SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1994 OR
-----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] FOR THE
TRANSITION PERIOD FROM TO
------------ -------------
Commission file number 1-4801
------
BARNES GROUP INC.
-----------------
(Exact name of registrant as specified in its charter)
Delaware 06-0247840
--------------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
123 Main St., Bristol, Connecticut 06011-0489
--------------------------------------- --------------------
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code 203/583-7070
--------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
------------------- on which registered
------------------------
Common Stock par value
----------------------------
$1.00 per share New York Stock Exchange
---------------------------- -------------------------
Securities registered pursuant to Section 12(g) of the Act: NONE.
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
--- ---
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the registrant's voting stock held
by non-affiliates amounted to $209,712,133 as of February 7,
1995.
The registrant had outstanding 6,437,865 shares of common stock
as of February 7, 1995.
Parts I and II incorporate information by reference from the
registrant's 1994 Annual Report to Stockholders. Part III
incorporates information by reference from the registrant's Proxy
Statement dated March 3, 1995.
Exhibit Index located at pages 16-18.
PART I
Item 1. Business.
---------
The Company is in three businesses: Bowman Distri-
bution, a distributor of consumable repair and replacement
products for industrial, heavy equipment, and transportation
maintenance markets; Associated Spring, a manufacturer and
distributor of custom-made springs and other close-tolerance
engineered metal components; and Barnes Aerospace, a manufacturer
of precision machined and fabricated assemblies for the aircraft
and aerospace industries and a refurbisher of jet engine
components.*
Bowman Distribution. Bowman Distribution is engaged in
-------------------
distributing in the United States, Canada, the United Kingdom and
France a variety of replacement parts and other products,
including fasteners and special purpose hardware, automotive
parts, automotive specialties and accessories, general purpose
electric and gas welding supplies, industrial maintenance
supplies, and industrial aerosols such as adhesives, lubricants,
and sealants.
The products sold by Bowman Distribution are, for the
most part, not manufactured by the Company, but are obtained from
a number of outside suppliers. The vast majority of the products
are repackaged and sold under Bowman's labels.
Sales by Bowman Distribution in the United States and
Canada are primarily to industrial plants, chemical and petro-
chemical process industries, contractors, new car dealers,
garages, service stations, operators of vehicle fleets, and
airline ground maintenance facilities.
In 1992, the Company sold substantially all of the
assets of the Pioneer division of Bowman.
Associated Spring. Associated Spring manufactures and
-----------------
distributes a wide variety of custom metal parts for mechanical
purposes. It is equipped to produce practically every type of
spring requiring precision engineering, as well as an extensive
variety of precision metal components and assemblies. Its
-----------------------
*As used in this annual report, "Company" refers to the
registrant and its consolidated subsidiaries except where the
context requires otherwise, and "Associated Spring," "Barnes
Aerospace," and "Bowman Distribution" refer to the above-defined
businesses, but not to separate corporate entities.
- 1 -
<PAGE>
products range in size from fine hairsprings for instruments to
large springs for heavy machinery, and its output of a given
metal part may vary in amount from a few units to several
million. Associated Spring does not produce leaf springs or bed
springs.
Associated Spring's custom metal parts are sold in the
United States and through the Company's foreign subsidiaries to
manufacturers in many industries, chiefly for use as components
in their own products. Custom metal parts are sold primarily
through Associated Spring's sales employees. In view of the
diversity of functions which Associated Spring's custom metal
parts perform, Associated Spring's output is characterized by
little standardization, with the major portion being manufactured
to customer specifications.
The automotive and automotive parts industries
constitute Associated Spring's largest single custom metal parts
market. Other important outlets include manufacturers of
industrial and textile machinery, motors, generators, meters and
other electrical and electronic equipment, aircraft, diesel and
other internal combustion engines, household appliances and
fixtures, hardware, office equipment, agricultural equipment,
railroad equipment, general machinery, firearms, and scientific
instruments.
The Associated Spring Distribution division is engaged
in the distribution of industrial products to the tool and die
market, of which die springs manufactured by Associated Spring
are the principal item. It also distributes certain standard
parts manufactured by Associated Spring consisting primarily of
stock wire and flat springs which are sold under the Company's
SPEC registered trademark. The Company has an exclusive
marketing agreement with Stroemsholmens Mekaniska Verkstad AB to
market Kaller nitrogen gas springs and systems in North America
and other specified countries.
Associated Spring also has manufacturing operations in
Brazil, Canada, Mexico, and Singapore, and distribution
operations in the United Kingdom and France. In 1992, the
Company closed its spring manufacturing plant in Dayton, Ohio.
In 1993, the Company closed its spring manufacturing plant in
Memphis, Tennessee and transferred the warehouse operations
conducted in Corry, Pennsylvania to a new warehouse facility
located in Ypsilanti, Michigan. In 1994, it closed its spring
manufacturing plants in Gardena, California, and Monterrey,
Mexico. The Company has retained a minority interest of 15% in
its former subsidiary in Argentina.
The Company is a partner in a joint venture corporation
in the United States with NHK Spring Co., Ltd. of Japan. The
joint venture corporation, NHK-Associated Spring Suspension
Components
- 2 -
<PAGE>
Inc. ("NASCO"), has a manufacturing facility in Bowling Green,
Kentucky. It manufactures and sells hot-wound coil springs for
automotive suspension systems and counterbalance torque bars for
trunk lids. Barnes Group owns a minority interest of 45% in
NASCO.
Barnes Aerospace. Barnes Aerospace is engaged in the
----------------
advanced fabrication and precision machining of components for
jet engines and airframes as well as the repair and overhaul of
jet engine components. Windsor Manufacturing, Windsor Airmotive,
and Advanced Fabrications constitute the Barnes Aerospace Group.
Windsor Manufacturing manufactures machined and
fabricated parts as well as assemblies. It specializes in the
machining of difficult-to-process aircraft engine superalloys.
Manufacturing processes include computer numerically controlled
machining, electrical discharge machining, laser drilling,
creep-feed grinding, and automated deburring. Customers include
gas turbine engine manufacturers for commercial and military jets
as well as land-based turbines. In 1993, the operations of the
Company's Central Metal Products plant were consolidated with
Windsor Manufacturing.
Windsor Airmotive specializes in refurbishing jet
engine components. Electron beam welding and plasma spray are
two of the major processes used in this division, and customers
include approximately 30 airlines world-wide and the military.
Windsor Airmotive also has a facility in Singapore.
Advanced Fabrications, through its Jet Die and Flameco
plants, specializes in hot forming and fabricating titanium and
other high-temperature alloys such as hastelloy and inconel for
use in precision details and assemblies for aircraft engine and
airframe applications. It utilizes advanced manufacturing
processes including superplastic forming and diffusion bonding.
Segment Analysis.The analysis of the Company's revenue
-----------------
from sales to unaffiliated customers, operating income, and
identifiable assets by industry segments and geographic areas
appearing on pages 26 and 27 of the Company's 1994 Annual Report
to Stockholders, included as Exhibit 13 to this report, is
incorporated by reference.
Competition. The Company competes with many other
-----------
companies, large and small, engaged in the manufacture and sale
of custom metal parts (including aerospace components). The
Company believes Associated Spring is the largest domestic
manufacturer of precision springs used for mechanical purposes.
The Company also faces active competition in the products sold by
Bowman
- 3 -
<PAGE>
Distribution. The principal methods of competition for the
Company's three businesses include service, quality, price,
reliability of supply, and also, in the case of Associated Spring
and Barnes Aerospace, technology and design.
Backlog. The backlog of the Company's orders believed to
-------
be firm amounted to $108,143,000 at the end of 1994, as compared
with $102,596,000 at the end of 1993. Of the 1994 year-end
backlog, $53,622,000 is attributable to the Barnes Aerospace
Group and all of the balance is attributable to the Associated
Spring Group. $16,067,000 of Barnes Aerospace's backlog is not
expected to be shipped in 1995. Substantially all of the
remainder of the Company's backlog is expected to be shipped
during 1995.
Raw Materials and Customers. None of the Company's
---------------------------
divisions or groups are dependent upon any single source for any
of their principal raw materials or products for resale, and all
such materials and products are readily available. No one
customer accounted for more than 10% of total sales in 1994.
Automotive manufacturers continue to be important customers of
Associated Spring. Sales by Barnes Aerospace to two domestic jet
engine manufacturers accounted for approximately 50% of its
business. Bowman Distribution is not dependent on any one or a
few customers for a significant portion of its sales.
Research and Development. Although most of the products
------------------------
manufactured by the Company are custom parts made to the
customers' specifications, the Company is engaged in continuing
efforts aimed at discovering and implementing new knowledge that
is useful in developing new products or services or improving
significantly an existing product or service. The Company spent
approximately $2,640,000 on its research and development
activities in 1994, as compared to expenditures of approximately
$1,846,000 in 1993 and $1,145,000 in 1992. There were no
significant customer-sponsored research and development
activities in 1994. Barnes Aerospace divisions spent
approximately $495,000 in 1993 on customer-sponsored research and
development activities compared to expenditures of approximately
$6,882,000 in 1992.
Patents and Trademarks. Patents, licenses, franchises
----------------------
and concessions are not material to any of the Company's
businesses.
Employees. As of the date of this report, the Company
---------
employs approximately 4,200 persons.
Environmental Laws. Compliance with federal, state, and
------------------
local laws which have been enacted or adopted regulating the
discharge of materials into the environment or otherwise relating
to the protection of the environment has not had a material
effect and is not expected to have a material effect upon the
capital expenditures, earnings, or competitive position of the
Company.
- 4 -
<PAGE>
Item 2. Properties.
----------
The Company and its Canadian subsidiary operate 12
manufacturing plants and 15 warehouses at various locations
throughout the United States and Canada, of which all of the
plants and 6 of the warehouses are owned in fee, and the others
are leased. Of the properties which are owned, none is subject
to any encumbrance. The Company's other foreign subsidiaries own
or lease plant or warehouse facilities in the countries where
their operations are conducted. The listing of the facility
locations of each of the Company's businesses contained in the
Directory of Operations on the inside back cover of the 1994
Annual Report to Stockholders, included as Exhibit 13 to this
report, is incorporated by reference.
The Company believes that its owned and leased
properties have been adequately maintained, are in satisfactory
operating condition, are suitable and adequate for the business
activities conducted therein, and have productive capacities
sufficient to meet current needs.
Item 3. Legal Proceedings.
-----------------
There are no material pending legal proceedings to
which the Company or any of its subsidiaries is a party, or of
which any of their property is the subject.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
No matter was submitted during the fourth quarter of
1994 to a vote of security holders.
The following information is included in accordance
with the provisions of Item 401(b) of Regulation S-K:
<TABLE>
<CAPTION>
Executive Officers of the Company
---------------------------------
Age as of
December 31,
Executive Officer Position 1994
----------------- -------- ----------
<S> <C> <C>
A. Stanton Wells President and Chief Executive 63
Officer (since 1993)
Thomas O. Barnes Senior Vice President- 45
Administration (since 1993)
Mary Louise Beardsley Associate General Counsel 40
and Secretary (since 1994)
</TABLE>
- 5 -
<PAGE>
<TABLE>
<CAPTION>
Age as of
December 31,
Executive Officer Position 1994
----------------- -------- ----------
<S> <C> <C>
John E. Besser Senior Vice President-Finance 52
and Law (since 1993)
Francis C. Boyle, Jr. Assistant Controller 44
(since 1987)
Leonard M. Carlucci Vice President, Barnes Group 48
Inc. and General Manager,
Bowman U.S. (since 1994)
Ali A. Fadel Vice President, Barnes Group 39
Inc. and President,
Associated Spring (since 1994)
J. Gary Lewis Vice President, Barnes Group 50
Inc. and President, Bowman
Distribution (since 1994)
John J. Locher Vice President, Treasurer 50
(since 1992)
Theodore E. Martin Executive Vice President- 55
Operations (since 1993)
</TABLE>
Except for Messrs. Barnes, Fadel, and Martin, each of
the Company's executive officers has been employed by the Company
or its subsidiaries in an executive or managerial capacity for at
least the past five years. Each officer holds office until his
or her successor is chosen and qualified, or otherwise as
provided in the By-Laws. No family relationships exist among the
executive officers of the Company.
Mr. Barnes was elected Senior Vice President-
Administration effective December 16, 1993. From 1982 to 1993,
Mr. Barnes was employed by The Olson Brothers Company as
Executive Vice President and President, which position he held
since 1983. Prior to joining Olson Brothers, Mr. Barnes held a
variety of management positions with The Connecticut Bank and
Trust Company, The S. Carpenter Construction Company, and the
Company's Bowman Distribution division.
Mr. Fadel was elected Vice President of Barnes Group
Inc. and President, Associated Spring effective January 21, 1994.
Mr. Fadel joined the Company in 1991 as Group Director of
Advanced Engineering and Technology for Associated Spring. In
addition, Mr. Fadel served as Division Manager at the Associated
Spring plant in Saline, Michigan from 1992 to 1994. From 1989 to
to 1991, Mr. Fadel
- 6 -
<PAGE>
was employed by Herman Miller, Inc. as Manager of Chemical
Engineering and Senior Project Manager. Prior to joining Herman
Miller, he held industrial and manufacturing engineering
positions at Chrysler Corp., General Dynamics Corp. and the
former Burroughs Corporation.
Mr. Martin was elected Executive Vice President-
Operations effective December 16, 1993. He joined the Company on
October 1, 1990 as Group Vice President, Associated Spring. In
December, 1991, his title was changed to President and Chief
Operating Officer of Associated Spring. Mr. Martin was
previously Corporate Vice President of Manufacturing for Herman
Miller, Inc. Prior to joining Herman Miller, he worked for
Bendix Corporation from 1981 to 1988 as Vice President of
Planning of its Industrial Group, Vice President and General
Manager of the Electronics Division, Vice President and General
Manager of the Filtration Systems Group and most recently served
as President of Bendix's Fram Canada business. Prior to 1981,
Mr. Martin held a variety of management positions with the
General Electric Company and was a senior consultant with Arthur
D. Little.
PART II
Item 5. Market for the Registrant's Common Stock and Related
----------------------------------------------------
Stockholder Matters.
-------------------
The information regarding the Company's common stock
contained on pages 23 and 29 of the Company's 1994 Annual Report
to Stockholders is incorporated by reference. As of February 7,
1995, the Company's common stock was held by 3,583 stockholders
of record. The Company's common stock is traded on the New York
Stock Exchange.
Item 6. Selected Financial Data.
-----------------------
The selected financial data for the last five years
contained on pages 30 and 31 of the Company's 1994 Annual Report
to Stockholders is incorporated by reference.
Item 7. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations.
-----------------------------------
The financial review and management's analysis thereof
appearing on pages 11 through 13 of the Company's 1994 Annual
Report to Stockholders are incorporated by reference.
- 7 -
<PAGE>
Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
The financial statements and report of independent
accountants appearing on pages 14 through 28 of the Company's
1994 Annual Report to Stockholders are incorporated by reference.
See also the reports of independent accountants included on pages
13 and 14 below pursuant to Item 302(a) of Regulation S-K. The
material under "Quarterly Data" on page 29 of the Company's 1994
Annual Report to Stockholders is also incorporated by reference.
Item 9. Changes and Disagreements with Accountants on
-------------------------------------------------------
Accounting and Financial Disclosure.
-----------------------------------
The material under "Approval of Selection of
Independent Accountants" on pages 13 and 14 of the Company's
Proxy Statement dated March 3, 1995 is incorporated by reference.
PART III
Item 10. Directors and Executive Officers of the Company.
-----------------------------------------------
The material under "Election of Directors" on pages 1
through 5 of the Company's Proxy Statement dated March 3, 1995 is
incorporated by reference. See also "Executive Officers of the
Company," included above pursuant to Item 401(b) of Regulation
S-K.
Item 11. Executive Compensation.
----------------------
The material under "Compensation of Directors"
appearing on page 6, the material under "Stock Plan for Non-
Employee Directors" appearing on page 7, and the information
appearing on pages 8 through 12 of the Company's Proxy Statement
dated March 3, 1995 is incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
---------------------------------------------------
Management.
----------
The information concerning this item appearing on pages
6 through 8 of the Company's Proxy Statement dated March 3, 1995
is incorporated by reference.
Item 13. Certain Relationships and Related Transactions.
----------------------------------------------
The information concerning this item appearing on page
6 of the Company's Proxy Statement dated March 3, 1995 is
incorporated by reference.
- 8 -
<PAGE>
PART IV
<TABLE>
<CAPTION>
Item 14. Exhibits, Financial Statement Schedules and Reports on
------------------------------------------------------
Form 8-K.
--------
(a) The reports of Price Waterhouse LLP and Ernst &
Young LLP, independent accountants, and the
following financial statements and financial
statement schedules are filed as part of this
report:
Reference
----------------------------
Annual Report
Form 10-K to Stockholders
(page) (page)
--------- ---------------
<S> <C> <C>
Reports of independent accountants 13 - 14 28
Consolidated balance sheets at 15
December 31, 1994 and 1993
Consolidated statements of income 14
for the years ended
December 31, 1994, 1993 and 1992
Consolidated statements of changes 17
in stockholders' equity for the
years ended December 31, 1994,
1993 and 1992
Consolidated statements of cash 16
flows for the years ended
December 31, 1994, 1993 and 1992
Notes to consolidated financial 18 - 28
statements
Supplementary information 29
Quarterly data (unaudited)
Consolidated schedules for the years
ended December 31, 1994, 1993
and 1992
VIII - Valuation and qualifying 15
accounts
</TABLE>
All other schedules have been omitted since the
required information is not present or not present in amounts
sufficient to require submission of the schedule, or because
the information required is included in the consolidated
financial statements or notes thereto.
- 9 -
<PAGE>
The consolidated financial statements listed in the
above index which are included in the Annual Report to Stock-
holders of Barnes Group Inc. for the year ended December 31,
1994 are hereby incorporated by reference. With the exception of
the pages listed in the above index and in Items 1, 2, 5, 6, 7, and
8, the 1994 Annual Report to Stockholders is not to be deemed
filed as part of this report.
(b) No reports on Form 8-K were filed during the last
quarter of the period covered by this report.
(c) The Exhibits required by Item 601 of Regulation
S-K are filed as Exhibits to this Annual Report
and indexed at pages 16 through 18 of this
report.
- 10 -
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: February 17, 1995
BARNES GROUP INC.
By /s/ A. Stanton Wells
-----------------------------
A. Stanton Wells
President and Chief Executive Officer
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below as of
the above date by the following persons on behalf of the
Company in the capacities indicated.
/s/ A. Stanton Wells
---------------------------
A. Stanton Wells
President and Chief Executive Officer
(the principal executive officer) and Director
/s/ John E. Besser
---------------------------
John E. Besser
Senior Vice President-Finance and Law
(the principal financial officer)
/s/ Francis C. Boyle, Jr.
---------------------------
Francis C. Boyle, Jr.
Assistant Controller
(the principal accounting officer)
/s/ Thomas O. Barnes
---------------------------
Thomas 0. Barnes
Director
/s/ Wallace Barnes
--------------------------
Wallace Barnes
Director
- 11 -
<PAGE>
/s/ Gary G. Benanav
---------------------------
Gary G. Benanav
Director
/s/ William S. Bristow, Jr.
---------------------------
William S. Bristow, Jr.
Director
/s/ Robert J. Callander
--------------------------
Robert J. Callander
Director
/s/ George T. Carpenter
---------------------------
George T. Carpenter
Director
/s/ Donna R. Ecton
---------------------------
Donna R. Ecton
Director
/s/ Marcel P. Joseph
---------------------------
Marcel P. Joseph
Director
/s/ Theodore E. Martin
----------------------
Theodore E. Martin
Director
/s/ Juan M. Steta
---------------------------
Juan M. Steta
Director
/s/ K. Grahame Walker
---------------------------
K. Grahame Walker
Director
- 12 -
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of Barnes Group Inc.
Our audit of the consolidated financial statements referred to
in our report dated January 23, 1995 appearing on page 28 of
the 1994 Annual Report to Stockholders of Barnes Group Inc.
(which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule for
the year ended December 31, 1994 listed in Item 14(a) of this
Form 10-K. In our opinion, this Financial Statement Schedule
presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related
consolidated financial statements.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Hartford, Connecticut
January 23, 1995
- 13 -
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Stockholders and Board of Directors
Barnes Group Inc.
We have audited the consolidated balance sheet of Barnes Group
Inc. as of December 31, 1993 and the related consolidated
statements of income, stockholders' equity and cash flows for
each of the two years in the period ended December 31, 1993.
Our audits also included the financial statement schedule listed
in the Index at Item 14(a) for each of the two years in the period
ended December 31, 1993. These financial statements and schedule
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about 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 audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of Barnes Group Inc. at
December 31, 1993 and the consolidated results of its
operations and its cash flows for each of the two years in the
period ended December 31, 1993, in conformity with generally
accepted accounting principles. Also, in our opinion, the
related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
As discussed in Note 1 to the consolidated financial
statements, the Company changed its methods of accounting
for income taxes and for certain postretirement and postemployment
benefits in the year ended December 31, 1992.
/s/ Ernst & Young LLP
Ernst & Young LLP
Hartford, Connecticut
January 28, 1994
- 14 -
<PAGE>
BARNES GROUP INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 1994, 1993 and 1992
(in thousands)
<TABLE>
<CAPTION>
Provision
Balance at charged to Balance at
beginning costs and end of
of year expenses (Deductions(1) Year
---------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
1994
Allowance
for doubtful
accounts $2,217 $1,523 $ 518 $3,222
1993
Allowance
for doubtful
accounts $2,332 $1,095 $1,210 $2,217
1992
Allowance
for doubtful
accounts $2,348 $1,558 $1,574 $2,332
(1) Write-offs, net of recoveries
</TABLE>
- 15 -
<PAGE>
EXHIBIT INDEX
-------------
Barnes Group Inc.
