UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1995
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For transition period from
--------------------
to
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Commission File Number 1-4801
BARNES GROUP INC.
(a Delaware Corporation)
I.R.S. Employer Identification No. 06-0247840
123 Main Street, Bristol, Connecticut 06010
Telephone Number (203) 583-7070
Number of common shares outstanding at
July 28, 1995 - 6,580,254
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
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BARNES GROUP INC.
FORM 10-Q INDEX
For Quarterly period ended June 30, 1995
<CAPTION>
DESCRIPTION PAGES
----------- -----
<S> <S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Statements
of Income for the six months and second
quarter ended June 30, 1995 and 1994 3
Consolidated Balance Sheets as
of June 30, 1995 and December 31, 1994 4-5
Consolidated Statements of Cash Flows
for the six months ended June 30,
1995 and 1994 6
Notes to the Consolidated Financial
Statements 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-10
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 11
Signatures 11
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<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------ -----------------
1995 1994 1995 1994
-------- -------- --------- -------
<S> <C> <C> <C> <C>
Net sales $150,993 $143,157 $309,611 $285,259
Cost of sales 96,227 91,770 197,118 182,472
Selling and admin-
istrative expenses 41,356 41,763 84,536 84,365
-------- -------- -------- --------
137,583 133,533 281,654 266,837
-------- -------- -------- --------
Operating income 13,410 9,624 27,957 18,422
Other income 1,144 1,142 2,351 2,263
Interest expense 1,465 1,296 2,892 2,676
Other expenses 1,082 743 1,530 1,124
-------- -------- -------- --------
Income before income
taxes 12,007 8,727 25,886 16,885
Income taxes 4,660 3,204 10,199 6,467
-------- -------- -------- --------
Net income $ 7,347 $ 5,523 $ 15,687 $ 10,418
======== ======== ======== ========
Per common share:
Net Income $ 1.12 $ .87 $ 2.41 $ 1.65
Dividends .40 .35 .80 .70
Average common shares
outstanding 6,552,198 6,327,109 6,507,918 6,311,701
<FN>
See accompanying notes.
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BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
ASSETS June 30, December 31,
1995 1994
-------- -----------
(Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 14,957 $ 22,023
Accounts receivable, less allowances
(1995-$3,012; 1994-$3,222) 98,269 86,877
Inventories
Finished goods 28,922 28,769
Work-in-process 16,527 13,697
Raw materials and supplies 10,222 8,379
-------- --------
55,671 50,845
Deferred income taxes and prepaid
expenses 16,033 15,792
-------- --------
Total current assets 184,930 175,537
Deferred income taxes 22,686 23,854
Property, plant and equipment 284,537 276,185
Less accumulated depreciation 168,909 163,616
-------- --------
115,628 112,569
Goodwill 20,321 20,614
Other assets 19,339 19,382
-------- --------
Total assets $362,904 $351,956
======== ========
<FN>
See accompanying notes.
</TABLE>
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<TABLE>
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31,
1995 1994
--------- -----------
(Unaudited)
<S> <C> <C>
Current liabilities
Notes payable $ 6,262 $ 7,903
Accounts payable 31,436 31,424
Accrued liabilities 41,131 45,713
Guaranteed ESOP obligation-current 2,258 2,172
-------- --------
Total current liabilities 81,087 87,212
Long-term debt 70,000 70,000
Guaranteed ESOP obligation 8,688 9,839
Accrued retirement benefits 67,389 66,817
Other liabilities 11,196 10,949
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 27,457 27,772
Retained earnings 129,489 118,938
Foreign currency translation
adjustments (8,314) (8,715)
Treasury stock at cost,
1995-768,974 shares
1994-916,748 shares (28,879) (34,582)
-------- --------
135,490 119,150
Guaranteed ESOP obligation (10,946) (12,011)
-------- --------
Total stockholders' equity 124,544 107,139
-------- --------
Total liabilities and stockholders'
equity $362,904 $351,956
======== ========
<FN>
See accompanying notes.
