SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K FOR ANNUAL REPORT OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 33-41313 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: Bairnco Corporation 401(k) Savings Plan and Trust B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Bairnco Corporation 2251 Lucien Way Maitland, Florida 32751 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Advisory Committee of Bairnco Corporation 401(k) Savings Plan and Trust: We have audited the accompanying statements of net assets available for benefits of Bairnco Corporation 401(k) Savings Plan and Trust as of December 31, 1997 and 1996, and the related statement of changes in net assets available for benefits for the year ended December 31, 1997. These financial statements and the schedules referred to below are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements and schedules 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 financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Bairnco Corporation 401(k) Savings Plan and Trust as of December 31, 1997 and 1996, and the changes in its net assets available for benefits for the year ended December 31, 1997, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of reportable transactions, assets held for investment and transactions with parties in interest are presented for purposes of complying with the Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 and are not a required part of the basic financial statements. Such schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Orlando, Florida February 13, 1998 Arthur Andersen LLP BAIRNCO CORPORATION 401(k) SAVINGS PLAN AND TRUST STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS AS OF DECEMBER 31, 1997 AND 1996 1997 1996 ASSETS INVESTMENTS, at fair market value (Notes 2 & 3) Bairnco common stock $ 277,830 $ 181,378 Mutual funds 3,873,674 2,805,520 Participant notes receivable 108,523 42,633 TOTAL INVESTMENTS 4,260,027 3,029,531 RECEIVABLES Participants' contributions 69,647 67,678 Accrued investment income 1,396 1,289 TOTAL RECEIVABLES 71,043 68,967 TOTAL ASSETS 4,331,070 3,098,498 NET ASSETS AVAILABLE FOR BENEFITS $4,331,070 $3,098,498 The accompanying notes are an integral part of these financial statements. BAIRNCO CORPORATION 401(k) SAVINGS PLAN AND TRUST STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1997 (Note 6) 1997 NET ASSETS AVAILABLE FOR BENEFITS, beginning of year $3,098,498 ADDITIONS: Participants' contributions 1,172,323 Interest and dividends 216,775 Net realized and unrealized appreciation on investments (Note 2) 505,548 1,894,646 DEDUCTIONS: Distributions 659,088 Administrative expenses 2,986 662,074 NET INCREASE 1,232,572 NET ASSETS AVAILABLE FOR BENEFITS, end of year $4,331,070 The accompanying notes are an integral part of these financial statements. BAIRNCO CORPORATION 401(k) SAVINGS PLAN AND TRUST NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 and 1996 1. PLAN DESCRIPTION: The following description of the Bairnco Corporation 401(k) Savings Plan and Trust (the "Plan") provides only general information. Participants of the Plan should refer to the Plan document for a complete description of the Plan's provisions. The Plan document is available from Bairnco Corporation ("Bairnco" or the "Corporation") at its offices in Maitland, Florida. General Bairnco established the Plan effective July 1, 1991. The Plan is a defined contribution plan under which all full-time employees become eligible for participation on the first day of the month following completion of thirty days of service. Once an employee becomes eligible for participation, salary deferrals (contributions) may commence on any subsequent date. The Plan excludes non-resident aliens, leased employees and independent contractors from participating in the Plan. Union employees of the Corporation are permitted to participate in the Plan. The Plan is subject to the Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 ("ERISA"). Contributions Under the terms of the Plan, allowable contributions are outlined as follows: Participant Contributions - The participants may elect to defer a minimum of 1% and a maximum of 20% of compensation, as defined in the Plan, not to exceed $9,500 for 1997. The maximum dollar amount that may be deferred is adjusted annually by the Internal Revenue Service. The amount of the compensation which is deferred, plus any earnings or losses on that amount, is not subject to federal income tax until the funds are actually distributed to the participant by the Plan. However, contributions are subject to FICA (Social Security and Medicare Taxes). Employer Contributions - The Corporation does not match elective deferrals pursuant to the Plan. Participant Accounts Each participant's account is credited with the participant's contribution and allocations of Plan earnings, and charged with an allocation of administrative expenses. Allocations are based on participant account balances, as defined. The benefit to which a participant is entitled is the amount that can be provided from the participant's vested account. Vesting A participant shall at all times have a 100 percent nonforfeitable interest in the value of his/her account attributable to all contributions made plus or minus investment earnings and losses thereon and related administrative