Annual Report on Form 10-K
for year ended December 31, 1994
--------------------------------
<TABLE>
<CAPTION>
Exhibit No. Description Reference
----------- ----------- ---------
<S> <C> <C>
3.1 Restated Certificate of Incorporated by reference
Incorporation, as amended. to Exhibit 3.1 to the
Company's report on Form
10-K for the year ended
December 31, 1992.
3.2 By-Laws. Filed with this report.
4.1 Revolving Credit Agreement Incorporated by reference
dated as of December 1, to Exhibit 4.1 to the
1991 among the Company and Company's report on Form
several commercial banks. 10-K for the year ended
December 31, 1991.
4.2 First Amendment to Credit Incorporated by reference
Agreement set forth in to Exhibit 4.2 to the
Exhibit 4.1 dated as of Company's report on Form
December 1, 1992. 10-K for the year ended
December 31, 1992.
4.3 Second Amendment to Credit Incorporated by reference
Agreement set forth in to Exhibit 4.3 to the
Exhibit 4.1 dated as of Company's report on Form
December 1, 1993. 10-K for the year ended
December 31, 1993.
4.4 Third Amendment to Credit Filed with this report.
Agreement set forth in
Exhibit 4.1 dated as of
December 1, 1994.
4.5 Rights Agreement dated as Incorporated by reference
of July 16, 1986 between to Exhibit 4.2 to the
the Company and The Company's report on Form
Connecticut Bank & Trust 10-K for the year ended
Company, National December 31, 1991.
Association.
4.6 Amendment to the Rights Incorporated by reference
Agreement set forth in to Exhibit 4.4 to the
Exhibit 4.4 dated Company's report on Form
July 15, 1990. 10-K for the year ended
December 31, 1990.
</TABLE>
- 16 -
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description Reference
----------- ----------- ---------
<S> <C> <C>
4.7 Note Agreement dated as of Incorporated by reference
September 16, 1991 among to Exhibit 4.4 to the
the Company and several Company's report on Form
insurance companies. 10-K for the year ended
December 31, 1991.
10.1 The Company's Management Filed with this report.
Incentive Compensation
Plan.
10.2 The Company's Long Term Filed with this report.
Incentive Plan.
10.3 The Company's Retirement Incorporated by reference
Benefit Equalization Plan. to Exhibit 10.3 to the
Company's report on Form
10-K for the year ended
December 31, 1990.
10.4 The Company's Supplemental Filed with this report.
Executive Retirement Plan.
10.5 The Company's 1981 Stock Incorporated by reference
Incentive Plan. to Exhibit 10.5 to the
Company's report on Form
10-K for the year ended
December 31, 1991.
10.6 The Company's 1991 Stock Filed with this report.
Incentive Plan.
10.7 The Company's Non-Employee Filed with this report.
Director Deferred Stock Plan.
10.8 The Company's Directors' Incorporated by reference
Deferred Compensation Plan. to Exhibit 10.8 to the
Company's report on Form
10-K for the year ended
December 31, 1992.
10.9 Consulting Agreement dated Filed with this report.
as of April 1, 1994
between the Company and
Wallace Barnes.
</TABLE>
- 17 -
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description Reference
----------- ----------- ---------
<S> <C> <C>
10.10 The Company's Officer Incorporated by reference
Enhanced Life Insurance to Exhibit 10.11 to the
Program. Company's report on Form
10-K for the year ended
December 31, 1993.
10.11 The Company's Enhanced Incorporated by reference
Life Insurance Program. to Exhibit 10.12 to the
Company's report on Form
10-K for the year ended
December 31, 1993.
13 Portions of the 1994 Annual Filed with this report.
Report to Stockholders.
16 Letter from Ernst & Young Incorporated by reference
LLP Regarding Change in to Exhibit 16 to the
Certifying Accountant. Company's report on Form
8-K filed on March 4, 1994.
22 List of Subsidiaries. Filed with this report.
23.1 Consent of Independent Filed with this report.
Accountants.
23.2 Consent of Independent Filed with this report.
Auditors.
</TABLE>
The Company agrees to furnish to the Commission,
upon request, a copy of each instrument with respect to which
there are outstanding issues of unregistered long-term debt of
the Company and its subsidiaries the authorized principal
amount of which does not exceed 10% of the total assets of the
Company and its subsidiaries on a consolidated basis.
Except for Exhibit 13, which will be furnished free of
charge, and Exhibits 22, 23.1 and 23.2, which are included
herein, copies of exhibits referred to above will be furnished
at a cost of twenty cents per page to security holders who
make written request therefor to The Secretary, Barnes Group
Inc., Executive Office, 123 Main Street, P.O. Box 489,
Bristol, Connecticut 06011-0489.
- 18 -
<PAGE>
EXHIBIT 22
BARNES GROUP INC.
LIST OF SUBSIDIARIES
--------------------
<TABLE>
<CAPTION>
Operating Subsidiaries of the Company:
--------------------------------------
Jurisdiction of
Name Incorporation
---- ---------------
<S> <C>
Associated Spring-Asia PTE. LTD. Singapore
Associated Spring SPEC Limited United Kingdom
Barnes Group (Bermuda) Limited Bermuda
Barnes Group Canada Inc. Canada
Barnes Group Holding B.V. Netherlands
Bowman Distribution Europe Limited United Kingdom
Bowman Distribution France S.A. France
Resortes Mecanicos, S.A. Mexico
Ressorts SPEC, EURL France
Stumpp & Schuele do Brasil Industria e Brazil
Comercio Limitada
Windsor Airmotive Asia PTE. LTD. Singapore
</TABLE>
Associated Spring SPEC Limited is wholly-owned by Bowman
Distribution Europe Limited. Ressorts SPEC, EURL is wholly-owned
by Bowman Distribution France S.A. Windsor Airmotive Asia PTE.
LTD. is wholly-owned by Barnes Group Canada Inc. Associated
Spring-Asia PTE. LTD., Resortes Mecanicos, S.A., and Stumpp &
Schuele do Brasil Industria e Comercio Limitada are wholly-owned
by Barnes Group (Bermuda) Limited. Barnes Group Canada Inc.,
Bowman Distribution Europe Limited, and Bowman Distribution
France S.A. are wholly-owned by Barnes Group Holding B.V. Barnes
Group (Bermuda) Limited and Barnes Group Holding B.V. are wholly-
owned by Barnes Group Inc. The Company's consolidated financial
statements include all of the above-named subsidiaries. For a
statement of the principles of consolidation applicable to these
subsidiaries, see note 1 of the Notes to Consolidated Financial
Statements on page 18 of the 1994 Annual Report to Stockholders.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
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
statement filed on July 18, 1994 pertaining to the 1991 Stock
Incentive Plan) of Barnes Group Inc. of our report dated January
23, 1995 appearing on page 28 of the Annual Report to
Stockholders which is incorporated in this Annual Report on Form
10-K. We also consent to the incorporation by reference of our
report on the Financial Statement Schedule, which appears on page
13 of this Form 10-K.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Hartford, Connecticut
March 6, 1995
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We 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 unnumbered one filed on
July 18, 1994 pertaining to the 1991 Stock Incentive Plan) of
Barnes Group Inc. of our report dated January 28, 1994, with
respect to the consolidated financial statements of Barnes Group
Inc. included in the Annual Report on Form 10-K for the year
ended December 31, 1994.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Hartford, Connecticut
March 3, 1995
<PAGE>
EXHIBIT 3.2
BARNES GROUP INC.
BY-LAWS
-------
ARTICLE I: MEETINGS OF STOCKHOLDERS
SECTION 1. Annual Meetings.
The annual meeting of the stockholders of the
Corporation for the election of directors and for the
transaction of such other business as may properly come
before the meeting shall be held at 10:30 A.M. on the first
Wednesday in April of each year or on such other date or
time as may be designated by the Board of Directors.
SEC. 2. Special Meetings.
Special meetings of the stockholders may be called at
any time by the Chairman, the President or the Board of
Directors. (As used in these by-laws, the term "Chairman"
means the Chairman of the Company appointed pursuant to
Article IV Section 1 unless otherwise specified).
SEC. 3. Place of Meetings.
All meetings of the stockholders shall be held at such
place, within or without the State of Delaware, as may be
designated by the Board of Directors and specified in the
notice to be given to the stockholders in the manner
provided in Section 4 of this Article I.
1
<PAGE>
SEC. 4. Notice of Meetings.
Except as otherwise provided by statute, notice of each
meeting of the stockholders, whether annual or special,
shall be given to each stockholder of record entitled to
vote thereat, not less than ten days before the day on which
the meeting is to be held, by delivering a written or
printed notice thereof to him personally or by posting such
notice in a postage prepaid envelope addressed to him at his
last known post-office address. Except as otherwise
provided by statute, no publication of any notice of a
meeting of the stockholders shall be required. Every notice
of a special meeting of stockholders, besides stating the
time and place of the meeting, shall state briefly the
objects thereof and no business other than that specified in
such notice and matters germane thereto shall be presented
at such meeting, except with the unanimous consent in
writing of the holders of all the outstanding shares of the
Corporation entitled to vote thereon. Nevertheless, notice
of any meeting shall not be required to be given to any
stockholder who shall attend such meeting in person or by
proxy; and if any stockholder shall waive notice of any
meeting in person or by attorney thereunto authorized in
writing or by telegraph, notice thereof need not be given to
him. Notice of any adjourned meeting of stockholders shall
not be required to be given.
SEC. 5. Quorum.
At each meeting of stockholders the holders of record
of a majority of the shares outstanding and entitled to vote
2
<PAGE>
at such meeting, present in person or represented by proxy,
shall be necessary and sufficient to constitute a quorum for
the transaction of business; provided that any number of
stockholders entitled to vote, present in person or repre-
sented by proxy at any annual election of directors, though
holding less than a majority of the shares out-standing and
entitled to vote at such election, may elect the directors.
In the absence of a quorum, a majority in interest of the
stockholders entitled to vote, present in person or repre-
sented by proxy, or, if no such stockholder is present or
represented, any officer entitled to preside or act as
Secretary of such meeting, may adjourn the meeting from time
to time. At any such adjourned meeting at which a quorum
may be present, any business may be transacted which might
have been transacted at the meeting as originally called.
SEC. 6. Voting.
The Secretary or other officer who has charge of the
stock ledger shall prepare and make, at least ten days
before every election of directors, a complete list of the
stockholders entitled to vote at said election, arranged in
alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the
examination of any stockholder during ordinary business
hours, for a period of at least ten days prior to the
election, either at a place within the city, town or village
where the election is to be held and which place shall be
specified in the notice of the meeting, or, if not so
3
<PAGE>
specified, at the place where said meeting is to be held,
and the list shall be produced and kept at the time and
place of election during the whole time thereof, and subject
to the inspection of any stockholder who may be present.
Unless otherwise provided in the Certificate of
Incorporation or these By-Laws, each stockholder shall at
every meeting of the stockholders be entitled to one vote in
person or by proxy for each share of stock held by such
stockholder, but no proxy shall be voted on after three
years from its date unless the proxy provides for a longer
period. Except where the transfer books of the Corporation
shall have been closed or a date shall have been fixed as a
record date for the determination of its stockholders
entitled to vote, as provided in Section 5 of Article VII of
these By-Laws, no share of stock shall be voted on at any
election for directors which shall have been transferred on
the books of the Corporation within twenty days next pre-
ceding such election. Persons holding shares in a fiduciary
capacity shall be entitled to vote the shares so held. At
all meetings of the stockholders all matters, other than
those the manner of deciding which is expressly regulated by
statute, by the Certificate of Incorporation, or by these
By-Laws, shall be decided by the vote of a majority in
interest of the stockholders present in person or repre-
sented by proxy and entitled to vote, a quorum being
present. The vote for directors shall be by ballot.
4
<PAGE>
SEC. 7.
Only persons who are nominated in accordance with the
following procedures shall be eligible for election as
directors of the Corporation, except as may be otherwise
provided in the Certificate of Incorporation of the
Corporation with respect to the right of holders of pre-
ferred stock of the Corporation to nominate and elect a
specified number of directors in certain circumstances.
Nominations of persons for election to the Board of
Directors may be made at any annual meeting of stockholders,
or at any special meeting of stockholders called for the
purpose of electing directors, (a) by or at the direction of
the Board of Directors (or any duly authorized committee
thereof) or (b) by any stockholder of the Corporation (i)
who is a stockholder of record on the date of the giving of
the notice provided for in this Section 7 of this Article I
and on the record date for the determination of stockholders
entitled to vote at such meeting and (ii) who complies with
the notice procedures set forth in this Section 7 of this
Article I.
In addition to any other applicable requirements, for a
nomination to be made by a stockholder, such stockholder
must have given timely notice thereof in proper written form
to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary
must be delivered to or mailed and received at the principal
executive offices of the Corporation (a) in the case of an
annual meeting, not less than sixty (60) days nor more than
ninety (90) days prior to the anniversary date of the
5
<PAGE>
immediately preceding annual meeting of stockholders;
provided, however, that in the event that the annual meeting
is called for a date that is not within thirty (30) days
before or after such anniversary date, notice by the stock-
holder in order to be timely must be so received not later
than the close of business on the tenth (10th) day following
the day on which such notice of the date of the annual
meeting was mailed or such public disclosure of the date of
the annual meeting was made, whichever first occurs; and (b)
in the case of a special meeting of stockholders called for
the purpose of electing directors, not later than the close
of business on the tenth (10th) day following the day on
which notice of the date of the special meeting was mailed
or public disclosure of the date of the special meeting was
made, whichever first occurs.
To be in proper written form, a stockholder's notice to
the Secretary must set forth (a) as to each person whom the
stockholder proposes to nominate for election as a director
(i) the name, age, business address and residence address of
the person, (ii) the principal occupation or employment of
the person, (iii) the class or series and number of shares
of capital stock of the Corporation which are owned bene-
ficially or of record by the person and (iv) any other
information relating to the person that would be required to
be disclosed in a proxy statement or other filings required
to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder;
6
<PAGE>
and (b) as to the stockholder giving the notice (i) the name
and record address of such stockholder, (ii) the class or
series and number of shares of capital stock of the Corpora-
tion which are owned beneficially or of record by such
stockholder, (iii) a description of all arrangements or
understandings between such stockholder and each proposed
nominee and any other person or persons (including their
names) pursuant to which the nomination(s) are to be made by
such stockholder, (iv) a representation that such stock-
holder intends to appear in person or by proxy at the
meeting to nominate the persons named in its notice and (v)
any other information relating to such stockholder that
would be required to be disclosed in a proxy statement or
other filings required to be made in connection with solici-
tations of proxies for election of directors pursuant to
Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by
a written consent of each proposed nominee to being named as
a nominee and to serve as a director if elected.
No person shall be eligible for election as a director
of the Corporation unless nominated in accordance with the
procedures set forth in this Section 7 of this Article I.
If the Chairman of the meeting determines that a nomination
was not made in accordance with the foregoing procedures,
the Chairman shall declare to the meeting that the nomina-
tion was defective and such defective nomination shall be
disregarded.
7
<PAGE>
SEC. 8.
No business may be transacted at an annual meeting of
stockholders, other than business that is either (a)
specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of
Directors (or any duly authorized committee thereof), (b)
otherwise properly brought before the annual meeting by or
at the direction of the Board of Directors (or any duly
authorized committee thereof) or (c) otherwise properly
brought before the annual meeting by any stockholder of the
Corporation (i) who is a stockholder of record on the date
of the giving of the notice provided for in this Section 8
of this Article I and on the record date for the deter-
mination of stockholders entitled to vote at such annual
meeting and (ii) who complies with the notice procedures set
forth in this Section 8 of this Article I.
In addition to any other applicable requirements, for
business to be properly brought before an annual meeting by
a stockholder, such stockholder must have given timely
notice thereof in proper written form to the Secretary of
the Corporation.
To be timely, a stockholder's notice to the Secretary
must be delivered to or mailed and received at the principal
executive offices of the Corporation not less than sixty
(60) days nor more than ninety (90) days prior to the
anniversary date of the immediately preceding annual meeting
of stockholders; provided, however, that in the event that
the annual meeting is called for a date that is not within
thirty (30) days before or after such anniversary date,
8
<PAGE>
notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth
(10th) day following the day on which such notice of the
date of the annual meeting was mailed or such public dis-
closure of the date of the annual meeting was made, which-
ever first occurs.
To be in proper written form, a stockholder's notice to
the Secretary must set forth as to each matter such stock-
holder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought
before the annual meeting and the reasons for conducting
such business at the annual meeting, (ii) the name and
record address of such stock-holder, (iii) the class or
series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by
such stockholder, (iv) a description of all arrangements or
understandings between such stockholder and any other person
or persons (including their names) in connection with the
proposal of such business by such stockholder and any
material interest of such stockholder in such business and
(v) a representation that such stockholder intends to appear
in person or by proxy at the annual meeting to bring such
business before the meeting.
No business shall be conducted at the annual meeting of
stockholders except business brought before the annual
meeting in accordance with the procedures set forth in this
Section 8 of this Article I, provided, however, that, once
business has been properly brought before the annual meeting
in accordance with such procedures, nothing in this Section
9
<PAGE>
8 of this Article I shall be deemed to preclude discussion
by any stockholder of any such business. If the Chairman of
an annual meeting determines that business was not properly
brought before the annual meeting in accordance with the
foregoing procedures, the Chairman shall declare to the
meeting that the business was not properly brought before
the meeting and such business shall not be transacted.
10
<PAGE>
ARTICLE II: BOARD OF DIRECTORS
SECTION 1. General Powers.
The property, affairs and business of the Corporation
shall be managed by the Board of Directors.
SEC. 2. Number, Classification, Term of Office, and
Qualifications.
The number of directors to constitute the whole Board
of Directors shall be nine, but such number may from time to
time be increased, or diminished to not less than three, by
resolution adopted by the Board of Directors. The Board of
Directors shall be divided into three classes as nearly
equal in number as may be, with the term of office of one
class expiring each year. At the annual meeting of
stockholders in 1970, directors of the first class shall be
elected to hold office for a term expiring at the next
succeeding annual meeting, directors of the second class
shall be elected to hold office for a term expiring at the
second succeeding annual meeting and directors of the third
class shall be elected to hold office for a term expiring at
the third succeeding annual meeting. At each annual meeting
of stockholders after 1970, successors to the directors
whose terms shall then expire shall be elected to hold
office for terms expiring at the third succeeding annual
meeting, except that any director elected to a directorship
newly created since the last annual meeting shall hold
office for the same term as the other directors of the class
to which such director has been assigned. When the number
11
<PAGE>
of directors is changed, any newly created directorships or
any decrease in directorships shall be so assigned among the
classes by the Board of Directors as to make all classes as
nearly equal in number as may be. Each director shall
continue in office until his successor shall have been
elected and qualified or until his death or until his
resignation or removal in the manner hereinafter provided.
No director need be a stockholder, nor a resident of the
State of Delaware.
SEC. 3. Election of Directors.
At each meeting of the stockholders for the election of
directors, the directors shall be elected by a plurality of
the votes given at such election.
SEC. 4. Place of Meetings, etc.
The directors may hold their meetings and have one or
more offices, and keep the books of the Corporation, outside
of Delaware, at the office or place of business of the
Corporation in the City of Bristol, Connecticut, or at such
other places as they may from time to time determine.
SEC. 5. Time of Meetings, Notices, etc.
There shall be a meeting of the Board of Directors for
organization, for the election of officers and for the
transaction of such other business as may properly come
before the meeting on the date of the annual meeting of
stockholders or within thirty days thereafter upon the
notice hereinafter provided for a special meeting. The
12
<PAGE>
directors may, however, without notice, hold such meeting in
the city where the annual meeting of stockholders is held
and immediately following such annual meeting of stock-
holders. At the organizational meeting, the Directors shall
elect one of the director or Chairman of the Board of
Directors. The Chairman of the Board of Directors, or in
his/her absence, the Chairman of the Board's Executive
Committee, shall preside at all meetings of the Board of
Directors. The Chairman of the Board of Directors may be
removed as Chairman of the Board of Directors at any time by
the Board of Directors. The Board of Directors by
resolution may provide for the holding of regular meetings
and may fix the time of holding such meetings. Such regular
meetings of the Board of Directors may be held without
notice. Special meetings of the Board of Directors may be
called by the Chairman of the Board of Directors, the
Chairman, the President or any three directors. Unless
otherwise specified in the notice or waiver of notice
thereof, all meetings of the Board of Directors shall be
held at the office of the Corporation in Bristol,
Connecticut. Notice of each special meeting shall be mailed
to each director addressed to him at his residence or usual
place of business at least seven days before the day on
which the meeting is to be held or shall be sent to him at
such place by telegraph, or telephoned or delivered to him
personally, not later than three days before the day on
which the meeting is to be held, unless the Chairman of the
Board of Directors, the Chairman or the President determines
that circumstances require that a meeting be held on shorter
13
<PAGE>
notice. Notice of any meeting need not be given to any
director, however, if waived by him in writing or by
telegraph. Any meeting of the Board of Directors shall be a
legal meeting without any notice thereof having been given
if all the directors shall be present thereat.
SEC. 6. Quorum and Manner of Acting.
A majority of the directors at the time in office (but
not less than one-third of the number necessary to
constitute the whole Board) at a meeting duly assembled
shall be necessary and sufficient to constitute a quorum for
the transaction of business, subject, however, to the
provisions of Section 9 of this Article II. Except as
otherwise provided by law or in these By-Laws, the act of a
majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of
Directors. In the absence of a quorum, a majority of the
directors present at any meeting may adjourn the meeting
from time to time until a quorum be had. Notice of any
adjourned meeting need not be given. The directors shall
act only as a Board and the individual directors shall have
no power as such.
