Exhibit 99.1
Barnes Group Inc.
Corporate Office
Bristol, CT 06010
Tel: (860) 583-7070
![]() | ![]() |
Brian D. Koppy Investor Relations (860) 973-2126 Stephen J. McKelvey Corporate Communications (860) 973-2132 |
BARNES GROUP INC. ANNOUNCES
THIRD QUARTER 2006 FINANCIAL RESULTS
l | Net sales increase 19 percent to a record $322 million | |
l | Net income up 61 percent; diluted EPS up 46 percent from adjusted third quarter 2005 results | |
l | Full-year 2006 estimated net income per diluted share raised to $1.33 - $1.35 |
Bristol, Connecticut, October 19, 2006—Barnes Group Inc. (NYSE: B) today announced financial results for the quarter ended September 30, 2006. Net sales for the third quarter 2006 were $322.0 million, up 19 percent from $271.5 million in the third quarter 2005.
Net income for the third quarter 2006 was $18.9 million, or $0.35 per diluted share, compared to $15.4 million, or $0.31 per diluted share, in the third quarter of the prior year. Against an adjusted third quarter 2005 net income of $11.7 million, or $0.24 per diluted share, the increase in net income is 61 percent and an increase of 46 percent for diluted EPS. Included in Barnes Group’s third quarter 2005 results were retroactive tax benefits of approximately $2.6 million or $0.05 per diluted share, and an out-of-period $1.1 million, or $0.02 per diluted share, favorable adjustment related to accounts payable.
References in this release to the third quarter and year-to-date 2005 adjusted net income, adjusted net income per diluted share, and adjusted operating income are non-GAAP financial measures which are detailed on the non-GAAP financial reconciliations at the end of the press release.
Operating income increased 73 percent to $30.6 million in the third quarter of 2006, from an adjusted $17.6 million in the third quarter of the prior year.
“In the third quarter, Barnes Group achieved $322 million in sales, a record, representing double-digit revenue growth supported by organic growth in each of our three businesses,” said Gregory F. Milzcik, President and Chief Executive Officer. “These outstanding results showcase the combined strength of our businesses and continued commitment to our objective of balanced, sustainable, profitable growth.
Barnes Group Inc. / 2
“Considering the strong contributions by all three businesses during the first three quarters, and current market conditions, we are increasing our full-year estimate of diluted earnings per share to $1.33 to $1.35,” continued Milzcik.
Sales at Barnes Distribution were $135.4 million in the third quarter of 2006, up 19 percent from the year-ago quarter, including $16.3 million in incremental sales from acquisitions, primarily from the KENT acquisition which closed on July 31, 2006. Organic sales growth was driven mostly by Barnes Distribution-North America as a result of double-digit sales growth in Corporate Accounts and Tier II relationships.
Operating profit at Barnes Distribution was $9.2 million, up 24 percent from $7.4 million in the third quarter of 2005. On an adjusted basis, operating profit increased 65 percent from an adjusted $5.6 million in the third quarter of 2005. Contributions from recent acquisitions and lower stock compensation drove operating profit improvements.
“Barnes Distribution will continue to focus on improving sales growth, operational performance and successfully integrating acquisitions,” said Idelle K. Wolf, President, Barnes Distribution. “We are pleased with the integration of the Toolcom and SPD acquisitions, and we are looking forward to similar benefits from the KENT acquisition, led by a strong management team for our expanded European business.”
Third quarter sales at Associated Spring were $112.0 million, up 12 percent, including $7.6 million from the recent acquisition of Heinz Hänggi GmbH, Stanztechnik. Sales in specialty operations, excluding Heinz Hänggi, increased 2 percent, while sales in the traditional business rose 6 percent, with continued improvement in operating margin.
Operating profit at Associated Spring in the third quarter 2006 increased 82 percent to $10.1 million, as a result of the Heinz Hänggi acquisition, organic sales growth, and lower stock compensation. Tempering this increase in operating profit were expenses of approximately $0.6 million that were incurred during the quarter for the transfer of manufacturing operations from Barnes Precision Valve’s suburban Detroit location to domestic and international facilities.
