1
Barnes Group Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS
SALES
In 1995, sales were $593 million, up 4% from 1994. Sales in
1994 were $569 million, a 13% increase over 1993's level of
$502 million.
Associated Spring's 1995 sales increased 2% to $279 million,
following an increase of 17% in 1994. In North America, sales
were down slightly, reflecting in part, a softening of the
U.S. durable goods market and labor issues at its Bristol,
Connecticut plant. Internationally, the group reported very
strong sales growth, led by its Singapore operation which
continued its penetration of the electronics industry. The
group's distribution business, which markets die springs and
precision stock springs, also reported good sales growth.
Bowman Distribution's 1995 sales were $217 million, up
slightly from 1994. Sales in 1994 were $215 million, 11%
higher than 1993's level of $193 million. Sales from Bowman
U.S., the group's largest business unit, kept pace with the
prior year. Bowman's sales in Europe increased nearly 15%
reflecting progress in the development of new systems business
in the U.K. Bowman's Canadian business showed slight
year-over-year gains in sales.
Barnes Aerospace's sales were $97 million in 1995, up 18% from
1994, following an increase of 7% in 1994. Sharply higher
sales were reported by both the group's Advanced Fabrications
and Precision Machining businesses. The sales of the group's
Repair and Overhaul business were marginally higher than 1994.
OPERATING INCOME
Consolidated operating income in 1995 was $48.8 million,
compared to $36.6 million in 1994 and $12.5 million in 1993.
As a result, operating income margin has risen significantly
to 8.2%, an improvement of nearly six percentage points in the
past two years. The gain in operating income in 1995 resulted
primarily from cost reductions and productivity improvements
at Barnes Aerospace and Bowman Distribution, and sharply
higher sales volume in Barnes Aerospace. Increased volume,
manufacturing efficiencies and overall containment of costs in
all three operating groups contributed to the 1994 gain. The
continued focus on cost control led to lower selling and
administrative expenses, as a percent of sales, in both 1995
and 1994 compared to previous years. Operating income in 1993
included provisions of $4.9 million for plant consolidations
and work force reductions.
Associated Spring's increase in operating income, to a record
$42.6 million, kept pace with its sales growth. Strong profit
gains overseas, driven by higher sales volume and
manufacturing efficiencies, offset lower year-over-year
results in its North American manufacturing operations.
Bowman's operating income in 1995 of $17.4 million was $4.8
million above the 1994 level. This gain reflects sharply lower
selling and administrative expenses, primarily at Bowman U.S.
Barnes Aerospace's operating income was $5.0 million in 1995
compared to an operating loss of $1.8 million in 1994. The
1994 operating loss included $1.1 million of severance costs
recognized in the fourth quarter. The sharply higher profits
in 1995 reflect higher sales volume coupled with ongoing
productivity improvements and cost containment. The
improvements in sales volume, gross margins and operating
costs, resulted in the group reporting operating income for
four consecutive quarters.
Please refer to Note 13 of the Notes to Consolidated Financial
Statements on pages 26-27 for further information about the
company's operations by business segment.
11
2
Barnes Group Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS
NON-OPERATING INCOME/EXPENSE
Other income was $4.4 million in 1995, $4.6 million in 1994
and $4.1 million in 1993 and includes $1.9 million, $2.3
million and $1.7 million, respectively, from the company's
investment in NASCO, a company jointly owned with NHK Spring
Co., Ltd. of Japan. Interest income, another major component
of other income, increased 10% in 1995 to $1.4 million,
primarily due to higher levels of short-term investments in
Brazil.
Interest expense increased slightly in 1995, following a
decrease in 1994. The impact of lower debt in 1995 was
largely offset by higher interest rates.
Other expenses increased in 1995, following a decrease in
1994, primarily due to higher foreign exchange and translation
losses. These losses were $1.1 million, $0.5 million and $1.7
million in 1995, 1994 and 1993, respectively.
INCOME TAXES
The company's effective tax rate was 39.5% in 1995 compared
with 40.1% in 1994 and 47.8% in 1993. Note 6 of the Notes to
Consolidated Financial Statements on page 22 contains an
explanatory table showing the factors affecting the company's
effective tax rate in each of these years.
NET INCOME AND NET INCOME PER SHARE
Consolidated net income was $27.5 million in 1995, $20.3
million in 1994 and $4.4 million in 1993. On a per share
basis, income for 1995 was $4.20 compared to $3.20 in 1994 and
$.70 in 1993.
INFLATION
Management believes that inflation during the 1993-1995
period did not have a material impact on the company's
historical financial statements.
FINANCIAL CONDITION
The company's financial condition, as presented in its
statement of cash flows and balance sheet, is strong. The
following is a discussion of the significant elements of these
financial statements.
CASH FLOWS
Operating activities are the principal source of cash flow for
the company. In 1995, operating activities generated a record
$47 million in cash flow, $10 million more than 1994 and $28
million more than 1993. During the past three years,
operating activities provided over $104 million in cash which
the company used to pay dividends to stockholders and fund
significant investments in new plant and equipment.
Investing activities utilized cash of $37 million in 1995
compared with $31 million in 1994. Capital expenditures
increased to $36 million in 1995, 12% over 1994 and 61% over
1993. Management continued to invest heavily to improve
quality and productivity while adding capacity. During the
past three years the company has invested nearly $90 million
in new plant and equipment with over 65% of that at Associated
Spring. In 1996, capital expenditures are expected to exceed
1995, with the level of investments in all three businesses
expected to increase.
12
3
Barnes Group Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The company's financing activities used cash of $14 million in
1995 compared to $8 million in 1994. The company continued to
use surplus cash generated by its U.S. operations to reduce
borrowings under short-term credit lines. Surplus cash from
foreign operations was used, in part, to fund strategic
investments in Mexico and Europe. In 1995, the annual
dividend per share increased from $1.45 to $1.60. As a
result, total cash dividends paid to the owners of the company
increased by 14% to $10 million. Cash generated from the
exercise of employee stock options partially offset these
uses.
LIQUIDITY AND CAPITAL RESOURCES
The company's liquidity, measured in terms of the level of
working capital, increased $7 million in 1995 to $95 million
at December 31, 1995. The current ratio, a key measure of
liquidity, improved to 2.2 at December 31, 1995 compared to
2.0 at December 31, 1994.
In evaluating the company's working capital position,
consideration should be given to the fact that the majority of
its inventories are accounted for on a LIFO basis. If these
inventories were stated on a current cost basis, their value
would have been higher by $13 million in both 1995 and 1994.
The company's ratio of interest-bearing debt to total
capitalization improved for the sixth consecutive year to 25%
at December 31, 1995 from 28% at December 31, 1994. For this
purpose, total capitalization includes interest-bearing debt,
plus other long-term liabilities, accrued long-term retirement
benefits and stockholders' equity, excluding the guaranteed
ESOP obligation.
To supplement internal cash generation in the U.S., the
company maintains substantial bank borrowing facilities. At
December 31, 1995, the company had $100 million of borrowing
capacity available under a revolving credit agreement which
expires in 2000. In addition, the company has available $135
million in uncommitted, short-term bank credit lines, of which
$1.5 million was in use at December 31, 1995. During 1995 and
1994, the company maintained long-term debt of $70 million
comprised, in part, of borrowings under its short-term bank
credit lines backed by its long-term revolving credit
agreement. In December 1995, substantially all of the credit
line borrowings were replaced with the proceeds of a $25
million private placement with a final maturity in 2005. This
was done to extend the maturity of the company's long-term
financing and to secure an additional block of committed
funding. The company believes its bank credit facilities
coupled with cash generated from operations are adequate for
its anticipated future requirements.