SEC. 7. Resignations.
Any director may resign at any time by giving written
notice to the Chairman of the Board, the Chairman, the
President or the Secretary. Such resignation shall take
effect at the time specified therein; and unless otherwise
14
<PAGE>
specified therein the acceptance of such resignation shall
not be necessary to make it effective.
SEC. 8. Removal of Directors.
Any director may be removed at any time for cause, at a
meeting of stockholders called for the purpose, by the
affirmative vote of the holders of not less than two-thirds
of the outstanding shares of stock of the Corporation
entitled to vote in elections of directors, considered for
the purposes of this Section 8 as one class.
SEC. 9. Vacancies and Newly Created Directorships.
Any vacancy occurring among the directors by death,
resignation, removal or otherwise and any newly created
directorships may be filled by a majority of the directors
then in office, though less than a quorum, or, in the event
such directors are unable to act, by the stockholders. Each
director elected to fill a vacancy shall hold office for the
unexpired term in respect of which such vacancy occurred.
Each director elected to a newly created directorship shall
hold office until the next annual meeting of stockholders.
15
<PAGE>
ARTICLE III
COMMITTEES OF THE BOARD OF DIRECTORS
SECTION 1. How Constituted.
The Board of Directors, by resolution or resolutions
passed by a majority of the whole Board, may appoint an
Executive Committee, an Audit Committee and such other
committees as the Board of Directors may determine. The
Executive Committee and Audit Committee shall consist of
three or more directors, and each such other committee shall
consist of two or more directors, as determined by the Board
of Directors. The Executive Committee shall have the powers
set out in Section 2 of this Article III; other committees
shall have such powers as the Board of Directors delegates
thereto. The Board of Directors may appoint alternate
committee members who, at the invitation of the committee
chairman, may attend a committee meeting in the place of a
regular member who is unable to attend. When attending in
the place of regular members, alternate members shall have
all the powers of regular members and their presence shall
be included in the determination of whether a quorum exists.
SEC. 2. Powers of the Executive Committee.
During the intervals between the meetings of the Board
of Directors, the Executive Committee shall possess and may
exercise the powers of the Board of Directors, in the
management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed
to all papers which may require it.
16
<PAGE>
SEC. 3. Proceedings.
Each committee of the Board of Directors may appoint a
secretary of such committee, may fix its own rules of
procedure and may meet at such place or places and at such
time or times as the committee from time to time shall
determine. Each such committee shall cause its proceedings
to be recorded, and the minutes of committee meetings shall
be distributed to the Board of Directors.
SEC. 4. Quorum and Manner of Acting.
A majority of the number of regular members of any
committee of the Board of Directors shall constitute a
quorum thereof for the transaction of business and the act
of a majority of those present at a meeting thereof at which
a quorum shall be present shall be the act of such
committee. The members of any such committee shall act only
as a committee and the individual members thereof shall have
no powers as such.
SEC. 5. Removal.
Any member of any committee of the Board of Directors,
may be removed at any time by a vote of the majority of the
directors then in office at any meeting of the Board of
Directors at which a quorum is present.
SEC. 6. Vacancies.
Any vacancy in any committee of the Board of Directors
shall be filled in the manner prescribed in these By-Laws
for the original appointment of such committee.
17
<PAGE>
ARTICLE IV
OFFICERS, COMMITTEES AND OTHER EXECUTIVES
SECTION 1. Number.
The officers of the Corporation shall be a President,
one or more Vice Presidents, a Secretary and a Treasurer,
and such other offices, including a Chairman, as may be
determined by the Board of Directors. The Board of
Directors may designate a Vice President as Senior Vice
President or Executive Vice President. Any two of the
offices established by or pursuant to this Section I may be
held by the same person.
SEC. 2. Election, Term of Office and Qualifications.
Each officer shall be chosen by the Board of Directors
and shall hold his/her office until his/her successor shall
have been duly chosen and qualified or until death or until
he/she shall resign or shall have been removed in the manner
hereinafter provided.
SEC. 3. Divisional Executives, Department Heads, Committees and
Agents.
The Board of Directors or the Executive Committee from
time to time may appoint group and divisional executives,
department heads, committees and agents (with such
designations as may be determined in the resolution
appointing them), each of whom shall act for such period,
have such powers, and perform such duties as the Board of
Directors or the Executive Committee from time to time may
18
<PAGE>
determine; provided, however, that the Board of Directors or
the Executive Committee may delegate to any officer or
committee the power to appoint, or to provide for the
appointment of, divisional executives, department heads,
committees or agents authorized by the provisions of this
Section 3, who shall have such designations, powers and
duties as the person or committee appointing them may
determine.
SEC. 4. Removal.
The Chairman, if any, and the President may be removed
either with or without cause by a vote of a majority of the
directors then in office at any meeting of the Board of
Directors at which a quorum is present. Any other officer
may be removed in a like manner or may be removed either
with or without cause by the Chairman, or if there is no
Chairman, by the President.
SEC. 5. Resignations.
Any officer may resign at any time by giving written
notice to the Board of Directors, the Chairman, the
President or the Secretary.
SEC. 6. Vacancies.
A vacancy in any office because of death, resignation,
removal or disqualification or any other cause, shall be
filled for the unexpired portion of the term in the manner
prescribed by these By-Laws for regular election or
appointment to such office.
19
<PAGE>
SEC. 7. The Chairman and the President.
The Chairman, or if no Chairman is elected by the Board
of Directors, the President shall be the chief executive
officer of the Corporation and, subject to the instructions
of the Board of Directors and the committees of the Board of
Directors, he/she shall have general charge of the business,
affairs and property of the Corporation and control over its
several officers. He/she shall preside at all meetings of
the stockholders. The chief executive officer shall see
that all orders and resolutions of the Board of Directors
and of all committees of the Board of Directors are carried
into effect. He/she may sign, with any other officer
thereunto authorized, certificates of stock of the
Corporation, and may sign and execute, in the name of the
Corporation, deeds, mortgages, bonds and other instruments
authorized by the Board of Directors or the Executive
Committee, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of
Directors or the Executive Committee to some other officer
or agent. From time to time the chief executive officer
shall report to the Board of Directors and to the committees
of the Board of Directors all matters within his/her
knowledge which the interests of the Corporation may require
to be brought to their notice. He/she shall do and perform
such other duties as from time to time may be assigned by
the Board of Directors or any committee of the Board of
Directors.
20
<PAGE>
SEC. 8. The President.
If a Chairman has been elected by the Board of
Directors, the President shall have the powers and duties
set forth in this Section 8. The President shall be the
chief operating officer and shall have general supervision
over the operations of the Corporation and the conduct of
its business. In the absence of the Chairman, the President
shall preside at all meetings of the stockholders, and shall
perform the other duties assigned to the Chairman by Section
7 of this Article IV. The President may sign, with any
other officer thereunto authorized, certificates of stock of
the Corporation, and may sign and execute, in the name of
the Corporation, deeds, mortgages, bonds and other
instruments authorized by the Board of Directors or the
Executive Committee, except in cases where the signing and
execution thereof shall be expressly delegated by the Board
of Directors or the Executive Committee to some other
officer or agent. He/she shall do and perform such other
duties as from time to time may be assigned to him/her by
the Board of Directors, any committee of the Board of
Directors, or the Chairman.
SEC. 9. The Vice Presidents.
At the request of the President or in his absence or
disability, the Vice President designated by the President
(or in the absence of such designation, the Vice President
designated by the Chairman, or if there is no Chairman, the
Chairman of the Board of Directors) shall perform all the
duties of the President, and when so acting, he/she shall
21
<PAGE>
have all the powers of, and be subject to all restrictions
upon, the President. Any vice President may also sign, with
any other officer thereunto authorized, certificates of
stock of the Corporation, and may sign and execute, in the
name of the Corporation, deeds, mortgages, bonds and other
instruments authorized by the Board of Directors or the
Executive Committee, except in cases where the signing and
execution thereof shall be expressly delegated by the Board
of Directors or the Executive Committee to some other
officer or agent, and shall perform such other duties as
from time to time may be assigned to him/her by the Board of
Directors, the Executive Committee, the Chairman of the
Board, the Chairman of the Executive Committee or the
President.
SEC. 10. The Secretary.
The Secretary shall be sworn to the faithful discharge
of this duties. He/she shall:
(a) Keep the minutes of the meetings of the stockholders
and of the Board of Directors and cause the same,
together with the minutes of each meeting of any
committee of the Board of Directors, to be recorded in
books provided for that purpose.
(b) See that all notices are duly given in accordance with
the provisions of these By-Laws or as required by law.
22
<PAGE>
(c) Whenever any committee shall be appointed in pursuance
of a resolution of the Board of Directors, furnish the
chairman of the committee with a copy of the
resolution.
(d) Be custodian of the records of the Corporation, the
Board of Directors and the committees thereof, and of
the seal of the Corporation and see that the seal is
affixed to all stock certificates prior to their
issuance and to all documents, the execution of which
on behalf of the Corporation under its seal shall be
duly authorized.
(e) Sign, with the Chairman, the President or a Vice
President, certificates of stock.
(f) See that the books, reports, statements, certificates
and the other documents and records required by law are
properly kept and filed.
(g) In general, perform all duties incident to the office
of Secretary and such other duties as from time to time
may be assigned to him/her by the Board of Directors,
the Executive Committee, the Chairman or the President.
SEC. 11. Assistant Secretaries.
At the request of the Secretary or in his/her absence
or disability, the Assistant Secretary designated by him/her
(or in the absence of such designation, the Assistant
23
<PAGE>
Secretary designated by the Board of Directors or the
Executive Committee) shall perform all the duties of the
Secretary, and when so acting, he/she shall have all the
powers of and be subject to all restrictions upon the
Secretary. The Assistant Secretaries shall perform such
other duties as from time to time may be assigned to them
respectively by the Board of Directors, the Executive
Committee or the Secretary, and shall be sworn to the
faithful discharge of their duties.
SEC. 12. The Treasurer.
The Treasurer shall have supervision over the funds,
securities, receipts and disbursements of the Corporation.
He/she shall cause all moneys and other valuable effects to
be deposited in the name and to the credit of the
Corporation, in such banks or trust companies or with such
bankers or other depositaries as shall be selected in
accordance with the provisions of Section 3 of Article VI of
these By-Laws. He/she shall cause the funds of the
Corporation to be disbursed by checks or drafts upon the
authorized depositaries of the Corporation. The Treasurer
shall cause to be taken and preserved proper vouchers for
all moneys disbursed. The Treasurer may also sign, with the
Chairman, the President or a Vice President, certificates of
stock of the Corporation. The Treasurer shall have the
right and is hereby empowered from time to time to require
from the officers or agents of the Corporation reports or
statements giving such information as he/she may desire with
24
<PAGE>
respect to any and all financial transactions of the
Corporation.
SEC. 13. Assistant Treasurers.
At the request of the Treasurer or in his/her absence
or disability, the Assistant Treasurer designated by him/her
(or in the absence of such designation, the Assistant
Treasurer designated by the Board of Directors or the
Executive Committee) shall perform all the duties of the
Treasurer, and when so acting, he shall have all the powers
of and be subject to all restrictions upon the Treasurer.
The Assistant Treasurers shall perform such other duties as
from time to time may be assigned to them respectively by
the Board of Directors, the Executive Committee or the
Treasurer.
SEC. 14. Surety Bonds.
Any officer or agent of the Corporation from whom the
Board of Directors or the Executive Committee may at any
time think fit to require a bond shall execute to the
Corporation the same in such sum and with such surety or
sureties as the Board of Directors or the Executive
Committee may direct, conditioned upon the faithful
performance of his duties to the Corporation, including
responsibility for negligence and for the accounting for all
property, moneys or securities of the Corporation which may
come into his hands.
25
<PAGE>
ARTICLE V
REIMBURSEMENT AND INDEMNIFICATION OF
DIRECTORS, OFFICERS AND EMPLOYEES
SECTION 1. Reimbursement.
Each director and officer of the Corporation shall be
entitled to reimbursement for his reasonable expenses
incurred in connection with his attention to the affairs of
the Corporation, including attendance at meetings. Each
employee of the Corporation other than an officer shall be
entitled to such reimbursement for his reasonable expenses
incurred in connection with his attention to the affairs of
the Corporation as the Board of Directors, the Executive
Committee or any person designated by one of them may
authorize.
SEC. 2. Indemnification.
(a) Each person who was or is a party or is threatened to
be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative
or investigative (hereinafter a "proceeding"), by
reason of the fact that he/she, or a person of whom
he/she is the legal representative, is or was a
director or officer of the Corporation or is or was
serving at the request of the Corporation as a
director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust
or other enterprise, including service with respect to
employee benefit plans, whether the basis of such
26
<PAGE>
proceeding is alleged action or inaction in an official
capacity or in any other capacity while serving as a
director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the
fullest extent permitted by the laws of Delaware, as
the same exist or may hereafter be amended, against all
costs, charges, expenses, liabilities and losses
(including attorneys' fees, judgments, fines, employee
benefit plan excise taxes or penalties and amounts paid
or to be paid in settlement reasonably incurred or
suffered by such person in connection therewith, and
such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent
and shall inure to the benefit of his/her heirs,
executors and administrators; provided, however, that,
except as provided in subdivision (b) of this Section
2, the Corporation shall indemnify any such person
seeking indemnification in connection with a proceeding
(or part thereof) initiated by such person only if such
proceeding (or part thereof) was authorized by the
Board. The right to indemnification conferred in this
Section 2 shall include the right to be paid by the
Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition;
provided, however, that, if the Delaware General
Corporation Law requires, the payment of such expenses
incurred by a director or officer in his/her capacity
as a director or officer (and not in any other capacity
in which service was or is rendered by such person
27
<PAGE>
while a director or officer, including, without
limitation, service to any employee benefit plan) in
advance of the final disposition of a proceeding, shall
be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or
officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer
is not entitled to be indemnified under this
subdivision (a) or otherwise. The Corporation may, by
action of the Board, provide indemnification to
employees and agents of the Corporation with the same
scope and effect as the foregoing indemnification of
directors and officers.
(b) If a claim under subdivision (a) of this Section 2 is
not paid in full by the Corporation within sixty days
after a written claim has been received by the
Corporation, the claimant may at any time thereafter
bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole
or in part, the claimant shall be entitled to be paid
also the expense of prosecuting such claim. It shall
be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final
disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that
the claimant has failed to meet a standard of conduct
which makes it permissible under the Delaware law for
28
<PAGE>
the Corporation to indemnify the claimant for the
amount claimed. Neither the failure of the Corporation
(including the Board, independent legal counsel, or its
stockholders) to have made a determination prior to the
commencement of such action that indemnification of the
claimant is permissible in the circumstances because
he/she has met such standard of conduct, nor an actual
determination by the Corporation (including the Board,
independent legal counsel, or its stockholders) that
the claimant has not met such standard of conduct,
shall be a defense to the action or create a
presumption that the claimant has failed to meet such
standard of conduct.
(c) The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance
of its final disposition conferred in this Section 2
shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, By-Laws,
agreement, vote of stockholders or disinterested
directors or otherwise.
(d) The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee
or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or
not the Corporation would have the power to indemnify
29
<PAGE>
such person against such expense, liability or loss
under Delaware law.
(e) To the extent that any director, officer, employee or
agent of the Corporation is by reason of such position,
or a position with another entity at the request of the
Corporation, a witness in any action, suit or
proceeding, he shall be indemnified against all costs
and expenses actually and reasonably incurred by him or
on his behalf in connection therewith.
(f) The Corporation may enter into agreements with any
director, officer, employee or agent of the Corporation
providing for indemnification to the full extent
permitted by Delaware law.
(g) For purposes of this Section 2, the term "Board" shall
mean the Board of Directors of the Corporation or, to
the extent permitted by the laws of Delaware, as the
same exist or may hereafter be amended, its Executive
Committee. On vote of the Board, the Corporation may
assent to the adoption of this Article V by any
subsidiary, whether or not wholly owned.
(h) The rights provided by this Section 2 shall not be
available with respect to any claim asserted against
the director, officer, employee or agent which is based
on matters which antedate the adoption of this Section
30
<PAGE>
2; any such claim will be governed by the By-Laws in
effect prior to April 2, 1987.
(i) If any provision of this Section 2 shall for any reason
be determined to be invalid, the remaining provisions
hereof shall not be affected thereby but shall remain
in full force and effect.
31
<PAGE>
ARTICLE VI
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. Contracts, etc. How Executed.
Except as in these By-Laws otherwise provided, the
Board of Directors or the Executive Committee may authorize
any officer or officers, agent or agents, to enter into any
contract or execute and deliver any instrument in the name
of and on behalf of the Corporation, and such authority may
be general or confined to specific instances; and, unless so
authorized, no officer, agent or employee shall have any
power or authority to bind the Corporation by any contract
or engagement or to pledge its credit or to render it liable
pecuniarily for any purpose or to any amount.
SEC. 2. Loans.
No loans or advances shall be contracted on behalf of
the Corporation and no negotiable paper shall be issued in
its name, unless and except as authorized by the Board of
Directors or the Executive Committee. Any officer or agent
of the Corporation thereto authorized by the Board of
Directors or the Executive Committee may effect loans and
advances for the Corporation from any bank, trust company or
other institution, or from any firm, corporation or
individual, and for such loans and advances may make,
execute and deliver promissory notes, bonds or other
evidences of indebtedness of the Corporation and, when
authorized as aforesaid, may pledge, hypothecate or transfer
as security for the payment of any and all loans, advances,
32
<PAGE>
indebtedness and liabilities of the Corporation, any and all
stocks, securities and other personal property at any time
held by the Corporation and to that end may endorse, assign
and deliver the same. Such authority may be general or
confined to specific instances. But no mortgage (other than
a purchase money mortgage) upon its property and franchises
shall be created by the Corporation unless first there shall
have been obtained the consent of the holders of not less
than two-thirds of the shares of the capital stock of the
Corporation then issued and outstanding, given by vote at a
meeting of the stockholders called for the purpose.
SEC. 3. Deposits.
All funds shall be deposited from time to time to the
credit of the Corporation in such banks or trust companies
or with such bankers or other depositaries as the Board of
Directors or the Executive Committee may select or as may be
selected by any officer or officers, agent or agents of the
Corporation to whom such power may from time to time be
delegated by the Board of Directors or the Executive
Committee.
SEC. 4. Checks, Drafts, etc.
All notes, drafts, acceptances, checks, endorsements,
or other evidences of indebtedness, shall be signed by the
Treasurer or an Assistant Treasurer and countersigned by the
Chairman or the President, or shall be signed by one or more
officers or agents of the Corporation as may from time to
time be designated by resolution of the Board of Directors
33
<PAGE>
or of the Executive Committee. Endorsements for deposit to
the credit of the Corporation in any of its duly authorized
depositaries may be made by the Treasurer or Assistant
Treasurer, or by any other officer or agent who may be
designated by resolution of the Board of Directors or the
Executive Committee, without counter-signature, or by
hand-stamped impression in the name of the Corporation.
34
<PAGE>
ARTICLE VII
SHARES AND THEIR TRANSFER
SECTION 1. Certificate of Stock.
Every holder of stock in the Corporation shall be
entitled to have a certificate signed by, or in the name of
the Corporation by, the Chairman, the President or a Vice
President, and the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary, certifying the
number of shares owned by him/her in the Corporation. Any
of or all the signatures on the certificate may be a
facsimile. In case of any officer, transfer agent or
registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate
is issued, the certificate may be issued by the Corporation
with the same effect as if he/she were such officer,
transfer agent or registrar at the date of issue.
Certificates representing shares of stock of the Corporation
shall be in such form as shall be approved by the Board of
Directors. There shall be entered upon the stock books of
the Corporation at the time of issuance of each share the
number of the certificate issued, the name of the person
owning the shares and the date of issuance thereof.
SEC. 2. Transfer of Stock.
Transfer of shares of stock of the Corporation shall be
made on the books of the Corporation by the holder of record
thereof, or by his/her attorney thereunto duly authorized by
35
<PAGE>
a power of attorney duly executed in writing and filed with
the Secretary of the Corporation or any of its transfer
agents, and on surrender of the certificate or certificates
representing such shares. The Corporation and its transfer
agents and registrars, if any, shall be entitled to treat
the holder of record of any share or shares of stock as the
absolute owner thereof for all purposes, and accordingly
shall not be bound to recognize any legal, equitable or
other claim to or interest in such share or shares on the
part of any other person whether or not it or they shall
have express or other notice thereof, except as otherwise
expressly provided by the statutes of the State of Delaware;
provided, however, that whenever any transfer of shares
shall be made for collateral security and not absolutely,
and written notice thereof shall be given to the Secretary
of the Corporation or to any of its transfer agents, such
fact shall be expressed in the entry of the transfer.
SEC. 3. Lost or Destroyed Certificates.
The holder of any shares of the Corporation shall
immediately notify the Corporation of any loss or
destruction of the certificate therefor. The Corporation
may issue a new certificate in the place of any certificate
theretofore issued by it, alleged to have been lost or
destroyed, but the Board of Directors or Executive Committee
may require the owner of the lost or destroyed certificate
or his/her legal representatives to give a bond in such sum,
not exceeding double the value of the shares, and with such
surety or sureties, as it may direct, to indemnify the
36
<PAGE>
Corporation and its transfer agents and registrars of
transfers, if any, against any claim that may be made
against it on account of the alleged loss or destruction of
any such certificate or the issuance of such new
certificate.
SEC. 4. Regulations.
The Board of Directors may make such rules and
regulations as it may deem expedient concerning the
issuance, transfer and registration of certificates for
shares of the stock of the Corporation. It may appoint
transfer agents or registrars of transfers, or both, and may
require all certificates of stock to bear the signature of
either or both.
