THE COMPANY
Bairnco Corporation is a diversified multinational company that operates two
business sectors.
Engineered materials and components are designed, manufactured and sold under
the Arlon brand identity to electronic, industrial and commercial markets.
These products are based on a common technology in coating, laminating, resin
technology 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, and on-site maintenance services 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.
STRATEGY
Bairnco's strategy is to serve a broad range of niche markets with quality
products and services, while providing extra value to its customers through
focused and cost effective organizations and facilities. Bairnco strives to
develop true partnership relationships with its customers in these selected
markets through close cooperation in developing value added solutions to
their needs. Bairnco seeks to identify and participate in those markets that
will provide growth opportunities due to either technical developments or the
changing needs of the customers.
OBJECTIVES
Bairnco believes that concentrating its resources in selected market niches
can provide the basis to achieve both superior profitability and growth.
Management's long term objectives are to achieve a 15% compound rate of
earnings growth, a 20% return on stockholders' investment, and a 15% return
on total capital employed.
CONTENTS
Financial Highlights 1
Letter to our Stockholders 2
Engineered Materials & Components (Arlon) 4
Replacement Products & Services (Kasco) 6
Directors and Management 8
Financial History 9
Management's Discussion and Analysis 10
Quarterly Results of Operations 12
Report of Independent Certified Public Accountants 13
Consolidated Financial Statements 14
Notes to Consolidated Financial Statements 18
FINANCIAL HIGHLIGHTS
(In thousands except per share data)
Percent Change
1996 1995 1994 96/95 95/94
Net Sales $ 150,234 $ 150,507 $ 145,522 0% 3%
Operating Profit $ 14,956 $ 14,633 $ 13,654 2% 7%
Net Income $ 8,335 $ 7,781 $ 7,255 7% 7%
Earnings per Share $ 0.85 $ 0.75 $ 0.69 13% 9%
Cash Dividends
per Share $ 0.20 $ 0.20 $ 0.20 0% 0%
Stockholders'
Investment per
Share $ 5.02 $ 4.60 $ 4.19 9% 10%
Total Assets $ 102,600 $ 98,196 $ 102,772 4% (4%)
Stockholders'
Investment $ 49,464 $ 48,024 $ 43,997 3% 9%
Average Shares
Outstanding 9,851 10,440 10,500 (6%) (1%)
Graphic - Bar Chart depicting Sales (y-axis) for six years - 1991 to
1996 (x-axis):
Year Sales
(in thousands)
1991 $128,566
1992 $135,581
1993 $134,958
1994 $145,522
1995 $150,507
1996 $150,234
Graphic - Bar Chart depicting Income from Continuing Operations (y-axis) for
six years - 1991 to 1996 (x-axis):
Year Income from Continuing Operations
(in thousands)
1991 $6,643
1992 $7,755
1993 $ 817
1994 $7,255
1995 $7,781
1996 $8,355
Graphic - Bar Chart depicting Earnings per Share from Continuing Operations
(y-axis) for six years - 1991 to 1996 (x-axis):
Year Earnings per Share from Continuing Operations
1991 $0.61
1992 $0.72
1993 $0.08
1994 $0.69
1995 $0.75
1996 $0.85
LETTER TO OUR STOCKHOLDERS
1996 was a year of solid progress for Bairnco. Earnings increased despite
level sales. Debt increased modestly as the result of the stock repurchase
program and a small product line acquisition. Our strong financial condition
improved. Significant personnel additions and promotions added to the
management strength of our operations and headquarters.
FINANCIAL RESULTS
Sales of $150,234,000 in 1996 were level with $150,507,000 in 1995. Arlon's
sales increased 4.1%. Sales to the graphics and electric insulation markets
continued to grow which more than offset lower sales to the electronics
industry caused by the industry inventory correction primarily during the
second and third quarters. Kasco's sales decreased 8.5%, part of which was
consistent with the program to refocus Kasco North America on its core
business and part of which was totally unexpected due to the severe impact
of BSE ("mad cow" disease) on meat consumption in Europe and its attendant
impact on Kasco's replacement, and equipment business in Europe.
In 1996, gross profit decreased 1.5% to $52,536,000 from $53,317,000 in the
prior year. Gross profit margins declined to 35.0% from 35.4% last year.
Arlon's gross profit increased 3.7% as a result of sales growth and a mix
change, which was partially offset by lower yields in two plants caused by the
gyrations in the electronics market during the year resulting in lower gross
profit margins as a percent of sales. Kasco's gross profit declined 8.6% as a
result of the sales decrease. The program to refocus Kasco's North America
operations was substantially completed and gross profit margin increased 1.5%
on lower sales. However these improvements were more than offset by the $1.1
million reduced gross profit in Europe most of which occurred in the second
and third quarters from the BSE panic. Meat consumption and the confidence
of the European meat processing and distribution markets began to recover in
the fourth quarter.
Selling and administrative expenses decreased $1,104,000 or 2.9% to
$37,580,000 from $38,684,000 in 1995. As a percent of sales, these expenses
decreased to 25.0% in 1996 from 25.7% in 1995. Selling expense decreased
slightly. Kasco's expenses were reduced consistent with its plan. Arlon's
sales and marketing expenses increased in accord with its continued
investment in sales and marketing. Administrative expenses continued to be
reduced both absolutely and as a percentage of sales. Research and
development expenses increased 1.5% as Bairnco continued to invest in the
development of new products and improved quality. New and improved products
introduced in the last 5 years accounted for approximately 30% of our sales
in 1996.
Net interest expense decreased $301,000 or 14.9% from $2,026,000 to
$1,725,000. The decrease was due primarily to lower interest rates.
Income before income taxes increased 4.9% to $13,231,000 in 1996 as compared
to $12,607,000 in 1995. The effective tax rate decreased to 37.0% from
38.3% in 1995.
Net income increased 7.1% to $8,335,000 in 1996 as compared to $7,781,000 in
1995. Earnings per share increased 13.3% to $.85 from $.75 last year. As a
result of the stock repurchase program, the average number of shares
outstanding in 1996 was 9,851,000, a 5.6% decrease from the 10,440,000
average outstanding in 1995.
FINANCIAL MANAGEMENT
Return on capital employed increased to 12.3% from 11.9% last year. Return
on stockholders' investment increased to 17.2% compared to 16.7% last year.
Management continues to make progress towards our long term objectives of a
20% return on stockholders' investment and a 15% return on total capital
employed.
In 1996, Bairnco's Board of Directors authorized the repurchase of up to
$5,000,000 of its common stock. This authorization was in addition to the
$2,420,000 still unused from the prior year $5,000,000 authorization.
During the year the Company repurchased 803,900 shares for $5,412,000. The
Board has authorized management to continue its stock repurchase program in
1997 subject to market conditions and the capital requirements of the
business.
Working capital as a percent of sales increased from 18.8% to 20.2%. The
increase in other current assets is due to a tax refund expected to be
received during the first quarter 1997.
Net cash flows provided by operating activities were $13,612,000. These cash
flows were more than sufficient to cover operating requirements, fund
Bairnco's capital expenditure program, pay dividends and generate some excess
cash. However, the acquisition, attendant capital expenditures and the stock
repurchase program required $7.9 million in additional funds. Consequently,
1996 total debt increased to $28,179,000 from $24,578,000 at the end of 1995.
Debt as a percent of equity increased to 57.0% from 51.2% in 1995.
Subsequent to year end, the reducing revolving credit agreement was amended
to increase the maximum available borrowings to $45 million from $35 million
and to extend the final maturity to December 31, 2001. At year end 1996,
Bairnco had $23.3 million available under its revolving credit agreement, and
$5.6 million available under short term lines of credit.
1996 capital expenditures were $10,131,000 as compared to a plan of
$12,300,000. The reduction in capital expenditures from plan was due
primarily to the deferment of a capacity addition from 1996 into future
years. Again substantial improvements in operating efficiencies in 1996 and
planned for 1997 permitted the postponement of this major capital expenditure.
Depreciation and amortization were $6,305,000. The focus of the capital
expenditure program during 1996 was primarily on required replacements,
efficiency and quality improvements, and capacity additions.
The capital expenditure plan for 1997 is approximately $13.3 million.
Depreciation and amortization is estimated to be approximately $7.0 million.
The planned capital expenditures include cost reduction projects,
replacements, quality improvements, new product developments, new processing
equipment, capacity additions and equipment to meet new environmental
regulatory requirements primarily in California. Approximately $4 million of
the planned expenditures are contingent upon the realization of the
anticipated growth in several markets.
DIVIDEND
The quarterly $.05 per share cash dividend was maintained during the year.
MANAGEMENT
Effective October 1, 1996, Jeff Berresford was appointed President of Kasco
Corporation. Mr. Berresford was previously Vice President of Marketing for
the Food and Beverage Division of Ecolab, Inc.
