☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
06-0247840
|
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
|
|||
123 Main Street
|
|
|
|
|
Bristol
|
|
|
|
|
Connecticut
|
|
06010
|
|
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
|
Title of Each Class
|
|
Trading Symbol
|
|
Name of Each Exchange on Which Registered
|
Common Stock, par value $0.01 per share
|
|
B
|
|
New York Stock Exchange
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
|
Yes
|
☐
|
No
|
☒
|
|
|
Page
|
Part I.
|
FINANCIAL INFORMATION
|
|
|
|
|
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Part II.
|
OTHER INFORMATION
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
||
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Net sales
|
$
|
330,671
|
|
|
$
|
376,692
|
|
|
|
|
|
||||
Cost of sales
|
208,248
|
|
|
244,643
|
|
||
Selling and administrative expenses
|
73,110
|
|
|
81,400
|
|
||
|
281,358
|
|
|
326,043
|
|
||
Operating income
|
49,313
|
|
|
50,649
|
|
||
|
|
|
|
||||
Interest expense
|
4,324
|
|
|
5,113
|
|
||
Other expense (income), net
|
1,594
|
|
|
1,806
|
|
||
Income before income taxes
|
43,395
|
|
|
43,730
|
|
||
Income taxes
|
13,662
|
|
|
9,738
|
|
||
Net income
|
$
|
29,733
|
|
|
$
|
33,992
|
|
|
|
|
|
||||
Per common share:
|
|
|
|
||||
Basic
|
$
|
0.58
|
|
|
$
|
0.66
|
|
Diluted
|
0.58
|
|
|
0.65
|
|
||
|
|
|
|
||||
Weighted average common shares outstanding:
|
|
|
|
||||
Basic
|
51,061,132
|
|
|
51,660,804
|
|
||
Diluted
|
51,501,857
|
|
|
52,189,465
|
|
|
Three Months Ended
March 31, |
|
||||||
|
2020
|
|
2019
|
|
||||
Net income
|
$
|
29,733
|
|
|
$
|
33,992
|
|
|
Other comprehensive (loss) income, net of tax
|
|
|
|
|
||||
Unrealized loss on hedging activities, net of tax (1)
|
(2,337
|
)
|
|
(568
|
)
|
|
||
Foreign currency translation adjustments, net of tax (2)
|
(36,333
|
)
|
|
(9,225
|
)
|
|
||
Defined benefit pension and other postretirement benefits, net of tax (3)
|
4,481
|
|
|
1,615
|
|
|
||
Total other comprehensive loss, net of tax
|
(34,189
|
)
|
|
(8,178
|
)
|
|
||
Total comprehensive (loss) income
|
$
|
(4,456
|
)
|
|
$
|
25,814
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
112,827
|
|
|
$
|
93,805
|
|
Accounts receivable, less allowances (2020 - $5,899; 2019 - $5,197)
|
335,409
|
|
|
348,974
|
|
||
Inventories
|
240,951
|
|
|
232,706
|
|
||
Prepaid expenses and other current assets
|
67,404
|
|
|
67,532
|
|
||
Assets held for sale
|
—
|
|
|
21,373
|
|
||
Total current assets
|
756,591
|
|
|
764,390
|
|
||
|
|
|
|
||||
Deferred income taxes
|
18,474
|
|
|
21,235
|
|
||
|
|
|
|
||||
Property, plant and equipment
|
834,313
|
|
|
840,640
|
|
||
Less accumulated depreciation
|
(485,390
|
)
|
|
(484,037
|
)
|
||
|
348,923
|
|
|
356,603
|
|
||
|
|
|
|
||||
Goodwill
|
920,202
|
|
|
933,022
|
|
||
Other intangible assets, net
|
563,692
|
|
|
581,116
|
|
||
Other assets
|
59,723
|
|
|
53,924
|
|
||
Assets held for sale
|
—
|
|
|
28,045
|
|
||
Total assets
|
$
|
2,667,605
|
|
|
$
|
2,738,335
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Notes and overdrafts payable
|
$
|
28,314
|
|
|
$
|
7,724
|
|
Accounts payable
|
116,065
|
|
|
118,509
|
|
||
Accrued liabilities
|
205,264
|
|
|
209,992
|
|
||
Long-term debt - current
|
1,926
|
|
|
2,034
|
|
||
Liabilities held for sale
|
—
|
|
|
4,616
|
|
||
Total current liabilities
|
351,569
|
|
|
342,875
|
|
||
|
|
|
|
||||
Long-term debt
|
783,424
|
|
|
825,017
|
|
||
Accrued retirement benefits
|
90,689
|
|
|
93,358
|
|
||
Deferred income taxes
|
85,313
|
|
|
88,408
|
|
||
Long-term tax liability
|
66,012
|
|
|
66,012
|
|
||
Other liabilities
|
45,638
|
|
|
45,148
|
|
||
Liabilities held for sale
|
—
|
|
|
6,989
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 16)
|
|
|
|
||||
Stockholders' equity
|
|
|
|
||||
Common stock - par value $0.01 per share
Authorized: 150,000,000 shares
Issued: at par value (2020 - 63,889,861 shares; 2019 - 63,872,756 shares)
|
639
|
|
|
639
|
|
||
Additional paid-in capital
|
492,025
|
|
|
489,282
|
|
||
Treasury stock, at cost (2020 - 13,448,609 shares; 2019 - 13,051,256 shares)
|
(513,708
|
)
|
|
(498,074
|
)
|
||
Retained earnings
|
1,510,688
|
|
|
1,489,176
|
|
||
Accumulated other non-owner changes to equity