SEC. 5. Closing of Transfer Books and Fixing of Record Date.
The Board of Directors shall have power to close the
stock transfer books of the Corporation for a period not
exceeding seventy days preceding the date of any meeting of
stockholders or the date for payment of any dividend or the
date for the allotment of rights or the date when any change
or conversion or exchange of capital stock shall go into
effect; provided, however, that in lieu of closing the stock
transfer books as aforesaid, the Board of Directors may fix
in advance a date, not exceeding seventy days preceding the
date of any meeting of stockholders or the date for the
payment of any dividend, or the date for the allotment of
rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, as a record
37
<PAGE>
date for the determination of the stockholders entitled to
notice of, and to vote at, any such meeting, or entitled to
receive payment of any such dividend, or to any such
allotment of rights, or to exercise the rights in respect of
any such change, conversion or exchange of capital stock,
and in such case only such stockholders as shall be
stockholders of record on the date so fixed shall be enti-
tled to such notice of, and to vote at, such meeting, or to
receive payment of such dividend, or to receive such
allotment or rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as
aforesaid.
38
<PAGE>
ARTICLE VIII
CORPORATE SEAL
The corporate seal shall be in the form of a circle and
shall bear the words and figures "Barnes Group Inc., 1925,
Delaware," or words and figures of similar import, provided that
the form of such seal shall be subject to alteration by the Board
of Directors.
39
<PAGE>
ARTICLE IX
FISCAL YEAR
The fiscal year of the Corporation shall begin on the
first day of January and end on the thirty-first day of the
following December.
40
<PAGE>
ARTICLE X
AMENDMENTS
All By-Laws of the Corporation shall be subject to
alteration or repeal, and new By-Laws may be made, either (1) by
the affirmative vote of the holders of record of a majority of
the outstanding shares of the stock of the Corporation entitled
to vote given at an annual meeting or at any special meeting, or
(2) by the affirmative vote of at least a majority of the number
of directors necessary to constitute the whole Board.
* * *
11/18/94
B:\BY-LAWS
41
<PAGE>
EXHIBIT 4.4
THIRD AMENDMENT
TO
CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this
"Amendment"), dated as of December 1, 1994, by and between BARNES
GROUP, INC. (the "Borrower"), the Lenders parties to the Credit
Agreement (as defined below) from time to time (the "Lenders"),
and MELLON BANK, N.A., a national banking association, as Agent
(in such capacity, the "Agent").
WHEREAS, the Agent, the Lenders and the Borrower are
parties to a certain Credit Agreement dated as of December 1,
1991 (as amended, the "Credit Agreement"); and
WHEREAS, the Borrower has requested that the Lenders
extend the Revolving Credit Maturity Date for a period of two
years;
WHEREAS, the Agent, the Lenders and the Borrower desire
to amend the Credit Agreement as set forth herein; and
WHEREAS, all words and terms used in this Amendment
which are defined in the Credit Agreement are used herein with
the same meanings unless otherwise defined herein or required by
the context;
NOW, THEREFORE, in consideration of the foregoing
premises and intending to be legally bound, the Agent, the
Lenders and the Borrower hereby agree as follows:
Section 1. Extension of Revolving Credit Maturity
--------------------------------------
Date. Pursuant to Section 2.03 of the Credit Agreement and as
----
requested by the Borrower in a letter to the Agent dated October
17, 1994, the Lenders and the Agent hereby agree to extend the
Revolving Credit Maturity Date for a period of two years. On and
after December 6, 1994 (the "Effective Date"), as provided in
Section 2.03 of the Credit Agreement, the Revolving Credit
Maturity Date shall be December 6, 1999, as such date may be
further extended by the Lenders pursuant to Section 2.03 of the
Credit Agreement.
Section 2. Amendments to Credit Agreement. The Credit
------------------------------
Agreement is hereby amended as follows:
<TABLE>
<CAPTION>
(a) The Initial Revolving Credit Committed Amount of
each Lender shall be reallocated as follows:
<S> <C>
Mellon Bank, N.A. $30,000,000
Chemical Bank $20,000,000
Shawmut Bank, N.A. $20,000,000
NBD Bank, N.A. $10,000,000
<PAGE>
Society National Bank $10,000,000
Fleet Bank, National
Association $10,000,000
</TABLE>
(b) Section 2.02(a) is hereby deleted and the
following substituted therefor:
"(a) Commitment Fee.
--------------
(i) Consolidated Leverage Ratio Adjustments. The
---------------------------------------
Borrower shall pay to the Agent for the account of each
Lender a commitment fee (the "Commitment Fee") equal to
(x) 0.17% per annum if the Borrower's Consolidated
Leverage Ratio is less than 1.15:1, (y) 0.22% if the
Borrower's Consolidated Leverage Ratio is equal to or
greater than 1.15:1 but less than or equal to 1.40:1,
and (z) 0.25% if the Borrower's Consolidated Leverage
Ratio is greater than 1.40:1, (based on a year of 365
or 366 days and actual days elapsed), for each day from
and including the Closing Date and to but not including
the Revolving Credit Maturity Date, of the amount (not
less than zero) equal to (1) such Lender's Revolving
Credit Commited Amount on such day minus (2) such
Lender's Revolving Credit Loans outstanding on such
day. Such Commitment Fee shall be due and payable for
the preceding period for which such fee has not been
paid (A) on each Regular Payment Date and (B) on the
Revolving Credit Maturity Date.
(ii) Usage Adjustments. The Commitment Fee shall
-----------------
be increased to .375% for each day on which the
aggregate amount of Revolving Credit Loans of all
Lenders outstanding exceeds 75% of the aggregate
Revolving Credit Commitments of all Lenders."
(c) Section 2.06(b) is hereby deleted and the
following substituted therefor:
"(b) Applicable Margins. The "Applicable Margin and
------------------
interest rate Option for any day shall mean the
percentage set forth below:
<TABLE>
<CAPTION>
Interest Rate Option Applicable Margin
-------------------- -----------------
<S> <C>
Base Rate Option 0.000%
CD Rate Option 0.625%
Euro-Rate Option 0.500%
</TABLE>
provided, however, that
(i) the Applicable Margin for each day on which the
Borrower's Consolidated Leverage Ratio is less than
1.15:1 shall mean the percentage set forth below:
- 2 -
<PAGE>
<TABLE>
<CAPTION>
Interest Rate Option Applicable Margin
-------------------- -----------------
<S> <C>
Base Rate Option 0.000%
CD Rate Option 0.575%
Euro-Rate Option 0.450%
</TABLE>
(ii) the Applicable Margin for each day on which the
Borrower's Consolidated Leverage Ratio is greater than
1.15:1 but less than 1.40:1 shall mean the percentage
set forth below:
[CAPTION]
<TABLE>
Interest Rate Option Applicable Margin
-------------------- -----------------
<S> <C>
Base Rate Option 0.000%
CD Rate Option 0.625%
Euro-Rate Option 0.500%
</TABLE>
and
(iii) the Applicable Margin for each day on which the
Borrower's Consolidated Leverage Ratio is grater than
1.40:1 shall mean the percentage set forth below:
<TABLE>
<CAPTION>
Interest Rate Option Applicable Margin
-------------------- -----------------
<S> <C>
Base Rate Option 0.125%
CD Rate Option 0.750%
Euro-Rate Option 0.625%
</TABLE>
Section 3. Conditions. The obligation of the Agent
----------
and the Lenders to extend the Revolving Credit Maturity Date and
to agree with the amendments set forth herein shall be subject to
satisfaction by the Borrower of the following conditions
precedent:
(a) The Agent shall have received (with a copy
for each Lender) the following documents dated as of
the date of the issuance of the Amendment (the "Closing
Date") and in form and substance satisfactory to the
Lenders:
(i) An executed counterpart of this Amendment;
and
(ii) A certificate signed by a duly authorized
officer of the Borrower stating that (A) the
representations and warranties contained in
Article III of the Credit Agreement (except for
Section 3.06 which continues to be true as of the
date set forth therein) are correct on and as of
the Closing Date and as though made on and as of
the Closing Date and (B) no Event of Default and
no event, act or omission which, with the giving
of notice or the lapse of time or both, would
constitute such an
-3-
<PAGE>
Event of Default has occurred and is continuing or
would result from the execution and delivery of
the Amendment.
(b) The Agent shall have received (with a copy
for each Lender) such other approvals, certificates,
opinions or documents, in form and substance
satisfactory to the Lenders, as the Lenders may
reasonably request.
Section 4. Effect of Amendment. The Credit Agreement,
-------------------
as amended by this Amendment, is in all respects ratified,
approved and confirmed and shall, as so amended, remain in full
force and effect. From and after the date hereof, all references
in any document or instrument to the Credit Agreement shall mean
and include the Credit Agreement, as amended by this Amendment.
Section 5. Governing Law. This Amendment shall be
-------------
governed by and shall be interpreted and enforced in accordance
with the laws of the State of New York.
Section 6. Counterparts. This Amendment may be
------------
executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to
be an original, and all of which counterparts, taken together,
shall constitute but one and the same Amendment.
Section 7. Expenses. The Borrower shall reimburse the
--------
Lenders for all costs and expenses (including fees and expenses
of counsel to the Agent) incurred in connection with this
Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective
officers thereunto duly authorized.
BARNES GROUP, INC.
By /s/ J. Locher
-------------------------
Title
----------------------
MELLON BANK, N.A.,
individually and as Agent
By /s/Joseph F. Bond Jr.
-------------------------
Title Joseph F. Bond, Jr.
----------------------
Vice President
-4-
<PAGE>
CHEMICAL BANK
By /s/ C. C. Wardell
-------------------------
Title Managing Director
----------------------
SHAWMUT BANK, N.A.
By /s/ Paul Veiga
-------------------------
Title Vice President
----------------------
NBD BANK, N.A.
By /s/ Carolyn J. Parks
-------------------------
Title Vice President
----------------------
SOCIETY NATIONAL BANK
By /s/ Peter D. Moore
-------------------------
Title Vice President
----------------------
FLEET BANK, N.A.
By /s/ Marlene K. Haddad
-------------------------
Title Vice President
----------------------
-5-
<PAGE>
EXHIBIT 10.1
BARNES GROUP INC.
-----------------
MANAGEMENT INCENTIVE COMPENSATION PLAN
--------------------------------------
SECTION l. Purpose
--------------------
The Management Incentive Compensation Plan ("MICP") is
designed to provide incentive compensation opportunities to per-
sons in key positions who contribute importantly to the success
of Barnes Group Inc. (the "Company").
SECTION 2. Administration
---------------------------
The MICP shall be administered by the Compensation Committee
of the Board of Directors or its successor (the "Committee").
Amounts paid or projected to be paid under the MICP are referred
to herein as "Awards".
SECTION 3. Incentive Funds
---------------------------
3.1 Prior to March 1st of each year, the Committee will deter-
mine which units should have separate incentive funds. For
each fund it will then set:
a. a Performance Profit level above which an Award will be
earned (the "Base"),
b. the percent of total base salary in the fund which will
be paid as an Award if Performance Profit equals the
Performance Profit in the current operating plan, and
c. the amount of Performance Profit which will yield the
maximum payout (the "Maximum").
The Committee may also designate an intermediate level
of Performance Profit between the Base and the Maximum (the
1
<PAGE>
Management Incentive Compensation Plan
--------------------------------------
"Target") and the percent of salary which will be paid as an
Award if Performance Profit equals the Target.
Based on the above determinations by the Committee and
the total actual base salaries of the participants in each
incentive fund, the Vice President-Controller shall
calculate participation rates for each fund. The Incentive
Fund available at the end of the year for payment of Awards
shall be equal to the participation rate(s) times the
applicable amount by which Performance Profit exceeds the
profit objective(s). Performance Profit will be adjusted to
exclude amounts for any extraordinary and non-recurring
items designated for exclusion by the Committee or for other
factors deemed appropriate by the Committee.
3.2 For participants in the Corporate Incentive Fund, Net Income
shall be used for all purposes rather than Performance
Profit. Net Income will be adjusted to exclude the after-
tax effect of any extraordinary and non-recurring items
designated for exclusion by the Committee or for other
factors deemed appropriate by the Committee.
3.3 The Committee may also elect to use Net Income rather than
Performance Profit for units based outside the United
States.
SECTION 4. Participants
------------------------
Prior to March 1st of each year, the Chief Executive Officer
of the Company, upon the recommendations of the group presidents
2
<PAGE>
Management Incentive Compensation Plan
--------------------------------------
and the senior staff officers, shall designate participants in
the MICP for the current year and the funds in which they shall
participate. (The designation will be incorporated in a memo-
randum from the Chief Executive Officer to the Vice President-
Controller.) The Chief Executive Officer shall participate in
the MICP and in the Corporate Incentive Fund. New employees and
persons who are promoted during the year may be added as partici-
pants during the year by the Chief Executive Officer upon written
notice to the Vice President-Controller.
SECTION 5. Grant of Awards
---------------------------
5.1 The Committee shall meet each December to make determina-
tions relating to the Awards to be made under the MICP.
5.2 The Vice President-Controller shall provide to the Committee
an estimate of each Incentive Fund for the year and the
estimated percent of salaries earned as Awards by partici-
pants based on the objectives set by the Committee pursuant
to Section 3 hereof.
5.3 The Committee will then decide the portion of each Incentive
Fund which will be collectively awarded to the participants
in the fund; provided, however, that the Incentive Fund may
not exceed 50% of the total base compensation of all the
participants in the fund.
5.4 In December the Committee shall decide each officer's per-
centage share of his/her applicable fund. However, no
3
<PAGE>
Management Incentive Compensation Plan
--------------------------------------
officer may be awarded a share which would result in an
Award which is greater than 50% of his/her base compensation
for the year with respect to which the Award is made.
Each officer's percentage share of the Incentive Fund
is subject to adjustment if the actual amount of the fund
determined on the basis of full year actual figures
increases from the December estimate by an amount such that
the application of said percentage share would result in an
Award which exceeded 50%.
Any excess amount resulting from the above limitation
shall be distributed among the other participants unless
decided otherwise prior to year end.
5.5 After the end of the year and based on the final amount of
each Incentive Fund, the Chief Executive Officer, upon
recommendation from the group presidents and the senior
staff officers, shall determine each participant's share of
the Incentive Funds (except for officers of the Company).
However, no participant may be awarded a share which would
result in an Award which is greater than 50% of his/her base
compensation for the year with respect to which the Award is
made.
5.6 The Committee shall have full authority to determine that no
portion of an Incentive Fund will be paid, and to refrain
from making an Award to any officer. Except for persons who
retire, die, or become permanently disabled during the year,
4
<PAGE>
Management Incentive Compensation Plan
--------------------------------------
a person must be employed by the Company or one of its
subsidiaries on December 1st in order to receive an Award,
unless the Committee decides otherwise in individual cases.
SECTION 6. Payment
--------------------
6.1 Prior to March 1st, a report signed by the Vice President,
Controller and the Chief Financial Officer specifying the
final Incentive Funds and the percent of salaries to be
awarded to Participants will be given to the Committee.
6.2 Awards shall be paid prior to March 1st, unless otherwise
decided by the Committee.
SECTION 7. General
-------------------
7.1 The interpretation of this plan by the Committee and its
decisions on all questions arising under this plan shall be
conclusive and binding on all concerned parties.
7.2 This plan may be amended at any time, including retro-
actively, by the Committee.
* * * * *
Amended: 2/17/95
-----------------
HVL:B:\MICP
5
<PAGE>
EXHIBIT 10.2
BARNES GROUP INC.
-----------------
LONG TERM INCENTIVE PLAN
-----------------------
SECTION l. PURPOSE
--------------------
The Long Term Incentive Plan ("LTIP") is designed to provide
incentive compensation to key executives of Barnes Group Inc.
(the "Company") and its subsidiaries in a form which relates the
financial reward to an increase in the value of the Company to
its shareholders. The plan shall be administered by the
Compensation Committee of the Board of Directors (the
"Committee").
SECTION 2. DEFINITIONS
-----------------------
2.1 Cost of Equity. Cost of Equity equals Average Stockholder's
--------------
Equity, except for the cycles prior to the 1995-1997 cycle
such equity shall be determined without regard for the
effects of the Statements of Financial Accounting Standards
No. 106 ("FAS 106") and No. 112 ("FAS 112"), and the one-
time effect of the initial adoption of FAS 109 and the one-
time FAS 109 adjustment in 1993 of $800,000 resulting from a
change in the U.S. federal tax rate, multiplied by the sum
of
(i) a risk-free rate of return equal to the average of the
interest rates for Treasury Bills of 90-day maturity on
the first business day of each month, or such other
standard as may be designated by the Committee; plus
(ii) a risk adjustment factor computed by multiplying the
general stock market risk premium over a risk-free
1
<PAGE>
Long Term Incentive Plan
------------------------
investment times the average Beta for the Company's
stock for each calendar year as published by Value Line
or some other source designated by the Committee.
Average Stockholder's Equity shall be computed by adding
stockholder's equity on December 31st of the prior year to
stockholder's equity at the end of each month of the
applicable year and dividing the result by 13.
2.2 Economic Return. Economic Return for any year equals Cash
---------------
Flow From Operations less the Cost of Equity divided by the
average number of common shares outstanding for the year.
In computing Economic Return, the Committee may make adjust-
ments for any extraordinary changes which occur during an
Incentive Award Period.
2.3 Cash Flow From Operations. Cash Flow From Operations equals
-------------------------
net income, less any dividends on preferred stock, plus
depreciation and amortization, losses (gains) on sale of
plant, property and equipment, and other assets, and
translation losses (gains) as appropriate in computing cash
provided from operations. For cycles prior to the 1995-1997
cycle, cash flows will be determined without regard to FAS
106, and FAS 112, and the one-time effect of the initial
adoption of FAS 109 in 1992 and the one-time FAS 109
adjustment in 1993 of $800,000 resulting from a change in
the U.S. federal tax rate. In addition, cash flow from
operations shall include the increase (decrease) in deferred
2
<PAGE>
Long Term Incentive Plan
------------------------
income tax liabilities in all years through 1991 but be
excluded from the calculation in 1992 and thereafter. For
cycles beginning with the 1995-1997 cycle, which include
1992 in the base period, net income shall exclude the
cumulative effect of the accounting changes for FAS 106,
109, and FAS 112.
2.4 Performance Unit. A Performance Unit is the form of award
----------------
under the LTIP. Its value in any year is equal to the sum
of the Economic Returns for the five preceding calendar
years.
SECTION 3. ADMINISTRATION
--------------------------
The Committee shall designate participants, award a number
of Performance Units to each participant, and perform all other
actions necessary to the proper administration of the LTIP. The
interpretation by the Committee of the LTIP and any awards made
hereunder shall be binding upon the participants and the Company.
SECTION 4. PARTICIPANTS
------------------------
Key senior executives of the Company and its subsidiaries
whose activities can contribute significantly to the performance
of the Company are eligible to participate in the LTIP; provided,
however, that no member of the Committee may be a participant.
3
<PAGE>
Long Term Incentive Plan
------------------------
SECTION 5. GRANT OF INCENTIVE AWARDS
-------------------------------------
5.1 Prior to March 1 of each year, the Committee shall determine
whether or not Performance Units will be granted in the
current year. If they are to be granted, the Committee
shall:
(a) establish an Incentive Award Period which will commence
on January 1 of the current year and terminate on
January 1 of a year selected by the Committee;
provided, however, that in no event shall it be less
than 24 months; and
(b) designate recipients of Performance Units and the
number of Performance Units to be awarded to each
participant.
5.2 During an Incentive Award Period, new employees and
employees who are promoted or transferred may be granted new
or additional Performance Units.
SECTION 6. PAYMENT
-------------------
6.1 Incentive award payments shall be calculated by multiplying
the number of Performance Units held by a participant times
the increase, if any, in the value of the Performance Unit
between the beginning and end of the Incentive Award Period.
6.2 If a participant has not worked at the Company unit with
respect to which his Performance Units were granted for the
entire Incentive Award Period, the Committee may direct that
4
<PAGE>
Long Term Incentive Plan
------------------------
payment under any such Performance Unit will be reduced by
multiplying its value by a fraction, the numerator of which
shall be the number of full calendar months of the Incentive
Award Period during which the Participant worked at said
Company unit, and the denominator of which shall be the
number of full calendar months in the Incentive Award
Period.
6.3 Notwithstanding anything in the LTIP to the contrary, the
amount of payment made to each participant shall be in the
sole discretion of the Committee. The amount of all such
payments shall be determined by the Committee within 90 days
after the end of the Incentive Award Period.
6.4 The Committee, in its sole discretion, shall determine
whether all or any portion of any payment made with respect
to the Performance Units held by each participant shall be
deferred and credited to a participant's Incentive Deferred
Compensation Account.
6.5 As soon as practical after the amount of any award is deter-
mined, it shall be paid in cash to the participant or all or
part of it shall be credited to the participant's Incentive
Deferred Compensation Account, all in accord with the
procedures specified in paragraph 9.
5
<PAGE>
Long Term Incentive Plan
------------------------
SECTION 7. EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH
--------------------------------------------------------
If a participant ceases to be an employee prior to the end
of an Incentive Award Period other than by reason of death,
disability, or retirement after attaining age 55, then the
Performance Units granted to the participant shall terminate. If
a participant ceases to be an employee because of death,
disability, or retirement after attaining age 55, then payment
under his Performance Units may be adjusted as set forth in
paragraph 6.2.
SECTION 8. TRANSFERABILITY
---------------------------
Performance Units and any amount standing to a person's
credit in the Incentive Deferred Compensation Account may not be
transferred or assigned by a participant except by will or by the
laws of descent and distribution.
