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 July 4, 1998
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.
8,647,534 shares of Common Stock Outstanding as of July 4, 1998.
"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,
1998 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, 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
<TABLE>
BAIRNCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED JULY 4, 1998 AND JUNE 28, 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
Net sales $ 37,651,000 $ 41,128,000
Cost of sales 24,905,000 27,020,000
Gross profit 12,746,000 14,108,000
Selling and administrative expenses 9,717,000 9,981,000
Operating profit 3,029,000 4,127,000
Interest expense, net 508,000 460,000
Income before income taxes 2,521,000 3,667,000
Provision for income taxes 933,000 1,320,000
Net income $ 1,588,000 $ 2,347,000
Basic earnings per share of common
stock (Note 2) $ 0.18 $ 0.26
Diluted earnings per share of common
stock (Note 2) $ 0.18 $ 0.25
Dividends per share of common stock $ 0.05 $ 0.05
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
BAIRNCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JULY 4, 1998 AND JUNE 28, 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
Net sales $ 79,776,000 $ 78,573,000
Cost of sales 53,347,000 51,485,000
Gross profit 26,429,000 27,088,000
Selling and administrative expenses 19,433,000 19,097,000
Operating profit 6,996,000 7,991,000
Interest expense, net 989,000 875,000
Income before income taxes 6,007,000 7,116,000
Provision for income taxes 2,223,000 2,596,000
Net income $ 3,784,000 $ 4,520,000
Basic earnings per share of common
stock (Note 2) $ 0.43 $ 0.49
Diluted earnings per share of common
stock (Note 2) $ 0.42 $ 0.48
Dividends per share of common stock $ 0.10 $ 0.10
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
BAIRNCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE QUARTERS ENDED JULY 4, 1998 AND JUNE 28, 1997
(Unaudited)
Note 3
<CAPTION>
1998 1997
<S> <C> <C>
Net income $ 1,588,000 $ 2,347,000
Other comprehensive income, net of tax:
Foreign currency translation adjustment (4,000) (95,000)
Comprehensive income $ 1,584,000 $ 2,252,000
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
BAIRNCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JULY 4, 1998 AND JUNE 28, 1997
(Unaudited)
Note 3
<CAPTION>
1998 1997
<S> <C> <C>
Net income $ 3,784,000 $ 4,520,000
Other comprehensive income, net of tax:
Foreign currency translation adjustment (78,000) (563,000)
Comprehensive income $ 3,706,000 $ 3,957,000
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
BAIRNCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF JULY 4, 1998 AND DECEMBER 31, 1997
<CAPTION>
(Unaudited)
1998 1997
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,078,000 $ 1,217,000
Accounts receivable, less allowances of
$1,005,000 and $943,000, respectively 24,517,000 24,939,000
Inventories (Note 4) 28,095,000 26,398,000
Deferred income taxes 2,641,000 2,641,000
Other current assets 3,183,000 2,748,000
Total current assets 59,514,000 57,943,000
Plant and equipment, at cost 92,428,000 89,870,000
Less - Accumulated depreciation and amortization (52,653,000) (49,957,000)
Plant and equipment, net 39,775,000 39,913,000
Cost in excess of net assets of purchased
businesses 7,763,000 7,607,000
Other assets 3,766,000 3,823,000
$110,818,000 $109,286,000
LIABILITIES & STOCKHOLDERS' INVESTMENT
Current Liabilities:
Short-term debt $ 4,506,000 $ 3,018,000
Current maturities of long-term debt 4,000 9,000
Accounts payable 8,916,000 8,661,000
Accrued expenses (Note 5) 8,838,000 10,543,000
Total current liabilities 22,264,000 22,231,000
Long-term debt 29,582,000 27,291,000
Deferred income taxes 4,086,000 4,098,000
Other liabilities 3,188,000 3,197,000
Stockholders' Investment:
Preferred stock, par value $.01, 5,000,000
shares authorized, none issued -- --
Common stock, par value $.01, 30,000,000
shares authorized, 11,173,899 and 11,160,774
shares issued, respectively 112,000 112,000
Paid-in capital 49,096,000 49,030,000
Retained earnings 25,707,000 22,802,000
Accumulated other comprehensive income (Note 3) 1,494,000 1,572,000
Treasury stock, at cost, 2,526,365 and
2,166,765 shares, respectively (24,711,000) (21,047,000)
Total stockholders' investment 51,698,000 52,469,000
$110,818,000 $109,286,000
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
BAIRNCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JULY 4, 1998 AND JUNE 28, 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 3,784,000 $ 4,520,000
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 3,423,000 3,311,000
(Gain) loss on disposal of plant and
equipment (27,000) 1,000
Deferred income taxes (12,000) (7,000)
