EXHIBIT 99.1
BAIRNCO CORPORATION
300 PRIMERA BOULEVARD, SUITE 432
LAKE MARY, FLORIDA 32746
(407) 875-2222
PRESS RELEASE
BAIRNCO ANNOUNCES FOURTH QUARTER AND FULL YEAR 2003 RESULTS
Lake Mary, Florida, January 29, 2004 - Bairnco Corporation (NYSE-BZ) today reported full year 2003 sales were down slightly to $152,696,000 from $154,354,000 in 2002. Net income increased to $2,649,000 in 2003 from $1,361,000 in 2002. Fourth quarter 2003 sales were down 1.9% to $37,135,000 and net income increased to $589,000 from a loss of $(1,628,000) in the fourth quarter of 2002. A $4.0 million pre-tax provision for litigation costs was taken in the fourth quarter of 2002 in connection with a change in estimate to defend the Transactions Lawsuit through trial.
The consolidation of the industrial engineered coated product’s businesses in the new facility in San Antonio, Texas, made good progress in 2003. In 2003, consolidation and startup expenses were approximately $1,682,000 for the year and $714,000 in the fourth quarter.
Performance – Fourth Quarter 2003
Sales in the fourth quarter 2003 were $37,135,000, a slight decrease from $37,853,000 in the fourth quarter 2002. Arlon sales decreased 3.8% to $27,048,000 and Kasco sales increased 3.6% to $10,087,000 as compared to the fourth quarter of 2002.
Gross profit decreased to $10,427,000 from $10,655,000 as a result of reduced sales and the $714,000 of new facility consolidation and startup expenses. Gross profit margin as a percent of sales remained at 28.1%.
Selling and administrative expenses of $9,367,000 were essentially level with last year excluding the 2002 $4.0 million provision for litigation costs and the $496,000 gain on sale of Arlon’s Northbrook, Illinois plant both of which were recorded in the fourth quarter 2002.
Net interest expense decreased to $190,000 in the fourth quarter 2003 as compared to $212,000 in the fourth quarter 2002 due to lower average interest rates.
Income before income taxes in the fourth quarter 2003 increased to $870,000 from a loss of $(2,535,000) in the fourth quarter 2002. Excluding the 2002 litigation provision, income before income taxes decreased $595,000 in the fourth quarter of 2003 from $1,465,000 in the fourth quarter 2002 as a result of the $714,000 of new facility consolidation and startup expenses in 2003 and the fourth quarter 2002 gain on sale of plant of $496,000.
Net income was $589,000 as compared to a loss of $(1,628,000) in the fourth quarter of 2002. Diluted earnings per common share were $.08 as compared to a loss of $(.22) per share in the fourth quarter of 2002. The provision for litigation costs reduced net income in the fourth quarter 2002 by $2,640,000, or $.36 per share.
Performance - Year Ended December 31, 2003
Sales for the year ended December 31, 2003 decreased 1.1% to $152,696,000 from $154,354,000 in 2002. Arlon's sales decreased 4.1% from last year due to continued weakness in the electronics, wireless telecommunications and domestic graphics markets. Kasco's sales increased 8.8% as compared to last year. Kasco’s North American sales were up 6.4% due to increased service and repair revenues. Kasco’s European operations’ sales were up 11.6% primarily due to the positive currency translation effect of the weakened US dollar versus the British Pound and the Euro. This increase was partially offset by lower sales due to a severe drop in meat consumption because of the unseasonably hot European summer.
Gross profit decreased 4.7% to $42,871,000 from $44,991,000 in 2002 due primarily to the $1,682,000 of new facility consolidation and startup expenses and lower sales. The gross profit margin as a percent of sales decreased slightly to 28.1% from 29.1%.
In the fourth quarter of 2002, Bairnco recorded a $4.0 million pre-tax provision for litigation costs in connection with a change in estimate to defend the Transactions Lawsuit. The $4.0 million provision for litigation reduced net income in 2002 by approximately $2,640,000, or $.36 per share.
Selling and administrative expenses, which exclude the litigation provision, were $38,248,000 in 2003 as compared to $38,189,000 in 2002. Selling and administrative expenses in 2003 decreased $437,000 as compared to 2002 excluding the fourth quarter gain on sale of plant of $496,000. As a percent of sales, selling and administrative expenses increased to 25.0% in 2003 as compared to 24.7% in 2002.
Net interest expense decreased to $768,000 in 2003 as compared to $1,005,000 in 2002 due to lower average interest rates.
Income before income taxes in 2003 increased to $3,855,000 as compared to $1,797,000 in 2002. Excluding the 2002 litigation provision, income before income taxes decreased to $3,855,000 in 2003 from $5,797,000 in 2002 as a result of the $1,682,000 of new facility consolidation and startup expenses in 2003 and the fourth quarter 2002 gain on sale of plant of $496,000.
Effective January 1, 2002, the Internal Revenue Service (IRS) enacted the Extraterritorial Income Exclusion (EIE), a statutory exclusion from taxable income. The income exclusion is calculated based on a percentage of foreign trade income. Bairnco’s effective tax rate in 2002 was 24.3% which resulted from the interaction between the significant reduction in pre-tax income due to the $4.0 million litigation provision and the tax benefit of the EIE. The effective tax rate in 2003 was 31.3% which results primarily from the tax benefit of the EIE.