CHANGES IN ACCOUNTING PRINCIPLES
In 1995, the FASB issued Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation,"
effective for years beginning after December 15, 1995. Under
the provisions of this accounting standard, the company is not
required to change its method of accounting for stock-based
compensation. Management expects to retain its current method
of accounting.
13
4
Barnes Group Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
Years Ended December 31, 1995 1994 1993
----------------------------------------------------------------------------
Net sales $592,509 $569,197 $502,292
Cost of sales 382,150 366,455 323,950
Selling and administrative expenses 161,555 166,093 160,904
Plant closings and restructurings - - 4,900
----------------------------------------------------------------------------
543,705 532,548 489,754
----------------------------------------------------------------------------
Operating income 48,804 36,649 12,538
Other income 4,373 4,611 4,117
Interest expense 5,274 5,133 5,187
Other expenses 2,453 2,205 3,077
----------------------------------------------------------------------------
Income before income taxes 45,450 33,922 8,391
Income taxes 17,966 13,606 4,008
----------------------------------------------------------------------------
Net income $ 27,484 $ 20,316 $ 4,383
============================================================================
Per common share:
Net income $ 4.20 $ 3.20 $ .70
============================================================================
Dividends $ 1.60 $ 1.45 $ 1.40
============================================================================
Average common shares outstanding 6,546,671 6,353,777 6,249,966
See accompanying notes.
14
5
Barnes Group Inc.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
December 31, 1995 1994
----------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents $ 17,868 $ 22,023
Accounts receivable, less allowances
(1995 - $3,635; 1994 - $3,222) 86,086 86,877
Inventories 56,749 50,845
Deferred income taxes 8,344 12,147
Prepaid expenses 3,769 3,645
----------------------------------------------------------------------
Total current assets 172,816 175,537
Deferred income taxes 24,308 23,854
Property, plant and equipment 122,870 112,569
Goodwill 20,028 20,614
Other assets 21,527 19,382
----------------------------------------------------------------------
Total assets $361,549 $351,956
======================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ 509 $ 7,903
Accounts payable 31,839 31,424
Accrued liabilities 42,840 45,713
Guaranteed ESOP obligation-current 2,348 2,172
----------------------------------------------------------------------
Total current liabilities 77,536 87,212
Long-term debt 70,000 70,000
Guaranteed ESOP obligation 7,491 9,839
Accrued retirement benefits 68,824 66,817
Other liabilities 8,857 10,949
Stockholders' equity
Common stock - par value $1.00 per share
Authorized: 20,000,000 shares
Issued: 7,345,923 shares stated at 15,737 15,737
Additional paid-in capital 27,360 27,772
Retained earnings 136,092 118,938
Foreign currency translation adjustments (10,656) (8,715)
Treasury stock at cost (1995 - 791,205 shares;
1994 - 916,748 shares) (29,853) (34,582)
----------------------------------------------------------------------
138,680 119,150
Guaranteed ESOP obligation (9,839) (12,011)
----------------------------------------------------------------------
Total stockholders' equity 128,841 107,139
----------------------------------------------------------------------
Total liabilities and stockholders' equity $361,549 $351,956
======================================================================
See accompanying notes.
15
6
Barnes Group Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Years Ended December 31, 1995 1994 1993
------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income $27,484 $20,316 $ 4,383
Adjustments to reconcile net income
to net cash from operating activities:
Depreciation and amortization 26,750 23,733 23,094
Gain on sale of property, plant and equipment (268) (151) (442)
Translation losses 290 356 1,459
Changes in assets and liabilities:
Accounts receivable 365 (9,411) (4,504)
Inventories (6,073) (1,037) 1,599
Accounts payable 794 4,298 3,113
Accrued liabilities (2,664) 2,630 (6,369)
Deferred income taxes 3,479 (485) 1,992
Other liabilities and assets (2,862) (2,549) (4,683)
------------------------------------------------------------------------------------
Net cash provided by operating activities 47,295 37,700 19,642
INVESTING ACTIVITIES:
Proceeds from sale of property, plant
and equipment 1,301 2,835 4,506
Capital expenditures (35,820) (31,848) (22,216)
Other (2,057) (2,252) (3,014)
------------------------------------------------------------------------------------
Net cash used by investing activities (36,576) (31,265) (20,724)
FINANCING ACTIVITIES:
Net decrease in notes payable (7,389) (2,653) (4,377)
Proceeds from the issuance of common stock 5,849 3,956 1,706
Payments to acquire treasury stock (1,746) - -
Dividends paid (10,491) (9,223) (8,756)
------------------------------------------------------------------------------------
Net cash used by financing activities (13,777) (7,920) (11,427)
Effect of exchange rate changes on cash flows (1,097) (621) (2,430)
------------------------------------------------------------------------------------
Decrease in cash and cash equivalents (4,155) (2,106) (14,939)
Cash and cash equivalents at beginning of year 22,023 24,129 39,068
------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $17,868 $22,023 $24,129
====================================================================================
See accompanying notes.
16
7
Barnes Group Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Foreign
Additional Currency Guaranteed
Common Paid-In Retained Translation Treasury ESOP Stockholders'
(Dollars in thousands) Stock Capital Earnings Adjustments Stock Obligation Equity
- -----------------------------------------------------------------------------------------------------------------------------------
January 1, 1993 $15,737 $29,502 $111,838 $ (5,138) $(42,488) $(15,876) $ 93,575
Net income 4,383 4,383
Cash dividends (8,756) (8,756)
Employee stock plans (757) 2,670 1,913
Guaranteed ESOP obligation 1,857 1,857
Income tax benefits on
unallocated ESOP dividends 203 203
Translation adjustments (1,326) (1,326)
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1993 15,737 28,745 107,668 (6,464) (39,818) (14,019) 91,849
Net income 20,316 20,316
Cash dividends (9,223) (9,223)
Employee stock plans (973) 5,236 4,263
Guaranteed ESOP obligation 2,008 2,008
Income tax benefits on
unallocated ESOP dividends 177 177
Translation adjustments (2,251) (2,251)
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1994 15,737 27,772 118,938 (8,715) (34,582) (12,011) 107,139
Net income 27,484 27,484
Cash dividends (10,491) (10,491)
Employee stock plans (412) 4,729 4,317
Guaranteed ESOP obligation 2,172 2,172
Income tax benefits on
unallocated ESOP dividends 161 161
Translation adjustments (1,941) (1,941)
- -----------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1995 $15,737 $27,360 $136,092 $(10,656) $(29,853) $ (9,839) $128,841
===================================================================================================================================
See accompanying notes.
17
8
Barnes Group Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts included in the notes are stated in
thousands except per share data and the tables in Note 13.)
- -------------------------------------------------------------------------------
1. SUMMARY OF GENERAL: The preparation of financial statements requires
SIGNIFICANT management to make estimates and assumptions that affect the
ACCOUNTING reported amounts of assets and liabilities at the date of the
POLICIES financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could
differ from those estimates.