“Associated Spring continues to implement changes that leverage the operational effectiveness of its global manufacturing operations,” said Jerry W. Burris, President, Associated Spring. “The expansion of Barnes Precision Valve’s manufacturing footprint in Asia is strategically important as we align ourselves with our globally expanding customers.”
Sales at Barnes Aerospace were up 30 percent to a record $77.2 million for the quarter ended September 30, 2006. Sales increased 15 percent and 76 percent in the OEM and aftermarket businesses, respectively.
Orders at Barnes Aerospace were up 70 percent to $118.6 million in the third quarter 2006, from the prior year. Commercial orders were $68.0 million, military orders were $25.8 million, and industrial gas turbine orders were $1.1 million. Backlog at Barnes Aerospace was a record $367.7 million, up 44 percent from a year ago and up 37 percent from December 31, 2005.
Operating profit at Barnes Aerospace grew 72 percent to $11.3 million in the third quarter 2006. The strong increase in operating profit was driven by higher sales volume and an increased percentage of higher margin aftermarket activity.
Barnes Group Inc. / 3
“The Barnes Aerospace team continues to accelerate its growth, enabling us to achieve strong results with record sales and profits in the third quarter of 2006,” said Patrick J. Dempsey, President. “Our success derives from Barnes Aerospace’s ability to provide high-quality components and value-added engineering services to meet the needs of the global aerospace industry.”
William C. Denninger, Barnes Group Inc.’s Chief Financial Officer, commented, “Barnes Group’s financial performance continues to reflect sustained top-line and bottom-line growth. Our consistent performance demonstrates the benefits of a well balanced and diversified business.”
For the nine months ended September 30, 2006, Barnes Group’s net sales were $930.8 million, up 13 percent. Net income increased 24 percent to $55.3 million, or $1.06 per diluted share, for the nine months ended September 30, 2006. Operating income for the nine months ended September 30, 2006 increased 45 percent to $87.4 million.
On an adjusted basis, net income increased 46 percent to $55.3 million or $1.06 per diluted share, for the nine months ended September 30, 2006, from an adjusted $37.8 million or $0.78 per diluted share in the same period last year. Operating income for the nine months ended September 30, 2006 increased 49 percent to $87.4 million, up from an adjusted $58.6 million for the nine months ended September 30, 2005.
Barnes Group will conduct a conference call with investors to discuss third quarter results at 1:00 p.m. ET today, October 19, 2006. A web cast of the live call, supporting materials and an archived replay will be available on the Barnes Group investor relations link at www.barnesgroupinc.com.
Barnes Group Inc. (NYSE:B) is an international diversified industrial manufacturing and distribution company focused on achieving balanced, sustainable, profitable growth. Founded in 1857, Barnes Group consists of three businesses: Barnes Distribution, Associated Spring and Barnes Aerospace. Over 6,500 dedicated employees at more than 65 locations worldwide contribute to Barnes Group Inc.’s success. The Company has paid cash dividends to stockholders on a continuous basis since 1934. For more information, visit www.barnesgroupinc.com.
This release may contain certain forward-looking statements as defined in the Private Securities Litigation and Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed in the forward-looking statements. The risks and uncertainties, which are described in our periodic filings with the Securities and Exchange Commission, include, among others, uncertainties arising from the behavior of financial markets; future financial performance of the industries or customers that we serve; changes in market demand for our products and services; integration of acquired businesses; changes in raw material prices and availability; our dependence upon revenues and earnings from a small number of significant customers; uninsured claims; and numerous other matters of global, regional or national scale, including those of a political, economic, business, competitive, regulatory and public health nature. The Company assumes no obligation to update our forward-looking statements.
