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 ~~September 30, 2017~~March 31, 2020



¨☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-4801

BARNES GROUP ~~INC.~~INC.

(Exact name of registrant as specified in its charter)



Delaware			06-0247840
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

123 Main Street
Bristol
Connecticut			06010
(Address of Principal Executive Offices)			(Zip Code)

~~(860)~~ (860) 583-7070

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	B	New York Stock Exchange

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. Yesx No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filerx	☒	Accelerated filer¨	☐
Non-accelerated filer¨	☐	Smaller reporting company¨	☐
		Emerging growth company¨	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

~~Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes~~ ¨ No x



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).	Yes	☐	No	☒

The registrant had outstanding ~~53,610,570~~50,442,459 shares of common stock as of ~~October 25, 2017.~~April 22, 2020.

Barnes Group Inc.

Index to Form 10-Q

For the Quarterly Period Ended ~~September 30, 2017~~March 31, 2020



		Page
Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	3
	Consolidated Statements of Income for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	3
	Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	4
	Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019	5
	Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	6
	Notes to Consolidated Financial Statements	7
	Report of Independent Registered Public Accounting Firm	1822

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1923

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3033

Item 4.	Controls and Procedures	3033

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	3134

Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3134

Item 6.	Exhibits	3236

	Signatures	3337
	Exhibit Index	3438

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. See “FORWARD-LOOKING STATEMENTS” under Part I - Item 2 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BARNES GROUP INC.

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)


	Three months ended September 30,				Nine months ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2020		2019
Net sales	$	357,156	$	311,561	$	1,063,451	$	906,586	$	330,671	$	376,692

Cost of sales	236,016		198,600		692,355		582,028		208,248		244,643
Selling and administrative expenses	73,354		61,144		210,423		183,754		73,110		81,400
	309,370		259,744		902,778		765,782		281,358		326,043
Operating income	47,786		51,817		160,673		140,804		49,313		50,649

Interest expense	3,748		3,020		10,638		8,826		4,324		5,113
Other expense (income), net	357		621		773		24		1,594		1,806
Income before income taxes	43,681		48,176		149,262		131,954		43,395		43,730
Income taxes	8,348		11,348		30,599		33,066		13,662		9,738
Net income	$	35,333	$	36,828	$	118,663	$	98,888	$	29,733	$	33,992

Per common share:
Basic	$	0.65	$	0.68	$	2.19	$	1.82	$	0.58	$	0.66
Diluted	0.65		0.67		2.17		1.81		0.58		0.65
Dividends	0.14		0.13		0.41		0.38

Weighted average common shares outstanding:
Basic	54,066,509		54,206,064		54,140,551		54,206,798		51,061,132		51,660,804
Diluted	54,570,677		54,572,315		54,649,723		54,643,739		51,501,857		52,189,465

See accompanying notes.

BARNES GROUP INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Net income $ 35,333
$ 36,828
$ 118,663
$ 98,888
Other comprehensive income, net of tax
      Unrealized gains (losses) on hedging activities, net of tax (1) 335
(150 ) (124 ) (580 )
      Foreign currency translation adjustments, net of tax (2) 20,004
990
80,174
2,100
      Defined benefit pension and other postretirement benefits, net of tax (3) 1,640
2,042
3,576
5,740
Total other comprehensive income, net of tax 21,979
2,882
83,626
7,260
Total comprehensive income $ 57,312
$ 39,710
$ 202,289
$ 106,148



	Three Months Ended March 31,
	2020			2019
Net income	$	29,733		$	33,992
Other comprehensive (loss) income, net of tax
Unrealized loss on hedging activities, net of tax (1)	(2,337		)	(568		)
Foreign currency translation adjustments, net of tax (2)	(36,333		)	(9,225		)
Defined benefit pension and other postretirement benefits, net of tax (3)	4,481			1,615
Total other comprehensive loss, net of tax	(34,189		)	(8,178		)
Total comprehensive (loss) income	$	(4,456	)	$	25,814

(1) Net of tax of ~~$125~~$(823) and $1$(175) for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively, and $(87) and $(141) for the nine months ended September 30, 2017 and 2016,~~2019, respectively.

(2) Net of tax of ~~$146~~$(66) and ~~$31~~$(100) for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively, and $526 and $105 for the nine months ended September 30, 2017 and 2016,~~2019, respectively.

(3) Net of tax of ~~$946~~$810 and ~~$977~~$540 for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively, and $2,749 and $2,930 for the nine months ended September 30, 2017 and 2016,~~2019, respectively.

See accompanying notes.

BARNES GROUP INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

(Unaudited)


	September 30, 2017			December 31, 2016			March 31, 2020			December 31, 2019
Assets
Current assets
Cash and cash equivalents	$	134,471		$	66,447		$	112,827		$	93,805
Accounts receivable, less allowances (2017 - $4,495; 2016 - $3,992)	325,189			287,123
Accounts receivable, less allowances (2020 - $5,899; 2019 - $5,197)							335,409			348,974
Inventories	252,502			227,759			240,951			232,706
Prepaid expenses and other current assets	31,591			27,163			67,404			67,532
Assets held for sale							—			21,373
Total current assets	743,753			608,492			756,591			764,390

Deferred income taxes	31,942			25,433			18,474			21,235

Property, plant and equipment	825,705			762,187			834,313			840,640
Less accumulated depreciation	(471,760		)	(427,698		)	(485,390		)	(484,037		)
	353,945			334,489			348,923			356,603

Goodwill	685,990			633,436			920,202			933,022
Other intangible assets, net	514,331			522,258			563,692			581,116
Other assets	16,570			13,431			59,723			53,924
Assets held for sale							—			28,045
Total assets	$	2,346,531		$	2,137,539		$	2,667,605		$	2,738,335

Liabilities and Stockholders' Equity
Current liabilities
Notes and overdrafts payable	$	16,875		$	30,825		$	28,314		$	7,724
Accounts payable	127,750			112,024			116,065			118,509
Accrued liabilities	191,889			156,967			205,264			209,992
Long-term debt - current	1,689			2,067			1,926			2,034
Liabilities held for sale							—			4,616
Total current liabilities	338,203			301,883			351,569			342,875

Long-term debt	497,429			468,062			783,424			825,017
Accrued retirement benefits	91,803			109,350			90,689			93,358
Deferred income taxes	64,700			66,446			85,313			88,408
Long-term tax liability							66,012			66,012
Other liabilities	24,795			23,440			45,638			45,148
Liabilities held for sale							—			6,989

Commitments and contingencies (Note 13)
Commitments and contingencies (Note 16)
Stockholders' equity
Common stock - par value $0.01 per share Authorized: 150,000,000 shares Issued: at par value (2017 - 62,987,803 shares; 2016 - 62,692,403 shares)	630			627
Common stock - par value $0.01 per share Authorized: 150,000,000 shares Issued: at par value (2020 - 63,889,861 shares; 2019 - 63,872,756 shares)							639			639
Additional paid-in capital	452,677			443,235			492,025			489,282
Treasury stock, at cost (2017 - 9,377,948 shares; 2016 - 8,889,947 shares)	(279,978		)	(251,827		)
Treasury stock, at cost (2020 - 13,448,609 shares; 2019 - 13,051,256 shares)							(513,708		)	(498,074		)
Retained earnings	1,273,474			1,177,151			1,510,688			1,489,176
Accumulated other non-owner changes to equity	(117,202		)	(200,828		)	(244,684		)	(210,495		)
Total stockholders' equity	1,329,601			1,168,358			1,244,960			1,270,528
Total liabilities and stockholders' equity	$	2,346,531		$	2,137,539		$	2,667,605		$	2,738,335

See accompanying notes.

BARNES GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


	Nine months ended September 30,						Three Months Ended March 31,
	2017			2016			2020			2019
Operating activities:
Net income	$	118,663		$	98,888		$	29,733		$	33,992
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	68,535			58,949			23,617			25,100
Gain on disposition of property, plant and equipment	(96		)	(475		)
(Gain) loss on disposition of property, plant and equipment							(123		)	91
Stock compensation expense	8,472			8,620			2,552			3,021
Changes in assets and liabilities, net of the effects of acquisitions:
Seeger divestiture charges							6,620			—
Changes in assets and liabilities, net of the effects of divestitures:
Accounts receivable	(26,773		)	(18,461		)	9,592			4,345
Inventories	(11,454		)	4,626			(12,788		)	7,300
Prepaid expenses and other current assets	(2,398		)	(296		)	(3,227		)	(2,670		)
Accounts payable	14,134			9,799			1,328			(9,179		)
Accrued liabilities	28,889			13,028			(7,885		)	(4,708		)
Deferred income taxes	(18,063		)	998			462			(872		)
Long-term retirement benefits	(11,469		)	(16,026		)	(3,518		)	(3,428		)
Other	(677		)	461			821			68
Net cash provided by operating activities	167,763			160,111			47,184			53,060

Investing activities:
Proceeds from disposition of property, plant and equipment	401			715			185			322
Proceeds from the sale of businesses, net of cash sold							36,879			—
Investment in restricted cash							(6,621		)	—
Capital expenditures	(41,957		)	(32,920		)	(11,912		)	(13,738		)
Business acquisitions, net of cash acquired	(8,922		)	(120,675		)
Component Repair Program payments	—			(900		)
Other	(3,000		)	—
Net cash used by investing activities	(53,478		)	(153,780		)
Net cash provided (used) in investing activities							18,531			(13,416		)

Financing activities:
Net change in other borrowings	(14,103		)	(9,321		)	20,775			20,903
Payments on long-term debt	(60,897		)	(263,578		)	(83,521		)	(152,195		)
Proceeds from the issuance of long-term debt	89,118			288,982			50,000			102,990
Proceeds from the issuance of common stock	1,731			2,463			183			986
Common stock repurchases	(23,300		)	(15,660		)	(15,550		)	—
Dividends paid	(22,042		)	(20,444		)	(8,133		)	(8,217		)
Withholding taxes paid on stock issuances	(4,851		)	(4,881		)	(84		)	(80		)
Other	(17,773		)	3,406			(7,252		)	(1,340		)
Net cash used by financing activities	(52,117		)	(19,033		)
Net cash used in financing activities							(43,582		)	(36,953		)

Effect of exchange rate changes on cash flows	5,856			717			(3,111		)	97
Increase (decrease) in cash and cash equivalents	68,024			(11,985		)
Increase in cash and cash equivalents							19,022			2,788
Cash and cash equivalents at beginning of period	66,447			83,926			93,805			100,719
Cash and cash equivalents at end of period	$	134,471		$	71,941		$	112,827		$	103,507

~~Supplemental Disclosure of Cash Flow Information:~~

~~Non-cash investing activities in 2016 included the recognition of $12,436 of liabilities in connection with the FOBOHA acquisition.~~

See accompanying notes.

BARNES GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(All dollar amounts included in the notes are stated in thousands except per share data)

(Unaudited)

1. ~~Summary~~Basis of ~~Significant Accounting Policies~~Presentation

The accompanying unaudited consolidated balance sheet and the related unaudited consolidated statements of income, comprehensive income and cash flows 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. The consolidated financial statements do not include all information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. The balance sheet as of December 31, ~~2016~~2019 has been derived from the ~~2016~~2019 financial statements of Barnes Group Inc. (the “Company”). For additional information, please refer to the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019. In the opinion of management, all adjustments, including normal recurring accruals considered necessary for a fair statement of the results, have been included. Operating results for the ~~nine-month~~three-month period ended ~~September 30, 2017~~March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~2020.

2. ~~Acquisition~~Divestiture

On ~~April 3, 2017,~~December 20, 2019, the Company ~~completed its acquisition~~entered into a Share Purchase and Transfer Agreement ("SPA") with the Kajo Neukirchen Group ("KNG") to sell the Seeger business, consisting of partnership interests and shares, respectively, of Seeger-Orbis GmbH & Co. OHG and Seeger-Orbis Mechanical Components (Tianjin) Co., Ltd. (“Seeger”) for 42,500 Euros, subject to certain adjustments. The Company classified the assets and liabilities of Seeger, which operated within the Industrial segment, as "held for sale" on the Consolidated Balance Sheet as of December 31, 2019. Pursuant to the required accounting guidance, the Company allocated $15,000 of goodwill from the Engineered Components reporting unit to Seeger based on the estimated relative fair values of the ~~assets~~business to be disposed of and the portion of the privately held Gammaflux L.P. business ("Gammaflux"), a leading supplier of hot runner temperature and sequential valve gate control systems to the plastics industry. Gammaflux, which is headquartered in Sterling, Virginia and has offices in Illinois and Germany, provides temperature control solutions for injection molding, extrusion, blow molding, thermoforming, and other applications. Its end markets include packaging, electronics, automotive, household products, medical, and tool building.reporting unit that will be retained. The Company ~~acquired the assets~~subsequently recorded an impairment charge of Gammaflux for an aggregate purchase price of $8,866, which was financed using cash on hand and borrowings under the Company's revolving credit facility. The purchase price includes adjustments under the terms of the Asset Purchase Agreement ("APA"), including $2 related to cash acquired. In connection with the acquisition, the Company recorded $1,535 of goodwill and $3,700 of intangible assets.

~~During the nine months ended September 30, 2017, the Company incurred $184 of acquisition-related costs~~$5,600 related to the ~~Gammaflux acquisition. These costs include due diligence costs~~goodwill that was allocated to Seeger. The impairment charge was recorded within Selling and ~~transaction costs to complete the acquisition and have been recognized in~~Administrative expenses on the Consolidated Statements of Income in the period ended December 31, 2019.