CONSOLIDATION: The accompanying consolidated financial
statements include the accounts of the company and all of its
subsidiaries. Intercompany transactions and account balances
have been eliminated. The company accounts for its 45%
investment in the common stock of NASCO, an automotive
suspension spring company jointly owned with NHK Spring Co.,
Ltd. of Japan, under the equity method. Other income in the
accompanying income statements includes $1,897, $2,314 and
$1,734 for the years 1995, 1994 and 1993, respectively, of
income from the company's investment in NASCO.
REVENUE RECOGNITION: Sales and related cost of sales are
recognized when products are shipped to customers.
CASH AND CASH EQUIVALENTS: All highly liquid investments
purchased with a maturity of three months or less are cash
equivalents and are carried at fair market value.
INVENTORIES: Inventories are valued at the lower of cost or
market. The last-in, first-out (LIFO) method was used to
accumulate the cost of all U.S. inventories which represent
69% of total inventories. The cost of foreign subsidiary
inventories was determined using the first-in, first-out
(FIFO) method.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment
is stated at cost. Depreciation is provided using accelerated
methods over estimated useful lives ranging generally from 20
to 50 years for buildings and 3 to 17 years for machinery and
equipment. Maintenance and repairs charged to expense were
$15,396, $16,341 and $12,966 in 1995, 1994 and 1993,
respectively.
GOODWILL: Goodwill represents the excess purchase price over
the net assets of companies acquired in business combinations.
Goodwill acquired since 1970 is being amortized on a
straight-line basis over 40 years; similar investments for
businesses acquired prior to 1970 (approximately $5,200) are
not being amortized. The company has determined that there is
no indication of any impairment in the value of goodwill.
Accumulated amortization was $7,588 and $7,002 at December 31,
1995 and 1994, respectively.
FOREIGN CURRENCY TRANSLATION: Assets and liabilities of
foreign operations, except those in countries with high rates
of inflation, are translated at year-end rates of exchange;
revenue and expenses are translated at average annual rates of
exchange. The resulting translation gains and losses are
reflected in foreign currency translation adjustments within
stockholders' equity.
For operations in countries that have high rates of inflation,
translation gains and losses are included in net income.
These losses, along with those generated from foreign
currency transactions, were $1,078, $550 and $1,661 in
1995, 1994 and 1993, respectively.
INCOME PER COMMON SHARE: Income per common share is based on
the weighted average number of common shares outstanding
during the year. The effect of common stock equivalents
(stock options) is not material. For purposes of calculating
income per share, Employee Stock Ownership Plan (ESOP) shares
are considered outstanding.
18
9
Barnes Group Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. INVENTORIES Inventories at December 31, consisted of:
1995 1994
---------------------------------------------------------------
Finished goods $28,541 $28,769
Work-in-process 16,222 13,697
Raw materials and supplies 11,986 8,379
---------------------------------------------------------------
$56,749 $50,845
===============================================================
Inventories valued by the LIFO method aggregated $39,219 and
$37,781 at December 31, 1995 and 1994, respectively. If LIFO
inventories had been valued using the FIFO method, they would
have been $12,632 and $12,639 higher at those dates.
- --------------------------------------------------------------------------------
3. PROPERTY, Property, plant and equipment at December 31, consisted of:
PLANT AND
EQUIPMENT
1995 1994
---------------------------------------------------------------
Land $ 5,412 $ 5,651
Buildings 60,064 59,727
Machinery and equipment 232,356 210,807
---------------------------------------------------------------
297,832 276,185
Less accumulated depreciation 174,962 163,616
---------------------------------------------------------------
$122,870 $112,569
===============================================================
- --------------------------------------------------------------------------------
4. ACCRUED Accrued liabilities at December 31, consisted of:
LIABILITIES
1995 1994
---------------------------------------------------------------
Payroll and other compensation $ 12,699 $ 15,033
Postretirement/postemployment benefits 6,541 7,631
Vacation pay 4,460 4,500
Accrued income taxes 5,006 3,927
Pension and profit sharing 2,017 1,707
Other 12,117 12,915
---------------------------------------------------------------
$ 42,840 $ 45,713
===============================================================
- --------------------------------------------------------------------------------
5. DEBT AND Long-term debt at December 31, consisted of:
COMMITMENTS
1995 1994
---------------------------------------------------------------
Carrying Fair Carrying
Amount Value Amount
---------------------------------------------------------------
9.47% Notes $36,923 $40,228 $40,000
7.13% Notes 25,000 25,302 -
Borrowings under lines of credit 1,077 1,077 23,000
Other 7,000 7,000 7,000
---------------------------------------------------------------
$70,000 $73,607 $70,000
===============================================================
The 9.47% Notes are payable in thirteen semi-annual payments
of $3,077 beginning on September 16, 1995, while the 7.13%
Notes are payable in four equal installments of $6,250
beginning on December 5, 2002. The fair values of these notes
are determined using discounted cash flows based upon the
company's estimated current interest rate for similar types of
borrowings. The carrying values of other long-term debt,
notes payable and guaranteed ESOP obligation approximate their
fair value.
19
10
Barnes Group Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The company has a revolving credit agreement with five banks
that allows borrowings up to $100,000 under notes due December
6, 2000. A commitment fee of .17% per annum is paid on the
unused portion of the commitments. The company had no
borrowings under this agreement at December 31, 1995 and 1994.
The company has available $135,000 in uncommitted, short-term
bank credit lines, of which $1,500 and $30,000 were in use at
December 31, 1995 and 1994, respectively. The interest rate
on these borrowings was 6.1% and 6.2% at December 31, 1995 and
1994, respectively.
At December 31, 1995, the company classified $1,077 of
borrowings under its lines of credit and $6,154 of its 9.47%
Notes due within one year as long-term debt. The company has
both the intent and the ability, through its revolving credit
agreement, to refinance these amounts on a long-term basis.
During 1995, the company had outstanding an interest rate
swap, a form of derivative, which effectively converted
$18,462 of its fixed rate 9.47% Notes to floating rate debt
with interest equal to LIBOR plus 83 basis points. The
effective interest rate on this floating rate portion was 6.7%
and 7.3% at December 31, 1995 and 1994, respectively. This
swap decreases as the Notes are repaid. The fair value of the
swap is determined based upon current market prices and was
$1,914 at December 31, 1995. The company does not use
derivatives for trading purposes.
The company guaranteed $9,953 of letters of credit, bank
borrowings and capital lease obligations related to its 45%
investment in NASCO. In addition, the company has other
outstanding letters of credit totaling $7,004 at December 31,
1995.
The required principal payments on the Notes are $6,154 in
each of the next five years. As noted above, the 1996
maturity has been classified as long-term.
Certain of the company's debt arrangements contain
requirements to maintain minimum levels of working capital and
net worth, which as a result, place limitations on dividend
payments and acquisitions of the company's common stock.
Under the most restrictive covenant in any agreement, $43,118
was available for dividends or acquisitions of common stock at
December 31, 1995.
Interest paid was $5,661, $5,626 and $5,496 in 1995, 1994 and
1993, respectively.
