-----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, STSCiQg/Et7oRrcytl6qvLRchDI19iAXA1sTpyWhsVq9IhR2YMbgZmhE38xYfIAE 9bw68PdAdBH6NM+05JesMA== 0000009984-99-000014.txt : 19991115 0000009984-99-000014.hdr.sgml : 19991115 ACCESSION NUMBER: 0000009984-99-000014 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990830 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991112 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: 8-K/A SEC ACT: SEC FILE NUMBER: 001-04801 FILM NUMBER: 99750144 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 8-K/A 1 BARNES GROUP INC. FORM 8-K/A 08/30/1999 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 30, 1999 Barnes Group Inc. ----------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-04801 06-0247840 ----------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 123 Main Street Bristol, CT 06010 --------------------------------------------------- (Address of principal executive offices) (Zip Code) (860) 583-7070 -------------------------------------------------- Registrant's telephone number, including area code N/A ---------------------------------------------------------- (Former name or former address, if changed since last report) -1- AMENDMENT NO. 1 The Registrant amends its Current Report on Form 8-K, filed September 14, 1999, by including the following information regarding ITEM 2, the refinancing of a portion of the funds needed for the acquisition and ITEM 7, adding financial statements and pro forma financial information that were unavailable at the time the Current Report on Form 8-K was filed. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On November 12, 1999, the Registrant refinanced a portion of the funds needed to purchase the assets of the Nitrogen Business Unit of the Teledyne Fluid Systems Division of Teledyne Industries, Inc. through the issuance of $70 million of long-term private placement debt. The debt ranges in maturity from eight to eleven years at an average annual interest rate of 7.75%. ITEM 7 - FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements of Business Acquired. The audited consolidated balance sheet of Teledyne Fluid Systems' Nitrogen Business Unit as of December 31, 1998, the statement of income and comprehensive income and cash flow for the year ended December 31, 1998, the related notes to the audited financial statements and the related independent auditors' report are filed with this report as Exhibit 99.1. (b) Pro Forma Financial Information. The following unaudited pro forma consolidated financial statements of Barnes Group Inc. with explanatory notes reflecting the impact of the acquisition are filed with this report as Exhibit 99.2. (1) The unaudited pro forma consolidated balance sheet as of December 31, 1998 reflecting the impact on the balance sheet as if the acquisition occurred on December 31, 1998. (2) The unaudited pro forma consolidated income statement for the year ended December 31, 1998, reflecting the impact on the income statement as if the acquisition had occurred on January 1, 1998. (3) The unaudited pro forma consolidated income statement for the nine months ended September 30, 1999, reflecting the impact on the income statement as if the acquisition had occurred on January 1, 1999. -2- (c) Exhibits. 23 Consent of Independent Auditors. 99.1 Teledyne Fluid Systems' Nitrogen Business Unit Audited Financial Statements, For The Year Ended December 31, 1998 With Report of Independent Auditors. 99.2 Unaudited Barnes Group Inc. Pro Forma Consolidated Financial Statements Information With Explanatory Notes. 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 hereunto duly authorized. Dated: November 12, 1999 BARNES GROUP INC. By:/s/ Signe S. Gates ------------------- Signe S. Gates Senior Vice President General Counsel & Secretary EXHIBIT INDEX Exhibit No. Description - ---------- ------------ Exhibit 23 Consent of Independent Auditors. Exhibit 99.1 Teledyne Fluid Systems' Nitrogen Business Unit Audited Financial Statements, For The Year Ended December 31, 1998 With Report of Independent Auditors. Exhibit 99.2 Unaudited Barnes Group Inc. Pro Forma Consolidated Financial Statements Information With Explanatory Notes. -3- EX-23 2 EXHIBIT 23 EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS. We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 2-56437, pertaining to the Employee Stock Purchase Plan; No. 2-91285, pertaining to the 1981 Stock Incentive Plan; Nos. 33-20932 and 33-30229, pertaining to the Guaranteed Stock Plan; and the registration statements filed on July 18, 