|
(244,684
|
)
|
|
(210,495
|
)
|
||
Total stockholders' equity
|
1,244,960
|
|
|
1,270,528
|
|
||
Total liabilities and stockholders' equity
|
$
|
2,667,605
|
|
|
$
|
2,738,335
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
29,733
|
|
|
$
|
33,992
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
23,617
|
|
|
25,100
|
|
||
(Gain) loss on disposition of property, plant and equipment
|
(123
|
)
|
|
91
|
|
||
Stock compensation expense
|
2,552
|
|
|
3,021
|
|
||
Seeger divestiture charges
|
6,620
|
|
|
—
|
|
||
Changes in assets and liabilities, net of the effects of divestitures:
|
|
|
|
||||
Accounts receivable
|
9,592
|
|
|
4,345
|
|
||
Inventories
|
(12,788
|
)
|
|
7,300
|
|
||
Prepaid expenses and other current assets
|
(3,227
|
)
|
|
(2,670
|
)
|
||
Accounts payable
|
1,328
|
|
|
(9,179
|
)
|
||
Accrued liabilities
|
(7,885
|
)
|
|
(4,708
|
)
|
||
Deferred income taxes
|
462
|
|
|
(872
|
)
|
||
Long-term retirement benefits
|
(3,518
|
)
|
|
(3,428
|
)
|
||
Other
|
821
|
|
|
68
|
|
||
Net cash provided by operating activities
|
47,184
|
|
|
53,060
|
|
||
|
|
|
|
||||
Investing activities:
|
|
|
|
||||
Proceeds from disposition of property, plant and equipment
|
185
|
|
|
322
|
|
||
Proceeds from the sale of businesses, net of cash sold
|
36,879
|
|
|
—
|
|
||
Investment in restricted cash
|
(6,621
|
)
|
|
—
|
|
||
Capital expenditures
|
(11,912
|
)
|
|
(13,738
|
)
|
||
Net cash provided (used) in investing activities
|
18,531
|
|
|
(13,416
|
)
|
||
|
|
|
|
||||
Financing activities:
|
|
|
|
||||
Net change in other borrowings
|
20,775
|
|
|
20,903
|
|
||
Payments on long-term debt
|
(83,521
|
)
|
|
(152,195
|
)
|
||
Proceeds from the issuance of long-term debt
|
50,000
|
|
|
102,990
|
|
||
Proceeds from the issuance of common stock
|
183
|
|
|
986
|
|
||
Common stock repurchases
|
(15,550
|
)
|
|
—
|
|
||
Dividends paid
|
(8,133
|
)
|
|
(8,217
|
)
|
||
Withholding taxes paid on stock issuances
|
(84
|
)
|
|
(80
|
)
|
||
Other
|
(7,252
|
)
|
|
(1,340
|
)
|
||
Net cash used in financing activities
|
(43,582
|
)
|
|
(36,953
|
)
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash flows
|
(3,111
|
)
|
|
97
|
|
||
Increase in cash and cash equivalents
|
19,022
|
|
|
2,788
|
|
||
Cash and cash equivalents at beginning of period
|
93,805
|
|
|
100,719
|
|
||
Cash and cash equivalents at end of period
|
$
|
112,827
|
|
|
$
|
103,507
|
|
Assets
|
|
||
Accounts receivable, less allowance of $152
|
$
|
6,844
|
|
Inventories
|
13,727
|
|
|
Prepaid expenses and other current assets
|
802
|
|
|
Current assets held for sale
|
21,373
|
|
|
|
|
||
Property, plant and equipment, net
|
17,701
|
|
|
Other intangible assets, net
|
590
|
|
|
Goodwill
|
9,400
|
|
|
Other assets
|
354
|
|
|
Non-current assets held for sale
|
28,045
|
|
|
|
|
||
Liabilities
|
|
||
Accounts payable
|
$
|
2,961
|
|
Accrued liabilities
|
1,655
|
|
|
Current liabilities held for sale
|
4,616
|
|
|
|
|
||
Accrued retirement benefits
|
5,788
|
|
|
Other liabilities
|
1,201
|
|
|
Non-current liabilities held for sale
|
6,989
|
|
|
Three Months Ended
March 31, 2020 |
||||||||||
|
Industrial
|
|
Aerospace
|
|
Total Company
|
||||||
Product and Services
|
|
|
|
|
|
||||||
Engineered Components Products
|
$
|
47,707
|
|
|
$
|
—
|
|
|
$
|
47,707
|
|
Molding Solutions Products
|
97,406
|
|
|
—
|
|
|
97,406
|
|
|||
Force & Motion Control Products
|
39,791
|
|
|
—
|
|
|
39,791
|
|
|||
Automation Products
|
14,196
|
|
|
—
|
|
|
14,196
|
|
|||
Aerospace Original Equipment Manufacturer Products
|
—
|
|
|
81,706
|
|
|
81,706
|
|
|||
Aerospace Aftermarket Product and Services
|
—
|
|
|
49,865
|
|
|
49,865
|
|
|||
|
$
|
199,100
|
|
|
$
|
131,571
|
|
|
$
|
330,671
|
|
|
|
|
|
|
|
||||||
Geographic Regions (A)
|
|
|
|
|
|
||||||
Americas
|
$
|
80,644
|
|
|
$
|
92,578
|
|
|
$
|
173,222
|
|
Europe
|
81,864
|
|
|
25,163
|
|
|
107,027
|
|
|||
Asia
|
35,493
|
|
|
11,696
|
|
|
47,189
|
|
|||
Rest of World
|
1,099
|
|
|
2,134
|
|
|
3,233
|
|
|||
|
$
|
199,100
|
|
|
$
|
131,571
|
|
|
$
|
330,671
|
|
|
Three Months Ended
March 31, 2019 |
||||||||||
|
Industrial
|
|
Aerospace
|
|
Total Company
|
||||||
Product and Services
|
|
|
|
|
|
||||||