SECTION 9. INCENTIVE DEFERRED COMPENSATION ACCOUNT
---------------------------------------------------
9.1 To the extent that the Committee decided to defer payment of
any award made under the LTIP, the amount of such deferred
award shall be credited to the Company's Incentive Deferred
Compensation Account. The Company shall not be required to
segregate or earmark assets with respect to such account and
participants shall have no interest in any specific asset as
a result of the creation of such account or of any award
6
<PAGE>
Long Term Incentive Plan
------------------------
under the LTIP. All funds in such accounts shall be
available for general corporate purposes.
9.2 Interest will be credited quarterly on the unpaid amount
standing to any participant's credit in the Incentive
Deferred Compensation Account at the end of each quarter.
On or as soon as practical after the first business day of
January, the Company will pay to each participant who is
less than 60 years old the interest credited to his account
with respect to the prior year. No cash payment will be
made to participants who are employed by the Company and who
have attained age 60.
9.3 The interest rate for purposes of computing interest under
paragraph 9.2 shall be the rate of interest for prime
commercial loans of 90-day maturities charged by Chemical
Bank (or such other New York City bank as the Committee may
select) on the first business day of each quarter.
9.4 Payments from the amount standing to a participant's credit
in the Incentive Deferred Compensation Account shall begin
on the first day of the month following the month in which
the participant ceases to be an employee of the Company.
Payments shall be made in 120 monthly installments (as equal
as possible); provided, however, that, except if otherwise
decided by the Committee, the entire amount then standing to
the participant's credit in the Incentive Deferred
Compensation Account shall be paid in one lump sum to any
7
<PAGE>
Long Term Incentive Plan
------------------------
person whose employment is terminated other than by death or by
early or normal retirement under the applicable retirement plan.
Notwithstanding anything in this section to the contrary, the
Committee may in its discretion either:
(i) without the consent of the participant, advance the
time of payment of any unpaid portion of the award; or
(ii) if the consent of the participant is obtained, further
defer the time of payment of any unpaid portion of the
award to a time not later than 15 years after the ter-
mination of the participant's employment.
9.5 No amendment or termination of the LTIP shall reduce or
cancel any amount standing to a participant's credit in the
Incentive Deferred Compensation Account, prior to the
effective date of such amendment or termination.
9.6 In the event of the death of a participant while there is
still an amount standing to the participant's credit in the
Incentive Deferred Compensation Account, the amount shall be
paid to the beneficiary designated by the participant in
installments; provided, however, that (a) if the beneficiary
is the participant's estate, the funds shall be paid in a
lump sum, and (b) notwithstanding anything in this section
to the contrary, the Committee may advance the time of
payment to a beneficiary of any unpaid funds credited to the
Incentive Deferred Compensation Account. In the absence of
a designated beneficiary, any amount standing to the
8
<PAGE>
Long Term Incentive Plan
------------------------
participant's credit in the Incentive Deferred Compensation
Account shall be paid in a lump sum to the participant's
estate.
SECTION 10. AMENDMENT
----------------------
The LTIP may be amended at any time by the Committee.
Amended: 2/17/95
----------------
HVL:B:\LTIP
<PAGE>
EXHIBIT 10.4
BARNES GROUP INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
--------------------------------------
1. Purpose
-------
The purpose of the Supplemental Executive Retirement Plan
(the "Supplemental Plan") is to provide supplemental pension
benefits to Officers of Barnes Group Inc. ("Officers") who elect
any form of contingent annuity under the Barnes Group Inc.
Salaried Retirement Income Plan (the "Pension Plan") under which
a spouse or former spouse is the contingent annuitant.
2. Benefits
--------
2.1 The Company will pay to each person who (i) is an Officer on
or after November 16, 1979 and either retires as an Officer
under the Plan or ceases to be an Officer due to,
disability, and (ii) who is receiving retirement benefits
under the Pension Plan pursuant to a contingent pensioner
form of benefit under which the contingent pension is the
Officer's spouse or former spouse, a monthly supplemental
annuity equal to (a) minus (b) where:
(a) equals the monthly retirement income payable to the
Officer if he/she elected a straight life annuity under the
Plan, including any amount payable pursuant to the
Retirement Benefit Equalization Plan; and
(b) equals the monthly pension benefits to which the Officer
is entitled pursuant to the Pension Plan were he/she to
1
<PAGE>
elect the 50% contingent pensioner form of annuity, naming
such spouse or former spouse as contingent pensioner.
2.3 Benefits payable hereunder will be paid at the same time and
in the same manner as benefits paid pursuant to the Pension
Plan.
3. Administration
--------------
The Retirement Committee which administers the Pension Plan
shall administer the Supplemental Plan, and it shall have the
same powers relating to the Supplemental Plan as it does with
respect to the Pension Plan.
4. General
-------
4.1 The Supplemental Plan may be amended or terminated at any
time by the Board of Directors of the Company, except that
no such amendment or termination shall adversely affect the
benefits payable to any person who has begun to receive
benefits hereunder.
4.2 Benefits payable under the Supplemental Plan shall not be
funded and shall be paid out of the general assets of the
Company.
4.3 The Supplemental Plan shall be construed, administered and
enforced according to the laws of the State of Connecticut.
As amended October 18, 1991
2
<PAGE>
EXHIBIT 10.6
1991 BARNES GROUP STOCK INCENTIVE PLAN
--------------------------------------
As Amended and Restated as of July 16, 1993
-------------------------------------------
1. Purpose
------------
The purpose of the Plan is to authorize the grant to Senior
Executives of the Company or any Subsidiary of (i) nonqualified
options to purchase shares of Common Stock, (ii) Stock
Appreciation Rights, (iii) Incentive Stock Rights, and (iv)
Performance Unit Awards, and thus benefit the Company by giving
such employees a greater personal interest in the success of the
enterprise and an added incentive to continue and advance their
employment.
2. Definitions
----------------
The following terms, when used in the Plan, shall mean:
1981 Plan: The Barnes Group Inc. Stock Incentive Plan
---------
adopted by the stockholders of the Company in 1981.
Board: The Board of Directors of the Company.
-----
Committee: Such committee as shall be appointed by the
---------
Board pursuant to the provisions of Section 11.
Common Stock: The Common Stock of the Company, par value
------------
$1.00 per share, or such other class of shares or other
securities as may be applicable pursuant to the provisions
of Section 9.
Company: Barnes Group Inc.
-------
Disability: Inability to perform the services normally
----------
rendered by the employee due to any physical or mental
impairment that can be expected either to be of indefinite
1
<PAGE>
duration or to result in death, as determined by the
Committee on the basis of appropriate medical evidence.
Fair Market Value: As applied to the Common Stock on any
-----------------
day, the closing market price of such stock as reported in
the New York Stock Exchange Composite Transactions Index for
such day, or if the Common Stock was not traded on such day,
for the last preceding day on which the Common Stock was
traded.
Incentive: An incentive granted under the Plan in one of
---------
the forms provided for in Section 3.
Option: An option to purchase shares of Common Stock.
------
Plan: The 1991 Barnes Group Stock Incentive Plan herein set
----
forth, as amended from time to time.
Senior Executive: An employee of the Company or of a
----------------
Subsidiary, including an officer or director who is an
employee, who in the Committee's judgment can contribute
significantly to the growth and successful operations of the
Company or a Subsidiary.
Subsidiary: A corporation in which the Company owns,
----------
directly or indirectly, at least 50% of the voting stock.
3. Grants of Incentives
-------------------------
(a) Subject to the provisions of the Plan, the Committee
may at any time, or from time to time, grant Incentives
under the Plan to, and only to, Senior Executives.
(b) Incentives may be in the following forms:
(i) an Option, in accordance with Section 5;
2
<PAGE>
(ii) a stock appreciation right, in accordance
with Section 6;
(iii) an incentive stock right, in accordance with
Section 7;
(iv) a performance unit award, in accordance with
Section 8; or
(v) a combination of two or more of the
foregoing.
4. Stock Subject to the Plan
------------------------------
(a) Subject to adjustment as provided in Section 9, the
aggregate number of shares of Common Stock which may be
issued subject to Incentives granted under the Plan
shall not exceed the sum of (i) 500,000 shares and (ii)
the number of shares of stock covered by outstanding
options (or installments thereof) granted under the
1981 Plan which, after its expiration, shall terminate
or expire in whole or in part without being exercised.
Charges against such aggregate number are governed by
the provisions of paragraph (c) of this Section 4,
paragraph (j) of Section 5, paragraph (e) of Section 6,
paragraph (c) of Section 7, and paragraph (e) of
Section 8.
(b) Such shares may be either authorized but unissued
shares or shares issued and thereafter acquired by the
Company.
(c) If any shares subject to an Incentive shall cease to be
subject thereto because of the termination without
exercise or payment, in whole or in part, of such
Incentive, the shares as to which the Incentive was not
3
<PAGE>
exercised or paid shall no longer be charged against
the limits in paragraph (a) of this Section 4 and may
again be made subject to Incentives.
(d) The Committee may permit the voluntary surrender of all
or a portion of any Incentive granted under this Plan
conditioned upon the granting to the employee of a new
Incentive for the same or a different number of shares
or amount of other payment as the Incentive
surrendered, or it may require such voluntary surrender
as a condition to a grant of a new Incentive to such
employee. Such new Incentive shall be exercisable at
the price, during the period, and in accordance with
any other terms or conditions specified by the
Committee at the time the new Incentive is granted, all
determined in accordance with the provisions of this
Plan without regard to the price, period of exercise,
or any other terms or conditions of the Incentive
surrendered.
5. Options
------------
Incentives, in the form of options to purchase shares of
Common Stock, shall be subject to the following provisions:
(a) The Option price per share shall be determined as of
the effective date of the grant and shall not be less
than 85% of the Fair Market Value of the Common Stock
at the time of the grant of the Option. In no event
shall the Option price be less than the par value of
the stock which is the subject of the Option.
(b) Each Option shall expire at such time as the Committee
may determine at the time the Option is granted;
provided, however, that no Option may, under any
4
<PAGE>
circumstances, expire later than ten years from the
date such Option shall have been granted.
(c) Any Option granted under the Plan may be exercised
solely by the person to whom granted, by his/her
guardian or legal representative, or, in the case of
death, by an estate.
(d) No Option may be exercised less than 12 months from the
date it is granted. After completion of any additional
required period of employment specified in the Option
grant, the Option may be exercised, in whole or in
part, at any time or from time to time during the
balance of the term of the Option, except as limited by
provisions contained in the Option (including
provisions regarding exercise in installments).
(e) If the optionee terminates employment prior to
attaining age 55, the Option shall terminate 90 days
after termination of employment, except in the case of
death or disability.
(f) If employment terminates as a result of death or dis-
ability, or if the Optionee terminates employment after
attaining age 55, the Option shall terminate five years
after termination of employment; provided, however, if
the Optionee's employment is terminated upon the
request of the Company after the Optionee attains age
55, the Option may be terminated by the Committee
effective 90 days after termination of employment.
(g) Notwithstanding anything else in this Section 5 to the
contrary, the Committee may provide that an option will
terminate prior to time periods specified in paragraphs
5(e) and 5(f) on conditions specified by the Committee
5
<PAGE>
and incorporated in an Option Agreement between the
Company and the person receiving the option.
(h) Shares purchased upon exercise of an Option shall be
paid for in full within twenty days of the date of
exercise in cash or, with the consent of the Committee,
in whole or in part in shares of Common Stock based on
their Fair Market Value on the date of exercise.
(i) If so authorized by the Committee, the Company may,
with the consent of the optionee, and at any time or
from time to time, cancel all or a portion of any
Option granted under the Plan then subject to exercise
and discharge its obligation in respect of the Option
either by payment to the optionee of an amount of cash
equal to the excess, if any, of the Fair Market Value,
at such time, of the shares subject to the portion of
the Option so cancelled over the aggregate option price
of such shares, or by issuance or transfer to the
optionee of shares of Common Stock with a Fair Market
Value, at such time, equal to any such excess, or by a
combination of cash and shares.
(j) The forms of Option authorized by the Plan may contain
such other provisions as the Committee shall deem
advisable.
(k) Upon the exercise of an Option there shall be charged
against the limits in paragraph (a) of Section 4 the
number of shares issued to the optionee. Upon the
cancellation of any Option pursuant to paragraph (h) of
Section 5, there shall be charged against the
limitations in paragraph (a) of Section 4 a number of
shares equal to (A) the number of any shares issued to
the optionee plus (B) the number of shares purchasable
6
<PAGE>
with the amount of any cash paid to the optionee on the
basis of the Fair Market Value as of the date of
payment; and the number of shares subject to the
portion of the Option so cancelled, less the number of
shares so charged against such limitations, shall
thereafter be available for other grants of Incentives.
(l) An Option will not be treated as an Incentive Stock
Option within the meaning or section 422A of the
Internal Revenue Code of 1986, as amended.
6. Stock Appreciation Rights
------------------------------
(a) A Stock Appreciation Right ("SAR") may be granted in
connection with any Option granted under the Plan,
either at the time of the grant of such Option or at
any time thereafter during the term of the Option, or
independently of the grant of an Option.
(b) An SAR shall entitle the holder thereof, upon exercise
of the SAR, to receive a number of shares of Common
Stock or cash or a combination of cash and shares (as
the Committee in its discretion may elect) determined
pursuant to paragraph (d) of this Section 6.
(c) An SAR shall be subject to the following terms and
conditions and to such other terms and conditions not
inconsistent with the Plan as shall from time to time
be approved by the Committee:
(i) If granted in connection with an Option, an SAR
shall be exercisable at such time or times and by
such person or persons and to the extent, but only
to the extent, that the Option to which it relates
shall be exercisable; provided, however, that such
SAR shall be exercisable only during the ten-day
7
<PAGE>
periods (the "Exercise Periods") beginning on the
third business day following the date of release
of a summary statement of the Company's quarterly
or annual sales and earnings and ending on the
twelfth business day following such date of
release.
(ii) If granted independently of an Option, an SAR
shall be subject to the following provisions:
(A) If a person terminates employment prior to
attaining age 55, the SAR shall terminate 90
days after the termination of employment,
except in the case of death or disability.
(B) If employment terminates as a result of death
or disability or if a person terminates
employment after attaining age 55, the SAR
will terminate one year after the termination
of employment.
(d) Upon exercise of an SAR, the holder thereof shall be
entitled to receive a number of shares equal in Fair
Market Value to (1) the amount by which the Fair Market
Value of a share of Common Stock on the date of such
exercise shall exceed the Fair Market Value of a share
of Common Stock on the date of grant of the related
Option, or, in the case of any SAR granted
independently of an option, on the date of grant of
such SAR, multiplied by (2) the number of shares in
respect of which the SAR shall have been exercised.
Settlement for any fraction of a share due shall be
made in cash. The Committee may settle all or any part
of the Company's obligation arising out of an exercise
of any SAR by the payment of cash equal to the
8
<PAGE>
aggregate value of the shares of Common Stock that it
would otherwise be obligated to deliver under the
provisions of this paragraph (d).
(e) Upon exercise of any SAR, (i) there shall be charged
against the limitations in paragraph (a) of Section 4 a
number of shares equal to (A) the number of shares
issued to the grantee under paragraph (d) of this
Section 6 plus (B) the number of shares purchasable
with the amount of any cash paid to the grantee on the
basis of the Fair Market Value as of the date of
payment and (ii) the portion of the Incentive in
respect of which such SAR shall have been exercised
shall be cancelled and the number of shares subject to
such portion, less the number of shares so charged
against such limitations, shall thereafter be available
for other grants of Incentives.
7. Incentive Stock Rights
---------------------------
(a) An Incentive Stock Right will consist of incentive
stock units, each of which will be equivalent to one
share of Common Stock. An Incentive Stock Right will
be evidenced by an agreement in form approved by the
Committee, will be nontransferable, will entitle the
holder to receive shares of Common Stock, without
payment to the Company, after the lapse of the
incentive period or periods established by the
Committee and will be subject to the limitations in
paragraph (a) of Section 4. Holders of Incentive Stock
Rights will be entitled, from the date of the award, to
receive from the Company cash payments equal to the
amount of dividends declared on the number of shares of
Common Stock equal to the number of incentive stock
units held by them, such payments to be made on or
about the Company's dividend payment dates.
9
<PAGE>
(b) If an employee terminates employment prior to attaining
age 55, all Incentive Stock Rights will terminate on
the date employment terminates, except in the case of
death or disability. If employment terminates as a
result of death or disability, or after attainment of
age 55, the Committee may elect, at the end of the
Incentive period, to award a portion of the shares of
Common Stock that would have been awarded, but for the
termination of employment, equal to the number of
months in the incentive period prior to the termination
date divided by the number of months in the award
period.
(c) After the lapse of the incentive period and the
issuance of shares, there will be charged against the
limitations in paragraph (a) of Section 4 the number of
shares equal to the number of shares issued.
8. Performance Unit Awards
----------------------------
(a) A Performance Unit Award will consist of performance
units granted to Senior Executives selected by the
Committee which can be paid in cash or shares of Common
Stock. Performance units may be granted alone or in
conjunction with and related to an Option. When
granted in conjunction with an Option, the number of
performance units, unless otherwise provided by the
Committee, will be equal to the number of shares under
the related Option. To the extent that the Committee
elects to pay performance units granted with a related
Option, there will be a proportionate reduction in the
number of shares available under such Option and any
related SAR. To the extent the related Option or an
SAR granted in connection with such Option is
exercised, the related number of performance units will
be proportionately reduced.
10
<PAGE>
(b) The Committee will establish an initial value for each
performance unit at the time of grant. At that time,
the Committee will also establish performance targets
to be achieved during the award period of not less than
one year set by the Committee. The value of the
performance units at the end of the award period will
be determined by the degree to which the performance
targets are achieved. Performance Unit Awards will be
subject to the limitations in paragraph (a) of Section
4 and will be evidenced by agreements setting forth the
initial value for each performance unit, the
performance targets, the award period and such other
terms and conditions not inconsistent with the Plan as
the Committee may determine.
(c) Payment, if any, at the end of the award period will be
made in cash, shares of Common Stock, or both, as
determined by the Committee. A Performance Unit Award
granted alone, not in conjunction with an Option, is
automatically payable if the conditions are met. A
Performance Unit Award granted in conjunction with an
Option is payable only at the election of the
Committee, as an alternative to the continuance of the
related option and any related SAR. The Committee may
make this election to pay only during the first two
months after the end of the award period. If the
election to pay is not made, the Performance Unit Award
terminates and the related Option and SAR continue in
effect.
(d) In the event of termination of employment prior to the
end of the award period by reason of death, disability,
or termination of employment after attainment of 55
years of age, a pro rata portion of the value of the
performance units at the end of the award period will
11
be paid to the employee (or his/her estate in the case
of death), unless the Committee determines that a
different portion should be payable or elects to
terminate the award. Upon termination of employment
under any other circum-stances, the Performance Unit
Award will terminate.
(e) Upon payment of a Performance Unit Award, there shall
be charged against the aggregate limitations in
paragraph (a) of Section 4 a number of shares equal to
(i) the number of any shares issued to the employee in
respect of the Performance Unit Award plus (ii) the
number of shares purchasable with the amount of any
cash paid to the employee in respect of the Performance
Unit Award on the basis of the Fair Market Value of the
Common Stock as of the date of payment.
(f) The Committee may make such adjustments to the publicly
reported amounts of the Company's consolidated earnings
or book value as it deems appropriate for changes in
accounting practices or principles, for material
acquisitions or disposition of stock or property, for
recapitalizations or reorganizations or for any other
events with respect to which the Committee determines
such an adjustment to be appropriate in order to avoid
distortion in the operation of the Plan.
9. Adjustment Provisions
--------------------------
The Options granted under the Plan shall contain such
provisions as the Commit-tee may determine with respect to
adjustments to be made in the number and kind of shares covered
by such Options and in the Option price in the event of a
reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, rights offering, or
any other change in the corporate structure or shares of the
12
<PAGE>
Company, and in the event of any such change, the aggregate
number and kind of shares available under the Plan shall be
appropriately adjusted. In the event of any such change,
equitable adjustments shall also be made by the Committee in its
discretion in the terms and conditions of any SAR, Incentive
Stock Right, or Performance Unit Award granted under the Plan.
10. Term
---------
The Plan shall become effective if and when approved by the
Company's stockholders. No Incentives shall be granted under the
Plan after April 4, 2001.
11. Administration
-------------------
(a) The Plan shall be administered by the Committee, to be
appointed from time to time by the Board consisting of
not less than three members of the Board. No member of
the Committee shall be eligible to participate in the
Plan.
(b) Incentives under the Plan shall be granted in
accordance with the Committee's determinations pursuant
to the Plan, by execution and prompt delivery to the
employee of instruments approved by the Committee. Any
such grant shall be effective on the date of such
determination or, if after, on the date specified in
the instrument evidencing the grant.
(c) The interpretation and construction by the Committee of
any provision of the Plan and of any Incentive granted
thereunder shall, unless otherwise determined by the
Board, be final and conclusive on all persons having
any interest thereunder.
13
<PAGE>
12. General Provisions
-----------------------
(a) Absence on leave because of military or governmental
service, or other reason, if such absence is approved
by the Committee, shall not be considered an
interruption or termination of employment for any
purpose of the Plan, or Incentives granted thereunder,
except that no Incentive may be granted to an employee
while he/she is absent on leave.
(b) Nothing in the Plan or in any instrument executed
pursuant thereto shall confer upon any employee any
right to continue in the employ of the Company or a
Subsidiary.
(c) No shares of Common Stock shall be sold, issued, or
transferred pursuant to, or accepted as payment of the
Option price of, an Incentive unless and until there
has been compliance, in the opinion of the Company's
General Counsel, with all applicable legal
requirements, including without limitation those
relating to securities laws and stock exchange
listings.
(d) No employee (individually or as a member of a group),
and no beneficiary or other person claiming under or
through him/her, shall have any right, title, or
interest in or to any shares of Common Stock allocated
or reserved for the Plan or subject to any Incentive
except as to such shares of Common Stock, if any, as
shall have been sold, issued, or transferred to
him/her.
