-----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, F2DmLW6yc1Ijlz2cEskLFZZdmjKy+AZcNxY5fn82YawLaY9l+yhY48NWk85Vk5IX 9lJIF8yqazJEySha1YWFag== 0000009984-97-000046.txt : 19971117 0000009984-97-000046.hdr.sgml : 19971117 ACCESSION NUMBER: 0000009984-97-000046 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: 97718491 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, 1997 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 September 30, 1997 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 November 11, 1997 - 20,287,400 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 September 30, 1997
DESCRIPTION PAGES ----------- ----- PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Statements of Income for the nine months and third quarter ended September 30, 1997 and 1996 3 Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996 4-5 Consolidated Statements of Cash Flows for the nine months ended September 30, 1997 and 1996 6 Notes to Consolidated Financial Statements 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-11 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 Nine months ended September 30, September 30, ------------------- ------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Net sales $158,538 $147,080 $482,538 $449,775 Cost of sales 105,341 94,897 319,530 290,957 Selling and admin- istrative expenses 37,061 37,506 112,585 118,465 -------- -------- -------- -------- 142,402 132,403 432,115 409,422 -------- -------- -------- -------- Operating income 16,136 14,677 50,423 40,353 Other income 1,621 1,024 3,743 3,077 Interest expense 1,178 1,323 3,703 3,911 Other expenses 347 556 900 1,419 -------- -------- -------- -------- Income before income taxes 16,232 13,822 49,563 38,100 Income taxes 6,087 5,114 18,586 14,097 -------- -------- -------- -------- Net income $ 10,145 $ 8,708 $ 30,977 $ 24,003 ======== ======== ======== ======== Per common share: Net income $ .50 $ .44 $ 1.53 $ 1.21 Dividends .16 .15 .48 .45 Average common shares outstanding 20,302,282 19,992,237 20,232,625 19,890,153 See accompanying notes.
-3- BARNES GROUP INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
ASSETS September 30, December 31, 1997 1996 --------- -------- (Unaudited) Current assets Cash and cash equivalents $ 36,466 $ 23,986 Accounts receivable, less allowances (1997-$2,797; 1996-$3,158) 94,904 88,060 Inventories Finished goods 32,896 30,285 Work-in-process 18,082 17,730 Raw materials and supplies 14,360 16,927 -------- -------- 65,338 64,942 Deferred income taxes and prepaid expenses 15,986 13,310 -------- -------- Total current assets 212,694 190,298 Deferred income taxes 22,863 23,575 Property, plant and equipment 335,587 320,604 Less accumulated depreciation 200,059 189,533 -------- -------- 135,528 131,071 Goodwill 19,016 19,441 Other assets 27,085 25,571 -------- -------- Total assets $417,186 $389,956 ======== ======== See accompanying notes.
-4- BARNES GROUP INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY September 30, December 31, 1997 1996 -------- -------- (Unaudited) Current liabilities Notes payable $ 2,263 $ 1,767 Accounts payable 38,444 30,363 Accrued liabilities 45,252 46,152 Guaranteed ESOP obligation-current 2,693 2,540 -------- -------- Total current liabilities 88,652 80,822 Long-term debt 70,000 70,000 Guaranteed ESOP obligation 2,912 4,951 Accrued retirement benefits 68,533 69,085 Other liabilities 7,330 7,934 Stockholders' equity Common stock-par value $.01 per share Authorized: 60,000,000 shares Issued: 22,037,769 shares stated at 220 15,737 Additional paid-in capital 46,227 28,347 Retained earnings 177,818 156,698 Foreign currency translation adjustments (13,743) (10,087) Treasury stock at cost, 1997-1,787,093 shares 1996-2,046,009 shares (25,158) (26,040) Guaranteed ESOP obligation (5,605) (7,491) -------- -------- Total stockholders' equity 179,759 157,164 -------- -------- Total liabilities and stockholders' equity $417,186 $389,956 ======== ======== See accompanying notes.
