18
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 1, 2000
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.)
300 Primera Boulevard, Suite 432, Lake Mary, FL 32746
(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.
7,609,784 shares of Common Stock Outstanding as of April 21, 2000.
"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,
2000 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,
disruptions in operations due to labor disputes; changes in the
pricing of the products of the Corporation or its competitors;
changes in US or international economic or political conditions,
such as inflation or fluctuations in interest or foreign exchange
rates; 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; 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.
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 1, 2000 AND APRIL 3, 1999
(Unaudited)
2000 1999
Net sales $ 45,816,000 $ 42,662,000
Cost of sales 30,475,000 28,410,000
Gross profit 15,341,000 14,252,000
Selling and administrative expenses 10,918,000 10,245,000
Operating profit 4,423,000 4,007,000
Interest expense, net 683,000 567,000
Income before income taxes 3,740,000 3,440,000
Provision for income taxes 1,234,000 1,170,000
Net income $ 2,506,000 $ 2,270,000
Basic earnings per share of common stock
(Note 2) $ 0.32 $ 0.28
Diluted earnings per share of common
stock (Note 2) $ 0.32 $ 0.28
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 1, 2000 AND APRIL 3, 1999
(Unaudited)
Note 3
2000 1999
Net income $ 2,506,000 $ 2,270,000
Other comprehensive income, net of tax:
Foreign currency translation adjustment (227,000) (335,000)
Comprehensive income $ 2,279,000 $ 1,935,000
The accompanying notes are an integral part of these financial statements.
BAIRNCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF APRIL 1, 2000 AND DECEMBER 31, 1999
(Unaudited)
2000 1999
ASSETS
Current assets:
Cash and cash equivalents $ 771,000 $ 660,000
Accounts receivable, less allowances of
$1,394,000 and $1,136,000, respectively 33,422,000 29,107,000
Inventories (Note 4) 29,252,000 25,204,000
Deferred income taxes 4,599,000 4,598,000
Other current assets 2,348,000 3,640,000
Total current assets 70,392,000 63,209,000
Plant and equipment, at cost 113,489,000 101,672,000
Less - Accumulated depreciation and amortization (63,929,000) (61,990,000)
Plant and equipment, net 49,560,000 39,682,000
Cost in excess of net assets of purchased
businesses (Note 5) 12,485,000 11,822,000
Other assets 4,777,000 4,432,000
$137,214,000 $119,145,000
LIABILITIES & STOCKHOLDERS' INVESTMENT
Current Liabilities:
Short-term debt $ 3,771,000 $ 4,692,000
Accounts payable 13,305,000 10,719,000
Accrued expenses (Note 6) 13,681,000 14,542,000
Total current liabilities 30,757,000 29,953,000
Long-term debt 43,492,000 26,591,000
Deferred income taxes 5,454,000 5,459,000
Other liabilities 6,468,000 6,975,000
Stockholders' Investment:
Preferred stock, par value $.01, 5,000,000
shares authorized, none issued -- --
Common stock, par value $.01, 30,000,000 shares
authorized, 11,198,849 shares issued 112,000 112,000
Paid-in capital 49,235,000 49,235,000
Retained earnings 31,836,000 29,719,000
Accumulated other comprehensive income (Note 3) 1,002,000 1,229,000
Treasury stock, at cost, 3,544,065 and
3,402,065 shares, respectively (31,142,000) (30,128,000)
Total stockholders' investment 51,043,000 50,167,000
$137,214,000 $119,145,000
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 1, 2000 AND APRIL 3, 1999
(Unaudited)
2000 1999
Cash Flows from Operating Activities:
Net income $ 2,506,000 $ 2,270,000
Adjustments to reconcile to net cash provided
by Operating activities:
Depreciation and amortization 2,169,000 1,843,000
Loss on disposal of plant and equipment -- 20,000
Deferred income taxes (6,000) 324,000
Change in operating assets and liabilities:
(Increase) in accounts receivable (3,227,000) (1,640,000)
(Increase) decrease in inventories (1,912,000) 106,000
Decrease (increase) in other current assets 1,284,000 (217,000)
Increase in accounts payable 2,796,000 3,566,000
(Decrease) in accrued expenses (1,286,000) (337,000)
Other (862,000) (444,000)
Net cash provided by operating activities 1,462,000 5,491,000
Cash Flows from Investing Activities:
Capital expenditures (1,886,000) (1,371,000)
Payment for purchased businesses, net of cash
acquired (13,982,000) --
Net cash (used in) investing activities (15,868,000) (1,371,000)
Cash Flows from Financing Activities:
Net borrowings (repayments) of external debt 16,060,000 (1,637,000)
Payment of dividends (389,000) (410,000)
Purchase of treasury stock (1,014,000) (2,017,000)
Net cash provided by (used in)
financing activities 14,657,000 (4,064,000)
Effect of foreign currency exchange rate changes
on cash and cash equivalents (140,000) (86,000)
Net increase (decrease) in cash and cash
equivalents 111,000 (30,000)
Cash and cash equivalents, beginning of period 660,000 822,000
Cash and cash equivalents, end of period $ 771,000 $ 792,000
The accompanying notes are an integral part of these financial statements.
BAIRNCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
APRIL 1, 2000
(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 management
believes that the disclosures made are adequate to make the
information presented not misleading. Management believes the
statements include all adjustments of a normal recurring nature
necessary to present fairly the results of operations for the
interim periods.
The consolidated results of operations for the quarter ended
April 1, 2000 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 1, 2000 and April
3, 1999 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 1, 2000 and
December 31, 1999:
2000 1999
Raw materials and supplies $ 7,120,000 $ 5,986,000
Work in process 9,717,000 8,574,000
Finished goods 12,415,000 10,644,000
Total inventories $29,252,000 $25,204,000
(5) Cost in Excess of Net Assets of Purchased Businesses
Cost in excess of net assets of purchased businesses acquired
prior to 1971 of approximately $3.5 million is not being
amortized since, in the opinion of management, there has been no
diminution in value. For businesses acquired subsequent to 1970,
the cost in excess of net assets of purchased businesses,
aggregating $11,036,000 and $10,298,000 at April 1, 2000 and
December 31, 1999, respectively, is being amortized over 40
years. Accumulated amortization at April 1, 2000 and December
31, 1999, was $2,036,000 and $1,964,000, respectively.
(6) Accrued Expenses
Accrued expenses consisted of the following as of April 1, 2000
and December 31, 1999:
2000 1999
Salaries and wages $ 1,792,000 $ 3,114,000
Income taxes 603,000 550,000
Insurance 3,186,000 3,581,000
Litigation 2,249,000 2,588,000
Other accrued expenses 5,851,000 4,709,000
Total accrued expenses $13,681,000 $14,542,000
Accrued expenses-litigation: The Corporation accrues for the
estimated costs to defend existing lawsuits, claims and
proceedings where it is probable that it will incur such costs in
the future. These non-discounted accruals are management's best
estimate of the most likely cost to defend the litigation based
on discussions with counsel. Such estimates are reviewed and
evaluated in light of ongoing experiences and expectations. Any
changes in estimates from this review process are reflected in
operations currently.
In the fourth quarter of 1998, Bairnco recorded a $7,500,000 pre-
tax provision for litigation costs. The litigation provision
added to the existing reserves for asbestos-related litigation
expenditures due to a change in the estimate to defend the
Transaction Lawsuit (refer to Part II, Item 1. "Legal
Proceedings" of this filing). Through April 1, 2000,
approximately $2.8 million had been spent. The remaining
litigation reserves included in accrued expenses and other long-
term liabilities in the Corporation's consolidated condensed
balance sheet are expected to be spent by the end of 2001. These
litigation reserves and related time frame for spending assume a
vigorous defense of the case through discovery, summary judgment
motions and trial.
Accrued expenses-insurance: Accrued expenses-insurance
represents the estimated costs of known and anticipated claims
under the Corporation's general liability, automobile liability,
property and workers compensation insurance policies for all of
its US operations. The Corporation provides reserves on reported
claims and claims incurred but not reported at each balance sheet
date based upon the estimated amount of the probable claim or the
amount of the deductible, whichever is lower. Such estimates are
reviewed and evaluated in light of emerging claim experience and
existing circumstances. Any changes in estimates from this
review process are reflected in operations currently.
(7) Reportable Segment Data
Bairnco's quarterly segment disclosures are prepared in
accordance with Statement of Financial Accounting Standards No.
131. There are no differences to the 1999 annual report in the
basis of segmentation or in the basis of measurement of segment
profit or loss included herein. Financial information about the
Corporation's operating segments for the first quarter of 2000
and 1999 as required under SFAS 131 is as follows:
2000 Net Sales Operating Profit (Loss)
Arlon $34,303,000 $4,884,000
Kasco 11,513,000 371,000
Headquarters -- (832,000)
$45,816,000 $4,423,000
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
The total assets of the segments as of April 1, 2000 and December
31, 1999 are as follows:
2000 1999
Arlon $ 87,811,000 $ 69,915,000
Kasco 40,349,000 39,294,000
Headquarters 9,054,000 9,936,000
$137,214,000 $119,145,000
(8) 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,
1999.
