-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mRmMo2ZkZSGmM3dpU2prC3/hGCTwdRQ3IAiJ2wR/c995NsT4wrnUwuP3Rh+IlGU+ atbDQZwA5vgoLFT6SBl6zg== 0000009984-94-000014.txt : 19941122 0000009984-94-000014.hdr.sgml : 19941122 ACCESSION NUMBER: 0000009984-94-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARNES GROUP INC CENTRAL INDEX KEY: 0000009984 STANDARD INDUSTRIAL CLASSIFICATION: 3490 IRS NUMBER: 060247840 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04801 FILM NUMBER: 94559969 BUSINESS ADDRESS: STREET 1: 123 MAIN ST CITY: BRISTOL STATE: CT ZIP: 06011 BUSINESS PHONE: 2035837070 FORMER COMPANY: FORMER CONFORMED NAME: ASSOCIATED SPRING CORP DATE OF NAME CHANGE: 19760518 10-Q 1 BARNES GROUP INC. FORM 10-Q SEPTEMBER 30, 1994 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM lO-Q (Mark One) (X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 1994 or ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For transition period from ____________________ to ____________________ Commission File Number 1-4801 BARNES GROUP INC. (a Delaware Corporation) I.R.S. Employer Identification No. 06-0247840 123 Main Street, Bristol, Connecticut 06010 Telephone Number (203) 583-7070 Number of common shares outstanding at November 8, 1994 - 6,423,238 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- PART I. FINANCIAL INFORMATION Item 1. Financial Statements BARNES GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share data) (Unaudited)
Three months ended Nine months ended September 30 September 30 ------------------ ----------------- 1994 1993 1994 1993 -------- -------- -------- -------- Net sales $140,261 $123,103 $425,520 $377,633 Cost of sales 89,688 79,259 272,160 240,836 Selling and admin- istrative expenses 40,401 39,012 124,766 120,343 Plant closings and restructurings -- -- -- 3,400 -------- -------- -------- -------- 130,089 118,271 396,926 364,579 -------- -------- -------- -------- Operating income 10,172 4,832 28,594 13,054 Other income 1,056 957 3,319 2,803 Interest expense 1,320 1,256 3,996 3,837 Other expenses 865 490 1,989 2,132 -------- -------- -------- -------- Income before income taxes 9,043 4,043 25,928 9,888 Income taxes 3,671 1,276 10,138 3,896 -------- -------- -------- -------- Net income $ 5,372 $ 2,767 $ 15,790 $ 5,992 ======== ======== ======== ======== Per common share: Net Income $ .84 $ .44 $ 2.49 $ .96 Dividends $ .35 $ .35 $ 1.05 $ 1.05 Average common shares outstanding 6,371,543 6,259,538 6,331,867 6,241,267 See accompanying notes.
-1- BARNES GROUP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited)
September 30, December 31, 1994 1993 ------------ ----------- ASSETS Current assets Cash and cash equivalents $ 19,018 $ 24,129 Accounts receivable, less allowances (1994 - $2,834; 1993 - $2,217) 91,635 77,651 Inventories Finished goods 27,948 25,527 Work-in-process 17,779 17,117 Raw materials and supplies 8,030 7,847 -------- -------- 53,757 50,491 Deferred income taxes and prepaid expenses 16,591 16,469 -------- -------- Total current assets 181,001 168,740 Deferred income taxes 23,438 22,277 Property, plant and equipment 272,906 256,606 Less accumulated depreciation 164,167 153,563 -------- -------- 108,739 103,043 Goodwill, net 20,761 21,201 Other assets 16,972 18,035 -------- -------- $350,911 $333,296 ======== ======== See accompanying notes.
-2- BARNES GROUP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited)
September 30, December 31, 1994 1993 ------------ ----------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Notes and overdrafts payable $ 7,019 $ 10,553 Accounts payable 31,387 27,165 Accrued liabilities 45,575 42,003 Guaranteed ESOP obligation - current 2,130 2,008 -------- -------- Total current liabilities 86,111 81,729 Long-term debt 70,000 70,000 Guaranteed ESOP obligation 10,398 12,011 Deferred income taxes and other liabilities 11,327 12,369 Accrued retirement benefits 66,572 65,338 Stockholders' equity Common stock - par value $1.00 per share Authorized: 20,000,000 shares Issued: 7,345,923 shares stated at 15,737 15,737 Additional paid-in capital 27,901 28,745 Retained earnings 116,935 107,668 Foreign currency translation adjustments (5,870) (6,464) Treasury stock at cost, 1994 - 944,811 shares 1993 - 1,052,440 shares (35,672) (39,818) -------- -------- 119,031 105,868 Guaranteed ESOP obligation (12,528) (14,019) -------- -------- 106,503 91,849 -------- -------- $350,911 $333,296 ======== ======== See accompanying notes.
