UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM lO-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 March 31, 1995
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For transition period from ____________________
to ____________________
Commission File Number 1-4801
BARNES GROUP INC.
(a Delaware Corporation)
I.R.S. Employer Identification No. 06-0247840
123 Main Street, Bristol, Connecticut 06010
Telephone Number (203) 583-7070
Number of common shares outstanding at
May 8, 1995 - 6,551,239
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
-1-
<PAGE>
<TABLE>
BARNES GROUP INC.
FORM 10-Q INDEX
For Quarterly period ended March 31, 1995
<CAPTION>
DESCRIPTION PAGES
----------- -----
<S> <S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Statements
of Income for the three months ended
March 31, 1995 and 1994 3
Consolidated Balance Sheets as
of March 31, 1995 and December 31, 1994 4-5
Consolidated Statements of Cash Flows
for the three months ended March 31,
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 4. Submission of Matters to Vote of
Security Holders 10
ITEM 5. Other Information 10-11
ITEM 6. Exhibits and Reports on Form 8-K 11
Signatures 11
</TABLE>
-2-
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
Three months ended March 31, 1995 and 1994
(Dollars in thousands, except per share data)
(Unaudited)
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Net sales $158,618 $142,102
Cost of sales 100,891 90,702
Selling and administrative expenses 43,180 42,602
-------- --------
144,071 133,304
-------- --------
Operating income 14,547 8,798
Other income 1,208 1,120
Interest expense 1,428 1,380
Other expenses 448 380
-------- --------
Income before income taxes 13,879 8,158
Income taxes 5,539 3,263
-------- --------
Net income $ 8,340 $ 4,895
======== ========
Per common share:
Net Income $ 1.29 $ .78
Dividends .40 .35
Average common shares outstanding 6,463,146 6,296,121
<FN>
See accompanying notes.
</TABLE>
-3-
<PAGE>
<TABLE>
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
ASSETS March 31, December 31,
1995 1994
-------- -----------
(Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 17,761 $ 22,023
Accounts receivable, less allowances
(1995-$3,062; 1994-$3,222) 99,824 86,877
Inventories
Finished goods 28,045 28,769
Work-in-process 17,234 13,697
Raw materials and supplies 9,597 8,379
-------- --------
54,876 50,845
Deferred income taxes and prepaid
expenses 15,750 15,792
-------- --------
Total current assets 188,211 175,537
Deferred income taxes 23,008 23,854
Property, plant and equipment 278,697 276,185
Less accumulated depreciation 165,575 163,616
-------- --------
113,122 112,569
Goodwill 20,467 20,614
Other assets 19,752 19,382
-------- --------
Total assets $364,560 $351,956
======== ========
<FN>
See accompanying notes.
</TABLE>
-4-
<PAGE>
<TABLE>
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY March 31, December 31,
1995 1994
-------- -----------
(Unaudited)
<S> <C> <C>
Current liabilities
Notes payable $ 12,425 $ 7,903
Accounts payable 34,835 31,424
Accrued liabilities 42,186 45,713
Guaranteed ESOP obligation-current 2,215 2,172
-------- --------
Total current liabilities 91,661 87,212
Long-term debt 70,000 70,000
Guaranteed ESOP obligation 9,269 9,839
Accrued retirement benefits 67,983 66,817
Other liabilities 9,514 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 27,595 27,772
Retained earnings 124,725 118,938
Foreign currency translation
adjustments (9,063) (8,715)
Treasury stock at cost,
1995-833,704 shares
1994-916,748 shares (31,377) (34,582)
-------- --------
127,617 119,150
Guaranteed ESOP obligation (11,484) (12,011)
-------- --------
Total stockholders' equity 116,133 107,139
-------- --------
Total liabilities and stockholders'
equity $364,560 $351,956
======== ========
<FN>
See accompanying notes.
