SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 16, 2003
Barnes Group Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-04801 06-0247840
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
123 Main Street Bristol, CT 06010
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(Address of principal executive offices) (Zip Code)
(860) 583-7070
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Registrant's telephone number, including area code
N/A
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(Former name or former address, if changed since last report)
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Item 7. Financial Statements and Exhibits.
The following exhibit is furnished pursuant to Item 12:
Exhibit 99.1: Press Release issued October 16, 2003 announcing the
financial results of operations for the third quarter and nine
months ended September 30, 2003.
Item 12. Results of Operations and financial Conditions.
On October 16, 2003, Barnes Group Inc. issued a press release
announcing the financial results of operations for the third
quarter and nine months ended September 30, 2003. A copy is
attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
The information in this Current Report on 8-K and the exhibit
attached hereto shall not be deemed to be "filed" for the purposes
of Section 18 of the Securities Exchange Act of 1934, as amended,
nor shall it be deemed incorporated by reference in any filing
under the Exchange Act or Securities Act of 1933, as amended,
except as expressly set forth by specific reference in such
filing.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 16, 2003 BARNES GROUP INC.
(Registrant)
By:/s/ William C. Denninger
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William C. Denninger
Senior Vice President and
Chief Financial Officer
Exhibit Index
Exhibit No. Document Description
99.1 Press Release, dated October 16, 2003
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Barnes Group Inc. EXHIBIT 99.1
Executive Office ------------
Bristol, CT 06010
Tel: 860.583.7070
BARNES GROUP INC. [Logo] News Release
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Contact:
FOR IMMEDIATE RELEASE Investors:
October 16, 2003 Phillip J. Penn
(860) 973-2126
Media:
Stephen J. McKelvey
(860) 973-2132
BARNES GROUP ANNOUNCES THIRD QUARTER FINANCIAL RESULTS
- NET SALES INCREASE 13 PERCENT TO $222 MILLION
- OPERATING INCOME UP 40 PERCENT, NET INCOME INCREASES 29 PERCENT TO
$9 MILLION
- AEROSPACE ORDERS EXCEED $51 MILLION, DRIVING ORDER BACKLOG TO $149 MILLION
BRISTOL, CONNECTICUT, OCTOBER 16, 2003---Barnes Group Inc. (NYSE: B)
today announced financial results for the quarter ended September 30, 2003.
Net sales for the third quarter of 2003 were $222.2 million, up 13 percent
from $196.8 million in the third quarter of 2002. The Company reported a 40
percent increase in operating income to $14.0 million, as net income
increased to $9.0 million, or $0.38 per diluted share, in the third quarter
of 2003, from $6.9 million, or $0.36 per diluted share, in the comparable
year-ago period. Average diluted shares outstanding were 23.3 million in the
quarter ended September 30, 2003, up 21 percent from 19.2 million in the
year-ago period.
"Our operating performance this quarter, despite the headwind of a
still-sluggish economic climate, clearly demonstrates the returns from
investments we continue to make to generate sustainable, profitable growth
for our Company," said Edmund M. Carpenter, Barnes Group Inc.'s President and
C.E.O. "Going forward, these investments should continue to enhance our top-
and bottom-line performance," Carpenter continued.
Sales at Barnes Distribution were $103.8 million for the quarter ended
September 30, 2003, up $31.8 million, or 44 percent, from $72.0 million in
the quarter ended September 30, 2002. Kar Products, which Barnes Group
purchased in February 2003, contributed $30.8 million of sales in the most
recent quarter. Barnes Distribution generated operating profit of $7.4
million in the third quarter of 2003, up sharply from operating profit of
$2.4 million in the third quarter of 2002.
The improvement in operating profit was driven primarily by the
operating profit contribution from Kar Products and higher gross profit
margin. Included in Barnes Distribution's operating profit is an incremental
year-over-year gain of $0.9 million from the sale of distribution centers;
the gain was essentially offset by approximately $0.8 million of incremental
severance expense.
