-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GdL0BzOJ9UueFkTZO0NXfKFh53oK6Y8dQwk8xNb71ShYGkPbFipKKFEjS8OUNAfA 5KG8zL+OreFacqzG+9hf5Q== 0000350750-99-000007.txt : 19990512 0000350750-99-000007.hdr.sgml : 19990512 ACCESSION NUMBER: 0000350750-99-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990403 FILED AS OF DATE: 19990511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BAIRNCO CORP /DE/ CENTRAL INDEX KEY: 0000350750 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS, MATERIALS, SYNTH RESINS & NONVULCAN ELASTOMERS [2821] IRS NUMBER: 133057520 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08120 FILM NUMBER: 99616556 BUSINESS ADDRESS: STREET 1: 2251 LUCIEN WAY SUITE 300 CITY: MAITLAND STATE: FL ZIP: 32751 BUSINESS PHONE: 4078752222 MAIL ADDRESS: STREET 1: 2251 LUCIEN WAY, SUITE 300 CITY: MAITLAND STATE: FL ZIP: 32751-7037 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark one) [X] QUARTERLY EXCHANGE REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 3, 1999 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 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, Suite 300, Maitland, FL 32751 (Address of principal executive offices) (Zip Code) (407) 875-2222 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) 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 (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PRECEDING FIVE YEARS) Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No (APPLICABLE ONLY TO CORPORATE ISSUERS) Indicate the number of shares outstanding of each issuer's classes of common stock, as of the latest practicable date. 7,907,959 shares of Common Stock Outstanding as of April 26, 1999. "Safe Harbor" Statement under the Private Securities Reform Act of 1995 Certain of the statements contained in this Quarterly Report (other than the financial statements and statements of historical fact), including, without limitation, statements as to management expectations and beliefs presented under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations", are forward-looking statements. Forward- looking statements are made based upon management's expectations and belief concerning future developments and their potential effect upon the Corporation. There can be no assurance that future developments will be in accordance with management's expectations or that the effect of future developments on the Corporation will be those anticipated by management. The Corporation wishes to caution readers that the assumptions which form the basis for forward-looking statements with respect to or that may impact earnings for the year ended December 31, 1999 and thereafter include many factors that are beyond the Corporation's ability to control or estimate precisely. These risks and uncertainties include, but are not limited to, the market demand and acceptance of the Corporation's existing and new products; the impact of competitive products; changes in the market for raw or packaging materials which could impact the Corporation's manufacturing costs; changes in product mix; changes in the pricing of the products of the Corporation or its competitors; the loss of a significant customer or supplier; production delays or inefficiencies; disruptions in operations due to labor disputes; the unanticipated costs and disruption in operations due to Year 2000 non-compliance; the costs and other effects of complying with environmental regulatory requirements; losses due to natural disasters where the Corporation is self- insured; the costs and other effects of legal and administrative cases and proceedings, settlements and investigations; and changes in US or international economic or political conditions, such as inflation or fluctuations in interest or foreign exchange rates. While the Corporation periodically reassesses material trends and uncertainties affecting the Corporation's results of operations and financial condition in connection with its preparation of management's discussion and analysis contained in its quarterly reports, the Corporation does not intend to review or revise any particular forward-looking statement referenced herein in light of future events. PART I - FINANCIAL INFORMATION Item 1: FINANCIAL STATEMENTS BAIRNCO CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME FOR THE QUARTERS ENDED APRIL 3, 1999 AND APRIL 4, 1998 (Unaudited)
1999 1998 Net sales $ 42,662,000 $ 42,125,000 Cost of sales 28,410,000 28,442,000 Gross profit 14,252,000 13,683,000 Selling and administrative expenses 10,245,000 9,716,000 Operating profit 4,007,000 3,967,000 Interest expense, net 567,000 481,000 Income before income taxes 3,440,000 3,486,000 Provision for income taxes 1,170,000 1,290,000 Net income $ 2,270,000 $ 2,196,000 Basic earnings per share of common stock (Note 2) $ 0.28 $ 0.25 Diluted earnings per share of common stock (Note 2) $ 0.28 $ 0.24 Dividends per share of common stock $ 0.05 $ 0.05 The accompanying notes are an integral part of these financial statements.
BAIRNCO CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE QUARTERS ENDED APRIL 3, 1999 AND APRIL 4, 1998 (Unaudited) Note 3
1999 1998 Net income $ 2,270,000 $ 2,196,000 Other comprehensive income, net of tax: Foreign currency translation adjustment (335,000) (74,000) Comprehensive income $ 1,935,000 $ 2,122,000 The accompanying notes are an integral part of these financial statements.