- --------------------------------------------------------------------------------
6. INCOME The components of income before income taxes and the provision
TAXES for income taxes follow:
1995 1994 1993
---------------------------------------------------------------
Income before income taxes:
U.S. $31,722 $23,639 $6,212
International 13,728 10,283 2,179
---------------------------------------------------------------
$45,450 $33,922 $8,391
===============================================================
Income tax provision:
Current:
U.S. - federal $ 7,668 $ 7,975 $ (743)
U.S. - state 1,363 1,639 (172)
International 5,456 4,477 2,931
---------------------------------------------------------------
14,487 14,091 2,016
---------------------------------------------------------------
Deferred:
U.S. - federal 2,479 (403) 1,383
U.S. - state 1,056 355 626
International (56) (437) (17)
---------------------------------------------------------------
3,479 (485) 1,992
---------------------------------------------------------------
$17,966 $13,606 $4,008
===============================================================
20
11
Barnes Group Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred income tax assets and liabilities at December 31,
consist of the tax effects of temporary differences related to
the following:
Assets Liabilities
----------------------------------------------------------------------------
1995 1994 1995 1994
----------------------------------------------------------------------------
Allowance for doubtful accounts $ 1,296 $ 1,197 $ (10) $ (7)
Depreciation and amortization (6,460) (7,155) 1,980 1,826
Inventory valuation 3,127 6,295 775 594
Postretirement/
postemployment costs 28,921 29,234 (435) -
Tax loss carryforwards 7,665 6,672 - -
Other 4,742 5,744 1,163 1,050
----------------------------------------------------------------------------
39,291 41,987 3,473 3,463
Valuation allowance (6,639) (5,986) - -
----------------------------------------------------------------------------
$32,652 $36,001 $ 3,473 $ 3,463
============================================================================
Current deferred income taxes $ 8,344 $12,147 $ 765 $ 587
Noncurrent deferred
income taxes 24,308 23,854 2,708 2,876
----------------------------------------------------------------------------
$32,652 $36,001 $ 3,473 $ 3,463
============================================================================
The components of the net deferred income tax balances
recognized in the accompanying balance sheets at December 31,
follow:
1995 1994
----------------------------------------------------------------------------
Total deferred income tax assets $53,307 $56,892
Total deferred income tax asset valuation allowance (6,639) (5,986)
Total deferred income tax liabilities (17,489) (18,368)
----------------------------------------------------------------------------
$29,179 $32,538
============================================================================
A portion of the deferred income tax assets can be realized
through carrybacks and reversals of existing taxable temporary
differences with the remainder, net of the valuation
allowance, dependent on future income. Management believes
that sufficient income will be earned in the future to realize
the remaining net deferred income tax assets.
The company has not recognized deferred income taxes on
$69,092 of undistributed earnings of its international
subsidiaries since such earnings are considered to be
reinvested indefinitely. If the earnings were distributed in
the form of dividends, the company would be subject to both
U.S. income taxes and foreign withholding taxes. Determination
of the amount of this unrecognized deferred income tax
liability is not practicable.
21
12
Barnes Group Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the U.S. federal statutory income tax
rate to the consolidated effective income tax rate follows:
1995 1994 1993
------------------------------------------------------------------------
U.S. federal statutory income tax rate 35.0% 35.0% 35.0%
Effect of graduated rates - - (1.0)
State taxes (net of federal benefit) 3.5 3.8 3.6
Foreign losses without tax benefit 2.7 4.0 25.2
Translation losses 0.2 0.4 5.9
Research and development tax credits - (0.3) (1.8)
Foreign tax rates (1.6) (3.1) (5.2)
NASCO income (1.0) (2.0) (5.9)
Goodwill amortization 0.5 0.7 2.7
Income tax benefit of allocated ESOP dividends (0.8) (0.9) (3.2)
Enacted rate change - - (9.5)
Other 1.0 2.5 2.0
------------------------------------------------------------------------
Consolidated effective income tax rate 39.5% 40.1% 47.8%
========================================================================
Income taxes paid, net of refunds, were $13,269, $8,848 and
$4,255 in 1995, 1994 and 1993, respectively.
- -------------------------------------------------------------------------------
7. COMMON STOCK In 1995, 1994 and 1993, 167,779, 135,692 and 70,504 shares of
common stock were issued from treasury for the exercise of
stock options, purchases by the Employee Stock Purchase Plan
and various other incentive awards. Also in 1995, the company
acquired 42,236 shares of the company's common stock from its
Guaranteed Stock Plan at a cost of $1,746. These acquired
shares were placed in treasury.
Each share of outstanding common stock contains a dividend
distribution right (Right) which entitles the holder to
purchase 1/100 of a share of Series A Junior Participating
Preferred Stock for one hundred dollars.
Separate rights certificates will be mailed to stockholders if
a person or group acquires or commences a tender or exchange
offer for 50% or more of the outstanding shares of the
company's common stock. The Rights, which have no voting or
dividend rights, expire July 29, 1996 and may be redeemed by
the company at a price of five cents per Right at any time
until the tenth day following public announcement that a
person or group has acquired or intends to acquire 50% or more
of the outstanding common stock.
If, following the acquisition by a person or group of 50% or
more of the outstanding shares of the company's common stock,
the company is acquired in a merger or other business
combination or 50% or more of the company's assets or earning
power is sold or transferred, each outstanding Right becomes
exercisable for common stock or other securities of the
acquiring entity having a value of twice the exercise price of
the Right.
- -------------------------------------------------------------------------------
8. PREFERRED At December 31, 1995 and 1994, the company had 3,000,000
STOCK shares of $1 par value preferred stock authorized, none of
which were outstanding.
- -------------------------------------------------------------------------------
9. STOCK PLANS All U.S. salaried and non-union hourly employees are eligible
to participate in the company's Guaranteed Stock Plan (GSP).
The GSP provides for the investment of employer and employee
contributions in the company's common stock. The company
guarantees a minimum rate of return on certain GSP assets.
22
13
Barnes Group Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The GSP is a leveraged Employee Stock Ownership Plan (ESOP).
In 1989, the GSP purchased 579,310 shares of the company's
common stock at a cost of $21,000 using the proceeds of a loan
guaranteed by the company. These shares are held in trust and
are issued to employees' accounts in the GSP as the loan is
repaid. Principal and interest on the GSP loan are being paid
in quarterly installments through 1999. The loan bears
interest based on LIBOR. At December 31, 1995 the interest
rate was 6.7%. Interest of $747, $653 and $592 was incurred
in 1995, 1994 and 1993, respectively.
Contributions and certain dividends received are used in part
by the GSP to service its debt. Contributions include both
employee contributions up to a maximum of 10% of eligible pay
and company contributions.
The company contributions are equal to the amount required by
the Plan to pay the principal and interest due under the Plan
loan plus that required to purchase any additional shares
required to be allocated to participant accounts, less the sum
of participant contributions and dividends received by the
GSP. The GSP used $1,459, $1,323 and $1,277 of company
dividends for debt service in 1995, 1994 and 1993,
respectively. The company expenses all cash contributions
made to the GSP. Compensation expense was $2,245, $2,268 and
$2,452 in 1995, 1994 and 1993, respectively. In addition to
the company shares held in trust, the GSP also purchases the
company's common stock on the open market to meet its
requirements. As of December 31, 1995, the GSP held 1,158,819
shares of the company's common stock, of which 224,968 shares
were unallocated.
For financial statement purposes, the company reflects its
guarantee of the GSP's debt as a liability with a like amount
reflected as a reduction of stockholders' equity.