The Seeger assets and liabilities held for sale were comprised of the following as ~~selling~~of December 31, 2019:



Assets
Accounts receivable, less allowance of $152	$	6,844
Inventories	13,727
Prepaid expenses and other current assets	802
Current assets held for sale	21,373

Property, plant and equipment, net	17,701
Other intangible assets, net	590
Goodwill	9,400
Other assets	354
Non-current assets held for sale	28,045

Liabilities
Accounts payable	$	2,961
Accrued liabilities	1,655
Current liabilities held for sale	4,616

Accrued retirement benefits	5,788
Other liabilities	1,201
Non-current liabilities held for sale	6,989

The Company completed the sale of the Seeger business to KNG effective February 1, 2020. Gross proceeds received were 39,634 Euros ($43,732). The Company yielded net cash proceeds of $36,879 after consideration of cash sold and ~~administrative expenses.~~transaction

costs. The ~~operating results~~final amount of ~~Gammaflux have been included~~proceeds from the sale is subject to post-closing adjustments. Resulting tax charges of $4,211 were recognized in the first quarter of 2020 following the completion of the sale. Divestiture charges of $2,409 resulted from the completion of the sale and were recorded within Selling and Administrative expenses on the Consolidated Statements of Income ~~since~~in the quarter ended March 31, 2020.

The Company utilized the proceeds from the sale to reduce debt under the Amended Credit Facility. Pursuant to the SPA, 6,000 Euros ($6,626) of the proceeds were placed in escrow and will be released pro-ratably through 2024, pending any potential settlement of claims. Cash related to a pending claim would remain in escrow until a final determination of the claim has been made. The Company has recorded the $6,626 of restricted cash in other assets as of March 31, 2020.

3. Recent Accounting Standards

The Financial Accounting Standards Board ("FASB") establishes changes to accounting principles under U.S. GAAP through the use of Accounting Standards Updates ("ASUs") to the FASB's Accounting Standards Codification. The Company evaluates the applicability and potential impacts of recent ASUs on its Consolidated Financial Statements and related disclosures.

Recently Adopted Accounting Standards

In February 2016, the FASB amended its guidance related to lease accounting. The amended guidance required lessees to recognize a majority of their leases on the balance sheet as a right-of-use ("ROU") asset and a lease liability. The guidance was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption was permitted. The Company adopted the new standard using the modified retrospective approach on January 1, 2019. The most significant impact of the guidance was the recognition of ROU assets and related lease liabilities for operating leases on the Consolidated Balance Sheet. The Company recognized ROU assets and related lease liabilities of $31,724 and $32,579 respectively, related to operating lease commitments, as of January 1, 2019. The amended guidance did not have a material impact on the Company's cash flows or results of operations.

In June 2016, the FASB amended its guidance related to credit losses on financial instruments. The amended guidance requires the use of a methodology of estimation that reflects expected credit losses on certain types of financial instruments, including trade receivables, as a replacement to the current methodology, which estimates losses based on incurred credit losses. This expected credit loss methodology requires that the Company consider a broader range of information when estimating credit losses on receivables. The amended guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company adopted this amended guidance and applicable FASB updates related to the guidance during the first quarter of 2020 and it did not have a material impact on the Company's Consolidated Financial Statements.

In January 2017, the FASB amended its guidance related to goodwill impairment testing. The amended guidance simplified the subsequent measurement of goodwill, eliminating Step 2 from the goodwill impairment test. Under the amended guidance, companies should perform their annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Companies would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, assuming the loss recognized does not exceed the total amount of goodwill for the reporting unit. The amended guidance was effective for fiscal years beginning after December 15, 2019. Early adoption was permitted. The Company elected to early adopt this amended guidance during the second quarter of 2018 in connection with its annual goodwill impairment testing and it did not have an impact on the Company's Consolidated Financial Statements.

In August 2017, the FASB amended its guidance related to hedge accounting. The amended guidance made more financial and nonfinancial hedging strategies eligible for hedge accounting, amends presentation and disclosure requirements and changes the assessment of effectiveness. The guidance also more closely aligned hedge accounting with management strategies, simplifies application and increases the transparency of hedging. The amended guidance was effective January 1, 2019, with early adoption permitted in any interim period. The Company adopted the amended guidance on January 1, 2019 and it did not have a material impact on the Consolidated Financial Statements, however it did result in amendments to certain disclosures required pursuant to the earlier guidance. See Note 10 of the Consolidated Financial Statements.

In August 2018, the FASB issued new guidance related to a customer's accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by a vendor (for example, a service contract). Pursuant to the new guidance, customers apply the same criteria for capitalizing implementation costs in a hosting arrangement as they would for an arrangement that has a software license. The new guidance was effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption was permitted, including adoption in any interim period for which financial statements have not been issued. The FASB provided the option of applying the guidance retrospectively or prospectively to all implementation costs incurred after the date of ~~acquisition.~~adoption. The Company ~~reported $6,483~~elected to early

adopt this guidance, prospectively, during the third quarter of 2018, and it did not have a material impact on the Consolidated Financial Statements.

Recently Issued Accounting Standards

In August 2018, the FASB amended its guidance related to disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The amended requirements serve to remove, add and otherwise clarify certain existing disclosures. The amended guidance is effective for fiscal years ending after December 15, 2020. The guidance requires application on a retrospective basis to all periods presented. The adoption of this amended guidance is not expected to have a material impact on the Company's Consolidated Financial Statements.

In December 2019, the FASB amended its guidance related to income taxes. The amended guidance simplifies the accounting for income taxes, eliminating certain exceptions to the general income tax principles, in ~~net sales~~an effort to reduce the cost and complexity of application. The amended guidance is effective for annual periods beginning after December 15, 2020, and interim periods within those reporting periods. Early adoption is permitted in any interim or annual period. The guidance requires application on either a prospective, retrospective or modified retrospective basis, contingent on the income tax exception being applied. The adoption of this amended guidance is not expected to have a material impact on the Company's Consolidated Financial Statements.

4. Revenue

The Company is a global provider of highly engineered products, differentiated industrial technologies, and innovative solutions, serving a wide range of end markets and customers. Its specialized products and services are used in far-reaching applications including aerospace, transportation, manufacturing, automation, healthcare, and packaging.

Revenue is recognized by the Company when control of the product or solution is transferred to the customer. Control is generally transferred when products are shipped or delivered to customers, title is transferred, and the significant risks and rewards of ownership have transferred, and the Company has rights to payment and rewards of ownership pass to the customer. Customer acceptance may also be a factor in determining whether control of the product has transferred. Although revenue is generally transferred at a point in time, a certain portion of businesses with customized products or contracts in which the Company performs work on customer-owned assets requires the use of an over time recognition model as certain contracts meet one or more of the established criteria pursuant to the accounting guidance. Also, service revenue is recognized as control transfers, which is concurrent with the services being performed.

The following table presents the Company's revenue disaggregated by products and services, and geographic regions, by segment:



	Three Months Ended March 31, 2020
	Industrial		Aerospace		Total Company
Product and Services
Engineered Components Products	$	47,707	$	—	$	47,707
Molding Solutions Products	97,406		—		97,406
Force & Motion Control Products	39,791		—		39,791
Automation Products	14,196		—		14,196
Aerospace Original Equipment Manufacturer Products	—		81,706		81,706
Aerospace Aftermarket Product and Services	—		49,865		49,865
	$	199,100	$	131,571	$	330,671

Geographic Regions ^(A)
Americas	$	80,644	$	92,578	$	173,222
Europe	81,864		25,163		107,027
Asia	35,493		11,696		47,189
Rest of World	1,099		2,134		3,233
	$	199,100	$	131,571	$	330,671



	Three Months Ended March 31, 2019
	Industrial		Aerospace		Total Company
Product and Services
Engineered Components Products	$	69,684	$	—	$	69,684
Molding Solutions Products	106,793		—		106,793
Force & Motion Control Products	51,617		—		51,617
Automation Products	14,408		—		14,408
Aerospace Original Equipment Manufacturer Products	—		87,939		87,939
Aerospace Aftermarket Product and Services	—		46,251		46,251
	$	242,502	$	134,190	$	376,692

Geographic Regions ^(A)
Americas	$	98,288	$	96,144	$	194,432
Europe	94,430		24,324		118,754
Asia	48,942		12,404		61,346
Rest of World	842		1,318		2,160
	$	242,502	$	134,190	$	376,692

(A) Sales by geographic region are based on the location to which the product is shipped.

Revenue from goods and services transferred to customers at a point in time accounted for approximately 85 percent and approximately 90 percent of revenue for the three month period ~~from the acquisition date through September 30, 2017. Gammaflux results have been included~~ended March 31, 2020 and 2019, respectively. A majority of revenue within the Industrial ~~segment.~~segment and Aerospace OEM business, along with a portion of revenue within the Aerospace Aftermarket business, is recognized at a point in time, primarily when the product or solution is shipped to the customer.

Revenue from products and services transferred to customers over time accounted for approximately 15 percent and approximately 10 percent of revenue for the three month period ended March 31, 2020 and 2019, respectively. The Company recognizes revenue over time in instances where a contract supports a continual transfer of control to the customer.

Substantially all of our revenue in the Aerospace maintenance repair and overhaul business and a portion of the Engineered Components Products, Molding Solutions Products and Aerospace Original Equipment Manufacturer Products is recognized over time. Within the Molding Solutions and Aerospace Aftermarket businesses, this continual transfer of control to the customer results from repair and refurbishment work performed on customer controlled assets. With other contracts, this continual transfer of control to the customer is supported by clauses in the contract where we deliver products that do not have an alternative use and requires an enforceable right to payment of costs incurred (plus a reasonable profit) or the Company has a contractual right to complete any work in process and receive full contract price.

The majority of our revenues are from contracts that are less than one year, however certain Aerospace OEM and Industrial Molding Solutions business contracts extend beyond one year. In the Industrial segment, customers are typically OEMs or suppliers to OEMs and, in some businesses, distributors. In the Aerospace segment, customers include commercial airlines, OEMs and other aircraft and military parts and service providers.

A performance obligation represents a promise within a contract to provide a distinct good or service to the customer. Revenue is recognized in an over time model based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. The Company utilizes the cost-to-cost measure of progress for over time contracts as we believe this measure best depicts the transfer of control to the customer, which occurs as we incur costs on contracts.

Adjustments to net sales, cost of sales and the related impact to operating income are recognized as necessary in the period they become known. Revenue recognized from performance obligations satisfied in previous periods was not material in both the three months ended March 31, 2020 and 2019.

Contract Balances. The timing of revenue recognition, invoicing and cash collections affect accounts receivable, unbilled receivables (contract assets) and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheets.

Unbilled Receivables (Contract Assets) - Pursuant to the over time revenue recognition model, revenue may be recognized prior to the customer being invoiced. An unbilled receivable is recorded to reflect revenue that is recognized when 1) the cost-to-cost method is applied and 2) such revenue exceeds the amount invoiced to the customer. Unbilled receivables are included within prepaid expenses and other current assets on the Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019.

Customer Advances and Deposits (Contract Liabilities) - The Company may receive a customer advance or deposit, or have an unconditional right to receive a customer advance, prior to revenue being recognized. Certain contracts within the Molding Solutions business, for example, may require such advances. Since the performance obligations related to such advances may not have been satisfied, a contract liability is established. An offsetting asset of equal amount is recorded as an account receivable until the advance is collected. Advances and deposits are included within accrued liabilities on the Consolidated Balance Sheets until the respective revenue is recognized. Advance payments are not considered a significant financing component as they are generally received less than one year before the customer solution is completed. These assets and liabilities are reported on the Consolidated Balance Sheets on an individual contract basis at the end of each reporting period.

Net contract liabilities consisted of the following:



	March 31, 2020			December 31, 2019			$ Change		% Change
Unbilled receivables (contract assets)	$	26,301		$	22,444		$	3,857	17	%
Contract liabilities	(51,086		)	(55,076		)	3,990		(7	)%
Net contract liabilities	$	(24,785	)	$	(32,632	)	$	7,847	(24	)%

Contract liabilities balances at March 31, 2020 and December 31, 2019 include $14,064 and $16,971, respectively, of customer advances for which the Company has an unconditional right to collect payment. Accounts receivable, as presented on the Consolidated Balance Sheet, includes corresponding balances at March 31, 2020 and December 31, 2019, respectively.

Changes in the net contract liabilities balance during the three-month period ended March 31, 2020 were impacted by a $3,990 decrease in contract liabilities, driven primarily by revenue recognized in the current period, partially offset by new customer advances and deposits. Adding to this net contract liability decrease was a $3,857 increase in contract assets, driven primarily by contract progress (i.e. unbilled receivable), partially offset by earlier contract progress being invoiced to the customer.

The Company recognized approximately 40% of the revenue related to the contract liability balance as of December 31, 2019 during the three months ended March 31, 2020, primarily representing revenue from the sale of molds and hot runners within the Molding Solutions business.

Remaining Performance Obligations. The Company has elected to disclose remaining performance obligations only for contracts with an original duration of greater than one year. Such remaining performance obligations represent the transaction price of firm orders for which work has not been performed and, for Aerospace, excludes projections of components and assemblies that Aerospace OEM customers anticipate purchasing in the future under existing programs, which represent orders that are beyond lead time and do not represent performance obligations pursuant to accounting guidance. As of March 31, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was $207,343. The Company expects to recognize revenue on approximately 75% of the remaining performance obligations over the next 12 months, with the remainder being recognized within 24 months.