Engineered Components Products
|
$
|
69,684
|
|
|
$
|
—
|
|
|
$
|
69,684
|
|
Molding Solutions Products
|
106,793
|
|
|
—
|
|
|
106,793
|
|
|||
Force & Motion Control Products
|
51,617
|
|
|
—
|
|
|
51,617
|
|
|||
Automation Products
|
14,408
|
|
|
—
|
|
|
14,408
|
|
|||
Aerospace Original Equipment Manufacturer Products
|
—
|
|
|
87,939
|
|
|
87,939
|
|
|||
Aerospace Aftermarket Product and Services
|
—
|
|
|
46,251
|
|
|
46,251
|
|
|||
|
$
|
242,502
|
|
|
$
|
134,190
|
|
|
$
|
376,692
|
|
|
|
|
|
|
|
||||||
Geographic Regions (A)
|
|
|
|
|
|
||||||
Americas
|
$
|
98,288
|
|
|
$
|
96,144
|
|
|
$
|
194,432
|
|
Europe
|
94,430
|
|
|
24,324
|
|
|
118,754
|
|
|||
Asia
|
48,942
|
|
|
12,404
|
|
|
61,346
|
|
|||
Rest of World
|
842
|
|
|
1,318
|
|
|
2,160
|
|
|||
|
$
|
242,502
|
|
|
$
|
134,190
|
|
|
$
|
376,692
|
|
|
March 31, 2020
|
|
December 31, 2019
|
|
$ Change
|
|
% Change
|
|||||||
Unbilled receivables (contract assets)
|
$
|
26,301
|
|
|
$
|
22,444
|
|
|
$
|
3,857
|
|
|
17
|
%
|
Contract liabilities
|
(51,086
|
)
|
|
(55,076
|
)
|
|
3,990
|
|
|
(7
|
)%
|
|||
Net contract liabilities
|
$
|
(24,785
|
)
|
|
$
|
(32,632
|
)
|
|
$
|
7,847
|
|
|
(24
|
)%
|
|
|
Common
Stock (Number of Shares) |
|
Common
Stock (Amount) |
|
Additional
Paid-In Capital |
|
Treasury
Stock (Number of Shares) |
|
Treasury
Stock (Amount) |
|
Retained
Earnings |
|
Accumulated
Other Non-Owner Changes to Equity |
|
Total
Stockholders’ Equity |
||||||||||||||
December 31, 2019
|
|
63,873
|
|
|
$
|
639
|
|
|
$
|
489,282
|
|
|
13,051
|
|
|
$
|
(498,074
|
)
|
|
$
|
1,489,176
|
|
|
$
|
(210,495
|
)
|
|
$
|
1,270,528
|
|
Comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,733
|
|
|
(34,189
|
)
|
|
(4,456
|
)
|
||||||
Dividends declared ($0.16 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,133
|
)
|
|
—
|
|
|
(8,133
|
)
|
||||||
Common stock repurchases
|
|
—
|
|
|
—
|
|
|
—
|
|
|
396
|
|
|
(15,550
|
)
|
|
—
|
|
|
—
|
|
|
(15,550
|
)
|
||||||
Employee stock plans
|
|
17
|
|
|
—
|
|
|
2,743
|
|
|
2
|
|
|
(84
|
)
|
|
(88
|
)
|
|
—
|
|
|
2,571
|
|
||||||
March 31, 2020
|
|
63,890
|
|
|
$
|
639
|
|
|
$
|
492,025
|
|
|
13,449
|
|
|
$
|
(513,708
|
)
|
|
$
|
1,510,688
|
|
|
$
|
(244,684
|
)
|
|
$
|
1,244,960
|
|
|
|
Common
Stock (Number of Shares) |
|
Common
Stock (Amount) |
|
Additional
Paid-In Capital |
|
Treasury
Stock (Number of Shares) |
|
Treasury
Stock (Amount) |
|
Retained
Earnings |
|
Accumulated
Other Non-Owner Changes to Equity |
|
Total
Stockholders’ Equity |
||||||||||||||
December 31, 2018
|
|
63,367
|
|
|
$
|
634
|
|
|
$
|
470,818
|
|
|
12,034
|
|
|
$
|
(441,668
|
)
|
|
$
|
1,363,772
|
|
|
$
|
(190,500
|
)
|
|
$
|
1,203,056
|
|
Comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,992
|
|
|
(8,178
|
)
|
|
25,814
|
|
||||||
Dividends declared ($0.16 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,217
|
)
|
|
—
|
|
|
(8,217
|
)
|
||||||
Employee stock plans
|
|
51
|
|
|
—
|
|
|
4,039
|
|
|
1
|
|
|
(80
|
)
|
|
(109
|
)
|
|
—
|
|
|
3,850
|
|
||||||
March 31, 2019
|
|
63,418
|
|
|
$
|
634
|
|
|
$
|
474,857
|
|
|
12,035
|
|
|
$
|
(441,748
|
)
|
|
$
|
1,389,438
|
|
|
$
|
(198,678
|
)
|
|
$
|
1,224,503
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Finished goods
|
$
|
71,244
|
|
|
$
|
69,594
|
|
Work-in-process
|
92,624
|
|
|
88,196
|
|
||
Raw material and supplies
|
77,083
|
|
|
74,916
|
|
||
|
$
|
240,951
|
|
|
$
|
232,706
|
|
|
Industrial
|
|
Aerospace
|
|
Total Company
|
||||||
January 1, 2020
|
$
|
902,236
|
|
|
$
|
30,786
|
|
|
$
|
933,022
|
|
Foreign currency translation
|
(12,820
|
)
|
|
—
|
|
|
(12,820
|
)
|
|||
March 31, 2020
|
$
|
889,416
|
|
|
$
|
30,786
|
|
|
$
|
920,202
|
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
|
Range of
Life -Years
|
|
Gross Amount
|
|
Accumulated Amortization
|
|
Gross Amount
|
|
Accumulated Amortization
|
||||||||
Amortized intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Revenue Sharing Programs (RSPs)
|
Up to 30
|
|
$
|
299,500
|
|
|
$
|
(138,889
|
)
|
|
$
|
299,500
|
|
|
$
|
(135,466
|
)
|
Component Repair Programs (CRPs)
|
Up to 30
|
|
111,839
|
|
|
(28,585
|
)
|
|
111,839
|
|
|
(27,270
|
)
|
||||
Customer relationships
|
10-16
|
|
338,366
|
|
|
(103,779
|
)
|
|
338,366
|
|
|