-3- BARNES GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months ended September 30, 1994 and 1993 (Dollars in thousands) (Unaudited)
1994 1993 -------- -------- Operating Activities Net income $ 15,790 $ 5,992 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 18,456 17,895 Gain on sale of property, plant and equipment (176) (443) Translation losses 490 1,195 Changes in assets and liabilities: Accounts receivable (15,247) (7,767) Inventories (3,028) (1,487) Accounts payable and accrued liabilities 8,695 (965) Deferred income taxes 81 946 Other liabilities and assets (921) (3,012) -------- -------- Net Cash Provided by Operating Activities 24,140 12,354 Investing Activities Proceeds from sale of property, plant and equipment 2,647 3,604 Capital expenditures (21,913) (17,973) Other (1,754) (2,292) -------- --------- Net Cash Used by Investing Activities (21,020) (16,661) Financing Activities Net decrease in notes and overdrafts payable (3,548) (2,870) Proceeds from the issuance of common stock 3,058 1,046 Dividends paid (6,654) (6,554) -------- -------- Net Cash Used by Financing Activities (7,144) (8,378) Effect of exchange rate changes on cash flows (1,087) (2,090) -------- -------- Decrease in cash and cash equivalents (5,111) (14,775) Cash and cash equivalents at beginning of period 24,129 39,068 -------- -------- Cash and cash equivalents at end of period $ 19,018 $ 24,293 ======== ======== See accompanying notes.
-4- Notes to Condensed Consolidated Financial Statements: 1. Summary of Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. For additional information, please refer to the consolidated financial statements and footnotes included in the company's Annual Report on Form 10-K for the year ended December 31, 1993. In the opinion of management, all adjustments, including normal recurring accruals considered necessary for a fair presentation, have been included. All material, non-recurring accruals and adjustments are disclosed below. Operating results for the nine-month period ended September 30, 1994 are not necessarily indicative of the results that may be expected for the year ending December 31, 1994. 2. Plant closings and restructurings In the first quarter of 1993, the company took a pre-tax charge of $3.4 million, or 33 cents per share (net of tax benefits), related to a consolidation in its Aerospace business segment. The consolidation involved moving the Central Metals Products division from a leased facility in East Windsor, CT to owned space at the Windsor Manufacturing division in Windsor, CT and an associated reduction in the workforce. The charge also provided for a reduction in employment at its fabrication units. 3. Contingency In December, 1991, the company was notified that McDonnell Douglas Corp. was terminating for default an $8.2 million contract with the company's Flameco division. In the fourth quarter of 1992, the company wrote off $4.0 million of net assets related to this contract. The company believes it has legitimate defenses to the default claim. While no reasonable estimate of possible loss or range of loss can be made at this time, management believes that it is unlikely that the ultimate resolution of this dispute will have a material effect on future results of operations of the company. In management's opinion, the ultimate resolution of this dispute, regardless of the outcome, will not have a material effect on the financial position of the company. 4. Income Taxes The company's effective tax rates for the first nine months of both 1994 and 1993 were approximately 39%. In the third quarter of 1993, the company recorded a tax benefit of $800,000, resulting from the revaluation of deferred tax assets retated to an increase in the federal tax rate applicable to corporations. Without this tax benefit in 1993, the rate would have been 47%. -5- The 1994 effective rate (39%), compared to the 1993 rate without the $800,000 tax benefit (47%), was lower primarily because foreign losses, for which there are no tax benefits, comprise a much smaller percentage of consolidated income before income taxes in 1994 than 1993. Also contributing to the lower effective tax rate in 1994 is a higher level of income in 1994 in certain foreign tax jurisdictions where the tax rate is lower than the U.S. federal statutory income tax rate. Item 2. Management's Discussion and Analysis Sales ----- The company's 1994 nine months sales were $425.5 million, up 13% from $377.6 million in 1993. Third quarter 1994 sales were up 14% to $140.3 million from the third quarter of 1993 level of $123.1 million. These results reflect continued sales gains by Associated Spring's worldwide operations and at Bowman. Associated Spring's 1994 first nine month sales increased 18% to $205.6 million from $174.0 million in 1993. Third quarter sales were $68.3 million, up 22% from last year's $56.0 million. Sales were strong in all market sectors, especially transportation and electronics. Bowman Distribution's sales were up 11% for the first nine months of 1994 to $162.7 million from 1993's level of $145.9 million. Third quarter sales were $53.7 million, up 9% from $49.2 million in 1993. The 1994 sales gains were primarily a result of the progress made in its U.S. industrial maintenance supply business. Barnes Aerospace 1994 nine month sales were down slightly to $57.7 million versus $58.4 million in 1993. Third quarter sales improved however to $18.4 million from $18.1 million in 1993's third quarter. The Aerospace segment continues to suffer from soft commercial and military markets. Operating Income ---------------- Operating income in 1994 improved substantially over the same 1993 periods. 