporation 401(k) Savings Exhibit 4.3 to Bairnco's
Plan and Trust. Registration Statement on Form
S-8, No. 33-41313.
Bairnco Corporation 1990 Stock Exhibit 4.3 to Bairnco's
Incentive Plan. Registration Statement on Form
S-8, No. 33-36330.
Bairnco Corporation Management Exhibit 10 to Bairnco's Annual
Incentive Compensation Plan. Report on Form 10-K for fiscal
year ended December 31, 1981.
Employment Agreement dated January Exhibit 10 to Bairnco's Annual
22, 1990, between Bairnco Report on Form 10-K for fiscal
Corporation and Luke E. Fichthorn year ended December 31, 1989.
III.
Amendment dated as of April 18, Exhibit 4 to Bairnco's
1995, to Amended and Restated Credit Quarterly Report on Form 10-Q
Agreement dated as of December 17, for the quarterly period ended
1992, by and among Bairnco April 1, 1995.
Corporation and certain of its
subsidiaries and certain Commercial
Lending Institutions and Continental
Bank NA (now Bank of America,
Illinois), as the Agent for Lenders.
Amendment dated as of February 14, Exhibit 4 to Bairnco's Annual
1997, to Amended and Restated Credit Report on Form 10-K for fiscal
Agreement dated as of December 17, year ended December 31, 1996.
1992, by and among Bairnco
Corporation and certain of its
subsidiaries and certain Commercial
Lending Institutions and Bank of
America, Illinois, as the Agent for
Lenders.
Promissory Note dated January 31, Exhibit 4 filed herewith.
1998, between Bairnco Corporation
and Bank of America NT&SA
Calculation of Basic and Diluted Exhibit 11 filed herewith.
Earnings per Share for the years
ended December 31, 1997, 1996 and
1995.
1997 Annual Report to Stockholders. Exhibit 13 filed herewith.
Subsidiaries of the Registrant. Exhibit 21 filed herewith.
Consent of Independent Certified Exhibit 23 filed herewith.
Public Accountants.
Financial Data Schedules. Exhibit 27 filed herewith
(electronic filing only).
Form 11-K Re: Bairnco Corporation Exhibit 99 filed herewith.
401(k) Savings Plan and Trust for
the fiscal year ended December 31,
1997.