costs. Transfers From Other Qualified Plans Participants who have an interest in any other qualified employee benefit plan (as described in Section 401(a) of the Internal Revenue Code) may transfer the distributions from these plans directly into the Plan at the discretion of the Administrative Committee (see Note 4). Distributions A participant who has attained age 59-1/2 may elect, by filing a written application with the Administrative Committee, to withdraw any amount up to 100 percent of the vested portion of his/her account, for any reason. For participants who have not attained age 59-1/2, the reasons for such withdrawals are restricted to those defined in the Plan. Upon termination of employment, a participant can elect to have the balance in the participant's account distributed to the participant in a single lump sum cash distribution or a partial distribution if requested in writing by the participant. As an alternative, the participant may also elect to leave the related funds in the Plan or transfer the related funds into another qualified plan. Participant Notes Receivable An active participant may borrow from his/her account a minimum of $1,000 up to a maximum equal to the lesser of (1) a total of $50,000 of borrowings within one year or (2) 50% of the participant's account balance. Loan transactions are treated as transfers between the investment fund and the participant notes receivable account. Loan terms range from 1-5 years or up to 15 years for the purchase of a primary residence. The loans are secured by the balance in the participant's account and bear interest at the prime rate at the time of borrowing plus 2%. During 1997, interest rates ranged from 10.25% to 10.5%. Principal and interest are paid quarterly through payroll deductions. As of December 31, 1997, there were 43 loans outstanding. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Use of Estimates- The preparation of 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 financial statements and the reported amounts of additions and deductions from the net assets available for benefits during the reporting period. Actual results could differ from those estimates. Basis Of Accounting- For the year ended December 31, 1997, the accounting records of the Plan and the Plan's assets were maintained by Schwab Retirement Plan Services, Inc. ("Schwab") a subsidiary of the Charles Schwab Corporation. The participants' account balances are determined on the cash basis; however, the Plan's financial statements contained herein are presented on an accrual basis. Investment Valuation and Income Recognition- Investments are stated at fair market value. Securities which are traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Any unlisted securities are valued at the bid price next preceding the close of business on the valuation date. Participant notes receivable are valued at cost, which approximates fair value. Any unrealized appreciation/depreciation on investments represents the difference between fair value of investments at the beginning of the Plan year or when acquired, whichever is later, and the fair value of investments at the end of the Plan year. Interest income is recognized on the accrual basis. Administrative Expenses- Administrative expenses of the Plan are paid directly by Bairnco on behalf of the Plan. During the year ended December 31, 1997, Bairnco paid administrative expenses of approximately $15,205. Benefit Payments- Benefits are recorded when paid. 3. INVESTMENTS: There are currently six investment options into which participants may direct the investment of their accounts. These are the Invesco Strategic Technology Fund, Founders Growth Fund, Schwab 1000 Equity Fund, Strong Government Securities Fund and the Schwab Retirement Money Fund (collectively the "mutual funds"), and the Bairnco Corporation Common Stock Fund ("Bairnco common stock fund"). Participants invest in units of participation of the fund which represents an undivided interest in the underlying assets of the fund. Participants may separately direct the investment of future deferrals and existing account balances into these six investment options in increments of 5%. Participants are permitted to modify their elections for future deferrals and existing account balances between investment funds on a daily basis. All the investments represent 5% or more of the net assets available for benefits (see Note 6). 4. TRUST AGREEMENT: Schwab is the Plan's Trustee pursuant to the Plan document which is signed by the Corporation and Plan Trustee. Schwab manages the Plan assets and makes distributions to participants as directed by the Plan Administrator. The Administrative Committee of the Corporation is the Plan Administrator. Expenses incurred by the Plan Trustee or the Plan Administrator in the performance of their duties may be paid by the Plan or the Corporation at the Corporation's discretion. During 1997, all investment managers' fees were paid directly by the Plan. 5. PLAN TERMINATION: Although it has not expressed any intent to do so, the Corporation reserves the right under the Plan to terminate the Plan, in whole or in part, at any time. In the event of the Plan's termination, the Plan assets will be distributed to the participants in lump sum distributions or transferred to another qualified plan at the direction of the participant. 