(98,953
|
)
|
||||
Patents and technology
|
4-11
|
|
123,433
|
|
|
(70,419
|
)
|
|
123,433
|
|
|
(68,188
|
)
|
||||
Trademarks/trade names
|
10-30
|
|
10,949
|
|
|
(10,216
|
)
|
|
10,949
|
|
|
(10,145
|
)
|
||||
Other
|
Up to 15
|
|
10,746
|
|
|
(4,191
|
)
|
|
10,746
|
|
|
(4,014
|
)
|
||||
|
|
|
894,833
|
|
|
(356,079
|
)
|
|
894,833
|
|
|
(344,036
|
)
|
||||
Unamortized intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Trade names
|
|
|
55,670
|
|
|
—
|
|
|
55,670
|
|
|
—
|
|
||||
Foreign currency translation
|
|
|
(30,732
|
)
|
|
—
|
|
|
(25,351
|
)
|
|
—
|
|
||||
Other intangible assets
|
|
|
$
|
919,771
|
|
|
$
|
(356,079
|
)
|
|
$
|
925,152
|
|
|
$
|
(344,036
|
)
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Revolving credit agreement
|
$
|
679,079
|
|
|
$
|
673,294
|
|
|
$
|
720,379
|
|
|
$
|
737,816
|
|
3.97% Senior Notes
|
100,000
|
|
|
110,993
|
|
|
100,000
|
|
|
104,151
|
|
||||
Borrowings under lines of credit and overdrafts
|
28,314
|
|
|
28,314
|
|
|
7,724
|
|
|
7,724
|
|
||||
Finance leases
|
5,915
|
|
|
6,028
|
|
|
6,266
|
|
|
6,515
|
|
||||
Other foreign bank borrowings
|
356
|
|
|
358
|
|
|
406
|
|
|
410
|
|
||||
|
813,664
|
|
|
818,987
|
|
|
834,775
|
|
|
856,616
|
|
||||
Less current maturities
|
(30,240
|
)
|
|
|
|
(9,758
|
)
|
|
|
||||||
Long-term debt
|
$
|
783,424
|
|
|
|
|
$
|
825,017
|
|
|
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||
|
|
Fair Value
|
|
|
Fair Value
|
||||||||||
|
Balance Sheet Location
|
March 31, 2020
|
December 31, 2019
|
|
Balance Sheet Location
|
March 31, 2020
|
December 31, 2019
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts
|
Other assets
|
$
|
—
|
|
$
|
—
|
|
|
Other liabilities
|
$
|
(3,042
|
)
|
$
|
(820
|
)
|
Foreign exchange contracts
|
Prepaid expenses and other current assets
|
—
|
|
700
|
|
|
Accrued liabilities
|
(635
|
)
|
—
|
|
||||
Total derivatives designated as hedging instruments
|
|
—
|
|
700
|
|
|
|
(3,677
|
)
|
(820
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Prepaid expenses and other current assets
|
6
|
|
1,375
|
|
|
Accrued liabilities
|
(846
|
)
|
(1
|
)
|
||||
Total derivatives not designated as hedging instruments
|
|
6
|
|
1,375
|
|
|
|
(846
|
)
|
(1
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Total derivatives
|
|
$
|
6
|
|
$
|
2,075
|
|
|
|
$
|
(4,523
|
)
|
$
|
(821
|
)
|
|
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) on Derivative
|
Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income
|
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income
|
|||||||||||||
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
|||||||||||||
Derivatives in Hedging Relationships
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|||||||||
Derivatives in Cash Flow Hedging Relationships:
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts
|
$
|
(1,694
|
)
|
|
$
|
(487
|
)
|
|
Interest expense
|
$
|
(61
|
)
|
|
$
|
142
|
|
Foreign exchange contracts
|
(643
|
)
|
|
(81
|
)
|
|
Net sales
|
(523
|
)
|
|
(337
|
)
|
||||
Total
|
$
|
(2,337
|
)
|
|
$
|
(568
|
)
|
|
|
$
|
(584
|
)
|
|
$
|
(195
|
)
|
|
Location and Amount of Gain (Loss) Recognized in Income on Hedging Relationships
|
||||||||||||||
|
Three Months Ended
March 31, |
||||||||||||||
|
2020
|
|
2019
|
||||||||||||
|
Net sales
|
|
Interest expense
|
|
Net sales
|
|
Interest expense
|
||||||||
Total amounts of income and expense line items presented in the consolidated statements of income in which the effects of hedges are recorded
|
$
|
330,671
|
|
|
$
|
4,324
|
|
|
$
|
376,692
|
|
|
$
|
5,113
|
|
The effects of hedging:
|
|
|
|
|
|
|
|
||||||||
Gain (Loss) on cash flow hedging relationships
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts
|
|
|
|
|
|
|
|
||||||||
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income
|
|
|
(61
|
)
|
|
|
|
142
|
|
||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
||||||||
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income
|
(523
|
)
|
|
|
|
(337
|
)
|
|
|
|
Level 1
|
Unadjusted quoted prices in active markets for identical assets or liabilities.
|
Level 2
|
Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.
|
Level 3
|
Unobservable inputs for the asset or liability.
