UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM l0-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, 1996
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For transition period from
--------------------
to
--------------------
Commission File Number 1-4801
BARNES GROUP INC.
(a Delaware Corporation)
I.R.S. Employer Identification No. 06-0247840
123 Main Street, Bristol, Connecticut 06010
Telephone Number (860) 583-7070
Number of common shares outstanding at
May 6, 1996 - 6,638,412
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 the Quarterly period ended March 31, 1996
<CAPTION>
DESCRIPTION PAGES
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<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Statements
of Income for the three months ended
March 31, 1996 and 1995 3
Consolidated Balance Sheets as
of March 31, 1996 and December 31, 1995 4-5
Consolidated Statements of Cash Flows
for the three months ended March 31,
1996 and 1995 6
Note to Consolidated Financial
Statements 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7-10
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to Vote of
Security Holders 11
ITEM 6. Exhibits and Reports on Form 8-K 11
Signatures 12
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<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
Three months ended March 31, 1996 and 1995
(Dollars in thousands, except per share data)
(Unaudited)
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Net sales $150,091 $158,618
Cost of sales 97,173 100,891
Selling and administrative expenses 41,664 43,180
-------- --------
138,837 144,071
-------- --------
Operating income 11,254 14,547
Other income 950 1,208
Interest expense 1,288 1,428
Other expenses 381 448
-------- --------
Income before income taxes 10,535 13,879
Income taxes 3,898 5,539
-------- --------
Net income $ 6,637 $ 8,340
======== ========
Per common share:
Net Income $ 1.01 $ 1.29
Dividends .45 .40
Average common shares outstanding 6,582,635 6,463,146
<FN>
See accompanying note.
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<TABLE>
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
ASSETS March 31, December 31,
1996 1995
-------- -----------
(Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 15,780 $ 17,868
Accounts receivable, less allowances
(1996-$3,381; 1995-$3,635) 92,929 86,086
Inventories
Finished goods 30,694 28,541
Work-in-process 16,780 16,222
Raw materials and supplies 14,731 11,986
-------- --------
62,205 56,749
Deferred income taxes and prepaid
expenses 13,734 12,113
-------- --------
Total current assets 184,648 172,816
Deferred income taxes 23,607 24,308
Property, plant and equipment 303,671 297,832
Less accumulated depreciation 179,844 174,962
-------- --------
123,827 122,870
Goodwill 19,881 20,028
Other assets 21,684 21,527
-------- --------
Total assets $373,647 $361,549
======== ========
<FN>
See accompanying note.
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<TABLE>
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY March 31, December 31,
1996 1995
--------- -----------
(Unaudited)
<S> <C> <C>
Current liabilities
Notes payable $ 4,232 $ 509
Accounts payable 34,138 31,839
Accrued liabilities 44,640 42,840
Guaranteed ESOP obligation-current 2,395 2,348
-------- --------
Total current liabilities 85,405 77,536
Long-term debt 70,000 70,000
Guaranteed ESOP obligation 6,874 7,491
Accrued retirement benefits 69,215 68,824
Other liabilities 7,176 8,857
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 27,338 27,360
Retained earnings 139,799 136,092
Foreign currency translation
adjustments (11,433) (10,656)
Treasury stock at cost,
1996-722,332 shares
1995-791,205 shares (27,195) (29,853)
-------- --------
144,246 138,680
Guaranteed ESOP obligation (9,269) (9,839)
-------- --------
Total stockholders' equity 134,977 128,841
-------- --------
Total liabilities and stockholders'
equity $373,647 $361,549
======== ========
<FN>
See accompanying note.