# # #
Barnes Group Inc. / 4
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, | ||||||||||||||||||
2006 | 2005 | % Change | 2006 | 2005 | % Change | ||||||||||||||
As adjusted | As adjusted | ||||||||||||||||||
(note 1) | (note 1) | ||||||||||||||||||
Net sales | $ | 322,048 | $ | 271,518 | 19 | $ | 930,826 | $ | 825,768 | 13 | |||||||||
Cost of sales (note 2) | 203,493 | 172,070 | 18 | 592,496 | 526,572 | 13 | |||||||||||||
Selling and administrative expenses | 87,989 | 79,998 | 10 | 250,939 | 238,768 | 5 | |||||||||||||
291,482 | 252,068 | 16 | 843,435 | 765,340 | 10 | ||||||||||||||
Operating income | 30,566 | 19,450 | 57 | 87,391 | 60,428 | 45 | |||||||||||||
Operating margin | 9.5 | % | 7.2 | % | 9.4 | % | 7.3 | % | |||||||||||
Other income (note 3) | (21 | ) | 533 | NM | 856 | 10,065 | (91 | ) | |||||||||||
Interest expense | 6,768 | 4,387 | 54 | 16,906 | 12,892 | 31 | |||||||||||||
Other expenses | 309 | 174 | 77 | 694 | 716 | (3 | ) | ||||||||||||
Income before income taxes | 23,468 | 15,422 | 52 | 70,647 | 56,885 | 24 | |||||||||||||
Income taxes (note 4) | 4,607 | 27 | NM | 15,306 | 12,430 | 23 | |||||||||||||
Net income | $ | 18,861 | $ | 15,395 | 23 | $ | 55,341 | $ | 44,455 | 24 | |||||||||
Per common share: (note 5) | |||||||||||||||||||
Net income: | |||||||||||||||||||
Basic | $ | 0.36 | $ | 0.32 | 12 | $ | 1.10 | $ | 0.95 | 16 | |||||||||
Diluted | 0.35 | 0.31 | 13 | 1.06 | 0.91 | 16 | |||||||||||||
Dividends | 0.125 | 0.110 | 14 | 0.360 | 0.310 | 16 | |||||||||||||
Average common shares outstanding: (note 5) | |||||||||||||||||||
Basic | 51,868,493 | 47,394,820 | 9 | 50,188,177 | 46,994,458 | 7 | |||||||||||||
Diluted | 53,526,824 | 49,647,536 | 8 | 52,415,932 | 48,737,774 | 8 |
NM- not meaningful
Footnotes:
(1) Adjusted to reflect the change in accounting for stock-based compensation in accordance with SFAS 123R.
(2) Third quarter 2005 cost of sales includes a $1,814 ($1,141 after tax, or $0.02 diluted EPS) positive adjustment related to accounts payable.
(3) Other income in 2005 includes the $8,892 gain ($4,030 after tax, or $0.08 diluted EPS) on the April sale of NASCO investment.
(4) Third quarter 2005 taxes include a $2,553 benefit ($0.05 diluted EPS) of which $1,473 ($0.03 diluted EPS) relates to prior years, related to being granted Pioneer tax status in Singapore.
(5) Adjusted to reflect the two for one stock split in June 2006.
Barnes Group Inc. / 5
BARNES GROUP INC.