The company also has an Employee Stock Purchase Plan under
which eligible employees may elect to have up to 10% of base
compensation deducted from payroll for the purchase of the
company's common stock at 85% of market value on the date of
purchase. The maximum number of shares which may be purchased
under the Plan is 675,000. During 1995, 21,012 shares (22,367
and 23,737 shares in 1994 and 1993, respectively) were
purchased. As of December 31, 1995, 221,871 shares may be
issued in the future.
The 1991 Barnes Group Stock Incentive Plan authorizes the
granting of incentives to officers and other executives in the
form of stock options, stock appreciation rights, incentive
stock rights and performance unit awards. A predecessor plan
which provided for similar incentives expired in 1991.
Options granted under that plan continue to be exercisable and
any options which terminate without being exercised become
available for grant under the 1991 Plan. A maximum of 660,926
common shares are subject to issuance under this plan after
December 31, 1995. Data relating to grants under these plans
follow:
Options 1995 1994
--------------------------------------------------------------
Outstanding, January 1 644,554 713,696
Granted 79,100 117,300
Exercised (at $17.96 to $38.38) 146,046 108,464
Cancelled 77,252 77,978
--------------------------------------------------------------
Outstanding, December 31 (at $20.83
to $42.13) 500,356 644,554
==============================================================
Exercisable, December 31 (at $20.83
to $38.38) 142,400 237,120
==============================================================
Available for future grants, December 31 160,570 162,418
==============================================================
23
14
Barnes Group Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Under the Non-employee Director Deferred Stock Plan each
non-employee director is awarded 2,000 shares of the company's
common stock upon retirement. In 1994, 4,000 shares were
issued under this plan. No shares were issued in 1995 or
1993. As of December 31, 1995, 20,000 shares were reserved
for issuance under this plan.
Total shares reserved for issuance under all stock plans
aggregated 902,797 at December 31, 1995.
- -------------------------------------------------------------------------------
10. PENSION The company has noncontributory defined benefit pension plans
PLANS covering a majority of its worldwide employees at Associated
Spring, Bowman Distribution and its Executive Office. Plan
benefits for salaried and non-union hourly employees are based
on years of service and average salary. Plans covering union
hourly employees provide benefits based on years of service.
The company funds U.S. pension costs in accordance with the
Employee Retirement Income Security Act of 1974 (ERISA).
Plan assets consist primarily of common stocks and fixed
income investments.
Pension expense consisted of the following:
1995 1994 1993
--------------------------------------------------------------
Service cost $ 4,836 $ 5,282 $ 4,467
Interest cost 15,907 15,290 14,946
Actual (return) loss on
plan assets (43,256) 941 (25,875)
Net amortization and deferral 22,960 (20,295) 7,308
--------------------------------------------------------------
$ 447 $ 1,218 $ 846
==============================================================
The funded status of the plans at December 31, is set forth
below:
1995 1994
--------------------------------------------------------------
Plan assets at fair value $247,915 $216,767
Actuarial present value of
benefit obligations:
Vested benefits 201,231 176,219
Nonvested benefits 4,124 3,856
--------------------------------------------------------------
Accumulated benefit obligations 205,355 180,075
Additional benefits based on projected
future salary increases 23,026 20,324
--------------------------------------------------------------
Projected benefit obligations 228,381 200,399
--------------------------------------------------------------
Plan assets greater than projected
benefit obligations $ 19,534 $ 16,368
==============================================================
Reconciliation to net pension asset recognized in the
accompanying balance sheets:
1995 1994
--------------------------------------------------------------
Plan assets greater than projected
benefit obligations $ 19,534 $ 16,368
Adjustments for unrecognized:
Net gains (6,512) (2,901)
Prior service costs 4,591 4,859
Net asset at transition (9,043) (10,639)
--------------------------------------------------------------
(10,964) (8,681)
--------------------------------------------------------------
Net pension asset $ 8,570 $ 7,687
==============================================================
24
15
Barnes Group Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Significant assumptions used in determining pension expense
and the funded status of the plans were:
1995 1994 1993
---------------------------------------------------------------
Weighted average discount rate 7.25% 8.25% 7.50%
Increase in compensation 5.25% 5.25% 5.25%
Long-term rate of return on plan assets 9.00% 9.00% 9.00%
The reduction in the weighted average discount rate, from
8.25% to 7.25%, increased the projected benefit obligations by
approximately $23,016 at December 31, 1995 and will increase
annual pension expense by $712.
The company has defined contribution plans covering employees
of Barnes Aerospace and field sales employees of Bowman
Distribution's U.S. operation. Company contributions under
these plans are based primarily on the performance of the
business unit and employee compensation. Total expense
amounted to $1,748, $1,431 and $1,566 in 1995, 1994 and 1993,
respectively.
The pension agreement between the company and the union
representing the three largest Associated Spring plants became
subject to renegotiation during the first quarter of 1995.
Pension negotiations have been delayed, in part, due to
negotiations for a new collective bargaining agreement
covering workers at Associated Spring's largest plant. The
pension negotiation could be further delayed by the fact that
the labor agreement covering workers at another large
Associated Spring plant is scheduled for renegotiation in
1996.
- --------------------------------------------------------------------------------
11. POSTRE- The company provides certain medical, dental and life
TIREMENT insurance benefits for a majority of its retired employees in
HEALTHCARE the U.S. and Canada. It is the company's practice to fund
AND LIFE these benefits as incurred.
INSURANCE
BENEFITS Postretirement benefit expense consisted of the following:
1995 1994 1993
---------------------------------------------------------------
Service cost $ 679 $ 874 $ 792
Interest cost 5,594 5,199 5,840
Net amortization (158) (158) -
---------------------------------------------------------------
$ 6,115 $ 5,915 $ 6,632
===============================================================
The amounts included in the accompanying balance sheets at
December 31, were as follows:
1995 1994 1993
---------------------------------------------------------------
Accumulated benefit obligations:
Retirees $57,160 $50,917 $48,199
Employees eligible to retire 6,904 6,209 8,334
Employees not eligible to retire 13,654 12,020 15,204
Unrecognized prior service cost 1,021 1,245 1,403
Unrecognized net loss (7,339) (986) (4,823)
---------------------------------------------------------------
$71,400 $69,405 $68,317
===============================================================
Postretirement benefit obligations included in:
Accrued liabilities $ 5,673 $ 5,300 $ 5,200
Accrued retirement benefits 65,727 64,105 63,117
---------------------------------------------------------------
$71,400 $69,405 $68,317
===============================================================
A deferred tax asset is included in the accompanying balance
sheets recognizing the future tax benefit of the
postretirement benefit obligations (See Note 6).
25
16
Barnes Group Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cash payments made in 1995, 1994 and 1993 for postretirement
benefits were $5,210, $4,828 and $4,597, respectively.
The company's accumulated benefit obligations take into
account certain cost-sharing provisions. The annual assumed
rate of increase in the cost of covered benefits (i.e.,
healthcare cost trend rate) is assumed to be 10.0% for 1995,
gradually reducing to 5.0% by the year 2001. A one percentage
point increase in the assumed healthcare cost trend rate would
increase the accumulated benefit obligations by approximately
$6,664 at December 31, 1995, and would have increased 1995
expense by approximately $815.
Discount rates of 7.25%, 8.25% and 7.5% were used in
determining the accumulated benefit obligations at December
31, 1995, 1994 and 1993, respectively. While the reduction in
the weighted average discount rate from 8.25% to 7.25%
increased the accumulated benefit obligations by $7,213 at
December 31, 1995, it will have only a minor impact on the
1996 expense.
