Barnes Group Net Income Up 42 Percent In 2002.Business Editors BRISTOL Bristol, cities, United States Bristol. 1 Industrial city (1990 pop. 60,640), Hartford co., central Conn., on the Pequabuck River; settled 1727, inc. 1785. Its clock-making industry dates from 1790. , Conn.--(BUSINESS WIRE)--Feb. 14, 2003 -- Cash flow from operations exceeds $54 million in 2002. -- Fourth quarter operating income rises sharply year-over-year. Barnes Group Inc. (NYSE NYSE See: New York Stock Exchange : B) today announced financial results for the quarter and year ended December December: see month. 31, 2002. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the fourth quarter of 2002 were $183.6 million, essentially flat compared with the fourth quarter of 2001. The Company reported net income of $4.8 million, or $0.25 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, in the fourth quarter of 2002, compared to a net loss of $0.8 million, or $0.04 per diluted share, in the year-ago period. Net income in the fourth quarter of 2001 included a pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern charge of $4.8 million, equivalent on an after-tax basis After-tax basis The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond. to $0.16 per diluted share, related to the closure of an Associated Spring plant in Texas and the reorganization of the sales management Sales Management Role and Goal Importance of sales management is critical for any commercial organization. Expanding business in not possible without increasing sales volumes, and effective sales management goal is to organize sales team work in such a manner that ensures a function at Barnes Distribution. "Our financial results improved from the year-ago period, reflecting hard work by all employees in our three businesses," said Edmund Edmund, 921–46, king of Wessex (939–46), half brother and successor of Athelstan. Immediately after his accession he had to face an invasion of Irish vikings led by Olaf Guthfrithson. M. Carpenter, Barnes Group Inc.'s President and C.E.O. "Market conditions in the fourth quarter were very tough, as the protracted pro·tract tr.v. pro·tract·ed, pro·tract·ing, pro·tracts 1. To draw out or lengthen in time; prolong: disputants who needlessly protracted the negotiations. 2. downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in industrial activity continued to affect us negatively. Despite this, these fourth quarter results reflect the cumulative efforts to properly position the company to continue to generate long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. value for our shareholders," Carpenter added. Sales at Associated Spring were $77.2 million for the quarter ended December 31, 2002, up 22 percent from $63.2 million in the quarter ended December 31, 2001. Top line growth in the 2002 period reflected approximately $11.0 million of incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. sales from recent acquisitions, modest growth in sales of products for the transportation sector, and nearly 20 percent growth in the sales of nitrogen gas spring products. Associated Spring's operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. was $6.9 million for the fourth quarter of 2002, compared to an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $1.1 million in the fourth quarter of 2001. Operating profit growth reflected the higher sales volume, more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. and productivity improvements versus the 2001 period, as well as the absence in the current year period of the above-noted charge for the Texas plant closure. Carpenter commented, "Associated Spring had another excellent quarter, with substantive sales growth in almost every major category. In what is historically a soft seasonal period for sales to our transportation customers, profitability was excellent, and a testament to efforts the team at Associated Spring has made to improve asset utilization and effectively manage costs." Sales at Barnes Aerospace were $40.5 million for the fourth quarter of 2002, down 24 percent from a record $52.9 million in the fourth quarter of 2001. Operating profit was $3.4 million for the quarter ended December 31, 2002, down slightly from $3.6 million in the comparable year-ago period, reflecting the lower sales volume; this was mostly offset by the positive impact of reduced employment levels and other recent actions aimed at improving the profitability of the business. Barnes Aerospace recorded orders of $49 million during the fourth quarter of 2002; order backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. remained strong at $152 million at December 31, 2002, up from $143 million at September 30, 2002 and down only four percent compared with record year-end backlog of $159 million at December 31, 2001. "Barnes Aerospace employees worked very diligently dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d in 2002 to position the business for the current environment in the commercial aerospace industry. The solid operating profit in the fourth quarter, despite a sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. decline in sales, is a validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. of those efforts. Moreover, orders grew 25 percent sequentially, and were particularly strong from our military and government customers, an indication that our continued investments in sales, marketing, and engineering have been quite effective," Carpenter stated. Sales at Barnes Distribution were $67.6 million for the quarter ended December 31, 2002, down two percent from $69.0 million in the quarter ended December 31, 2001. Barnes Distribution recorded an operating loss of $0.3 million in the fourth quarter of 2002, compared with an operating loss of $0.8 million in the fourth quarter of 2001. The improvement in operating results reflected a higher gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. and overall decline in selling and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. . These positives were mostly offset by the sales volume decline, approximately $0.5 million in additional freight and other expenses related to reconfiguration of a primary distribution center, and higher travel costs related to the roll-out of new national and regional accounts opened during the latter half of the year. "End market conditions were very tough in the fourth quarter for Barnes Distribution," Carpenter stated. "On a more positive note, sales efforts aimed at capturing new national and regional accounts continue to go very well, as we opened 116 new accounts in 2002, compared to 18 national accounts opened in 2001. While we are incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. some up-front costs in the initial roll-out of these accounts, it is an investment in the future growth of the business, as the sales potential from these new customers should be $10 million to $20 million per year," Carpenter added. "In addition to a strong operating performance, our fourth quarter financial results also improved from the elimination of goodwill amortization in the current-year period, offset in part by higher expenses related to post-retirement benefits; these same factors impacted our full-year 2002 results as well. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses in the fourth quarter was $18.8 million; thus, we generated cash flow from operations for the full year of $54.4 million," commented William C. Denninger, Barnes Group Inc.'s Chief Financial Officer. "Cash generation in 2002 allowed us to reduce our total debt by $15.9 million year-over-year, while funding the growth investments we made in our businesses," Denninger added. For all of 2002, Barnes Group's net income was $27.2 million, up 42 percent from $19.1 million for the same period a year ago. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were $1.42 for the year ended December 31, 2002, compared with $1.01 in the same period of 2001. Net sales for 2002 were $784.0 million, up two percent from net sales of $768.8 million last year. For the full year, sales at Associated Spring were $321.7 million in 2002, up 15 percent from $279.2 million in 2001. Acquisitions provided approximately $39.7 million in incremental sales to Associated Spring in 2002, with the balance of the sales growth reflecting solid demand for nitrogen gas springs and transportation-related products. Operating profit was $28.1 million, up 45% from $19.4 million in 2001. Operating profit grew as a result of the higher sales volume, operational improvements and effective efforts to lower costs; operating profit for 2001 was negatively affected by the charge for the Texas plant closure mentioned above. Full-year sales at Barnes Aerospace were $183.0 million in 2002, down nine percent from a record $200.4 million in 2001, which reflected the conditions in the commercial aerospace market noted above. Operating profit at Barnes Aerospace was $10.8 million for the year ended December 31, 2002, compared with $16.4 million in the year-ago period. Operating profit fell largely as a function of the decreased sales volume and approximately $1.3 million in severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and other personnel expenses. This was partially offset by the positive impact of reduced employment levels noted above. Sales at Barnes Distribution were $286.7 million for the year ended December 31, 2002, down four percent from $298.4 million in the comparable period in 2001. Operating profit for all of 2002 was $7.5 million, up from $5.5 million for the same period in 2001. Operating profit increased as a result of higher gross profit margin and significantly reduced administrative and warehouse expenses versus the year-ago period, offset in part by the sales volume decline. Carpenter concluded, "Given the state of our end markets, we would regard our 2002 performance as solid. Looking at 2003, Associated Spring appears to be off to a strong start. The new growth initiatives rolled out by Barnes Distribution last year and the integration of recently acquired Kar Products should begin to have a positive financial impact. Finally, Barnes Aerospace is positioned to remain profitable, building off their strong year-end backlog. As a company, we are ready for what 2003 brings, and we remain committed to generating sustainable growth in our businesses, and building lasting value for our stockholders." Barnes Group will conduct a conference call with investors to discuss fourth quarter results on Friday, February 14, 2003 at 10:00 AM EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . A webcast of the live call, supporting slides and an archived replay will be available on the Barnes Group investor relations Investor relations The process by which the corporation communicates with its investors. website (ir.barnesgroupinc.com). Barnes Group Inc. (www.barnesgroupinc.com) is a diversified diversified (di·verˑ·s international manufacturer of precision metal parts and distributor of industrial supplies, serving a wide range of markets and customers. Founded in 1857 and headquartered in Bristol, Connecticut Bristol is a city located in Hartford County, Connecticut, 20 miles (32 km) southwest of Hartford. According to 2006 Census Bureau estimates, the population of the city is 61,353. , 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; Barnes Aerospace, a manufacturer and repairer of highly engineered assemblies and products 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 6,200 dedicated employees at more than 60 locations worldwide contribute to Barnes Group Inc.'s success. This release may contain certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 and political conditions, worldwide and in the locations where the Company does business; interest and foreign exchange rate fluctuations; and regulatory changes.
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended Twelve months ended
December 31 December 31
2002 2001 2002 2001
Net sales $183,616 $183,607 $784,036 $768,821
Cost of sales 122,976 127,906 530,004 519,536
Selling and admin.
expenses 51,138 54,194 209,192 208,965
174,114 182,100 739,196 728,501
Operating income 9,502 1,507 44,840 40,320
Other income 294 191 3,651 3,890
Interest expense 3,928 3,594 14,823 16,161
Other expenses 179 1,161 557 4,590
Income (loss) before
income taxes 5,689 (3,057) 33,111 23,459
Income taxes (benefit) 887 (2,291) 5,960 4,338
Net income (loss) $4,802 $(766) $27,151 $19,121
Per common share:
Net income (loss)
- basic $.25 $(.04) $1.45 $1.03
Net income (loss)
- diluted .25 (.04) 1.42 1.01
Dividends .20 .20 .80 .80
Average common shares
outstanding
- basic 18,908,240 18,417,046 18,750,442 18,506,247
- diluted 19,275,407 18,832,513 19,185,332 18,919,968
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
Unaudited
December December
2002 2001
Assets
Current assets
Cash and cash equivalents $ 28,355 $ 48,868
Accounts receivable 97,533 94,124
Inventories 88,809 85,721
Deferred income taxes and prepaid
expenses 23,940 27,822
Total current assets 238,637 256,535
Deferred income taxes 22,610 5,783
Property, plant and equipment 159,440 152,943
Goodwill 164,594 159,836
Other assets 67,249 61,408
$652,530 $636,505
Liabilities and Stockholders' Equity
Current liabilities
Notes payable $ - - $ 5,500
Accounts payable 63,389 71,410
Accrued liabilities 61,853 59,118
Long-term debt - current 6,837 47,576
Total current liabilities 132,079 183,604
Long-term debt 214,125 178,365
Accrued retirement benefits 87,162 63,610
Other liabilities 10,944 12,089
Stockholders' equity 208,220 198,837
$652,530 $636,505
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