OPERATIONS BY REPORTABLE BUSINESS SEGMENT
(Dollars in thousands)
Unaudited
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||
2006 | 2005 | % Change | 2006 | 2005 | % Change | ||||||||||||||
Net Sales | As adjusted (note 1) | As adjusted (note 1) | |||||||||||||||||
Barnes Distribution | $ | 135,417 | $ | 113,959 | 19 | $ | 385,316 | $ | 340,906 | 13 | |||||||||
Associated Spring | 111,951 | 100,249 | 12 | 335,059 | 321,283 | 4 | |||||||||||||
Barnes Aerospace | 77,185 | 59,301 | 30 | 218,048 | 171,237 | 27 | |||||||||||||
Intersegment sales | (2,505 | ) | (1,991 | ) | (26 | ) | (7,597 | ) | (7,658 | ) | 1 | ||||||||
Total net sales | $ | 322,048 | $ | 271,518 | 19 | $ | 930,826 | $ | 825,768 | 13 | |||||||||
Operating profit (note 1) | |||||||||||||||||||
Barnes Distribution (note 2) | $ | 9,175 | $ | 7,373 | 24 | $ | 26,999 | $ | 18,391 | 47 | |||||||||
Associated Spring | 10,069 | 5,536 | 82 | 29,912 | 24,096 | 24 | |||||||||||||
Barnes Aerospace | 11,326 | 6,590 | 72 | 30,494 | 18,149 | 68 | |||||||||||||
Total operating profit | 30,570 | 19,499 | 57 | 87,405 | 60,636 | 44 | |||||||||||||
Interest income | 230 | 469 | (51 | ) | 792 | 903 | (12 | ) | |||||||||||
Interest expense | (6,768 | ) | (4,387 | ) | 54 | (16,906 | ) | (12,892 | ) | 31 | |||||||||
Other income (expense), net (note 3) | (564 | ) | (159 | ) | NM | (644 | ) | 8,238 | NM | ||||||||||
Income before income taxes | $ | 23,468 | $ | 15,422 | 52 | $ | 70,647 | $ | 56,885 | 24 |
NM- not meaningful
Footnotes:
(1) Adjusted to reflect the change in accounting for stock-based compensation in accordance with SFAS 123R.
(2) Barnes Distribution third quarter 2005 operating profit includes a $1,814 positive adjustment to accounts payable.
(3) Year to date other income in 2005 includes the $8,892 gain on the April sale of the NASCO investment.
Barnes Group Inc. / 6
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
Unaudited
September 30, 2006 | September 30, 2005 | ||||||
Assets | As adjusted (note 1) | ||||||
Current assets | |||||||
Cash and cash equivalents | $ | 32,150 | $ | 31,489 | |||
Accounts receivable | 203,272 | 163,281 | |||||
Inventories | 185,770 | 158,465 | |||||
Deferred income taxes | 22,292 | 20,817 | |||||
Prepaid expenses | 14,944 | 12,376 | |||||
Total current assets | 458,428 | 386,428 | |||||
Deferred income taxes | 20,107 | 27,127 | |||||
Property, plant and equipment, net | 208,373 | 157,276 | |||||
Goodwill | 349,478 | 234,084 | |||||
Other intangible assets, net | 242,020 | 165,894 | |||||
Other assets | 52,527 | 48,073 | |||||
Total assets | $ | 1,330,933 | $ | 1,018,882 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities | |||||||
Accounts payable | 156,825 | 141,746 | |||||
Accrued liabilities | 107,467 | 84,465 | |||||
Long-term debt-current | 20,999 | 21,614 | |||||
Total current liabilities | 285,291 | 247,825 | |||||
Long-term debt | 415,199 | 266,382 | |||||
Accrued retirement benefits | 90,326 | 84,589 | |||||
Other liabilities | 31,141 | 18,387 | |||||
Stockholders' equity | 508,976 | 401,699 | |||||
Total liabilities and stockholders' equity | $ | 1,330,933 | $ | 1,018,882 |
Footnote:
(1) Periods prior to 1/1/06 adjusted to reflect the change in accounting for stock-based compensation in accordance with SFAS 123R.
Barnes Group Inc. / 7
BARNES GROUP INC.