- -------------------------------------------------------------------------------
12. LEASES Rent expense was $5,866, $6,072 and $5,256 for 1995, 1994 and
1993, respectively. Minimum rental commitments under
noncancellable leases (principally for buildings and
equipment) in years 1996 through 2000 are $3,089, $2,198,
$1,601, $1,023, $837 and $4,895 thereafter.
- -------------------------------------------------------------------------------
13. INFORMATION The company operates three businesses:
ON BUSINESS
SEGMENTS Associated Spring: manufactures and distributes custom-made
springs and other close-tolerance engineered metal components
principally to the transportation, electronics and industrial
markets. Associated Spring's custom metal parts are sold in
the United States and through its foreign subsidiaries.
Foreign manufacturing operations are located in Brazil,
Canada, Mexico and Singapore. The automotive and automotive
parts industries constitute Associated Spring's largest
market.
Bowman Distribution: distributes fast-moving, consumable
repair and replacement products for industrial, heavy
equipment and transportation maintenance markets. Bowman
Distribution's operations and markets are located primarily in
the United States. Other important locations include Canada
and Europe.
Barnes Aerospace: manufactures precision machined parts and
fabricated assemblies, and refurbishes jet engine components
for the aircraft and aerospace industries. Barnes Aerospace's
operations and markets are located primarily in the United
States.
Sales between the business segments and between the geographic
areas are accounted for on the same basis as sales to
unaffiliated customers. Operating income includes net sales
less cost of sales, selling and administrative expenses and
the cost of plant closings and restructurings. In 1993, plant
closings and restructurings included $3,400 for combining
operations of the Aerospace machining units and $1,500 for the
consolidation of Associated Spring's operations in Mexico.
Other income and expenses are not included in operating
income. Corporate assets consist of cash and cash
equivalents, deferred income taxes, other assets,
transportation equipment and the Executive Office building.
Included in the 1995 identifiable international assets are the
assets of manufacturing facilities in Singapore ($19,200),
Brazil ($14,100), Canada ($18,000) and Mexico ($10,300) and
distribution facilities in Canada ($13,100), United Kingdom
($16,300) and France ($8,000). Associated Spring's operation
in Singapore was an important contributor to the company's
international operating income during each of the three years
presented.
26
17
Barnes Group Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables set forth information about the company's operations by its
three business segments and by geographic area:
OPERATIONS BY BUSINESS SEGMENT
Net Sales Operating Income
-----------------------------------------------------
(Dollars in millions) 1995 1994 1993 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
Associated Spring $279.0 $272.4 $233.0 $ 42.6 $ 41.7 $ 28.6
Bowman Distribution 217.0 215.1 193.2 17.4 12.6 6.7
Barnes Aerospace 97.3 82.3 77.0 5.0 (1.8) (4.5)
Intersegment sales (0.8) (0.6) (0.9) - - -
-----------------------------------------------------
$592.5 $569.2 $502.3 65.0 52.5 30.8
========================
Plant closings and restructurings - - (4.9)
Corporate expenses (16.2) (15.9) (13.4)
- ----------------------------------------------------------------------------------------------------------
Operating Income $ 48.8 $ 36.6 $ 12.5
==========================================================================================================
Identifiable Assets Capital Expenditures Depreciation Expense
----------------------------------------------------------------------------------
(Dollars in millions) 1995 1994 1993 1995 1994 1993 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
Associated Spring $160.3 $144.7 $124.3 $ 24.2 $ 23.7 $ 11.1 $ 11.6 $ 9.0 $ 7.7
Bowman Distribution 79.2 86.0 80.7 3.6 4.3 5.6 4.1 3.1 2.9
Barnes Aerospace 87.0 85.6 90.0 7.8 3.7 5.4 7.2 7.5 8.0
Corporate 35.0 35.7 38.3 0.2 0.1 0.1 0.3 0.2 0.3
- ----------------------------------------------------------------------------------------------------------
$361.5 $352.0 $333.3 $ 35.8 $ 31.8 $ 22.2 $ 23.2 $ 19.8 $ 18.9
==========================================================================================================
OPERATIONS BY GEOGRAPHIC AREA
Net Sales Operating Income
-----------------------------------------------------
(Dollars in millions) 1995 1994 1993 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
Domestic $463.4 $454.8 $404.8 $ 51.3 $ 45.0 $ 28.4
International 137.9 121.9 103.1 13.7 7.5 2.4
Sales between geographic areas (8.8) (7.5) (5.6) - - -
- ----------------------------------------------------------------------------------------------------------
$592.5 $569.2 $502.3 $ 65.0 $ 52.5 $ 30.8
==========================================================================================================
Identifiable Assets
------------------------
(Dollars in millions) 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
Domestic $227.5 $226.6 $210.3
International 99.0 89.7 84.7
Corporate 35.0 35.7 38.3
- ----------------------------------------------------------------------------------------------------------
$361.5 $352.0 $333.3
==========================================================================================================
27
18
Barnes Group Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
14. CONTINGENCY In December, 1991, the company was notified by the McDonnell
Douglas Corporation that McDonnell Douglas was terminating for
default an $8,200 contract with the company's Advanced
Fabrication division. In 1992, the company wrote off $4,000
of net assets related to this contract previously included in
its financial statements. The company believed from the onset
that it had legitimate defenses to the default claim. In
June, 1995, this dispute was settled to the satisfaction of
both parties with no further financial impact on the results
of operations or on the financial position of the company.
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF BARNES GROUP INC.
In our opinion, the accompanying consolidated balance sheets
and the related consolidated statements of income, changes in
stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of Barnes Group Inc.
and its subsidiaries at December 31, 1995 and 1994, and the
results of their operations and their cash flows for the years
then ended, in conformity with generally accepted accounting
principles. These financial statements are the responsibility
of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion
expressed above. The financial statements of Barnes Group
Inc. for the year ended December 31, 1993 were audited by
other independent accountants whose report dated January 28,
1994 expressed an unqualified opinion on those statements.
/s/ PRICE WATERHOUSE LLP
Hartford, Connecticut
January 23, 1996
28
19
Barnes Group Inc.
QUARTERLY DATA (UNAUDITED)
First Second Third Fourth Full
(Dollars in millions except per share data) Quarter Quarter Quarter Quarter Year
- -----------------------------------------------------------------------------------------------------------------------------------
1995
Net sales $158.6 $151.0 $141.7 $141.2 $592.5
Gross profit* 57.7 54.8 49.8 48.1 210.4
Operating income 14.5 13.4 11.1 9.8 48.8
Net income 8.3 7.3 6.3 5.6 27.5
Per Common Share:
Net income 1.29 1.12 .95 .84 4.20
Dividends .40 .40 .40 .40 1.60
Market prices (high-low) $44 3/8-36 1/4 $45 3/4-40 1/4 $43-40 $40 7/8-35 7/8 $45 3/4-35 7/8
1994
Net sales $142.1 $143.2 $140.3 $143.6 $569.2
Gross profit* 51.4 51.4 50.6 49.3 202.7
Operating income 8.8 9.6 10.2 8.0 36.6
Net income 4.9 5.5 5.4 4.5 20.3
Per Common Share:
Net income .78 .87 .84 .71 3.20
Dividends .35 .35 .35 .40 1.45
Market prices (high-low) $31 1/2-29 1/2 $37 3/4-29 3/4 $38-33 5/8 $39 7/8-35 1/2 $39 7/8-29 1/2
Note: The fourth quarter of 1994 includes a pretax charge of $1.1 or $.10 per
common share for severance costs at Barnes Aerospace.
