0000009984-95-000025.txt : 19950815 0000009984-95-000025.hdr.sgml : 19950815 ACCESSION NUMBER: 0000009984-95-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARNES GROUP INC CENTRAL INDEX KEY: 0000009984 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [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: 95562992 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 JUNE 30, 1995 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-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 June 30, 1995 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 July 28, 1995 - 6,580,254 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 --- --- -1- BARNES GROUP INC. FORM 10-Q INDEX For Quarterly period ended June 30, 1995
DESCRIPTION PAGES ----------- ----- PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Statements of Income for the six months and second quarter ended June 30, 1995 and 1994 3 Consolidated Balance Sheets as of June 30, 1995 and December 31, 1994 4-5 Consolidated Statements of Cash Flows for the six months ended June 30, 1995 and 1994 6 Notes to the Consolidated Financial Statements 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K 11 Signatures 11
-2- PART I. FINANCIAL INFORMATION Item 1. Financial Statements BARNES GROUP INC. CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share data) (Unaudited)
Three months ended Six months ended June 30, June 30, ------------------ ----------------- 1995 1994 1995 1994 -------- -------- --------- ------- Net sales $150,993 $143,157 $309,611 $285,259 Cost of sales 96,227 91,770 197,118 182,472 Selling and admin- istrative expenses 41,356 41,763 84,536 84,365 -------- -------- -------- -------- 137,583 133,533 281,654 266,837 -------- -------- -------- -------- Operating income 13,410 9,624 27,957 18,422 Other income 1,144 1,142 2,351 2,263 Interest expense 1,465 1,296 2,892 2,676 Other expenses 1,082 743 1,530 1,124 -------- -------- -------- -------- Income before income taxes 12,007 8,727 25,886 16,885 Income taxes 4,660 3,204 10,199 6,467 -------- -------- -------- -------- Net income $ 7,347 $ 5,523 $ 15,687 $ 10,418 ======== ======== ======== ======== Per common share: Net Income $ 1.12 $ .87 $ 2.41 $ 1.65 Dividends .40 .35 .80 .70 Average common shares outstanding 6,552,198 6,327,109 6,507,918 6,311,701 See accompanying notes.
-3- BARNES GROUP INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
ASSETS June 30, December 31, 1995 1994 -------- ----------- (Unaudited) Current assets Cash and cash equivalents $ 14,957 $ 22,023 Accounts receivable, less allowances (1995-$3,012; 1994-$3,222) 98,269 86,877 Inventories Finished goods 28,922 28,769 Work-in-process 16,527 13,697 Raw materials and supplies 10,222 8,379 -------- -------- 55,671 50,845 Deferred income taxes and prepaid expenses 16,033 15,792 -------- -------- Total current assets 184,930 175,537 Deferred income taxes 22,686 23,854 Property, plant and equipment 284,537 276,185 Less accumulated depreciation 168,909 163,616 -------- -------- 115,628 112,569 Goodwill 20,321 20,614 Other assets 19,339 19,382 -------- -------- Total assets $362,904 $351,956 ======== ======== See accompanying notes.
-4- BARNES GROUP INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31, 1995 1994 --------- ----------- (Unaudited) Current liabilities Notes payable $ 6,262 $ 7,903 Accounts payable 31,436 31,424 Accrued liabilities 41,131 45,713 Guaranteed ESOP obligation-current 2,258 2,172 -------- -------- Total current liabilities 81,087 87,212 Long-term debt 70,000 70,000 Guaranteed ESOP obligation 8,688 9,839 Accrued retirement benefits 67,389 66,817 Other liabilities 11,196 10,949 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 27,457 27,772 Retained earnings 129,489 118,938 Foreign currency translation adjustments (8,314) (8,715) Treasury stock at cost, 1995-768,974 shares 1994-916,748 shares (28,879) (34,582) -------- -------- 135,490 119,150 Guaranteed ESOP obligation (10,946) (12,011) -------- -------- Total stockholders' equity 124,544 107,139 -------- -------- Total liabilities and stockholders' equity $362,904 $351,956 ======== ======== See accompanying notes.
