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, 1998
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 (the
Plan) as of December 31, 1998 and 1997, and the related statement of
changes in net assets available for benefits for the year ended
December 31, 1998. These financial statements and the supplemental
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 Plan as of December 31, 1998 and 1997, and the changes
in its net assets available for benefits for the year ended December
31, 1998, 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
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974.
The Fund Information in Note 6 is presented for purposes of additional
analysis rather than to present the changes in net assets available
for benefits of each fund. The supplemental schedules and Fund
Information 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
March 9, 1999
Arthur Andersen LLP
BAIRNCO CORPORATION
401(k) SAVINGS PLAN AND TRUST
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1998 AND 1997
1998 1997
ASSETS
INVESTMENTS, at fair market value (Notes 2 & 3)
Bairnco common stock $ 194,962 $ 277,830
Mutual funds 5,131,997 3,873,674
Participant notes receivable 193,146 108,523
TOTAL INVESTMENTS 5,520,105 4,260,027
RECEIVABLES
Participants' contributions 71,745 69,647
Investment income -- 1,396
TOTAL RECEIVABLES 71,745 71,043
TOTAL ASSETS 5,591,850 4,331,070
NET ASSETS AVAILABLE FOR BENEFITS $5,591,850 $4,331,070
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, 1998
(Note 6)
1998
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year $4,331,070
ADDITIONS:
Participants' contributions 1,038,728
Interest and dividends 157,892
Net realized and unrealized appreciation on
investments (Note 2) 654,560
1,851,180
DEDUCTIONS:
Distributions 584,679
Administrative expenses 5,721
590,400
NET INCREASE 1,260,780
NET ASSETS AVAILABLE FOR BENEFITS, end of year $5,591,850
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, 1998 and 1997
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's 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 $10,000 for 1998. 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 or losses, and charged with
an allocation of administrative expenses. Allocations are based on
participant account balances, as defined in the Plan. 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 1998, interest
rates ranged from 9.75% to 10.5%. Principal and interest are paid
quarterly through payroll deductions. As of December 31, 1998 and 1997,
there were 61 and 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, 1998, 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 market value.
Any unrealized appreciation/depreciation on investments represents the
difference between fair market value of investments at the beginning of the
Plan year or when acquired, whichever is later, and the fair market value
of investments at the end of the Plan year.
Interest income is recognized on the accrual basis.
Administrative Expenses-
Certain administrative expenses of the Plan are paid directly by
Bairnco on behalf of the Plan. During the year ended December 31, 1998,
Bairnco paid administrative expenses of approximately $16,000.
Benefit Payments-
Benefits are recorded when paid.
3. INVESTMENTS:
There are currently eight investment options into which participants
may direct the investment of their accounts. These are Invesco Strategic
Technology Fund, Founders Growth Fund, Schwab 1000 Equity Fund, Strong
Government Securities Fund, Schwab Retirement Money Fund, Neuberger &
Berman Partners Fund and Neuberger & Berman Guardian Fund (collectively the
"mutual funds"), and 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 eight 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.