</TABLE>
-5-
<PAGE>
<TABLE>
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months ended March 31, 1995 and 1994
(Dollars in thousands)
(Unaudited)
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Operating Activities
Net income $ 8,340 $ 4,895
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 7,233 6,545
Gain on sale of property, plant and
equipment (159) (9)
Translation losses 86 316
Changes in assets and liabilities:
Accounts receivable (13,067) (13,256)
Inventories (3,755) 2,999
Accounts payable 3,547 537
Accrued liabilities (3,429) (3,754)
Deferred income taxes 1,503 13
Other liabilities and assets (1,071) 329
------- -------
Net Cash Used by Operating Activities (772) (1,385)
Investing Activities
Proceeds from sale of property, plant
and equipment 235 933
Capital expenditures (7,778) (7,322)
Other (620) (931)
------- -------
Net Cash Used by Investing Activities (8,163) (7,320)
Financing Activities
Net increase in notes payable 4,522 5,284
Proceeds from the issuance of common stock 2,914 393
Dividends paid (2,597) (2,203)
------- -------
Net Cash Provided by Financing Activities 4,839 3,474
Effect of exchange rate changes on
cash flows (166) (850)
------- -------
Decrease in cash and cash equivalents (4,262) (6,081)
Cash and cash equivalents at beginning
of period 22,023 24,129
------- -------
Cash and cash equivalents at end of period $17,761 $18,048
======= =======
<FN>
See accompanying notes.
</TABLE>
-6-
<PAGE>
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 three-month period ended March
31, 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 believes it has legitimate defenses to the
default claim. While no reasonable estimate of 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.
-7-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
---------------------
Sales
-----
The company's first quarter 1995 consolidated sales were $158.6
million making it the best quarter in the company's history.
Sales were up 12% from the $142.1 million reported in 1994. This
increase reflected sales gains by all three operating groups.
Associated Spring's first quarter 1995 sales improved 11% to
$74.9 million from $67.6 million in 1994. Sales improved in all
markets with the strongest gains reported in industrial markets,
particularly electronics.
Bowman Distribution's sales were up 12% to $61.0 million in the
first three months of 1995 versus $54.3 million in 1994. All
businesses reported sales increases with substantial improvement
reported by Bowman U.S.
First quarter 1995 Barnes Aerospace sales improved 13% over 1994,
increasing to $23.0 million from $20.4 million in the prior year.
Both the Advanced Fabrications and Precision Machining businesses
reported year-over-year sales growth while the Repair and
Overhaul business reported a small decline in sales.
Operating Income
----------------
Consolidated operating income for 1995's first quarter was $14.5
million, up 65% over 1994's level of $8.8 million. All three
business segments reported significant gains in operating income
over last year.
Associated Spring's operating income improvement resulted from
the increase in sales volume coupled with gains in manufacturing
productivity and excellent control of selling and administrative
expenses.
Bowman Distribution's operating income improvement was the result
of higher sales volume in the U.S. combined with sharply lower
selling and administrative expenses.
Barnes Aerospace's operating income improvement was mainly driven
by the higher sales volume.
Non-operating Income/Expense
----------------------------
Other income in the first three months of 1995 increased slightly
over the prior year due to the increase in interest income
primarily on funds invested in Brazil.
-8-
<PAGE>
Other expenses in the first quarter of 1995 were up due to an
increase in foreign exchange losses. This increase was offset in
part by a reduction of the losses recorded on the disposal of
fixed assets.
Net Income and Net Income Per Share
-----------------------------------
The company reported a record net income of $8.3 million, or
$1.29 per share, for the first quarter of 1995, compared to
1994's first quarter of $4.9 million, or 78 cents per share.
Financial Condition
-------------------
Cash Flows
----------
Net cash used by operating activities of $0.8 million in the
first quarter of 1995 reflects the significant increase in
business activity. Cash generated from strong earnings after
adjustments for depreciation and amortization was offset by the
cash required to fund increases in accounts receivable and
inventories. In 1994, operating activities used $1.4 million of
cash, as earnings were not sufficient to offset the increase in
accounts receivable.