BAIRNCO CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS AS OF APRIL 3, 1999 AND DECEMBER 31, 1998
(Unaudited) 1999 1998 ASSETS Current assets: Cash and cash equivalents $ 792,000 $ 822,000 Accounts receivable, less allowances of $1,245,000 and $1,224,000, respectively 29,378,000 27,999,000 Inventories (Note 4) 25,811,000 26,179,000 Deferred income taxes 4,137,000 4,137,000 Other current assets 1,909,000 1,709,000 Total current assets 62,027,000 60,846,000 Plant and equipment, at cost 98,256,000 97,291,000 Less-Accumulated depreciation and amortization (57,345,000) (55,889,000) Plant and equipment, net 40,911,000 41,402,000 Cost in excess of net assets of purchased businesses 12,114,000 11,840,000 Other assets 4,469,000 4,467,000 $119,521,000 $118,555,000 LIABILITIES & STOCKHOLDERS' INVESTMENT Current Liabilities: Short-term debt $ 2,820,000 $ 4,373,000 Accounts payable 12,436,000 9,022,000 Accrued expenses (Note 5) 13,693,000 14,192,000 Total current liabilities 28,949,000 27,587,000 Long-term debt 33,256,000 33,471,000 Deferred income taxes 3,236,000 2,912,000 Other liabilities 8,130,000 8,147,000 Stockholders' Investment: Preferred stock, par value $.01, 5,000,000 shares authorized, none issued -- -- Common stock, par value $.01, 30,000,000 shares authorized, 11,187,224 shares issued 112,000 112,000 Paid-in capital 49,165,000 49,165,000 Retained earnings 24,534,000 22,670,000 Accumulated other comprehensive income (Note 3) 1,410,000 1,745,000 Treasury stock, at cost, 3,279,265 and 2,904,165 shares, respectively (29,271,000) (27,254,000) Total stockholders' investment 45,950,000 46,438,000 $119,521,000 $118,555,000 The accompanying notes are an integral part of these financial statements.
BAIRNCO CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS FOR THE QUARTER ENDED APRIL 3, 1999 AND APRIL 4, 1998 (Unaudited)
1999 1998 Cash Flows from Operating Activities: Net income $ 2,279,000 $ 2,196,000 Adjustments to reconcile to net cash provided by operating activities: Depreciation and amortization 1,843,000 1,704,000 Loss (gain) on disposal of plant and equipment 20,000 (42,000) Deferred income taxes 324,000 4,000 Change in operating assets and liabilities: (Increase) in accounts receivable (1,640,000) (2,866,000) Decrease (increase) in inventories 106,000 (879,000) (Increase) in other current assets (217,000) (71,000) Increase in accounts payable 3,566,000 1,143,000 (Decrease) in accrued expenses (337,000) (1,124,000) Other (444,000) 55,000 Net cash provided by operating activities 5,491,000 120,000 Cash Flows from Investing Activities: Capital expenditures (1,371,000) (1,775,000) Proceeds from sale of plant and equipment -- 55,000 Net cash (used in) investing activities (1,371,000) (1,720,000) Cash Flows from Financing Activities: Net (repayments) borrowings of external debt (1,637,000) 3,602,000 Payment of dividends (410,000) (443,000) Purchase of treasury stock (2,017,000) (2,164,000) Exercise of stock options -- 35,000 Net cash (used in) provided by financing activities (4,064,000) 1,030,000 Effect of foreign currency exchange rate changes on cash and cash equivalents (86,000) 1,000 Net (decrease) in cash and cash equivalents (30,000) (569,000) equivalents Cash and cash equivalents, beginning of period 822,000 1,217,000 Cash and cash equivalents, end of period $ 792,000 $ 648,000 The accompanying notes are an integral part of these financial statements.
BAIRNCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS APRIL 3, 1999 (Unaudited) (1) Basis of Presentation The accompanying consolidated condensed financial statements include the accounts of Bairnco Corporation and its subsidiaries ("Bairnco" or the "Corporation") after the elimination of all material intercompany accounts and transactions. The unaudited consolidated condensed financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures which are normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Corporation believes that the disclosures made are adequate to make the information presented not misleading. The consolidated results of operations for the quarter ended April 3, 1999 are not necessarily indicative of the results of operations for the full year. (2) Earnings per Common Share Earnings per share data is based on net income and not comprehensive income. Statements regarding the computation of earnings per share for the quarters ended April 3, 1999 and April 4, 1998 are included as Exhibit 11 to this Quarterly Report on Form 10-Q. Basic earnings per common share were computed by dividing net income by the weighted average number of common shares outstanding during the quarter. Diluted earnings per common share include the effect of all dilutive stock options. (3) Comprehensive Income Comprehensive income includes net income as well as certain other transactions shown as changes in stockholders' investment. For Bairnco, comprehensive income includes net income plus the change in net asset values of foreign divisions as a result of translating the local currency values of net assets to US dollars at varying exchange rates. Accumulated other comprehensive income consists solely of foreign currency translation adjustments. There are currently no tax expenses or benefits associated with the foreign currency translation adjustments. (4) Inventories Inventories consisted of the following as of April 3, 1999 and December 31, 1998: 1999 1998 Raw materials and supplies $ 5,723,000 $ 5,701,000 Work in process 6,378,000 6,604,000 Finished goods 13,710,000 13,874,000 Total inventories $25,811,000 $26,179,000 (5) Accrued Expenses Accrued expenses consisted of the following as of April 3, 1999 and December 31, 1998: 1999 1998 Salaries and wages $ 2,061,000 $ 2,669,000 Income taxes 1,094,000 633,000 Insurance 2,598,000 2,462,000 Litigation 3,410,000 3,580,000 Other accrued expenses 4,530,000 4,848,000 Total accrued expenses $13,693,000 $14,192,000 (6) Reportable Segment Data In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("SFAS 131"), which is effective for fiscal years beginning after December 15, 1997. SFAS 131 introduces a new model for segment reporting called the management approach. The management approach is based on the way the chief operating decision-maker organizes segments within a company for making operating decisions and assessing performance. SFAS 131 requires disclosures for each segment that are similar to those required under previous standards with the addition of limited quarterly disclosure requirements. Bairnco adopted SFAS 131 effective January 1, 1998. There are no differences to the 1998 annual report in the basis of segmentation or in the basis of measurement of segment profit or loss included herein. In addition, there has been no material change in total assets of the segments from the amounts disclosed in the 1998 annual report. Financial information about the Corporation's operating segments for the first quarter of 1999 and 1998 as required under SFAS 131 is as follows: 1999 Net Sales Operating Profit (Loss) Arlon $29,943,000 $4,010,000 Kasco 12,719,000 966,000 Headquarters -- (969,000) $42,662,000 $4,007,000 1998 Net Sales Operating Profit (Loss) Arlon $30,063,000 $4,172,000 Kasco 12,062,000 661,000 Headquarters -- (866,000) $42,125,000 $3,967,000 (7) Contingencies Bairnco Corporation and its subsidiaries are defendants in certain legal actions which are discussed more fully in Part II, Item 1 ("Legal Proceedings") of this filing. Item 2:MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the accompanying Consolidated Condensed Financial Statements and related notes and with Bairnco's Audited Consolidated Financial Statements and related notes for the year ended December 31, 1998. Bairnco Corporation is a diversified multinational company that operates two distinct businesses under the names Arlon and Kasco. 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 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 industrial, consumer and commercial products. Replacement products and services are manufactured and distributed under the Kasco name principally to retail food stores and meat, poultry and fish processing plants throughout the United States, Canada and Europe. The principal products include replacement band saw blades for cutting meat, fish, wood and metal, on site maintenance services and seasonings for ready- to-cook foods for the retail food industry primarily in the meat and deli departments. Kasco also distributes equipment to the food industry in Canada and France. These products 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. Comparison of First Quarter 1999 to First Quarter 1998 The results for the first quarter were improved over last year's first quarter which was the best quarter of 1998 as the impact of the "Asian flu" and the down turn in the electronic market depressed results for the next three quarters. The improved results are primarily due to the inclusion of the acquisition made last year and substantial improvements in operating efficiencies. Sales in the first quarter 1999 were $42,662,000, an increase of 1.3% from $42,125,000 in 1998. [Last year the first quarter was Bairnco's best quarter, whereas historically it has