NON-GAAP FINANCIAL MEASURE RECONCILIATION
(Dollars in thousands, except per share data)
Unaudited
Following is a reconciliation of results excluding certain adjustments to the Company's reported results:
Three months ended September 30, 2005 | Nine months ended September 30, 2005 | ||||||||||||||||||
As reported | Adjustments | As adjusted | As reported | Adjustments | As adjusted | ||||||||||||||
(note 1) | (note 1) | ||||||||||||||||||
Segment results: | |||||||||||||||||||
Barnes Distribution | |||||||||||||||||||
Operating profit (note 2) | $ | 7,373 | $ | (1,814 | ) | $ | 5,559 | $ | 18,391 | $ | (1,814 | ) | $ | 16,577 | |||||
Consolidated results: | |||||||||||||||||||
Net sales | $ | 271,518 | $ | $ | 271,518 | $ | 825,768 | $ | $ | 825,768 | |||||||||
Cost of sales (note 2) | 172,070 | 1,814 | 173,884 | 526,572 | 1,814 | 528,386 | |||||||||||||
Selling and administrative expenses | 79,998 | 79,998 | 238,768 | 238,768 | |||||||||||||||
252,068 | 1,814 | 253,882 | 765,340 | 1,814 | 767,154 | ||||||||||||||
Operating income | 19,450 | (1,814 | ) | 17,636 | 60,428 | (1,814 | ) | 58,614 | |||||||||||
Operating margin | 7.2 | % | 6.5 | % | 7.3 | % | 7.1 | % | |||||||||||
Other income (note 3) | 533 | 533 | 10,065 | (8,892 | ) | 1,173 | |||||||||||||
Interest expense | 4,387 | 4,387 | 12,892 | 12,892 | |||||||||||||||
Other expenses | 174 | 174 | 716 | 716 | |||||||||||||||
Income before income taxes | 15,422 | (1,814 | ) | 13,608 | 56,885 | (10,706 | ) | 46,179 | |||||||||||
Income taxes (notes 2, 3 and 4) | 27 | 1,880 | 1,907 | 12,430 | (4,062 | ) | 8,368 | ||||||||||||
Net income | $ | 15,395 | $ | (3,694 | ) | $ | 11,701 | $ | 44,455 | $ | (6,644 | ) | $ | 37,811 | |||||
Net income per common share - diluted | $ | 0.31 | $ | (0.07 | ) | $ | 0.24 | $ | 0.91 | $ | (0.13 | ) | $ | 0.78 |
Footnotes: | ||||||||||||||||||||||||
(1) Periods prior to January 1, 2006 have been adjusted to reflect the change in accounting for stock-based compensation in accordance with SFAS No. 123R. All per-share amounts have been adjusted to reflect the effect of the 2-for-1 stock split in the second quarter of 2006. | ||||||||||||||||||||||||
The Company has presented certain financial measurements, excluding certain discrete items. These discrete items include: | ||||||||||||||||||||||||
(2) As part of management's ongoing internal control assessment, during the third quarter of 2005, the Company identified and recorded an adjustment to accounts payable and cost of sales at Barnes Distribution. The Company determined that cost of sales was overstated in prior periods due to inaccuracies in recording inventory receipts from 2000 through 2005. This overstatement was corrected in the third quarter of 2005 as a reduction to cost of sales of $1,814. The after-tax effect of this adjustment was $1,141, or $0.02 per diluted share. Management concluded that such corrections were immaterial, both quantitatively and qualitatively, to the 2005 financial statements and to the previously reported results of the prior years to which they relate. | ||||||||||||||||||||||||
(3) During the second quarter of 2005, the Company sold its 45 percent interest in NHK-Associated Spring Suspension Components Inc. ("NASCO"), resulting in a pre-tax gain of $8,892 and an after-tax gain of $4,030, or $0.08 per diluted share. | ||||||||||||||||||||||||
(4) During the third quarter of 2005, the Company was granted Pioneer tax status in Singapore and recorded a benefit of $2,553 or $0.05 per diluted share of which $1,473 or $0.03 per diluted share related to prior years. | ||||||||||||||||||||||||
These adjustments represent discrete items and an out-of-period adjustment. Management believes that providing results, excluding these items, is useful to investors when comparing year-over-year results of operations. Management does not intend results excluding these adjustments to represent results as defined by GAAP, and the reader should not consider it as an alternative measurement calculated in accordance with GAAP or as an indicator of the Company's operating performance. Accordingly, the measurements have limitations depending on their use. |
Barnes Group Inc. / 8
BARNES GROUP INC.
