Item 1. BUSINESS
a. Recent Developments and Description
Bairnco Corporation was incorporated under the laws of the State of New York on April 9, 1981. Effective September 24, 1991, Bairnco Corporation changed its state of incorporation from New York to Delaware. Unless otherwise indicated herein, the terms "Bairnco" and the "Corporation" refer to Bairnco Corporation and its subsidiaries. Effective December 31, 1993, Bairnco adopted a restructuring plan, a major component of which was a formal plan of divestiture relating to the businesses that comprised Bairnco's Specialty Construction Products segment and secure communications electronics operations. Accordingly, these businesses are classified as discontinued operations in the consolidated financial statements as of, and for the years ended, December 31, 1994, 1993 and 1992, and in other financial information accompanying this filing. During 1994 the majority of the Specialty Construction businesses were sold and plans are underway concerning the disposition of the smallest and last remaining operation of the Specialty Construction business. The secure communications business was restructured during the year bringing the operation to an acceptable level of profitability. Negotiations for this operation have not yet resulted in an offer equal to the value that management believes is inherent in the operation. The business continues to be reported as a discontinued operation. These remaining operations are expected to be disposed of during 1995. As a result of the restructuring plan, Bairnco's focus is now on its two remaining core businesses: Arlon's Engineered Components and Materials, and KASCO's Replacement Products and Services. At December 31, 1994, Bairnco's continuing operations employed 884 persons including 13 Headquarters personnel. Bairnco's continuing operations occupy approximately 758,750 square feet of factory and office space at its principal locations.
b. & c. Financial Information About Industry Segments and Narrative Description of Business
Bairnco Corporation is a diversified multinational company that operates two distinct businesses under the names, Arlon and KASCO. Engineered materials and components are designed, manufactured, and sold under the Arlon brand identity to electronic, industrial and commercial markets. 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. Financial data and other information about the Corporation's segments is set forth in Note 10 to the Consolidated Financial Statements on pages 19 and 20 and on pages 4 through 7 of Bairnco's 1994 Annual Report to Stockholders which is incorporated herein by reference. This information should be read in conjunction with the "Financial History" set forth on page 9 of Bairnco's 1994 Annual Report to Stockholders, and "Management's Discussion and Analysis" set forth on pages 10 and 11 of Bairnco's 1994 Annual Report to Stockholders, which is incorporated herein by reference. The principal facilities utilized by each segment are detailed on pages 9 and 10 under "Item 2.
Item 2. PROPERTIES
The following chart lists for the Corporation as a whole, and by each of its segments, the principal locations of the Corporation's facilities (excluding approximately 207,500 square feet of leased space related to discontinued operations discussed in Note 3 on page 16 of Bairnco's 1994 Annual Report to Stockholders which is incorporated herein by reference) and indicates whether the property is owned or leased and if leased, the lease expiration date.
LEASED OR OWNED LOCATION SQUARE FEET (LEASE EXPIRATION)
CORPORATION TOTAL 758,750
Headquarters
Maitland, FL 7,700 Leased(Expires 1995)
Replacement Products and Services (KASCO)
Calgary, Alberta, Canada 6,600 Leased(Expires 1998) City of Industry, CA 15,000 Leased(Expires 1995) Edmonton, Alberta, Canada 2,400 Leased(Expires 1996) Gwent, Wales, U.K. 25,000 Leased(Expires 2005) Lyon, France 11,000 Leased(Expires 1999) Montreal, Quebec, Canada 9,300 Leased(Expires 1998) Pansdorf, Germany 22,000 Owned Paris, France 12,000 Leased(Expires 1996) Rennes, France 4,000 Leased(Expires 1995) Quebec City, Quebec, Canada 2,500 Leased(Expires 1997) Scarborough, Ontario, Canada 32,000 Owned St. Louis, MO 75,000 Owned St. Louis, MO 50,000 Leased(Expires 1995) Vancouver, B.C., Canada 10,000 Leased(Expires 1996) Vancouver, B.C., Canada 4,250 Leased(Expires 1995) Winnipeg, Manitoba, Canada 5,000 Leased(Expires 1997) Field Warehouses (Approximately 70 locations in North America) 55,000 Leased
Engineered Materials and Components (Arlon)
Bear, DE 133,000 Owned East Providence, RI 68,000 Owned Merksem, Belgium 5,000 Leased(Expires 2002) Rancho Cucamonga, CA 80,000 Owned Santa Ana, CA 124,000 Leased(Expires 2003)
Item 3.