been the third best quarter.] Arlon's sales were down only 0.4% from last year due to the inclusion of the acquisition and modest recoveries from the depressed markets of the last three quarters of last year. Kasco's sales increased 5.4% due to improved sales in the U.S. Gross profit increased 4.2% to $14,252,000 from $13,683,000 due to improved manufacturing efficiencies and the contribution from the acquisition. The gross profit margin as a percent of sales increased to 33.4% from 32.5%. Selling and administrative expenses increased 5.4% to $10,245,000 from $9,716,000. As a percent of sales, selling and administrative expenses increased to 24.0% from 23.1%. Productivity as measured by sales per employee improved 4.6% from $198,900 in 1998 to $208,100 in 1999. Interest expense increased to $567,000 in 1999 as compared to $481,000 in 1998 due primarily to higher average borrowings resulting from the acquisition in the fourth quarter of 1998 and the continuing program to repurchase Bairnco common stock. The effective tax rate for the first quarter of 1999 was 34% versus 37% for 1998. The provision for income taxes in both periods includes all applicable federal, state, local and foreign income taxes. Net income was up to $2,270,000 as compared to $2,196,000 in the first quarter of 1998. These results represent a significant improvement over the results for the prior three quarters. Diluted earnings per common share increased 16.7% to $.28 from $.24 as a result of improved earnings and the reduced number of shares outstanding. Dividend The first quarter cash dividend of $.05 per share was paid on March 31, 1999 to stockholders of record on March 8, 1999. Liquidity and Capital Resources At April 3, 1999, Bairnco had working capital of $33.1 million compared to $33.3 million at December 31, 1998. The increase in accounts receivable relates primarily to the increased sales in the first quarter of 1999 versus the fourth quarter of 1998. During the first quarter 1999, the Board of Directors authorized an additional $5,000,000 to be available for the ongoing repurchase of Bairnco's common stock. The Board has authorized management to continue its stock repurchase program subject to market conditions and capital requirements of the business. During the first quarter Bairnco repurchased 375,100 shares of its common stock at a total cost of $2,017,000. At April 3, 1999, Bairnco's total debt outstanding was $36,076,000 compared to $37,844,000 at the end of 1998. At April 3, 1999 approximately $10.7 million was available for borrowing under the Corporation's secured reducing revolving credit agreement, as amended. In addition, approximately $6.0 million was available under various short-term domestic and foreign uncommitted credit facilities. Bairnco made approximately $1.4 million of capital expenditures during the first quarter of 1999. Total capital expenditures for 1999 are expected to approximate $8.5 million. Cash provided by operating activities plus the amounts available under the existing credit facilities are expected to be sufficient to fulfill Bairnco's anticipated cash requirements in 1999. Year 2000 Compliance As stated in Bairnco's 1998 Annual Report on Form 10-K, the Corporation has evaluated and identified its internal risks of software failure due to processing errors arising from calculations using the Year 2000 date. The plan that was established to maintain the integrity of its financial systems and ensure the reliability of its operating systems is proceeding on schedule. The total estimated cost of achieving Year 2000 compliance remains at approximately $250,000 and includes software and installation costs. Of this amount, approximately $200,000 had been incurred through April 3, 1999 with the remainder expected to be incurred during the second and third quarters of 1999. In January of 1998 Bairnco adopted a formal plan to address the Year 2000 issue. This plan has defined roles, identified staff members to execute the plan, set target dates, and provided a detailed budget. The plan also incorporates the use of outside consultants. The plan is periodically updated and modified, and progress is monitored against it to ensure that target dates are being met and that the Corporation designates whatever resources are necessary to meet the plan's requirements. Bairnco has compiled a checklist for all areas that may be affected by this issue. The Corporation has formed task forces at each of its operating divisions and charged them with doing thorough and complete audits of their facilities using the checklist as a guide. The Corporation is aware of some hardware issues and has assembled a plan to have the outmoded equipment replaced. This process has begun and will be completed during the second and third quarters of 1999. Bairnco has assessed the software in use at all of its operations and identified applications that do not currently process using a four-digit field to record the date. The Corporation is in the process of adapting or replacing any such programs and expects to have the work completed on schedule. Through April 3, 1999, five of the seven North American locations' operating information technology ("IT") systems plus all of the European locations' IT systems had been upgraded to be Year 2000 compliant with the remaining two North American locations expected to be completed by the end of the third quarter of 1999. These two locations are in various stages of validation and implementation of the upgraded systems. Bairnco has contacted the majority of its suppliers and customers with whom the Corporation has a material business relationship regarding their Year 2000 state of readiness. The responses to date have indicated they are, or expect to be, Year 2000 compliant. Based on the results