NON-GAAP FINANCIAL MEASURE RECONCILIATION
(Dollars in thousands, except per share data)
Unaudited
Following is a reconciliation of results excluding certain adjustments to the Company's reported results:
Year ended December 31, 2005 | ||||||||||
As reported | Adjustments | As adjusted | ||||||||
(note 1) | ||||||||||
Net sales | ||||||||||
Barnes Distribution | $ | 453,754 | $ | 453,754 | ||||||
Associated Spring | 422,403 | 422,403 | ||||||||
Barnes Aerospace | 235,420 | 235,420 | ||||||||
Intersegment sales | (9,403 | ) | (9,403 | ) | ||||||
Total net sales | $ | 1,102,174 | $ | 1,102,174 | ||||||
Operating profit | ||||||||||
Barnes Distribution (note 2) | $ | 22,566 | $ | (1,814 | ) | $ | 20,752 | |||
5.0 | % | 4.6 | % | |||||||
Associated Spring | 28,576 | 28,576 | ||||||||
6.8 | % | 6.8 | % | |||||||
Barnes Aerospace | 25,497 | 25,497 | ||||||||
10.8 | % | 10.8 | % | |||||||
Total operating profit | $ | 76,639 | $ | (1,814 | ) | $ | 74,825 | |||
Consolidated results: | ||||||||||
Net sales | $ | 1,102,174 | $ | 1,102,174 | ||||||
Cost of sales (note 2) | 705,488 | $ | 1,814 | 707,302 | ||||||
Selling and administrative expenses | 320,301 | 320,301 | ||||||||
1,025,789 | 1,814 | 1,027,603 | ||||||||
Operating income | 76,385 | (1,814 | ) | 74,571 | ||||||
Operating margin | 6.9 | % | 6.8 | % | ||||||
Other income (note 4) | 10,449 | (8,892 | ) | 1,557 | ||||||
Interest expense | 17,551 | 17,551 | ||||||||
Other expenses | 1,132 | 1,132 | ||||||||
Income before income taxes | 68,151 | (10,706 | ) | 57,445 | ||||||
Income taxes (notes 2, 3 and 4) | 13,609 | (4,062 | ) | 9,547 | ||||||
Income before cumulative effect of a change in accounting principle | 54,542 | (6,644 | ) | 47,898 | ||||||
Cumulative effect of a change in accounting principle, net of income taxes of $190 (note 5) | (391 | ) | 391 | - | ||||||
Net income | $ | 54,151 | $ | (6,253 | ) | $ | 47,898 | |||
Net income per common share - diluted | $ | 1.10 | $ | (0.12 | ) | $ | 0.98 |
Footnotes: | |||||||||||
(1) Periods prior to January 1, 2006 have been adjusted to reflect the change in accounting for stock-based compensation in accordance with SFAS No. 123R. All per-share amounts have been adjusted to reflect the effect of the 2-for-1 stock split in the second quarter of 2006. | |||||||||||
The Company has presented certain financial measurements, excluding certain discrete items. These discrete items include: | |||||||||||
(2) As part of management's ongoing internal control assessment, during the third quarter of 2005, the Company identified and recorded an adjustment to accounts payable and cost of sales at Barnes Distribution. The Company determined that cost of sales was overstated in prior periods due to inaccuracies in recording inventory receipts from 2000 through 2005. This overstatement was corrected in the third quarter of 2005 as a reduction to cost of sales of $1,814. The after-tax effect of this adjustment was $1,141, or $0.02 per diluted share. Management concluded that such corrections were immaterial, both quantitatively and qualitatively, to the 2005 financial statements and to the previously reported results of the prior years to which they relate. | |||||||||||
(3) During the third quarter of 2005, the Company was granted Pioneer tax status in Singapore and recorded retroactive tax benefits of which $1,473, or $0.03 per diluted share, related to periods prior to January 1, 2005. | |||||||||||
(4) During the second quarter of 2005, the Company sold its 45 percent interest in NHK-Associated Spring Suspension Components Inc. ("NASCO"), resulting in a pre-tax gain of $8,892 and an after-tax gain of $4,030, or $0.08 per diluted share. | |||||||||||
(5) In the fourth quarter of 2005, the Company adopted FIN No. 47 "Accounting for Conditional Asset Retirement Obligations" resulting in a charge of $391, net of taxes, or $0.01 per diluted share. | |||||||||||
These adjustments represent discrete items and an out-of-period adjustment. Management believes that providing results, excluding these items, is useful to investors when comparing year-over-year results of operations. Management does not intend results excluding these adjustments to represent results as defined by GAAP, and the reader should not consider it as an alternative measurement calculated in accordance with GAAP or as an indicator of the Company's operating performance. Accordingly, the measurements have limitations depending on their use. |
Barnes Group Inc. / 9
BARNES GROUP INC.