Effective October 14, 1996, Elmer Pruim was appointed President of Arlon's
Adhesives & Films Division. Mr. Pruim was Acting President of Kasco North
America from September 1995 to September 1996 and served as Bairnco's
Controller since August 1994.
Effective October 21, 1996, Linda Metcalf was appointed Vice President
Administration and Secretary of Bairnco. Mrs. Metcalf was previously
Managing Director of Human Resources at CBIS.
During 1996 the management development program, which is one of the keys to
our success, continued to make progress in all operations. Many key
positions were filled or upgraded through a combination of internal
promotions and external additions. The ongoing improvement and development
of all employees remains a critical and never ending element for Bairnco's
success.
SUMMARY AND OUTLOOK
1996 was another year of progress for Bairnco. Arlon's results continued to
manifest the benefits of investing in the development of new products, new
markets, and expanded sales, marketing and research efforts. The depressing
impact of the electronics industry inventory correction during 1996 is not
expected to recur in 1997.
The program of refocusing Kasco North America to become the preeminent
supplier of cutting products and routine instore equipment services was
substantially completed during the year. There were again expenses incurred
in the continuing re-engineering and cost reduction programs. Throughout the
year, in the North American operations, the benefits of these actions
appeared in the improving financial results as compared to last year. We
expect to see continuing benefits in 1997 and beyond from the actions taken.
The positive impact of these programs was substantially offset by the impact
of BSE on the European operations. BSE's negative impact appears to be
behind us but the recovery will be gradual over the next several years.
Kasco's entire organization is now focused on growing through providing
superior products and services to its customers and core markets.
The outlook for 1997 is for improved sales and earnings. The US economy is
again expected to experience slow growth during 1997 with inflation remaining
under control and the Federal Reserve Board maintaining interest rates within
recent historical bands. It is expected that the combination of growth in
new products and in certain niche markets will result in sales increases more
than offsetting the low margin sales that have been eliminated. Improved
earnings are expected both from increased sales and the continuing cost
reduction and efficiency and yield improvement programs. Due to the
relatively strong first quarter in 1996, the timing of product line pruning
during 1996 and the anticipated implementation of programs in 1997, the first
part of 1997 is expected to be level with last year with the improvements
beginning during the second quarter.
The continuing dedication and excellent performance of all our employees
remains the key to our past and future success. Bairnco is dedicated to
making 1997 a year of continuing improvement.
Respectfully yours,
Luke E. Fichthorn III
Chairman and CEO
ENGINEERED MATERIALS AND COMPONENTS
BUSINESS
Bairnco designs, manufactures, and sells engineered materials and components
for the electronic, industrial and commercial markets under the Arlon brand
name. These products are based on a common technology in coating, laminating,
resin technology and dispersion chemistry.
PRODUCTS AND APPLICATIONS
CIRCUIT BOARD MATERIALS:
Arlon Materials for Electronics has an international reputation as the
premier supplier of high technology materials for the printed circuit board
industry. The products include the high performance and high temperature
materials of the Electronic Substrates product line, and the frequency
dependent and low signal loss materials of the Microwave Materials product
line. These products are marketed principally to printed circuit board
manufacturers and OEM's by a direct sales force in concert with strong
technical support teams. These materials are used in products for the
commercial, military, industrial, computer and telecommunications markets.
The economic factors affecting demand for these products include the level
of economic activity in North America, Europe and Asia for high performance
electronics, sophisticated defense electronics procurement, and
telecommunication systems.
The core of the Electronic Substrates line includes premium high temperature
capable laminate products used in circuit boards for military electronics and
sophisticated commercial applications. Product applications included
next-generation commercial and military avionics systems combining demands
for surface mount technology with high temperature fabrication and use
temperatures, and high performance test fixturing for next-generation
integrated circuits. Intermediate temperature laminates which provide both
improved product reliability in the field and ease of manufacture are also
key to the line. Specialty products have been developed for the surface
mounting of computer chips on circuit boards and multi-chip modules which are
growing segments of the printed circuit board market. Efforts at the Rancho
Cucamonga, California facility continue to stress improved customer
responsiveness both in product design as well as shortened delivery time.
This facility is ISO 9002 (International Quality Standard) certified.
The Microwave Materials product line produces the world's leading substrates
for microwave applications. The business mix has moved from a predominantly
military base to technology and cost driven commercial applications. The
existing and emerging consumer products operating at microwave frequencies
include digital cordless telephones, local and global cellular phone systems,
direct broadcast satellite TV systems, global positioning satellite systems,
and other personal communications equipment. Additional wireless
opportunities for Arlon circuit board materials include local area networks
for computers and public business exchange systems or PBX's where telephones
operate as microcellular phones within the confines of a facility or complex.
A major emerging market for wireless communications is the new phone systems
which are being planned for a number of developing countries in Asia and
South America. These systems will bypass the high cost of installing and
maintaining a hard-wire infrastructure and will permit regional installation
based on population density. This should be a large and growing market over
the next decade as numerous countries become involved.
The frequency dependent market area continues to drive toward lower cost to
allow greater commercial and consumer penetration by new electronics
applications. Increased activity in high speed digital applications and low
cost, low signal loss materials has resulted in the development of a
multi-layerable low loss product at Rancho Cucamonga. New product
development continues with emphasis on low cost , low signal loss materials.
The Arlon Microwave facility in Bear, Delaware continues to invest in
equipment to convert from low volume military to high volume commercial
materials. It is expected this facility will be ISO 9002 certified in 1997.
SPECIALTY GRAPHIC FILMS:
Bairnco manufactures and markets, under the Calon brand name, cast and
calendered vinyl films in a wide variety of colors and with varying face
stocks and adhesive systems for specialty graphics which are used by
commercial sign manufacturers and graphic printing houses, and in numerous
commercial and governmental specification applications.
The economic factors affecting this business are the general level of
economic activity in the United States, Canada, Europe, South America and
the Asian Basin.
Arlon has entered into a strategic alliance with a United Kingdom based
graphics and distribution company to further develop the European market.
This new venture is expected to provide better and more cost effective
services to Arlon's European distributors. Arlon N.V., Arlon's Belgium
subsidiary which had served Europe, continued to under perform and was
closed in 1996.
The graphic film products are produced primarily at the Santa Ana facility
which is ISO 9001 certified. Products are also produced and distributed
from the East Providence facility.
Continued investments in equipment and R&D resources yielded further
improvements in quality and productivity. Additional quality and
productivity gains are expected in 1997.
Several new graphics products and colors were introduced in 1996. This
market is expected to continue to grow modestly in excess of the economy.
Price competition in the lower performance calendered vinyl films continued
in 1996.
Additional new products and colors are planned for introduction in 1997. It
is also expected that the additional sales and marketing resources put in
place during 1996 will result in better market penetration and that the new
European market strategy will contribute positively to sales and earnings.
Graphic - Arlon Adhesives & Films Division's new line of inkjet vinyl offers
new application opportunities to the graphics industry.
CUSTOM ENGINEERED LAMINATES AND ADHESIVE SYSTEMS:
Bairnco manufactures and markets custom engineered laminates and adhesives
systems under the Arlon brand name.
The economic factors impacting this business are primarily the general level
of industrial economic activity in the United States.
Typical applications include insulating foam tapes for thermopane windows,
electrical insulation, thermal insulation panels for appliances and cars,
security tags and labels, durable printing stock for high speed laser printing
systems, and custom engineered laminates for specific industrial applications.
The combination of the Santa Ana, California and East Providence, Rhode
Island operations provides a unique ability to meet the needs of new custom
laminate applications. The East Providence facility was certified ISO 9001
during 1996.
Arlon is now focusing on developing additional engineered laminates, coatings
and pressure sensitive systems for specific industrial applications. In
addition to focused sales efforts, certain engineered laminates and coated
products are now being marketed through the electronic and silicone products
sales teams.
SILICONE RUBBER TECHNOLOGIES:
Bairnco manufactures a line of silicone rubber materials used in a broad
range of consumer, industrial and commercial products. This business is
sensitive to the level of general industrial and consumer spending in the
United States.
Typical applications of these materials include silicone rubber for molding
composites, silicone rubber insulating tape for electric traction motor
windings, industrial flexible heaters, power utility insulating tapes, as
wall as, many thermal and electrical conductivity applications.
The silicone rubber product line provides significant opportunity for Arlon
in a number of areas. During 1996 further progress was made in both the
development and applications of Thermabond(tm), a range of thermally conductive
silicone products designed for the dissipation of heat from electronic
circuit boards. Further progress was also made during the year in
identifying new channels of distribution to serve international markets.