3.5. Stockholders' Equity

A schedule of consolidated changes in equity for the three months ended March 31, 2020 is as follows (shares in thousands):



	Common Stock (Number of Shares)	Common Stock (Amount)		Additional Paid-In Capital		Treasury Stock (Number of Shares)	Treasury Stock (Amount)			Retained Earnings			Accumulated Other Non-Owner Changes to Equity			Total Stockholders’ Equity
December 31, 2019	63,873	$	639	$	489,282	13,051	$	(498,074	)	$	1,489,176		$	(210,495	)	$	1,270,528
Comprehensive income	—	—		—		—	—			29,733			(34,189		)	(4,456		)
Dividends declared ($0.16 per share)	—	—		—		—	—			(8,133		)	—			(8,133		)
Common stock repurchases	—	—		—		396	(15,550		)	—			—			(15,550		)
Employee stock plans	17	—		2,743		2	(84		)	(88		)	—			2,571
March 31, 2020	63,890	$	639	$	492,025	13,449	$	(513,708	)	$	1,510,688		$	(244,684	)	$	1,244,960

A schedule of consolidated changes in equity for the three months ended March 31, 2019 is as follows (shares in thousands):



	Common Stock (Number of Shares)	Common Stock (Amount)		Additional Paid-In Capital		Treasury Stock (Number of Shares)	Treasury Stock (Amount)			Retained Earnings			Accumulated Other Non-Owner Changes to Equity			Total Stockholders’ Equity
December 31, 2018	63,367	$	634	$	470,818	12,034	$	(441,668	)	$	1,363,772		$	(190,500	)	$	1,203,056
Comprehensive income	—	—		—		—	—			33,992			(8,178		)	25,814
Dividends declared ($0.16 per share)	—	—		—		—	—			(8,217		)	—			(8,217		)
Employee stock plans	51	—		4,039		1	(80		)	(109		)	—			3,850
March 31, 2019	63,418	$	634	$	474,857	12,035	$	(441,748	)	$	1,389,438		$	(198,678	)	$	1,224,503

6. Net Income Per Common Share

For the purpose of computing diluted net income per common share, the weighted-average number of common shares outstanding is increased for the potential dilutive effects of stock-based incentive plans. For the purpose of computing diluted net income per common share, the weighted-average number of common shares outstanding was increased by ~~504,168~~440,725 and ~~366,251~~528,661 for the ~~three-month~~three month periods ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively, and by 509,172 and 436,941 for the nine-month periods ended September 30, 2017 and 2016,~~2019, respectively, to account for the potential dilutive effect of stock-based incentive plans. There were no adjustments to net income for the purposes of computing income available to common stockholders for the periods.

The calculation of weighted-average diluted shares outstanding excludes all shares that would have been anti-dilutive. During the ~~three-month~~three month periods ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, the Company excluded 0325,670 and 209,907 stock awards, respectively, from the calculation of weighted-average diluted shares outstanding as the stock awards were considered anti-dilutive. During the nine-month periods ended September 30, 2017 and 2016, the Company excluded 59,261 and 346,468221,201 stock awards, respectively, from the calculation of weighted-average diluted shares outstanding as the stock awards were considered anti-dilutive.

The Company granted ~~125,300~~102,500 stock options, ~~85,307~~79,994 restricted stock unit awards and ~~83,970~~81,283 performance share awards ("PSAs") in February ~~2017~~2020 as part of its annual grant awards. All of the stock options and the restricted stock unit awards vest upon meeting certain service conditions. The restricted stock unit awards are included in basic weighted-average common

shares outstanding as they contain nonforfeitable rights to dividend payments. The PSAs are part of the long-term Performance

Share Award Program ~~(the "Awards Program")~~ and are based on performance goals that are driven by a combination of independently measured metrics (depending on the grant year) with each metric being weighted equally. The metrics for awards granted in ~~2016 and 2017~~2020 include the Company’s total shareholder return (“TSR”) ~~and~~, return on invested capital (“ROIC”) and operating income before depreciation and amortization growth ("EBITDA growth"). The TSR ~~metric is~~and EBITDA growth metrics are designed to assess the long-term Company performance relative to the performance of companies included in the Russell 2000 Index over a ~~three-year~~three -year performance period. ~~The~~ ROIC ~~metric~~ is ~~measured based on~~designed to assess the Company's performance compared to pre-established Company targets over ~~the same~~a three -year performance period. The participants can earn from ~~zero~~0 to 250% of the target award and the award includes a forfeitable right to dividend equivalents, which are not included in the aggregate target award numbers. The fair value of the TSR ~~portion of the PSA~~ was determined using a Monte Carlo valuation method as the award contains a market condition.

4.7. Inventories

The components of inventories consisted of:



	March 31, 2020		December 31, 2019
Finished goods	$	71,244	$	69,594
Work-in-process	92,624		88,196
Raw material and supplies	77,083		74,916
	$	240,951	$	232,706

September 30, 2017 December 31, 2016
Finished goods $ 78,116

$ 71,100
Work-in-process 110,204
98,246
Raw material and supplies 64,182
58,413
$ 252,502

$ 227,759

5.8. Goodwill and Other Intangible Assets

Goodwill:

The following table sets forth the change in the carrying amount of goodwill for each reportable segment and for the Company as of and for the period ended ~~September 30, 2017:~~March 31, 2020:



	Industrial			Aerospace		Total Company
January 1, 2020	$	902,236		$	30,786	$	933,022
Foreign currency translation	(12,820		)	—		(12,820		)
March 31, 2020	$	889,416		$	30,786	$	920,202

Industrial Aerospace Total Company
January 1, 2017 $ 602,650
$ 30,786
$ 633,436
Acquisition related 3,330
—
3,330
Foreign currency translation 49,224
—
49,224
September 30, 2017 $ 655,204
$ 30,786
$ 685,990

~~In the second quarter of 2017, management performed its annual impairment testing of goodwill. Based on this assessment, there was no goodwill impairment recognized as of June 30, 2017.~~

OtherIntangible Assets:

Other intangible assets consisted of:



		March 31, 2020						December 31, 2019
	Range of Life -Years	Gross Amount			Accumulated Amortization			Gross Amount			Accumulated Amortization
Amortized intangible assets:
Revenue Sharing Programs (RSPs)	Up to 30	$	299,500		$	(138,889	)	$	299,500		$	(135,466	)
Component Repair Programs (CRPs)	Up to 30	111,839			(28,585		)	111,839			(27,270		)
Customer relationships	10-16	338,366			(103,779		)	338,366			(98,953		)
Patents and technology	4-11	123,433			(70,419		)	123,433			(68,188		)
Trademarks/trade names	10-30	10,949			(10,216		)	10,949			(10,145		)
Other	Up to 15	10,746			(4,191		)	10,746			(4,014		)
		894,833			(356,079		)	894,833			(344,036		)
Unamortized intangible assets:
Trade names		55,670			—			55,670			—
Foreign currency translation		(30,732		)	—			(25,351		)	—
Other intangible assets		$	919,771		$	(356,079	)	$	925,152		$	(344,036	)

September 30, 2017 December 31, 2016

Range of
Life -Years
Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization
Amortized intangible assets:
Revenue sharing programs (RSPs) Up to 30 $ 293,700
$ (105,054 ) $ 293,700
$ (95,701 )
Component repair programs (CRPs) Up to 30 111,839
(15,112 ) 111,839
(10,497 )
Customer lists/relationships 10-16 215,966
(62,250 ) 215,266
(53,198 )
Patents and technology 4-14 87,052
(45,428 ) 84,052
(37,897 )
Trademarks/trade names 10-30 11,950
(10,258 ) 11,950
(9,967 )
Other Up to 15 20,551
(16,960 ) 20,551
(16,338 )
741,058
(255,062 ) 737,358
(223,598 )
Unamortized intangible assets:
Trade names 42,770
—
42,770
—
Foreign currency translation (14,435 ) —
(34,272 ) —
Other intangible assets $ 769,393
$ (255,062 ) $ 745,856
$ (223,598 )

Estimated amortization of intangible assets for future periods is as follows: ~~2017 - $41,000; 2018 - $41,000; 2019 - $40,000;~~ 2020 - ~~$37,000 and~~$46,000; 2021 - ~~$36,000.~~$50,000; 2022- $49,000; 2023 - $48,000 and 2024 - $46,000.

In the second quarter of 2017 management performed its annual impairment testing of its trade names, indefinite-lived intangible assets. Based on this assessment, there was no impairment recognized as of June 30, 2017.

6.9. Debt

The Company's debt agreements contain financial covenants that require the maintenance of interest coverage and leverage ratios. The Company is in compliance with its financial covenants as of September 30, 2017, and continues to monitor its future compliance based on current and anticipated future economic conditions.

Long-term debt and notes and overdrafts payable at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 consisted of:



	March 31, 2020					December 31, 2019
	Carrying Amount			Fair Value		Carrying Amount			Fair Value
Revolving credit agreement	$	679,079		$	673,294	$	720,379		$	737,816
3.97% Senior Notes	100,000			110,993		100,000			104,151
Borrowings under lines of credit and overdrafts	28,314			28,314		7,724			7,724
Finance leases	5,915			6,028		6,266			6,515
Other foreign bank borrowings	356			358		406			410
	813,664			818,987		834,775			856,616
Less current maturities	(30,240		)			(9,758		)
Long-term debt	$	783,424				$	825,017

September 30, 2017 December 31, 2016

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value
Revolving credit agreement $ 393,000
$ 397,805
$ 363,300
$ 364,775
3.97% Senior Notes 100,000
103,319
100,000
101,598
Borrowings under lines of credit and overdrafts 16,875
16,875
30,825
30,825
Capital leases 4,882
5,314
5,413
5,902
Other foreign bank borrowings 1,236
1,249
1,416
1,428
515,993
524,562
500,954
504,528
Less current maturities (18,564 ) (32,892 )
Long-term debt $ 497,429
$ 468,062

In February 2017, the Company and certain of its subsidiaries entered into the fourth amendment of its fifth amended and restated revolving credit agreement (the “Amended Credit Agreement”) and retained Bank of America, N.A as the Administrative Agent for the lenders. The Amended Credit Agreement ~~increases~~increased the facility from $750,000 to $850,000 and extends the maturity date from September 2018 to February 2022. The Amended Credit Agreement also increases the ~~existing~~ previous

accordion feature from $250,000, allowing the Company to now request additional borrowings of up to $350,000. The Company may exercise the accordion feature upon request to the Administrative Agent as long as an event of default has not occurred or is not continuing. The borrowing availability of $850,000, pursuant to the terms of the Amended Credit Agreement, allows for multi-currency borrowing which includes ~~euro,~~Euro, British pound sterling or Swiss franc borrowing, up to $600,000.

In September 2018, the Company and one of its wholly owned subsidiaries entered into a Sale and Purchase Agreement to acquire Gimatic. In conjunction with the Acquisition, the Company requested additional borrowings of $150,000 that was provided for under the existing accordion feature. The Administrative Agent for the lenders approved the Company's access to the accordion feature and on October 19, 2018 the lenders formally committed the capital to fund such feature, resulting in the execution of the fifth amendment to the Amended Credit Agreement (the "Fifth Amendment"). The Fifth Amendment, effective October 19, 2018, thereby increased the borrowing availability of the existing facility to $1,000,000. The Company may also request access to the residual $200,000 of the accordion feature. Depending on the Company’s consolidated leverage ratio, and at the election of the Company, borrowings under the Amended Credit Agreement will bear interest at either LIBOR plus a margin of between 1.10% and 1.70% or the base rate, as defined in the Amended Credit Agreement, plus a margin of 0.10% to 0.70%. ~~The Company paid fees and expenses of $2,542 in conjunction with executing~~Multi-currency borrowings, pursuant to the Amended Credit ~~Agreement; such fees have been deferred within Other Assets on~~Agreement, bear interest at their respective interbank offered rate (i.e. Euribor) or 0.00% (higher of the ~~accompanying Consolidated Balance Sheets~~two rates) plus a margin of between 1.10% and are being amortized into interest expense on the accompanying Consolidated Statements of Income through its maturity. Cash used to pay these fees have been recorded through other financing activities on the Consolidated Statements of Cash Flows.1.70%.

Borrowings and availability under the Amended Credit Agreement were ~~$393,000~~$679,079 and ~~$457,000,~~$320,921, respectively, at ~~September 30, 2017~~March 31, 2020 and ~~$363,300~~$720,379 and ~~$386,700,~~$279,621, respectively, at December 31, ~~2016.~~2019, subject to covenants in the Company's revolving debt agreements. The borrowing capacity under the Amended Credit Agreement was limited by the Senior Debt Ratio (defined below) to $294,190 as of March 31, 2020. The average interest rate on these borrowings was ~~2.34%~~1.44% and ~~1.86%~~1.76% on ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively. Borrowings included Euro-denominated borrowings of 456,490 Euros ($504,079) at March 31, 2020 and 504,690 Euros ($565,379) at December 31, 2019. The fair value of the borrowings is based on observable Level 2 inputs. The borrowings were valued using discounted cash flows based upon the Company's estimated interest costs for similar types of borrowings. In 2019, the Company borrowed 44,100 Euros ($49,506) under the Amended Credit Facility through an international subsidiary. The proceeds were distributed to the Parent Company and subsequently used to pay down U.S. borrowings under the Amended Credit Agreement.

In October 2014, the Company entered into a Note Purchase Agreement (“Note Purchase Agreement”), among the Company and New York Life Insurance Company, New York Life Insurance and Annuity Corporation and New York Life Insurance and Annuity Corporation Institutionally Owned Life Insurance Separate Account, as purchasers, for the issuance of $100,000 aggregate principal amount of 3.97% Senior Notes due October 17, 2024 (the “3.97% Senior Notes”).

