Barnes Group Inc. 8-K Exhibit 99.1

EX-99 2 bgi8k022205_exh991.htm BARNES GROUP INC. PRESS RELEASE 2-22-05 Barnes Group Inc. 8-K Exhibit 99.1

Barnes Group Inc.
Executive Office
Bristol, CT 06010
Tel: (860) 583-7070

	NEWS RELEASE

	Brian D. Koppy Investor Relations (860) 973-2126
	Stephen J. McKelvey Corporate Communications (860) 973-2132

BARNES GROUP ANNOUNCES FOURTH QUARTER
AND FULL YEAR FINANCIAL RESULTS

      - Net sales for the quarter rise 14 percent to a record $251.6 million
      - Net sales for the full year rise 12 percent to a record $994.7 million
      - Barnes Aerospace achieves full year record operating profit, sales, orders, and backlog

Bristol, Connecticut, February 22, 2005 --- Barnes Group Inc. (NYSE: B) today announced financial results for the quarter and year ended December 31, 2004. Net sales for the quarter were $251.6 million, up 14 percent from $220.3 million in the fourth quarter of 2003. Net income was $3.3 million or $0.14 per diluted share in the fourth quarter of 2004, compared to $7.0 million, or $0.29 per diluted share in the year-ago period.

Included in the fourth quarter results were pre-tax charges of approximately $4.5 million, or $0.12 per diluted share, for actions implemented to offset higher raw material costs going forward at Associated Spring and to enable the realization of benefits from the Kar Products integration and improved customer service levels at Barnes Distribution. These charges include $3.5 million related to severance costs, which are estimated to generate annual savings of approximately $5.5 million, and $1.0 million in inventory and facility charges. The charges were partially offset by a $0.7 million pre-tax benefit related principally to the reduction of lease obligations on idle facilities within Barnes Distribution.

For all of 2004, net sales were $994.7 million, up 12 percent from $890.8 million last year. Barnes Group's net income was $33.4 million, a slight increase from $33.0 million for the same period a year ago. Diluted earnings per share were $1.40 for the year ended December 31, 2004, compared with $1.49 in 2003. Full-year results excluding the fourth quarter charges of $4.5 million would have been $1.52 per diluted share¹.

"Full year sales of just under $1 billion established a new record for the Company, including sales of $252 million in the fourth quarter," said Edmund M. Carpenter, President and Chief Executive

¹ Page 8 provides the Non-GAAP Financial Measure Reconciliation of this measurement.

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Officer, Barnes Group Inc. "The record sales year was driven by organic growth in each of the Company's business segments."

Sales at Barnes Aerospace were $51.4 million for the fourth quarter of 2004, up 19 percent from $43.4 million in the fourth quarter of 2003, reflecting continued growth in both OEM sales and aftermarket sales. Sales of components for the GE90-115B engine were at the highest levels since the program began and our aftermarket Revenue Sharing Programs continued to generate solid sales. Operating profit increased to $5.5 million for the quarter, from $3.4 million in the comparable year-ago period. Operating profit was positively impacted by the profit contribution from the sharply higher sales volume and the increased percentage of aftermarket activity.

Barnes Aerospace generated record orders of $71.5 million during the quarter ended December 31, 2004, up 66 percent from orders of $43.0 million in the fourth quarter of 2003. Order backlog reached a record $193.8 million at December 31, 2004, up 31 percent from $147.7 million at December 31, 2003. Military orders in the fourth quarter were strong at $23.9 million, and were approximately 33 percent of the total orders received in the most recent quarter.

For all of 2004, sales at Barnes Aerospace were $205.9 million, an increase of 24 percent from $165.7 million in 2003. Operating profit rose 94 percent to a record $20.7 million from $10.7 million compared to a year ago.

"In 2004, Barnes Aerospace achieved record results in operating profits, sales, and orders, generated the highest backlog in its history, and remains optimistic for its continued growth in 2005," stated Carpenter.

Sales at Barnes Distribution were $104.2 million for the fourth quarter of 2004, up 6 percent from $98.3 million in the quarter ended December 31, 2003. Sales from Barnes Distribution's strategic growth initiatives - newly-opened national accounts, e-commerce platforms and Tier 2 relationships with other industrial distributors - rose over 50 percent to $8.1 million in the most recent quarter.

