Barnes Group Announces First Quarter Results

Business Wire, April 10, 2002

Business Editors

BRISTOL, Conn.--(BUSINESS WIRE)--April 10, 2002

-- Company achieves earnings of $0.36 per diluted share despite unsettled economic conditions.

-- Aerospace orders and order backlog solid; strong growth in non-commercial markets.

-- Cost reduction efforts at Associated Spring, Barnes Distribution contribute to results.

Barnes Group Inc. (NYSE: B) today announced financial results for the first quarter ended March 31, 2002. Net sales for the first quarter of 2002 were $194.2 million, down three percent from $199.3 million in the first quarter of 2001. The Company reported net income of $6.8 million, or $0.36 per diluted share, in the first quarter of 2002, compared to net income of $7.3 million, or $0.39 per diluted share, in the year-ago period.

"The first quarter of 2002 showed the first signs of economic improvement since late 2000, although some of our end markets, such as commercial aviation and telecommunications, remain challenged," said Edmund M. Carpenter, Barnes Group Inc.'s President and Chief Executive Officer. "Efforts that were made in all three of our businesses to aggressively cut costs and reduce infrastructure are now having an impact as our sales begin to recover. We are also starting to see the positive influence of the acquisitions we closed in late 2001 and early 2002," Carpenter continued.

Commenting on the quarter, William C. Denninger, Barnes Group Inc.'s Chief Financial Officer, stated, "We significantly reduced our interest expense compared with the year-ago period by effectively managing our debt on a global basis, obtaining lower interest rates, and generating solid cash flow over the past year. Our earnings this quarter also benefited from a further reduction in our effective tax rate, and, as expected, from the elimination of approximately $1 million of goodwill amortization. These benefits were offset, in large part, by an absence of foreign exchange gains in the most recent period."

Sales at Associated Spring were $75.6 million for the quarter ended March 31, 2002, down one percent from $76.0 million in the quarter ended March 31, 2001. Continued strong sales of nitrogen gas springs and approximately $4.4 million of incremental sales from recently-completed acquisitions positively impacted sales in the most recent period. These positives, however, were more than offset by continuing weak sales to customers in the telecommunications and electronics industries. Associated Spring recorded an operating profit of $7.1 million for the first quarter of 2002, compared with an operating profit of $7.2 million in the first quarter of 2001.

Carpenter commented, "Light vehicle production has improved through the first few months of 2002, and published reports suggest that this trend will continue through at least the end of the second quarter. However, we are not seeing any positive change in the telecommunications and electronics markets, where volumes are still off substantially from year-ago levels. Associated Spring's management team has done an excellent job of reducing costs since the end of 2000, and we are seeing the benefit of those actions as our sales volume begins to stabilize."

Sales at Barnes Aerospace were $47.4 million for the first quarter of 2002, up one percent from $46.9 million in the first quarter of 2001. Operating profit fell to $2.7 million for the quarter ended March 31, 2002 from $3.9 million in the comparable year-ago period, reflecting severance and related personnel costs and additional expenses tied to new product introduction. Barnes Aerospace recorded orders of $45 million during the first quarter of 2002. Order backlog was $156 million at March 31, 2002, essentially unchanged from December 31, 2001.

"Clearly, the commercial aircraft market remains challenging. While the number of people flying has improved in the past three months, traffic is still well below pre-September 11th levels. Importantly though, the actions by Barnes Aerospace to diversify sales were quite evident this quarter, as half of the orders recorded were for either military aircraft, business jets, or industrial gas turbines. Equally notable, Barnes Aerospace's management team continued to position the business for the downturn in commercial aircraft production, reducing the workforce by approximately 150 people during the first quarter," Carpenter stated.

Sales at Barnes Distribution were $72.9 million for the quarter ended March 31, 2002, down eight percent from $79.4 million in the quarter ended March 31, 2001. The sales decline reflected continued weak economic conditions in industrial markets throughout North America and Europe, and the impact of one less selling day during the 2002 period. Barnes Distribution generated operating profit of $2.0 million for the first quarter of 2002, down from operating profit of $3.0 million in the first quarter of 2001. Operating profit was negatively impacted by the sales volume decline, which eclipsed the benefit of cost savings initiatives started in 2001 and a slight improvement in gross margin.