The distributor agreement with Airtech, a leading supplier of vacuum bagging
materials to the composite industry, continues to develop opportunities in
industrial as well as defense and aerospace composite applications.
In January of 1996, Arlon acquired the silicone rubber tape product line of
Permacel, Inc.. During the year the Permacel line was integrated into the
Bear, Delaware facility and now provides additional capacity and a broader
range of capability including the ability to calender ultra-thin silicone
rubber materials both with a supporting backbone as well as unsupported.
1997 is expected to be a year of continued growth for existing and new
engineered products.
Graphic - Arlon's Thermabond(tm), a conductive silicone-sheet adhesive, is
laser-cut to conform to PCB and heat-sink configurations and forms a
flexible bond to transfer energy away from a densely populated board.
REPLACEMENT PRODUCTS AND SERVICES
BUSINESS
Bairnco, through its multinational Kasco operations, manufactures and
supplies replacement products and services principally to retail food stores
and meat, poultry and fish processing plants throughout the United States,
Canada and Europe. Replacement band saw blades are also sold for use in wood
and metal industries. The French and Canadian operations also distribute
equipment to the supermarket and food processing industries in their
respective markets.
PRODUCTS AND APPLICATIONS
Kasco manufactures band saw blades for cutting, and chopper plates and knives
for grinding meat in supermarkets and packing plants, band saw blades used
in frozen fish factories, small band saw blades for cutting metal and wood,
and large band saw blades for lumber mills. Kasco formulates, manufactures
and markets seasoning products for the meat and deli departments of
supermarkets which are primarily used in the preparation of instore products.
Kasco distributes related supply products to supermarkets and other customers.
Kasco also provides preventive maintenance and repair parts and service for a
broad range of supermarket equipment primarily in the meat and deli areas in
selected markets.
VAN SERVICE:
In North America, Kasco supplies its products and services directly to the
supermarket and meat cutting industries through a continent-wide network of
service professionals. These service professionals make regularly scheduled
calls on the accounts in their region. They supply the Company's products
and provide related equipment maintenance services. Kasco's service
professionals are continuously trained in the service and maintenance of
equipment used in the meat preparation areas of retail food outlets.
The field computerization program permits the service professionals to more
efficiently service their customer base.
Graphic - Kasco's continent-wide network of service professionals provides
quick, efficient and practical solutions to its customers.
REPAIR SERVICE:
Kasco integrated its service centers with its van service network in North
America during the fourth quarter of 1996. This integration was designed to
both improve the cost effectiveness and provide improved timely equipment
maintenance. The integration will result in lower revenues in 1997 but
improved profit contribution.
The repair service operations provide preventive maintenance programs and
emergency repair programs for a broad range of equipment primarily in the
meat preparation and deli areas of supermarkets and other retail food outlets
in their geographical areas.
SEASONING:
Seasoning represents an emerging opportunity for Kasco to provide new value
added programs to the meat and deli departments of its supermarket customers.
As supermarkets increasingly compete with the restaurant trade for the
consumers food dollars, they are turning to prepared foods. Kasco is well
positioned to support its customers with its comprehensive "Mealtime
Solutions" seasoning program. "Mealtime Solutions" offers a package of
seasoning blends, recipes and instruction which allows a supermarket to
present value added products in their meat and deli departments.
Graphic - Kasco offers its customers "Mealtime Solutions", a value added
seasoning program.
SPECIAL PRODUCTS:
Through its special products group, Kasco supplies band saw blades to OEMs
in the meat cutting industry and band saw blades for cutting wood and metal
to the OEMs supplying machines to those industries. Special products also
sells through general distribution and is responsible for export sales
throughout the world with the exception of Europe where such sales are the
responsibility of the three operations in Europe.
EQUIPMENT DISTRIBUTION:
In France, in addition to providing its standard products, Kasco distributes
equipment used in the supermarket industry and in the food processing
industry. In Canada Kasco has reduced its equipment distribution activity
during 1996 to those select markets where it provides superior value and
service to its customers.
MANUFACTURING
Kasco and its subsidiaries have manufacturing operations in St. Louis,
Missouri; City of Industry, California; Toronto, Canada; Gwent, Wales,
United Kingdom; and Pansdorf, Germany. During 1996, Kasco's continuous
improvement programs combined with significant capital and process
investments resulted in superior quality bands, improved on time deliveries
and improved productivity. Continuing improvements are expected in 1997.
DIRECTORS (individual photographs)
1. Luke E. Fichthorn III
Chairman and CEO
Bairnco Corporation
2. Charles T. Foley
President
Estabrook Capital Management, Inc.
3. Richard A. Shantz
Private Investor
4. William F. Yelverton
CEO - Individual Insurance Group
Prudential Insurance Company of America
MANAGEMENT (individual photographs)
1. Jeffrey M. Berresford
President
Kasco Corporation
2. Robert M. Carini
President
Arlon Materials for Electronics
3. Linda M. Metcalf
Vice President Administration & Secretary
Bairnco Corporation
4. Elmer G. Pruim
President
Arlon Adhesives & Films
5. J. Robert Wilkinson
Vice President Finance & Treasurer
Bairnco Corporation
FINANCIAL HISTORY
1996 1995 1994 1993 1992
Summary of Operations
($ in thousands)
Net sales $ 150,234 150,507 145,522 134,958 135,581
Gross profit $ 52,536 53,317 53,177 52,645 54,714
Earnings before interest,
charges & taxes (a) $ 14,956 14,633 13,654 13,617 15,846
Operating profit $ 14,956 14,633 13,654 4,874 15,846
Interest expense, net $ 1,725 2,026 2,144 2,248 2,911
Income before income
taxes $ 13,231 12,607 11,510 2,626 12,935
Provision for income
taxes $ 4,896 4,826 4,255 1,809 5,180
Income from continuing
operations $ 8,335 7,781 7,255 817 7,755
Return from continuing
operations on:
Net sales % 5.5 5.2 5.0 0.6 5.7
Stockholders'
investment % 17.2 16.7 17.4 1.4 12.1
Capital employed % 12.3 11.9 10.6 2.0 8.6
Year-End Position
($ in thousands)
Working capital $ 30,341 28,350 26,277 20,098 18,983
Plant and equipment, net $ 38,276 34,449 36,289 38,654 39,232
Total assets excluding
discontinued operations $ 102,600 98,196 99,243 95,547 98,916
Net assets of
discontinued operations $ -- -- 3,529 12,434 34,337
Total assets $ 102,600 98,196 102,772 107,981 133,253
Total debt $ 28,179 24,578 31,775 43,718 45,733
Stockholders' investment $ 49,464 48,024 43,997 38,515 62,055
Capital employed - total $ 77,643 72,602 75,772 82,233 107,788
Capital employed -
proforma (b) $ 77,643 72,602 75,772 82,233 85,895
Per Share Data
Primary and fully diluted
income from continuing
operations $ 0.85 0.75 0.69 0.08 0.72
Cash dividend $ 0.20 0.20 0.20 0.20 0.20
Stockholders' investment $ 5.02 4.60 4.19 3.67 5.91
Market price:
High $ 8-1/2 6 5-1/2 8-1/2 8-1/4
Low $ 5-1/2 3-7/8 3 3-3/8 5-5/8
Other Data (in thousands)
Depreciation and
amortization $ 6,305 6,314 6,502 6,700 5,808
Capital expenditures $ 10,131 4,831 5,176 6,318 13,195
Average shares
outstanding (c) 9,851 10,440 10,500 10,500 10,749
Current ratio 2.4 2.2 2.0 1.8 1.7
Number of common
stockholders 1,773 1,967 2,198 2,326 2,440
Average number of
employees 825 874 915 920 935
Sales per employee $ 182,100 172,200 159,040 146,700 145,000
(a) Excludes impact of non-recurring litigation and restructuring costs of
$8,743 (pre-tax) in 1993.
(b) Stockholders' investment and capital employed adjusted on a proforma
basis for discontinued operations NRV writedown and loss on
discontinuance recorded in 1993.
(c) Assuming full dilution.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with the Consolidated
Financial Statements and related notes which begin on page 14.
Results of Operations: 1996 Compared to 1995
Net sales for 1996 of $150,234,000 were level with net sales for 1995 of
$150,507,000. Arlon's sales increased 4.1%. Sales to the graphics and
electrical insulation markets continued to grow which more than offset lower
sales to the electronics industry caused by the industry inventory correction
primarily in the second and third quarters. Kasco's sales decreased 8.5%,
part of which was consistent with the program to refocus Kasco North America
on its core business and part of which was due to the severe impact of BSE
("mad cow" disease) on meat consumption in Europe and its attendant impact
on Kasco's replacement and equipment business in Europe.
In 1996, gross profit decreased 1.5% to $52,536,000 from $53,317,000 in the
prior year. Gross profit margins declined to 35.0% from 35.4% last year.