Barnes Distribution had an operating loss of $1.1 million in the fourth quarter, which includes $2.3 million of pre-tax charges related to severance costs of $1.3 million and inventory and facility charges of $1.0 million, compared to an operating profit of $1.0 million in the fourth quarter of 2003. The charges in 2004 were partially offset by a $0.7 million pre-tax benefit related principally to the reduction of lease obligations.

For all of 2004, sales at Barnes Distribution were $424.8 million, up from $400.7 million in 2003. Operating profit was $13.8 million for 2004, down from $16.5 million in 2003.

"For Barnes Distribution, 2004 was an important year as critical initiatives were undertaken and completed providing the necessary operational structure for future growth," stated Carpenter. "With Barnes Distribution's customer service levels back to our targeted range, and the integration efforts now complete, we are well positioned for improved performance in 2005."

Sales at Associated Spring were $97.0 million for the quarter ended December 31, 2004, up 21 percent from $80.3 million in the quarter ended December 31, 2003. Double digit sales growth occurred across all of Associated Spring's key markets. DE-STA-CO Manufacturing, which Barnes Group acquired on September 17, 2004, contributed approximately $7.2 million in sales to Associated Spring during the quarter. Light vehicle sales grew by 11 percent, as growth in sales to transplants continued to outpace our sales to the U.S. automakers. Industrial product sales were up

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a solid 35 percent, and sales of nitrogen gas springs were up approximately 17 percent in the fourth quarter.

Associated Spring's operating profit was $3.3 million for the fourth quarter of 2004, down from $5.1 million in the fourth quarter of 2003. Included in the fourth quarter results is a $2.2 million pre-tax charge for severance costs. In addition, operating results were negatively impacted by approximately $2.6 million related to increased raw material prices.

For all of 2004, sales at Associated Spring were $373.5 million, up from $333.1 million. Operating profit was $22.5 million, down from $26.8 million in 2003.

"Within Associated Spring we continue to diversify our customer base providing enhanced flexibility and increased opportunities for margin improvement. Since 1999, we grew our other businesses which significantly reduced the level of concentration of the Big-3 U.S. automakers light vehicle sales in our total Company sales from 16 percent to less than 9 percent," Carpenter commented.

William C. Denninger, Barnes Group Inc.'s Chief Financial Officer, commented, "Our cash flow and balance sheet remain very strong. We generated over $54 million in cash flow from operating activities during 2004 and ended the year with $36.3 million in cash on our balance sheet. Our debt-to-capitalization ratio at year-end was 44%, within our targeted leverage range. As a result, we are well positioned to support the projected growth in our businesses in 2005."

"During 2004, we implemented critical and necessary actions to address certain business realities. Our successful execution of these efforts has positioned each of our business segments for continued success in 2005," Carpenter added. The Company's targeted earnings for the full year 2005, based on current market conditions, is in the range of $1.70 to $1.80 per diluted share.

Barnes Group will conduct a conference call with investors to discuss fourth quarter and full year 2004 results at 11:00 a.m. ET today. A webcast of the live call, supporting materials and an archived replay will be available on the Barnes Group investor relations link at www.barnesgroupinc.com.

Barnes Group Inc. (www.barnesgroupinc.com) is a diversified international manufacturer of precision metal components and assemblies and a distributor of industrial supplies, serving a wide range of markets and customers. Founded in 1857 and headquartered in Bristol, Connecticut, Barnes Group consists of three businesses with 2004 sales of $994.7 million: Associated Spring, one of the world's largest manufacturers of precision mechanical and nitrogen gas springs and a global supplier of retaining rings, reed valves, shock discs, and injection-molded plastic components; Barnes Aerospace, a manufacturer and repairer of highly engineered assemblies and components for commercial and military aircraft engines, airframes, and land-based industrial gas turbines; and Barnes Distribution, an international, full-service distributor of maintenance, repair, operating, and production supplies. As of December 31, 2004 over 6,000 dedicated employees at 60 locations worldwide contribute to Barnes Group Inc.'s success.

This release may contain certain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements. Investors are encouraged to consider these risks and uncertainties as described within the Company's periodic filings with the Securities and Exchange Commission, including the

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following: the ability of the Company to integrate newly acquired businesses and to realize acquisition synergies on schedule; changes in market demand for the types of products and services produced and sold by the Company; the Company's success in identifying, and attracting customers in new markets; the Company's ability to develop new and enhanced products to meet customers' needs timely; the effectiveness of the Company's marketing and sales programs; uninsured claims; increased competitive activities that could adversely affect customer demand for the Company's products; the availability of raw materials at prices that allow the Company to make and sell competitive products; changes in economic, political and public health conditions worldwide and in the locations where the Company does business; interest and foreign exchange rate fluctuations; and regulatory changes. The Company assumes no obligation to update any forward-looking statements contained in this release.