|
|
|
|
|
Fair Value Measurements Using
|
||||||||||||
Description
|
|
Total
|
|
Quoted Prices in Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
||||||||
March 31, 2020
|
|
|
|
|
|
|
|
|
||||||||
Asset derivatives
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
Liability derivatives
|
|
(4,523
|
)
|
|
—
|
|
|
(4,523
|
)
|
|
—
|
|
||||
Bank acceptances
|
|
12,911
|
|
|
—
|
|
|
12,911
|
|
|
—
|
|
||||
Rabbi trust assets
|
|
2,507
|
|
|
2,507
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
10,901
|
|
|
$
|
2,507
|
|
|
$
|
8,394
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2019
|
|
|
|
|
|
|
|
|
||||||||
Asset derivatives
|
|
$
|
2,075
|
|
|
$
|
—
|
|
|
$
|
2,075
|
|
|
$
|
—
|
|
Liability derivatives
|
|
(821
|
)
|
|
—
|
|
|
(821
|
)
|
|
—
|
|
||||
Bank acceptances
|
|
14,460
|
|
|
—
|
|
|
14,460
|
|
|
—
|
|
||||
Rabbi trust assets
|
|
2,947
|
|
|
2,947
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
18,661
|
|
|
$
|
2,947
|
|
|
$
|
15,714
|
|
|
$
|
—
|
|
|
Three Months Ended
March 31, |
||||||
Pensions
|
2020
|
|
2019
|
||||
Service cost
|
$
|
1,649
|
|
|
$
|
1,433
|
|
Interest cost
|
3,817
|
|
|
4,536
|
|
||
Expected return on plan assets
|
(7,393
|
)
|
|
(7,078
|
)
|
||
Amortization of prior service cost
|
80
|
|
|
103
|
|
||
Amortization of actuarial losses
|
3,339
|
|
|
2,158
|
|
||
Net periodic benefit cost
|
$
|
1,492
|
|
|
$
|
1,152
|
|
|
Three Months Ended
March 31, |
||||||
Other Postretirement Benefits
|
2020
|
|
2019
|
||||
Service cost
|
$
|
22
|
|
|
$
|
19
|
|
Interest cost
|
264
|
|
|
340
|
|
||
Amortization of prior service cost
|
7
|
|
|
6
|
|
||
Amortization of actuarial losses
|
23
|
|
|
10
|
|
||
Net periodic benefit cost
|
$
|
316
|
|
|
$
|
375
|
|
|
Gains and Losses on Cash Flow Hedges
|
|
Pension and Other Postretirement Benefit Items
|
|
Foreign Currency Items
|
|
Total
|
||||||||
January 1, 2020
|
$
|
(115
|
)
|
|
$
|
(144,047
|
)
|
|
$
|
(66,333
|
)
|
|
$
|
(210,495
|
)
|
Other comprehensive income (loss) before reclassifications
|
(2,879
|
)
|
|
1,842
|
|
|
(36,333
|
)
|
|
(37,370
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income
|
542
|
|
|
2,639
|
|
|
—
|
|
|
3,181
|
|
||||
Net current-period other comprehensive income (loss)
|
(2,337
|
)
|
|
4,481
|
|
|
(36,333
|
)
|
|
(34,189
|
)
|
||||
March 31, 2020
|
$
|
(2,452
|
)
|
|
$
|
(139,566
|
)
|
|
$
|
(102,666
|
)
|
|
$
|
(244,684
|
)
|
|
Gains and Losses on Cash Flow Hedges
|
|
Pension and Other Postretirement Benefit Items
|
|
Foreign Currency Items
|
|
Total
|
||||||||
January 1, 2019
|
$
|
834
|
|
|
$
|
(138,690
|
)
|
|
$
|
(52,644
|
)
|
|
$
|
(190,500
|
)
|
Other comprehensive income (loss) before reclassifications
|
(723
|
)
|
|
(122
|
)
|
|
(9,225
|
)
|
|
(10,070
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income
|
155
|
|
|
1,737
|
|
|
—
|
|
|
1,892
|
|
||||
Net current-period other comprehensive income (loss)
|
(568
|
)
|
|
1,615
|
|
|
(9,225
|
)
|
|
(8,178
|
)
|
||||
March 31, 2019
|
$
|
266
|
|
|
$
|
(137,075
|
)
|
|
$
|
(61,869
|
)
|
|
$
|
(198,678
|
)
|
Details about Accumulated Other Comprehensive Income (Loss) Components
|
|
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
|
Affected Line Item in the Consolidated Statements of Income
|
|||||||
|
|
Three Months Ended
March 31, 2020 |
|
Three Months Ended
March 31, 2019 |
|
|
||||
Gains and losses on cash flow hedges
|
|
|
|
|
|
|
||||
Interest rate contracts
|
|
$
|
(61
|
)
|
|
$
|
142
|
|
|
Interest expense
|
Foreign exchange contracts
|
|
(523
|
)
|
|
(337
|
)
|
|
Net sales
|
||
|
|
(584
|
)
|
|
(195
|
)
|
|
Total before tax
|
||
|
|
42
|
|
|
40
|
|
|
Tax benefit
|
||
|
|
(542
|
)
|
|
(155
|
)
|
|
Net of tax
|
||
|
|
|
|
|
|
|
||||
Pension and other postretirement benefit items
|
|
|
|
|
|
|
||||
Amortization of prior-service costs
|
|
$
|
(87
|
)
|
|
$
|
(109
|
)
|
|
(A)
|
Amortization of actuarial losses
|
|
(3,362
|
)
|
|
(2,168
|
)
|
|
(A)
|
||
|
|
(3,449
|
)
|
|
(2,277
|
)
|
|
Total before tax
|
||
|
|
810
|
|
|
540
|
|
|
Tax benefit
|
||
|
|
(2,639
|
)
|
|
(1,737
|
)
|
|
Net of tax
|
||
|
|
|
|
|
|
|
||||
Total reclassifications in the period
|
|
$
|
(3,181
|
)
|
|
$
|
(1,892
|
)
|
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Net sales
|
|
|
|
||||
Industrial
|
$
|
199,100
|
|
|
$
|
242,502
|
|
Aerospace
|
131,571
|
|
|
134,190
|
|
||
Intersegment sales
|
—
|
|
|
—
|
|
||
Total net sales
|
$
|
330,671
|
|
|
$
|
376,692
|
|
|
|
|
|
||||
Operating profit
|
|
|
|
||||
Industrial
|
$
|
17,924
|
|
|
$
|
21,502
|
|
Aerospace
|
31,389
|
|
|
29,147
|
|
||
Total operating profit
|
49,313
|
|
|
50,649
|
|
||
Interest expense
|
4,324
|
|
|
5,113
|
|
||
Other expense (income), net
|
1,594
|
|
|
1,806
|
|
||
Income before income taxes
|
$
|
43,395
|
|
|
$
|
43,730
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Assets
|
|
|
|
||||
Industrial
|
$
|
1,789,094
|
|
|
$
|
1,879,258
|
|
Aerospace
|
706,104
|
|
|
704,318
|
|
||
Other (A)
|
172,407
|
|
|
154,759
|
|
||
Total assets
|
$
|
2,667,605
|
