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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, 1998
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 8, 1999, the aggregate market value of the Registrant's
voting stock held by non-affiliates was $38,993,888.
On March 8, 1999, there were 8,209,659 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,
1998. Part III incorporates information by reference from the Proxy
Statement dated March 17, 1999 in connection with the Registrant's
Annual Meeting of Stockholders to be held on April 22, 1999.
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, 1998, Bairnco employed 816 persons including 13
Headquarters personnel. Bairnco's operations occupy approximately
634,700 square feet of factory and office space at its principal
locations. There is an additional 54,000 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 Canada and 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 10 to the Consolidated Financial
Statements on pages 29 through 31 and on pages 4 through 7 of
Bairnco's 1998 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 9 of Bairnco's 1998
Annual Report to Stockholders, and "Management's Discussion and
Analysis" set forth on pages 10 and 13 of Bairnco's 1998 Annual Report
to Stockholders, which is incorporated herein by reference.
The principal facilities utilized by each segment are detailed on
page 10 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 technologies
in coating, laminating, polymers and dispersion chemistry. Arlon's
principal products include high technology materials for the printed
circuit board industry, pressure sensitive and adhesive coated cast
and calendered vinyl films, custom-engineered laminates and coated
products, and special silicone rubber compounds and components.
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 sophisticated
commercial applications and military electronics. These applications
require materials that withstand continuous high or widely varying
operating temperatures, provide ease of field reparability, are highly
reliable, and improve board 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 and other resin based laminates providing high yields
and high performance for low signal-loss and frequency-dependent
microwave applications. The applications for this product line
include 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. In November of 1998, Bairnco
announced the purchase of MII International, Inc., a manufacturer of
adhesive coated films for use in the graphics and industrial markets.
MII's product lines complement Arlon's current vinyl product lines,
and will provide product line extensions, additional brand
recognition, product development synergies, and penetration into new
customer segments and markets. The acquisition also expanded Arlon's
coating and converting capacity.
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 flexible 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 materials, used in a broad range of
consumer, industrial and commercial products, is also manufactured and
marketed under the Arlon brand identity. Typical applications and
products include silicone rubber for molding composites, silicone
rubber insulating tapes for traction motor coil windings, insulation
for industrial flexible heaters, silicone materials for high
temperature hose and duct markets, insulating tapes for electrical
splices, as well as compliant thermally and electrically conductive
silicone sheet adhesives known as ThermabondT.
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 North and South America,
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, TeflonT 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 has been qualified and is expected to completely replace the
existing resin system during 1999. 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, 1998, approximately 486 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, chopper 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 Canadian and
French operations also distribute 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.
During 1998, Kasco made several product design improvements to
its band saw blades and its chopper plates and knives. Kasco has
introduced a line of premium wood cutting band saw blades for use by
professional cabinetry and furniture makers and serious hobbyists.
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. During 1998, Kasco
developed several new product lines which expand their Mealtime
Solutions program into deli and seafood departments.
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 1998, Kasco 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 segment have been readily available
throughout this last year and, despite some tightness in several
seasoning raw materials forecasted for 1999, Kasco's long-term supply
contracts assume adequate availability of raw materials to sustain the
current growth rate in this segment.
Employees
As of December 31, 1998, approximately 317 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 10 to the Consolidated Financial Statements on pages 29
through 31 of Bairnco's 1998 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, 1998, 1997 and 1996 were
$30,554,000, $28,770,000 and $28,692,000, 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 688,700
Headquarters
Maitland, FL 7,700 Leased (Expires 2000)
Engineered Materials and Components (Arlon)
Bear, DE 135,000 Owned
East Providence, RI 60,000 Owned
Northbrook, IL 30,000 Owned
Rancho Cucamonga, CA 80,000 Owned
Santa Ana, CA 124,000 Leased (Expires 2003)
Replacement Products and Services (Kasco)
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 20,000 Leased (Expires 2000)
Toronto, Ontario, Canada 33,000 Owned
Field Warehouses
(Approximately 70 locations
in North America) 54,000 Leased
Item 3. LEGAL PROCEEDINGS
Bairnco and its subsidiaries are among the defendants in a
lawsuit pending in the U.S. District Court for the Southern
District of New York (the "Transactions Lawsuit") in which it is
alleged that Bairnco and others are derivatively liable for the
asbestos-related claims against its former subsidiary, Keene
Corporation ("Keene"). The plaintiffs in the Transactions Lawsuit
are the trustees of Keene Creditors Trust ("KCT"), a successor in
interest to Keene. In the Transactions Lawsuit complaint, the KCT
alleges that certain sales of assets by Keene to other
subsidiaries of Bairnco were fraudulent conveyances and otherwise
violative of state law, as well as being violative of the civil
RICO statute, 18 U.S.C. Section 1964. The complaint seeks
compensatory damages of $700 million, interest, punitive damages,
and trebling of the compensatory damages pursuant to civil RICO.