The 3.97% Senior Notes are senior unsecured obligations of the Company and pay interest semi-annually on April 17 and October 17 of each year at an annual rate of 3.97%. The 3.97% Senior Notes will mature on October 17, 2024 unless earlier prepaid in accordance with their terms. Subject to certain conditions, the Company may, at its option, prepay all or any part of

the 3.97% Senior Notes in an amount equal to 100% of the principal amount of the 3.97% Senior Notes so prepaid, plus any

accrued and unpaid interest to the date of prepayment, plus the Make-Whole Amount, as defined in the Note Purchase Agreement, with respect to such principal amount being prepaid. The fair value of the 3.97% Senior Notes was determined using the USU.S. Treasury yield and a long-term credit spread for similar types of borrowings, ~~that~~which represent Level 2 observable inputs.

The Company's borrowing capacity remains limited by various debt covenants in the Amended Credit Agreement and the Note Purchase Agreement (the "Agreements"). The Agreements require the Company to maintain a ratio of Consolidated Senior Debt, as defined, to Consolidated EBITDA, as defined, of not more than 3.25 times ("Senior Debt Ratio"), a ratio of Consolidated Total Debt, as defined, to Consolidated EBITDA of not more than 3.75 times ("Total Debt Ratio") and a ratio of Consolidated EBITDA to Consolidated Cash Interest Expense, as defined, of not less than 4.25, in each case at the end of each fiscal quarter; provided that the debt to EBITDA ratios are permitted to increase for a period of four fiscal quarters after the closing of certain permitted acquisitions. A permitted acquisition is defined as an acquisition exceeding $150,000, for which the acquisition of Gimatic on October 31, 2018 qualified. With the completion of a permitted acquisition, the Senior Debt Ratio cannot exceed 3.50 times and the Total Debt Ratio cannot exceed 4.25 times. The increased ratios were allowed for a period of four fiscal quarters subsequent to the close of the permitted acquisition and therefore expired in the fourth quarter of 2019. At March 31, 2020, the Company was in compliance with all covenants under the Agreements and continues to monitor its future compliance based on current and future economic conditions.

In addition, the Company has available approximately ~~$59,000~~$81,000 in uncommitted short-term bank credit lines ("Credit Lines") and overdraft facilities. The Credit Lines are accessed locally and are available primarily within the U.S., Europe and Asia. The Credit Lines are subject to the applicable borrowing rates within each respective country and vary between jurisdictions (i.e. LIBOR, Euribor, etc.). Under the Credit Lines, ~~$16,800~~$27,900 was borrowed at ~~September 30, 2017 at an interest rate of 2.05% and $30,700 was borrowed at December~~March 31, ~~2016~~2020 at an average interest rate of ~~1.96%~~1.05% and $7,700 was borrowed at December 31, 2019 at an average interest rate of 2.38%. The Company had also borrowed ~~$75~~$414 and ~~$125~~$24 under the overdraft facilities at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively. Repayments under the Credit Lines are due within one month after being borrowed. Repayments of the overdrafts are generally due within two days after being borrowed. The carrying amounts of the Credit Lines and overdrafts approximate fair value due to the short maturities of these financial instruments.

The Company also has ~~capital~~several finance leases under which $5,915 and $6,266 was outstanding at ~~the Thermoplay~~March 31, 2020 and ~~Männer businesses.~~December 31, 2019, respectively. The fair value of the ~~capital~~finance leases isare based on observable Level 2 inputs. These instruments ~~are~~were valued using discounted cash flows based upon the Company's estimated interest costs for similar types of borrowings.

~~The~~At March 31, 2020 and December 31, 2019, the Company also ~~has~~had other foreign bank ~~borrowings.~~borrowings of $356 and $406, respectively. The fair value of the other foreign bank borrowings iswas based on observable Level 2 inputs. These instruments ~~are~~were valued using discounted cash flows based upon the Company's estimated interest costs for similar types of borrowings.

7.10. Derivatives

The Company has manufacturing and sales facilities around the world and thus makes investments and conducts business transactions denominated in various currencies. The Company is also exposed to fluctuations in interest rates and commodity price changes. These financial exposures are monitored and managed by the Company as an integral part of its risk management program.

Financial instruments have been used by the Company to hedge its exposure to fluctuations in interest rates. In 2012, the Company entered into five-year interest rate swap agreements (the "Swaps") transacted with three banks which together converted the interest on the first $100,000 of the Company's one-month LIBOR-based borrowings from a variable rate plus the borrowing spread to a fixed rate of 1.03% plus the borrowing spread. The Swaps expired on April 28, 2017. The Company entered into ~~a new~~an interest rate swap agreement (the "Swap") ~~that commenced~~ on April 28, 2017, with ~~one~~1 bank, ~~and~~which converts the interest on the first $100,000 of the Company's one-month LIBOR-based borrowings from a variable rate plus the borrowing spread to a fixed rate of 1.92% plus the borrowing spread. The Swap expires on January 31, ~~2022. These interest rate swap agreements are~~2022 and is accounted for as a cash flow ~~hedges.~~hedge.

The Company also uses financial instruments to hedge its exposures to fluctuations in foreign currency exchange rates. The Company has various contracts outstanding which primarily hedge recognized assets or liabilities and anticipated transactions in various currencies including the Euro, British pound sterling, U.S. dollar, Canadian dollar, Japanese yen, Singapore dollar, Korean won, Swedish kroner, Chinese renminbi, Mexican peso, Hong Kong dollar and Swiss franc. Certain foreign currency derivative instruments are treated as cash flow hedges of forecasted transactions. All foreign exchange contracts are due within two years.

The Company does not use derivatives for speculative or trading purposes or to manage commodity exposures. Changes in the fair market value of derivatives that qualify as ~~fair value hedges or~~ cash flow hedges are recorded ~~directly~~ to ~~earnings or~~ accumulated other non-owner changes to ~~equity, depending on the designation.~~equity. Amounts recorded to accumulated other non-owner changes to equity are reclassified to earnings in a manner that

matches the earnings impact of the hedged transaction. ~~Any ineffective portion, or amounts~~Amounts related to contracts that are not designated as hedges are recorded directly to earnings.

The Company's policy for classifying cash flows from derivatives is to report the cash flows consistent with the underlying hedged item. Other financing cash flows during the first ~~nine~~three months of ~~2017~~2020 and ~~2016,~~2019, as presented on the ~~consolidated~~

~~statements~~ConsolidatedStatements of ~~cash flows,~~Cash Flows, include ~~$14,962~~$7,212 and $1,299, respectively, of net cash payments ~~and $3,822 of net cash proceeds, respectively, from~~related to the settlement of foreign currency hedges related to intercompany financing.

The following table sets forth the fair value amounts of derivative instruments held by the ~~Company.~~Company:



	Derivative Assets					Derivative Liabilities
		Fair Value					Fair Value
	Balance Sheet Location	March 31, 2020		December 31, 2019		Balance Sheet Location	March 31, 2020			December 31, 2019
Derivatives designated as hedging instruments:
Interest rate contracts	Other assets	$	—	$	—	Other liabilities	$	(3,042	)	$	(820	)
Foreign exchange contracts	Prepaid expenses and other current assets	—		700		Accrued liabilities	(635		)	—
Total derivatives designated as hedging instruments		—		700			(3,677		)	(820		)

Derivatives not designated as hedging instruments:
Foreign exchange contracts	Prepaid expenses and other current assets	6		1,375		Accrued liabilities	(846		)	(1		)
Total derivatives not designated as hedging instruments		6		1,375			(846		)	(1		)

Total derivatives		$	6	$	2,075		$	(4,523	)	$	(821	)

September 30, 2017 December 31, 2016
Asset Derivatives Liability Derivatives Asset Derivatives Liability Derivatives
Derivatives designated as hedging instruments:
Interest rate contracts $ —
$ (345 ) $ —
$ (78 )
Foreign exchange contracts —
(121 ) —
(177 )

Derivatives not designated as hedging instruments:
Foreign exchange contracts 65
(377 ) 397
(1,499 )
Total derivatives $ 65
$ (843 ) $ 397
$ (1,754 )

Asset derivatives are recorded in prepaid expenses and other current assets in the accompanying consolidated balance sheets. Liability derivatives related to interest rate contracts and foreign exchange contracts are recorded in other liabilities and accrued liabilities, respectively, in the accompanying Consolidated Balance Sheets.

The following table sets forth the ~~gain (loss), net~~effect of ~~tax, recorded in~~hedge accounting on accumulated other comprehensive (loss) income ~~(loss), net of tax,~~ for the ~~three- and nine-month~~three month periods ended ~~September 30, 2017~~March 31, 2020 and ~~2016 for derivatives held by the Company and designated as hedging instruments.~~2019:



	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) on Derivative						Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income
	Three Months Ended March 31,							Three Months Ended March 31,
Derivatives in Hedging Relationships	2020			2019				2020			2019
Derivatives in Cash Flow Hedging Relationships:
Interest rate contracts	$	(1,694	)	$	(487	)	Interest expense	$	(61	)	$	142
Foreign exchange contracts	(643		)	(81		)	Net sales	(523		)	(337		)
Total	$	(2,337	)	$	(568	)		$	(584	)	$	(195	)

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Cash flow hedges:
Interest rate contracts $ 97
$ 137
$ (167 ) $ 74
Foreign exchange contracts 238
(287 ) 43
(654 )
$ 335
$ (150 ) $ (124 ) $ (580 )

Amounts related to the interest rate swaps included within accumulated other comprehensive income (loss) that were reclassified to expense during the first nine months of 2017 and 2016 resulted in a fixed rate of interest plus the borrowing spread for the first $100,000 of one-month LIBOR borrowings. The fixed rate of interest was 1.92% for the period covered by the Swap, which matures in January 2022, and 1.03% for the Swaps, which matured in April 2017. Additionally, there were no amounts recognized in income for hedge ineffectiveness during the three- and nine-month periods ended September 30, 2017 and 2016.

The following table sets forth the ~~net (loss) gain recorded in other expense (income), net in~~effect of hedge accounting on the consolidated statements of income for the ~~three- and nine-month~~three-month periods ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019:



	Location and Amount of Gain (Loss) Recognized in Income on Hedging Relationships
	Three Months Ended March 31,
	2020						2019
	Net sales			Interest expense			Net sales			Interest expense
Total amounts of income and expense line items presented in the consolidated statements of income in which the effects of hedges are recorded	$	330,671		$	4,324		$	376,692		$	5,113
The effects of hedging:
Gain (Loss) on cash flow hedging relationships
Interest rate contracts
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income				(61		)				142
Foreign exchange contracts
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income	(523		)				(337		)

The following table sets forth the effect of derivatives not designated as hedging instruments on the consolidated statements of income for ~~non-designated derivatives held by~~ the ~~Company.~~three-month periods ended March 31, 2020 and 2019:



	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative^(A)
		Three Months Ended March 31,
Derivatives Not Designated as Hedging Instruments		2020			2019
Foreign exchange contracts	Other expense (income), net	$	(12,195	)	$	(3,819	)

(A) Such amounts were substantially offset by the net (gain) loss recorded on the underlying hedged asset or liability, also recorded in other expense (income), net.

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Foreign exchange contracts $ (2,545 ) $ (3,755 ) $ (12,949 ) $ (7,506 )

8.11. Fair Value Measurements

The provisions of the accounting standard for fair value define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard classifies the inputs used to measure fair value into the following hierarchy:


Level 1	Unadjusted quoted prices in active markets for identical assets or ~~liabilities~~liabilities.


Level 2	Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or ~~liability~~liability.


Level 3	Unobservable inputs for the asset or ~~liability~~liability.

The following table provides the ~~financial~~ assets and ~~financial~~ liabilities reported at fair value and measured on a recurring basis:

Fair Value Measurements Using
Description Total
Quoted Prices in Active Markets for
Identical Assets
(Level 1)

Significant Other Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)
September 30, 2017
Asset derivatives $ 65
$ —
$ 65
$ —
Liability derivatives (843 ) —
(843 ) —
Bank acceptances 13,009
—
13,009
—
Rabbi trust assets 2,427
2,427
—
—
$ 14,658
$ 2,427
$ 12,231
$ —

December 31, 2016
Asset derivatives $ 397
$ —
$ 397
$ —
Liability derivatives (1,754 ) —
(1,754 ) —
Bank acceptances 9,690
—
9,690
—
Rabbi trust assets 2,216
2,216
—
—
$ 10,549

$ 2,216
$ 8,333
$ —



				Fair Value Measurements Using
Description	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
March 31, 2020
Asset derivatives	$	6		$	—	$	6		$	—
Liability derivatives	(4,523		)	—		(4,523		)	—
Bank acceptances	12,911			—		12,911			—
Rabbi trust assets	2,507			2,507		—			—
Total	$	10,901		$	2,507	$	8,394		$	—

December 31, 2019
Asset derivatives	$	2,075		$	—	$	2,075		$	—
Liability derivatives	(821		)	—		(821		)	—
Bank acceptances	14,460			—		14,460			—
Rabbi trust assets	2,947			2,947		—			—
Total	$	18,661		$	2,947	$	15,714		$	—

The derivative contracts are valued using observable current market information as of the reporting date such as the prevailing LIBOR-based interest rates and foreign currency spot and forward rates. Bank acceptances represent financial instruments accepted from certain ~~Chinese~~China-based customers in lieu of cash paid on receivables, generally range from three to six months in maturity and are guaranteed by banks. The carrying amounts of the bank acceptances, which are included within prepaid expenses and other current assets, approximate fair value due to their short maturities. The fair values of rabbi trust assets are based on quoted market prices from various financial exchanges.