Arlon's gross profit increased 3.7% as a result of sales growth and a mix
change, which was partially offset by lower yields in two plants caused by
the gyrations in the electronics market during the year resulting in lower
gross profit margins as a percent of sales. Kasco's gross profit declined
8.6% as a result of the sales decrease. The program to refocus Kasco's North
America operations was substantially completed and gross profit margin
increased 1.5% on lower sales. However these improvements were more than
offset by the $1.1 million reduced gross margin in Europe most of which
occurred in the second and third quarters from the BSE panic. Meat
consumption and the confidence of the European meat processing and
distribution markets began to recover in the fourth quarter.
Selling and administrative expenses decreased $1,104,000 or 2.9% to
$37,580,000 from $38,684,000 in 1995. As a percent of sales, these expenses
decreased to 25.0% in 1996 from 25.7% in 1995. Selling expense decreased
slightly. Kasco's expenses were reduced consistent with its plan. Arlon's
sales and marketing expenses increased in accord with its continued
investment in sales and marketing. Administrative expenses continued to be
reduced both absolutely and as a percentage of sales. Research and
development expenses increased 1.5% as Bairnco continued to invest in the
development of new products and improved quality.
Operating profit in 1996 was $14,956,000, or 10.0% of net sales, compared
to operating profit in 1995 of $14,633,000, or 9.7% of net sales.
Net interest expense decreased $301,000 or 14.9% from $2,026,000 to
$1,725,000. The decrease was due primarily to lower interest rates.
Income before income taxes increased 4.9% to $13,231,000 in 1996 as compared
to $12,607,000 in 1995. The effective tax rate decreased to 37.0% from
38.3% in 1995 due primarily to the tax benefits attendant with the
establishment of Bairnco's foreign sales corporation. The provision for
income taxes in both years includes all applicable federal, state, local
and foreign income taxes. Audits of the Corporation's consolidated US
federal income tax returns have been completed for all years through 1992.
Net income increased 7.1% to $8,335,000 in 1996 as compared to $7,781,000 in
1995. Earnings per share increased 13.3% to $.85 from $.75 last year. As a
result of the stock repurchase program, the average number of shares
outstanding in 1996 was 9,851,000, a 5.6% decrease from the 10,440,000
average outstanding in 1995.
Results of Operations: 1995 Compared to 1994
Net sales increased 3.4% to $150,507,000 in 1995 from $145,522,000 in 1994.
Sales of Arlon engineered materials and components increased 7.8% due to
growing sales to the high end and microwave printed circuit board markets.
Sales of Kasco replacement products and services declined 4.1% due to the
planned reduction in Kasco's North American service center revenues as part
of the program to focus Kasco on its core business.
In 1995, gross profit increased nominally to $53,317,000 from $53,177,000
in the prior year. The favorable impact from increased sales was offset by
the decline in gross profit margins to 35.4% from 36.5% last year. Arlon's
gross profit increased only 3.1% as a result of the growth in lower margin
commercial products and margin erosion in certain market segments due to
competitive pressures. Kasco's gross profit declined 3.5% as a result of the
4.1% sales decrease, whereas its gross profit margin increased slightly due
to an improved sales mix and reduced manufacturing costs.
Selling and administrative expenses decreased $839,000 or 2.1% to $38,684,000
from $39,523,000 in 1994. As a percent of sales, these expenses decreased to
25.7% in 1995 from 27.2% in 1994. Selling expenses decreased slightly as the
reductions in Kasco from focusing on the core business were partially offset
by the continued investment in sales and marketing expense to grow selected
Arlon segments. Administrative expenses continued to be reduced both
absolutely and as a percentage of sales. Research and development expenses
increased 3.0% as Bairnco continued to invest in the development of new
products and improved quality.
Operating profit in 1995 was $14,633,000, or 9.7% of net sales, compared to
operating profit in 1994 of $13,654,000, or 9.4% of net sales.
Net interest expense decreased to $2,026,000 in 1995 from $2,144,000 in 1994
due primarily to a $7.2 million reduction in debt of which approximately $3.5
million occurred during the fourth quarter of 1995.
Income before income taxes increased 9.5% to $12,607,000 in 1995 as compared
to $11,510,000 in 1994. The effective tax rate increased to 38.3% in 1995
from 37.0% in 1994. The lower effective tax rate in 1994 resulted from the
benefit of foreign losses which were booked at a higher tax rate. The
provision for income taxes in both years includes all applicable federal,
state, local and foreign income taxes.
Net income increased 7.3% to $7,781,000 in 1995 as compared to $7,255,000 in
1994. Earnings per share increased 8.7% to $.75 from $.69 last year. The
average number of shares outstanding in 1995 was 10,440,000, a 0.6% decrease
from the 10,500,000 average outstanding in 1994 due to the stock repurchase
program.
Liquidity and Capital Resources
At December 31, 1996, Bairnco had working capital of $30.3 million compared
to $28.4 million at December 31, 1995. The increase in other current assets
is primarily due to a tax refund expected to be received during the first
quarter 1997.
The decrease in other assets primarily reflects payments on the long term
portion of the notes receivable on the discontinued operations disposed of
during 1995 (refer to Note 2 to the Consolidated Financial Statements).
Subsequent to year end, the reducing revolving credit agreement was amended
to increase the maximum available borrowings to $45 million from $35 million
and to extend the final maturity to December 31, 2001.
At December 31, 1996, $28.2 million of total debt was outstanding compared to
$24.6 million at the end of 1995. As of December 31, 1996, approximately
$23.3 million was available for borrowing under the Corporation's secured
reducing revolving credit agreement, as amended. In addition, approximately
$5.6 million was available under various short term domestic and foreign
uncommitted credit facilities. Debt as a percent of equity increased to
57.0% at the end of 1996 from 51.2% at the end of 1995.
Bairnco made $10,131,000 of capital expenditures in 1996 as compared to its
plan of approximately $12.3 million. The reduction in capital expenditures
from plan was due primarily to the deferment of a capacity addition from 1996
into future years. Again, substantial improvements in operating efficiencies
in 1996 and planned for 1997 permitted the postponement of this major capital
expenditure. Total capital expenditures in 1997 are expected to be
approximately $13.3 million. Approximately $4.0 million of the planned
expenditures are contingent upon realization of the anticipated growth in
several markets.
In 1996, Bairnco's Board of Directors authorized the repurchase of up to
$5,000,000 of its common stock. The authorization was in addition to the
$2,420,000 still unused from the prior year $5,000,000 authorization. During
the year the Company repurchased 803,900 shares for $5,412,000. The Board
has authorized management to continue its stock repurchase program in 1997
subject to market conditions and the capital requirements of the business.
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 1997.
Other Matters
Bairnco Corporation and its subsidiaries are defendants in a number of legal
actions and proceedings which are discussed in more detail in Note 10 to the
Consolidated Financial Statements. 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 December 31, 1996.
Outlook
Management is not aware of any adverse trends that would materially affect
the Company's strong financial position. The outlook for 1997 is for
improved sales and earnings. It is expected that the combination of growth
from new products and in certain niche markets will result in sales increases
more than offsetting the low margin sales that have been eliminated.
Improved earnings are expected both from increased sales and the continuing
cost reduction and efficiency and yield improvement programs. Due to the
relatively strong first quarter in 1996, the timing of product line pruning
during 1996 and the anticipated implementation of programs in 1997, the first
part of 1997 is expected to be level with last year with the improvements
beginning during the second quarter.