Net cash used by investing activities in the first quarter of
1995 was $0.8 million higher than the prior year due to increased
capital expenditures as well as lower proceeds from the sale of
property, plant and equipment.
Net cash provided by financing activities was $4.8 million in the
first quarter of 1995 and $3.5 million the first quarter of 1994.
The increase in notes payable partially funded the cash
requirements for both operating and investing activities. The
1995 increase in the proceeds from the issuance of common stock
was a result of the exercise of stock options.
Liquidity and Capital Resources
-------------------------------
The company's liquidity, measured in terms of working capital,
increased $8.2 million to $96.6 million at March 31, 1995 from
the December 31, 1994 level. The current ratio approximated 2.0
at March 31, 1995 and December 31, 1994.
The ratio of interest bearing debt to total capitalization
approximated 29% at March 31, 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.
-9-
<PAGE>
The company maintains substantial bank borrowing facilities to
supplement internal cash generation. At March 31, 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 $31.5 million
was in use at March 31, 1995. During 1995 and 1994, 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. The company believes these
credit facilities coupled with cash generated from operations are
adequate for its anticipated future requirements.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
-------------------------------------------------
(a) The Annual Meeting of the registrant's stockholders
was held on April 5, 1995. Proxies for the meeting
were solicited pursuant to Regulation 14(a).
(c) The stockholders approved the selection of Price
Waterhouse LLP as the company's independent
accountants for 1995. The proposal was adopted as
5,617,070 shares voted for, 56,746 shares voted
against, 17,206 shares abstained and there were no
not voted shares.
Item 5. Other Information
-----------------
By-Laws Amendments
In November, 1994, the Board of Directors amended the
company's By-Laws to include advance notice provisions
regarding stockholder proposals and nominations for
directors. Stockholders wishing to present proposals
for a formal vote (other than proposals included in the
company's proxy statement) or to nominate candidates for
election as directors at a meeting of the company's
stockholders, must do so in accordance with the
company's By-Laws. The By-Laws provide, in general,
that in order to be presented at the stockholder's
meeting, such stockholder proposals or nominations may
be made only by a stockholder of record who shall have
given notice of the proposed business or nomination to
the company:
-10-
<PAGE>
(a) in the case of an Annual Meeting, not less than
sixty (60) nor more than ninety (90) days prior to the
anniversary date of the immediately preceding Annual
Meeting of Stockholders; and (b) in the case of a
special meeting of stockholders, not later than 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 occurs first. The notice must contain, among
other things, background information concerning the
stockholder making the proposal or nomination, the
stockholder's ownership of the company's stock, and in
the case of nominations, background and stock ownership
information with respect to each nominee.
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 March 31, 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 May 12, 1995 By John E. Besser
------------ ------------------------------------
John E. Besser
Senior Vice President-Finance and Law
Date May 12, 1995 By Francis C. Boyle, Jr.
------------ --------------------------------------
Francis C. Boyle, Jr.
Assistant Controller
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF BARNES GROUP INC AT MARCH 31, 1995 AND THE
RELATED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 17,761
<SECURITIES> 0
<RECEIVABLES> 102,886
<ALLOWANCES> 3,062
<INVENTORY> 54,876
<CURRENT-ASSETS> 188,211
<PP&E> 278,697
<DEPRECIATION> 165,575
<TOTAL-ASSETS> 364,560
<CURRENT-LIABILITIES> 91,661
<BONDS> 79,269
<COMMON> 15,737
0
0
<OTHER-SE> 100,396
<TOTAL-LIABILITY-AND-EQUITY> 364,560
<SALES> 158,618
<TOTAL-REVENUES> 158,618
<CGS> 100,891
<TOTAL-COSTS> 100,891
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 63
<INTEREST-EXPENSE> 1,428
<INCOME-PRETAX> 13,879
<INCOME-TAX> 5,539
<INCOME-CONTINUING> 8,340
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,340
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.29
</TABLE>