The investments that represent 5% or more of the net assets available
for benefits are as follows at December 31, 1998 and 1997:
1998 1997
Invesco Strategic Technology Fund $ 476,615 $ 312,018
Founders Growth Fund 844,891 551,921
Schwab 1000 Equity Fund 2,379,812 1,907,170
Strong Government Securities Fund 758,197 565,494
Schwab Retirement Money Fund 637,965 537,071
Bairnco Common Stock Fund 194,962 277,830
$5,292,442 $4,151,504
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 1998, 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 AVAILABLE FOR BENEFITS, WITH FUND INFORMATION:
The following schedule presents changes in net assets available for
benefits, by fund, for the year ended December 31, 1998:
Participant Directed
Invesco Schwab Strong Schwab Neuberger Neuberger Bairnco
Strategic Founders 1000 Government Retirement & Berman & Berman Common Participant
Technology Growth Equity Securities Money Partners Guardian Stock Notes Other
Fund Fund Fund Fund Fund Fund Fund Fund Receivable Receivable Total
Net Assets
Available
for
Benefits,
beginning
of year $312,018 $551,921 $1,907,170 $565,494 $537,071 $ -- $ -- $277,830 $108,523 $71,043 $4,331,070
Additions:
Participant's
contributions 157,803 287,199 321,615 151,154 64,831 7,179 3,164 43,685 -- 2,098 1,038,728
Interest and
dividends (5) 47,062 17,830 52,496 31,558 2,448 946 6,953 -- (1,396) 157,892
Net realized
and
unrealized
appreciation
(depreciation)
on investments 111,924 115,830 509,632 (617) 390 (3,128) (2,429) (77,042) -- -- 654,560
Total additions 269,722 450,091 849,077 203,033 96,779 6,499 1,681 (26,404) -- 702 1,851,180
Deductions:
Distributions 64,038 86,971 319,600 55,558 37,899 1,728 -- 9,549 9,336 -- 584,679
Administrative
expenses 740 1,145 2,210 759 455 5 6 401 -- -- 5,721
Total
deductions 64,778 88,116 321,810 56,317 38,354 1,733 6 9,950 9,336 -- 590,400
Transfers to
other funds (40,347) (69,005) (54,625) 45,987 42,469 23,626 4,450 (46,514) 93,959 -- --
Net increase
(decrease) 164,597 292,970 472,642 192,703 100,894 28,392 6,125 (82,868) 84,623 702 1,260,780
Net Assets
Available
for
Benefits,
end of year $476,615 $844,891 $2,379,812 $758,197 $637,965 $28,392 $6,125 $194,962 $193,146 $71,745 $5,591,850
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
1998 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. SUBSEQUENT EVENT
Effective October 31, 1998, Bairnco purchased MII International, Inc.
("MII"). On December 11, 1998, Bairnco's Board of Directors elected to
merge the MII 401(k) plan into the Plan effective January 1, 1999, at which
time the employees of MII will begin participating in the Plan.
10. SUPPLEMENTAL SCHEDULES:
Supplemental Schedule I lists the reportable transactions of the Plan
for the year ended December 31, 1998. Purchases and sales are made at
fair market value on the date of transaction.
Supplemental Schedule II lists the Plan assets held for investment as
of December 31, 1998.
Supplemental Schedule III lists transactions with parties in interest
of the Plan for the year ended December 31, 1998.
SCHEDULE I
BAIRNCO CORPORATION
401(k) SAVINGS PLAN AND TRUST
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
Sales Sales Sales
Description of Transaction Purchases Cost Proceeds Net Gain
Founders Growth Fund $433,631 $236,572 $256,491 $ 19,919
Schwab 1000 Equity Fund 512,349 390,721 549,339 158,618
Strong Government Securities Fund 317,252 117,020 123,932 6,912
Schwab Retirement Money Fund 229,053 127,794 128,549 755
The preceding 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, 1998
Fair Market
Description Value (Note 2) Cost
Cash Equivalents
Schwab Money Market Fund $ 1,411 $ 1,411
Common Stocks
Bairnco Corporation 193,551 174,600
Total Bairnco Common Stock Fund $ 194,962 $ 176,011
Mutual Funds
Invesco Strategic Technology Fund $ 476,615 $ 419,042
Founders Growth Fund 844,891 760,963
Schwab 1000 Equity Fund 2,379,812 1,521,336
Strong Government Securities Fund 758,197 741,957
Schwab Retirement Money Fund 637,965 637,965
Neuberger & Berman Partners Fund 28,392 30,914
Neuberger & Berman Guardian Fund 6,125 7,492
Total Mutual Funds $5,131,997 $4,119,669
Other Investments
Participant Notes Receivable $ 193,146 $ 193,146
Total $5,520,105 $4,488,826
The preceding 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, 1998
Description Amount
Sold 8,228.303 units of Bairnco Corporation Common
Stock between $5.563 and $11.375 per unit $ 71,213
Purchased 7,469.303 units of Bairnco Corporation Common
Stock between $5.563 and $12.023 per unit $ 64,311
The preceding 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: March 9, 1999 By: /s/ J. ROBERT WILKINSON
J. ROBERT WILKINSON
Administrative Committee Member