Quarterly Results of Operations (Unaudited)
(In thousands except per share data)
1st 1st 2nd 2nd 3rd 3rd 4th 4th Total Total
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
Net Sales $38,094 $38,523 $37,323 $38,309 $36,152 $37,386 $38,665 $36,289 $150,234 $150,507
Cost of sales 24,656 24,794 24,067 24,462 23,645 24,511 25,330 23,423 97,698 97,190
Gross Profit 13,438 13,729 13,256 13,847 12,507 12,875 13,335 12,866 52,536 53,317
Selling and
administrative
expenses 9,621 10,132 9,276 9,980 8,965 9,292 9,718 9,280 37,580 38,684
Operating Profit 3,817 3,597 3,980 3,867 3,542 3,583 3,617 3,586 14,956 14,633
Interest expense, net 415 547 433 527 417 479 460 473 1,725 2,026
Income before income
taxes 3,402 3,050 3,547 3,340 3,125 3,104 3,157 3,113 13,231 12,607
Provision for income
taxes 1,293 1,159 1,348 1,269 1,187 1,211 1,068 1,187 4,896 4,826
Net Income $ 2,109 $ 1,891 $ 2,199 $ 2,071 $ 1,938 $ 1,893 $ 2,089 $ 1,926 $ 8,335 $ 7,781
Earnings per Share $ 0.21 $ 0.18 $ 0.22 $ 0.20 $ 0.20 $ 0.18 $ 0.22 $ 0.19 $ 0.85 $ 0.75
Market Price:
High $ 8-1/2 $ 4-7/8 $ 7-5/8 $ 4-7/8 $ 7-3/8 $ 5-1/2 $ 6-7/8 $ 6 $ 8-1/2 $ 6
Low 5-7/8 3-7/8 6-5/8 3-7/8 5-1/2 4-3/8 5-3/4 4-3/8 5-1/2 3-7/8
"Safe Harbor" Statement under the Private Securities Reform Act of 1995
Certain of the statements contained in this annual report (other than the
financial statements and statements of historical fact), including, without
limitation, statements as to management expectations and belief presented
under the captions "Letter to Our Stockholders" and "Management's Discussion
and Analysis", 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, 1997 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, 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 the stockholders' letter and
management's discussion and analysis contained in its annual reports, the
Corporation does not intend to review or revise any particular forward-looking
statement referenced herein in light of future events.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders of Bairnco Corporation:
We have audited the accompanying consolidated balance sheets of Bairnco
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1996
and 1995, and the related consolidated statements of income, stockholders'
investment and cash flows for each of the three years in the period ended
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Bairnco
Corporation and subsidiaries as of December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1996, in conformity with generally accepted
accounting principles.
Orlando, Florida
January 23, 1997
Arthur Andersen LLP
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, 1996, 1995 and 1994
Bairnco Corporation and Subsidiaries
1996 1995 1994
Net Sales $ 150,234,000 $ 150,507,000 $ 145,522,000
Cost of sales 97,698,000 97,190,000 92,345,000
Gross Profit 52,536,000 53,317,000 53,177,000
Selling and administrative
expenses 37,580,000 38,684,000 39,523,000
Operating Profit 14,956,000 14,633,000 13,654,000
Interest expense, net 1,725,000 2,026,000 2,144,000
Income before Income Taxes 13,231,000 12,607,000 11,510,000
Provision for income taxes
(Note 4) 4,896,000 4,826,000 4,255,000
Net Income $ 8,335,000 $ 7,781,000 $ 7,255,000
Earnings per Share of Common
Stock (Note 3) $ 0.85 $ 0.75 $ 0.69
Dividends per Share of Common
Stock $ 0.20 $ 0.20 $ 0.20
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
Bairnco Corporation and Subsidiaries
1996 1995
Assets
Current Assets:
Cash and cash equivalents $ 855,000 $ 608,000
Accounts receivable, less allowances
of $822,000 and $763,000,
respectively 21,476,000 21,472,000
Inventories:
Raw materials and supplies 4,733,000 4,651,000
Work in process 5,999,000 5,451,000
Finished goods 12,767,000 13,634,000
23,499,000 23,736,000
Deferred income taxes (Note 4) 2,922,000 3,396,000
Other current assets (Note 2) 3,748,000 2,130,000
Total current assets 52,500,000 51,342,000
Plant and Equipment, at cost:
Land 1,560,000 1,534,000
Buildings and leasehold interests
and improvements 16,451,000 16,332,000
Machinery and equipment 66,520,000 59,926,000
84,531,000 77,792,000
Less - Accumulated depreciation
and amortization (46,255,000) (43,343,000)
38,276,000 34,449,000
Cost in Excess of Net Assets of
Purchased Businesses (Note 1) 7,922,000 8,152,000
Other Assets (Notes 1 and 2) 3,902,000 4,253,000
$102,600,000 $ 98,196,000
Liabilities and Stockholders' Investment
Current Liabilities:
Short-term debt (Note 6) $ 3,337,000 $ 3,156,000
Current maturities of long-term
debt (Note 6) 125,000 186,000
Accounts payable 7,383,000 7,885,000
Accrued expenses (Note 5) 11,314,000 11,765,000
Total current liabilities 22,159,000 22,992,000
Long-Term Debt (Note 6) 24,717,000 21,236,000
Deferred Income Taxes (Note 4) 3,114,000 3,215,000
Other Liabilities 3,146,000 2,729,000
Stockholders' Investment
(Notes 3, 6 and 7):
Preferred stock, par value $.01,
5,000,000 shares authorized,
none issued -- --
Common stock, par value $.01,
30,000,000 shares authorized,
11,155,499 and 11,062,499 issued,
respectively 112,000 111,000
Paid-in capital 49,004,000 48,533,000
Retained earnings 15,858,000 9,460,000
Currency translation adjustment
(Note 1) 2,282,000 2,300,000
Treasury stock, at cost, 1,741,965
and 938,065 shares, respectively (17,792,000) (12,380,000)
Total stockholders' investment 49,464,000 48,024,000
$102,600,000 $ 98,196,000
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1996, 1995 and 1994
Bairnco Corporation and Subsidiaries
1996 1995 1994
Cash Flows from Operating Activities:
Income from continuing operations $ 8,335,000 $ 7,781,000 $ 7,255,000
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 6,305,000 6,314,000 6,502,000
Loss on disposal of plant and
equipment 203,000 294,000 18,000
Deferred income taxes 373,000 1,561,000 242,000
Change in operating assets and
liabilities:
(Increase) in accounts
receivable, net (4,000) (587,000) (1,953,000)
Decrease (increase) in
inventories 237,000 (3,694,000) (549,000)
(Increase) decrease in other
current assets (1,618,000) 3,205,000 (2,629,000)
(Decrease) increase in accounts
payable (502,000) (1,877,000) 2,399,000
(Decrease) in accrued expenses (451,000) (1,019,000) (1,498,000)
Cash provided by discontinued
operations -- 1,988,000 4,863,000
Other 734,000 699,000 (115,000)
Net cash provided by operating
activities 13,612,000 14,665,000 14,535,000
Cash Flows from Investing Activities:
Capital expenditures (10,131,000) (4,831,000) (5,176,000)
Proceeds from sale of plant and
equipment 138,000 328,000 1,728,000
Proceeds from sale of discontinued
operations -- 100,000 2,865,000
Net cash (used in) investing
activities (9,993,000) (4,403,000) (583,000)
Cash Flows from Financing Activities:
Net borrowings (repayment) of
external debt 3,968,000 (7,427,000) (12,107,000)
Payment of dividends (1,937,000) (2,087,000) (2,100,000)
Purchase of treasury stock (5,412,000) (2,580,000) --
Exercise of stock options 472,000 560,000 --
Net cash (used in) financing
activities (2,909,000) (11,534,000) (14,207,000)
Effect of foreign currency exchange
rate changes on cash and cash
equivalents (463,000) 402,000 350,000
Net increase (decrease) in cash and
cash equivalents 247,000 (870,000) 95,000
Cash and cash equivalents, beginning
of year 608,000 1,478,000 1,383,000
Cash and cash equivalents, end
of year $ 855,000 $ 608,000 $ 1,478,000
Supplemental Disclosures of
Cash Flow Information:
Cash paid (received) during the
year for:
Interest $ 1,696,000 $ 1,992,000 $ 2,242,000
Income Taxes $ 5,378,000 $ (310,000) $ (533,000)
Noncash investing activities:
Notes Received from Sale of
Discontinued Operations $ -- $ 2,500,000 $ --
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
For the years ended December 31, 1996, 1995 and 1994
Bairnco Corporation and Subsidiaries
Retained Currency
Common Paid-In Earnings Translation Treasury
Stock Capital (Deficit) Adjustment Stock
Balance, December 31, 1993 $109,000 $47,975,000 $(1,389,000) $1,620,000 $ (9,800,000)
Net income -- -- 7,255,000 -- --
Cash dividends ($.20 per share) -- -- (2,100,000) -- --
Currency translation adjustment
(Note 1) -- -- -- 327,000 --
Balance, December 31, 1994 109,000 47,975,000 3,766,000 1,947,000 (9,800,000)
Net income -- -- 7,781,000 -- --
Cash dividends ($.20 per share) -- -- (2,087,000) -- --
Issuance of 110,375 shares
pursuant to exercise of
stock options 2,000 558,000 -- -- --
Acquisition of treasury stock
(486,200 shares at cost) -- -- -- -- (2,580,000)
Currency translation adjustment
(Note 1) -- -- -- 353,000 --
Balance, December 31, 1995 111,000 48,533,000 9,460,000 2,300,000 (12,380,000)
Net income -- -- 8,335,000 -- --
Cash dividends ($.20 per share) -- -- (1,937,000) -- --
Issuance of 93,000 shares
pursuant to exercise of
stock options 1,000 471,000 -- -- --
Acquisition of treasury stock
(803,900 shares at cost) -- -- -- -- (5,412,000)
Currency translation adjustment
(Note 1) -- -- -- (18,000) --
Balance, December 31, 1996 $112,000 $49,004,000 $15,858,000 $ 2,282,000 $(17,792,000)
The accompanying notes are integral part of these financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Nature of Operations and Summary of Significant Accounting Policies
Nature of operations:
Bairnco Corporation is a diversified multinational company that operates two
business sectors: Engineered Materials and Components which are designed,
manufactured and sold under the Arlon brand identity to electronic,
industrial and commercial markets worldwide; and, Replacement Products and
Services which 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.
