-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FPBHLU+THNLeOMNodlWmZ0ua4vptoBlqft7e2PWfx0czPFHLQy2Pvu038VP0Wm+3 vkMZFArB+maT2lYQK2uRMg== 0000009984-98-000002.txt : 19980518 0000009984-98-000002.hdr.sgml : 19980518 ACCESSION NUMBER: 0000009984-98-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 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: SEC FILE NUMBER: 001-04801 FILM NUMBER: 98624184 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 MARCH 31, 1998 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM l0-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 March 31, 1998 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 (860) 583-7070 Number of common shares outstanding at May 7, 1998 - 20,281,216 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 the Quarterly period ended March 31, 1998
DESCRIPTION PAGES ----------- ----- PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Statements of Income for the three months ended March 31, 1998 and 1997 3 Consolidated Balance Sheets as of March 31, 1998 and December 31, 1997 4-5 Consolidated Statements of Cash Flows for the three months ended March 31, 1998 and 1997 6 Notes to Consolidated Financial Statements 7-8 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-11 PART II. OTHER INFORMATION ITEM 4. Submission of Matters to Vote of Security Holders 11 ITEM 6. Exhibits and Reports on Form 8-K 12 Signatures 12
-2- PART I. FINANCIAL INFORMATION Item 1. Financial Statements BARNES GROUP INC. CONSOLIDATED STATEMENTS OF INCOME Three months ended March 31, 1998 and 1997 (Dollars in thousands, except per share data) (Unaudited)
1998 1997 -------- -------- Net sales $168,916 $158,133 Cost of sales 111,358 102,946 Selling and administrative expenses 38,178 38,383 -------- -------- 149,536 141,329 -------- -------- Operating income 19,380 16,804 Other income 1,196 920 Interest expense 1,125 1,288 Other expenses 505 247 -------- -------- Income before income taxes 18,946 16,189 Income taxes 7,105 6,071 -------- -------- Net income $ 11,841 $ 10,118 ======== ======== Per common share: Net income: Basic $ .59 $ .50 Diluted .58 .49 Dividends .17 .15 Average common shares outstanding 20,173,149 20,085,390
[FN] See accompanying notes. -3- BARNES GROUP INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
ASSETS March 31, December 31, 1998 1997 -------- ----------- (Unaudited) Current assets Cash and cash equivalents $ 40,429 $ 32,530 Accounts receivable, less allowances (1998-$2,833; 1997-$3,061) 98,317 91,757 Inventories Finished goods 30,421 30,519 Work-in-process 19,740 17,369 Raw materials and supplies 15,186 13,194 -------- -------- 65,347 61,082 Deferred income taxes and prepaid expenses 17,559 17,648 -------- -------- Total current assets 221,652 203,017 Deferred income taxes 22,849 24,083 Property, plant and equipment 342,584 334,836 Less accumulated depreciation 206,380 201,006 -------- -------- 136,204 133,830 Goodwill 18,636 18,773 Other assets 27,917 28,275 -------- -------- Total assets $427,258 $407,978 ======== ========
[FN] See accompanying notes. -4- BARNES GROUP INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY March 31, December 31, 1998 1997 --------- ----------- (Unaudited) Current liabilities Notes payable $ 8,759 $ 2,437 Accounts payable 44,498 37,776 Accrued liabilities 45,105 46,966 Guaranteed ESOP obligation-current 2,800 2,746 -------- -------- Total current liabilities 101,162 89,925 Long-term debt 60,000 60,000 Guaranteed ESOP obligation 1,484 2,205 Accrued retirement benefits 67,209 67,486 Other liabilities 6,575 7,503 Stockholders' equity Common stock-par value $0.01 per share Authorized: 60,000,000 shares Issued: 22,037,769 shares stated at par value 220 220 Additional paid-in capital 48,211 47,007 Retained earnings 192,288 183,857 Accumulated other comprehensive income (16,336) (15,841) Treasury stock at cost, 1998-1,807,818 shares 1997-1,875,111 shares (29,271) (29,433) Guaranteed ESOP obligation (4,284) (4,951) -------- -------- Total stockholders' equity 190,828 180,859 -------- -------- Total liabilities and stockholders' equity $427,258 $407,978 ======== ========
[FN] See accompanying notes. -5- BARNES GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended March 31, 1998 and 1997 (Dollars in thousands) (Unaudited)
1998 1997 Operating Activities: ------- ------- Net income $11,841 $10,118 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 7,110 6,785 Loss (gain) on sale of property, plant and equipment 3 (137) Changes in assets and liabilities: Accounts receivable (6,609) (13,825) Inventories (4,252) (1,766) Accounts payable 6,702 5,803 Accrued liabilities (1,877) (2,779) Deferred income taxes 1,772 411 Other (169) (1,348) ------- ------- Net Cash Provided by Operating Activities 14,521 3,262 Investing Activities: Proceeds from sale of property, plant and equipment 70 766 Capital expenditures (8,832) (9,161) Other (473) (506) ------- ------- Net Cash Used by Investing Activities (9,235) (8,901) Financing Activities: Net increase in notes payable 6,395 2,056 Proceeds from the issuance of common stock 1,669 3,848 Common stock repurchases (1,560) -- Dividends paid (3,373) (3,020) ------- ------- Net Cash Provided by Financing Activities 3,131 2,884 Effect of exchange rate changes on cash flows (518) (99) ------- ------- Increase (decrease) in cash and cash equivalents 7,899 (2,854) Cash and cash equivalents at beginning of period 32,530 23,986 ------- ------- Cash and cash equivalents at end of period $40,429 $21,132 ======= =======