</TABLE>
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<TABLE>
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 1996 and 1995
(Dollars in thousands)
(Unaudited)
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Operating Activities
Net income $ 6,637 $ 8,340
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 6,867 7,233
Gain on sale of property, plant and
equipment (108) (159)
Translation losses 73 86
Changes in assets and liabilities:
Accounts receivable (7,299) (13,067)
Inventories (5,549) (3,755)
Accounts payable 2,338 3,547
Accrued liabilities 1,759 (3,429)
Deferred income taxes 152 1,503
Other liabilities and assets (2,369) (1,071)
------- -------
Net Cash Provided (Used) by Operating Activities 2,501 (772)
Investing Activities
Proceeds from sale of property, plant
and equipment 710 235
Capital expenditures (7,443) (7,778)
Other (449) (620)
------- -------
Net Cash Used by Investing Activities (7,182) (8,163)
Financing Activities
Net increase in notes payable 3,723 4,522
Proceeds from the issuance of common stock 2,517 2,914
Dividends paid (2,969) (2,597)
------- -------
Net Cash Provided by Financing Activities 3,271 4,839
Effect of exchange rate changes on cash flows (678) (166)
------- -------
Decrease in cash and cash equivalents (2,088) (4,262)
Cash and cash equivalents at beginning of period 17,868 22,023
------- -------
Cash and cash equivalents at end of period $15,780 $17,761
======= =======
<FN>
See accompanying note.
</TABLE>
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<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, 1995. 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, 1996 are not necessarily
indicative of the results that may be expected for the year
ending December 31, 1996.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
---------------------
Sales
-----
The company's first quarter 1996 consolidated sales were $150.1
million, down five percent from last year's results of $158.6
million.
Associated Spring's first quarter 1996 sales were four percent
lower than last year's record total. The 1996 sales were $71.8
million compared to $74.9 million in 1995. Sales were down for
most of the U.S. manufacturing operations, while gains were made in
Singapore and Mexico.
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Bowman Distribution's sales were down 10% to $55.0 million in the
first three months of 1996 versus $61.0 million in 1995. The sales
decline was primarily due to lower volume in its U.S. business.
First quarter 1996 Barnes Aerospace sales improved two percent over
1995, increasing to $23.5 million from $23.0 million in the prior
year. Good sales gains were reported by both the Precision
Machining and the Repair and Overhaul units while the Advanced
Fabrication's business reported lower sales.
Operating Income
----------------
Consolidated operating income for 1996's first quarter was $11.3
million, down 23% from 1995's level of $14.5 million. All three
business segments reported declines in operating income compared
with last year's strong levels. In the first quarter of 1996, the
company took a pre-tax provision of $1.3 million related to
workforce reductions, primarily at Bowman Distribution.
Eliminating the effect of this provision, operating income
decreased 14% in 1996 compared to 1995.
Associated Spring's operating income decline resulted primarily
from lower sales volume coupled with an increase in selling and
administrative expenses. Manufacturing costs kept pace with sales.
While most U.S. manufacturing operations reported lower year-over-
year operating income, improvements were made in Singapore and
Mexico and Associated Spring's distribution business.
Bowman Distribution's decrease in operating income was the result
of lower sales volume and the cost of the workforce reduction. The
group's European business improved over the prior year's first
quarter results.
Barnes Aerospace's operating income was adversely affected by
higher than anticipated manufacturing costs in its Advanced
Fabrication business and by start-up costs at the new Repair and
Overhaul facility in Singapore.
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Income Taxes
-------------
The company's first quarter 1996 effective tax rate was three
percentage points lower than the first quarter of 1995, primarily
because foreign income, with tax rates lower than the U.S.
statutory tax rate, comprised a larger percentage of consolidated
income before income taxes in 1996 than in 1995.
Net Income and Net Income Per Share
-----------------------------------
The company reported net income of $6.6 million, or $1.01 per
share, for the first quarter of 1996, compared to 1995's first
quarter record net income of $8.3 million, or $1.29 per share.
This is the company's second best first quarter in terms of
earnings. The pretax workforce reduction charge of $1.3 million
reduced 1996 first quarter earnings by 12 cents per share.
Financial Condition
-------------------
Cash Flows
----------
Net cash provided by operating activities was $2.5 million, an
increase of $3.3 million over 1995. Strong earnings, after
adjustments for the noncash charges for depreciation and
amortization, more than offset the net change in operating assets
and liabilities. In 1995, operating activities used $0.8 million
of cash reflecting 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.
Net cash used by investing activities in the first quarter of 1996
was $1.0 million lower than the prior year due to an increase in
the proceeds from the sale of property, plant and equipment and a
small decrease in capital expenditures.