1994, No. 33-91758 and May 16, 1997, No. 33- 27339, pertaining to the 1991 Barnes Group Stock Incentive Plan) of Barnes Group Inc. of our report dated October 8, 1999, with respect to the financial statements of Teledyne Fluid Systems' Nitrogen Business Unit included in this Form 8-K/A for the year ended December 31, 1998. Ernst & Young LLP /s/ ERNST & YOUNG LLP Pittsburgh, Pennsylvania November 10, 1999 EX-99 3 EXHIBIT 99.1 EXHIBIT 99.1 TELEDYNE FLUID SYSTEMS' NITROGEN BUSINESS UNIT AUDITED FINANCIAL STATEMENTS, FOR THE YEAR ENDED DECEMBER 31, 1998 WITH REPORT OF INDEPENDENT AUDITORS. Audited Financial Statements Teledyne Fluid Systems' Nitrogen Business Unit For the year ended December 31, 1998 with Report of Independent Auditors Teledyne Fluid Systems' Nitrogen Business Unit Audited Financial Statements Year ended December 31, 1998 Contents Report of Independent Auditors 1 Audited Financial Statements Balance Sheet 2 Statement of Income and Comprehensive Income 3 Statement of Cash Flow 4 Notes to Audited Financial Statements 5 Report of Independent Auditors Board of Directors Barnes Group Inc. We have audited the accompanying balance sheet of Teledyne Fluid Systems' Nitrogen Business Unit (the "Company") as of December 31, 1998 and the related statements of income and comprehensive income and cash flow for the period then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based upon our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Teledyne Fluid Systems' Nitrogen Business Unit at December 31, 1998, and the results of its operations and its cash flows for the period then ended, in conformity with generally accepted accounting principles. Ernst & Young LLP /s/ ERNST & YOUNG LLP Pittsburg, Pennsylvania October 8, 1999 -1-
Teledyne Fluid Systems' Nitrogen Business Unit Balance Sheet December 31, 1998 (000's omitted) Assets Current assets: Cash and cash equivalents $ 4,764 Accounts receivable, net 8,633 Inventory, net 5,116 Due from affiliates 2,320 Prepaid expenses 78 Deferred tax asset 385 -------- Total current assets 21,296 Land 201 Buildings 4,411 Equipment 18,904 -------- 23,516 Accumulated depreciation (14,601) -------- Net property, plant and equipment 8,915 Goodwill-net 899 Deferred tax asset 127 Other assets 307 -------- Total assets $ 31,544 ======== Liabilities and stockholder's equity Liabilities: Accounts payable $ 3,360 Accrued liabilities 3,100 Foreign income tax liability 2,022 Deferred tax liability 415 -------- Total current liabilities 8,897 Notes payable and long term debt 124 Deferred tax liability 205 -------- Total liabilities 9,226 Stockholder's equity Net advances from Allegheny Teledyne Incorporated 23,534 Accumulated other comprehensive income (1,216) -------- Total stockholder's equity 22,318 -------- Total liabilities and stockholder's equity $ 31,544 ======== See accompanying notes.
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Teledyne Fluid Systems' Nitrogen Business Unit Statement of Income and Comprehensive Income Year ended December 31, 1998 (000's omitted) Sales $ 47,408 Cost of sales 28,917 --------- Gross profit 18,491 Selling, general and administrative expenses 8,318 --------- Earnings before other income 10,173 Other income: Interest income 76 Other income 16 --------- Income before income taxes 10,265 Income taxes 3,666 --------- Net income 6,599 Other comprehensive income, net of tax: Foreign currency translation adjustments (808) Realized gain included in net income (16) --------- Comprehensive income $ 5,775 ========= See accompanying notes.
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Teledyne Fluid Systems' Nitrogen Business Unit Statement of Cash Flow Year ended December 31, 1998 (000's omitted) Operating activities: Net income $ 6,599 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,659 Deferred income taxes 272 Change in operating assets and liabilities: Accounts receivable (1,112) Due from affiliates (1,854) Inventories 358 Accounts payable 1,440 Other 28 -------- Cash provided by operating activities 7,390 Investing activities: Purchases of property, plant and equipment (3,078) -------- Cash used in investing activities (3,078) Financing activities: Net advances to Allegheny Teledyne Incorporated (1,147) -------- Cash used in financing activities (1,147) Effect of foreign currency exchange rate changes on cash and cash equivalents (808) -------- Net increase in cash and cash equivalents 2,357 Cash and cash equivalents at beginning of year 2,407 -------- Cash and cash equivalents at end of year $ 4,764 ======== See accompanying notes.