*Sales minus cost of sales.
29
20
Barnes Group Inc.
SELECTED FINANCIAL DATA
1995 1994 1993(2)
- ---------------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE (1)
Income (loss)
Continuing operations $ 4.20 $ 3.20 $ .70
Effect of accounting changes - - -
Discontinued operations - - -
Net income (loss) 4.20 3.20 .70
Dividends paid 1.60 1.45 1.40
Stockholders' equity before deduction of guaranteed
ESOP obligation (at year-end) 21.16 18.53 16.82
Stock price (at year-end) 36 38 31 1/4
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR (in thousands)
Net sales $592,509 $569,197 $502,292
Operating income 48,804 36,649 12,538
As a percent of sales 8.2% 6.4% 2.5%
Income from continuing operations before income taxes
and effect of accounting changes $ 45,450 $ 33,922 $ 8,391
Income taxes 17,966 13,606 4,008
Income from continuing operations before
effect of accounting changes (8) 27,484 20,316 4,383
As a percent of average stockholders' equity
before deduction of guaranteed ESOP obligation 20.8% 18.0% 4.1%
Effect of accounting changes $ - $ - $ -
Net income (loss) 27,484 20,316 4,383
Net income (loss) applicable to common stock 27,484 20,316 4,383
Depreciation and amortization 26,750 23,733 23,094
Capital expenditures 35,820 31,848 22,216
Average common shares outstanding 6,547 6,354 6,250
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR-END FINANCIAL POSITION (in thousands)
Working capital $ 95,280 $ 88,325 $ 87,011
Current ratio 2.2 to 1 2.0 to 1 2.1 to 1
Property, plant and equipment $122,870 $112,569 $103,043
Total assets 361,549 351,956 333,296
Long-term debt 70,000 70,000 70,000
Stockholders' equity before deduction of
guaranteed ESOP obligation 138,680 119,150 105,868
Guaranteed ESOP obligation 9,839 12,011 14,019
Stockholders' equity 128,841 107,139 91,849
Debt as a percent of total capitalization (9) 24.6% 28.3% 30.5%
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR-END STATISTICS
Employees 3,880 4,181 4,357
<FN>
(1) All per-share data, other than earnings per common share, are based on
common shares outstanding at the end of each year. Earnings per common share
are based on weighted average common shares outstanding during each year.
(2) Includes a $3.4 million pretax, $2.0 million after-tax charge ($.33 per
share) against income related to the plant consolidation and work force
reduction at Barnes Aerospace and a $1.5 million charge without tax
benefit ($.24 per share) for a plant consolidation at Associated Spring's
Mexican operations.
(3) Includes a $17.8 million pretax, $10.7 million after-tax charge ($1.73
per share) against income related to the costs of plant closings at
Associated Spring, Barnes Aerospace charges on a terminated contract and
restructuring of Bowman U.S. sales organization. These charges were
partially offset by a $5.0 million pretax gain, $3.7 million after-tax
($.60 per share) from the sale of Bowman's Pioneer division.
(4) Barnes Group adopted three new accounting standards in 1992 retroactive to
the beginning of the year. Included is a one-time $39.7 million after-tax
charge ($6.41 per share) to comply with FAS 106 and 112 which changes the
accounting for certain postretirement and postemployment benefits to the
accrual method and an additional $1.0 million income tax charge ($.15 per
share) for FAS 109, which changed income tax accounting.
30
21
1992(3)(4) 1991 1990 1989(5) 1988 1987(6) 1986(7) 1985
- -----------------------------------------------------------------------------------------------------------
$ .94 $ 2.60 $ 2.76 $ 1.94 $ 3.06 $ 2.80 $ 2.57 $ 2.27
(6.56) - - - - - - -
- - - - - - - (.60)
(5.62) 2.60 2.76 1.94 3.06 2.80 2.57 1.67
1.40 1.40 1.40 1.40 1.20 1.15 1.00 .85
17.59 25.31 23.88 21.96 20.35 17.91 19.27 17.68
30 1/2 35 3/8 25 7/8 29 35 5/8 32 30 1/2 27 1/2
- -----------------------------------------------------------------------------------------------------------
$529,073 $535,660 $545,857 $511,221 $496,060 $458,016 $439,727 $431,762
7,259 37,982 41,198 33,990 43,702 42,265 43,056 40,767
1.4% 7.1% 7.5% 6.6% 8.8% 9.2% 9.8% 9.4%
$ 7,671 $ 28,849 $ 29,952 $ 23,118 $ 33,175 $ 34,576 $ 35,336 $ 33,574
1,838 12,926 13,163 10,745 14,327 16,736 18,733 17,157
5,833 15,923 16,789 11,114 16,711 17,700 16,603 16,417
5.1% 10.5% 12.0% 9.0% 15.9% 14.0% 14.0% 13.4%
$(40,695) $ - $ - $ - $ - $ - $ - $ (4,324)
(34,862) 15,923 16,789 12,373 18,848 17,840 16,603 12,093
(34,862) 15,923 16,789 11,114 16,711 17,700 16,603 12,093
23,741 23,159 22,044 18,167 16,626 15,470 14,511 13,486
16,238 19,099 21,615 18,218 21,821 22,457 18,803 16,232
6,202 6,127 6,078 5,733 5,465 6,321 6,461 7,223
- -----------------------------------------------------------------------------------------------------------
$ 93,500 $102,995 $ 94,087 $ 89,194 $102,126 $ 85,991 $ 54,659 $ 54,077
2.0 to 1 2.2 to 1 1.9 to 1 1.9 to 1 2.3 to 1 2.0 to 1 1.5 to 1 1.6 to 1
$104,437 $114,299 $114,717 $107,491 $100,403 $ 96,066 $ 87,613 $ 87,662
348,346 341,857 342,383 328,116 311,876 297,946 277,828 253,586
70,000 78,428 78,714 79,088 79,287 73,853 32,285 29,837
109,451 156,407 145,614 133,218 112,810 97,103 123,025 113,978
15,876 17,594 19,182 20,650 - - - -
93,575 138,813 126,432 112,568 112,810 97,103 123,025 113,978
31.2% 36.5% 39.8% 41.1% 37.7% 39.7% 28.5% 22.9%
- -----------------------------------------------------------------------------------------------------------
4,051 4,478 4,744 4,799 4,770 4,712 4,697 4,845
<FN>
(5) Includes a $6.5 million pretax, $3.9 million after-tax charge ($.68 per share) against income related
to restructuring costs at Associated Spring.
(6) Includes a $2.9 million pretax, $1.6 million after-tax charge ($.26 per share) against income related
to the transition costs involved in modernizing Associated Spring's valve spring production
facilities in North America.
(7) Barnes Group changed its U.S. pension cost accounting to comply with FAS 87. The effect was to
increase net income by $2.2 million ($.33 per share).
(8) Adjusted for preferred dividends in 1989, 1988 and 1987.