Item 3. LEGAL PROCEEDINGS
Since its announcement in January 1990 of its intentions to spin off Keene, Bairnco has been named as a defendant in a number of individual personal injury and wrongful death cases in which it is alleged that Bairnco is derivatively liable for the asbestos- related claims against Keene. In 1993 Bairnco and certain of its present and former officers and directors were also named as defendants in two purported class actions in which the same types of claims were made. Both of these purported class actions, which have been consolidated in the United States District Court for the Southern District of New York, have been stayed by order of the Bankruptcy Court for the Southern District of New York, as described in the following paragraph. On December 6, 1993, Keene filed for protection under Chapter 11 of the Bankruptcy Code. The filing and certain subsequent proceedings led to a stay of the asbestos-related individual and class actions referred to above. In an order entered on March 11, 1994, the Bankruptcy Court overseeing the reorganization of Keene entered an order appointing an examiner (the "Examiner") to evaluate and report to the Court whether there are any viable claims arising out of the transfer of assets for value by Keene to other subsidiaries of Bairnco or the spinoffs of certain subsidiaries, including Keene, by Bairnco. Bairnco provided evidence and other information to the Examiner. The Examiner's preliminary report was released on October 3, 1994. Since that time, the Court has held a number of hearings at which the preliminary report has been discussed. The Court has not ruled on whether the potential claims discussed in the report should be prosecuted, and if so by whom or under what circumstances. 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 an action in the United States Bankruptcy Court for the Southern District of New York brought by its former subsidiary Keene Corporation, which presently is in Chapter 11, to determine which of the two companies is entitled to receive the benefit of tax refunds attributable to the carryback by Keene of certain net operating losses. (After filing this action, Keene ceded control of the action to the official committee of unsecured creditors that previously was formed in the Chapter 11 proceeding.) Pending resolution of the dispute by the Bankruptcy Court, any refunds actually received are to be placed in escrow. Keene alleges that the refunds in question could total approximately $30 million. There can be no assurance whatsoever that refunds in such amount will be payable or that resolution of the dispute with Keene will result in the release of any portion of the refunds to Bairnco.
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, 1994.
Item 4.
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter of 1994. EXECUTIVE OFFICERS OF THE REGISTRANT
Effective January 16, 1995, Duncan J. del Toro resigned as President of Bairnco Corporation. It is the Corporation's intent not to fill this position in the near future. The information required with respect to executive officers of the Corporation is as follows:
Name and Age of Data Pertaining to Executive Officers Executive Officers
Luke E. Fichthorn III (53) Mr. Fichthorn has served as Chairman of Bairnco since May 1990, and on December 18, 1991, became Chief Executive Officer of Bairnco. For over nineteen years, Mr. Fichthorn has been a private investment banker and partner of Twain Associates, a private investment banking and consulting firm. Mr. Fichthorn served as a director of Keene Corporation, a former subsidiary of Bairnco Corporation from August, 1969 until May, 1981, and became a director of Bairnco in January, 1981. Mr. Fichthorn is also a director of Florida Rock Industries, Inc. and FRP Properties, Inc., neither of which is affiliated with Bairnco.
J. Robert Wilkinson (60) Mr. Wilkinson was elected Vice President - Finance and Treasurer in March 1990. From September 1986 to September 1989, Mr. Wilkinson was Bairnco's Vice President - Controller. From October 1989 to March 1990 he was Executive Vice President of Shielding Systems Corporation, a wholly- owned subsidiary of Bairnco. Prior to joining Bairnco, Mr. Wilkinson served as Vice President and Controller of Transway International Corporation from November 1981 to June 1986.