-5- BARNES GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months ended September 30, 1997 and 1996 (Dollars in thousands) (Unaudited)
1997 1996 ------- ------- Operating activities: Net income $30,977 $24,003 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 21,033 20,507 Gain on sale of property, plant and equipment (267) (499) Translation losses 121 260 Changes in assets and liabilities: Accounts receivable (7,395) (10,040) Inventories (1,147) (10,796) Accounts payable 8,523 1,773 Accrued liabilities (1,761) 4,758 Deferred income taxes 180 (1,033) Other liabilities and assets (3,311) (2,261) ------- ------- Net cash provided by operating activities 46,953 26,672 Investing activities: Proceeds from sale of property, plant and equipment 1,412 1,339 Capital expenditures (26,253) (25,073) Other (1,213) (403) ------- ------- Net cash used by investing activities (26,054) (24,137) Financing activities: Net increase in notes payable 580 6,400 Proceeds from the issuance of common stock 6,507 4,362 Payments to acquire treasury stock (4,518) -- Dividends paid (9,805) (8,961) ------- ------- Net cash (used) provided by financing activities (7,236) 1,801 Effect of exchange rate changes on cash flows (1,183) (766) ------- ------- Increase in cash and cash equivalents 12,480 3,570 Cash and cash equivalents at beginning of period 23,986 17,868 ------- ------- Cash and cash equivalents at end of period $36,466 $21,438 ======= ======= 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 notes required by generally accepted accounting principles for complete financial statements. For additional information, please refer to the consolidated financial statements and notes included in the company's Annual Report on Form 10-K for the year ended December 31, 1996. In the opinion of management, all adjustments, including normal recurring accruals considered necessary for a fair presentation, have been included. Operating results for the nine-month period ended September 30, 1997, are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. 2. Common Stock ------------ On April 2, 1997, the stockholders approved an amendment to the company's Restated Certificate of Incorporation providing for an increase in the number of authorized common shares from 20 million to 60 million and a reduction in the par value of common and preferred stock from $1.00 to $.01 per share. This allowed the company to effect a three-for-one stock split for stockholders of record on April 3, 1997, previously authorized by the Board of Directors. All references to shares and per share amounts in the consolidated financial statements and accompanying notes have been adjusted retroactively for the three-for-one stock split. Stockholders' equity at September 30, 1997, reflects the effect of the stock split and change in par value per share. These changes reduced the common stock account by $15.5 million and increased the additional paid-in capital account by a like amount. -7- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations --------------------- The company's third quarter 1997 sales were up 8% to $158.5 million compared to $147.1 million in 1996. Operating income increased 10% to $16.1 million versus 1996 results of $14.7 million. The 1997 first nine months sales were $482.5 million, up 7% from $449.8 million in 1996. The 1997 year-to-date operating income was $50.4 million, an increase of 25% over the $40.4 million reported in 1996. The 1997 nine month operating margin was 10.4% versus 9.0% in the comparable 1996 period. The results for 1997 reflect the strong period-over-period sales and operating income growth in the Barnes Aerospace businesses. The strong sales and profit performance in the company's aerospace segment was somewhat offset by the slowdown among North American automotive manufacturers and its impact on the company's Associated Spring segment. Segment Review - Sales and Operating Income ------------------------------------------- Associated Spring sales for the third quarter and nine months ending September 30, 1997 increased approximately 2% over both comparable 1996 periods. Sales for the 1997 third quarter were $69.9 million and $218.4 million year to date. Slower sales growth was reported due to a slowdown in the domestic automotive market. Operating income for 1997 declined for the three and nine month periods compared to 1996, a result of higher manufacturing costs and selling and administrative expenses. Bowman Distribution's 1997 third quarter and nine month sales were $54.1 million and $166.0 million, a 3% increase over the comparable 1996 periods in spite of the UPS strike's negative impact on shipments. The group's operating income also improved for the quarter and year-to-date. The gains in sales and operating income reflect the progress made in cultivating the large, multi-location customer business in the United States, specifically in the industrial and transportation markets. Additionally, Bowman continues to improve profitability in the European market. Barnes Aerospace sales for the third quarter and first nine months of 1997 increased in excess of 30% over the same 1996 periods to $34.8 million and $99.1 million. Very strong gains in operating income were also reported as the entire group capitalized on the improved commercial aviation engine and airframe markets. -8- Non-operating Income/Expense ---------------------------- Other income for the third quarter and first nine months of 