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable 359,000 (4,698,000)
(Increase) in inventories (1,772,000) (3,436,000)
(Increase) decrease in other current assets (441,000) 1,635,000
Increase in accounts payable 275,000 4,583,000
(Decrease) in accrued expenses (1,686,000) (1,232,000)
Other (184,000) (684,000)
Net cash provided by operating activities 3,719,000 3,993,000
Cash Flows from Investing Activities:
Capital expenditures (3,301,000) (4,644,000)
Proceeds from collection on notes receivable -- 179,000
Proceeds from sale of plant and equipment 66,000 19,000
Net cash (used in) investing activities (3,235,000) (4,446,000)
Cash Flows from Financing Activities:
Net borrowings of external debt 3,826,000 4,855,000
Payment of dividends (880,000) (929,000)
Purchase of treasury stock (3,664,000) (2,866,000)
Exercise of stock options 66,000 2,000
Net cash (used in) provided by financing
activities (652,000) 1,062,000
Effect of foreign currency exchange rate
changes on cash and cash equivalents 29,000 (38,000)
Net (decrease) increase in cash and cash
equivalents (139,000) 571,000
Cash and cash equivalents, beginning of period 1,217,000 855,000
Cash and cash equivalents, end of period $ 1,078,000 $ 1,426,000
The accompanying notes are an integral part of these financial
statements.
</TABLE>
BAIRNCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JULY 4, 1998
(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 and six-
month period ended July 4, 1998 are not necessarily indicative of
the results of operations for the full year.
Certain reclassifications were made to prior year balances in
order to conform to the current year presentation.
(2) Earnings per Common Share
The Corporation adopted Statement of Financial Accounting
Standards ("SFAS") No. 128 effective December 15, 1997, and as a
result, the Corporation's previously reported quarterly earnings
per common share for 1997 have been restated. Earnings per share
data is based on net income and not comprehensive income.
Statements regarding the computation of earnings per share for
the quarters and six-month periods ended July 4, 1998 and June
28, 1997 are included as Exhibit 11.1 and Exhibit 11.2,
respectively, to this Quarterly Report on Form 10-Q.
(3) Comprehensive Income
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("SFAS 130"), which is effective for years
beginning after December 15, 1997. SFAS 130 established
standards for reporting and displaying comprehensive income and
its components in a full set of general-purpose financial
statements. This statement requires that all items of
comprehensive income are classified by their nature in a
financial statement and that the accumulated balance of other
comprehensive income be displayed separately from retained
earnings and additional paid-in capital in the equity section of
a statement of financial position. The comparative prior period
financial statements have been reclassified to conform to the
current period presentation.
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 July 4, 1998 and
December 31, 1997:
1998 1997
Raw materials and supplies $ 5,694,000 $ 5,646,000
Work in process 6,088,000 6,402,000
Finished goods 16,313,000 14,350,000
Total inventories $28,095,000 $26,398,000
(5) Accrued Expenses
Accrued expenses consisted of the following as of July 4, 1998
and December 31, 1997:
1998 1997
Salaries and wages $ 1,677,000 $ 2,353,000
Income taxes 72,000 139,000
Insurance 1,952,000 2,216,000
Litigation 1,101,000 1,461,000
Other accrued expenses 4,036,000 4,374,000
Total accrued expenses $ 8,838,000 $ 10,543,000
(6) 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,
1997.
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 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 Second Quarter 1998 to Second Quarter 1997
Sales in the second quarter 1998 were $37,651,000, a decrease of
8.5% from $41,128,000 in 1997. Arlon second quarter sales
decreased 13.8% over prior year. Arlon sales to the electronics,
telecommunications and insulation markets decreased significantly
due to the impact of the Asian economic crisis on both our
domestic and foreign customers. The strong dollar versus the
Asian rim currencies resulted in price pressure on export sales
to those markets. The down turn was exacerbated by an inventory
correction in the supply chain to the electronics and
telecommunications markets. Kasco sales increased 5.3% due to
improved seasoning and route sales.
Gross profit decreased 9.7% to $12,746,000 from $14,108,000 as a
result of the decreased sales, pressure on export prices to the
Asian rim and increased price competition in the electronics,
telecommunications and insulation markets. Bairnco has and is
continuing to reduce production costs in the operations affected.