-4- Teledyne Fluid Systems' Nitrogen Business Unit Notes to Audited Financial Statements December 31, 1998 (All dollar amounts included in the notes are stated in thousands except per share data.) 1. Summary of Significant Accounting Policies Basis of Combination Teledyne Fluid Systems' Nitrogen Business Unit (the Company or the Nitrogen Business Unit) consists of the Hyson, Kaller and Stromsholmen facilities of Teledyne Fluid Systems' Division of Teledyne Industries, Inc., a wholly owned subsidiary of Allegheny Teledyne Incorporated (Allegheny Teledyne). The Nitrogen Business Unit has no separate legal existence. The accompanying financial statements have been prepared solely to comply with the requirements of the Securities and Exchange Commission (for inclusion in the Barnes Group Inc.'s current report on Form 8-k(a).) Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. Revenue Recognition Sales of nitrogen gas springs are recognized as product sales when the unit is shipped and title has passed to the customer. Inventories Inventories are stated at the lower of cost (last-in, first-out; and first-in, first-out cost methods) or market. Costs include direct material, direct labor and applicable manufacturing and engineering overhead, and other direct costs. Income Taxes Provision for income taxes includes deferred taxes resulting from temporary differences in income for financial and tax purposes using the liability method. Such temporary differences result primarily from differences in the carrying value of assets and liabilities. -5- Teledyne Fluid Systems' Nitrogen Business Unit Notes to Audited Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Accounts Receivable Accounts receivable is presented net of a reserve for doubtful accounts of $28 at December 31, 1998. The Company markets its products and services principally throughout the United States, Europe and Asia. Trade credit is extended based upon evaluation of each customer's ability to perform its obligations, which are updated periodically. Property, Plant and Equipment Property, plant and equipment are carried at cost. The method of depreciation adopted for all property placed into service after June 30, 1996 is the straight-line method. For buildings and equipment acquired prior to July 1, 1996, depreciation is computed using a combination of accelerated and straight-line methods. Foreign Currency Translation The Company's Stromsholmen entity's accounts are measured using local currency as the functional currency. Assets and liabilities are translated at the exchange rate in affect at year-end. Revenues and expenses are translated at the rates of exchange prevailing during the year. Translation adjustments arising from differences in exchange rates from period to period are reflected in accumulated other comprehensive income within stockholder's equity. 2. Accounts Receivable
Accounts receivable is summarized as follows at December 31, 1998: Trade accounts receivable $ 8,608 Other receivables 53 Reserve for doubtful accounts (28) -------- Total accounts receivable $ 8,633 ========
-6- Teledyne Fluid Systems' Nitrogen Business Unit Notes to Audited Financial Statements (continued) 3. Inventories
Inventories are summarized as follows at December 31, 1998: Raw materials $ 1,669 Work-in-process 1,642 Finished goods 2,253 -------- Total inventories at current cost 5,564 Less allowance to reduce current cost value to LIFO basis (227) Less reserve for obsolete inventory (221) -------- Total inventories $ 5,116 ======== Inventories determined on the last-in, first-out method were $1,726 at December 31, 1998. 4. Related Party Transactions
The accompanying financial statements include transactions with Allegheny Teledyne as follows at December 31, 1998: Net advances from Allegheny Teledyne, beginning of the year $ 18,082 Net income 6,599 Net cash transactions with Allegheny Teledyne (1,147) -------- Net advances from Allegheny Teledyne, end of the year $ 23,534 ========