Arlon's products are based on a common technology in coating, laminating,
resin technology 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.
Kasco's principal products include replacement band saw blades for cutting
meat, fish, wood and metal, and on-site maintenance services for the retail
food industry primarily in the meat and deli departments. Kasco also
distributes equipment to the food industry in Canada and France.
Principles of consolidation:
The accompanying consolidated 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 preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Consolidated statements of cash flows:
The Corporation considers cash in banks, commercial paper, demand notes and
similar investments with a maturity of less than three months as cash and
cash equivalents for the purposes of the consolidated statements of cash
flows.
Inventories:
Inventories are stated at cost, which is not in excess of market. Inventory
costs include material, labor and overhead. Inventories are stated
principally on a first-in, first-out (FIFO) basis.
Plant and equipment:
The Corporation provides for depreciation of plant and equipment principally
on a straight-line basis by charges to income in amounts estimated to
allocate the cost of these assets over their useful lives. Rates of
depreciation vary among the several classifications as well as among the
constituent items in each classification, but generally fall within the
following ranges:
Years
Buildings and leasehold interests
and improvements 5 - 40
Machinery and equipment 3 - 20
When property is sold or otherwise disposed of, the asset cost and
accumulated depreciation are removed from the accounts and any resulting gain
or loss is included in the statement of income.
Leasehold interests and improvements are amortized over the terms of the
respective leases, or over their estimated useful lives, whichever is
shorter.
Maintenance and repairs are charged to operations. Renewals and betterments
are capitalized.
Accelerated methods of depreciation are used for income tax purposes, and
appropriate provisions are made for the related deferred income taxes.
Depreciation expense of $6,123,000, $6,131,000 and $6,197,000 was recognized
during 1996, 1995 and 1994, respectively.
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 $5,833,000 and $5,931,000 at December 31, 1996 and 1995,
respectively, is being amortized over 40 years. Accumulated amortization at
December 31, 1996 and 1995, was $1,396,000 and $1,265,000, respectively.
Amortization expense of $149,000, $150,000 and $146,000 was recognized during
1996, 1995 and 1994, respectively.
At each balance sheet date, the Corporation evaluates the realizability of
its cost in excess of net assets of purchased businesses based upon
expectations of nondiscounted cash flows and operating income for each
division having a material cost in excess of net assets of purchased
businesses balance. Based upon its most recent analysis, the Corporation
believes that no material impairment of its cost in excess of net assets of
purchased businesses exists at December 31, 1996.
Intangibles:
Intangible assets of purchased businesses, net of amortization, are included
in other assets and totaled $136,000 and $94,000 at December 31, 1996 and
1995, respectively. These items are amortized over their estimated lives,
which generally range from three to twenty years. Amortization expense
recognized was $33,000 during 1996 and 1995, and $159,000 during 1994.
Long-lived assets:
Effective January 1, 1996, the Corporation adopted Statement of Financial
Accounting Standards No. 121, Accounting for Impairment of Long-Lived Assets
("SFAS 121"). SFAS 121 requires the Corporation to review the recoverability
of long-lived assets, including certain identifiable intangibles to be held
and used, for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The
implementation of SFAS 121 had no impact on the accompanying consolidated
financial statements.
Revenue recognition:
Revenues are recognized when products are shipped or when services are
rendered.
Income taxes:
The Corporation accounts for income taxes using an asset and liability
approach that requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been recognized
in the Corporation's financial statements or tax returns. In estimating
future tax consequences, the Corporation generally considers all expected
future events other than enactment of changes in the tax law or changes in
tax rates. Changes in tax laws or rates will be recognized in the future
years in which they occur. Temporary differences between income for financial
reporting and income tax purposes arise primarily from the timing of the
deduction of certain accruals and from the use of accelerated methods of
depreciation for income tax reporting purposes compared to the method of
depreciation used for financial reporting purposes.
Accrued expenses:
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.
Stock options:
The Corporation accounts for stock options under Accounting Principles Board
Opinion No. 25 ("APB 25"), under which no compensation expense has been
recognized. In October 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), which is effective for years
beginning after December 15, 1995. SFAS 123 established financial accounting
and reporting standards for stock-based employee compensation plans. The
statement defines a fair value based method of accounting for an employee
stock option or similar equity instrument and encourages all entities to
adopt that method of accounting for all of their stock compensation plans.
However, it also allows an entity to continue to measure compensation costs
for those plans using the intrinsic value based method of accounting
prescribed by APB 25, but requires pro-forma disclosure of net income and
earnings per share for the effects on compensation expense had the accounting
guidance for SFAS 123 been adopted. Compensation costs determined consistent
with SFAS 123 did not have a material impact on the accompanying consolidated
net earnings and earnings per share.
Translation of foreign currencies:
Balance sheet accounts of foreign subsidiaries are translated at the rates
of exchange in effect at the balance sheet date while income and expenses are
translated at the monthly average rates of exchange in effect during the
year.
Fair value of financial instruments:
The carrying values of cash and cash equivalents, accounts receivable,
accounts payable and accrued liabilities, approximate fair value due to the
short-term maturities of these assets and liabilities.
The interest rates on the notes receivable (see Note 2 to the Consolidated
Financial Statements) are reset at least quarterly to reflect current market
rates. Consequently, the carrying values of the notes receivable approximate
fair value.
The carrying amount of the Corporation's short-term and long-term debt
approximates fair value, since the debt is at floating rates or rates
approximating rates currently offered to the Corporation for debt of the
same remaining maturities.
Reclassifications:
Certain reclassifications were made to prior year balances in order to
conform to the current year presentation
(2) Discontinued Operations
Bairnco adopted a restructuring plan effective December 31, 1993, which
included a formal plan of divestiture relating to the businesses that
comprised Bairnco's Specialty Construction Products segment and secure
communications electronics operations. During 1994, the majority of the
Specialty Construction businesses were sold. The smallest and last remaining
operation of the Specialty Construction business was sold on December 29,
1995. The secure communications business was sold on November 30, 1995. The
net sales price of the discontinued operations sold in 1995 was $2.6 million
and consisted of $100,000 in cash and two promissory notes. The current
portion of the promissory notes is $550,000 and is included in Other Current
Assets in the Consolidated Balance Sheet as of December 31, 1996 and 1995.
The remaining $1,017,000 at December 31, 1996 and $1,950,000 at December 31,
1995 represents the net long term portion of the promissory notes and is
included in Other Assets in the Consolidated Balance Sheet as of December
31, 1996 and 1995, respectively. No gain or loss was recognized on the sale
of these operations in 1994, 1995 nor 1996.
As part of the asset purchase agreements for the two discontinued operations
disposed of in 1995, the Corporation has guaranteed certain lease payments of
one facility and remains the lessee/guarantor of a second facility even
though such obligations have been transferred to the respective buyers. The
total lease payments guaranteed as of December 31, 1996 amounted to
approximately $821,000. In the event the Corporation is called upon to
satisfy these guarantees, such payments would be offset by certain buyout
provisions which could reduce the total lease payments by as much as
$335,000, in addition to any recoveries from sub-leasing the property of
which the Corporation remains the lessee/guarantor.
Net sales from the discontinued operations for the years ended December 31,
1995 and 1994 were $10.6 million and $20.2 million, respectively. The 1995
and 1994 losses of the discontinued operations approximated the prior
estimates.
(3) Earnings per Share
Primary and fully-diluted earnings per share are equal within each of the
years ended December 31, 1996, 1995 and 1994. Earnings per share are based
on the weighted average number of common shares outstanding during the year
as follows:
1996 1995 1994
Primary 9,851,000 10,436,000 10,500,000
Fully-Diluted 9,851,000 10,440,000 10,500,000
Primary and fully-diluted shares outstanding reflect all common stock
equivalents (primarily outstanding stock options as described in Note 7 to
the Consolidated Financial Statements) to the extent they are not
antidilutive.