|
|
$
|
2,738,335
|
|
/s/ PricewaterhouseCoopers LLP
|
|
Hartford, Connecticut
|
|
April 27, 2020
|
|
|
Three Months Ended
March 31, |
|||||||||||||
(in millions)
|
2020
|
|
2019
|
|
Change
|
|||||||||
Industrial
|
$
|
199.1
|
|
|
$
|
242.5
|
|
|
$
|
(43.4
|
)
|
|
(17.9
|
)%
|
Aerospace
|
131.6
|
|
|
134.2
|
|
|
(2.6
|
)
|
|
(2.0
|
)%
|
|||
Total
|
$
|
330.7
|
|
|
$
|
376.7
|
|
|
$
|
(46.0
|
)
|
|
(12.2
|
)%
|
|
Three Months Ended
March 31, |
|||||||||||||
(in millions)
|
2020
|
|
2019
|
|
Change
|
|||||||||
Cost of sales
|
$
|
208.2
|
|
|
$
|
244.6
|
|
|
$
|
(36.4
|
)
|
|
(14.9
|
)%
|
% sales
|
63.0
|
%
|
|
64.9
|
%
|
|
|
|
|
|||||
Gross profit (1)
|
$
|
122.4
|
|
|
$
|
132.0
|
|
|
$
|
(9.6
|
)
|
|
(7.3
|
)%
|
% sales
|
37.0
|
%
|
|
35.1
|
%
|
|
|
|
|
|||||
Selling and administrative expenses
|
$
|
73.1
|
|
|
$
|
81.4
|
|
|
$
|
(8.3
|
)
|
|
(10.2
|
)%
|
% sales
|
22.1
|
%
|
|
21.6
|
%
|
|
|
|
|
|||||
Operating income
|
$
|
49.3
|
|
|
$
|
50.6
|
|
|
$
|
(1.3
|
)
|
|
(2.6
|
)%
|
% sales
|
14.9
|
%
|
|
13.4
|
%
|
|
|
|
|
|
Three Months Ended
March 31, |
|||||||||||||
(in millions, except per share)
|
2020
|
|
2019
|
|
Change
|
|||||||||
Net income
|
$
|
29.7
|
|
|
$
|
34.0
|
|
|
$
|
(4.3
|
)
|
|
(12.5
|
)%
|
Net income per common share:
|
|
|
|
|
|
|
|
|||||||
Basic
|
$
|
0.58
|
|
|
$
|
0.66
|
|
|
$
|
(0.08
|
)
|
|
(12.1
|
)%
|
Diluted
|
0.58
|
|
|
0.65
|
|
|
(0.07
|
)
|
|
(10.8
|
)%
|
|||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|||||||
Basic
|
51.1
|
|
|
51.7
|
|
|
(0.6
|
)
|
|
(1.2
|
)%
|
|||
Diluted
|
51.5
|
|
|
52.2
|
|
|
(0.7
|
)
|
|
(1.3
|
)%
|
|
Three Months Ended
March 31, |
|||||||||||||
(in millions)
|
2020
|
|
2019
|
|
Change
|
|||||||||
Sales
|
$
|
199.1
|
|
|
$
|
242.5
|
|
|
$
|
(43.4
|
)
|
|
(17.9
|
)%
|
Operating profit
|
17.9
|
|
|
21.5
|
|
|
(3.6
|
)
|
|
(16.6
|
)%
|
|||
Operating margin
|
9.0
|
%
|
|
8.9
|
%
|
|
|
|
|
|
Three Months Ended
March 31, |
|||||||||||||
(in millions)
|
2020
|
|
2019
|
|
Change
|
|||||||||
Sales
|
$
|
131.6
|
|
|
$
|
134.2
|
|
|
$
|
(2.6
|
)
|
|
(2.0
|
)%
|
Operating profit
|
31.4
|
|
|
29.1
|
|
|
2.2
|
|
|
7.7
|
%
|
|||
Operating margin
|
23.9
|
%
|
|
21.7
|
%
|
|
|
|
|
|
Three Months Ended
March 31, |
||||||||||
(in millions)
|
2020
|
|
2019
|
|
Change
|
||||||
Operating activities
|
$
|
47.2
|
|
|
$
|
53.1
|
|
|
$
|
(5.9
|
)
|
Investing activities
|
18.5
|
|
|
(13.4
|
)
|
|
31.9
|
|
|||
Financing activities
|
(43.6
|
)
|
|
(37.0
|
)
|
|
(6.6
|
)
|
|||
Exchange rate effect
|
(3.1
|
)
|
|
0.1
|
|
|
(3.2
|
)
|
|||
Increase in cash
|
$
|
19.0
|
|
|
$
|
2.8
|
|
|
$
|
16.2
|
|
|
Four fiscal quarters ended March 31, 2020
|
||
Net income
|
$
|
154.1
|
|
Add back:
|
|
||
Interest expense
|
19.8
|
|
|
Income taxes
|
52.4
|
|
|
Depreciation and amortization
|
97.6
|
|
|
Adjustment for non-cash stock based compensation
|
12.5
|
|
|
Amortization of Gimatic acquisition inventory step-up
|
(1.9
|
)
|
|
Due diligence and transaction expenses
|
4.0
|
|
|
Non-cash impairment charge (see Note 2)
|
5.6
|
|
|
Other adjustments
|
(3.2
|
)
|
|
Consolidated EBITDA, as defined within the Amended Credit Agreement
|
$
|
340.9
|
|
|
|
||
Consolidated Senior Debt, as defined, as of March 31, 2020
|
$
|
813.7
|
|
Ratio of Consolidated Senior Debt to Consolidated EBITDA
|
2.39
|
|
|
Maximum
|
3.25
|
|
|
Consolidated Total Debt, as defined, as of March 31, 2020
|
$
|
813.7
|
|
Ratio of Consolidated Total Debt to Consolidated EBITDA
|
2.39
|
|
|
Maximum
|
3.75
|
|
|
Consolidated Cash Interest Expense, as defined, as of March 31, 2020
|
$
|
19.8
|
|
Ratio of Consolidated EBITDA to Consolidated Cash Interest Expense
|
17.18
|
|
|
Minimum
|
4.25
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Net income
|
$
|
29.7
|
|
|
$
|
34.0
|
|
Add back:
|
|
|
|
||||
Interest expense
|
4.3
|
|
|
5.1
|
|
||
Income taxes
|
13.7
|
|
|
9.7
|
|
||
Depreciation and amortization
|
23.6
|
|
|
25.1
|
|
||
EBITDA
|
$
|
71.3
|
|
|
$
|
73.9
|
|
Period
|
|
(a)
Total Number of Shares (or Units) Purchased
|
|
(b)
Average Price Paid Per Share (or Unit)
|
|
(c)
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
|
|
(d)
Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs(2)
|
|||||
January 1-31, 2020
|
|
938
|
|
|
$
|
64.64
|
|
|
—
|
|
|
4,100,000
|
|
February 1-29, 2020
|
|
223
|
|
|
$
|
65.07
|
|
|
—
|
|
|
4,100,000
|
|
March 1-31, 2020
|
|
396,192
|
|
|
$
|
39.27
|
|
|
396,000
|
|
|
3,704,000
|
|
Total
|
|
397,353
|
|
(1)
|
$
|
39.35
|
|
|
396,000
|
|
|
|
(1)
|
Other than 396,000 shares purchased during the first quarter of 2020, which were purchased as part of the Company's Repurchase Program (defined below), all acquisitions of equity securities were the result of the operation of the terms of the Company's stockholder-approved equity compensation plans and the terms of the equity rights granted pursuant to those plans to pay for the related income tax upon issuance of shares. The purchase price of a share of stock used for tax withholding is the market price on the date of issuance.