1993's operating income included a first quarter provision of $3.4 million for the consolidation of the Aerospace machining business. Eliminating the effect of this provision, operating income for the first nine months of 1994 increased 74%, to $28.6 million from $16.5 million in 1993. Operating income of $10.2 mil- lion for the third quarter of 1994 was $5.3 million higher than 1993. Both Associated Spring and Bowman Distribution reported significant improvements in operating income. Associated Spring benefited significantly from sales volume increases, gains in manufacturing productivity and tight control of administrative expenses. -6- Bowman Distribution's improvement in operating income in 1994 result- ed from higher sales volume and from cost cutting. However, the cost of expansion of the Bowman System business in Europe continues to dampen overall segment operating income. Barnes Aerospace sharply reduced its operating losses in 1994. Consolidation of manufacturing facilities, workforce reductions and improvements in manufacturing efficiencies all contribued to the improvement in operating results. However, new project start-up expenses and excess costs at its advanced fabrication business partially offset these gains. Additional measures are being taken to enhance performance in all of the group's operations. Consolidated selling and administrative expenses, expressed as a ratio to sales, decreased in 1994 compared to 1993 as a result of excellent expence control. Non-operating Income/Expense ---------------------------- Other income in 1994 increased over 1993 primarily due to an increase in interest income and an increase in equity income from NASCO, the company jointly-owned by Barnes Group and NHK Ltd of Japan. The primary reason for the decrease in other expenses for the first nine months of 1994 compared to 1993 was lower foreign exchange losses. Cash Flows ---------- In the first three quarters of 1994, operating activities provided $24.1 million of net cash flow, a substantial increase over the $12.4 million provided in the same 1993 period. The improvement was due to the company's strong earnings in 1994. The higher level of receivables, payables and accrued liabilities is a result of sales growth at Associated Spring and Bowman Distribution in 1994. Net cash used by investing activities in 1994 increased $4.4 million over 1993 due to increased capital expenditures at Associated Spring. These expenditures are primarily for state-of-the-art equipment that will increase both productivity and product quality and enhance the group's competitiveness in the world market. Financing activities in both 1994 and 1993 used cash to reduce notes and overdrafts payable and to fund dividend payments, partially offset by proceeds from the issuance of common stock. Liquidity and Capital Resources ------------------------------- The company's liquidity, measured in terms of working capital, increased $7.9 million to $94.9 million at September 30, 1994 from the December 31, 1993 level. The current ratio approximated 2.1 at September 30, 1994 and December 31, 1993. The ratio of interest bearing debt to total capitalization was down slightly to 28% at September 30, 1994 from 31% at December 31, 1993. -7- For this purpose, total capitalization is defined as total interest- bearing debt, plus deferred income taxes and other long-term liabilities, accrued retirement benefits and stockholders' equity excluding the guaranteed ESOP obligation. The company maintains substantial bank borrowing facilities to supplement internal cash generation. At September 30, 1994, the company had $100.0 million of borrowing capacity available under its revolving credit agreement. In addition, the company maintains approximately $200.0 million in uncommitted short-term bank credit lines, of which $26.0 million was borrowed at September 30, 1994. The company believes these credit facilities coupled with cash generated from operations are adequate for its anticipated future requirements. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K -------------------------------- No reports on Form 8-K were filed during the quarter ended September 30, 1994. SIGNATURES Pursuant to the requirements 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. Barnes Group Inc. (Registrant) Date November 11, 1994 By John E. Besser ----------------- --------------------------- John E. Besser Senior Vice President Finance and Law Date November 11, 1994 By George J. Crowley ----------------- --------------------------- George J. Crowley Vice President, Controller -8- EX-27 2 ARTICLE 5 FINANCIAL DATA SCHEDULE 3RD QTR 1994 FORM 10-Q
5 1,000 9-MOS DEC-31-1993 JAN-01-1994 SEP-30-1994 19,018 0 91,635 2,834 53,757 181,001 272,906 164,167 350,911 86,111 0 15,737 0 0 90,766 350,911 425,520 425,520 272,160 272,160 124,766 0 3,996 25,928 10,138 15,790 0 0 0 15,790 2.49 2.49
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