(e) The Company or a Subsidiary may make such provisions as
it may deem appropriate for the withholding of any
14
<PAGE>
taxes which the Company or Subsidiary determines it is
required to withhold in connection with any Incentive.
(f) No Incentive and no rights under the Plan, contingent
or otherwise, (i) shall be assignable or subject to any
encumbrance, pledge, or charge of any nature, whether
by operation of law or otherwise, (ii) shall be subject
to execution, attachment, or similar process, or (iii)
shall be transferable other than by will or the laws of
descent and distribution, and every Incentive and all
rights under the Plan shall be exercisable during the
employee's lifetime only by him/her or by a guardian or
legal representative.
(g) Nothing in the Plan is intended to be a substitute for,
or shall preclude or limit the establishment or
continuation of, any other plan, practice, or
arrangement for the payment of compensation or fringe
benefits to any employee which the Company or any
Subsidiary now has or may hereafter put into effect,
including without limitation any retirement, pension,
savings or thrift, insurance, death benefit, stock
purchase, incentive compensation, of bonus plan.
13. Amendment or Discontinuance of Plan
----------------------------------------
(a) The Plan may be amended by the Board at any time,
provided that, without the approval of the stockholders
of the Company, no amendment shall be made which (i)
increases the aggregate number of shares of Common
Stock that may be made the subject of Incentives as
provided in paragraph (a) of Section 4, (ii) materially
increases the benefits accruing to participants under
the Plan, (iii) materially modifies the requirements as
to eligibility for participation in the Plan, (iv)
15
<PAGE>
amends Section 10 to extend the term of the Plan, or
(v) amends this Section 13.
(b) The Board may discontinue the Plan at any time.
(c) No amendment or discontinuance of the Plan shall
adversely affect, except with the consent of the
holder, any Incentive theretofore granted.
4/6/94
HVL:B:\SIP.93
16
<PAGE>
EXHIBIT 10.7
BARNES GROUP INC.
-----------------
NON-EMPLOYEE DIRECTOR DEFERRED STOCK PLAN
-----------------------------------------
Section 1: Establishment of Plan
------------------------------------
There is hereby established a plan effective February 20,
1987 whereby Directors of the Company can share in the long-term
growth of the Company by acquiring an ownership interest in the
Company (the "Plan").
Section 2: Definitions
--------------------------
When used in this Plan, the following terms shall have the
definitions set forth in this section:
2.1 "Board of Directors" shall mean the Board of Directors of
Barnes Group Inc.
2.2 "Company" shall mean Barnes Group Inc.
2.3 "Director" shall mean a member of the Board of Directors who
is not an employee of the Company.
2.4 "shares of stock" or "shares" shall mean shares of the
common stock of Barnes Group Inc.
Section 3: Deferred Stock Grant
-----------------------------------
3.1 Each current Director and, upon election, each newly elected
Director, and each person who continues as a Director
subsequent to the Annual Meeting of Stockholders following
his/her retirement as an employee of the Company, is hereby
granted the right to receive 2,000 shares of stock on the
date or dates set forth in Section 4 hereof. A Director
shall have no rights as a stockholder of the Company with
respect to any of these shares until the shares are
delivered to the Director pursuant to Section 4 hereof.
3.2 The number of shares granted or to be granted to Directors
hereunder shall be adjusted for any stock splits, stock
dividends, recapitalization or corporate reorganizations.
3.3 The right of a Director to receive shares under the Plan may
not be assigned or transferred except by will or applicable
laws of descent and distribution.
1
<PAGE>
Section 4: Delivery of Shares
---------------------------------
4.1 The shares granted under the Plan shall be delivered to each
Director and transferred on the books of the Company either
on the first business day of the month immediately following
his/her termination as a Director (the "Delivery Date") or,
at the election of the Director, five years after the
Delivery Date or in five annual installments (as equal as
practical) commencing on the Delivery Date. The aforesaid
election shall be made by (a) a current Director within
thirty days after the effective date of the Plan, (b) a
newly elected Director within thirty days after election to
the Board of Directors, and (c) a person who continues as a
Director after resigning as an employee of the Company
within 60 days after the Annual Meeting of Stockholders
following his/her retirement.
4.2 In the event of the death of a Director prior to receipt of
the shares earned pursuant to the grant, the shares shall be
delivered to the beneficiary designated by the Director or,
in the absence of such designation, to the Director's
estate.
4.3 Regardless of any election by a Director to defer delivery
of shares, the Retirement Committee may in its sole dis-
cretion deliver to the Director all shares the Director is
entitled to receive at any time on or after the Delivery
Date.
4.4 All shares transferred pursuant to this Plan shall be
transferred out of treasury shares to the extent available.
Section 5: Dividend Equivalents
-----------------------------------
5.1 On each date on which dividends are paid to stockholders
with respect to the common stock of the Company, each
Director will be paid an amount equal to the dividend per
share for the applicable dividend payment date times the
number of shares the Director has a right to receive which
have not yet been delivered ("the Dividend Equivalent").
5.2 At the election of a Director, which election may be changed
from time to time, the Dividend Equivalent will be invested
in the Company's common stock in a similar manner as is
authorized through the Dividend Investment Plan maintained
by the Company and it's transfer agent.
5.3 If a Director has been granted the right to receive shares
of stock under this Plan and subsequently becomes an
employee of the Company, he/she shall be entitled to
continue to receive Dividend Equivalents.
2
<PAGE>
Section 6: Administration
-----------------------------
The Plan shall be administered by the Retirement Committee
of the Board of Directors which shall have the authority to adopt
rules and regulations for carrying out the Plan and shall
interpret and implement the Plan.
Section 7: Amendment and Termination
----------------------------------------
The Plan may be amended or terminated at any time by the
Board of Directors of the Company; provided, however, that no
amendment or termination shall reduce the number of shares
granted under the Plan to Directors prior to any such amendment
or termination.
Adopted by the Board of Directors
on May 19, 1989
and Amended on February 18, 1994
HVL:B:\NEDDSP
3
<PAGE>
EXHIBIT 10.9
CONSULTING AGREEMENT
--------------------
This AGREEMENT is entered into as of April 1, 1994
between Wallace Barnes ("Barnes") and Barnes Group Inc. ("BGI").
WHEREAS, the consulting agreement between the parties
hereto dated April 1, 1991 has expired; and
WHEREAS, BGI desires to retain Barnes' services as a
consultant for a period of two additional years;
NOW, THEREFORE, the parties agree as follows:
1. Consulting Services. During the term of this Agreement,
-------------------
Barnes shall provide the following services to BGI:
a. represent BGI in business-related organizations
specified by BGI;
b. assist BGI in its developing relationship with NHK
Spring Co., and participate in meetings of the Board of
Directors of NHK-Associated Spring Suspension
Components Inc.;
c. participate in managers' meetings and employee func-
tions as reasonably requested by the President of BGI;
d. provide advice to the President and other senior
officers of BGI; and
e. provide such other services as the President of BGI
reasonably requests.
2. Fees. Barnes shall be paid $60,000 per year for the
----
services specified above. Payments shall be in monthly
installments and shall be made on or about the first day of
1
<PAGE>
the month. In addition, BGI will pay all reasonable
expenses that Barnes incurs in connection with the services
provided hereunder.
3. Term. This Agreement shall be for a term commencing April
----
1, 1994 and ending March 31, 1996; provided, however, that
this Agreement may be cancelled by either party upon 30 days
written notice if either party determines that there is a
change in circumstances which limits the availability of
Barnes to perform the services specified herein.
4. Independent Contractor. Barnes will perform the services
----------------------
specified above as an independent contractor and not as an
employee of BGI, and Barnes will not be eligible to partici-
pate in any of the benefit programs applicable to BGI
employees.
IN WITNESS WHEREOF, the parties have signed this
Agreement as of the date first above written.
BARNES GROUP INC.
By:/s/ A. Stanton Wells /s/ Wallace Barnes
--------------------------- ------------------------------
A. Stanton Wells Wallace Barnes
P:\...\BD-CORR\WBCONSLT
2
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS BARNES GROUP INC.
SALES
In 1994, the company's sales of $569 million were up 13.3% over 1993. Sales
in 1993 were $502 million, 5% below 1992's level of $529 million. Included
in the 1992 consolidated statement of income was $29 million of sales from
the Pioneer division which was sold at the end of 1992.
Associated Spring's sales for 1994 increased 17% to $272 million, following
an increase of 15% in 1993. All operating units reported solid sales gains.
Sales were strong in all market sectors, especially transportation and
electronics. In North America, increased penetration of a strong automotive
market and increases in sales to industrial markets contributed to the sales
gains. Internationally, the group's Singapore operation continued its
excellent penetration of the electronics industry while Brazil increased its
export sales. The group's distribution business, which markets die springs
and precision stock springs, also reported good sales growth.
Bowman Distribution's 1994 sales were $215 million, up $22 million or 11%
from 1993. Bowman U.S., the group's largest business unit, achieved a sales
increase of 12% over 1993. This sales gain was primarily the result of the
progress made in improving the performance of its field sales organization
and gains in its Custom Service Division. Sales from Bowman's businesses in
Europe also increased 12% mainly because of the expansion in the U.K. of the
Bowman System business. Bowman's Canadian business also showed
year-over-year gains in sales, although this increase was dampened when
converted to U.S. dollars due to a weaker Canadian dollar. Bowman
Distribution's 1993 sales of $193 million were down $45 million from 1992.
As noted above, much of the 1993 sales decline resulted from the sale of
Bowman Distribution's Pioneer division at the end of 1992.
Barnes Aerospace sales were $82 million in 1994, up 7% from 1993, following a
decline of 15% in 1993. Strong gains were reported by the group's Advanced
Fabrications and its Repair and Overhaul businesses. The sales of the
group's Precision Machining business were adversely affected by weakness in
both its commercial and military markets.
OPERATING INCOME
Consolidated operating income in 1994 was $36.6 million, compared to $12.5
million in 1993 and $7.3 million in 1992. Provisions for plant closings and
restructurings taken in both 1993 and 1992 dampened operating earnings in
each of these years. Excluding these charges, operating income was $17.4
million in 1993 and $25.1 million in 1992. The gain in operating income in
1994 resulted from the increased volume of business, manufacturing
efficiencies and overall containment of costs. The focus on cost control led
to lower selling and administrative expenses, stated as a percent of sales,
in 1994, as compared to prior years.
Operating income in 1993 included a $3.4 million charge for a plant
consolidation and work force reduction at Barnes Aerospace and a $1.5 million
charge for a plant consolidation at Associated Spring's Mexican operations.
Operating income in 1992 included a $4.7 million charge for restructuring the
sales organization at Bowman's U.S. business, a provision of $9.1 million to
cover plant closings at Associated Spring, and a $4.0 million charge
related to the termination of a contract for C-17 aircraft parts at Barnes
Aerospace's Advanced Fabrications business.
Associated Spring's 1994 operating income rose $13.1 million, or 46%, from
the 1993 level before plant closing provisions. Gains in manufacturing
productivity coupled with excellent control of selling and administrative
expenses resulted in highly leveraged profit growth on the group's strong
sales gain.
Bowman's operating income in 1994 of $12.6 million was $5.9 million above the
1993 level. This gain reflects a higher sales volume in both the U.S. and
Europe and sharply lower selling and administrative expenses, stated
as a percent of sales.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Excluding the 1993 plant closing and restructuring charges, Barnes
Aerospace's operating loss was reduced by $2.7 million in 1994. The 1994
operating loss of $1.8 million included $1.1 million of severance costs
recognized in the fourth quarter. The smaller loss in 1994 was due to ongoing
productivity improvements and cost reduction programs. In addition, the
group's Repair and Overhaul business achieved good profit leverage on
significantly higher sales volume. On the negative side, the Advanced
Fabrications unit suffered from high development and start-up costs
associated with new business in 1994.
Please refer to Note 14 of the Notes to Consolidated Financial Statements on
pages 26-27 for further information about the company's operations by
business segment.
NON-OPERATING INCOME/EXPENSE
Other income was $4.6 million in 1994, $4.1 million in 1993 and $3.5 million
in 1992, and includes $2.3 million, $1.7 million and $0.9 million, respectively,
from the company's investment in NASCO, a company jointly owned with NHK
Spring Co., Ltd. of Japan. Interest income, another component of other
income, increased 56% over 1993 to $1.3 million, primarily due to higher
interest rates on funds invested in Brazil.
Interest expense decreased slightly in 1994 following a sharp decline in
1993. In 1994, the impact of lower debt levels was largely offset by higher
interest rates. Lower debt levels and interest rates caused the decline in
1993.
Other expenses decreased in 1994 following an increase in 1993 primarily due
to foreign exchange and translation losses. These losses were $0.5 million,
$1.7 million and $0.1 million in 1994, 1993 and 1992, respectively.
INCOME TAXES
The company's effective tax rate was 40.1% in 1994 compared with 47.8% in
1993 and 24.0% in 1992. Note 7 of the Notes to Consolidated Financial
Statements on page 22 contains an explanatory table showing the factors
affecting the company's effective tax rate in each of these years.
At December 31, 1994, the company had deferred income tax assets of $56.9
million, less a valuation allowance of $6.0 million, and deferred income tax
liabilities of $18.4 million. Management believes that sufficient income
will be earned in future years to realize the deferred tax assets.
NET INCOME AND NET INCOME PER SHARE
Consolidated income was $20.3 million in 1994, $4.4 million in 1993 and $5.8
million, before the effect of accounting changes, in 1992. On a per share
basis, income for 1994 was $3.20, compared to $.70 in 1993 and $.94, before
effect of accounting changes, in 1992. In 1992, after giving effect to
accounting changes, the company had a net loss of $34.9 million, or $5.62
per share.
INFLATION
Management believes that inflation during the 1992-1994 period did not have a
material impact on the company's historical financial statements.
FINANCIAL CONDITION
The company's financial condition, as measured by its statement of cash flows
and balance sheet, remained strong. The following is a discussion of the
significant elements of these financial statements.
Cash Flows
Operating activities are the principal source of cash flows for the company,
generating $38 million in 1994, $18 million more than 1993. During the
past three years, operating activities provided over $100 million in
cash which the company used to pay dividends to stockholders and fund
significant investments in new plant and equipment.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Investing activities utilized cash of $31 million in 1994 compared with $21
million in 1993. Capital expenditures of $32 million continued at an
accelerated pace in 1994, 43% higher than 1993 and nearly 100% higher than
1992. During the past three years the company has invested over $70
million in new plant and equipment with nearly 60% of that invested at
Associated Spring in new equipment aimed at improving quality and
productivity and providing for the manufacture of new products.
In 1995, capital expenditures are expected to exceed 1994's level, with
the level of investments in all three businesses expected to be up.
The company's financing activities used cash of $8 million in 1994 compared
to $11 million in 1993. In 1994 and 1993 the company continued to use
surplus cash generated by its U.S. operations to reduce borrowings under
short-term lines of credit. Cash dividends were increased in the fourth
quarter of 1994 from $.35 per share to $.40 per share. Partially offsetting
these uses was the cash generated from the issuance of common stock, largely
in response to the exercise of employee stock options.
Liquidity and Capital Resources
The company's liquidity, measured in terms of the level of working capital,
was $88 million at December 31, 1994, compared to $87 million at December 31,
1993. The current ratio, a key measure of liquidity, approximated 2.0 at
both December 31, 1994 and 1993.
In evaluating the company's working capital position, consideration should be
given to the fact that the majority of its inventories are accounted for on a
LIFO basis. If these inventories were stated on a current cost basis, their
value would have been higher by $13 million in both 1994 and 1993.
The company's ratio of debt to total capitalization improved to 28% at
year-end 1994 from 31% at year-end 1993. 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.
During 1994, the company funded nearly $13 million of cash requirements for
its operations in Mexico and Europe using surplus cash from other foreign
operations. Foreign cash requirements in 1995 are expected to be funded in
this manner. To supplement internal cash generation in the U.S., the company
maintains substantial bank borrowing facilities. At December 31, 1994, the
company had $100 million of borrowing capacity available under a revolving
credit agreement which expires in December of 1999. In addition, the company
has available approximately $155 million in uncommitted, short-term bank
credit lines, of which $30 million was in use at December 31, 1994. During
1994 and 1993, the company maintained long-term debt of $70 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 in 1995. The company believes these bank credit
facilities coupled with cash generated from operations are adequate for its
future requirements.
CHANGES IN ACCOUNTING PRINCIPLES
As of January 1, 1992, the company recorded the effect of changes in three
accounting principles: one related to postretirement benefits other than
pensions (FAS 106), another for other postemployment benefits (FAS 112), and
a third for income taxes (FAS 109). The aggregate, one-time effect of these
changes reflected in the 1992 results was a charge of $40.7 million net of
tax benefits, equal to $6.56 per common share.
13
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME BARNES GROUP INC.
(Dollars in thousands, except per share data)
Years Ended December 31, 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $569,197 $502,292 $529,073
Cost of sales 366,455 323,950 336,030
Selling and administrative expenses 166,093 160,904 167,949
Plant closings and restructurings -- 4,900 17,835
- -------------------------------------------------------------------------------------------------------------------------------
532,548 489,754 521,814
- -------------------------------------------------------------------------------------------------------------------------------
Operating income 36,649 12,538 7,259
Gain on sale of Pioneer division -- -- 5,000
Other income 4,611 4,117 3,464
Interest expense 5,133 5,187 6,609
Other expenses 2,205 3,077 1,443
- -------------------------------------------------------------------------------------------------------------------------------
Income before income taxes and
effect of accounting changes 33,922 8,391 7,671
Income taxes 13,606 4,008 1,838
Income before effect of accounting changes 20,316 4,383 5,833
Cumulative effect of accounting changes -- -- (40,695)
- -------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $20,316 $4,383 $(34,862)
===============================================================================================================================
Per common share:
Income before effect of accounting changes $3.20 $.70 $.94
Cumulative effect of accounting changes -- -- (6.56)
- -------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $3.20 $.70 $(5.62)
===============================================================================================================================
Dividends $1.45 $1.40 $1.40
Average common shares outstanding 6,353,777 6,249,966 6,202,305
</TABLE>
See accompanying notes.
14
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS BARNES GROUP INC
(Dollars in thousands)
December 31, 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $22,023 $24,129
Accounts receivable, less allowances
(1994 - $3,222; 1993 - $2,217) 86,877 77,651
Inventories 50,845 50,491
Deferred income taxes 12,147 12,642
Prepaid expenses 3,645 3,827
- -------------------------------------------------------------------------------------------------------------------------------
Total current assets 175,537 168,740
Deferred income taxes 23,854 22,277
Property, plant and equipment 112,569 103,043
Goodwill 20,614 21,201
Other assets 19,382 18,035
- -------------------------------------------------------------------------------------------------------------------------------
Total assets $351,956 $333,296
===============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $7,903 $10,553
Accounts payable 31,424 27,165
Accrued liabilities 45,713 42,003
Guaranteed ESOP obligation-current 2,172 2,008
- -------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 87,212 81,729
Long-term debt 70,000 70,000
Guaranteed ESOP obligation 9,839 12,011
Accrued retirement benefits 66,817 65,338
Other liabilities 10,949 12,369
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 27,772 28,745
Retained earnings 118,938 107,668
Foreign currency translation adjustments (8,715) (6,464)
Treasury stock at cost (1994 - 916,748 shares;
1993 - 1,052,440 shares) (34,582) (39,818)
- -------------------------------------------------------------------------------------------------------------------------------
119,150 105,868
Guaranteed ESOP obligation (12,011) (14,019)
- -------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 107,139 91,849
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $351,956 $333,296
===============================================================================================================================
</TABLE>
See accompanying notes.
15
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS BARNES GROUP INC.
(Dollars in thousands)
Years Ended December 31, 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $20,316 $4,383 $(34,862)
Adjustments to reconcile net income (loss)
to net cash from operating activities:
Cumulative effect of accounting changes -- -- 40,695
Depreciation and amortization 23,733 23,094 23,741
Gain on sale of Pioneer division -- -- (5,000)
Gain on sale of property, plant and equipment (151) (442) (343)
Translation losses 356 1,459 897
Changes in assets and liabilities:
Accounts receivable (9,411) (4,504) 782
Inventories (1,037) 1,599 7,712
Accounts payable 4,298 3,113 3,592
Accrued liabilities 2,630 (6,369) 9,302
Deferred income taxes (485) 1,992 (5,653)
Other liabilities and assets (2,549) (4,683) 2,161
- -------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 37,700 19,642 43,024
INVESTING ACTIVITIES
Proceeds from sale of Pioneer division -- 97 16,959
Proceeds from sale of property, plant and equipment 2,835 4,506 2,944
Capital expenditures (31,848) (22,216) (16,238)
Redemption of marketable securities -- -- 3,072
Other (2,252) (3,111) (1,771)
- -------------------------------------------------------------------------------------------------------------------------------
Net cash (used) provided by investing activities (31,265) (20,724) 4,966
FINANCING ACTIVITIES
Net decrease in notes payable (2,653) (4,377) (7,836)
Proceeds from the issuance of common stock 3,956 1,706 1,189
Payments to retire long-term debt -- -- (8,714)
Other -- -- (77)
Dividends paid (9,223) (8,756) (8,684)
- -------------------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities (7,920) (11,427) (24,122)
Effect of exchange rate changes on cash flows (621) (2,430) (2,761)
- -------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (2,106) (14,939) 21,107
Cash and cash equivalents at beginning of year 24,129 39,068 17,961
- -------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $22,023 $24,129 $39,068
===============================================================================================================================
</TABLE>
See accompanying notes.
16
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY BARNES GROUP INC.