Name and Age of Data Pertaining to Executive Officers Executive Officers
Barry M. Steinhart (42) Mr. Steinhart was elected Vice President - Administration and Secretary in March 1990. From June of 1983 through July 1986, Mr. Steinhart served as Division Personnel Manager and Manager of Human Resources of Lightolier, a wholly-owned subsidiary of the Genlyte Group which was a wholly-owned subsidiary of Bairnco until August 1988. From August 1986 through December 1988, Mr. Steinhart served as Director of Human Resources for Keene Corporation, which was a wholly-owned subsidiary of Bairnco Corporation until August, 1990. From January 1989 to February 1990, Mr. Steinhart served as Bairnco's Director of Human Resources.
Elmer G. Pruim III (32) Mr. Pruim was appointed Controller of Bairnco Corporation in August, 1994. Mr. Pruim was previously an Audit Manager with Arthur Andersen LLP.
PART II
Item 5.
Item 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
a. & c. Data regarding market prices of Bairnco's common stock is included in the "Quarterly Results of Operations" on page 11 of Bairnco's 1994 Annual Report to Stockholders which is incorporated herein by reference. Bairnco's common stock is traded on the New York Stock Exchange under the symbol BZ. Data on dividends paid is included in the Consolidated Statements of Income on page 12 of Bairnco's 1994 Annual Report to Stockholders which is incorporated herein by reference. The quarterly cash dividend remained constant at $0.05 per share during 1994. The Board continues to review the dividend on a quarterly basis. Data on the limitations of Bairnco's ability to pay dividends is included in Note 7 to the Consolidated Financial Statements on page 18 of Bairnco's 1994 Annual Report to Stockholders which is incorporated herein by reference.
b. The approximate number of common equity security holders is as follows: Approximate Number of Holders of Record Title of Stock as of December 31, 1994
Common Stock, Par Value $.01 per share 2,198
Item 6.
Item 6. SELECTED FINANCIAL DATA
Reference is made to "Financial History" on page 9 of Bairnco's 1994 Annual Report to Stockholders, which is incorporated herein by reference.
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the "Management's Discussion and Analysis" on pages 10 and 11 of Bairnco's 1994 Annual Report to Stockholders which is incorporated herein by reference.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the Consolidated Financial Statements and accompanying Notes included on pages 12 through 20 and the "Quarterly Results of Operations" on page 11 of Bairnco's 1994 Annual Report to Stockholders which is incorporated herein by reference. Financial Statement Schedules are included in Part IV of this filing.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required with respect to directors of Bairnco is included in the Proxy Statement for the 1995 Annual Meeting of Stockholders of Bairnco, which has been filed with the Securities and Exchange Commission and is incorporated herein by reference. See the information regarding executive officers of the Corporation which begins on page 13 of this Annual Report on Form 10-K.
Item 11.
Item 11. EXECUTIVE COMPENSATION
The information required by Item 11 is included in the Proxy Statement for the 1995 Annual Meeting of Stockholders of Bairnco, which has been filed with the Securities and Exchange Commission and is incorporated herein by reference.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is included in the Proxy Statement for the 1995 Annual Meeting of Stockholders of Bairnco, which has been filed with the Securities and Exchange Commission and is incorporated herein by reference.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is included in the Proxy Statement for the 1995 Annual Meeting of Stockholders of Bairnco, which has been filed with the Securities and Exchange Commission and is incorporated herein by reference.
PART IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
a) 1. Financial Statements
Included in the 1994 Annual Report to Stockholders which is included as Exhibit 13 to this Annual Report on Form 10-K:
- Report of Independent Certified Public Accountants; - Consolidated Statements of Income for the years ended December 31, 1994, 1993 and 1992; - Consolidated Balance Sheets as of December 31, 1994 and 1993; - Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1993 and 1992; - Consolidated Statements of Stockholders' Investment for the years ended December 31, 1994, 1993 and 1992; - Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
Included in Part IV of this Annual Report on Form 10-K:
- Report of Independent Certified Public Accountants on Financial Statement Schedules on page 21 of this Annual Report on Form 10-K; - Financial Statement Schedules for the years ended December 31, 1994, 1993 and 1992:
Schedule II - Valuation and Qualifying Accounts on page 22 of this Annual Report on Form 10-K;
All other schedules and notes specified under Regulation S-K are omitted because they are either not applicable, not required or the information called for therein appears in the Consolidated Financial Statements or Notes thereto.
