EXHIBIT 99.2
UNAUDITED BARNES GROUP INC. PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS INFORMATION WITH EXPLANATORY NOTES.
On August 30, 1999, Barnes Group Inc. (the Company)
purchased substantially all of the assets of the nitrogen gas
spring business of the Teledyne Fluid Systems Division of
Teledyne Industries, Inc. pursuant to an Asset Purchase and Sale
Agreement dated as of July 27, 1999. The $89.7 million purchase
price of the Nitrogen Business Unit has been preliminarily
allocated to tangible and intangible assets and liabilities of
the Nitrogen Business Unit based upon estimates of their
respective values. These allocations may be subsequently
adjusted based upon appraisals, valuations and other studies,
which will be finalized over the next several months. Final
values may differ substantially from those shown herein.
The following unaudited pro forma consolidated financial
information has been prepared from the historical financial
statements of Barnes Group Inc. and Teledyne Fluid Systems'
Nitrogen Business Unit and adjusted to reflect the acquisition
using the purchase method of accounting. These unaudited pro
forma financial statements should be read in conjunction with the
Company's historical financial statements and related notes filed
on Form 10-K on March 24, 1999 for the fiscal year ended December
31, 1998 and the Teledyne Fluid Systems' Nitrogen Business Unit
audited financial statements and related notes as presented in
EXHIBIT 99.1 of this report.
The unaudited pro forma consolidated financial statement
information is presented for informational purposes only. The
pro forma results from operations and statement of financial
position are not necessarily indicative of what would have
resulted had the acquisition occurred on January 1, 1998, January
1, 1999 or as of December 31, 1998 or which may result in the
future. The Company believes it has used reasonable methods in
the preparation of this financial statement information.
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BARNES GROUP INC.
Pro Forma Consolidated Balance Sheet
December 31, 1998
(Dollars in thousands)
(Unaudited)
Nitrogen Pro Forma Barnes
Barnes Business Adjust- Group Inc.
Group Inc. Unit ments Notes Pro Forma
--------- -------- --------- ----- ---------
ASSETS
Current assets
Cash and cash
equivalents $ 40,206 $ 4,764 $ (4,764) (1) $ 40,206
Short-term investments 2,566 -- -- 2,566
Accounts receivable,
less allowances 82,809 8,633 (18) (1) 91,424
Due from affiliates -- 2,320 (2,320) (1) --
Inventories 64,404 5,116 445 (1) (2) 69,965
Deferred income taxes
and prepaid expenses 17,243 463 (385) (1) 17,321
-------- -------- -------- --------
Total current assets 207,228 21,296 (7,042) 221,482
Deferred income taxes 25,136 127 (127) (1) 25,136
Property, plant
and equipment 139,247 8,915 3,442 (1) (2) 151,604
Goodwill 18,224 899 69,267 (3) 88,390
Other assets 29,069 307 4,424 (2) 33,800
-------- -------- -------- --------
Total assets $418,904 $ 31,544 $ 69,964 $520,412
======== ======== ======== ========
<FN>
See accompanying notes to the pro forma consolidated balance sheet.
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BARNES GROUP INC.
Pro Forma Consolidated Balance Sheet
December 31, 1998
(Dollars in thousands)
(Unaudited)
Nitrogen Pro Forma Barnes
Barnes Business Adjust- Group Inc.
Group Inc. Unit ments Notes Pro Forma
--------- -------- -------- ----- ---------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ 6,766 $ -- $ 829 (4) $ 7,595
Accounts payable 38,439 3,360 3,300 (7) 45,099
Accrued taxes and
other liabilities 52,934 5,537 (1,663) (1) (6) 56,808
Guaranteed ESOP
obligation-current 2,205 -- -- 2,205
-------- -------- -------- --------
Total current liabilities 100,344 8,897 2,466 111,707
Long-term debt 51,000 124 88,876 (4) 140,000
Accrued retirement benefits 68,129 -- -- 68,129
Taxes and other liabilities 10,757 205 940 (1) (6) 11,902
Stockholders' equity
Common stock-par value
$0.01 per share 220 -- -- 220
Additional paid-in capital 49,231 -- -- 49,231
Treasury stock at cost (42,893) -- -- (42,893)
Retained earnings 204,364 23,534 (23,534) (5) 204,364
Accumulated other
comprehensive income (20,043) (1,216) 1,216 (5) (20,043)
Guaranteed ESOP obligation (2,205) -- -- (2,205)
-------- -------- -------- --------
Total stockholders' equity 188,674 22,318 (22,318) 188,674
-------- -------- -------- --------
Total liabilities and
stockholders' equity $418,904 $ 31,544 $ 69,964 $520,412
======== ======== ======== ========
<FN>
See accompanying notes to the pro forma consolidated balance sheet.
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BARNES GROUP INC.
Notes to Unaudited Pro Forma Consolidated Balance Sheet
December 31, 1998
The unaudited pro forma consolidated balance sheet includes the pro forma
adjustments to reflect the acquisition of the Nitrogen Business Unit as
if it took place on December 31, 1998.
Note (1) Adjustments to eliminate assets and liabilities that were not
part of the purchase agreement.