|
(2)
|
At March 31, 2019, 1.5 million shares of common stock had not been purchased under the publicly announced Repurchase Program (the “Program”). On April 25, 2019, the Board of Directors of the Company increased the number of shares authorized for repurchase under the Program by 3.5 million shares of common stock (5.0 million authorized, in total). The Program permits open market purchases, purchases under a Rule 10b5-1 trading plan and privately negotiated transactions.
|
|
|
Barnes Group Inc.
|
|
|
(Registrant)
|
|
|
|
Date:
|
April 27, 2020
|
/s/ CHRISTOPHER J. STEPHENS, JR.
|
|
|
Christopher J. Stephens, Jr.
Senior Vice President, Finance
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
Date:
|
April 27, 2020
|
/s/ MARIAN ACKER
|
|
|
Marian Acker
Vice President, Controller
(Principal Accounting Officer)
|
Exhibit No.
|
|
Description
|
|
Reference
|
10.1
|
|
|
Filed with this report.
|
|
10.2
|
|
|
Filed with this report.
|
|
15
|
|
|
Filed with this report.
|
|
31.1
|
|
|
Filed with this report.
|
|
31.2
|
|
|
Filed with this report.
|
|
32
|
|
|
Furnished with this report.
|
|
Exhibit 101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
Filed with this report.
|
Exhibit 101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
Filed with this report.
|
Exhibit 101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
Filed with this report.
|
Exhibit 101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
Filed with this report.
|
Exhibit 101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
Filed with this report.
|
Exhibit 101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
Filed with this report.
|
/s/ PricewaterhouseCoopers LLP
|
|
Hartford, Connecticut
|
|
Patrick J. Dempsey
President and Chief Executive Officer
pjdempsey@BGInc.com
|
123 MAIN STREET
BRISTOL, CT 06010-6307
|
T: 860.973-2121
F: 860.582-3228
BGInc.com
|
▪
|
5,424 Stock Options, with an exercise price equal to the fair market value of Barnes Group’s stock (as defined in the 2014 Barnes Group Inc. Stock and Incentive Award Plan) on your date of employment. These options will vest one-third each on the 18th, 30th, and 42nd month anniversaries of the date of grant. Stock options are a speculative financial vehicle driven solely by stock price appreciation. Fair market value stock options have no intrinsic value absent such appreciation.
|
▪
|
1,855 Time-vested Restricted Stock Units, with each unit having the equivalent value of one share of Barnes Group stock. The restrictions will lapse one-third each on the 18th, 30th, and 42nd month anniversaries of the date of grant. You will receive dividends on these restricted stock units as such dividends are declared by the Company.
|
▪
|
3,091 Performance Share Awards, with each unit having the equivalent value of one share of Barnes Group stock. Performance share awards vest on the basis of the performance of Barnes Group over three years. Two of the performance measures, Total Shareholder Return (TSR) and EBITDA Growth are measured on a relative basis against the Russell 2000 companies. The third measure, Return on Invested Capital (ROIC), is measured on an absolute basis against “pre-established targets” as set by the Compensation and Management
|
Grantee:
|
[__________________________]
|
Grant Date:
|
February XX, 20XX
|
Target Award:
|
[______] Performance Shares
|
Performance Period:
|
The 3 year period beginning on January 1, 20XX and ending on December 31, 20XX
|
Performance Goals:
Vesting Schedule
|
The Performance Goals are based on the performance measures set forth on Schedule A.
The Performance Shares will be earned based on the performance level achieved with respect to the Performance Goals if, except as provided otherwise in the Performance Share Award Agreement, You continue employment with Company through the third anniversary of the Grant Date.
The number of Performance Shares set forth above is equal to the target number of shares of Common Stock that the Grantee will earn for 100% achievement of the Performance Goals (referred to as the “Target Award”). The actual number of shares of Common Stock that You will earn with respect to the Performance Shares may be greater or less than the Target Award, or even zero, and will be based on the performance level achieved by the Company with respect to the Performance Goals, as set forth on Schedule A. Performance level is measured based on the threshold, target and maximum performance levels set forth on Schedule A. Each performance level is calculated as a percentage of target level performance. Threshold performance level is 33% of target, target performance level is 100% of target, maximum performance level is 150% of target, maximum+ performance level is 200% of target and maximum++ performance level is 250% of target. If actual performance is between performance levels, the number of Performance Shares earned will be interpolated on a straight line basis for pro-rata achievement of the Performance Goals, rounded down to the nearest whole number. Failure to achieve the threshold performance level with respect to a Performance Goal will result in no Performance Shares being earned with respect to that Performance Goal.