[FN] 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, 1997. In the opinion of management, all adjustments, including normal recurring accruals considered necessary for a fair presentation, have been included. Operating results for the three-month period ended March 31, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. 2. Other Comprehensive Income -------------------------- In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income". This Statement establishes standards for reporting and displaying comprehensive income and its components in a full-set of financial statements. For interim reporting, the Statement requires the disclosure of total comprehensive income for the periods presented. The Statement is effective for fiscal periods beginning after December 15, 1997. Comprehensive income is defined as "the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources". This would include net income and "other comprehensive income" but exclude the sale and repurchases of stock and distribution of dividends. The only item of "other comprehensive income" the Company has is foreign currency translation adjustments. The effect of these adjustments reduced comprehensive income in the first quarter of 1998 by $0.5 million to $11.3 million and by $1.7 million to $8.4 million in the comparable 1997 period. -7- 3. Segment Disclosure ------------------ Effective January 1, 1998, management responsibility for Raymond Distribution was transferred from the Associated Spring Group to the Bowman Distribution Group. Raymond is engaged in the distribution of industrial products and of standard stock wire and flat springs manufactured primarily by Associated Spring. The transfer of Raymond to the Bowman Group will maximize synergy in the Company's distribution operations. All references to prior year segment data have been restated to reflect this transfer. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131, "Disclosure About Segments of an Enterprise and Related Information". The Statement is effective for the Company's 1998 annual financial statements and interim periods beginning in the second year of application. Although management has not completed its review of the new Standard, it does not anticipate that adoption of the Standard will have a significant effect on the Company's reporting segments. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations --------------------- The Company's first quarter 1998 consolidated sales were $168.9 million, up 6.8% from last year's results of $158.1 million. Operating income increased 15.3% in 1998 to $19.4 million compared to $16.8 million in 1997. Operating income margin in 1998 was 11.5%, compared to 10.6% in the prior year's first quarter. These results reflect period-over-period sales and earnings growth in all three business segments. Consolidated cost of sales as a percentage of sales was 65.9% in 1998 versus 65.1% in 1997. Selling and administrative expenses were 22.6% of sales compared to 24.3% in 1997's first quarter. Segment Review-Sales and Operating Income ------------------------------------------ Associated Spring segment sales for first quarter 1998 increased 3.0% over last year's comparable period. Sales were $68.5 million -8- versus $66.5 million in 1997. Operating income was slightly higher than last year's strong performance. The group's North American operations reported solid quarter-over-quarter growth on the continued strength of the automotive and durable goods markets. The Mexico operation reported a much improved first quarter having overcome the operating problems encountered in the second quarter of 1997. The Singapore operation reported lower sales and profits primarily due to softer telecommunications and electronics business. Bowman Distribution segment sales increased 2.7% to $66.5 million in the first three months of 1998 versus $64.8 million in 1997 as nearly all units reported sales gains. All units improved their operating results over 1997's first quarter. These gains resulted from the expansion of business with large, multi-location maintenance, repair and operating supply customers as well as cost containment within the selling and administrative expense functions. Barnes Aerospace segment first quarter 1998 sales of $37.7 million, improved 25.7% over a strong first quarter 1997 sales of $30.0 million. Significant sales gains were reported in both the original equipment manufacture and overhaul and repair businesses. This is a result of the strong commercial aviation engine and airframe markets. Operating income for the group also improved substantially over the very solid 1997 first quarter results. Non-Operating Income/Expense ---------------------------- In 1998 and 1997 other income includes $0.7 million and $0.4 million, respectively, from the Company's investment in NASCO and a small net foreign exchange gain in 1997. Other expenses in 1998 reflect a net foreign exchange loss of $0.2 million. Income Taxes ------------ The Company's effective tax rate for both the first quarter 1998 and 1997 was 37.5%. Net Income and Net Income Per Share ----------------------------------- Consolidated net