-5- BARNES GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months ended June 30, 1995 and 1994 (Dollars in thousands) (Unaudited)
1995 1994 ------- ------- Operating Activities Net income $15,687 $10,418 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 13,926 12,351 Gain on sale of property, plant and equipment (137) (149) Translation losses 205 597 Changes in assets and liabilities: Accounts receivable (11,413) (14,588) Inventories (4,389) 969 Accounts payable 95 4,020 Accrued liabilities (4,323) 2 Deferred income taxes 2,373 625 Other liabilities and assets (581) (42) ------- ------- Net Cash Provided by Operating Activities 11,443 14,203 Investing Activities Proceeds from sale of property, plant and equipment 501 1,338 Capital expenditures (16,142) (14,886) Other (1,004) (1,252) ------- ------- Net Cash Used by Investing Activities (16,645) (14,800) Financing Activities Net decrease in notes payable (1,641) (2,704) Proceeds from the issuance of common stock 5,220 1,522 Dividends paid (5,221) (4,419) ------- ------- Net Cash Used by Financing Activities (1,642) (5,601) Effect of exchange rate changes on cash flows (222) (1,281) ------- ------- Decrease in cash and cash equivalents (7,066) (7,479) Cash and cash equivalents at beginning of period 22,023 24,129 ------- ------- Cash and cash equivalents at end of period $14,957 $16,650 ======= ======= See accompanying notes.
-6- Notes to Consolidated Financial Statements: 1. Summary of Significant Accounting Policies ------------------------------------------ The accompanying unaudited 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, 1994. In the opinion of management, all adjustments, including normal recurring accruals considered necessary for a fair presentation, have been included. Operating results for the six-month period ended June 30, 1995 are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. 2. Contingency ----------- In December, 1991, the company was notified by the McDonnell Douglas Corporation that McDonnell Douglas was terminating for default an $8.2 million contract with the company's Advanced Fabrication unit. In 1992, the company wrote off $4.0 million of net assets related to this contract previously included in its financial statements. The company believed from the onset that it had legitimate defenses to the default claim. In June 1995, this dispute was settled to the satisfaction of both parties with no further financial impact on the results of operations or on the financial position of the company. -7- Item 2. Management's Disscussion and Analysis of Financial Condition and Results of Operations Results of Operations --------------------- Sales ----- The company's 1995 first half sales were $309.6 million, up 9% from $285.3 million in 1994. Second quarter 1995 sales were up 5% to $151.0 million from the 1994 level of $143.2 million. The increase reflects sales gains at all three operating groups. Associated Spring's 1995 first half sales increased 7% to $147.3 million from $137.3 million in 1994. Second quarter sales were $72.4 million, up 4% from a year ago. The North American manufacturing business was affected by a softening of the U.S. automotive market and work slowdowns caused by the slow progress in contract negotiations at several plants represented by the UAW. These factors were offset by very strong performances by the group's overseas manufacturing operations and the Raymond Distribution division. Bowman Distribution's 1995 first half sales were $116.6 million up 7% from the 1994 level of $108.9 million. Second quarter 1995 sales increased 2% to $55.6 million versus $54.6 million in 1994. All business units reported period-over-period sales improvements with the exception of Bowman U.S. whose sales were slightly lower in the second quarter of 1995 compared with 1994's second quarter. The sales decline was caused by a number of factors including softening demand in several key market segments and lower than planned employment levels in its field sales organization. Bowman U.S. is the group's largest business unit. Barnes Aerospace's 1995 first half sales climbed 18% to $46.2 million from 1994's first half sales of $39.3 million. Second quarter 1995 sales of $23.2 million increased 23% over 1994's second quarter sales of $18.8 million. All units reported period-over-period improvements with the strongest gains made in the Advanced Fabrications and Repair and Overhaul businesses. Operating Income ---------------- Operating income in 1995 improved significantly over strong 1994 results. Consolidated operating income for the first half of 1995 was up 52% to $28.0 million from the $18.4 million reported in the first half of 1994. Second quarter 1995 operating income of $13.4 million was 39% higher than the $9.6 million reported in 1994's second quarter. -8- Associated Spring's operating income in the second quarter and first half of 1995 kept pace with its sales growth as a small increase in the gross margin offset an increase in selling and administrative expenses as a percent of sales. Bowman Distribution's