1997 increased over 1996 primarily due to foreign exchange gains recognized in 1997, compared to losses recognized in 1996. The 1996 foreign exchange losses were included in other expenses. The foreign exchange gain in 1997 included $1.1 million related to our U.S. dollar based investment in Singapore. Income Taxes ------------ The company's 1997 third quarter and first nine months effective tax rate was 37.5%, compared to the effective rate of 37.0% in the comparable 1996 periods. The increase was due to U.S. income, with income tax rates higher than the foreign tax rates, comprising a greater percentage of consolidated income before taxes in 1997 as compared to 1996. Net Income and Net Income Per Share ----------------------------------- The consolidated net income for the third quarter of 1997 was $10.1 million, or 50 cents per share, up 17% compared to the third quarter of 1996 net income of $8.7 million, or 44 cents per share. This is the most profitable third quarter in the company's history. Consolidated net income for the nine month period in 1997 was $31.0 million, or $1.53 per share, up 29% compared to 1996's net income of $24.0 million, or $1.21 per share. Earnings for the nine month period in 1997 also set a new high for the company. In February 1997, the Financial Accounting Standards Board issued Statement No. 128 ("FAS 128"), "Earnings Per Share", requiring the dual presentation of basic and diluted earnings per share. The company is required to adopt the provisions of the Statement in the fourth quarter of 1997. If earnings per share for the quarters had been computed under the provisions of FAS 128 the results would be:
Three months ended Nine months ended September 30, September 30, Earnings Per Share 1997 1996 1997 1996 ---- ---- ---- ---- As Reported $.50 $.44 $1.53 $1.21 Pro forma: Basic .50 .44 1.53 1.21 Diluted .49 .43 1.50 1.19
-9- Financial Condition ------------------- Cash Flows ---------- In the first nine months of 1997, operating activities provided $47.0 million of cash flow, $20.3 million higher than in 1996. Improved earnings contributed $7.0 million of the increase, while the improvement in working capital management in 1997 provided $12.7 million of incremental cash flow compared to 1996. Net cash used for investing activities during the first three quarters of 1997 was $26.1 million compared to $24.1 million in 1996. The 1997 increase reflects higher levels of investment in property, plant and equipment. The company has made a strong commitment to the future as it begins to purchase new hardware and software for Bowman Distribution's customer information technologies systems project. In addition, Associated Spring and Barnes Aerospace continue to expand capacity and improve productivity, quality and customer service by investing in new manufacturing equipment and technology. During the first nine months of 1997, net cash used by financing activities was $7.2 million compared to funds provided of $1.8 million in 1996. The fluctuation is primarily attributable to reduced borrowing in 1997 and $4.5 million of stock repurchases during 1997. Dividends paid to shareholders increased $0.8 million in 1997, reflecting a 7% increase in the dividend rate. The proceeds from the issuance of common stock for both the 1997 and 1996 periods was largely from the exercise of stock options. Liquidity and Capital Resources ------------------------------- During 1997 and 1996, 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. At September 30, 1997, the company classified as long-term debt $13.4 million of borrowings under its lines of credit and $6.2 million of the current portion of its long-term debt. 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 considers this a cost effective way to manage its long-term financing needs. -10- The company maintains substantial bank borrowing facilities to supplement cash generated internally. At September 30, 1997, the company had $150.0 million of borrowing capacity available under its revolving credit agreement of which none was borrowed. In addition, the company had approximately $130.0 million in uncommitted short- term bank credit lines, of which $14.0 million was in use at September 30, 1997. The interest rate on this borrowing was 5.82%. 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 -------------------------------- (a) Exhibits Exhibit 27. Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K, Item 5, Other Events, were filed during the quarter ended September 30, 1997. 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 14, 1997 By /s/ Terry M. Murphy ----------------- ------------------------------------- Terry M. Murphy Senior Vice President-Finance (the principal financial officer) Date November 14, 1997 By /s/ Francis C. Boyle, Jr. ----------------- ------------------------------------- Francis C. Boyle, Jr. Vice President, Controller (the principal accounting officer) -11- EX-27 2
5 This schedule contains summary financial information extracted from the consolidated balance sheet of Barnes Group Inc. at September 30, 1997, and the related consolidated statement of income for the nine months ended September 30, 1997 and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 36,466 0 97,701 2,797 65,338 212,694 335,587 200,059 417,186 88,652 72,912 220 0 0 179,539 417,186 482,538 482,538 319,530 319,530 0 674 3,703 49,563 18,586 30,977 0 0 0 30,977 1.53 1.53
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