6. CHANGES IN NET ASSETS BY INVESTMENT FUND: The following schedule presents changes in the net assets available for benefits of the investment funds for the year ended December 31, 1997: Invesco Schwab Strong Schwab Bairnco Strategic Founders 1000 Government Retirement Common Participant Technology Growth Equity Securities Money Stock Notes Other Fund Fund Fund Fund Fund Fund Receivable Receivable Total Net assets available for benefits, 01-01-97 $142,077 172,271 1,391,710 474,789 624,673 181,378 42,633 68,967 3,098,498 Additions: Participant contributions 202,107 340,361 278,904 128,233 97,466 48,485 5,831 70,936 1,172,323 Interest and dividends 61,294 76,126 18,688 28,289 26,138 6,133 -- 107 216,775 Net realized and unrealized appreciation (depreciation) on investments (44,641) 8,435 438,062 13,751 -- 89,941 -- -- 505,548 Loan repayments 1,094 1,458 2,418 447 173 241 (5,831) -- -- Transfers from other funds 38,885 63,160 87,815 49,752 33,120 25,676 -- -- 298,408 258,739 489,540 825,887 220,472 156,897 170,476 -- 71,043 2,193,054 Deductions: Distributions (55,939) (76,835) (221,550) (82,419) (109,615) (37,314) (6,449) (68,967) (659,088) Loans (13,472) (11,624) (42,294) (10,067) (9,150) (6,187) 92,794 -- -- Administrative expenses (351) (456) (1,280) (376) (381) (142) -- -- (2,986) Transfers to other funds (19,036) (20,975) (45,303) (36,905) (125,353) (30,381) (20,455) -- (298,408) (88,798) (109,890) (310,427) (129,767) (244,499) (74,024) 65,890 (68,967) (960,482) Net assets available for benefits, 12-31-97 $312,018 551,921 1,907,170 565,494 537,071 277,830 108,523 71,043 4,331,070 7. TRANSACTIONS WITH PARTIES IN INTEREST: Under ERISA, the Plan is required to report investment transactions with and compensation paid to a "party in interest". The term "party in interest" is broadly defined but includes Bairnco Corporation as the Plan's sponsor, Schwab, as Plan Trustee, and any person or corporation which renders services to the Plan. Certain fees for legal and accounting services provided in connection with the Plan were paid by the Plan sponsor on behalf of the Plan during these years and are not included in the accompanying financial statements. Additional fees paid by the Plan during 1997 for services rendered by parties in interest were based on rates which the Plan's Administrator believes were customary and reasonable. 8. INCOME TAX STATUS: The Plan obtained its latest determination letter on April 29, 1997, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The plan administrator and legal counsel believe that the Plan is currently being operated in compliance with the applicable requirements of the Internal Revenue Code. 9. SUPPLEMENTAL SCHEDULES: Supplemental Schedule I lists the reportable transactions of the Plan for the year ended December 31, 1997. Purchases and sales are made at fair market value on the date of transaction. Supplemental Schedule II lists the Plan assets held for investment at December 31, 1997. Supplemental Schedule III lists transactions with parties in interest of the Plan for the year ended December 31, 1997. SCHEDULE I BAIRNCO CORPORATION 401(k) SAVINGS PLAN AND TRUST SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1997 Sales Sales Sales Net Gain Description of Transaction Purchases Cost Proceeds (Loss) Purchases: Founders Growth Fund $ 479,647 Invesco Strategic Technology Fund 302,286 Schwab Retirement Money Fund 156,724 Schwab 1000 Equity Fund 385,407 Strong Government Securities Fund 206,274 Sales: Founders Growth Fund $ 95,468 $108,432 $12,964 Invesco Strategic Technology Fund 86,306 87,704 1,398 Schwab Retirement Money Fund 244,691 244,326 (365) Schwab 1000 Equity Fund 250,400 308,009 57,609 Strong Government Securities Fund 126,563 129,320 2,757 Total All Funds $1,530,338 $803,428 $877,791 $74,363 The accompanying notes are an integral part of this schedule. SCHEDULE II BAIRNCO CORPORATION 401(k) SAVINGS PLAN AND TRUST SCHEDULE OF ASSETS HELD FOR INVESTMENT AS OF DECEMBER 31, 1997 Fair Market Description Value (Note 2) Cost Cash Equivalents Schwab Money Market Fund $ 335 $ 326 Common Stocks Bairnco Corporation 277,495 172,105 Total Bairnco Common Stock Fund $ 277,830 $ 172,431 Mutual Funds Invesco Strategic Technology Fund $ 312,018 $ 371,255 Founders Growth Fund 551,921 563,904 Schwab 1000 Equity Fund 1,907,170 1,399,708 Strong Government Securities Fund 565,494 541,725 Schwab Retirement Money Fund 537,071 536,706 Total Mutual Funds $3,873,674 $3,413,298 Other Investments Participant Notes Receivable $ 108,523 $ 108,523 Total $4,260,027 $3,694,252 The accompanying notes are an integral part of this schedule. SCHEDULE III BAIRNCO CORPORATION 401(k) SAVINGS PLAN AND TRUST SCHEDULE OF TRANSACTIONS WITH PARTIES IN INTEREST FOR THE YEAR ENDED DECEMBER 31, 1997 Description Amount Sold 9,222 shares of Bairnco Corporation Common Stock between $6.875 and $10.8125 per share $73,991 Purchased 9,866 shares of Bairnco Corporation Common Stock between $7.125 and $10.4375 per share $80,294 The accompanying notes are an integral part of this schedule. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrative Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. BAIRNCO CORPORATION 401(K) SAVINGS PLAN AND TRUST (Name of Plan) Date: February 13, 1998 By: /s/ J. ROBERT WILKINSON J. ROBERT WILKINSON Administrative Committee Member