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"This was a solid quarter for Barnes Distribution; beyond tripling
operating profit, the integration of Kar is running ahead of our original
schedule, and our new sales growth initiatives are performing very well,"
Carpenter stated. "Our national and regional customer development efforts, e-
commerce platforms and new Tier 2 relationships together contributed $5.9
million in sales to the most recent quarter, up from $1.8 million last year.
We added more than 50 new national and regional customers, bringing to 249
the total new customers gained since January, 2002," Carpenter added.
Carpenter continued, "During the quarter, we continued to integrate Kar
Products into Barnes Distribution, achieving a number of milestones. As a
result of the progress we have made to date, we believe that Kar will be
substantially integrated in the United States by the end of the year, and the
integration in Canada, which includes the construction of a new distribution
center, will be completed in the first half of 2004."
Sales at Associated Spring were $81.1 million for the quarter ended
September 30, 2003, up slightly compared with sales of $80.9 million in the
quarter ended September 30, 2002. The increase reflected higher sales of
nitrogen gas springs and products for industrial markets, combined with the
positive impact on sales from foreign currency translation. These were
essentially offset by a decline in sales related to the North American light
vehicle market.
Associated Spring's operating profit was $4.9 million for the third
quarter of 2003, down from $6.5 million in the third quarter of 2002.
Operating profit was positively impacted by the benefits from the 2002
closure of Associated Spring's Dallas, Texas facility. This was more than
offset by certain incrementally higher personnel costs, including pension and
severance expenses totaling approximately $1.0 million, and a $0.5 million
reduction in the carrying value of the Dallas facility, which is currently
held for sale.
Carpenter commented, "Associated Spring continues to successfully
leverage higher-growth segments of its key markets, such as nitrogen gas
springs and the non-U.S. automakers, to offset sales declines with some
domestic customers. Although this business remains quite profitable, during
the third quarter we began taking additional actions aimed at improving
operating margins to be more in line with historical levels."
Sales at Barnes Aerospace were $39.4 million for the third quarter of
2003, down from $45.8 million in the third quarter of 2002. Operating profit
was $2.0 million for the quarter ended September 30, 2003, up from $1.4
million in the comparable year-ago period, reflecting the benefit of cost
reduction efforts taken during 2002, productivity and efficiency improvements
and the absence of $0.7 million in severance that occurred in the 2002
period. These positives were offset in part by the sales volume decline.
Barnes Aerospace recorded orders of $51.7 million during the third
quarter of 2003, up 32 percent from $39.1 million in the comparable year-ago
period. Backlog increased to $149.3 million, up four percent from $143.0
million at September 30, 2002. Military orders were $18.1 million, or 35
percent of the orders received in the most recent quarter; this included
direct military orders that were particularly strong at $9.8 million. Barnes
Aerospace also received approximately $10.3 million in orders related to a
large commercial engine program that will enter service in early 2004.
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"It would appear that we have turned the corner at Barnes Aerospace from a
very challenging post-9/11 environment," Carpenter stated. "As a result of
the efforts taken to position the business for this difficult part of the
aerospace cycle, we are continuing to report solid operating results. With
the strong orders generated this past quarter, Barnes Aerospace is very well
positioned for top- and bottom-line growth in 2004," Carpenter added.
William C. Denninger, Barnes Group Inc.'s Chief Financial Officer,
commented, "In addition to a strong operating performance in the third
quarter, we further strengthened our balance sheet by reducing borrowings at
September 30, 2003 by approximately $9 million compared to June 30, while at
the same time increasing cash by $12 million, to $63 million. Our debt-to-
capitalization ratio at quarter-end was 45 percent, which is within our
targeted leverage range."
For the first nine months of 2003, Barnes Group's net sales were $670.5
million, up 12 percent from $600.4 million in the same period a year ago. Net
income was $26.1 million, or $1.21 per diluted share, for the nine months
ended September 30, 2003, up 17 percent from $22.3 million, or $1.17 per
diluted share, in the same period of 2002.