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
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 2000 to First Quarter 1999
The results for the first quarter 2000 were improved over last
year's first quarter. Sales in the first quarter 2000 were
$45,816,000, an increase of 7.4% from $42,662,000 in 1999.
Arlon's sales were up 14.6% from last year due to continued
penetration into the electronics and graphics markets and the
inclusion of the first quarter 2000 acquisition. Kasco's sales
decreased 9.5% due to competitive pressures in the U.S. markets
and the currency translation effect of the strong dollar.
Gross profit increased 7.6% to $15,341,000 from $14,252,000 due
to the increased sales. The gross profit margin as a percent of
sales increased marginally to 33.5% from 33.4%.
Selling and administrative expenses increased 6.6% to $10,918,000
from $10,245,000. As a percent of sales, selling and
administrative expenses decreased to 23.8% from 24.0%.
Interest expense increased to $683,000 in 2000 as compared to
$567,000 in 1999 due to higher average borrowings resulting from
the acquisition in the first quarter of 2000 and the continuing
program to repurchase Bairnco common stock, and higher average
interest rates.
Net income increased 10.4% to $2,506,000 as compared to
$2,270,000 in the first quarter of 1999.
During the first quarter Bairnco repurchased 142,000 shares of
its common stock at a total cost of $1,014,000.
Diluted earnings per common share increased 14.3% to $.32 from
$.28 as a result of improved earnings and the reduced number of
shares outstanding.
Acquisition
On February 16, 2000, Bairnco purchased certain assets of the
materials business ("Signtech") of Signtech USA, Ltd. for
approximately $14.5 million. Signtech manufactures and
distributes flexible reinforced vinyl materials used as the
substrate in flexible faced sign systems. Signtech's products are
sold primarily on a specification basis for corporate specified
programs using various striping, heat transfer and screen print
applications. Signtech's sales for the year ended December 31,
1999 were approximately $16.0 million. The transaction was
accounted for as a purchase and was financed with long-term debt.
The purchase price was allocated to the assets acquired based on
their estimated fair values.
Dividend
The first quarter cash dividend of $.05 per share was paid on
March 31, 2000 to stockholders of record on March 6, 2000.
Liquidity and Capital Resources
At April 1, 2000, Bairnco had working capital of $39.6 million
compared to $33.3 million at December 31, 1999. The increase in
accounts receivable is due to the increased sales in the first
quarter of 2000 versus the fourth quarter of 1999 and the impact
of the Signtech acquisition on the first quarter of 2000.
Similarly, inventories have increased both as a result of the
Signtech acquisition and in anticipation of increased sales in
the second quarter. Other current assets are down with the
recognition of the tax receivable in the first quarter of 2000.
The increase in accounts payable is consistent with the build in
inventories and the impact of the Signtech acquisition.
During the first quarter Bairnco repurchased 142,000 shares of
its common stock at a total cost of $1,014,000. The Board has
authorized management to continue its stock repurchase program
subject to market conditions and capital requirements of the
business.
On February 15, 2000, the Corporation's Credit Agreement was
amended. The amendment effectively increased the credit facility
from $50 million at December 31, 1999 to $75 million, including a
five-year term loan credit facility of $20 million subject to
quarterly amortization of principal of $500,000 in 2000, $750,000
in 2001, $1,000,000 in 2002, $1,250,000 in 2003 and $1,500,000 in
2004. The amended credit facility also includes a letter of
credit facility for $9 million which may be increased up to $15
million or decreased to $5 million with a corresponding change in
the loan commitment under the revolving credit facility. The
amendment extended the expiration date of the Credit Agreement
from December 31, 2003 to February 22, 2005, although the term
loan expires on December 31, 2004.
At April 1, 2000, Bairnco's total debt outstanding was
$47,263,000 compared to $31,283,000 at the end of 1999. The
increase was primarily due to the acquisition of Signtech. At
April 1, 2000 approximately $25.0 million was available for
borrowing under the Corporation's secured reducing revolving
credit agreement, as amended. In addition, approximately $4.9
million was available under various short-term domestic and
foreign uncommitted credit facilities.
Bairnco made approximately $1.9 million of capital expenditures
during the first quarter of 2000. Total capital expenditures for
2000 are expected to approximate $9.5 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
2000.
Year 2000 Date Conversion
During the first quarter of 2000, the Corporation did not
experience any 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.
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
1, 2000.