# # #

Barnes Group Inc. / 5

BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
Unaudited

	Three months ended December 31,								Twelve months ended December 31,

		2004			2003		% Change			2004			2003		% Change


Net sales	$	251,602		$	220,337		14.2		$	994,709		$	890,818		11.7

Cost of sales		168,242			144,642		16.3			654,572			576,835		13.5
Selling and administrative expenses		75,719			66,929		13.1			284,223			261,983		8.5


		243,961			211,571		15.3			938,795			838,818		11.9


Operating income ⁽¹⁾		7,641			8,766		(12.8	)		55,914			52,000		7.5

Operating margin		3.0	%		4.0	%				5.6	%		5.8	%

Other income		426			1,044		(59.1	)		2,145			3,337		(35.7	)

Interest expense		4,127			3,634		13.6			15,390			15,840		(2.8	)
Other expenses		689			139		NM			1,310			1,129		16.0


Income before income taxes		3,251			6,037		(46.1	)		41,359			38,368		7.8

Income taxes (benefit)		(22	)		(919	)	NM			7,958			5,353		48.7


Net income	$	3,273		$	6,956		(53.0	)	$	33,401		$	33,015		1.2


Per common share:
Net income:
Basic	$	.14		$	.31		(54.8	)	$	1.45		$	1.54		(5.8	)
Diluted		.14			.29		(51.7	)		1.40			1.49		(6.0	)
Dividends		.20			.20		---			.80			.80		---

Average common shares outstanding:
Basic	23,181,431			22,770,950			1.8		23,105,853			21,475,336			7.6
Diluted	23,817,543			23,796,154			0.1		23,836,463			22,101,560			7.8

NM- not meaningful

Footnote:
⁽¹⁾ Fourth quarter 2004 operating results include pre-tax charges of approximately $4.5 million for actions implemented to offset higher raw material costs going forward at Associated Spring, and to enable the realization of benefits from the Kar Products integration and improved customer service levels at Barnes Distribution combined with inventory and facility charges. This charge was partially offset by $0.7 million of benefits related to the reduction of lease obligations on idle facilities.

Barnes Group Inc. / 6

BARNES GROUP INC.
OPERATIONS BY REPORTABLE BUSINESS SEGMENT
(Dollars in thousands)
Unaudited

	Three months ended December 31,									Twelve months ended December 31,

			2004			2003		% Change				2004			2003		% Change


Net Sales

Barnes Distribution		$	104,155		$	98,330		5.9			$	424,752		$	400,651		6.0

Associated Spring			97,024			80,315		20.8				373,450			333,085		12.1

Barnes Aerospace			51,384			43,365		18.5				205,864			165,728		24.2

Intersegment sales			(961	)		(1,673	)	(42.6	)			(9,357	)		(8,646	)	8.2


Total net sales		$	251,602		$	220,337		14.2			$	994,709		$	890,818		11.7


Operating profit (loss) ⁽¹⁾

Barnes Distribution		$	(1,077	)	$	984		NM			$	13,756		$	16,507		(16.7	)

Associated Spring			3,347			5,131		(34.8	)			22,493			26,764		(16.0	)

Barnes Aerospace			5,525			3,375		63.7				20,704			10,677		93.9


Total operating profit			7,795			9,490		(17.9	)			56,953			53,948		5.6

Interest income			272			318		(14.5	)			1,088			1,386		(21.5	)

Interest expense			(4,127	)		(3,634	)	13.6				(15,390	)		(15,840	)	(2.8	)

Other net income (expense)			(689	)		(137	)	NM				(1,292	)		(1,126	)	14.7


Income before income taxes		$	3,251		$	6,037		(46.1	)		$	41,359		$	38,368		7.8

NM- not meaningful

Footnote:
⁽¹⁾ Fourth quarter 2004 operating results include pre-tax charges of approximately $4.5 million ($2.3 million at Barnes Distribution and $2.2 million at Associated Spring) for actions implemented to offset higher raw material costs going forward at Associated Spring, and to enable the realization of benefits from the Kar Products integration and improved customer service levels at Barnes Distribution combined with inventory and facility charges. This charge was partially offset by $0.7 million of benefits related to the reduction of lease obligations on idle facilities.