income for the first quarters of 1998 and 1997 was $11.8 million and $10.1 million, respectively. Basic earnings per share for 1998 first quarter was $.59 compared to 1997's $.50 per -9- share. On a diluted basis, earnings per share were $.58 in 1998 and $.49 in 1997. This is the Company's best ever quarter in terms of net income and earnings per share and is the eighth consecutive quarter of record breaking results. There were no adjustments to net income for the purpose of computing income available to common stockholders for the first quarters of 1998 and 1997, respectively. For purpose of computing dilutive earnings per share, the weighted average number of shares outstanding were increased 387,716 and 413,916 for the first quarters of 1998 and 1997, respectively, representing the potential dilutive effects of stock-based plans. Financial Condition ------------------- Cash Flows ---------- Net cash generated by operating activities in the first three months of 1998 was a very strong $14.5 million, an increase of $11.2 million over the first quarter of 1997. In both years, strong earnings, after adjustments for the non-cash charges for depreciation and amortization, more than offset the net change in operating assets and liabilities. The solid increase in cash generated in 1998 compared to 1997 was enhanced by the Company's continuing efforts to manage working capital. Net cash used by investing activities in the first quarter of 1998 was $9.2 million compared to $8.9 million in 1997. During 1998, all three business segments continued investing in new equipment in order to improve productivity, quality and customer service. Net cash provided by financing activities was $3.1 million in the first quarter of 1998 and $2.9 million in 1997's first quarter. Additional borrowings to support normal first quarter 1998 short- term working capital requirements was the reason for the increase in financing levels. Liquidity and Capital Resources ------------------------------- During 1998 and 1997, the Company's long-term debt was comprised, in part, of borrowings under its short-term bank lines of credit backed by its long-term revolving credit agreement. At March 31, 1998, the company classified as long-term debt $6.5 million of -10- borrowings under its lines of credit and $6.2 million of the current portion of its 9.47% long-term Notes. The Company has both the intent and the ability, through its revolving credit agreement, to refinance these amounts on a long-term basis. The Company intends to continue this cost-effective approach of long-term financing. The Company maintains substantial bank borrowing facilities to supplement internal cash generation. At March 31, 1998, the company had $150.0 million of borrowing capacity under its long- term revolving credit agreement of which none was borrowed. The Company had $13.0 million in borrowings under uncommitted short- term bank credit lines at March 31, 1998. The interest rates on these borrowing were 5.74%. The Company believes its credit facilities coupled with cash generated from operations are adequate for its anticipated future requirements. PART II. OTHER INFORMATION Item 4. Submission of Matters to Vote of Security Holders ------------------------------------------------- (a) The Annual Meeting of the registrant's stockholders was held on April 8, 1998. Proxies for the meeting were solicited pursuant to Regulation 14 A. (c) (1) The following directors were elected:
Votes in Votes For Terms Director Favor Withheld Expiring -------- ----- -------- -------- George T. Carpenter 18,280,674 308,234 2001 Donna R. Ecton 18,303,374 285,534 2001 Frank E. Grzelecki 18,270,885 318,023 2001
(2) The stockholders approved the selection of Price Waterhouse LLP as the Company's independent accountants for 1998. The proposal was adopted as 18,282,159 shares voted for, 190,914 shares voted against, 115,835 shares abstained and there were no non-votes. -11- Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits Exhibit 27.1 Financial Data Schedule, March 31, 1998 Exhibit 27.2 Financial Data Schedule, Restated 1997 Exhibit 27.3 Financial Data Schedule, Restated 1995 and 1996 (b) Reports on Form 8-K No reports on Form 8-K, Item 5, Other Events, were filed during the quarter ended March 31, 1998. 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 May 14, 1998 By /s/ Terry M. Murphy ------------ ------------------------------------- Terry M. Murphy Senior Vice President, Finance (the principal financial officer) Date May 14, 1998 By /s/ Francis C. Boyle, Jr. ------------ ------------------------------------- Francis C. Boyle, Jr. Vice President, Controller (the principal accounting officer) -12- EX-27.1 2 EX-27.1 FINANCIAL DATA SCHEDULE, MARCH 31, 1998
5 This schedule contains summary financial information extracted from the consolidated balance sheet of Barnes Group Inc. at March 31, 1998, and the related consolidated statement of income for the three months ended March 31, 1998, and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 40,429 0 101,150 2,833 65,347 221,652 342,584 206,380 427,258 101,162 61,484 0 0 220 190,608 427,258 168,916 168,916 111,358 111,358 0 (68) 1,125 18,946 7,105 11,841 0 0 0 11,841 .59 .58 Basic and diluted earnings per share calculated in accordance with Statement of Financial Accounting Standards No. 128.