The gross profit margin as a percent of sales decreased from
34.3% in 1997 to 33.9% in 1998.
Selling and administrative expenses decreased 2.6% to $9,717,000
from $9,981,000. As a percent of sales, selling and
administrative expenses increased from 24.3% to 25.8%.
Interest expense increased to $508,000 in 1998 as compared to
$460,000 in 1997 due primarily to higher average borrowings.
The effective tax rate for the second quarter of 1998 was 37%
versus 36% for 1997. The provision for income taxes in both
periods includes all applicable federal, state, local and foreign
income taxes.
Net income decreased 32.3% to $1,588,000 as compared to
$2,347,000 in the second quarter of 1997. Diluted earnings per
common share decreased 28% to $.18 from $.25 as a result of the
reduced net income.
Comparison of First Six Months 1998 to First Six Months 1997
Due to the weak second quarter results, sales for the first half
of 1998 were up only 1.5% to $79,776,000 from $78,573,000 in
1997.
Gross profit decreased $659,000, or 2.4% from $27,088,000 in the
first half of 1997. The gross profit margin as a percent of
sales decreased from 34.5% to 33.1%. The profit margin declines
are primarily attributable to the reduced sales and price
pressures resulting from the impact of the Asian economic crisis
during the second quarter.
Selling and administrative expenses increased 1.8% to $19,433,000
from $19,097,000. This increase was due to planned strengthening
of the sales force and investment in the development of new
products and information system upgrades during the first quarter
of 1998. As a percent of sales, selling and administrative
expenses increased to 24.4% from 24.3%.
Interest expense increased $114,000 as compared to the first half
of 1997. This increase was primarily the result of higher
average borrowings.
The effective tax rate for the first half of 1998 was 37% versus
36.5% in 1997. The provision for income taxes in both periods
includes all applicable federal, state, local and foreign income
taxes.
Net income decreased 16.3% to $3,784,000 from $4,520,000 and
diluted earnings per common share decreased 12.5% to $.42 from
$.48.
Liquidity and Capital Resources
At July 4, 1998, Bairnco had working capital of $37.3 million
compared to $35.7 million at December 31, 1997. The increase in
inventory from December 31, 1997 results from the sudden decrease
in sales trends that occurred during the second quarter of 1998.
Inventories were built to meet anticipated increased sales during
the second quarter which never materialized. Programs are in
place to reduce these inventories during the remainder of 1998.
Accrued expenses are down from December 31, 1997 primarily due to
1997 bonuses which were paid out during the first quarter 1998.
During the first quarter 1998, 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 second quarter Bairnco repurchased 155,300 shares of
its common stock at a total cost of $1,500,000. Total shares
repurchased during the first half of 1998 were 359,600.
At July 4, 1998, Bairnco's total debt outstanding was $34,092,000
compared to $30,318,000 at the end of 1997. This increase was
primarily due to the stock repurchases. At July 4, 1998
approximately $13.4 million was available for borrowing under the
Corporation's secured reducing revolving credit agreement, as
amended. In addition, approximately $3.3 million was available
under various short-term domestic and foreign uncommitted credit
facilities.
Bairnco made approximately $1.5 million of capital expenditures
during the second quarter of 1998 bringing the total capital
expenditures for 1998 to $3,301,000. Total capital expenditures
planned for 1998 have been cut from approximately $12 million to
$7 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
1998.
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 July
4, 1998.
As stated in Bairnco's 1997 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 estimated cost of achieving
Year 2000 compliance remains at approximately $250,000 and includes
software and installation costs to be incurred during 1998 and 1999.
Outlook
Bairnco has taken actions to reduce costs that should partially
mitigate the negative impact of weak markets without stopping our
programs to grow the business. Development of new products and
the penetration of new markets will continue at Arlon. Kasco is
expected to make continued progress in 1998 and beyond. However,
the operating results for the remainder of 1998 are expected to
continue to be below 1997 results.
Management is not aware of any adverse trends that would
materially affect the Corporation's strong financial position.
PART II - OTHER INFORMATION
Item 1: 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, its subsidiaries, 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 also is the defendant in a separate action originally
brought by Keene in the United States Bankruptcy Court for the
Southern District of New York in which Keene sought 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 April 4, 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.
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. On February 6, 1998, the court issued an
opinion granting the motions to dismiss of four of the defendants
in the Transactions Lawsuit. The court reserved decision on the
other defendants' motions. 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 July
4, 1998.
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
None
Item 5: OTHER INFORMATION
None.