Barnes Group Inc. / 7

BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
Unaudited

	December 31,			December 31,
	2004			2003


Assets
Current assets
Cash and cash equivalents		$	36,335		$	49,788
Accounts receivable			138,941			119,130
Inventories			122,894			109,780
Deferred income taxes and prepaid expenses			37,759			33,402


Total current assets			335,929			312,100

Deferred income taxes			25,070			22,790
Property, plant and equipment			166,284			154,088
Goodwill			221,856			220,118
Other intangible assets, net			125,447			61,923
Other assets			53,737			59,801


		$	928,323		$	830,820


Liabilities and Stockholders' Equity
Current liabilities
Notes payable		$	- -		$	10,000
Accounts payable			135,983			97,155
Accrued liabilities			79,039			78,520
Long-term debt-current			9,410			6,804


Total current liabilities			224,432			192,479

Long-term debt			258,635			224,213
Accrued retirement benefits			85,685			77,455
Other liabilities			17,686			14,934

Stockholders' equity			341,885			321,739


		$	928,323		$	830,820

Barnes Group Inc. / 8

BARNES GROUP INC.
NON-GAAP FINANCIAL MEASURE RECONCILIATION
(Dollars in thousands, except per share data)
Unaudited

Following is a reconciliation of results excluding certain fourth quarter charges⁽¹⁾ to the Company's reported results:

	Three months ended December 31,							Twelve months ended December 31,

		2004			2003	% Change			2004		2003	% Change


Segment results:
Barnes Distribution
Operating profit (loss), as reported	$	(1,077	)	$	984	NM		$	13,756	$	16,507	(16.7	)
Fourth quarter charges⁽¹⁾		2,326			- -	NM			2,326		- -	NM


Operating profit, excluding fourth quarter charges	$	1,249		$	984	26.9		$	16,082	$	16,507	(2.6	)


Associated Spring
Operating profit, as reported	$	3,347		$	5,131	(34.8	)	$	22,493	$	26,764	(16.0	)
Fourth quarter charges⁽¹⁾		2,184			- -	NM			2,184		- -	NM


Operating profit, excluding fourth quarter charges	$	5,531		$	5,131	7.8		$	24,677	$	26,764	(7.8	)


Consolidated results:
Barnes Group Inc.
Operating income, as reported	$	7,641		$	8,766	(12.8	)	$	55,914	$	52,000	7.5
Fourth quarter charges⁽¹⁾		4,510			- -	NM			4,510		- -	NM


Operating income, excluding fourth quarter charges	$	12,151		$	8,766	38.6		$	60,424	$	52,000	16.2


Net income, as reported	$	3,273		$	6,956	(53.0	)	$	33,401	$	33,015	1.2
Fourth quarter charges, after tax⁽¹⁾		2,792			- -	NM			2,792		- -	NM


Net income, excluding fourth quarter charges	$	6,065		$	6,956	(12.8	)	$	36,193	$	33,015	9.6


Net income per common share -diluted, as reported	$	0.14		$	0.29	(51.7	)	$	1.40	$	1.49	(6.0	)
Fourth quarter charges⁽¹⁾		0.12			- -	NM			0.12		- -	NM


Net income per common share- diluted, excluding fourth quarter charges	$	0.26		$	0.29	(10.3	)	$	1.52	$	1.49	2.0

NM - not meaningful

Footnote: ⁽¹⁾ The Company has presented certain financial measurements, excluding certain fourth quarter charges. The fourth quarter charges which aggregate $4,510 include severance costs of $2,184 at Associated Spring and $1,298 at Barnes Distribution and $1,028 of inventory and facility charges at Barnes Distribution. These charges relate to discrete actions taken in the fourth quarter.

These fourth quarter charges represent discrete actions taken by management, and management believes that providing results excluding the discrete charges, is useful to investors and reflects actions announced by the Company in December, 2004. Management does not intend results excluding the fourth quarter charges to represent results as defined by GAAP, and the reader should not consider it as an alternative measurement calculated in accordance with GAAP, or as an indicator of the Company's operating performance. Accordingly, the measurements have limitations depending on their use.