Net income was $2,649,000 in 2003 as compared to $1,361,000 in 2002. Diluted earnings per common share were $0.36 in 2003 versus $0.19 in 2002.
Stockholders Meeting
The Company also announced today that the Annual Meeting of Stockholders in Bairnco Corporation will be held on Thursday, April 22, 2004, at 9:00 a.m., local time, at Bairnco’s corporate offices, Lake Mary, Florida. The record date for determination of Stockholders is March 2, 2004.
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“Safe Harbor” Statement under the Private Securities Reform Act of 1995
Statements in this press release referring to the expected future plans and performance of the Corporation are forward-looking statements. Actual future results may differ materially from such statements. Factors that could affect future performance include, but are not limited to, the costs and other effects of legal and administrative cases and proceedings, settlements and investigations; changes in US or international economic or political conditions, such as the general level of economic activity, inflation or fluctuations in interest or foreign exchange rates; disruptions in operations due to labor disputes; the market demand and acceptance of the Corporation’s existing and new products; changes in the pricing of the products of the Corporation or its competitors; the impact of competitive products; the impact on production output and costs from the availability of energy sources and related pricing; changes in the market for raw or packaging materials which could impact the Corporation’s manufacturing costs; changes in the product mix; the loss of a significant customer or supplier; production delays or inefficiencies; the ability to achieve anticipated revenue growth, synergies and other cost savings in connection with acquisitions; the costs and other effects of complying with environmental regulatory requirements; and losses due to natural disasters where the Corporation is self-insured. 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 its press releases, the Corporation does not intend to review or revise any particular forward-looking statement referenced herein in light of future events.
Bairnco Corporation is a diversified multinational company that operates two distinct businesses - Arlon and Kasco. Arlon’s principal products include high technology materials for the printed circuit board industry, cast and calendered vinyl film systems, custom-engineered laminates and special silicone rubber compounds and components. Kasco’s principal products include replacement band saw blades for cutting meat, fish, wood and metal, and on site maintenance primarily in the meat and deli departments. Kasco also distributes equipment to the food industry in Canada and France.
CONTACT: Larry C. Maingot, Bairnco Corporation
Telephone: (407) 875-2222, ext. 230
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Comparative Results of Operations (Unaudited)
| | Quarter Ended | Year Ended |
Condensed Income Statements | Dec. 31, 2003 | Dec. 31, 2002 | Dec. 31, 2003 | Dec. 31, 2002 |
Net sales | $37,135,000 | $37,853,000 | $152,696,000 | $154,354,000 |
Cost of sales | 26,708,000 | 27,198,000 | 109,825,000 | 109,363,000 |
Gross profit | 10,427,000 | 10,655,000 | 42,871,000 | 44,991,000 |
Selling and administrative expenses | 9,367,000 | 8,978,000 | 38,248,000 | 38,189,000 |
Provision for litigation costs | -- | 4,000,000 | -- | 4,000,000 |
Operating profit (loss) | 1,060,000 | (2,323,000) | 4,623,000 | 2,802,000 |
Interest expense, net | 190,000 | 212,000 | 768,000 | 1,005,000 |
Income (loss) before income taxes | 870,000 | (2,535,000) | 3,855,000 | 1,797,000 |
Provision (benefit) for income taxes | 281,000 | (907,000) | 1,206,000 | 436,000 |
Net income (loss) | $ 589,000 | $(1,628,000) | $ 2,649,000 | $ 1,361,000 |
Basic Earnings per Share of Common Stock |
$ 0.08 |
$ (0.22) |
$ 0.36 |
$ 0.19 |
Diluted Earnings per Share of Common Stock |
$ 0.08 |
$ (0.22) |
$ 0.36 |
$ 0.19 |
| | | | | |
Basic Average Common Shares | 7,475,000 | 7,334,000 | 7,430,000 | 7,332,000 |
Diluted Average Common Shares | 7,534,000 | 7,334,000 | 7,451,000 | 7,337,000 |
Condensed Balance Sheets | Dec. 31, 2003 | Dec. 31, 2002 |
ASSETS | | |
| | | |
Cash | $ 796,000 | $ 705,000 |
Accounts receivable, net | 23,511,000 | 22,732,000 |
Inventories | 25,516,000 | 24,882,000 |
Other current assets | 7,873,000 | 8,689,000 |
Total current assets | 57,696,000 | 57,008,000 |
Plant and equipment, net | 36,476,000 | 37,468,000 |
Cost in excess of net assets of purchased businesses | 14,360,000 | 13,276,000 |
Other assets | 9,697,000 | 7,832,000 |
Total | $118,229,000 | $115,584,000 |
| | | |
LIABILITIES AND STOCKHOLDERS’ INVESTMENT | | |
| | | |
Short-term debt | $ 1,875,000 | $ 1,200,000 |
Current maturities of long-term debt | 2,173,000 | 7,000,000 |
Accounts payable | 10,159,000 | 9,855,000 |
Accrued expenses | 10,916,000 | 15,103,000 |
Total current liabilities | 25,123,000 | 33,158,000 |
Long-term debt | 27,785,000 | 19,547,000 |
Other liabilities | 11,023,000 | 11,363,000 |
Stockholders’ investment | 54,298,000 | 51,516,000 |
Total | $118,229,000 | $115,584,000 |
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