Item 6(a): EXHIBITS
Exhibit 11.1 - Calculation of Basic and Diluted Earnings per Share
for the Quarters ended July 4, 1998 and June 28, 1997.
Exhibit 11.2 - Calculation of Basic and Diluted Earnings per Share
for the Six Months ended July 4, 1998 and June 28, 1997.
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: August 5, 1998
EXHIBITS
TO FORM 10-Q
FOR QUARTER ENDED
July 4, 1998
EXHIBIT 11.1
<TABLE>
BAIRNCO CORPORATION
CALCULATION OF BASIC AND DILUTED EARNINGS PER SHARE
FOR THE QUARTERS ENDED JULY 4, 1998 AND JUNE 28, 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
BASIC EARNINGS PER COMMON SHARE:
Net income $ 1,588,000 $ 2,347,000
Average common shares outstanding 8,746,000 9,198,000
Basic Earnings Per Common Share $ 0.18 $ 0.26
DILUTED EARNINGS PER COMMON SHARE:
Net income $ 1,588,000 $ 2,347,000
Average common shares outstanding 8,746,000 9,198,000
Common shares issuable in respect to
options issued to employees with a
dilutive effect 252,000 142,000
Total diluted common shares outstanding 8,998,000 9,340,000
Diluted Earnings Per Common Share $ 0.18 $ 0.25
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.
</TABLE>
<TABLE>
EXHIBIT 11.2
BAIRNCO CORPORATION
CALCULATION OF BASIC AND DILUTED EARNINGS PER SHARE
FOR THE SIX MONTHS ENDED JULY 4, 1998 AND JUNE 28, 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
BASIC EARNINGS PER COMMON SHARE:
Net income $ 3,784,000 $ 4,520,000
Average common shares outstanding 8,825,000 9,295,000
Basic Earnings Per Common Share $ 0.43 $ 0.49
DILUTED EARNINGS PER COMMON SHARE:
Net income $ 3,784,000 $ 4,520,000
Average common shares outstanding 8,825,000 9,295,000
Common shares issuable in respect to
options issued to employees with a
dilutive effect 260,000 136,000
Total diluted common shares outstanding 9,085,000 9,431,000
Diluted Earnings Per Common Share $ 0.42 $ 0.48
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.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997 DEC-31-1998 DEC-31-1997
<PERIOD-END> JUL-04-1998 JUN-28-1997 JUL-04-1998 JUN-28-1997
<CASH> 1,078,000 1,426,000 1,078,000 1,426,000
<SECURITIES> 0 0 0 0
<RECEIVABLES> 25,522,000 26,803,000 25,522,000 26,803,000
<ALLOWANCES> 1,005,000 952,000 1,005,000 952,000
<INVENTORY> 28,095,000 26,538,000 28,095,000 26,538,000
<CURRENT-ASSETS> 59,514,000 58,818,000 59,514,000 58,818,000
<PP&E> 92,428,000 87,899,000 92,428,000 87,899,000
<DEPRECIATION> 52,653,000 48,691,000 52,653,000 48,691,000
<TOTAL-ASSETS> 110,818,000 110,029,000 110,818,000 110,029,000
<CURRENT-LIABILITIES> 22,264,000 26,146,000 22,264,000 26,146,000
<BONDS> 29,582,000 28,430,000 29,582,000 28,430,000
0 0 0 0
0 0 0 0
<COMMON> 112,000 112,000 112,000 112,000
<OTHER-SE> 51,586,000 49,513,000 51,586,000 49,513,000
<TOTAL-LIABILITY-AND-EQUITY> 110,818,000 110,029,000 110,818,000 110,029,000
<SALES> 37,651,000 41,128,000 79,776,000 78,573,000
<TOTAL-REVENUES> 37,651,000 41,128,000 79,776,000 78,573,000
<CGS> 24,905,000 27,020,000 53,347,000 51,485,000
<TOTAL-COSTS> 24,905,000 27,020,000 53,347,000 51,485,000
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 508,000 460,000 989,000 875,000
<INCOME-PRETAX> 2,521,000 3,667,000 6,007,000 7,116,000
<INCOME-TAX> 933,000 1,320,000 2,223,000 2,596,000
<INCOME-CONTINUING> 1,588,000 2,347,000 3,784,000 4,520,000
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 1,588,000 2,347,000 3,784,000 4,520,000
<EPS-PRIMARY> 0.18 0.26 0.43 0.49
<EPS-DILUTED> 0.18 0.25 0.42 0.48
</TABLE>