9.12. Pension and Other Postretirement Benefits

Pension and other postretirement benefits expenses consisted of the following:


	Three months ended September 30,						Nine months ended September 30,						Three Months Ended March 31,
Pensions	2017			2016			2017			2016			2020			2019
Service cost	$	1,572		$	1,354		$	4,674		$	4,056		$	1,649		$	1,433
Interest cost	4,764			4,869			14,051			14,650			3,817			4,536
Expected return on plan assets	(7,206		)	(7,564		)	(20,882		)	(22,774		)	(7,393		)	(7,078		)
Amortization of prior service cost	110			52			330			157			80			103
Amortization of actuarial losses	2,703			2,697			7,846			8,109			3,339			2,158
Curtailment gain	—			—			(7,217		)	—
Settlement loss (gain)	298			—			(193		)	—
Net periodic benefit cost	$	2,241		$	1,408		$	(1,391	)	$	4,198		$	1,492		$	1,152

~~In June 2017,~~



	Three Months Ended March 31,
Other Postretirement Benefits	2020		2019
Service cost	$	22	$	19
Interest cost	264		340
Amortization of prior service cost	7		6
Amortization of actuarial losses	23		10
Net periodic benefit cost	$	316	$	375

The service cost component of net periodic benefit cost is included within cost of sales and selling and administrative expenses. The components of net periodic benefit cost other than the ~~Company authorized the closure of its FOBOHA facility located~~service cost component are included in ~~Muri, Switzerland which resulted in pension curtailment and settlement gains of $7,217 and $230, respectively, during the second quarter of 2017. See Note 14 of~~Other Income (Expense) on the Consolidated ~~Financial~~ Statements ~~for additional information related to the Closure.~~

~~In May 2017, the Company contributed $5,000~~ of discretionary contributions to its U.S Qualified pension plans. The Company currently does not plan to make any additional discretionary contributions to its U.S. Qualified pension plans, however approximately $5,000 is expected to be made into its U.S. Non-qualified and international pension plans throughout 2017.

Three months ended September 30, Nine months ended September 30,
Other Postretirement Benefits 2017 2016 2017 2016
Service cost $ 20
$ 31
$ 62
$ 92
Interest cost 389
440
1,170
1,324
Amortization of prior service credit (17 ) (93 ) (51 ) (280 )
Amortization of actuarial losses 68
134
207
401
Net periodic benefit cost $ 460
$ 512
$ 1,388
$ 1,537

Income.

~~10.~~13. Income Taxes

The Company merged certain of its Swiss operating legal entities during the second quarter of 2017 (the "Merger"). Certain of these entities included businesses with deferred tax assets that were offset by valuation allowances. As a result of the Merger, the Company reevaluated the valuation allowances and deferred tax assets related to these businesses and determined such allowances were no longer required as the merged entities would more likely than not utilize previously unbenefited net operating losses that would have otherwise expired. In addition, certain deferred tax assets were adjusted as a result of higher income tax rates. The impacts of these adjustments were treated as discrete items in the second quarter of 2017 resulting in reductions in tax expense of $5,872 and $461, respectively.

The Company's effective tax rate for the first ~~nine months~~quarter of ~~2017~~2020 was ~~20.5%~~31.5% compared with ~~25.1%~~22.3% in the first ~~nine months~~quarter of ~~2016~~2019 and ~~25.7%~~23.4% for the full year ~~2016.~~2019. The ~~decrease~~increase in the first ~~nine months~~quarter of ~~2017~~2020 effective tax rate from the full year ~~2016~~2019 rate is primarily due to the ~~adjustment of certain valuation reserves and other benefits resulting from the merger of legal entities in Switzerland, and the settlement~~recognition of tax ~~audits and closure~~expense related to the completed sale of ~~tax years for various tax jurisdictions,~~the Seeger business during the first quarter of 2020 ($4,211), partially offset by a benefit related to a refund of withholding taxes that were previously paid and included in tax expense in prior years and a reduction of the ~~expiration~~statutory tax rate at one of ~~certain tax holidays.~~our international operations.

The Aerospace and Industrial ~~segments were previously awarded international tax holidays. All significant~~Segments have a number of multi-year tax holidays ~~for which~~in Singapore and China. These holidays are subject to the Company ~~currently receives benefit are expected to expire~~meeting certain commitments in the ~~fourth quarter~~respective jurisdictions. Aerospace was granted an income tax holiday for operations recently established in Malaysia. The Company anticipates the holiday beginning during the second half of ~~2017.~~2020. The holiday will remain effective for ten years.

~~11.~~14. Changes in Accumulated Other Comprehensive Income (Loss) by Component

The following ~~table sets~~tables set forth the changes in accumulated other comprehensive income (loss), net of tax, by component for the ~~nine-month~~three month periods ended ~~September 30, 2017~~March 31, 2020 and ~~2016:~~

Gains and Losses on Cash Flow Hedges Pension and Other Postretirement Benefit Items Foreign Currency Items Total
January 1, 2017 $ (227 ) $ (114,570 ) $ (86,031 ) $ (200,828 )
Other comprehensive (loss) income before reclassifications to consolidated statements of income (501 ) (1,888 ) 80,174
77,785
Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income 377
5,464
—
5,841
Net current-period other comprehensive (loss) income (124 ) 3,576
80,174
83,626
September 30, 2017 $ (351 ) $ (110,994 ) $ (5,857 ) $ (117,202 )
2019:

Gains and Losses on Cash Flow Hedges Pension and Other Postretirement Benefit Items Foreign Currency Items Total
January 1, 2016 $ 115
$ (105,703 ) $ (37,664 ) $ (143,252 )
Other comprehensive (loss) income before reclassifications to consolidated statements of income (823 ) 283
2,100
1,560
Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income 243
5,457
—
5,700
Net current-period other comprehensive (loss) income (580 ) 5,740
2,100
7,260
September 30, 2016 $ (465 ) $ (99,963 ) $ (35,564 ) $ (135,992 )



	Gains and Losses on Cash Flow Hedges			Pension and Other Postretirement Benefit Items			Foreign Currency Items			Total
January 1, 2020	$	(115	)	$	(144,047	)	$	(66,333	)	$	(210,495	)
Other comprehensive income (loss) before reclassifications	(2,879		)	1,842			(36,333		)	(37,370		)
Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income	542			2,639			—			3,181
Net current-period other comprehensive income (loss)	(2,337		)	4,481			(36,333		)	(34,189		)
March 31, 2020	$	(2,452	)	$	(139,566	)	$	(102,666	)	$	(244,684	)



	Gains and Losses on Cash Flow Hedges			Pension and Other Postretirement Benefit Items			Foreign Currency Items			Total
January 1, 2019	$	834		$	(138,690	)	$	(52,644	)	$	(190,500	)
Other comprehensive income (loss) before reclassifications	(723		)	(122		)	(9,225		)	(10,070		)
Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income	155			1,737			—			1,892
Net current-period other comprehensive income (loss)	(568		)	1,615			(9,225		)	(8,178		)
March 31, 2019	$	266		$	(137,075	)	$	(61,869	)	$	(198,678	)

The following ~~table sets~~tables set forth the reclassifications out of accumulated other comprehensive income (loss) by component for the ~~three- and nine-month~~three month periods ended ~~September 30, 2017~~March 31, 2020 and ~~2016:~~2019:


Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)						Affected Line Item in the Consolidated Statements of Income	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)						Affected Line Item in the Consolidated Statements of Income
	Three months ended September 30, 2017			Three months ended September 30, 2016				Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Gains and losses on cash flow hedges
Interest rate contracts	$	(174	)	$	(137	)	Interest expense	$	(61	)	$	142		Interest expense
Foreign exchange contracts	(40		)	(20		)	Net sales	(523		)	(337		)	Net sales
	(214		)	(157		)	Total before tax	(584		)	(195		)	Total before tax
	74			55			Tax benefit	42			40			Tax benefit
	(140		)	(102		)	Net of tax	(542		)	(155		)	Net of tax

Pension and other postretirement benefit items
Amortization of prior-service (costs) credits, net	$	(93	)	$	41		(A)
Amortization of prior-service costs								$	(87	)	$	(109	)	(A)
Amortization of actuarial losses	(2,771		)	(2,831		)	(A)	(3,362		)	(2,168		)	(A)
Settlement loss	(298		)	—			(A)
	(3,162		)	(2,790		)	Total before tax	(3,449		)	(2,277		)	Total before tax
	946			977			Tax benefit	810			540			Tax benefit
	(2,216		)	(1,813		)	Net of tax	(2,639		)	(1,737		)	Net of tax

Total reclassifications in the period	$	(2,356	)	$	(1,915	)		$	(3,181	)	$	(1,892	)

(A) These accumulated other comprehensive income (loss) components are included within the computation of net periodic ~~pension~~Pension and Other Postretirement Benefits cost. See Note 9.12.

Details about Accumulated Other Comprehensive Income (Loss) Components Amount Reclassified from Accumulated Other Comprehensive Income (Loss) Affected Line Item in the Consolidated Statements of Income
Nine months ended September 30, 2017 Nine months ended September 30, 2016
Gains and losses on cash flow hedges
     Interest rate contracts $ (380 ) $ (437 ) Interest expense
     Foreign exchange contracts (178 ) 40
Net sales
(558 ) (397 ) Total before tax
181
154
Tax benefit
(377 ) (243 ) Net of tax

Pension and other postretirement benefit items
     Amortization of prior-service (costs) credits, net $ (279 ) $ 123
(A)
Amortization of actuarial losses (8,053 ) (8,510 ) (A)
Curtailment gain 187
—
(A)
Settlement loss (68 ) —
(A)
(8,213 ) (8,387 ) Total before tax
2,749
2,930
Tax benefit
(5,464 ) (5,457 ) Net of tax

Total reclassifications in the period $ (5,841 ) $ (5,700 )

~~(A) These accumulated other comprehensive income (loss) components are included within the computation of net periodic pension cost. See Note 9.~~

~~12.~~

15. Information on Business Segments

The Company is organized based upon the nature of its products and services and reports under ~~two~~2 global business segments: Industrial and Aerospace. Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions and assesses operating performance. The Company has not aggregated operating segments for purposes of identifying these ~~two~~2 reportable segments.

~~The~~ Industrial ~~segment~~ is a global ~~manufacturer~~provider of highly-engineered, high-quality precision components, products and systems for critical applications serving a diverse customer base in end-markets such as transportation, industrial equipment, ~~consumer products,~~automation, personal care, packaging, electronics, and medical ~~devices, and energy.~~devices. Focused on innovative custom solutions, Industrial participates in the design phase of components and assemblies whereby customers receive the benefits of application and systems engineering, new product development, testing and evaluation, and the manufacturing of final products. Products are sold primarily through its direct sales force and global distribution channels. Industrial's Molding Solutions ~~businesses design~~business designs and ~~manufacture~~manufactures customized hot runner systems, advanced mold cavity sensors and process control systems, and precision high cavitation mold assemblies - collectively, the enabling technologies for many complex injection molding applications. ~~Industrial's Nitrogen Gas Products~~The Force & Motion Control business provides innovative cost effective force and motion control solutions for ~~sheet~~a wide range of metal forming ~~heavy duty suspension~~ and other ~~selective niche markets~~industrial markets. The Automation business designs and develops robotic grippers, advanced end-of-arm tooling systems, sensors and other automation components for ~~customers worldwide.~~intelligent robotic handling solutions and industrial automation applications. Industrial's Engineered Components ~~businesses manufacture~~business manufactures and ~~supply~~supplies precision mechanical products used in transportation and industrial applications, including mechanical springs, and high-precision punched and fine-blanked ~~components and retention rings.~~components.

~~The~~ Aerospace ~~segment~~ is a global ~~provider~~manufacturer of complex fabricated and ~~precision-machined~~precision machined components and assemblies for ~~original equipment manufacturer ("OEM")~~ turbine ~~engine, airframe~~engines, nacelles and ~~industrial gas turbine builders,~~structures for both commercial and ~~the military.~~military aircraft. The Aerospace ~~Aftermarket includes the jet~~aftermarket business provides aircraft engine component ~~maintenance overhaul and repair business ("MRO") and the spare parts business.~~ MRO ~~includes~~services, including services performed under our Component Repair Programs ~~("CRPs"~~(“CRPs”), ~~which service~~for many of the ~~world's~~world’s major turbine engine manufacturers, commercial airlines and the military. The Aerospace aftermarket activities also include the manufacture and delivery of aerospace aftermarket spare parts, ~~business includes our revenue sharing programs ("RSPs"~~including Revenue Sharing Programs (“RSPs”) under which the Company receives an exclusive right to supply designated aftermarket parts over the life of ~~the related~~specific aircraft engine ~~program.~~programs.