second quarter and first half operating income improved substantially in 1995 over 1994 as a result of higher sales volume and significantly lower selling and administrative costs expressed as a percentage of sales. Barnes Aerospace's operating results improved significantly for both the second quarter and first half of 1995 over the comparable 1994 periods as higher sales volumes and lower costs expressed as a percent of sales resulted in strong year-over-year profit growth. Non-operating Income/Expense ---------------------------- Other income for the first half of 1995 was up slightly over the prior year due primarily to an increase in interest income on funds invested in Brazil. Interest expense for the first six months of 1995 was somewhat higher than in the comparable 1994 period due to higher interest rates offset in part by lower debt levels. Other expenses increased in 1995 over 1994 primarily due to foreign exchange and translation losses. Financial Condition ------------------- Cash Flows ---------- In the first half of 1995, net cash flows provided by operating activities was $11.4 million. Strong earnings, adjusted for depreciation and amortization and an increase in deferred income taxes, more than offset the increase in accounts receivable and inventories and a decrease in accrued liabilities. The changes in operating assets and liabilities are a result of the increase in 1995's first half business activity. In 1994, operating activities provided $14.2 million of net cash flows. Earnings, adjusted for depreciation and amortization and an increase in accounts payable, more than offset the increase in accounts receivable. The increase in accounts receivable resulted from sales growth during the first half 1994. -9- Net cash used by investing activities for the first six months of 1995 was $16.6 million compared to $14.8 million in 1994's first half. Expenditures for property, plant and equipment increased $1.3 million or 8% period-over-period as the three operating groups continued to invest in new equipment to improve productivity, quality and customer service. In 1995, net cash used by financing activities was $1.6 million versus $5.6 million in the first half of 1994. This year-over- year decrease was primarily due to proceeds from the issuance of common stock increasing to $5.2 million in 1995 from $1.5 million in 1994 because of an increase in the exercise of stock options. The 1995 increase in dividends paid over the 1994 amount was due to increases in both the dividend per share and number of shares outstanding. Liquidity and Capital Resources ------------------------------- The company's liquidity, measured in terms of working capital, increased $15.5 million to $103.8 million at June 30, 1995 from the December 31, 1994 level. The current ratio was a very strong 2.3 at June 30, 1995 compared with 2.0 at December 31, 1994. The ratio of interest bearing debt to total capitalization approximated 26% at June 30, 1995 compared to 28% at year-end 1994. For this purpose, total capitalization is defined as total interest-bearing debt, plus accrued long-term retirement benefits, other long-term liabilities and stockholders' equity, excluding the guaranteed ESOP obligation. The company maintains substantial bank borrowing facilities to supplement internal cash generation. At June 30, 1995, the company had $100.0 million of borrowing capacity available under its revolving credit agreement. In addition, the company had approximately $155.0 million in uncommitted short-term bank credit lines, of which $29.0 million was in use at June 30, 1995. During 1995 and 1994, the company maintained long-term debt of $70.0 million, comprised, in part, of borrowings under its short- term bank credit lines backed by its long-term revolving credit agreement. The company has found this to be a cost effective approach to long-term financing and intends to continue this approach. The company believes these credit facilities coupled with cash generated from operations are adequate for its anticipated future requirements. -10- PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits Exhibit 27. Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended June 30, 1995. 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 August 14, 1995 By John E. Besser --------------- ------------------------------------- John E. Besser Senior Vice President-Finance and Law Date August 14, 1995 By Francis C. Boyle, Jr. --------------- ------------------------------------- Francis C. Boyle, Jr. Assistant Controller -11- EX-27 2 EXHIBIT 27, ARTICLE 5 FDS FOR 2ND QTR 10-Q, 1995
5 This schedule contains summary financial information extracted from the consolidated balance sheet of Barnes Group Inc. at June 30, 1995 and the related consolidated statement of income for the six months ended June 30, 1995 and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 14,957 0 101,281 3,012 55,671 184,930 284,537 168,909 362,904 81,087 78,688 15,737 0 0 108,807 362,904 309,611 309,611 197,118 197,118 0 394 2,892 25,886 10,199 15,687 0 0 0 15,687 2.41 2.41