|
Performance
Measure
|
Weight
|
Performance
Level
|
Performance Goals
|
Performance Shares Earned as a Percentage of Target
(% of Target)*
|
3-Year TSR**
|
33.3334%
|
Threshold
|
Achieve 33rd percentile ranking within the Russell 2000
|
33%
|
Target
|
Achieve 50th percentile ranking within the Russell 2000
|
100%
|
||
Maximum
|
Achieve 66th percentile ranking within the Russell 2000
|
150%
|
||
Maximum+
|
Achieve 75th percentile ranking within the Russell 2000
|
200%
|
||
Maximum++
|
Achieve 85th percentile ranking within the Russell 2000
|
250%
|
||
3-Year ROIC***
|
33.3333%
|
Threshold
|
Achieve x.xx% 3-Year ROIC
|
33%
|
Target
|
Achieve x.xx% 3-Year ROIC
|
100%
|
||
Maximum
|
Achieve x.xx% 3-Year ROIC
|
150%
|
||
Maximum+
|
Achieve x.xx% 3-Year ROIC
|
200%
|
||
Maximum++
|
Achieve x.xx% 3-Year ROIC
|
250%
|
||
3-Year EBITDA Growth****
|
33.3333%
|
Threshold
|
Achieve 33rd percentile ranking within the Russell 2000
|
33%
|
Target
|
Achieve 50th percentile ranking within the Russell 2000
|
100%
|
||
Maximum
|
Achieve 66th percentile ranking within the Russell 2000
|
150%
|
||
Maximum+
|
Achieve 75th percentile ranking within the Russell 2000
|
200%
|
||
Maximum++
|
Achieve 85th percentile ranking within the Russell 2000
|
250%
|
||
|
* The actual number of Performance Shares that will be earned with respect to the 3-Year TSR and 3-Year EBITDA Growth performance measures is based on the Company’s percentile ranking within the Russell 2000 Index at the end of the Performance Period. The actual number of Performance Shares that will be earned with respect to the 3-Year ROIC performance measure is based on the Company’s performance compared to pre-established goals as determined by the Committee and set forth in the chart above. Each performance measure will be evaluated on a measure by measure basis, and once performance results are determined as to each individual performance measure, those results will be aggregated and the weighting applied. When assessing each performance measure, actual performance level achievement between each performance level will be interpolated on a straight line basis rounded down to the nearest whole number; provided that if the actual performance level achieved does not meet threshold performance (i.e., less than 33%) for the applicable performance measure, then no Performance Shares will be earned for that performance measure pursuant to this Grant. Threshold level performance may be achieved for one performance measure and not another based on the Company’s actual performance during the Performance Period. The actual number of Performance Shares earned will be determined by the Committee based on the actual performance level achieved with respect to each of the applicable Performance Goals, factoring in the weighting for each performance measure. The maximum number of Performance Shares that may be earned pursuant to this Grant is capped at 250% of the Target Award.
** 3-Year TSR represents the comparison between the Opening Average Share Value and the Closing Average Share Value, plus cumulative dividends during the Performance Period. At the end of the Performance Period, the TSR for the Company and each company in the Russell 2000 Index will be calculated by dividing the Closing Average Share Value by the Opening Share Value. For purposes of this Grant, the term “Closing Average Share Value” means the average closing value of the common stock, for the 20 trading days ending on the last day of the Performance Period (i.e., the 20 trading days ending on December 31, 2022 (the “20-day period”), which will be calculated as follows: (i) determine the closing price of the common stock on each trading date during the 20-day period, (ii) average the amounts so determined for the 20-day period; the term “Opening Average Share Value” means the average of the closing price of a share of common stock for the 20 trading days preceding the start of the Performance Period (i.e., January 1, 2020).
*** 3-Year ROIC represents the ratio of the Company’s Net Income and the Company’s Total Average Invested Capital during the Performance Period. At the end of the Performance Period, the ROIC for the Company will be calculated for the Performance Period by dividing the Net Income during the Performance Period by Total Average Invested Capital during the Performance Period, and then divided by three. For purposes of this Grant, “Net Income” means the Company’s net income, adjusted for accounting changes and after-tax interest expense, and “Total Average Invested Capital” means the sum of the Company’s average total debt, stockholders equity and any non-controlling interest for the performance period computed on a four point basis. The 3-Year ROIC calculation is subject to the provisions as set forth below.
****3-Year EBITDA Growth represents Operating Income Before Depreciation and Amortization. EBITDA will be computed as EBITDA in Year 3 divided by EBITDA in the year preceding this award (i.e. 2019). The 3-Year EBITDA Growth calculation is subject to the provisions as set forth below.
3-Year ROIC and 3-Year EBITDA Growth shall be determined in accordance with generally accepted accounting principles (GAAP) and may include or exclude (or be adjusted to include or exclude) unusual or infrequently occurring items, the impact of charges for restructurings or productivity initiatives, non-operating items, discontinued operations and other unusual and non-recurring items, the effects of currency fluctuations, the effects of financing activities (by way of example, without limitation, the effect on earnings per share of issuing convertible debt securities), the effects of acquisitions and acquisition expenses, the effects of divesture and divesture expenses, and the effects of tax or accounting changes. However, notwithstanding the preceding sentence, unless the Committee determines otherwise either at the time it establishes the Performance Goals for an award or prior to the payment of an award, if any of the items referenced in the preceding sentence occurs, then such item shall be automatically excluded or included in determining the extent to which the Performance Goal has been achieved, whichever will produce the higher award (subject to any exercise of “negative discretion” by the Committee).
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2020 of Barnes Group Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ PATRICK J. DEMPSEY
|
|
Patrick J. Dempsey
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2020 of Barnes Group Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ CHRISTOPHER J. STEPHENS, JR.
|
|
Christopher J. Stephens, Jr.
|
|
Chief Financial Officer
|
/s/ PATRICK J. DEMPSEY
|
|
/s/ CHRISTOPHER J. STEPHENS, JR.
|
Patrick J. Dempsey
President and Chief Executive Officer
|
|
Christopher J. Stephens, Jr.
Chief Financial Officer
|
April 27, 2020
|
|
April 27, 2020
|