Foreign
Additional Currency Guaranteed
Common Paid-In Retained Translation Treasury ESOP Stockholders'
(Dollars in thousands) Stock Capital Earnings Adjustments Stock Obligation Equity
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 1, 1992 $15,737 $29,684 $155,151 $(261) $(43,904) $(17,594) $138,813
Net loss (34,862) (34,862)
Cash dividends (8,684) (8,684)
Employee stock plans (182) 1,416 1,234
Guaranteed ESOP obligation 1,718 1,718
Income tax benefits on unallocated
ESOP dividends 233 233
Translation adjustments (4,877) (4,877)
- -------------------------------------------------------------------------------------------------------------------------------
December 31, 1992 15,737 29,502 111,838 (5,138) (42,488) (15,876) 93,575
Net income 4,383 4,383
Cash dividends (8,756) (8,756)
Employee stock plans (757) 2,670 1,913
Guaranteed ESOP obligation 1,857 1,857
Income tax benefits on unallocated
ESOP dividends 203 203
Translation adjustments (1,326) (1,326)
- -------------------------------------------------------------------------------------------------------------------------------
December 31, 1993 15,737 28,745 107,668 (6,464) (39,818) (14,019) 91,849
Net income 20,316 20,316
Cash dividends (9,223) (9,223)
Employee stock plans (973) 5,236 4,263
Guaranteed ESOP obligation 2,008 2,008
Income tax benefits on unallocated
ESOP dividends 177 177
Translation adjustments (2,251) (2,251)
- -------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1994 $15,737 $27,772 $118,938 $(8,715) $(34,582) $(12,011) $107,139
===============================================================================================================================
</TABLE>
See accompanying notes.
17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts included in the notes are stated in thousands except
per share data and the tables in Note 14.)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION: The accompanying consolidated financial statements include
the accounts of the company and all of its subsidiaries. Intercompany
transactions and account balances have been eliminated. The company accounts
for its 45% investment in the common stock of NASCO, an automotive suspension
spring company jointly owned with NHK Spring Co., Ltd. of Japan, under
the equity method. Other income in the accompanying income statements
includes $2,314, $1,734 and $940 for the years 1994, 1993 and 1992,
respectively, of income from the Company's investment in NASCO.
Certain reclassifications have been made in the 1993 and 1992 amounts to
conform with the 1994 presentation.
REVENUE RECOGNITION: Sales and related cost of sales are recognized when
products are shipped to customers.
CASH AND CASH EQUIVALENTS: All highly liquid investments purchased with a
maturity of three months or less are cash equivalents and are carried at fair
market value.
INVENTORIES: Inventories are valued at the lower of cost or market. The
last-in, first-out (LIFO) method was used to accumulate the cost of all U.S.
inventories which represent 74% of total inventories. The cost of foreign
subsidiary inventories was determined using the first-in, first-out (FIFO)
method.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment is stated at
cost. Depreciation is provided using accelerated methods over estimated
useful lives ranging generally from 20 to 50 years for buildings, 3 to 17
years for machinery and equipment and 2 to 5 years for tooling. Maintenance
and repairs charged to expense were $16,341, $12,966 and $11,952 in 1994,
1993 and 1992, respectively.
GOODWILL: Goodwill represents the excess purchase price over the net assets
of companies acquired in business combinations. Goodwill acquired since 1970
is being amortized on a straight-line basis over 40 years; similar
investments for businesses acquired prior to 1970 (approximately $5,200) are
not being amortized. The company has determined that there is no indication
of any impairment in the value of goodwill. Accumulated amortization was
$7,002 and $6,415 at December 31, 1994 and 1993, respectively.
FOREIGN CURRENCY TRANSLATION: Assets and liabilities of foreign operations,
except those in countries with high rates of inflation, are translated at
year-end rates of exchange; revenue and expenses are translated at average
annual rates of exchange. The resulting translation gains and losses are
reflected in foreign currency translation adjustments within stockholders'
equity.
For operations in countries that have high rates of inflation, translation
gains and losses are included in net income. These losses, along with those
generated from foreign currency transactions, were $550, $1,661 and $147 in
1994, 1993 and 1992, respectively.
INCOME (LOSS) PER COMMON SHARE: Income (loss) per common share is based on
the weighted average number of common shares outstanding during the year.
The effect of common stock equivalents (stock options) is not material.
For purposes of calculating income per share, Employee Stock Ownership Plan
(ESOP) shares are considered outstanding.
CHANGES IN ACCOUNTING PRINCIPLE: Effective January 1, 1992, the company
adopted three new accounting standards, Statements of Financial Accounting
Standards No. 106, No. 109 and No. 112.
Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions," requires companies to
recognize the estimated future cost of providing health and other
post-retirement benefits on an accrual basis during the period such benefits
are earned by employees. These benefits were previously expensed when paid.
The company elected to record the previously unrecognized service cost of
these benefits immediately, reducing 1992 net income by $38,054, ($63,424
less related deferred income tax benefit of $25,370) or $6.14 per share.
18
<PAGE>
BARNES GROUP INC.
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," requires that the liability method be used to calculate deferred
income taxes. Under this method, deferred income tax assets and liabilities
are recognized on temporary differences between the financial statement and
tax bases of assets and liabilities using applicable tax rates. The
cumulative effect of this standard was to reduce 1992 net income by $950 or
$.15 per share.
Statement of Financial Accounting Standards No. 112, "Employers' Accounting
for Postemployment Benefits," requires that the cost of benefits provided to
former or inactive employees be recognized on the accrual basis of
accounting. Previously, the company recognized postemployment benefit costs
(primarily medical benefits provided to certain employees receiving workers'
compensation or long-term disability benefits) when paid. The cumulative
effect of this change in accounting principle, net of deferred income tax
benefit, reduced 1992 net income by $1,691, or $.27 per share.
2. DIVESTITURE
In December, 1992, the company sold its Pioneer division (formerly part of
the Bowman Distribution business segment) for $17,056 in cash. The company
recognized a pre-tax gain of $5,000 on the sale. Sales for Pioneer in 1992
included in the company's consolidated income statement were $29,349.
3. INVENTORIES
<TABLE>
<CAPTION>
Inventories at December 31, consisted of:
1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Finished goods $28,769 $25,527
Work-in-process 13,697 17,117
Raw materials and supplies 8,379 7,847
- -------------------------------------------------------------------------------------------------------------------------------
$50,845 $50,491
===============================================================================================================================
</TABLE>
Inventories valued by the LIFO method aggregated $37,781 and $37,473 at
December 31, 1994 and 1993, respectively. If LIFO inventories had been
valued using the FIFO method, they would have been $12,639 and $12,986
higher at those dates.
4. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Property, plant and equipment at December 31, consisted of:
1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<C> <S> <S>
Land $ 5,651 $ 5,762
Buildings 59,727 57,442
Machinery, equipment and tooling 210,807 193,402
- -------------------------------------------------------------------------------------------------------------------------------
276,185 256,606
Less accumulated depreciation 163,616 153,563
- -------------------------------------------------------------------------------------------------------------------------------
$112,569 $103,043
===============================================================================================================================
</TABLE>
19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. ACCRUED LIABILITIES
<TABLE>
<CAPTION>
Accrued liabilities at December 31, consisted of:
1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Payroll and other compensation $15,033 $10,371
Postretirement and postemployment benefits 7,631 6,611
Vacation pay 4,500 4,376
Accrued income taxes 3,927 2,486
Pension and profit sharing 1,707 1,718
Plant closings and restructurings 1,611 5,932
Other 11,304 10,509
- -------------------------------------------------------------------------------------------------------------------------------
$45,713 $42,003
===============================================================================================================================
</TABLE>
6. DEBT AND COMMITMENTS
<TABLE>
<CAPTION>
Long-term debt at December 31, consisted of:
1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
Carring Fair Carrying
Amount Value Amount
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Senior Notes $40,000 $42,100 $40,000
Borrowings under lines of credit 23,000 23,00 23,000
Other 7,000 7,000 7,000
- -------------------------------------------------------------------------------------------------------------------------------
$70,000 $72,100 $70,000
===============================================================================================================================
</TABLE>
Senior Notes placed with insurance companies are payable in thirteen
semi-annual payments of $3,077, beginning in September, 1995, and bear
interest at 9.47%. The fair value of these notes is determined using
discounted cash flows based on the company's estimated current interest rate
for similar types of borrowings. The carrying values of other long-term
debt, notes payable and guaranteed ESOP obligation approximate their fair
value.
The company has a revolving credit agreement with six banks that allows
borrowings up to $100,000 under notes due December 6, 1999. A commitment fee
of .17% per annum is paid on the unused portion of the commitments. The
company had no borrowings under this agreement at December 31, 1994 and 1993.
The company has available approximately $155,000 in uncommitted, short-term
bank credit lines, of which $30,000 and $33,500 were in use at December 31,
1994 and 1993, respectively. The interest rate on these borrowings was 6.2%
and 3.4% at December 31, 1994 and 1993.
At December 31, 1994, the company classified $23,000 of borrowings under its
lines of credit and $3,077 of its Senior Notes due within one year as
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.
20
<PAGE>
BARNES GROUP INC.
The company does not use derivatives for trading purposes. Interest rate
swaps, a form of derivative, are used to manage interest costs. During 1994
and 1993, the company used two interest rate swaps, one of which matured
in 1994. Currently, the company maintains an interest rate swap agreement
which effectively converts $20,000 of its fixed rate Senior Notes to floating
rate debt with interest equal to LIBOR plus 83 basis points. The effective
interest rate on this floating rate portion was 7.3% and 4.2% at December 31,
1994 and 1993, respectively. The difference between fixed rate and
floating rate interest is recognized as an adjustment to interest expense
in the period incurred. This swap decreases as the Senior Notes are repaid.
The fair value of the swap is estimated based upon current settlement prices
and was approximately $710 at December 31, 1994.
The company has guaranteed $7,400 of letters of credit and capital lease
obligations related to its 45% investment in NASCO. In addition, the company
has other outstanding letters of credit totalling $8,000 at December 31, 1994.
Maturities of long-term debt in each of the next five years are: $3,077,
$6,154, $6,154, $6,154 and $29,154. As noted, the 1995 maturity has
been classified as long-term.
Certain of the company's debt arrangements contain requirements as to
maintenance of minimum levels of working capital and net worth, and place
certain restrictions on dividend payments and acquisitions of the company's
common stock. Under the most restrictive covenant in any agreement, $34,009
was available for dividends or acquisitions of common stock at December 31,
1994.
Interest paid was $5,626, $5,496 and $6,650 in the years 1994, 1993 and 1992,
respectively.
7. INCOME TAXES
<TABLE>
<CAPTION>
The components of income before income taxes and effect of accounting changes
and the provision for income taxes follow:
1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income before income taxes and
effect of accounting changes:
U.S. $23,639 $6,212 $3,996
International 10,283 2,179 3,675
- -------------------------------------------------------------------------------------------------------------------------------
$33,922 $8,391 $7,671
- -------------------------------------------------------------------------------------------------------------------------------
Income tax provision:
Current:
U.S. - federal $ 7,975 $ (743) $4,521
U.S. - state 1,639 (172) 1,326
International 4,477 2,931 1,644
- -------------------------------------------------------------------------------------------------------------------------------
14,091 2,016 7,491
- -------------------------------------------------------------------------------------------------------------------------------
Deferred:
U.S. - federal (403) 1,383 (4,601)
U.S. - state 355 626 (1,201)
International (437) (17) 149
- -------------------------------------------------------------------------------------------------------------------------------
(485) 1,992 (5,653)
- -------------------------------------------------------------------------------------------------------------------------------
$13,606 $4,008 $1,838
===============================================================================================================================
</TABLE>
21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Deferred income tax assets and liabilities at December 31, consist of the tax
effects of temporary differences related to the following:
Assets Liabilities
- -------------------------------------------------------------------------------------------------------------------------------
1994 1993 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Plant closings and restructurings $ 794 $ 2,756 $ -- $ --
Depreciation and amortization (7,155) (8,292) 1,826 2,082
Inventory valuation 6,295 5,383 587 13
Postretirement and postemployment benefits 29,234 29,129 -- --
Tax loss carryforwards 6,672 5,088 -- --
Other 6,147 5,360 1,050 883
- -------------------------------------------------------------------------------------------------------------------------------
41,987 39,424 3,463 2,978
Valuation allowance (5,986) (4,505) -- --
- -------------------------------------------------------------------------------------------------------------------------------
$36,001 $34,919 $ 3,463 $ 2,978
===============================================================================================================================
Current deferred income taxes $12,147 $12,642 $ 587 $ 14
Noncurrent deferred income taxes 23,854 22,277 2,876 2,964
- -------------------------------------------------------------------------------------------------------------------------------
$36,001 $34,919 $ 3,463 $ 2,978
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
The components of the net deferred income tax balances recognized in the
balance sheet at December 31, follow:
1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total deferred income tax assets $ 56,892 $ 55,861
Total deferred income tax asset
valuation allowance (5,986) (4,505)
Total deferred income tax liabilities (18,368) (19,415)
- -------------------------------------------------------------------------------------------------------------------------------
$ 32,538 $ 31,941
===============================================================================================================================
</TABLE>
The company has not recognized deferred income taxes on $60,177 of
undistributed earnings of its international subsidiaries
since such earnings are considered to be reinvested indefinitely.
If the earnings were distributed in the form of dividends, the
company would be subject to both U.S. income taxes and foreign
withholding taxes. Determination of the amount of this unrecognized
deferred income tax liability is not practicable.
<TABLE>
<CAPTION>
A reconciliation of the U.S. federal statutory income tax rate to the
consolidated effective income tax rate follows:
1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. federal statutory income tax rate 35.0% 35.0% 34.0%
Effect of graduated rates -- (1.0) --
State taxes (net of federal benefit) 3.8 3.6 1.9
Foreign losses without tax benefit 4.0 25.2 3.5
Translation losses 0.4 5.9 4.0
Research and development tax credits (0.3) (1.8) (6.5)
Foreign tax rates (3.1) (5.2) (0.4)
NASCO income (2.0) (5.9) (4.2)
Pioneer sale -- -- (7.7)
Goodwill amortization 0.7 2.7 3.2
Income tax benefit of allocated ESOP dividends (0.9) (3.2) (3.6)
Enacted rate change -- (9.5) --
Other 2.5 2.0 (0.2)
- -------------------------------------------------------------------------------------------------------------------------------
Consolidated effective income tax rate 40.1% 47.8% 24.0%
===============================================================================================================================
</TABLE>
Income taxes paid were $8,848, $4,255 and $7,843 in 1994, 1993 and 1992,
respectively.
22
<PAGE>
BARNES GROUP INC.
8. COMMON STOCK
In 1994, 1993 and 1992, 135,692, 70,504 and 43,283 shares of common stock
were issued from treasury for the exercise of stock options, purchases by
the Employee Stock Purchase Plan and various other incentive awards.
Each share of outstanding common stock contains a dividend distribution right
(Right) which entitles the holder to purchase 1/100 of a share of Series
A Junior Participating Preferred Stock for one hundred dollars.
Separate rights certificates will be mailed to stockholders if a person or
group acquires, or commences a tender or exchange offer for 50% or more of
the outstanding shares of the company's common stock. The Rights, which have
no voting or dividend rights, expire July 29, 1996 and may be redeemed by the
company at a price of five cents per Right at any time until the tenth day
following public announcement that a person or group has acquired or intends
to acquire 50% or more of the outstanding common stock.
If, following the acquisition by a person or group of 50% or more of the
outstanding shares of the company's common stock, the company is acquired in
a merger or other business combination or 50% or more of the company's assets
or earning power is sold or transferred, each outstanding Right becomes
exercisable for common stock or other securities of the acquiring entity
having a value of twice the exercise price of the Right.
9. PREFERRED STOCK
At December 31, 1994 and 1993, the company had 3,000,000 shares of $1 par
value preferred stock authorized, none of which were outstanding.
10. STOCK PLANS
All U.S. salaried and non-union hourly employees are eligible to participate
in the company's Guaranteed Stock Plan (GSP). The GSP provides for the
investment of employer and employee contributions in the company's
common stock. The company guarantees a minimum rate of return on certain GSP
assets.
The GSP is a leveraged Employee Stock Ownership Plan (ESOP). In 1989, the
GSP purchased 579,310 shares of the company's common stock at a cost of
$21,000 using the proceeds of a loan guaranteed by the company. These
shares are held in trust and are issued to employees' accounts in the
GSP as the loan is repaid. Principal and interest on the GSP loan are
being paid in quarterly installments through 1999. The loan bears
interest based on LIBOR. At December 31, 1994 the interest rate was 6.2%.
Interest of $653, $592 and $773 was incurred in 1994, 1993 and 1992,
respectively.
Contributions and certain dividends received are used in part by the GSP to
service its debt. Contributions in-clude both employee contributions up to a
maximum of 10% of eligible pay and matching company contributions.
The company contributions are equal to the amount required by the Plan to pay
the principal and interest due under the Plan loan plus that required to
purchase any additional shares required to be allocated to participant
accounts, less the sum of participant contributions and dividends received by
the Plan. The GSP used $1,323 of company dividends for debt service in 1994,
and used $1,277 in each of the years 1993 and 1992. The company expenses all
cash contributions made to the GSP. Compensation expense related to the GSP
was $2,268, $2,452 and $1,682 in 1994, 1993 and 1992, respectively. In
addition to the company shares held in trust, the GSP also purchases the
company's common stock on the open market to meet its requirements.
As of December 31, 1994, the GSP held 1,184,332 shares of the company's
common stock, of which 283,720 shares were unallocated.
23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For financial statement purposes, the company reflects its guarantee of the
GSP's debt as a liability with a like amount reflected as a reduction of
stockholders' equity.
The company also has an Employee Stock Purchase Plan under which eligible
employees may elect to have up to 10% of base compensation deducted from
payroll for the purchase of the company's common stock at 85% of
market value. The maximum number of shares which may be purchased
under the Plan is 675,000. During 1994, 22,367 shares (23,737 and 23,532
shares in 1993 and 1992, respectively) were purchased. As of December 31,
1994, 242,883 shares may be issued in the future.
The 1991 Barnes Group Stock Incentive Plan authorizes the granting of
incentives to officers and other executives in the form of stock options,
stock appreciation rights, incentive stock rights and performance unit
awards. A predecessor plan which provided for similar incentives expired
in 1991. Options granted under that plan continue to be exercisable and
any options which terminate without being exercised become available for
grant under the 1991 Plan. A maximum of 806,972 common shares are
subject to issuance under this plan after December 31, 1994.
<TABLE>
<CAPTION>
Data relating to grants under these plans follow:
Options 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding, January 1 713,696 497,245
Granted 117,300 362,950
Exercised (at $17.64 to $36.13) 108,464 44,059
Cancelled 77,978 102,440
- -------------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31 (at $17.96 to $38.38) 644,554 713,696
===============================================================================================================================
Exercisable, December 31 (at $17.96 to $38.38) 237,120 291,312
===============================================================================================================================
Available for future grants, December 31 162,418 201,740
===============================================================================================================================
</TABLE>
Under the Non-employee Director Deferred Stock Plan each non-employee
director is awarded 2,000 shares of the company's common stock upon
retirement. In 1994, 4,000 shares were issued under this plan.
No shares were issued in 1993 or 1992. As of December 31, 1994, 20,000
shares were reserved for issuance under this plan.
Total shares reserved for issuance under all stock plans aggregated 1,069,855
at December 31, 1994.
11. PENSION PLANS
The company has noncontributory defined benefit pension plans covering a
majority of its worldwide employees at Associated Spring, Bowman Distribution
and its Executive Office. Plan benefits for salaried and non-union hourly
employees are based on years of service and average salary. Plans covering
union hourly employees provide benefits based on years of service. The
company funds U.S. pension costs in accordance with the Employee Retirement
Income Security Act of 1974 (ERISA). Plan assets consist primarily of common
stocks and fixed income investments.
<TABLE>
<CAPTION>
Pension expense consisted of the following:
1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 5,282 $ 4,467 $ 4,292
Interest cost 15,290 14,946 14,548
Actual (return) loss on plan assets 941 (25,875) (16,696)
Net amortization and deferral (20,295) 7,308 (1,294)
- -------------------------------------------------------------------------------------------------------------------------------
$ 1,218 $ 846 $ 850
===============================================================================================================================
</TABLE>
In connection with the company's 1992 plant closings, a curtailment gain of
$1,024 was recognized.
24
<PAGE>
BARNES GROUP INC.
<TABLE>
<CAPTION>
The funded status of the plans at December 31 is set forth below:
1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Plan assets at fair value $216,767 $229,455
Actuarial present value of benefit obligations:
Vested benefits 176,219 183,257
Nonvested benefits 3,856 3,083
- -------------------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligations 180,075 186,340
Additional benefits based on projected future salary increases 20,324 26,583
- -------------------------------------------------------------------------------------------------------------------------------
Projected benefit obligations 200,399 212,923
- -------------------------------------------------------------------------------------------------------------------------------
Plan assets greater than projected benefit obligations $16,368 $16,532
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Reconciliation to net pension asset recognized in the accompanying balance
sheets:
1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Plan assets greater than projected benefit obligations $16,368 $16,532
Adjustments for unrecognized:
Net gains (2,901) (2,935)
Prior service costs 4,859 5,456
Net asset at transition (10,639) (12,380)
- -------------------------------------------------------------------------------------------------------------------------------
(8,681) (9,859)
- -------------------------------------------------------------------------------------------------------------------------------
Net pension asset $ 7,687 $ 6,673
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Significant assumptions used in determining pension expense and the funded
status of the plans were:
1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average discount rate 8.25% 7.50% 9.00%
Increase in compensation 5.25% 5.25% 6.00%
Long-term rate of return on plan assets 9.00% 9.00% 9.00%
</TABLE>
The company has defined contribution plans covering employees of Barnes
Aerospace and field sales employees of Bowman Distribution's U.S. operation.