(9) Debt includes all interest-bearing debt and total capitalization includes interest-bearing debt,
accrued long-term retirement benefits, other long-term liabilities, preferred stock and stockholders'
equity, excluding the guaranteed ESOP obligation.
31
22
Barnes Group Inc.
DIRECTORS AND OFFICERS
DIRECTORS THOMAS O. BARNES
Chairman of the Board
* WALLACE BARNES
Retired Chairman of the Board
+ ++ GARY G. BENANAV
Executive Vice President
Aetna Life and Casualty Company
Hartford, Connecticut
* WILLIAM S. BRISTOW, JR.
President
W. S. Bristow & Associates, Inc.
Rollinsford, New Hampshire
* ++ ROBERT J. CALLANDER
Executive in Residence
Columbia University
School of Business
Retired Vice Chairman
Chemical Banking Corporation
New York, New York
* GEORGE T. CARPENTER
President
The S. Carpenter
Construction Company
Bristol, Connecticut
+ ++ DONNA R. ECTON
Chairman, President and
Chief Executive Officer
Business Mail Express, Inc.
Reston, Virginia
+ ++ MARCEL P. JOSEPH
Chairman of the Board
Augat Inc.
Mansfield, Massachusetts
* THEODORE E. MARTIN
President and
Chief Executive Officer
+ ++ JUAN M. STETA
Counsel to the law firm of
Santamarina y Steta
Mexico, D.F., Mexico
+ K. GRAHAME WALKER
Chairman and
Chief Executive Officer
The Dexter Corporation
Windsor Locks, Connecticut
* A. STANTON WELLS
Retired President and
Chief Executive Officer
OFFICERS EXECUTIVE OFFICE
THEODORE E. MARTIN
President and
Chief Executive Officer
THOMAS O. BARNES
Senior Vice President -
Administration
JOHN E. BESSER
Senior Vice President -
Finance and Law
JOSEPH R. KOWALCHIK
Senior Vice President -
Human Resources
+ JOHN J. LOCHER
Vice President, Treasurer
MARY LOUISE BEARDSLEY
Associate General Counsel
and Secretary
FRANCIS C. BOYLE, JR.
Assistant Controller
OPERATIONS
ALI A. FADEL
Vice President, Barnes Group Inc.,
and President, Associated Spring
LEONARD M. CARLUCCI
Vice President, Barnes Group Inc.,
and President, Bowman Distribution
THEODORE E. MARTIN
(Acting) President, Barnes Aerospace
* MEMBER OF EXECUTIVE COMMITTEE
+ MEMBER OF AUDIT COMMITTEE
++ MEMBER OF COMPENSATION COMMITTEE
32
23
Barnes Group Inc.
CORPORATE INFORMATION
DIRECTORY OF BARNES GROUP INC.
OPERATIONS Executive Office
Bristol, Connecticut
ASSOCIATED SPRING
Headquarters
Bristol, Connecticut
Manufacturing Plants
North America:
Bristol, Connecticut
Saline, Michigan
Syracuse, New York
Arden, North Carolina
Corry, Pennsylvania
Dallas, Texas
Milwaukee, Wisconsin
Burlington, Ontario, Canada
Mexico City, Mexico
South America:
Campinas, Brazil
Asia:
Republic of Singapore
Distribution Operations
United States:
Maumee, Ohio
Cerritos, California
Ypsilanti, Michigan
Arlington, Texas
New Berlin, Wisconsin
United Kingdom:
Evesham
France:
Montigny
BOWMAN DISTRIBUTION
Headquarters
Cleveland, Ohio
Distribution Centers
United States:
Bakersfield, California
Norcross, Georgia
Rockford, Illinois
Elizabethtown, Kentucky
Edison, New Jersey
Arlington, Texas
Auburn, Washington
Canada:
Concord, Ontario
Edmonton, Alberta
Moncton, New Brunswick
St. Laurent, Quebec
Distribution Operations
United Kingdom:
Corsham
France:
Voisins Le Bretonneux
BARNES AEROSPACE
Headquarters
Windsor, Connecticut
Manufacturing Plants
United States:
East Granby, Connecticut
Windsor, Connecticut
Lansing, Michigan
Ogden, Utah
Asia:
Republic of Singapore
STOCKHOLDERS' TRANSFER AGENT AND REGISTRAR
INFORMATION Shareholder Inquiries/
Address Changes/Consolidations
Chemical Mellon Shareholder
Services, L.L.C.
P.O. Box 590
Ridgefield Park, NJ 07660
1-800-288-9541
(Continental U.S. only)
or 1-412-236-8000
For Hearing Impaired
1-800-231-5469
Lost Certificates/Replacements
Chemical Mellon Shareholder
Services, L.L.C.
Estoppel Department
P.O. Box 467
Washington Bridge Station
New York, NY 10033
Certificate Transfers
Chemical Mellon Shareholder
Services, L.L.C.
P.O. Box 469
Washington Bridge Station
New York, NY 10033
All certificates should be sent
registered mail.
Dividend Investment/
Shareholder Investment Plans
Dividends on Barnes Group common
stock may be automatically invested
in additional shares.
Further information can be
obtained from:
Mellon Securities Trust Company
c/o Chemical Mellon
Shareholder Services, L.L.C.
P. O. Box 750
Pittsburgh, PA 15230
1-800-288-9541
(Continental U.S. only)
or 1-412-236-8000
For Hearing Impaired
1-800-231-5469
Hand Deliveries
Chemical Mellon Shareholder
Services, L.L.C.
120 Broadway, 13th Floor
New York, NY 10271
STOCK EXCHANGE
New York Stock Exchange
Stock Trading Symbol: B
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
One Financial Plaza
Hartford, CT 06103
ANNUAL MEETING
Barnes Group Inc. annual
meeting of stockholders will be held
at 10:30 a.m., Wednesday, April 3, 1996,
at The Travelers Education Center, Hartford, CT.
INVESTOR INFORMATION
Barnes Group welcomes inquiries from stockholders,
analysts and prospective investors. 10-K Reports
are available on request. Contact:
John F. Sand
Barnes Group Inc.
123 Main St., P.O. Box 489
Bristol, CT 06011-0489
1-860-583-7070
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>15
<TEXT>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of Barnes Group Inc. as of December 31, 1995, the
related consolidated statement of income, Note 3 to the consolidated financial
statements and Schedule VIII of Form 10-K and is qualified in its entirety by
reference to such financial statements, note and schedule.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 17,868
<SECURITIES> 0
<RECEIVABLES> 89,721
<ALLOWANCES> 3,635
<INVENTORY> 56,749
<CURRENT-ASSETS> 172,816
<PP&E> 297,832
<DEPRECIATION> 174,962
<TOTAL-ASSETS> 361,549
<CURRENT-LIABILITIES> 77,536
<BONDS> 77,491
<COMMON> 15,737
<PREFERRED-MANDATORY> 0
<PREFERRED> 0
<OTHER-SE> 113,104
<TOTAL-LIABILITY-AND-EQUITY> 361,549
<SALES> 592,509
<TOTAL-REVENUES> 592,509
<CGS> 382,150
<TOTAL-COSTS> 382,150
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,577
<INTEREST-EXPENSE> 5,274
<INCOME-PRETAX> 45,450
<INCOME-TAX> 17,966
<INCOME-CONTINUING> 27,484
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,484
<EPS-PRIMARY> 4.20
<EPS-DILUTED> 4.20