(4) Income Taxes
The components of income from continuing operations before income taxes and
the provisions for domestic and foreign income taxes on continuing operations
are as follows:
1996 1995 1994
Income before Income Taxes:
Domestic $13,176,000 $11,360,000 $11,096,000
Foreign 55,000 1,247,000 414,000
Total Income before Income Taxes $13,231,000 $12,607,000 $11,510,000
Provision for Income Taxes:
Domestic:
Currently payable $ 4,096,000 $ 1,671,000 $ 3,731,000
Deferred 594,000 2,413,000 751,000
Foreign:
Currently payable 452,000 943,000 (135,000)
Deferred (246,000) (201,000) (92,000)
Total Provision for Income Taxes $ 4,896,000 $ 4,826,000 $ 4,255,000
Bairnco's restated net current and non-current deferred tax assets
(liabilities) are comprised of the following at December 31:
1996 1995 1994
Current Deferred Tax Items:
Accrued Expenses $ 1,887,000 $ 2,211,000 $ 2,528,000
Inventories 872,000 961,000 980,000
Other 163,000 224,000 256,000
Tax Credit Carryforwards -- -- 1,177,000
Net Current Deferred Tax Asset 2,922,000 3,396,000 4,941,000
Non-Current Deferred Tax Items:
Fixed Assets (2,889,000) (2,650,000) (2,749,000)
Pensions (1,149,000) (938,000) (781,000)
Intangible Assets 15,000 (107,000) (102,000)
Other 909,000 480,000 (111,000)
Net Non-Current Deferred Tax
Liability (3,114,000) (3,215,000) (3,743,000)
Net Deferred Tax (Liability)
Asset $ (192,000) $ 181,000 $ 1,198,000
Management expects that future operations will generate sufficient taxable
income to realize the existing net temporary differences. As a result, the
Corporation has not recorded any valuation allowances against its deferred
tax assets.
As a result of tax benefits of approximately $1.1 and $7.7 million to be
realized from the discontinued operations sold in 1995 and 1994,
respectively, certain reclassifications were made between current and
deferred income taxes and net assets of discontinued operations.
Other current assets on the balance sheet include current income taxes
receivable of approximately $1.1 million at December 31, 1996.
In 1996, 1995 and 1994 the Corporation's effective tax rates were 37.0%,
38.3% and 37.0%, respectively, of income before income taxes. An analysis of
the differences between these rates and the US federal statutory income tax
rate is as follows:
1996 1995 1994
Computed income taxes at
statutory rate $ 4,499,000 $ 4,287,000 $ 3,910,000
State and local taxes, net of
federal tax benefit 321,000 205,000 310,000
Dividend income 198,000 193,000 185,000
Amortization of goodwill 9,000 9,000 43,000
Foreign income taxed at
different rates 187,000 318,000 (368,000)
Tax credits (271,000) (281,000) (242,000)
Benefit of Foreign Sales
Corporation (413,000) -- --
Other, net 366,000 95,000 417,000
Provision for income taxes $ 4,896,000 $ 4,826,000 $ 4,255,000
Audits of the federal income tax returns of the Corporation and its
subsidiaries have been completed through 1992.
Provision has not been made for US income taxes on approximately $3.3 million
of undistributed earnings of international subsidiaries. These earnings
could become subject to additional tax if they were remitted as dividends or
if the Corporation should sell its stock in the subsidiaries. It is not
practicable to estimate the amount of additional tax that might be payable
on the foreign earnings; however, the Corporation believes that US foreign
tax credits would largely eliminate any US income tax incurred.
(5) Accrued Expenses
Accrued expenses consisted of the following as of December 31, 1996 and
1995, respectively:
1996 1995
Salaries and wages $ 2,708,000 $ 2,312,000
Income taxes 245,000 360,000
Insurance 2,648,000 2,026,000
Litigation 1,654,000 1,942,000
Other accrued expenses 4,059,000 5,125,000
Total accrued expenses $ 11,314,000 $ 11,765,000
(6) Debt
Long-term debt consisted of the following as of December 31, 1996 and 1995,
respectively:
1996 1995
Revolving Credit Notes $21,707,000 $18,099,000
Equipment Loans 115,000 290,000
Industrial Revenue Bonds 3,000,000 3,000,000
Other 20,000 33,000
24,842,000 21,422,000
Less Current Maturities 125,000 186,000
Total $24,717,000 $21,236,000
Subsequent to year end, the Corporation's secured, reducing revolving credit
agreement ("Credit Agreement") with a consortium of four banks led by Bank of
America, Illinois, and including SunTrust Bank, NBD Bank and First Union Bank
of Florida, was amended. The amendment effectively extended the expiration
date of the Credit Agreement from August 31, 1999 to December 31, 2001 and
increased the revolving credit facility's maximum loan commitment of $35
million at December 31, 1996 to $45 million. The Credit Agreement also
includes a letter of credit facility of at least $10 million, although the
letter of credit facility may be increased up to $20 million with a
corresponding decrease in the revolving credit facility. At December 31,
1996, $21.7 million of revolving credit was outstanding and payable in 2001.
In addition, approximately $8.3 million of irrevocable standby letters of
credit were outstanding under the Credit Agreement, which are not reflected
in the accompanying consolidated financial statements. $5.0 million of the
letters of credit guarantee various trade and insurance activities. An
outstanding $3.3 million letter of credit supports the Industrial Revenue
Bonds. Interest rates vary on the revolving credit and are set at the time
of borrowing in relationship to one of several reference rates, as selected
by the Corporation at the time of the borrowing. Interest rates on the
revolving credit outstanding at December 31, 1996, were 6.4% on US borrowings
and 4.1% on European borrowings. A commitment fee is paid on the unused
portion of the total credit. The interest rate on the Industrial Revenue
Bonds was 4.6% at December 31, 1996.
Substantially all of the assets of the Corporation and its US subsidiaries
are pledged as collateral under the Credit Agreement, which expires on
December 31, 2001.
The Credit Agreement, as amended, contains covenants which require the
Corporation to meet minimum interest coverage ratios and which limit the
ratio of total debt to capital employed as defined in the Credit Agreement.
In addition, minimum levels of stockholders' investment must be maintained.
At December 31, 1996 the Corporation was in compliance with all covenants
contained in the Credit Agreement.
The Corporation has equipment loans, mortgages and other debt outstanding at
rates of 5.8% to 8.5% due in 1997 and 1998.
The annual maturity requirements for long-term debt due after December 31,
1996, are summarized as follows:
Year Ended December 31,
1997 $ 125,000
1998 10,000
1999 --
2000 --
2001 21,707,000
Due after December 31, 2001 3,000,000
Total Long-Term Debt $24,842,000
(7) Stock Options
The Corporation has a stock incentive plan which was established in 1990
("1990 Plan"). The 1990 Plan permits the grant of options to purchase not
more than 2,500,000 shares of common stock. The 1990 Plan provides for the
grant of non-qualified options and options qualifying as incentive stock
options under the Internal Revenue Code to key employees and each outside
Director of the Corporation at an option price equal to the fair market value
on the date of grant. Non-qualified stock options may also be granted at
book value. The term of each option may not exceed 10 years from the date
the option becomes exercisable (or, in the case of an incentive stock option,
10 years from the date of grant).
A senior executive of the Corporation presently holds performance based,
non-qualified stock options granted under the 1990 Plan to purchase a total
of 250,000 shares of common stock at option prices equal to the fair market
value on the date of grant. Two-thirds of these performance options became
exercisable as a result of the Corporations earnings performance in 1992 and
1995 with the remaining one-third becoming fully exercisable on the tenth
anniversary of the date of grant if the executive is still employed by the
Corporation. These options remain exercisable for ten years from the date
they first become exercisable.
Changes in the stock options granted under the 1990 Plan during 1996, 1995
and 1994 were as follows:
1996 1996 1995 1995 1994 1994
Wtd Avg Wtd Avg Wtd Avg
Exercise Exercise Exercise
Options Price Options Price Options Price
Outstanding at
beginning of year 716,950 $5.56 982,150 $5.44 1,086,287 $5.44
Granted 78,000 $6.32 21,600 $4.70 32,500 $4.55
Exercised (93,200) $5.09 (110,375) $5.06 -- $ --
Canceled (17,725) $5.28 (176,425) $5.13 (136,637) $5.22
Outstanding at
end of year 684,225 $5.71 716,950 $5.56 982,150 $5.44
Exercisable at
end of year 501,513 $5.62 506,917 $5.48 666,397 $5.36
At December 31, 1996, 1995 and 1994, 1,495,925, 1,556,200 and 1,401,375
shares, respectively, were available for option grants under the 1990 Plan.
The weighted average contractual life of the 684,225 options outstanding at
December 31, 1996 was 4.46 years. There were no charges to income in
connection with stock option activity during the years presented.