3. See Index to Exhibits on pages 24 through 28 of this Annual Report on Form 10-K.
b) Reports on Form 8-K - None for fiscal year 1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BAIRNCO CORPORATION (Registrant)
Date: March 22, 1995 By: /s/ J. Robert Wilkinson J. Robert Wilkinson Vice President-Finance and Treasurer (Principal Financial Officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been executed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated above.
/s/ Luke E. Fichthorn III Luke E. Fichthorn III - Chairman and CEO
/s/ Richard A. Shantz Richard A. Shantz - Director
/s/ Charles T. Foley Charles T. Foley - Director
/s/ William F. Yelverton William F. Yelverton - Director
/s/ J. Robert Wilkinson J. Robert Wilkinson - Vice President-Finance and Treasurer (Principal Financial Officer)
/s/ Elmer G. Pruim III Elmer G. Pruim III - Controller (Principal Accounting Officer)
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
TO BAIRNCO CORPORATION:
We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in Bairnco Corporation's Annual Report to Stockholders incorporated by reference in this Form 10-K, and have issued our report thereon dated January 27, 1995. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedules listed in Item 14(a) 2 are the responsibility of the company's management and are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic consolidated financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic consolidated financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.
Orlando, Florida January 27, 1995 Arthur Andersen LLP
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
Commission File No.: 1-8120
BAIRNCO CORPORATION
(Exact name of registrant as specified in the charter)
INDEX TO EXHIBITS
a. Certificate of Incorporation, as amended through September 24, 1991. Incorporated herein by reference to Exhibit 3 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1991. b. By Laws, as amended through December 18, 1991. Incorporated herein by reference to Exhibit 3 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1991. c. Amended and Restated Credit Agreement, dated as of December 17, 1992, among Bairnco Corporation and certain of its subsidiaries, as guarantors, and certain Commercial Lending Institutions and Continental Bank N.A., as the Agent for Lenders. Incorporated herein by reference to Exhibit 3.1 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1992. d. Promissory note, dated December 17, 1992, between Bairnco Corporation and Continental Bank N.A.. Incorporated herein by reference to Exhibit 3.2 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1992. e. Amendment dated as of March 16, 1994 to Amended and Restated Credit Agreement dated as of December 17, 1992, by and among Bairnco Corporation and certain of its subsidiaries and certain Commercial Lending Institutions and Continental Bank N.A., as the Agent for Lenders. Incorporated herein by reference to Exhibit 3 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1993. f. Promissory note, dated as of September 1, 1989, between Arlon, Inc. and the Delaware Economic Development Authority. Incorporated herein by reference to Exhibit 4 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1989. g. Indenture of Trust, series 1989, dated as of September 1, 1989, between the Delaware Economic Development Authority and Manufacturers and Traders Trust Company, securing variable rate demand Industrial Development Refunding Revenue Bonds (Arlon, Inc. Project), series 1989 of the Delaware Economic Development Authority. Incorporated herein by reference to Exhibit 4 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1989. h. Loan Agreement, dated as of September 1, 1989, between the Delaware Economic Development Authority and Arlon, Inc.. Incorporated herein by reference to Exhibit 4 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1989. i. Reimbursement Agreement dated as of September 1, 1989 by and among Arlon, Inc., Bairnco Corporation and Continental Bank. Incorporated herein by reference to Exhibit 4 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1989. j. Agreement of the Company, dated March 30, 1987, to furnish a copy of any instrument with respect to certain other long-term debt to the Securities and Exchange Commission upon its request. Incorporated