The following tables set forth information about the Company's operations by its ~~two~~2 reportable segments:


	Three months ended September 30,						Nine months ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2020		2019
Net sales
Industrial	$	240,390		$	208,748		$	719,556		$	608,534		$	199,100	$	242,502
Aerospace	116,767			102,816			343,899			298,055			131,571		134,190
Intersegment sales	(1		)	(3		)	(4		)	(3		)	—		—
Total net sales	$	357,156		$	311,561		$	1,063,451		$	906,586		$	330,671	$	376,692

Operating profit
Industrial	$	29,308		$	34,958		$	100,154		$	99,445		$	17,924	$	21,502
Aerospace	18,478			16,859			60,519			41,359			31,389		29,147
Total operating profit	47,786			51,817			160,673			140,804			49,313		50,649
Interest expense	3,748			3,020			10,638			8,826			4,324		5,113
Other expense (income), net	357			621			773			24			1,594		1,806
Income before income taxes	$	43,681		$	48,176		$	149,262		$	131,954		$	43,395	$	43,730


	September 30, 2017		December 31, 2016		March 31, 2020		December 31, 2019
Assets
Industrial	$	1,502,193	$	1,356,081	$	1,789,094	$	1,879,258
Aerospace	648,561		647,766		706,104		704,318
Other ^(A)	195,777		133,692		172,407		154,759
Total assets	$	2,346,531	$	2,137,539	$	2,667,605	$	2,738,335

(A) "Other" assets include corporate-controlled assets, the majority of which are cash and ~~deferred tax assets.~~cash equivalents.

~~13.~~16. Commitments and Contingencies

Product Warranties

The Company provides product warranties in connection with the sale of certain products. From time to time, the Company is subject to customer claims with respect to product warranties. The Company accrues its estimated exposure for warranty claims at the time of sale based upon the length of the warranty period, historical experience and other related information known to the Company. Liabilities related to product warranties and extended warranties were not material as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016.~~2019.

Litigation

~~14. Business Reorganization~~

~~In June 2017,~~The Company is subject to litigation from time to time in the ordinary course of business and various other suits, proceedings and claims are pending involving the Company ~~authorized the closure~~ and consolidation of two production facilities (the "Closures") including a FOBOHA facility located in Muri, Switzerland (60 employees) and an Associated Spring facility (30 employees) into other facilities included within the Industrial segment to leverage capacity, infrastructure and critical resources.its subsidiaries. The Company ~~recorded~~records a ~~net pre-tax gain~~loss contingency liability when a loss is considered probable and the amount can be reasonably estimated. While it is not possible to determine the ultimate disposition of ~~$1,392~~each of these proceedings and whether they will be resolved consistent with the Company's beliefs, the Company expects that the outcome of such proceedings, individually or in the first nine months of 2017 related to the Closures. This balance includes pension curtailment and settlement gains of $7,217 and $230, respectively, partially offset by employee severance charges of $3,756 and other Closure costs of $2,299, primarily related to asset write-downs. The severance liability was included within Accrued Liabilities as of September 30, 2017. The Company also expects to incur additional costs of approximately $700 in 2017 related to the Closures, including costs related to the transfer of work to other existing facilities. Closure costs are recorded primarily within Cost of Sales in the accompanying Consolidated Statements of Income and are reflected in the results of the Industrial segment.

~~The following table sets forth the change in the liability for the 2017 employee termination actions:~~

January 1, 2017 $ —
Employee termination benefit costs 3,756
Payments (3,008 )
Foreign currency translation (45 )
September 30, 2017 $ 703

~~The majority of this balance is expected to be paid in 2017.~~

~~15. Accounting Changes~~

In July 2015, the FASB amended its guidance related to the measurement of inventory. The amended guidance requires inventory to be measured at the lower of cost and net realizable value and thereby simplifies the current guidance of measuring inventory at the lower of cost or market. The amended guidance is effective prospectively for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company adopted the guidance during the first quarter of 2017 and it didaggregate, will not have a material ~~impact~~adverse effect on ~~its Consolidated Financial Statements.~~financial condition or results of operations.

With respect to the unaudited consolidated financial information of Barnes Group Inc. for the ~~nine-month periods~~three months period ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report dated ~~October~~April 27, ~~2017~~2020 appearing herein, states that they did not audit and they do not express an opinion on that unaudited consolidated financial information. Accordingly, the degree of reliance on their report should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933, as amended, for their report on the unaudited consolidated financial information because that report is not a “report” or a “part” of the registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Securities Act of 1933, as amended.

Report of Independent Registered Public Accounting Firm

To theBoard of Directors and Stockholders of

Barnes Group Inc.:

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Barnes Group Inc. and its subsidiaries (the “Company”) as of ~~September 30, 2017,~~March 31, 2020, and the related consolidated statements of income, ~~and~~ of comprehensive income, ~~for the three-month~~ and ~~nine-month periods ended September 30, 2017 and September 30, 2016 and the consolidated statement~~ of cash flows for the ~~nine-month~~three-month periods ended ~~September 30, 2017~~March 31, 2020 and ~~September 30, 2016. This~~2019, including the related notes (collectively referred to as the “interim financial information”).Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information isfor it to be in conformity with accounting principles generally accepted in the ~~responsibility~~United States of ~~the Company’s management.~~America.

We ~~conducted our review~~have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)., the consolidatedbalance sheet of the Company as of December 31, 2019, and the related consolidated statements of income, of comprehensive income, of changes in stockholders’ equity,and of cash flowsfor the year then ended (not presented herein), and in our report dated February 24, 2020, which includeda paragraph describing a change in the manner of accounting for leases in the 2019 financial statements and revenue in the 2018 financial statements, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 2019, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information isthe responsibility of the Company’s management.We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States),~~PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2016, and the related consolidated statements of income, of comprehensive income, of changes in stockholders’ equity and of cash flows for the year then ended (not presented herein), and in our report dated February 21, 2017, which included a paragraph describing a change in the manner of accounting for stock-based compensation and a change in the manner of accounting for classification of deferred taxes in the 2016 financial statements, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 2016, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.



/s/ PricewaterhouseCoopers LLP
~~PricewaterhouseCoopers LLP~~ Hartford, Connecticut
~~October~~April 27, ~~2017~~
~~Hartford, CT~~2020

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

Please refer to the Overview in the Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019. The Annual Report on Form 10-K and other documents related to the Company are located on the Company's website: www.bginc.com.

~~Third~~First Quarter ~~2017~~ Highlights

In the third quarter of 2017, sales increased by $45.6 million, or 14.6% from the third quarter of 2016, to $357.2 million. Within Industrial, this sales increase was partly driven by an incremental $11.3 million sales contribution from FOBOHA during July and August 2017 (acquisition completed on August 31, 2016) and Gammaflux sales of $3.2 million during the quarter. Organic sales (net sales excluding both foreign currency and acquisition impacts) increased by $26.0 million, or 8.3%, with increases of 5.8% within Industrial and 13.6% within Aerospace. Sales in Industrial were impacted by changes in foreign currency which increased sales by approximately $5.1 million as the U.S. dollar weakened against foreign currencies.

Operating income in the third quarter of 2017 decreased 7.8% to $47.8 million from the third quarter of 2016 and operating margin decreased from 16.6% to 13.4%. Operating income was largely impacted by lower productivity, resulting primarily from increased costs incurred on certain programs at Industrial, partially offset by increased leverage of organic sales in both segments.

~~RESULTS OF OPERATIONS~~

~~Net Sales~~

Three months ended September 30, Nine months ended September 30,
(in millions) 2017 2016 Change 2017 2016 Change
Industrial $ 240.4
$ 208.7
$ 31.6
15.2 % $ 719.6
$ 608.5
$ 111.0
18.2 %
Aerospace 116.8
102.8
14.0
13.6 % 343.9
298.1
45.8
15.4 %
Total $ 357.2
$ 311.6
$ 45.6
14.6 % $ 1,063.5
$ 906.6
$ 156.9
17.3 %

The Company reported net sales of $357.2 million in the third quarter of 2017, an increase of $45.6 million, or 14.6%, from the third quarter of 2016. Organic sales increased by $26.0 million, which included increases of $12.0 million and $14.0 million at Industrial and Aerospace, respectively. The increase at Industrial was driven primarily by continued strength in our Nitrogen Gas Products and Molding Solutions business units, whereas growth on newer, more technologically advanced engine platforms increased volumes at the original equipment manufacturing business within Aerospace. Sales within the Aerospace aftermarket businesses also improved during the third quarter of 2017. The overall sales increase was also driven by an incremental $11.3 million sales contribution from FOBOHA during July and August 2017 (acquisition completed on August 31, 2016) and Gammaflux sales of $3.2 million during the third quarter of 2017. The weakening of the U.S. dollar against foreign currencies increased net sales within the Industrial segment by approximately $5.1 million.

~~The Company reported net sales of $1,063.5~~$330.7 million in the first ~~nine months~~quarter of ~~2017, an increase~~2020, a decrease of ~~$156.9~~$46.0 million or ~~17.3%~~12.2%, from the first ~~nine months~~quarter of ~~2016. In~~2019. Organic sales decreased by $31.2 million, or 8.3%, including decreases of $28.6 at Industrial and $2.6 at Aerospace. The Company completed the ~~acquisitions~~sale of ~~FOBOHA in August 2016 and Gammaflux in April 2017 provided incremental~~its Seeger business on February 1, 2020, reducing sales ~~of $47.2~~by $10.3 million ~~and $6.5 million, respectively,~~ during the first ~~nine months~~quarter of 2017. Organic sales increased by $103.8 million, which included increases of $58.0 million and $45.8 million at Industrial and Aerospace, respectively. The increase at Industrial was driven primarily by continued strength in our Nitrogen Gas Products and Molding Solutions business units, whereas growth on newer, more technologically advanced engine platforms increased volumes at2020 relative to the ~~original equipment manufacturing business within Aerospace. Sales within the Aerospace aftermarket businesses also improved during the first nine months of 2017.~~prior year period (see below). The strengthening of the U.S. dollar against foreign currencies decreased net sales within the Industrial segment by approximately ~~$0.7~~$4.5 million.

~~Expenses and~~ Operating ~~Income~~

Three months ended September 30, Nine months ended September 30,
(in millions) 2017 2016 Change 2017 2016 Change
Cost of sales $ 236.0
$ 198.6
$ 37.4
18.8 % $ 692.4
$ 582.0
$ 110.3
19.0 %
    % sales 66.1 % 63.7 %

65.1 % 64.2 %
Gross profit ⁽¹⁾
$ 121.1
$ 113.0
$ 8.2
7.2 % $ 371.1
$ 324.6
$ 46.5
14.3 %
    % sales 33.9 % 36.3 %

34.9 % 35.8 %

Selling and administrative expenses $ 73.4
$ 61.1
$ 12.2
20.0 % $ 210.4
$ 183.8
$ 26.7
14.5 %
    % sales 20.5 % 19.6 % 19.8 % 20.3 %

Operating income $ 47.8
$ 51.8
$ (4.0 ) (7.8 )% $ 160.7
$ 140.8
$ 19.9

14.1 %
    % sales 13.4 % 16.6 % 15.1 % 15.5 %
^{(1) Sales less cost of sales.}

~~Cost of sales in the third quarter of 2017 increased 18.8%~~margins, however, improved from ~~the 2016 period, while gross profit margin decreased from 36.3% in the 2016 period~~13.4% to 33.9% in the 2017 period. Gross margins declined at both Aerospace and Industrial. Gross profit improved within both segments, driven primarily by organic growth within each of the business units. At Industrial, gross margins decreased14.9% during the ~~2017~~ period, ~~due to lower productivity, primarily~~largely a result of ~~additional costs incurred on certain programs at Engineered Components. Incremental costs include expedited freight, increased scrap and costs related to~~favorable productivity, the transfer of work to other facilities. A lower margin contribution on acquisition sales and an increase in incentive compensation at certain businesses also had an impact on the overall lower gross margins at Industrial. Partially offsetting these items was the profit impact of organic growth within our Molding Solutions and Nitrogen Gas Products business units. The third quarter of 2017 and the third quarter of 2016 both included $0.5 millionabsence of short-term purchase accounting adjustments related to the acquisition of ~~FOBOHA. Within~~Gimatic and a higher mix of sales volumes from the Aerospace ~~improvement in gross profit relates primarily to organic growth within each~~segment.

The Company completed the sale of the Seeger business effective February 1, 2020. Gross proceeds received were 39.6 million Euros ($43.7 million). The Company yielded net cash proceeds of $36.9 million after consideration of cash sold and transaction costs. The final amount of proceeds from the sale is subject to post-closing adjustments. Resulting tax charges of $4.2 million were recognized in the first quarter of 2020, following the completion of the sale. See Note 2 within the Consolidated Financial Statements for further discussion.

Impact of Coronavirus

In December 2019, an outbreak of a novel strain of coronavirus (“COVID-19”) began in Wuhan, China, and was subsequently declared a pandemic by the World Health Organization. The outbreak and a continued spread of COVID-19 has resulted in a substantial curtailment of business activities worldwide and is causing weakened economic conditions, both in the United States and abroad. As part of growing efforts to contain the spread of COVID-19, a number of state, local and foreign governments have imposed various restrictions on the conduct of business and travel. The Company's global manufacturing operations of essential systems and components continues at reduced levels, with minimal plant closures. As a result of the COVID-19 pandemic and in support of continuing its manufacturing efforts, the Company has undertaken a number of steps to protect its employees, suppliers and customers. The Company’s global supply chain management team continues to monitor and manage its ability to operate effectively, however, to date, the Company has not experienced any significant disruptions within its supply chain. Ongoing communications with the Company's suppliers to identify and mitigate risk and to manage inventory levels will continue. Notwithstanding the Company's continued operations, COVID-19 has begun to have and may have further negative impacts on its operations, customers and supply chain even after the preventative and precautionary measures being taken.