(8) Pension Plans
The Corporation has several pension plans which cover substantially all of
its employees. The benefits paid under these plans generally are based on
employees' years of service and compensation during the last years of
employment. Annual contributions made to the US plans are determined in
compliance with the minimum funding requirements of ERISA using a different
actuarial cost method and actuarial assumptions than are used for determining
pension expense for financial reporting purposes. Plan assets consist
primarily of publicly traded equity and debt securities. The Corporation
maintains unfunded supplemental plans in the United States to provide
retirement benefits in excess of levels provided under the Corporation's
other plans. The Corporation's foreign subsidiaries provide retirement
benefits for employees consistent with local practices. The foreign plans
are not significant in the aggregate and therefore are not included in the
following disclosures.
The following table describes the funded status of US pension plans.
Overfunded plans are those in which the amount provided for future benefits
(fair value of plan assets) exceeds the accumulated benefit obligation
(actuarial present value of benefits earned to date based on present pay
levels).
1996 1996 1995 1995
Overfunded Underfunded Overfunded Underfunded
Actuarial present value
of benefit obligation:
Vested $(19,242,000) $(2,476,000) $(18,137,000) $(2,409,000)
Non-vested (225,000) (24,000) (427,000) (66,000)
Accumulated benefit
obligation (19,467,000) (2,500,000) (18,564,000) (2,475,000)
Additional amounts
related to projected
pay increases (2,209,000) (65,000) (2,670,000) (69,000)
Projected benefit
obligation (21,676,000) (2,565,000) (21,234,000) (2,544,000)
Plan assets at fair value 22,531,000 1,841,000 20,172,000 1,587,000
Plan assets in excess of
(less than) projected
benefit obligation 855,000 (724,000) (1,062,000) (957,000)
Unrecognized net
transition obligation 255,000 291,000 334,000 330,000
Unrecognized prior
service costs (83,000) 94,000 (61,000) 116,000
Unrecognized net loss 1,171,000 207,000 2,514,000 307,000
Adjustment to recognize
minimum liability -- (527,000) -- (685,000)
Prepaid (accrued) pension
costs recognized in
balance sheet at
September 30 2,198,000 (659,000) 1,725,000 (889,000)
Fourth quarter accruals (91,000) (64,000) (225,000) (48,000)
Fourth quarter
contributions -- 65,000 169,000 44,000
Effect of curtailment -- -- (36,000) --
Prepaid (accrued) pension
costs at December 31 $ 2,107,000 $ (658,000) $ 1,633,000 $ (893,000)
The discount rate used in determining the actuarial present value of the
projected benefit obligations in the table above was 7.5% at both September
30, 1996 and 1995. The rate of projected pay increases, where applicable,
was 5% at both September 30, 1996 and 1995. The expected long-term rate of
return on retirement plan assets was 9% at both September 30, 1996 and 1995.
Net periodic pension cost for the US plans included the following:
1996 1995 1994
Service cost-benefits earned
during the year $ 716,000 $ 858,000 $ 915,000
Interest cost on projected
benefit obligation 1,695,000 1,646,000 1,493,000
Return on plan assets:
Expected return-(gain) (2,018,000) (1,666,000) (1,803,000)
Asset gain (loss) 434,000 2,879,000 (2,774,000)
Actual return-(gain) loss (2,452,000) (4,545,000) 971,000
Net amortization and deferral 566,000 3,135,000 (2,584,000)
Net periodic pension cost $ 525,000 $ 1,094,000 $ 795,000
(9) Business Segment Data
The Corporation operates two distinct businesses: Arlon - Engineered
Materials and Components' segment; and, Kasco - Replacement Products and
Services' segment. Information about the Corporation's major lines of
business for the years ended December 31, 1996, 1995 and 1994 is as follows:
Segment Depreciation
Operating Capital and
Net Sales Profit(Loss) Assets (a) Expenditures Amortization
1996
Arlon $103,449,000 $16,159,000 $ 61,118,000 $ 7,255,000 $3,312,000
Kasco 46,785,000 2,649,000 35,161,000 2,830,000 2,933,000
Corporate -- (3,852,000) 6,321,000 46,000 60,000
Total $150,234,000 $14,956,000 $102,600,000 $10,131,000 $6,305,000
1995
Arlon $ 99,391,000 $15,389,000 $ 55,108,000 $ 1,999,000 $3,274,000
Kasco 51,116,000 2,889,000 38,690,000 2,805,000 2,975,000
Corporate -- (3,645,000) 4,398,000 27,000 65,000
Total $150,507,000 $14,633,000 $ 98,196,000 $ 4,831,000 $6,314,000
1994
Arlon $ 92,214,000 $15,712,000 $ 50,234,000 $ 2,084,000 $3,562,000
Kasco 53,308,000 2,197,000 39,317,000 3,083,000 2,874,000
Corporate -- (4,255,000) 9,692,000 9,000 66,000
Total $145,522,000 $13,654,000 $ 99,243,000 $ 5,176,000 $6,502,000
The Corporation has operations in Canada and several European countries.
Information about the Corporation's operations by geographical area for the
years ended December 31, 1996, 1995 and 1994 is as follows:
Segment
Operating
Net Sales Profit Assets (a)
1996
United States $124,154,000 $ 14,564,000 $ 84,269,000
Foreign 26,080,000 392,000 18,331,000
Total $150,234,000 $ 14,956,000 $102,600,000
1995
United States $122,510,000 $ 12,797,000 $ 77,917,000
Foreign 27,997,000 1,836,000 20,279,000
Total $150,507,000 $ 14,633,000 $ 98,196,000
1994
United States $119,045,000 $ 12,754,000 $ 80,579,000
Foreign 26,477,000 900,000 18,664,000
Total $145,522,000 $ 13,654,000 $ 99,243,000
(a) Excludes net assets of discontinued operations of $3,529,000 for 1994.
(10) Contingencies
Since its announcement in January 1990 of its intention to spin off Keene,
Bairnco has been named as a defendant in a number of personal injury,
property damage and wrongful death cases in which it is alleged that Bairnco
is derivatively liable for the asbestos-related claims against Keene. On
December 6, 1993, Keene filed for protection under Chapter 11 of the
Bankruptcy Code. On June 8, 1995, the Creditors' Committee commenced an
adversary proceeding in the Bankruptcy Court against Bairnco, 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 subsidiaries by Bairnco, were fraudulent and
otherwise violative of law and seeking compensatory damages of $700 million,
plus interest and punitive damages (the "Transactions Lawsuit"). 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.
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 is party to a separate action brought by Keene in the United States
Bankruptcy Court for the Southern District of New York in which Keene seeks
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 December 31,
1996, 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 the
Transactions Lawsuit. Prior to confirmation, Bairnco and other defendants in
the Transactions Lawsuit had entered into a stipulation (the "Transactions
Stipulation") that calls for the Transactions Lawsuit to be litigated in
the District Court. The anticipated effect of these various provisions is
that all claims and claimants against Bairnco that relate to Keene's asbestos
liabilities should be consolidated for a single, binding resolution in the
Transactions Lawsuit in the District Court.
In keeping with the Transactions Stipulation, the parties have moved to
withdraw the reference - that is, they have requested that the District Court
assume from the Bankruptcy Court all responsibility for overseeing the
Transactions Lawsuit. Pending action on this request, proceedings in the
Transactions Lawsuit are stayed.
Bairnco Corporation and its subsidiaries are defendants in a number of other
actions. Management of Bairnco believes that the disposition of these other
actions, as well as the actions and proceedings described above, will not
have a material adverse effect on the consolidated results of operations or
the financial position of Bairnco Corporation and its subsidiaries as of
December 31, 1996.
CORPORATE INFORMATION
Corporate Office
Suite 300, 2251 Lucien Way
Maitland, Florida 32751
(407) 875-2222
Principal Facilities
Bear, Delaware
City of Industry, California
East Providence, Rhode Island
Rancho Cucamonga, California
St. Louis, Missouri
Santa Ana, California
Toronto, Ontario, Canada
Gwent, Wales, United Kingdom
Paris, France
Pansdorf, Germany
Transfer Agent and Registrar
Trust Company Bank
P.O. Box 4625
Atlanta, Georgia 30302
(404) 588-7815
Independent Certified Public Accountants
Arthur Andersen LLP
200 South Orange Avenue, Suite 2100
Orlando, Florida 32801
(407) 841-4601
Stock Listing
Bairnco common stock is listed on the New York Stock Exchange.
Symbol - BZ.
Annual Meeting
The annual stockholders meeting will be held at the Sheraton Orlando North,
600 North Lake Destiny Road,
Maitland, Florida 32751,
on April 18, 1997 at 10:00 a.m.
Form 10-K
Stockholders may obtain without charge a copy of Bairnco's Form 10-K filed
with the Securities and Exchange Commission by writing to Investor Relations
at the Corporate Office address.
Investor Relations Information
Contact Investor Relations at Bairnco's Corporate Office.
BAIRNCO CORPORATION
Suite 300, 2251 Lucien Way
Maitland, Florida 32751
(407) 875-2222
FAX (407) 875-3398