The Nitrogen Business Unit participates in Allegheny Teledyne's centralized cash management system. Cash receipts in excess of cash requirements are transferred to Allegheny Teledyne. These transactions with Allegheny Teledyne are non-interest bearing and the net advances fluctuate on a daily basis. The Company's general and administrative expenses include allocated expenses incurred by Allegheny Teledyne on the Company's behalf including costs for finance, legal, tax and human resources functions. The Nitrogen Business Unit also participates in casualty, medical and life insurance programs sponsored by Allegheny Teledyne. -7- Teledyne Fluid Systems' Nitrogen Business Unit Notes to Audited Financial Statements (continued) 5. Income Taxes
The Nitrogen Business Unit is included in the consolidated federal and certain state income tax returns of Allegheny Teledyne. Any required tax payments were made by Allegheny Teledyne as part of its consolidated returns. Provision for income taxes was calculated as if the Company had filed separate income tax returns. Provision for income taxes was as follows for the year ended December 31, 1998: Current: Federal $ 1,420 State 254 Foreign 1,720 -------- Total 3,394 -------- Deferred: Federal 245 State 27 -------- 272 -------- Total provision for income taxes $ 3,666 ========
Deferred income taxes result from temporary differences in the recognition of income and expense for financial and income tax reporting purposes. Deferred income taxes represent future tax benefits or costs to be recognized when those temporary differences reverse. -8- Teledyne Fluid Systems' Nitrogen Business Unit Notes to Audited Financial Statements (continued) 5. Income Taxes (continued)
The categories of assets and liabilities that have resulted in differences in the timing of the recognition of income and expense were as follows as of December 31, 1998: Deferred income tax assets: Reserves $ 203 Deferred compensation and other benefit plans 264 Other 45 -------- Total deferred income tax assets 512 -------- Deferred income tax liabilities: Basis of property, plant and equipment 205 Inventory valuation 192 Reserves 141 Other 82 -------- Total deferred income tax liabilities 620 -------- Net deferred income tax liabilities $ 108 ========
6. Pension Plan Certain Nitrogen Business Unit employees participate in a noncontributory defined benefit plan sponsored by Allegheny Teledyne. Benefits under the defined benefit plan are generally based on years of service and/or final average pay. Allegheny Teledyne funds the pension plan in accordance with the requirements of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, and the Internal Revenue Code. Net periodic pension expense allocated to the Nitrogen Business Unit was $114 for the year ended December 31, 1998. 7. Subsequent Event On August 30, 1999, Barnes Group Inc. purchased substantially all of the assets of the nitrogen gas springs business of the Teledyne Fluid Systems' Division of Teledyne Industries, Inc. pursuant to an Asset Purchase and Sale Agreement dated as of July 27, 1999 by and between Teledyne Industries, Inc. and Barnes Group Inc. (the "Purchaser"). -9- Teledyne Fluid Systems' Nitrogen Business Unit Notes to Audited Financial Statements (continued) 7. Subsequent Event (continued) The Purchaser intends to continue the use of such machinery, equipment and other physical property in connection with the operation of such business. The acquired assets also include all of the capital stock of Stromsholmen AB, a Swedish corporation, in Tranas, Sweden that produces and distributes nitrogen gas springs for the metal forming industries. Such stock was acquired by Barnes Sweden Holding Company AB, a wholly owned subsidiary of the Purchaser. -10- EX-99 4 EXHIBIT 99.2 EXHIBIT 99.2 UNAUDITED BARNES GROUP INC. PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS INFORMATION WITH EXPLANATORY NOTES. On August 30, 1999, Barnes Group Inc. (the Company) purchased substantially all of the assets of the nitrogen gas spring business of the Teledyne Fluid Systems Division of Teledyne Industries, Inc. pursuant to an Asset Purchase and Sale Agreement dated as of July 