In a series of decisions that remain subject to appeal, the court
has dismissed plaintiff's civil RICO claims; dismissed 14 of the
21 defendants named in the complaint; and partially granted
defendants' motions for summary judgment on statute of limitations
grounds. Discovery is now underway as to the remaining claims and
defendants.
Keene was spun off in 1990, filed for relief under Chapter 11
of the Bankruptcy Code in 1993, and emerged from Chapter 11
pursuant to a plan of reorganization approved in 1996 (the "Keene
Plan"). The Keene Plan provided for the creation of the KCT, and
transferred the authority to prosecute the Transactions Lawsuit
from the Official Committee of Unsecured Creditors of Keene (which
initiated the lawsuit in the Bankruptcy Court in 1995) to the KCT.
The Keene Plan further provided that only the KCT, and no other
entity, can sue Bairnco in connection with the claims in the
Transactions Lawsuit complaint. Therefore, although a number of
other asbestos-related personal injury and property damage cases
against Bairnco nominally remain pending in courts around the
country, it is expected that the resolution of the Transactions
Lawsuit in substance will resolve all such claims.
Bairnco also is the defendant in a separate action by the KCT
(the "NOL Lawsuit"), also pending in the United States District
Court for the Southern District of New York, in which the KCT
seeks the exclusive benefit of tax refunds attributable to the
carryback by Keene of certain net operating losses ("NOL
Refunds"), notwithstanding certain provisions of applicable tax
sharing agreements between Keene and Bairnco. (As with the
Transactions Lawsuit, the NOL Lawsuit was commenced during Keene's
Chapter 11 case and, pursuant to the Keene Plan, the KCT became
the plaintiff in the lawsuit and the lawsuit was moved from the
bankruptcy Court to the District Court.) Pending resolution of
the NOL Lawsuit, any refunds actually received are to be placed in
escrow. Through December 31, 1998, 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.
Bairnco and its Arlon subsidiary also are among the
defendants in a third action by the KCT (the "Properties
Lawsuit"), commenced December 8, 1998 and pending in the United
States District Court for the Southern District of New York. In
the Properties Lawsuit complaint, the KCT seeks a declaratory
judgment that it owns certain patents and real property purchased
by Arlon from Keene in 1989, based on the allegations that
technical title to these assets was not conveyed at the time of
the sale and that no proof of claim specifically referencing these
assets was filed during Keene's Chapter 11 case.
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, 1998.
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 1998.
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 (57) 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 (64) 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 (45) 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 14 of Bairnco's 1998 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 16
of Bairnco's 1998 Annual Report to Stockholders, which is
incorporated herein by reference. The quarterly cash
dividend remained constant at $0.05 per share during 1998.
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, 1998 was 1,436.
Item 6. SELECTED FINANCIAL DATA
Reference is made to "Financial History" on page 9 of
Bairnco's 1998 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 10 through 13 of Bairnco's 1998 Annual
Report to Stockholders which is incorporated herein by
reference.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
The interest on the Corporation's bank debt is floating
and based on prevailing market interest rates. For market
rate based debt, interest rate changes generally do not
affect the market value of the debt but do impact future
interest expense and hence earnings and cash flows, assuming
other factors remain unchanged. A theoretical one
percentage point change in market rates in effect on
December 31, 1998 would increase interest expense and hence
reduce the net income of the Corporation by approximately
$250,000 per year.