Outlook
The outlook for 2000 is for improved sales and earnings. It is
expected that the combination of growth from new products, higher
growth in certain niche markets and the results of the Signtech
acquisition will result in increased sales. Improved earnings
are expected both from increased sales and from ongoing
productivity improvement programs.
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 1, 2000 would increase interest expense and hence reduce
the net income of the Corporation by approximately $320,000 per
year.
The Corporation's fiscal first quarter 2000 sales denominated in
a currency other than U.S. dollars were approximately 11.9% of
total sales and net assets maintained in a functional currency
other than U.S. dollars at April 1, 2000 were approximately 14.1%
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. The court has entered a
scheduling order requiring the completion of all discovery
(including expert discovery) by May 11, 2001. A trial date has
not been set, but the Court has scheduled a conference for June
19, 2001, to determine dates for filing a pretrial order, for
trial, and/or for any pretrial motions. These dates remain
subject to adjustment based upon the progress of discovery.
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 1, 2000, 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. The
Properties Lawsuit has been transferred to the Transactions
Lawsuit Judge for consolidated discovery and other proceedings.
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
1, 2000.
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
The annual meeting of stockholders of Bairnco was held in Lake
Mary, Florida on April 21, 2000. Stockholders ratified
management's selection of Arthur Andersen LLP as auditors for
Bairnco for the 2000 fiscal year and elected all nominees to the
Board of Directors. Stockholders also approved the Bairnco
Corporation 2000 Stock Incentive Plan.
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 7,168,499 35,818
b. Votes on Election of Directors:
Luke E. Fichthorn III 7,131,199 73,118
Charles T. Foley 7,130,325 73,992
Richard A. Shantz 7,131,325 72,992
William F. Yelverton 7,130,235 74,082
c. Votes on 2000 Stock Incentive Plan 5,189,145 495,107
Item 5: OTHER INFORMATION
None.
Item 6(a): EXHIBITS
Exhibit 11 - Calculation of Basic and Diluted Earnings
per Share for the Quarters ended April 1, 2000 and April
3, 1999.
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/ James W. Lambert
James W. Lambert
Vice President Finance and Treasurer
(Chief Financial Officer)
DATE: May 5, 2000
EXHIBITS
TO FORM 10-Q
FOR QUARTER ENDED
April 1, 2000
1
EXHIBIT 11
BAIRNCO CORPORATION
CALCULATION OF BASIC AND DILUTED EARNINGS PER SHARE
FOR THE QUARTERS ENDED APRIL 1, 2000 AND APRIL 3, 1999
(Unaudited)
2000 1999
BASIC EARNINGS PER COMMON SHARE:
Net income $ 2,506,000 $ 2,270,000
Average common shares outstanding 7,761,000 8,165,000
Basic Earnings Per Common Share $ 0.32 $ 0.28
DILUTED EARNINGS PER COMMON SHARE:
Net income $ 2,506,000 $ 2,270,000
Average common shares outstanding 7,761,000 8,165,000
Common shares issuable in respect to options
issued to employees with a dilutive effect 91,000 22,000
Total diluted common shares outstanding 7,852,000 8,187,000
Diluted Earnings Per Common Share $ 0.32 $ 0.28
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM BAIRNCO'S FIRST
QUARTER 2000 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL INFORMATION.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-END> APR-01-2000 APR-03-1999
<CASH> 771,000 792,000
<SECURITIES> 0 0
<RECEIVABLES> 34,816,000 30,623,000
<ALLOWANCES> 1,394,000 1,245,000
<INVENTORY> 29,252,000 25,811,000
<CURRENT-ASSETS> 70,392,000 62,027,000
<PP&E> 113,489,000 98,256,000
<DEPRECIATION> 63,929,000 57,345,000
<TOTAL-ASSETS> 137,214,000 119,521,000
<CURRENT-LIABILITIES> 30,757,000 28,949,000
<BONDS> 43,492,000 33,256,000
0 0
0 0
<COMMON> 112,000 112,000
<OTHER-SE> 50,931,000 45,838,000
<TOTAL-LIABILITY-AND-EQUITY> 137,214,000 119,521,000
<SALES> 45,816,000 42,662,000
<TOTAL-REVENUES> 45,816,000 42,662,000
<CGS> 30,475,000 28,410,000
<TOTAL-COSTS> 30,475,000 28,410,000
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 683,000 567,000
<INCOME-PRETAX> 3,740,000 3,440,000
<INCOME-TAX> 1,234,000 1,170,000
<INCOME-CONTINUING> 2,506,000 2,270,000
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,506,000 2,270,000
<EPS-BASIC> 0.32 0.28
<EPS-DILUTED> 0.32 0.28
</TABLE>