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<TABLE>
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months ended June 30, 1995 and 1994
(Dollars in thousands)
(Unaudited)
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Operating Activities
Net income $15,687 $10,418
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 13,926 12,351
Gain on sale of property, plant and
equipment (137) (149)
Translation losses 205 597
Changes in assets and liabilities:
Accounts receivable (11,413) (14,588)
Inventories (4,389) 969
Accounts payable 95 4,020
Accrued liabilities (4,323) 2
Deferred income taxes 2,373 625
Other liabilities and assets (581) (42)
------- -------
Net Cash Provided by Operating Activities 11,443 14,203
Investing Activities
Proceeds from sale of property, plant
and equipment 501 1,338
Capital expenditures (16,142) (14,886)
Other (1,004) (1,252)
------- -------
Net Cash Used by Investing Activities (16,645) (14,800)
Financing Activities
Net decrease in notes payable (1,641) (2,704)
Proceeds from the issuance of common stock 5,220 1,522
Dividends paid (5,221) (4,419)
------- -------
Net Cash Used by Financing Activities (1,642) (5,601)
Effect of exchange rate changes on
cash flows (222) (1,281)
------- -------
Decrease in cash and cash equivalents (7,066) (7,479)
Cash and cash equivalents at beginning
of period 22,023 24,129
------- -------
Cash and cash equivalents at end of period $14,957 $16,650
======= =======
<FN>
See accompanying notes.
</TABLE>
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Notes to Consolidated Financial Statements:
1. Summary of Significant Accounting Policies
------------------------------------------
The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. They do not include all
information and footnotes required by generally accepted
accounting principles for complete financial statements.
For additional information, please refer to the
consolidated financial statements and footnotes included in
the company's Annual Report on Form 10-K for the year ended
December 31, 1994. In the opinion of management, all
adjustments, including normal recurring accruals considered
necessary for a fair presentation, have been included.
Operating results for the six-month period ended June 30,
1995 are not necessarily indicative of the results that may
be expected for the year ending December 31, 1995.
2. Contingency
-----------
In December, 1991, the company was notified by the
McDonnell Douglas Corporation that McDonnell Douglas was
terminating for default an $8.2 million contract with the
company's Advanced Fabrication unit. In 1992, the company
wrote off $4.0 million of net assets related to this
contract previously included in its financial statements.
The company believed from the onset that it had legitimate
defenses to the default claim. In June 1995, this dispute
was settled to the satisfaction of both parties with no
further financial impact on the results of operations or on
the financial position of the company.
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<PAGE>
Item 2. Management's Disscussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
---------------------
Sales
-----
The company's 1995 first half sales were $309.6 million, up 9%
from $285.3 million in 1994. Second quarter 1995 sales were up
5% to $151.0 million from the 1994 level of $143.2 million. The
increase reflects sales gains at all three operating groups.
Associated Spring's 1995 first half sales increased 7% to $147.3
million from $137.3 million in 1994. Second quarter sales were
$72.4 million, up 4% from a year ago. The North American
manufacturing business was affected by a softening of the U.S.
automotive market and work slowdowns caused by the slow progress
in contract negotiations at several plants represented by the
UAW. These factors were offset by very strong performances by the
group's overseas manufacturing operations and the Raymond
Distribution division.
Bowman Distribution's 1995 first half sales were $116.6 million
up 7% from the 1994 level of $108.9 million. Second quarter 1995
sales increased 2% to $55.6 million versus $54.6 million in 1994.
All business units reported period-over-period sales improvements
with the exception of Bowman U.S. whose sales were slightly lower
in the second quarter of 1995 compared with 1994's second
quarter. The sales decline was caused by a number of factors
including softening demand in several key market segments and
lower than planned employment levels in its field sales
organization. Bowman U.S. is the group's largest business unit.
Barnes Aerospace's 1995 first half sales climbed 18% to $46.2
million from 1994's first half sales of $39.3 million. Second
quarter 1995 sales of $23.2 million increased 23% over 1994's
second quarter sales of $18.8 million. All units reported
period-over-period improvements with the strongest gains made in
the Advanced Fabrications and Repair and Overhaul businesses.
Operating Income
----------------
Operating income in 1995 improved significantly over strong 1994
results. Consolidated operating income for the first half of
1995 was up 52% to $28.0 million from the $18.4 million reported
in the first half of 1994. Second quarter 1995 operating income
of $13.4 million was 39% higher than the $9.6 million reported in
1994's second quarter.
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Associated Spring's operating income in the second quarter and
first half of 1995 kept pace with its sales growth as a small
increase in the gross margin offset an increase in selling and
administrative expenses as a percent of sales.
Bowman Distribution's second quarter and first half operating
income improved substantially in 1995 over 1994 as a result of
higher sales volume and significantly lower selling and
administrative costs expressed as a percentage of sales.