EX-27.2 3 EX-27.2 FINANCIAL DATA SCHEDULE, RESTATED 1997
5 These schedules contain summary financial information extracted from the consolidated balance sheets and the consolidated statements of income of Barnes Group Inc. for the periods presented and is qualified in its entirety by reference to such financial statements. Earnings per share have been restated to be in compliance with Statement of Financial Accounting Standards No. 128 (FAS 128) "Earnings Per Share". 1,000 3-MOS 6-MOS 9-MOS DEC-31-1997 DEC-31-1997 DEC-31-1997 JAN-01-1997 JAN-01-1997 JAN-01-1997 MAR-31-1997 JUN-30-1997 SEP-30-1997 21,132 29,154 36,466 0 0 0 104,403 102,442 97,701 3,107 2,699 2,797 66,218 66,437 65,338 202,921 209,460 212,694 325,230 332,245 335,587 192,919 196,465 200,059 403,227 414,095 417,186 85,502 88,398 88,652 74,285 73,605 72,912 0 0 0 0 0 0 220 220 220 167,126 175,983 179,539 403,227 414,095 417,186 158,133 324,000 482,538 158,133 324,000 482,538 102,946 214,189 319,530 102,946 214,189 319,530 0 0 0 123 363 674 1,288 2,525 3,743 16,189 33,331 49,563 6,071 12,499 18,586 10,118 20,832 30,977 0 0 0 0 0 0 0 0 0 10,118 20,832 30,977 .50 1.03 1.53 .49 1.01 1.50 Restated basic and diluted EPS calculated in accordance with FAS 128.
EX-27.3 4 EX-27.3 FINANCIAL DATA SCHEDULE, RESTATED 1995 AND 1996
5 These schedules contain summary financial information extracted from the consolidated balance sheets and the consolidated statements of income of Barnes Group Inc. for the periods presented and is qualified in its entirety by reference to such financial statements. Earnings per share have been restated to be in compliance with Statement of Financial Accounting Standards No. 128 (FAS 128) "Earnings Per Share". In addition, earnings per share amounts have been restated for the 3-for-1 stock split effective April, 1997. 1,000 YEAR 3-MOS 6-MOS 9-MOS YEAR DEC-31-1995 DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996 JAN-01-1995 JAN-01-1996 JAN-01-1996 JAN-01-1996 JAN-01-1996 DEC-31-1995 MAR-31-1996 JUN-30-1996 SEP-30-1996 DEC-31-1996 17,868 15,780 24,442 21,438 23,986 0 0 0 0 0 89,721 96,310 97,876 98,605 91,218 3,635 3,381 3,091 2,940 3,158 56,749 62,205 64,032 65,701 64,942 172,816 184,648 197,001 196,616 190,298 297,832 303,671 309,690 316,765 320,604 174,962 179,844 184,763 188,012 189,533 361,549 373,647 390,200 393,559 389,956 77,536 85,405 93,093 90,494 80,822 77,491 76,874 76,246 75,605 74,951 0 0 0 0 0 0 0 0 0 0 15,737 15,737 15,737 15,737 15,737 113,104 119,240 127,441 134,572 141,427 361,549 373,647 390,200 393,559 389,956 592,509 150,091 302,695 449,775 594,989 592,509 150,091 302,695 449,775 594,989 382,150 97,173 196,060 290,957 384,722 382,150 97,173 196,060 290,957 384,722 0 0 0 0 0 1,577 82 155 234 545 5,274 1,288 2,588 3,911 4,981 45,450 10,535 24,278 38,100 52,310 17,966 3,898 8,983 14,097 19,742 27,484 6,637 15,295 24,003 32,568 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 27,484 6,637 15,295 24,003 32,568 1.40 .34 .77 1.21 1.63 1.38 .33 .76 1.19 1.61 Restated basic and diluted EPS calculated in accordance with FAS 128 and adjusted for the 3-for-1 stock split.
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