Note (2) Adjustments to record Nitrogen Business Unit's assets at
estimated fair market value.
Note (3) Adjustment to record incremental goodwill resulting from the
purchase of Nitrogen Business Unit.
Note (4) Adjustments to reflect impact on debt related to the
acquisition of Nitrogen Business Unit.
Note (5) Adjustments to eliminate equity of Teledyne Industries, Inc. in
Nitrogen Business Unit.
Note (6) Adjustments to reflect deferred taxes related to the non-
deductibility of certain foreign asset values in accordance
with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes."
Note (7) Adjustment to record costs associated with the acquisition.
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BARNES GROUP INC.
Pro Forma Consolidated Statements of Income
Year Ended December 31, 1998
(Dollars in thousands, except per share data)
(Unaudited)
Nitrogen Pro Forma Barnes
Barnes Business Adjust- Group Inc.
Group Inc. Unit ments Notes Pro Forma
-------- -------- -------- ----- --------
Net sales $651,183 $ 47,408 $ -- $698,591
Cost of sales 435,918 28,917 1,459 (A)(B) 466,294
Selling and admin- (C)
istrative expenses 160,044 8,318 -- 168,362
-------- -------- -------- --------
595,962 37,235 1,459 634,656
-------- -------- -------- --------
Operating income 55,221 10,173 (1,459) 63,935
Other income 5,617 92 5,709
Interest expense 4,106 -- 6,564 (D) 10,670
Other expenses 2,069 -- 1,743 (E) 3,812
-------- -------- -------- --------
Income before income
taxes 54,663 10,265 (9,766) 55,162
Income taxes (benefit) 20,169 3,666 (7,369) (F) 16,466
-------- -------- -------- --------
Net income $ 34,494 $ 6,599 $ (2,397) $ 38,696
======== ======== ======== ========
Per common share:
Net income-basic $ 1.72 $ .33 $ (.12) $ 1.93
-diluted 1.69 .32 (.12) 1.89
Average common shares
outstanding:
-basic 20,095,710 -- -- 20,095,710
-diluted 20,426,369 -- -- 20,426,369
<FN>
See accompanying notes to the pro forma consolidated statement of income.
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BARNES GROUP INC.
Pro Forma Consolidated Statements of Income
Nine Month Period Ended September 30, 1999
(Dollars in thousands, except per share data)
(Unaudited)
Nitrogen Pro Forma Barnes
Barnes Business Adjust- Group Inc.
Group Inc. Unit ments Notes Pro Forma
-------- -------- -------- ----- --------
Net sales $472,574 $ 30,130 $ -- $502,704
Cost of sales 320,485 17,570 973 (A)(B) 339,028
Selling and admin- (C)
istrative expenses 111,326 5,803 -- 117,129
-------- -------- -------- --------
431,811 23,373 973 456,157
-------- -------- -------- --------
Operating income 40,763 6,757 (973) 46,547
Other income 5,255 -- 5,255
Interest expense 3,530 3 4,376 (D) 7,909
Other expenses 1,204 -- 1,162 (E) 2,366
-------- -------- -------- --------
Income before income
taxes 41,284 6,754 (6,511) 41,527
Income taxes (benefit) 14,243 2,511 (4,400) (F) 12,354
-------- -------- -------- --------
Net income $ 27,041 $ 4,243 $ (2,111) $ 29,173
======== ======== ======== ========
Per common share:
Net income-basic $ 1.38 $ .22 $ (.11) $ 1.49
-diluted 1.37 .21 (.11) 1.47
Average common shares
Outstanding:
-basic 19,560,942 -- -- 19,560,942
-diluted 19,796,883 -- -- 19,796,883
<FN>
See accompanying notes to the pro forma consolidated statement of income.
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BARNES GROUP INC.
Notes to Unaudited Pro Forma Consolidated Statement of Income
for the Periods Ended December 31, 1998 and September 30, 1999
The unaudited pro forma consolidated statement of income includes the pro
forma adjustments to reflect the acquisition of the Nitrogen Business
Unit as if it took place on January, 1 1998 and January 1, 1999.
Note (A) Adjustment to reflect additional cost related to the write-up
of Nitrogen Business Unit's inventory to estimated fair market
value, expensed over one inventory turn.
Note (B) Adjustment to reflect additional depreciation expense related
to the write-up of Nitrogen Business Unit's fixed assets to
estimated fair market value, depreciated over estimated useful
lives of 8 years for machinery and equipment and 15 years for
buildings.
Note (C) Adjustment to reflect additional cost related to the write-up
of Nitrogen Business Unit's trademarks to estimated fair market
value, amortized over an estimated useful life of 30 years.
Note (D) Adjustment to reflect additional interest expense on the
acquisition related debt. The interest was calculated on a pro
forma basis using an average rate of 7.3% on borrowings of
$89.7 million. A 1% change in the interest rate would impact
the interest expense related to the acquisition debt by $0.9
million per year.
Note (E) Adjustment to reflect additional cost related to acquisition
goodwill amortized over its estimated useful life.
Note (F) Adjustment to reflect the tax deductibility of the above
adjustments on the pro forma statements as well as certain
foreign tax planning strategies.
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