The Corporation's fiscal 1998 sales denominated in a
currency other than U.S. dollars were less than 15% of total
sales and net assets maintained in a functional currency
other than U.S. dollars at December 31, 1998 were less than
15% of total net assets. The effects of changes in foreign
currency exchange rates has not historically been
significant to the Corporation's operations or net assets.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the Consolidated Financial
Statements and accompanying Notes included on pages 16
through 32 and the "Quarterly Results of Operations" on page
14 of Bairnco's 1998 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 1999
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 13 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 1999 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 1999 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 1999 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 1998 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, 1998, 1997 and 1996;
- Consolidated Statements of Comprehensive Income
for the years ended December 31, 1998, 1997 and
1996;
- Consolidated Balance Sheets as of December 31,
1998 and 1997;
- Consolidated Statements of Cash Flows for the
years ended December 31, 1998, 1997 and 1996;
- Consolidated Statements of Stockholders'
Investment for the years ended December 31,
1998, 1997 and 1996;
- 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 20 of this Annual Report on Form 10-K;
- Financial Statement Schedules for the years
ended December 31, 1998, 1997 and 1996:
Schedule II - Valuation and Qualifying
Accounts on page 21 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 23 through 25 of
this Annual Report on Form 10-K.
b) Reports on Form 8-K - None in fiscal year 1998.
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 19, 1999 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 21, 1999.
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 21, 1999
Arthur Andersen LLP
BAIRNCO CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Balance Balance
Year Ended Beginning Deductions End
December 31, of Year Expenses (a) Other (b) of Year
1998 - Reserve
for Doubtful
Accounts $943,000 $372,000 $(241,000) $150,000 $1,224,000
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
(a) Actual charges incurred in connection with the purpose for
which the reserves were established.
(b) Additions to the reserve from acquisition.
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, 1998
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
March 30, 1987, to furnish a copy of Annual Report on Form 10-K for
any instrument with respect to fiscal year ended December 31,
certain other long-term debt to the 1986.
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
John B. Merrill, Joseph S. Weedon Annual Report on Form 10-K
and Richard A. Westberg and KASCO for fiscal year ended
Corporation as successor to Atlantic December 31, 1986.
Service, Inc.
Standard Industrial Lease dated June Exhibit 10 to Bairnco's
30, 1983 between James E. and Nancy Annual Report on Form 10-K
S. Welsh, trustees under Welsh for fiscal year ended
Family Trust, dated April 20, 1979 December 31, 1983.
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
Incentive Compensation Plan. Annual Report on Form 10-K
for fiscal year ended
December 31, 1981.
Employment Agreement dated January Exhibit 10 to Bairnco's
22, 1990, between Bairnco Annual Report on Form 10-K
Corporation and Luke E. Fichthorn for fiscal year ended
III. December 31, 1989.
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
1992, by and among Bairnco ended 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
1997, to Amended and Restated Credit Annual Report on Form 10-K
Agreement dated as of December 17, for fiscal year ended
1992, by and among Bairnco December 31, 1996.
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 to Bairnco's
1998, between Bairnco Corporation Annual Report on Form 10-K
and Bank of America NT&SA. for fiscal year ended
December 31, 1997.
Amendment dated as of October 13, Exhibit 4 to Bairnco's
1998, to Amended and Restated Credit Quarterly Report on Form 10-
Agreement dated as of December 17, Q for the quarterly period
1992, by and among Bairnco ended October 3, 1998.
Corporation and certain of its
subsidiaries and certain Commercial
Lending Institutions and Bank of
America, Illinois, as the Agent for
Lenders.
Amendment dated as of December 31, Exhibit 4 filed herewith.
1998, to Amended and Restated Credit
Agreement dated as of December 17,
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.
Calculation of Basic and Diluted Exhibit 11 filed herewith.
Earnings per Share for the years
ended December 31, 1998, 1997 and
1996.
1998 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,
1998.