The Company maintains sufficient liquidity and will continue to evaluate ways to enhance its liquidity position as it navigates through the disrupted business environment that has resulted from COVID-19. As of March 31, 2020, the Company held $112.8 million in cash and cash equivalents and had $320.9 million of undrawn borrowing capacity under its $1,000.0 million Amended Credit Facility, subject to covenants in the Company's revolving debt agreements. The Company remained in compliance with all covenants under its revolving Credit Agreement, which matures in February 2022, as of March 31, 2020. At this time, the Company has not drawn on its debt agreements as it believes the availability of those funds are not at risk given the strength of the underlying bank syndicate. The Company does not currently anticipate requiring any additional debt facilities, nor does it anticipate a material change in the terms or covenants pertaining to its current facilities. Given the current environment, the Company is closely monitoring its cash generation, usage and preservation including the management of working capital to generate cash. To better align costs with the current business environment, the Company has taken several actions which include temporary reductions in compensation for salaried employees including Company officers and Board directors, employee furloughs and reductions in discretionary expenses. As well, management has now suspended share repurchase activity. See additional discussion regarding liquidity within “Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources”.

Entering 2020, automotive, tool and die, and personal care and packaging end markets were experiencing lingering softness. Given the onset of the COVID-19 outbreak, sales pressure increased further within these markets. Medical end markets are expected to remain favorable. Aerospace end markets remained strong entering 2020, however the Company currently anticipates growing sales pressure within OEM as certain aircraft programs have been delayed as a result of COVID-19. Within

the aftermarket businesses, ~~combined with favorable productivity,~~aircraft are being removed from service and utilization is reduced. See additional discussion regarding the anticipated financial impact of COVID-19 within “Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Outlooks”.

RESULTS OF OPERATIONS

Net Sales



	Three Months Ended March 31,
(in millions)	2020		2019		Change
Industrial	$	199.1	$	242.5	$	(43.4	)	(17.9	)%
Aerospace	131.6		134.2		(2.6		)	(2.0	)%
Total	$	330.7	$	376.7	$	(46.0	)	(12.2	)%

The Company reported net sales of $330.7 million in the first quarter of 2020, a decrease of $46.0 million or 12.2%, from the first quarter of 2019. Organic sales decreased by $31.2 million, or 8.3%, including decreases of $28.6 at Industrial and $2.6 at Aerospace. The decrease at Industrial was driven by organic sales declines within several of the Industrial business units, due partially to continued softness in automotive end markets, reflecting global uncertainty, and potential changes in regulatory requirements related to personal care and packaging markets, partially offset by ~~planned price deflation.~~increased volumes within medical end markets. The Automation business experienced slight growth during the current period. Sales at Industrial during the first quarter of 2019 also included a $2.6 million commercial settlement attributed to a patent-related matter. The Company completed the sale of its Seeger business on February 1, 2020, reducing sales by $10.3 million during the first quarter of 2020 relative to the prior year period. The decrease at Aerospace was driven by a decline in sales within the original equipment manufacturing business ("OEM"), partially offset by sales growth within the aftermarket businesses. The decline in OEM sales was attributed to the 737 Max aircraft, following a suspension of production by Boeing. The strengthening of the U.S. dollar against foreign currencies decreased net sales within the Industrial segment by approximately $4.5 million.

The impacts of the COVID-19 outbreak also began to impact sales during the first quarter of 2020. Beginning late in the first quarter, Industrial and Aerospace business units began to experience the negative impact on demand for certain products and services due to COVID-19's disruption of global manufacturing and consumer spending. Much of the Company's global manufacturing of essential systems and components continues at reduced levels, however the current situation is very dynamic, and visibility of future operations is challenged. See additional discussion related to the anticipated financial impacts of COVID-19 within the segment outlooks below. See discussion related to COVID-19's risk on the Company's Consolidated Financial Statements within Part II, Item 1A.

Expenses and Operating Income



	Three Months Ended March 31,
(in millions)	2020			2019			Change
Cost of sales	$	208.2		$	244.6		$	(36.4	)	(14.9	)%
% sales	63.0		%	64.9		%
Gross profit ⁽¹⁾	$	122.4		$	132.0		$	(9.6	)	(7.3	)%
% sales	37.0		%	35.1		%
Selling and administrative expenses	$	73.1		$	81.4		$	(8.3	)	(10.2	)%
% sales	22.1		%	21.6		%
Operating income	$	49.3		$	50.6		$	(1.3	)	(2.6	)%
% sales	14.9		%	13.4		%

(1) Sales less cost of sales.

Cost of sales in the first quarter of 2020 decreased 14.9% from the 2019 period, while gross profit margin increased from 35.1% in the 2019 period to 37.0% in the 2020 period. Gross margins improved at ~~Aerospace~~both Industrial and Aerospace. At Industrial, gross profit decreased primarily as a result of ~~price deflation within~~ the ~~original equipment manufacturing business and an increase in incentive compensation, partially offset by the~~reduced profit impact of lower sales volumes. Gross margin at Industrial, however, increased ~~sales~~during the 2020 period, driven primarily by the absence of $4.0 million of short-term purchase accounting

adjustments related to the acquisition of Gimatic and favorable productivity. Within Aerospace, increased volumes within ~~our~~the maintenance ~~repair~~overhaul and ~~overhaul~~repair and spare parts businesses, in particular, contributed to the increased gross profit and improvement in gross margin during the ~~third~~first quarter of ~~2017.~~2020. Selling and administrative expenses in the ~~third~~first quarter of ~~2017 increased 20.0%~~2020 decreased 10.2% from the ~~2016~~2019 period due ~~primarily~~ to ~~corresponding increases in sales volumes and incentive compensation during the period, partially offset by~~ the absence ~~of $0.6 million~~ of costs related to workforce reductions during the 2019 period, lower amortization of certain intangibles related to earlier acquisitions and a ~~customer termination dispute and $1.2~~reduction in employee related costs (including lower incentive compensation), partially offset by $2.4 million of ~~costs~~divestiture charges related to the ~~acquisition~~completion of ~~FOBOHA during~~ the 2016 period. Additional costs of $0.3 million related to the second quarter 2017 restructuring actions also contributed to the increase in selling and administrative expenses during the third quarter of 2017.Seeger sale. As a percentage of sales, selling and administrative costs increased slightly from 19.6% in the third quarter of 2016 to 20.5% in the 2017 period. Operating income in the third quarter of 2017 decreased 7.8% to $47.8 million from the third quarter of 2016 and operating income margin decreased from 16.6% to 13.4%, driven primarily by unfavorable productivity, as discussed above, at Industrial.

~~Cost of sales~~21.6% in the first ~~nine months~~quarter of ~~2017 increased 19.0% from the 2016 period, while gross profit margin decreased from 35.8%~~2019 to 22.1% in the 2016 period to 34.9% in the 2017 period. Gross margins improved at Aerospace and declined at Industrial. Gross profit improved within both segments, driven primarily by organic growth within each of the business units. At Industrial, gross margins decreased during the first nine months of 2017 as a result of lower productivity, primarily a result of additional costs incurred on certain programs at Engineered Components. Incremental costs include expedited freight, increased scrap and costs related to the transfer of work to other facilities. A lower margin contribution on acquisition sales also had an impact on the overall lower gross margins at Industrial. Partially offsetting these items was the profit impact of organic growth within our Molding Solutions and Nitrogen Gas Products business units and a pre-tax net benefit of $1.3 million resulting from the second quarter 2017 restructuring actions taken within Industrial. Gross profit during the first nine months of 2017 was negatively impacted by $2.3 million of short-term purchase accounting adjustments related to the acquisition of FOBOHA, whereas the prior year period included $0.5 million of such adjustments. Within Aerospace, improvement in gross profit relates primarily to organic growth within each of the businesses, combined with favorable productivity, partially offset by price deflation. Increased volumes in the maintenance repair and overhaul and spare parts businesses, in particular, contributed to the gross margin improvement during the first nine months of 2017. Selling and administrative expenses in the first nine months of 2017 increased 14.5% from the 2016 period, due primarily to corresponding increases in sales volumes, incentive compensation and the amortization of intangible assets related to the acquisition of FOBOHA, partially offset by the absence of $3.0 million of costs related to a customer termination dispute and $1.2 million of transaction costs related to FOBOHA during the first nine months of 2016. As a percentage of sales, selling and administrative costs slightly decreased from 20.3% in the first nine

~~months of 2016 to 19.8% in the 2017~~2020 period. Operating income in the first ~~nine months~~quarter of ~~2017 increased 14.1%~~2020 decreased by 2.6% to ~~$160.7~~$49.3 million ~~from~~compared with the first ~~nine months~~quarter of ~~2016 and~~2019, however operating income margin ~~decreased slightly~~increased from ~~15.5%~~13.4% to ~~15.1%.~~14.9%, primarily driven by the benefits to Cost of Sales at Industrial noted above and a higher mix of sales volumes from the Aerospace segment.

Interest expense

Interest expense ~~increased~~decreased by ~~$0.7~~$0.8 million in the ~~third~~first quarter of ~~2017,~~2020 as compared with the prior year period, primarily as a result of ~~higher interest rates. Interest expense increased by $1.8 million in the first nine months of 2017, as compared with the prior year period, also a result of higher~~decreased average borrowings and lower average interest rates.

Other expense (income), net

Other expense (income), net in the ~~third~~first quarter of ~~2017~~2020 was ~~$0.4~~$1.6 million compared to ~~$0.6 million in the third quarter of 2016. Other expense (income), net in the first nine months of 2017 was $0.8 million compared to $0.0~~$1.8 million in the first ~~nine months~~quarter of ~~2016. Foreign currency losses of $0.1 million~~2019. Other expense (income) in the ~~first nine months of 2017 compared with~~current period included a foreign currency ~~gains~~gain of ~~$0.8~~$0.3 million inand the ~~first nine months~~2019 period included a foreign currency loss of ~~2016.~~$1.1 million.

Income Taxes

The Company's effective tax rate for the first ~~nine months~~quarter of ~~2017~~2020 was ~~20.5%~~31.5% compared with ~~25.1%~~22.3% in the first ~~nine months~~quarter of ~~2016~~2019 and ~~25.7%~~23.4% for the full year ~~2016.~~2019. The ~~decrease~~increase in the first ~~nine months~~quarter of ~~2017~~2020 effective tax rate from the full year ~~2016~~2019 rate is primarily due to the ~~adjustment of certain valuation reserves and other benefits resulting from the merger of legal entities in Switzerland, and the settlement~~recognition of tax ~~audits and closure~~expense related to the completed sale of ~~tax years for various jurisdictions,~~the Seeger business during the first quarter of 2020 ($4.2 million), partially offset by a benefit related to a refund of withholding taxes that were previously paid and included in tax expense in prior years and a reduction of the ~~expiration~~statutory tax rate at one of ~~certain tax holidays.~~our international operations.

Income and Income per Share


	Three months ended September 30,									Nine months ended September 30,									Three Months Ended March 31,
(in millions, except per share)	2017		2016		Change					2017		2016		Change					2020		2019		Change
Net income	$	35.3	$	36.8	$	(1.5	)	(4.1	)%	$	118.7	$	98.9	$	19.8		20.0	%	$	29.7	$	34.0	$	(4.3	)	(12.5	)%
Net income per common share:
Basic	$	0.65	$	0.68	$	(0.03	)	(4.4	)%	$	2.19	$	1.82	$	0.37		20.3	%	$	0.58	$	0.66	$	(0.08	)	(12.1	)%
Diluted	0.65		0.67		(0.02		)	(3.0	)%	2.17		1.81		0.36			19.9	%	0.58		0.65		(0.07		)	(10.8	)%
Weighted average common shares outstanding:
Basic	54.1		54.2		(0.1		)	(0.3	)%	54.1		54.2		(0.1		)	(0.1	)%	51.1		51.7		(0.6		)	(1.2	)%
Diluted	54.6		54.6		—			—	%	54.6		54.6		—			—	%	51.5		52.2		(0.7		)	(1.3	)%

Basic and diluted net income per common share decreased for the ~~three-month period, and increased for the nine-month~~three month period as compared to 2019. The decreases were due to the ~~2016 periods, consistent with the changes~~decrease in net income for the ~~periods. Basic weighted average common shares outstanding decreased slightly while~~period and were partially offset by the impact of reductions in both basic and diluted weighted average common shares outstanding ~~were flat. Share repurchases~~which decreased due to the repurchase of ~~550,994~~900,000 and ~~407,000~~396,000 shares during ~~2016~~2019 and ~~the first nine months of 2017,~~2020, respectively, as part of the Company's ~~repurchase program were largely~~publicly announced Repurchase Program. The impact of the repurchased shares was partially offset by the ~~grant and~~ issuance of additional shares for employee stock plans.