Barnes Aerospace's operating results improved significantly for
both the second quarter and first half of 1995 over the
comparable 1994 periods as higher sales volumes and lower costs
expressed as a percent of sales resulted in strong year-over-year
profit growth.
Non-operating Income/Expense
----------------------------
Other income for the first half of 1995 was up slightly over the
prior year due primarily to an increase in interest income on
funds invested in Brazil.
Interest expense for the first six months of 1995 was somewhat
higher than in the comparable 1994 period due to higher interest
rates offset in part by lower debt levels.
Other expenses increased in 1995 over 1994 primarily due to
foreign exchange and translation losses.
Financial Condition
-------------------
Cash Flows
----------
In the first half of 1995, net cash flows provided by operating
activities was $11.4 million. Strong earnings, adjusted for
depreciation and amortization and an increase in deferred income
taxes, more than offset the increase in accounts receivable and
inventories and a decrease in accrued liabilities. The changes
in operating assets and liabilities are a result of the increase
in 1995's first half business activity. In 1994, operating
activities provided $14.2 million of net cash flows. Earnings,
adjusted for depreciation and amortization and an increase in
accounts payable, more than offset the increase in accounts
receivable. The increase in accounts receivable resulted
from sales growth during the first half 1994.
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Net cash used by investing activities for the first six months of
1995 was $16.6 million compared to $14.8 million in 1994's first
half. Expenditures for property, plant and equipment increased
$1.3 million or 8% period-over-period as the three operating
groups continued to invest in new equipment to improve
productivity, quality and customer service.
In 1995, net cash used by financing activities was $1.6 million
versus $5.6 million in the first half of 1994. This year-over-
year decrease was primarily due to proceeds from the issuance of
common stock increasing to $5.2 million in 1995 from $1.5 million
in 1994 because of an increase in the exercise of stock options.
The 1995 increase in dividends paid over the 1994 amount was due
to increases in both the dividend per share and number of shares
outstanding.
Liquidity and Capital Resources
-------------------------------
The company's liquidity, measured in terms of working capital,
increased $15.5 million to $103.8 million at June 30, 1995 from
the December 31, 1994 level. The current ratio was a very strong
2.3 at June 30, 1995 compared with 2.0 at December 31, 1994.
The ratio of interest bearing debt to total capitalization
approximated 26% at June 30, 1995 compared to 28% at year-end
1994. 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.
The company maintains substantial bank borrowing facilities to
supplement internal cash generation. At June 30, 1995, the
company had $100.0 million of borrowing capacity available under
its revolving credit agreement. In addition, the company had
approximately $155.0 million in uncommitted short-term bank
credit lines, of which $29.0 million was in use at June 30, 1995.
During 1995 and 1994, the company maintained long-term debt of
$70.0 million, comprised, in part, of borrowings under its short-
term bank credit lines backed by its long-term revolving credit
agreement. The company has found this to be a cost effective
approach to long-term financing and intends to continue this
approach. The company believes these credit facilities coupled
with cash generated from operations are adequate for its
anticipated future requirements.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended June 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934 the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Barnes Group Inc.
(Registrant)
Date August 14, 1995 By John E. Besser
--------------- -------------------------------------
John E. Besser
Senior Vice President-Finance and Law
Date August 14, 1995 By Francis C. Boyle, Jr.
--------------- -------------------------------------
Francis C. Boyle, Jr.
Assistant Controller
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of Barnes Group Inc. at June 30, 1995 and the
related consolidated statement of income for the six months ended June
30, 1995 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 14,957
<SECURITIES> 0
<RECEIVABLES> 101,281
<ALLOWANCES> 3,012
<INVENTORY> 55,671
<CURRENT-ASSETS> 184,930
<PP&E> 284,537
<DEPRECIATION> 168,909
<TOTAL-ASSETS> 362,904
<CURRENT-LIABILITIES> 81,087
<BONDS> 78,688
<COMMON> 15,737
0
0
<OTHER-SE> 108,807
<TOTAL-LIABILITY-AND-EQUITY> 362,904
<SALES> 309,611
<TOTAL-REVENUES> 309,611
<CGS> 197,118
<TOTAL-COSTS> 197,118
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 394
<INTEREST-EXPENSE> 2,892
<INCOME-PRETAX> 25,886
<INCOME-TAX> 10,199
<INCOME-CONTINUING> 15,687
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,687
<EPS-PRIMARY> 2.41
<EPS-DILUTED> 2.41
</TABLE>