Company contributions under these plans are based primarily on the
performance of the business unit and employee compensation. Total expense
amounted to $1,431, $1,566 and $1,288 in 1994,
1993 and 1992, respectively.
12. POSTRETIREMENT HEALTHCARE AND LIFE INSURANCE BENEFITS
The company provides certain medical, dental and life insurance benefits for
a majority of its retired employees in the U.S. and Canada. It is the
company's practice to fund these benefits as incurred.
<TABLE>
<CAPTION>
Postretirement benefit expense consisted of the following:
1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 874 $ 792 $ 968
Interest cost 5,199 5,840 5,799
Net amortization (158) -- --
- -------------------------------------------------------------------------------------------------------------------------------
$5,915 $6,632 $6,767
===============================================================================================================================
</TABLE>
25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
The amounts included in the accompanying balance sheets at December 31 were
as follows:
1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Accumulated benefit obligations: $50,917 $48,199 $45,267
Employees eligible to retire 6,209 8,334 9,445
Employees not eligible to retire 12,020 15,204 11,570
Unrecognized prior service cost 1,245 1,403 --
Unrecognized net loss (986) (4,823) --
- -------------------------------------------------------------------------------------------------------------------------------
$69,405 $68,317 $66,282
===============================================================================================================================
Postretirement benefit obligations included in:
Accrued liabilities $5,300 $5,200 $4,923
Accrued retirement benefits 64,105 63,117 61,359
- -------------------------------------------------------------------------------------------------------------------------------
$69,405 $68,317 $66,282
===============================================================================================================================
</TABLE>
A deferred tax asset is included in the accompanying balance sheet
recognizing the future tax benefit of the post-retirement benefit obligations
(See Note 7).
Cash payments made in 1994, 1993 and 1992 for postretirement benefits were
$4,828, $4,597 and $4,229, respectively.
The company's accumulated benefit obligations take into account certain
cost-sharing provisions. The annual assumed rate of increase in the cost of
covered benefits (i.e., healthcare cost trend rate) is assumed to be 13.0%
for 1994 gradually reducing to 5.0% by the year 2001. A one percentage point
increase in the assumed healthcare cost trend rate would increase the
accumulated benefit obligations by approximately $6,030 at December 31, 1994
and would increase 1994 expense by approximately $642.
Discount rates of 8.25%, 7.5% and 9.25% were used in determining the
accumulated benefit obligations at December 31, 1994, 1993 and 1992,
respectively.
13. LEASES
Rent expense was $6,072, $5,256 and $5,535 for 1994, 1993 and 1992,
respectively. Minimum rental commitments under noncancellable leases
(principally for buildings and equipment) in years 1995 through 1999 are
$3,705, $2,781, $1,896, $1,521, $998 and $5,258 thereafter.
14. INFORMATION ON BUSINESS SEGMENTS
The company operates three businesses:
ASSOCIATED SPRING manufactures and distributes precision springs and custom
metal parts.
BOWMAN DISTRIBUTION distributes fast-moving, consumable repair and
replacement products for industrial, transportation and heavy equipment
maintenance markets.
BARNES AEROSPACE manufactures and repairs jet engine components and airframe
parts principally for the aircraft and aerospace markets.
26
<PAGE>
BARNES GROUP INC.
The following tables set forth information about the company's operations by
its three business segments and by geographic area.
Sales between the business segments and between the geographic areas are
accounted for on the same basis as sales to unaffiliated customers.
Operating income includes net sales less cost of sales, selling and
administrative expenses and the cost of plant closings and restructurings.
In 1993, plant closings and restructurings included $3.4 million for
combining operations of the Aerospace machining units and $1.5 million for
the consolidation of Associated Spring's operations in Mexico. In 1992,
plant closings and restructurings included $9.1 million for closing
Associated Spring plants in Ohio, California and Tennessee and a
distribution facility in Pennsylvania, $4.7 million for restructuring Bowman
Distribution's U.S. sales organization, and $4.0 million related to the
termination of a contract for C-17 aircraft parts made by the Barnes
Aerospace Advanced Fabrications business. Other income and expenses are not
included in operating income. Corporate assets consist of cash and cash
equivalents, deferred income taxes, other assets, transportation equipment
and the Executive Office building.
<TABLE>
<CAPTION>
OPERATIONS BY BUSINESS SEGMENT
Net Sales Operating Income
- -------------------------------------------------------------------------------------------------------------------------------
(Dollars in millions) 1994 1993 1992 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Associated Spring $272.4 $233.0 $202.9 $41.7 $28.6 $18.5
Bowman Distribution 215.1 193.2 238.5 12.6 6.7 23.2
Barnes Aerospace 82.3 77.0 90.5 (1.8)* (4.5) (2.9)
Intersegment sales (0.6) (0.9) (2.8) -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
$569.2 $502.3 $529.1 52.5 30.8 38.8
========================
Plant closings and restructurings -- (4.9) (17.8)
Corporate expenses (15.9) (13.4) (13.7)
- -------------------------------------------------------------------------------------------------------------------------------
Operating income $36.6 $12.5 $ 7.3
===============================================================================================================================
</TABLE>
*Includes a $1.1 provision for severance costs recorded in the fourth quarter.
<TABLE>
<CAPTION>
Identifiable Assets Capital Expenditures Depreciation Expense
- -------------------------------------------------------------------------------------------------------------------------------
(Dollars in millions) 1994 1993 1992 1994 1993 1992 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Associated Spring $144.7 $124.3 $106.3 $23.7 $11.1 $ 6.4 $ 9.0 $ 7.7 $ 8.0
Bowman Distribution 86.0 80.7 83.7 4.3 5.6 4.2 3.1 2.9 3.8
Barnes Aerospace 85.6 90.0 102.8 3.7 5.4 5.5 7.5 8.0 7.7
Corporate 35.7 38.3 55.5 0.1 0.1 0.1 0.2 0.3 0.4
- -------------------------------------------------------------------------------------------------------------------------------
$352.0 $333.3 $348.3 $31.8 $22.2 $16.2 $19.8 $18.9 $19.9
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
OPERATIONS BY GEOGRAPHIC AREA
Net Sales Operating Income
- -------------------------------------------------------------------------------------------------------------------------------
(Dollars in millions) 1994 1993 1992 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Domestic $454.8 $404.8 $442.0 $45.0 $28.4 $36.4
International 121.9 103.1 93.8 7.5 2.4 2.4
Sales between geographic areas (7.5) (5.6) (6.7) -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
$569.2 $502.3 $529.1 $52.5 $30.8 $38.8
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Identifiable Assets
- -------------------------------------------------------------------------------------------------------------------------------
(Dollars in millions) 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic $226.6 $210.3 $209.9
International 89.7 84.7 82.9
Corporate 35.7 38.3 55.5
- -------------------------------------------------------------------------------------------------------------------------------
$352.0 $333.3 $348.3
===============================================================================================================================
</TABLE>
27
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. CONTINGENCY
In December, 1991, the company was notified by the McDonnell Douglas
Corporation that McDonnell Douglas was terminating for default an $8,200
contract with the company's Advanced Fabrication unit. In 1992, the company
wrote off $4,000 of net assets related to this contract previously included
in its financial statements. The company believes it has legitimate defenses
to the default claim. While no reasonable estimate of the possible loss or
range of loss can be made at this time, management believes that it is
unlikely that the ultimate resolution of this dispute will have a material
effect on future results of operations of the company. In management's
opinion, the ultimate resolution of this dispute, regardless of the outcome,
will not have a material effect on the financial position of the company.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of Barnes Group Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, changes in stockholders' equity and of
cash flows present fairly, in all material respects, the financial position
of Barnes Group Inc. and its subsidiaries at December 31, 1994, and the
results of their operations and their cash flows for the year, in conformity
with generally accepted accounting principles. These financial statements
are the responsibility of the Company's management; our re-sponsibility is to
express an opinion on these financial statements based on our audit. We
conducted our audit of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for the opinion expressed above. The
financial statements of Barnes Group Inc. for the years ended December 31,
1993 and 1992 were audited by other independent accountants whose report
dated January 28, 1994 on those statements included an explanatory paragraph
relative to the change, in 1992, in the methods of accounting for income
taxes and for certain postretirement and postemployment benefits.
/S/ PRICE WATERHOUSE LLP
Hartford, Connecticut
January 23, 1995
28
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY DATA (UNAUDITED)
First Second Third Fourth Full
(Dollars in millions except per share data) Quarter Quarter Quarter Quarter Year
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994
Net sales $142.1 $143.2 $140.3 $143.6 $569.2
Gross profit* 51.4 51.4 50.6 49.3 202.7
Operating income 8.8 9.6 10.2 8.0 36.6
Net income 4.9 5.5 5.4 4.5 20.3
Per Common Share:
Net income .78 .87 .84 .71 3.20
Dividends .35 .35 .35 .40 1.45
Market prices (high-low) $31 1/2-29 1/2 $37 3/4-29 3/4 $38-33 5/8 $39 7/8-35 1/2 $39 7/8-291/2
1993
Net sales $127.0 $127.5 $123.1 $124.7 $502.3
Gross profit* 45.9 47.1 43.8 41.5 178.3
Operating income (loss) 1.5 6.7 4.8 (.5) 12.5
Net income (loss) .3 2.9 2.8 (1.6) 4.4
Per Common Share:
Net income (loss) .05 .47 .44 (.26) .70
Dividends .35 .35 .35 .35 1.40
Market prices (high-low) $32 1/4-29 7/8 $33-301/2 $32 3/4-31 $32 3/4-31 1/4 $33-29 7/8
</TABLE>
Note: The fourth quarter of 1994 includes a pretax charge of $1.1 or $.10
per common share for severance costs at Barnes Aerospace. The first quarter
of 1993 includes a pretax charge of $3.4 or $.33 per common
share for plant consolidation and reduction of work force at Barnes
Aerospace. The fourth quarter of 1993 includes a $1.5 charge without tax
benefit or $.24 per common share for the consolidation of Associated
Spring's Mexican operations.
*Sales minus cost of sales.
29
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
1994 1993(2) 1992(3)(4)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER COMMON SHARE (1)
Income (loss)
Continuing operations $3.20 $.70 $.94
Effect of accounting changes -- -- (6.56)
Discontinued operations -- -- --
Net income (loss) 3.20 .70 (5.62)
Dividends paid 1.45 1.40 1.40
Stockholders' equity before deduction of guaranteed
ESOP obligation (at year-end) 18.53 16.82 17.59
Stock price (at year-end) 38 31 1/4 30 1/2
- --------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR (in thousands)
Net sales $569,197 $502,292 $529,073
Operating income
36,649 12,538 7,259
As a percent of sales 6.4% 2.5% 1.4%
Income from continuing operations before income taxes
and effect of accounting changes $33,922 $8,391 $7,671
Income taxes
13,606 4,008 1,838
Income from continuing operations before
effect of accounting changes (8) 20,316 4,383 5,833
As a percent of average stockholders' equity
before deduction of guaranteed ESOP obligation 18.0% 4.1% 5.1%
Effect of accounting changes $-- $-- $(40,695)
Net income (loss) 20,316 4,383 (34,862)
Net income (loss) applicable to common stock 20,316 4,383 (34,862)
Depreciation and amortization 23,733 23,094 23,741
Capital expenditures 31,848 22,216 16,238
Average common shares outstanding 6,354 6,250 6,202
- --------------------------------------------------------------------------------------------------------------------------
YEAR-END FINANCIAL POSITION (in thousands)
Working capital $88,325 $87,011 $93,500
Current ratio 2.0 TO 1 2.1 to 1 2.0 to 1
Property, plant and equipment $112,569 $103,043 $104,437
Total assets
351,956 333,296 348,346
Long-term debt 70,000 70,000 70,000
Stockholders' equity before deduction of
guaranteed ESOP obligation 119,150 105,868 109,451
Guaranteed ESOP obligation 12,011 14,019 15,876
Stockholders' equity 107,139 91,849 93,575
Debt as a percent of total capitalization (9) 28.3% 30.5% 31.2%
- --------------------------------------------------------------------------------------------------------------------------
YEAR-END STATISTICS
Employees 4,181 4,357 4,051
</TABLE>
(1) All per-share data, other than earnings per common share, are based on
common shares outstanding at the end of each year. Earnings per common
share are based on weighted average common shares outstanding during
each year.
(2) Includes a $3.4 million pretax, $2.0 million after-tax charge ($.33
per share) against income related to the plant consolidation and work
force reduction at Barnes Aerospace and a $1.5 million charge without
tax benefit ($.24 per share) for a plant consolidation at Associated
Spring's Mexican operations.
(3) Includes a $17.8 million pretax, $10.7 million after-tax charge
($1.73 per share) against income related to the costs of plant closings
at Associated Spring, Barnes Aerospace charges on a terminated contract
and restructuring of Bowman U.S. sales organization. These charges were
partially offset by a $5.0 million pretax gain, $3.7 million after-tax
($.60 per share) from the sale of Bowman's Pioneer division.
(4) Barnes Group adopted three new accounting standards in 1992 retroactive
to the beginning of the year. Included is a one-time $39.7 million
after-tax charge ($6.41 per share) to comply with FAS 106 and 112
which changes the accounting for certain postretirement and
postemployment benefits to the accrual method and an additional
$1.0 million income tax charge ($.15 per share) for FAS 109, which
changed income tax accounting.
30
<PAGE>
<TABLE>
1991 1990 1989(5) 1988 1987 1986(7) 1985 1984
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$2.60 $2.76 $1.94 $3.06 $2.80 $2.57 $2.27 $2.42
-- -- -- -- -- -- -- --
-- -- -- -- -- -- (.60) .09
2.60 2.76 1.94 3.06 2.80 2.57 1.67 2.51
1.40 1.40 1.40 1.20 1.15 1.00 .85 .80
25.31 23.88 21.96 20.35 17.91 19.27 17.68 18.09
35 3/8 25 7/8 29 35 5/8 32 30 1/2 27 1/2 21 5/8
- --------------------------------------------------------------------------------------------------------------------------
$535,660 $545,857 $511,221 $496,060 $458,016 $439,727 $431,762 $418,663
37,982 41,198 33,990 43,702 42,265 43,056 40,767 41,107
7.1% 7.5% 6.6% 8.8% 9.2% 9.8% 9.4% 9.8%
$28,849 $29,952 $23,118 $33,175 $34,576 $35,336 $33,574 $34,110
12,926 13,163 10,745 14,327 16,736 18,733 17,157 16,609
15,923 16,789 11,114 16,711 17,700 16,603 16,417 17,501
10.5% 12.0% 9.0% 15.9% 14.0% 14.0% 13.4% 13.9%
$-- $-- $-- $-- $-- $-- $(4,324) $622
15,923 16,789 12,373 18,848 17,840 16,603 12,093 18,123
15,923 16,789 11,114 16,711 17,700 16,603 12,093 18,123
23,159 22,044 18,167 16,626 15,470 14,511 13,486 13,120
19,099 21,615 18,218 21,821 22,457 18,803 16,232 13,395
6,127 6,078 5,733 5,465 6,321 6,461 7,223 7,232
- --------------------------------------------------------------------------------------------------------------------------
$102,995 $94,087 $89,194 $102,126 $85,991 $54,659 $54,077 $70,945
2.2 to 1 1.9 to 1 1.9 to 1 2.3 to 1 2.0 to 1 1.5 to 1 1.6 to 1 1.8 to 1
$114,299 $114,717 $107,491 $100,403 $96,066 $87,613 $87,662 $92,675
341,857 342,383 328,116 311,876 297,946 277,828 253,586 279,505
78,428 78,714 79,088 79,287 73,853 32,285 29,837 39,421
156,407 145,614 133,218 112,810 97,103 123,025 113,978 131,302
17,594 19,182 20,650 -- -- -- -- --
138,813 126,432 112,568 112,810 97,103 123,025 113,978 131,302
36.5% 39.8% 41.1% 37.7% 39.7% 28.5% 22.9% 24.4%
- --------------------------------------------------------------------------------------------------------------------------
4,478 4,744 4,799 4,770 4,712 4,697 4,845 5,354
</TABLE>
(5) Includes a $6.5 million pretax, $3.9 million after-tax charge
($.68 per share) against income related to restructuring costs at
Associated Spring.
(6) Includes a $2.9 million pretax, $1.6 million after-tax charge ($.26
per share) against income related to the transition costs involved
in modernizing Associated Spring's valve spring production facilities
in North America.
(7) Barnes Group changed its U.S. pension cost accounting to comply with
FAS 87. The effect was to increase net income by $2.2 million
($.33 per share).
(8) Adjusted for preferred dividends in 1989, 1988 and 1987.
(9) Debt includes all interest-bearing debt and total capitalization includes
interest-bearing debt, accrued long-term retirement benefits, other
long-term liabilities, preferred stock and stockholders' equity,
excluding the guaranteed ESOP obligation.
31
<PAGE>
[INSIDE BACK COVER]
DIRECTORY OF OPERATIONS STOCKHOLDERS' INFORMATION
BARNES GROUP INC. BOWMAN DISTRIBUTION TRANSFER AGENT
AND REGISTRAR
Executive Office Headquarters
Mellon Securities
Bristol, Connecticut Cleveland, Ohio Trust Company
Shareholder Inquiries
Bowman-U.S. and Stock Transfers
ASSOCIATED SPRING Headquarters 85 Challenger Rd.
Ridgefield Park, NJ 07660
Headquarters Cleveland, Ohio 1-800-288-9541
(Continental U.S. only)
Bristol, Connecticut or 1-412-236-8000
Distribution Centers
For Hearing Impaired
Manufacturing Plants United States: 1-800-231-5469
North America: Bakersfield, California
Norcross, Georgia Stock Exchange
Bristol, Connecticut Rockford, Illinois
Saline, Michigan Elizabethtown, Kentucky New York Stock Exchange
Syracuse, New York Edison, New Jersey Stock Trading Symbol: B
Arden, North Carolina Arlington, Texas
Corry, Pennsylvania Auburn, Washington
Dallas, Texas DIVIDEND INVESTMENT PLAN
Milwaukee, Wisconsin Canada:
Burlington, Ontario, Dividends on Barnes Group
Canada Concord, Ontario common stock may be
Mexico City, Mexico Edmonton, Alberta automatically invested
Moncton, New Brunswick in additional shares.
Brazil: St. Laurent, Quebec This service is
Stumpp & Schuele provided free to
do Brasil Other Operations stockholders. Further
Industria e information can be
Comercio Limitada, United Kingdom: obtained from:
Campinas
Singapore: Bowman Distribution Mellon Securities
Associated Spring-Asia Europe, Trust Company
Pte. Ltd. Motalink and Reinvestment Services
Bowman Systems UK, P. O. Box 750
Corsham Pittsburgh, PA 15230-9625
Distribution Headquarters 1-800-288-9541
France: (Continental U.S. only)
Maumee, Ohio or 1-412-236-8000
Bowman Distribution
France S.A., For Hearing Impaired
Autoliaisons and 1-800-231-5469
LeSysteme Bowman,
Voisins Le Bretonneux
Distribution Centers BARNES AEROSPACE INDEPENDENT ACCOUNTANTS
Cerritos, California Price Waterhouse LLP
Ypsilanti, Michigan Headquarters One Financial Plaza
Arlington, Texas Hartford, CT 06103
New Berlin, Wisconsin Windsor, Connecticut
10-K REPORT AVAILABLE
International Manufacturing Plants Stockholders who wish to
obtain a free copy of
United Kingdom: Flameco the 10-K Report, which
Associated Spring SPEC Ogden, Utah the Company files with
Limited, Evesham the Securities and
France: Jet Die Exchange Commission,
Associated Spring Lansing, Michigan should write to:
Ressorts SPEC
Montigny Windsor Manufacturing Secretary
Windsor, Connecticut Barnes Group Inc.
Executive Office
Windsor Airmotive 123 Main St,
East Granby, P. O. Box 489
Connecticut Bristol, CT 06011-0489
Windsor Airmotive Asia ANNUAL MEETING
Pte. Ltd.
Republic of Singapore Barnes Group Inc. annual
meeting of stockholders
will be held at
10:30 a.m.,Wednesday,
April 5, 1995, at The
Travelers Education
Center, Hartford, CT.
INVESTOR INFORMATION
Barnes Group welcomes
inquiries from
stockholders, analysts
and prospective
investors. Contact:
John F. Sand,
Director -
Public Affairs
Barnes Group Inc.
123 Main St.,
P.O. Box 489
Bristol, CT 06011-0489
1-203-583-7070
Printed on recycled paper
Design: Robert Farrell Associates, Inc./Printing: Allied Printing Service, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of Barnes Group Inc. as of December 31, 1994, the
related consolidated statement of income, Note 4 to the consolidated financial
statements and Schedule VIII of Form 10-K and is qualified in its entirety by
reference to such financial statements, note and schedule.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 22,023
<SECURITIES> 0
<RECEIVABLES> 90,099
<ALLOWANCES> 3,222
<INVENTORY> 50,845
<CURRENT-ASSETS> 175,537
<PP&E> 276,185
<DEPRECIATION> 163,616
<TOTAL-ASSETS> 351,956
<CURRENT-LIABILITIES> 87,212
<BONDS> 79,839
<COMMON> 15,737
0
0
<OTHER-SE> 91,402
<TOTAL-LIABILITY-AND-EQUITY> 107,139
<SALES> 569,197
<TOTAL-REVENUES> 569,197
<CGS> 366,455
<TOTAL-COSTS> 366,455
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,523
<INTEREST-EXPENSE> 5,133
<INCOME-PRETAX> 33,922
<INCOME-TAX> 13,606
<INCOME-CONTINUING> 20,316
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,316
<EPS-PRIMARY> 3.20
<EPS-DILUTED> 3.20