Barnes Group will conduct a conference call with investors to discuss
third quarter 2003 results on Thursday, October 16, 2003 at 12:00 PM ET. A
webcast of the live call, supporting materials and an archived replay will be
available on the Barnes Group investor relations website
(ir.barnesgroupinc.com).
Barnes Group Inc. (www.barnesgroupinc.com) is a diversified
international manufacturer of precision metal components and assemblies and a
distributor of industrial supplies, serving a wide range of markets and
customers. Founded in 1857 and headquartered in Bristol, Connecticut, Barnes
Group consists of three businesses with 2002 sales of $784 million:
Associated Spring, one of the world's largest manufacturers of precision
mechanical and nitrogen gas springs and a global supplier of retaining rings
and injection-molded plastic components; Barnes Aerospace, a manufacturer and
repairer of highly-engineered assemblies and components for commercial and
military aircraft engines, airframes, and land-based industrial gas turbines;
and Barnes Distribution, an international, full-service distributor of
maintenance, repair and operating supplies. Over 6,100 dedicated employees at
more than 60 locations worldwide contribute to Barnes Group Inc.'s success.
This release may contain certain forward-looking statements as defined
in the Private Securities Litigation Reform Act of 1995. These forward-
looking statements are subject to risks and uncertainties that may cause
actual results to differ materially from those contained in the statements.
Investors are encouraged to consider these risks and uncertainties as
described within the Company's periodic filings with the Securities and
Exchange Commission, including the following: the ability of the Company to
integrate newly acquired businesses and to realize acquisition synergies on
schedule; changes in market demand for the types of products and services
produced and sold by Barnes Group; the Company's success in identifying, and
attracting customers in, new markets; the Company's ability to develop new
and enhanced products to meet customers' needs timely; the effectiveness of
the Company's marketing and sales programs; increased competitive activities
including pricing, advertising and promotions that could adversely affect
customer demand for the Company's products; changes in economic, political
and public health conditions, worldwide and in the locations where the
Company does business; interest and foreign exchange rate fluctuations; and
regulatory changes.
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BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
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2003 2002 2003 2002
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Net sales $222,160 $196,799 $670,481 $600,420
Cost of sales 143,651 134,524 432,193 407,028
Selling and admin-
istrative expenses 64,470 52,256 195,054 158,054
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208,121 186,780 627,247 565,082
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Operating income 14,039 10,019 43,234 35,338
Other income 613 2,156 2,293 3,357
Interest expense 3,961 3,877 12,206 10,895
Other expenses 13 167 990 378
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Income before income
taxes 10,678 8,131 32,331 27,422
Income taxes 1,725 1,215 6,272 5,073
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Net income $ 8,953 $ 6,916 $ 26,059 $ 22,349
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Per common share:
Net income
Basic $ .40 $ .37 $ 1.24 $ 1.20
Diluted .38 .36 1.21 1.17
Dividends .20 .20 .60 .60
Average common shares
outstanding
Basic 22,561,901 18,839,580 21,038,719 18,697,265
Diluted 23,257,839 19,150,751 21,531,951 19,156,896
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BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
September September
2003 2002
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Assets
Current assets
Cash and short-term investments $ 63,253 $ 38,923
Accounts receivable 128,282 111,216
Inventories 105,704 85,413
Deferred income taxes and prepaid expenses 28,826 28,092
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Total current assets 326,065 263,644
Deferred income taxes 21,966 7,342
Property, plant and equipment 152,392 160,950
Goodwill 220,092 169,529
Other assets 99,938 71,712
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$820,453 $673,177
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Liabilities and Stockholders' Equity
Current liabilities
Notes payable $ 2,000 $ --
Accounts payable 93,265 68,526
Accrued liabilities 81,860 63,494
Long-term debt - current 24,794 8,227
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Total current liabilities 201,919 140,247
Long-term debt 216,229 234,345
Deferred income taxes 6,496 6,840
Other liabilities 93,714 74,300
Stockholders' equity 302,095 217,445
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$820,453 $673,177
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