of our efforts to date as discussed above, the Corporation believes it will not experience any material disruption in its operations due to Year 2000 issues with its computer software programs and operating systems or its interface with key suppliers and vendors. However, the implementation and validation of Bairnco's IT and non-IT systems, and the evaluation of the state of readiness of Bairnco's material business partners are ongoing. The disruption in service of any critical suppliers or the failure of the Corporation's operating systems to comply, could result in a shutdown of the operations affected for the duration of the disruption. The Corporation is currently analyzing the risks of a "most reasonably likely worst case scenario" in order to determine whether to develop a contingency plan to address this uncertainty. This process is scheduled for completion during the second quarter of 1999 and if necessary, a contingency plan will be formalized and implemented during the third quarter of 1999. Other Matters Bairnco Corporation and its subsidiaries are defendants in a number of legal actions and proceedings which are discussed in more detail in Part II, Item 1 ("Legal Proceedings") of this filing. Management of Bairnco believes that the disposition of these actions and proceedings 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 April 3, 1999. Outlook The outlook for 1999 is for resumed growth and progress towards our objectives. We continue to see modest improvements in served markets as compared to the run rates of the last nine months of last year. Both foreign and domestic competition remains intense in most markets. Last year's earnings per share were $.72 excluding the legal charge in the fourth quarter. Based on the first quarter results and the trend of the business entering the second quarter, we expect the results for 1999 to show a substantial improvement over last year. Management is not aware of any adverse trends that would materially affect the Corporation's strong financial position. Item 3: 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 April 3, 1999 would increase interest expense and hence reduce the net income of the Corporation by approximately $250,000 per year. The Corporation's fiscal first quarter 1999 sales denominated in a currency other than U.S. dollars were approximately 16% of total sales and net assets maintained in a functional currency other than U.S. dollars at April 3, 1999 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. PART II - OTHER INFORMATION Item 1: 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 April 3, 1999, 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 ("Arlon") 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. In an answer and counterclaims, Bairnco and Arlon have denied the KCT's claims and have requested a declaratory judgment that full title to the patents and real property in question in fact was transferred to Arlon at the time of the 1989 asset sale. 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 April 3, 1999. Item 2: CHANGES IN SECURITIES AND USE OF PROCEEDS None. Item 3: DEFAULTS UPON SENIOR SECURITIES None. Item 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the first quarter of 1999. The annual meeting of stockholders of Bairnco was held in Maitland, Florida on April 22, 1999. Stockholders ratified management's selection of Arthur Andersen LLP as auditors for Bairnco for the 1999 fiscal year and elected all nominees to the Board of Directors. The following table sets forth the results of votes: Votes Against Votes For or Withheld a. Votes on Ratification of Management's selection of Auditors: Arthur Andersen LLP 6,981,254 46,459 b. Votes on Election of Directors: Luke E. Fichthorn III 6,963,001 64,712 Charles T. Foley 6,963,301 64,412 Richard A. Shantz 6,962,101 65,612 William F. Yelverton 6,965,065 62,648 Item 5: OTHER INFORMATION None. Item 6(a): EXHIBITS Exhibit 11 - Calculation of Basic and Diluted Earnings per Share for the Quarters ended April 3, 1999 and April 4, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Bairnco has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BAIRNCO CORPORATION (Registrant) /s/ J. Robert Wilkinson J. Robert Wilkinson Vice President Finance and Treasurer (Chief Financial Officer) DATE: May 3, 1999 EXHIBITS TO FORM 10-Q FOR QUARTER ENDED April 3, 1999 EX-11 2 EXHIBIT 11 BAIRNCO CORPORATION CALCULATION OF BASIC AND DILUTED EARNINGS PER SHARE FOR THE QUARTERS ENDED APRIL 3, 1999 AND APRIL 4, 1998 (Unaudited)
1999 1998 BASIC EARNINGS PER COMMON SHARE: Net income $ 2,270,000 $ 2,196,000 Average common shares outstanding 8,165,000 8,896,000 Basic Earnings Per Common Share $ 0.28 $ 0.25 DILUTED EARNINGS PER COMMON SHARE: Net income $ 2,270,000 $ 2,196,000 Average common shares outstanding 8,165,000 8,896,000 Common shares issuable in respect to options issued to employees with a dilutive effect 22,000 274,000 Total diluted common shares outstanding 8,187,000 9,170,000 Diluted Earnings Per Common Share $ 0.28 $ 0.24
EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM BAIRNCO'S FIRST QUARTER 1999 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS 3-MOS DEC-31-1999 DEC-31-1998 APR-03-1999 APR-04-1998 792,000 648,000 0 0 30,623,000 28,690,000 1,245,000 966,000 25,811,000 27,202,000 62,027,000 61,024,000 98,256,000 91,179,000 57,345,000 51,191,000 119,521,000 112,346,000 28,949,000 25,744,000 33,256,000 27,294,000 0 0 0 0 112,000 112,000 45,838,000 51,903,000 119,521,000 112,346,000 42,662,000 42,125,000 42,662,000 42,125,000 28,410,000 28,442,000 28,410,000 28,442,000 0 0 0 0 567,000 481,000 3,440,000 3,486,000 1,170,000 1,290,000 2,270,000 2,196,000 0 0 0 0 0 0 2,270,000 2,196,000 0.28 0.25 0.28 0.24
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