herein by reference to Exhibit 4(e) to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1986. k. Extension and Modification of Lease Agreement between Max Rothenberg and Michael L. Friedman and Shielding Systems Corporation. Incorporated herein by reference to Exhibit 10.1 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1992. l. Lease dated December 31, 1991 between Reybold Homes, Inc. and Arlon, Inc.. Incorporated herein by reference to Exhibit 10.2 to Bairnco's Annual Report on form 10-K for fiscal year ended December 31, 1992. m. Lease dated December 10, 1991 between Mattei Corporation and Bairnco Corporation. Incorporated herein by reference to Exhibit 10 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1991. n. Lease dated February 18, 1991 between Pensionfund Realty Limited and KASCO Food Equipment Sales and Service Division of Atlantic Service Co., Ltd.. Incorporated herein by reference to Exhibit 10 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1991. o. Lease dated February 8, 1990 between Leggett and Platt, Inc. and KASCO Corporation. Incorporated herein by reference to Exhibit 10 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1991. p. Lease dated February 5, 1990 between Fernwood Developments Ltd. and KASCO Atlantic Service Company, Ltd.. Incorporated herein by reference to Exhibit 10 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1991. q. Agreements, each dated November 8, 1965, between Max Rothenberg and Michael L. Friedman and Shielding Systems Corporation as successor to Keene Corporation and amendment thereto, dated January 20, 1970. Incorporated herein by reference to Exhibit 10 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1989. r. Lease, dated October 7, 1986, between Sinnott Investments Ltd. and KASCO Corporation as successor to Atlantic Service Co., Ltd.. Incorporated herein by reference to Exhibit 10 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1986. s. Lease, dated July 1, 1985, between Succession V H Fortin and KASCO Corporation as successor to Atlantic Service Co., Ltd.. Incorporated herein by reference to Exhibit 10 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1986. t. Lease, dated May 1, 1985, between John B. Merrill, Joseph S. Weedon and Richard A. Westberg and KASCO Corporation as successor to Atlantic Service, Inc.. Incorporated herein by reference to Exhibit 10 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1986. u. Industrial Real Estate Lease, dated March 28, 1984, between Gerry Strauss, as trustee and Michael L. Strauss and Trenmark Division of Arlon, Inc. as successor to Keene Corporation. Incorporated herein by reference to Exhibit 10 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1984. v. Standard Industrial Lease dated June 30, 1983 between James E. and Nancy S. Welsh, trustees under Welsh Family Trust, dated April 20, 1979 and Arlon, Inc. as successor to Keene Corporation. Incorporated herein by reference to Exhibit 10 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1983. w. Bairnco Corporation 401(k) Savings Plan and Trust. Incorporated herein by reference to Exhibit 4.3 to Bairnco's Registration Statement on Form S-8, No. 33-41313. x. Bairnco Corporation 1990 Stock Incentive Plan. Incorporated herein by reference to Exhibit 4.3 to Bairnco's Registration Statement on Form S-8, No. 33-36330. y. Bairnco Corporation Management Incentive Compensation Plan. Incorporated herein by reference to Exhibit 10 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1981. z. Employment Agreement dated January 22, 1990, between Bairnco Corporation and Luke E. Fichthorn III. Incorporated herein by reference to Exhibit 10 to Bairnco's Annual Report on Form 10-K for fiscal year ended December 31, 1989. aa. Calculation of Primary and Fully Diluted Earnings per Share for the years ended December 31, 1994, 1993 and 1992. Exhibit 11 filed herewith. ab. 1994 Annual Report to Stockholders. Exhibit 13 filed herewith. ac. Subsidiaries of the Registrant. Exhibit 21 filed herewith. ad. Consent of Independent Certified Public Accountants. Exhibit 23 filed herewith. ae. Financial Data Schedules. Exhibit 27 filed herewith (electronic filing only). af. Form 11-K Re: Bairnco Corporation 401(k) Savings Plan and Trust for the fiscal year ended December 31, 1994. Exhibit 99 filed herewith.