27, 1999. The $89.7 million purchase price of the Nitrogen Business Unit has been preliminarily allocated to tangible and intangible assets and liabilities of the Nitrogen Business Unit based upon estimates of their respective values. These allocations may be subsequently adjusted based upon appraisals, valuations and other studies, which will be finalized over the next several months. Final values may differ substantially from those shown herein. The following unaudited pro forma consolidated financial information has been prepared from the historical financial statements of Barnes Group Inc. and Teledyne Fluid Systems' Nitrogen Business Unit and adjusted to reflect the acquisition using the purchase method of accounting. These unaudited pro forma financial statements should be read in conjunction with the Company's historical financial statements and related notes filed on Form 10-K on March 24, 1999 for the fiscal year ended December 31, 1998 and the Teledyne Fluid Systems' Nitrogen Business Unit audited financial statements and related notes as presented in EXHIBIT 99.1 of this report. The unaudited pro forma consolidated financial statement information is presented for informational purposes only. The pro forma results from operations and statement of financial position are not necessarily indicative of what would have resulted had the acquisition occurred on January 1, 1998, January 1, 1999 or as of December 31, 1998 or which may result in the future. The Company believes it has used reasonable methods in the preparation of this financial statement information. -1- BARNES GROUP INC. Pro Forma Consolidated Balance Sheet December 31, 1998 (Dollars in thousands) (Unaudited)
Nitrogen Pro Forma Barnes Barnes Business Adjust- Group Inc. Group Inc. Unit ments Notes Pro Forma --------- -------- --------- ----- --------- ASSETS Current assets Cash and cash equivalents $ 40,206 $ 4,764 $ (4,764) (1) $ 40,206 Short-term investments 2,566 -- -- 2,566 Accounts receivable, less allowances 82,809 8,633 (18) (1) 91,424 Due from affiliates -- 2,320 (2,320) (1) -- Inventories 64,404 5,116 445 (1) (2) 69,965 Deferred income taxes and prepaid expenses 17,243 463 (385) (1) 17,321 -------- -------- -------- -------- Total current assets 207,228 21,296 (7,042) 221,482 Deferred income taxes 25,136 127 (127) (1) 25,136 Property, plant and equipment 139,247 8,915 3,442 (1) (2) 151,604 Goodwill 18,224 899 69,267 (3) 88,390 Other assets 29,069 307 4,424 (2) 33,800 -------- -------- -------- -------- Total assets $418,904 $ 31,544 $ 69,964 $520,412 ======== ======== ======== ======== See accompanying notes to the pro forma consolidated balance sheet.
-2- BARNES GROUP INC. Pro Forma Consolidated Balance Sheet December 31, 1998 (Dollars in thousands) (Unaudited)
Nitrogen Pro Forma Barnes Barnes Business Adjust- Group Inc. Group Inc. Unit ments Notes Pro Forma --------- -------- -------- ----- --------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Notes payable $ 6,766 $ -- $ 829 (4) $ 7,595 Accounts payable 38,439 3,360 3,300 (7) 45,099 Accrued taxes and other liabilities 52,934 5,537 (1,663) (1) (6) 56,808 Guaranteed ESOP obligation-current 2,205 -- -- 2,205 -------- -------- -------- -------- Total current liabilities 100,344 8,897 2,466 111,707 Long-term debt 51,000 124 88,876 (4) 140,000 Accrued retirement benefits 68,129 -- -- 68,129 Taxes and other liabilities 10,757 205 940 (1) (6) 11,902 Stockholders' equity Common stock-par value $0.01 per share 220 -- -- 220 Additional paid-in capital 49,231 -- -- 49,231 Treasury stock at cost (42,893) -- -- (42,893) Retained earnings 204,364 23,534 (23,534) (5) 204,364 Accumulated other comprehensive income (20,043) (1,216) 1,216 (5) (20,043) Guaranteed ESOP obligation (2,205) -- -- (2,205) -------- -------- -------- -------- Total stockholders' equity 188,674 22,318 (22,318) 188,674 -------- -------- -------- -------- Total liabilities and stockholders' equity $418,904 $ 31,544 $ 69,964 $520,412 ======== ======== ======== ======== See accompanying notes to the pro forma consolidated balance sheet.