Net cash provided by financing activities was $3.3 million in the
first quarter of 1996 and $4.8 million in the first quarter of
1995. The increase in notes payable partially funded the cash
requirements for investing activities. Dividends per share in 1996
increased to 45 cents per share versus 40 cents per share in the
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first quarter of 1995, resulting in an increase in the amount of
dividends paid period-over-period. The high levels of proceeds
from the issuance of common stock in 1996 and 1995 were primarily a
result of the exercise of stock options.
Liquidity and Capital Resources
-------------------------------
The company's liquidity, measured in terms of working capital,
increased $4.0 million to $99.2 million at March 31, 1996 from the
December 31, 1995 level. The current ratio approximated 2.2 at
March 31, 1996 and December 31, 1995.
The ratio of interest-bearing debt (including the guaranteed ESOP
obligation) to total capitalization approximated 38% at March 31,
1996, and December 31, 1995. For this purpose, total
capitalization is defined as interest-bearing debt including the
guaranteed ESOP obligation, and total stockholders' equity.
During 1996 and 1995, the company maintained long-term debt of
$70.0 million, which includes borrowings under its short-term bank
credit lines and the current portion of its long-term notes. At
March 31, 1996, the company classified as long-term debt $4.2
million of borrowing under its lines of credit and $6.2 million of
the current portion of its 9.47% long-term Notes. The company has
both the intent and the ability, through its revolving credit
agreement, to refinance these amounts on a long-term basis. The
company intends to continue this cost effective approach of long-
term financing.
The company maintains substantial bank borrowing facilities to
supplement internal cash generation. At March 31, 1996, the
company had $100.0 million of borrowing capacity under its
revolving credit agreement of which none was borrowed. In
addition, the company had approximately $135.0 million in
uncommitted short-term bank credit lines, of which $6.5 million was
in use at March 31, 1996. The interest rate on this borrowing was
5.6%. 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 4. Submission of Matters to Vote of Security Holders
-------------------------------------------------
(a) The Annual Meeting of the registrant's stockholders was
held on April 3, 1996. Proxies for the meeting were
solicited pursuant to Regulation 14 A.
(c) (1) The stockholders approved the selection of Price
Waterhouse LLP as the company's independent accountants
for 1996. The proposal was adopted as 5,445,151 shares
voted for, 52,252 shares voted against, 56,890 shares
abstained and there were 128,935 non-votes.
(2) The stockholders acted upon a proposal to amend the
company's 1991 Stock Incentive Plan (amended by
stockholders in 1994) to increase by 500,000 the number of
shares available for incentives, extend the term of the
Plan by five years, impose a 50,000 share per year limit
on the aggregate number of grants of options, stock
appreciation rights, and incentive stock rights that an
individual can receive, establish performance criteria in
connection with payment of certain incentive stock rights,
and to include terms and provisions that enable most
incentives granted to qualify as performance-based
compensation within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended. The proposal
was adopted as 4,329,582 shares voted for, 908,940 shares
voted against, 137,574 shares abstained and there were
307,132 non-votes.
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, 1996.
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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 14, 1996 By /s/ Douglas P. Hamilton
------------ -------------------------------------
Douglas P. Hamilton
Senior Vice President-Finance
Date May 14, 1996 By /s/ Francis C. Boyle, Jr.
------------ -------------------------------------
Francis C. Boyle, Jr.
Assistant Controller
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of Barnes Group Inc. at March 31, 1996, and the
related consolidated statement of income for the three months ended March
31, 1996 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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 15,780
<SECURITIES> 0
<RECEIVABLES> 96,310
<ALLOWANCES> 3,381
<INVENTORY> 62,205
<CURRENT-ASSETS> 184,648
<PP&E> 303,671
<DEPRECIATION> 179,844
<TOTAL-ASSETS> 373,647
<CURRENT-LIABILITIES> 85,405
<BONDS> 76,874
<COMMON> 15,737
0
0
<OTHER-SE> 119,240
<TOTAL-LIABILITY-AND-EQUITY> 373,647
<SALES> 150,091
<TOTAL-REVENUES> 150,091
<CGS> 97,173
<TOTAL-COSTS> 97,173
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 82
<INTEREST-EXPENSE> 1,288
<INCOME-PRETAX> 10,535
<INCOME-TAX> 3,898
<INCOME-CONTINUING> 6,637
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,637
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 1.01
</TABLE>