NON-GAAP FINANCIAL MEASURE RECONCILIATION
(Dollars in thousands, except per share data)
Unaudited
Following is a reconciliation of results excluding certain adjustments to the Company's reported results:
Three months ended | ||||||||||||||||
March 31, 2005 | June 30, 2005 | September 30, 2005 | December 31, 2005 | Full year 2005 | ||||||||||||
Net income per common share - diluted, as adjusted (note 1) | $ | 0.24 | $ | 0.36 | $ | 0.31 | $ | 0.19 | $ | 1.10 | ||||||
Cumulative effect of change in accounting principle (note 2) | - | - | - | 0.01 | 0.01 | |||||||||||
Accounts payable adjustment (note 3) | - | - | (0.02 | ) | - | (0.02 | ) | |||||||||
Singapore tax benefit - prior year (note 4) | - | - | (0.03 | ) | - | (0.03 | ) | |||||||||
Singapore tax benefit - reclassification (note 4) | 0.01 | 0.01 | (0.02 | ) | - | - | ||||||||||
Gain on sale of NASCO (note 5) | - | (0.08 | ) | - | - | (0.08 | ) | |||||||||
Net income per common share - diluted, excluding cumulative effect of change in accounting principle and adjustments | $ | 0.25 | $ | 0.29 | $ | 0.24 | $ | 0.20 | $ | 0.98 |
Footnotes: | |||||||||
(1) Periods prior to January 1, 2006 have been adjusted to reflect the change in accounting for stock-based compensation in accordance with SFAS No. 123R. All per-share amounts have been adjusted to reflect the effect of the 2-for-1 stock split in the second quarter of 2006. | |||||||||
The Company has presented certain per share financial measurements, excluding the cumulative effect of a change in accounting principle, a positive adjustment related to accounts payable, certain retroactive tax benefits and the gain on the sale of NASCO as follows: | |||||||||
(2) In the fourth quarter of 2005, the Company adopted FIN No. 47 "Accounting for Conditional Asset Retirement Obligations" resulting in a charge of $391, or $0.01 per diluted share, net of taxes. | |||||||||
(3) As part of management's ongoing internal control assessment, during the third quarter of 2005, the Company identified and recorded an adjustment to accounts payable and cost of sales at Barnes Distribution. The Company determined that cost of sales was overstated in prior periods due to inaccuracies in recording inventory receipts from 2000 through 2005. This overstatement was corrected in the third quarter of 2005 as a reduction to cost of sales of $1,814. The after-tax effect of this adjustment was $1,141, or $0.02 per diluted share. Management concluded that such corrections were immaterial, both quantitatively and qualitatively, to the 2005 financial statements and to the previously reported results of the prior years to which they relate. | |||||||||
(4) During the third quarter of 2005, the Company was granted Pioneer tax status in Singapore and recorded retroactive tax benefits of $2,553 of which $1,473, or $0.03 per diluted share, related to periods prior to January 1, 2005 and $1,080, or $0.02 per diluted share, related to the first half of 2005 ($0.01 in each of the first and second quarters of 2005). | |||||||||
(5) During the second quarter of 2005, the Company sold its 45 percent interest in NHK-Associated Spring Suspension Components Inc. ("NASCO"), resulting in a pre-tax gain of $8,892 and an after-tax gain of $4,030, or $0.08 per diluted share. | |||||||||
These adjustments represent discrete items and an out-of-period adjustment. Management believes that providing results excluding these items is useful to investors when comparing year-over-year results of operations. Management does not intend results excluding the adjustments to represent results as defined by GAAP, and the reader should not consider it as an alternative measurement calculated in accordance with GAAP, or as an indicator of the Company's operating performance. Accordingly, the measurements have limitations depending on their use. |