Financial Performance by Business Segment

Industrial


	Three months ended September 30,											Nine months ended September 30,										Three Months Ended March 31,
(in millions)	2017			2016			Change					2017			2016			Change				2020			2019			Change
Sales	$	240.4		$	208.7		$	31.6		15.2	%	$	719.6		$	608.5		$	111.0	18.2	%	$	199.1		$	242.5		$	(43.4	)	(17.9	)%
Operating profit	29.3			35.0			(5.7		)	(16.2	)%	100.2			99.4			0.7		0.7	%	17.9			21.5			(3.6		)	(16.6	)%
Operating margin	12.2		%	16.7		%						13.9		%	16.3		%					9.0		%	8.9		%

Sales at Industrial were ~~$240.4~~$199.1 million in the ~~third~~first quarter of ~~2017,~~2020, a ~~$31.6~~$43.4 million, ~~increase~~or 17.9% decrease from the ~~third~~first quarter of 2016. This sales increase was partly driven by an incremental $11.3 million sales contribution from FOBOHA during July and August 2017 (acquisition completed on August 31, 2016) and Gammaflux sales of $3.2 million during the third quarter of 2017.2019. Organic sales ~~increased~~decreased by ~~$12.0~~$28.6 million, or ~~5.8%~~11.8%, during the ~~2017~~2020 period, driven ~~primarily~~ by declines in sales within each of the businesses, with the exception of Automation. Softness in automotive end markets continued ~~strength~~to negatively impact sales volumes, largely due to lower global auto production rates and delays in ~~our Nitrogen Gas Products~~automotive model change releases, reflecting ongoing global trade uncertainty. Sales within the personal care and ~~Molding Solutions~~packaging markets continued to be impacted by proposed environmental regulations affecting product and packaging composition and disposability. Increased volumes within the medical end market, however, partially offset the automotive, personal care and packaging related volume declines. Sales during the first quarter of 2019 also included a $2.6 million commercial settlement of a patent-related matter. The Company completed the sale of its Seeger business ~~units. A continuation of favorable demand trends in our tool and die and transportation end-markets have contributed to the organic growth within these business units. Foreign currency increased~~on February 1, 2020, reducing sales by approximately $5.1 million as the U.S. dollar weakened against foreign currencies. During the first nine months of 2017, this segment reported sales of $719.6 million, an 18.2% increase from the first nine months of 2016. Organic sales increased by $58.0 million, or 9.5%, during the 2017 period, primarily a result of continued strength in our Nitrogen Gas Products and Molding Solutions businesses. Acquisitions provided sales of $53.7$10.3 million during the first ~~nine months~~quarter of ~~2017. The impact~~2020 relative to the prior year period. Beginning in February 2020, Industrial began to experience further softness in China end markets resulting from the negative impacts of ~~foreign~~the COVID-19 pandemic, with softness expanding into European and North American markets in March 2020. See additional discussion below and within Part II, Item 1A. Foreign currency decreased sales by approximately ~~$0.7~~$4.5 million as the U.S. dollar strengthened against foreign currencies.

Operating profit in the ~~third~~first quarter of ~~2017~~2020 at Industrial was ~~$29.3~~$17.9 million, a decrease of ~~$5.7~~$3.6 million from the ~~third~~first quarter of ~~2016.~~2019. Operating profit was negatively impacted ~~primarily~~ by the lower profit contribution of declining organic sales volumes across the businesses and $2.4 million of divestiture charges related to the completion of the Seeger sale. Favorable productivity, ~~resulting primarily from increased costs incurred on certain programs within Engineered Components. Incremental costs include expedited freight, increased scrap and~~including the absence of costs related to workforce reductions during the ~~transfer~~2019 period, lower amortization of ~~work to other facilities. Costs~~certain intangibles related to earlier acquisitions and a reduction in employee related costs (including lower ~~productivity and an increase in~~ incentive ~~compensation at certain Industrial businesses were~~compensation) partially offset by the profit impact of ~~increased sales~~lower volumes ~~largely a result of stronger tool and die and transportation end-markets.~~within Industrial. The ~~third~~first quarter of ~~2017~~2019 also included $0.3 million of costs related to restructuring actions that occurred during the second quarter of 2017. See Note 14 to the Consolidated Financial Statements for further discussion related to the restructuring actions. The third quarter of 2017 includes $0.5$4.0 million of short-term purchase accounting adjustments related to the acquisition of ~~FOBOHA, whereas~~Gimatic and the ~~third quarter~~operating profit benefit of ~~2016 included $1.7~~the $2.6 million ~~of short-term purchase accounting adjustments and acquisition costs. Lower margins at FOBOHA also impacted the third quarter of 2017.~~commercial settlement. Operating margin ~~decreased~~increased from ~~16.7%~~8.9% in the ~~2016~~2019 period to ~~12.2%~~9.0% in the ~~2017~~2020 period, due to the above items. Operating profit in the first nine months of 2017 at Industrial was $100.2 million, an increase of $0.7 million from the first nine months of 2016. Operating profit benefited from increased sales volumes, largely offset by lower productivity, primarily driven by the increased costs incurred on certain programs within Engineered Components. The 2017 period also includes $2.3 million of short-term purchase accounting adjustments related to the acquisition of FOBOHA, primarily offset by a pre-tax net benefit of $1.4 million that resulted from the restructuring actions taken during the second quarter of 2017. Operating margin decreased from 16.3% in the 2016 period to 13.9% in the 2017 period primarily as a result of ~~these items. Lower margins at FOBOHA also impacted~~ the ~~first nine months of 2017.~~net benefits described above.

Outlook: In ~~the~~ Industrial, ~~manufacturing businesses,~~ management isremains focused on generating organic sales growth through the introduction of new products and services and by leveraging the benefits of ~~the~~its diversified products and global industrial end-markets, ~~in which its businesses have a global presence.~~however the onset of the COVID-19 pandemic has presented new challenges for the Company. Our ability to generate sales growth is subject to ~~economic conditions in~~recent disruptions within the global markets served by all of our businesses. Entering 2020, automotive, tool and die, and personal care and packaging end markets were experiencing lingering softness. Given the onset of COVID-19, sales pressure increased further within these markets. Markets in China have recently begun to indicate signs of recovery, however European and North American markets continue to remain challenged given ongoing restrictions on business and travel. Several automotive plants, including plants operated by certain of our more significant customers, experienced closures during the first quarter. General industrial end markets reflect indications of further softening from restricted levels of investment and capital expenditures. Orders within these end markets have continued to decline throughout the first quarter and into the second quarter as a result of the COVID-19 disruption, with further sales deterioration anticipated throughout the second quarter. These markets are expected to recover slowly as the global economic environment improves. Medical end markets are expected to remain favorable. For ~~general~~overall industrial end-markets, the manufacturing Purchasing ~~Managers Indices~~Managers' Index ("~~PMIs"~~PMI") ~~above 50~~has reflected the impacts of COVID-19. PMI in ~~China,~~both North America and Europe ~~are positive signs. Within~~has further deteriorated since December 31, 2019, to below 50 within both regions as of March 31, 2020. PMI in China ~~we have seen a strengthening in orders that began during the middle~~declined to nearly 40 through February 2020, however it has gradually recovered through March, returning to 50 as of ~~2016 and that is continuing into the fourth quarter of 2017, indicating strength within the transportation markets.~~March 31, 2020. Global forecasted production for light vehicles ~~is expected to grow nominally in 2017, however production is beginning~~has continued to decline ~~modestly~~ within the Europe, China and North ~~American market.~~America markets throughout the first quarter of 2020. Within our Molding Solutions ~~businesses,~~business, the global ~~markets remain healthy. For~~medical market remains healthy, while the ~~Molding Solutions businesses in the remainder of 2017, we anticipate favorable demand trends to continue within the medical and personal care~~automotive hot runner ~~markets~~market remains soft given the delay in model launches by automotive original equipment manufacturers, further intensified by the impacts of COVID-19. Proposed environmental regulations affecting product and packaging composition and disposability may continue to impact sales within these end markets. Overall industrial end-markets may also be impacted by uncertainty related to current and proposed tariffs announced by the United States and the ~~packaging and medical mold markets. Within our molds product line, orders continued~~China governments, although developments in this area have been muted given the global shift in focus to ~~improve during the third quarter of 2017.~~combating COVID-19. As noted above, our ~~third quarter~~first three months of sales were ~~positively~~ negatively

impacted by ~~$5.1~~$4.5 million from fluctuations in foreign currencies. To the extent that the U.S. dollar fluctuates relative to other foreign currencies, our sales may continue to be impacted by foreign currency relative to the prior year periods. The relative impact on operating profit is not expected to be as significant as the impact on sales as most of our businesses have expenses primarily denominated in local currencies, where their revenues ~~reside. The~~reside, however operating margins may be impacted. Although the Company's near-term focus remains on the preservation of cash and liquidity given the disruption caused by COVID-19, the Company also remains

focused long term on sales growth through acquisition and expanding geographic reach. Strategic investments in new technologies, manufacturing processes and product development are expected to provide incremental benefits over the long ~~term.~~term and management continues to evaluate such opportunities.

Given the recent pressures on sales growth resulting from COVID-19, the Company is focused on the proactive management of costs as it takes action to mitigate the impacts on operating profit. While management also remains focused on strategic investments and new product and process introductions in the long term, driving productivity by leveraging the Barnes Enterprise System in the short-term is a strategic initiative. Operating profit is ~~largely dependent on~~anticipated to be impacted by changes in sales volume noted above, mix and pricing, and the ~~sales volumes and mix~~levels of short term investments made within each of the ~~businesses~~Industrial businesses. Operating profit may also be impacted by enactment of or changes in tariffs, trade agreements and trade policies that may affect the ~~segment. Management continues to focus on improving profitability~~cost and/or availability of goods, including aluminum and expanding margins through leveraging organic sales growth, acquisitions, pricing initiatives, global sourcing, productivity and the evaluation of customer programs. We continue to evaluate market conditions and remain proactive in managing costs.steel. Costs associated with new product and process introductions, restructuring and other cost initiatives, strategic investments and the integration of acquisitions may negatively impact operating profit.

Aerospace


	Three months ended September 30,										Nine months ended September 30,										Three Months Ended March 31,
(in millions)	2017			2016			Change				2017			2016			Change				2020			2019			Change
Sales	$	116.8		$	102.8		$	14.0	13.6	%	$	343.9		$	298.1		$	45.8	15.4	%	$	131.6		$	134.2		$	(2.6	)	(2.0	)%
Operating profit	18.5			16.9			1.6		9.6	%	60.5			41.4			19.2		46.3	%	31.4			29.1			2.2			7.7	%
Operating margin	15.8		%	16.4		%					17.6		%	13.9		%					23.9		%	21.7		%



January 1, 2017	$	—
Employee termination benefit costs	3,756
Payments	(3,008		)
Foreign currency translation	(45		)
September 30, 2017	$	703


	Four fiscal quarters ended September 30, 2017		Four fiscal quarters ended March 31, 2020
Net income	$	155.4	$	154.1
Add back:
Interest expense	13.7		19.8
Income taxes	44.6		52.4
Depreciation and amortization	89.7		97.6
Adjustment for non-cash stock based compensation	10.4		12.5
Amortization of FOBOHA acquisition inventory step-up	2.4
Amortization of Gimatic acquisition inventory step-up			(1.9		)
Due diligence and transaction expenses			4.0
Non-cash impairment charge (see Note 2)			5.6
Other adjustments	0.6		(3.2		)
Consolidated EBITDA, as defined	$	316.7
Consolidated EBITDA, as defined within the Amended Credit Agreement			$	340.9

Consolidated Senior Debt, as defined, as of September 30, 2017	$	516.0
Consolidated Senior Debt, as defined, as of March 31, 2020			$	813.7
Ratio of Consolidated Senior Debt to Consolidated EBITDA	1.63		2.39
Maximum	3.25		3.25
Consolidated Total Debt, as defined, as of September 30, 2017	$	516.0
Consolidated Total Debt, as defined, as of March 31, 2020			$	813.7
Ratio of Consolidated Total Debt to Consolidated EBITDA	1.63		2.39
Maximum	3.75		3.75
Consolidated Cash Interest Expense, as defined, as of September 30, 2017	$	13.7
Consolidated Cash Interest Expense, as defined, as of March 31, 2020			$	19.8
Ratio of Consolidated EBITDA to Consolidated Cash Interest Expense	23.13		17.18
Minimum	4.25		4.25



Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid Per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs⁽²⁾

July 1-31, 2017	45,771		$	61.05	—	4,342,006
August 1-31, 2017	329,146		$	59.66	300,000	4,042,006
September 1-30, 2017	1,502		$	63.67	—	4,042,006
Total	376,419	⁽¹⁾	$	59.85	300,000



Exhibit 10.1	Offer Letter to James C. Pelletier dated February 14, 2020.
Exhibit 10.2	Form of Barnes Group Inc. Stock and Incentive Award Plan Performance Share Award Summary of Grant and Performance Share Award Agreement for Officers and Other Individuals as Designated by the Compensation and Management Development Committee dated as of February 13, 2020.
Exhibit 15	Letter regarding unaudited interim financial information.
Exhibit 31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 101.INS	XBRL Instance ~~Document.~~Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH	XBRL Taxonomy Extension Schema Document.
Exhibit 101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
Exhibit 101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
Exhibit 101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
Exhibit 101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.



		Barnes Group Inc.
		(Registrant)

Date:	~~October~~April 27, ~~2017~~2020	/s/ CHRISTOPHER J. STEPHENS, JR.
		Christopher J. Stephens, Jr. Senior Vice President, Finance Chief Financial Officer (Principal Financial Officer)

Date:	~~October~~April 27, ~~2017~~2020	/s/ MARIAN ACKER
		Marian Acker Vice President, Controller (Principal Accounting Officer)



Exhibit No.	Description	Reference
15 10.1	Offer Letter ~~regarding unaudited interim financial information.~~to James C. Pelletier dated February 14, 2020.	Filed with this report.
10.2	~~31.1~~Form of Barnes Group Inc. Stock and Incentive Award Plan Performance Share Award Summary of Grant and Performance Share Award Agreement for Officers and Other Individuals as Designated by the Compensation and Management Development Committee dated as of February 13, 2020.	Filed with this report.
15	Letter regarding unaudited interim financial information.	Filed with this report.
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed with this report.
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed with this report.
32	Certification pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Furnished with this report.
Exhibit 101.INS	XBRL Instance ~~Document.~~Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	Filed with this report.
Exhibit 101.SCH	XBRL Taxonomy Extension Schema Document.	Filed with this report.
Exhibit 101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.	Filed with this report.
Exhibit 101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.	Filed with this report.
Exhibit 101.LAB	XBRL Taxonomy Extension Label Linkbase Document.	Filed with this report.
Exhibit 101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.	Filed with this report.