-3- BARNES GROUP INC. Notes to Unaudited Pro Forma Consolidated Balance Sheet December 31, 1998 The unaudited pro forma consolidated balance sheet includes the pro forma adjustments to reflect the acquisition of the Nitrogen Business Unit as if it took place on December 31, 1998. Note (1) Adjustments to eliminate assets and liabilities that were not part of the purchase agreement. Note (2) Adjustments to record Nitrogen Business Unit's assets at estimated fair market value. Note (3) Adjustment to record incremental goodwill resulting from the purchase of Nitrogen Business Unit. Note (4) Adjustments to reflect impact on debt related to the acquisition of Nitrogen Business Unit. Note (5) Adjustments to eliminate equity of Teledyne Industries, Inc. in Nitrogen Business Unit. Note (6) Adjustments to reflect deferred taxes related to the non- deductibility of certain foreign asset values in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Note (7) Adjustment to record costs associated with the acquisition. -4- BARNES GROUP INC. Pro Forma Consolidated Statements of Income Year Ended December 31, 1998 (Dollars in thousands, except per share data) (Unaudited)
Nitrogen Pro Forma Barnes Barnes Business Adjust- Group Inc. Group Inc. Unit ments Notes Pro Forma -------- -------- -------- ----- -------- Net sales $651,183 $ 47,408 $ -- $698,591 Cost of sales 435,918 28,917 1,459 (A)(B) 466,294 Selling and admin- (C) istrative expenses 160,044 8,318 -- 168,362 -------- -------- -------- -------- 595,962 37,235 1,459 634,656 -------- -------- -------- -------- Operating income 55,221 10,173 (1,459) 63,935 Other income 5,617 92 5,709 Interest expense 4,106 -- 6,564 (D) 10,670 Other expenses 2,069 -- 1,743 (E) 3,812 -------- -------- -------- -------- Income before income taxes 54,663 10,265 (9,766) 55,162 Income taxes (benefit) 20,169 3,666 (7,369) (F) 16,466 -------- -------- -------- -------- Net income $ 34,494 $ 6,599 $ (2,397) $ 38,696 ======== ======== ======== ======== Per common share: Net income-basic $ 1.72 $ .33 $ (.12) $ 1.93 -diluted 1.69 .32 (.12) 1.89 Average common shares outstanding: -basic 20,095,710 -- -- 20,095,710 -diluted 20,426,369 -- -- 20,426,369 See accompanying notes to the pro forma consolidated statement of income.
-5- BARNES GROUP INC. Pro Forma Consolidated Statements of Income Nine Month Period Ended September 30, 1999 (Dollars in thousands, except per share data) (Unaudited)
Nitrogen Pro Forma Barnes Barnes Business Adjust- Group Inc. Group Inc. Unit ments Notes Pro Forma -------- -------- -------- ----- -------- Net sales $472,574 $ 30,130 $ -- $502,704 Cost of sales 320,485 17,570 973 (A)(B) 339,028 Selling and admin- (C) istrative expenses 111,326 5,803 -- 117,129 -------- -------- -------- -------- 431,811 23,373 973 456,157 -------- -------- -------- -------- Operating income 40,763 6,757 (973) 46,547 Other income 5,255 -- 5,255 Interest expense 3,530 3 4,376 (D) 7,909 Other expenses 1,204 -- 1,162 (E) 2,366 -------- -------- -------- -------- Income before income taxes 41,284 6,754 (6,511) 41,527 Income taxes (benefit) 14,243 2,511 (4,400) (F) 12,354 -------- -------- -------- -------- Net income $ 27,041 $ 4,243 $ (2,111) $ 29,173 ======== ======== ======== ======== Per common share: Net income-basic $ 1.38 $ .22 $ (.11) $ 1.49 -diluted 1.37 .21 (.11) 1.47 Average common shares Outstanding: -basic 19,560,942 -- -- 19,560,942 -diluted 19,796,883 -- -- 19,796,883 See accompanying notes to the pro forma consolidated statement of income.
-6- BARNES GROUP INC. Notes to Unaudited Pro Forma Consolidated Statement of Income for the Periods Ended December 31, 1998 and September 30, 1999 The unaudited pro forma consolidated statement of income includes the pro forma adjustments to reflect the acquisition of the Nitrogen Business Unit as if it took place on January, 1 1998 and January 1, 1999. Note (A) Adjustment to reflect additional cost related to the write-up of Nitrogen Business Unit's inventory to estimated fair market value, expensed over one inventory turn. Note (B) Adjustment to reflect additional depreciation expense related to the write-up of Nitrogen Business Unit's fixed assets to estimated fair market value, depreciated over estimated useful lives of 8 years for machinery and equipment and 15 years for buildings. Note (C) Adjustment to reflect additional cost related to the write-up of Nitrogen Business Unit's trademarks to estimated fair market value, amortized over an estimated useful life of 30 years. Note (D) Adjustment to reflect additional interest expense on the acquisition related debt. The interest was calculated on a pro forma basis using an average rate of 7.3% on borrowings of $89.7 million. A 1% change in the interest rate would impact the interest expense related to the acquisition debt by $0.9 million per year. Note (E) Adjustment to reflect additional cost related to acquisition goodwill amortized over its estimated useful life. Note (F) Adjustment to reflect the tax deductibility of the above adjustments on the pro forma statements as well as certain foreign tax planning strategies. -7- -----END PRIVACY-ENHANCED MESSAGE-----