Barnes Group Inc. Reports Fourth Quarter and Full Year 2013 Financial Results

  Barnes Group Inc. Reports Fourth Quarter and Full Year 2013 Financial
  Results

  *Fourth Quarter Sales of $291 million, Up 13%; Full Year Sales of $1,092
    Million, Up 18%
  *Fourth Quarter Diluted EPS from Continuing Operations of $0.47, down 4%;
    Up 14% to $0.57 on an Adjusted Basis
  *Full Year Diluted EPS from Continuing Operations of $1.31, Down 9%; Up 20%
    to $1.83 on an Adjusted Basis
  *Exits 2013 with Record Year-End Backlog of $758 million
  *Successfully Closed Männer Acquisition
  *2014 EPS from Continuing Operations Guidance of $2.02 to $2.17 per diluted
    share; $2.15 to $2.30 on an Adjusted Basis, Up 18% to 26% from 2013

Business Wire

BRISTOL, Conn. -- February 21, 2014

Barnes Group Inc. (NYSE: B), an international industrial and aerospace
manufacturer and service provider, today reported financial results for the
fourth quarter and full year 2013.

Fourth quarter 2013 net sales increased 13% to $291.1 million from $258.2
million in last year’s fourth quarter, driven by organic sales growth of 5%
and sales contribution from the recently acquired Männer business. Income from
continuing operations for the fourth quarter was $26.3 million, or $0.47 per
diluted share, down 4% from $0.49 in the prior year period. On an adjusted
basis, income from continuing operations was $0.57, up 14% from $0.50 per
diluted share a year ago. Adjusted diluted earnings from continuing operations
excludes the impact of short-term purchase accounting adjustments and
transaction costs which were $7.3 million pre-tax, or $0.10 per diluted share
in the fourth quarter of 2013 related to the Männer acquisition, and $0.8
million pre-tax, or $0.01 per diluted share in the fourth quarter of 2012
related to the Synventive acquisition.

For the full year, Barnes Group generated net sales of $1,092 million, up 18%
from last year; organic sales growth was 4%. Income from continuing operations
was $72.3 million, or $1.31 per diluted share, compared to $79.8 million, or
$1.44 per diluted share in 2012. For 2013, income from continuing operations
included $7.3 million pre-tax, or $0.10 per diluted share, of short-term
purchase accounting adjustments and transaction costs related to the
acquisition of Männer, $10.5 million pre-tax, or $0.12 per diluted share, of
non-recurring CEO transition costs, and a tax charge of $16.4 million, or
$0.30 per diluted share, associated with the April 2013 U.S. Tax Court’s
unfavorable decision arising out of an IRS audit for the tax years 2000
through 2002. Income from continuing operations in 2012 included $5.9 million
pre-tax, or $0.08 per diluted share, of short-term purchase accounting
adjustments and acquisition transaction costs related to the acquisition of
Synventive. Excluding these items, adjusted diluted earnings per share from
continuing operations was $1.83 for 2013, up 20% from $1.52 for 2012.

A table reconciling 2012 and 2013 non-GAAP adjusted results presented in this
release to our GAAP results is included at the end of this press release.

“2013 was a year of significant transformation for Barnes Group. With the
disposition of our Distribution business and the addition of Männer, we’re
squarely focused on driving growth and profitability through differentiated
manufacturing and service capabilities,” said Patrick J. Dempsey, President
and Chief Executive Officer of Barnes Group Inc. “The solid operational
results achieved this year continue to validate the strategic plan that we’ve
been executing. Our Aerospace segment is well positioned to deliver on a
favorable OEM market and to take advantage of a recovering aerospace
after-market. And our Industrial segment generated 4% organic sales growth and
improved profitability in 2013,” added Dempsey. “As we exit 2013 with positive
momentum, a record level of backlog, and favorable end-markets, we feel good
about the prospects for continued profitable growth in 2014.”

                                                                                                       
($ millions;
except per     Three months ended December 31,                     Twelve months ended December 31,
share data)
Unaudited        2013       2012       Change                      2013         2012       Change
Net Sales        $291.1       $258.2       $32.9     12.8   %        $1,091.6       $928.8       $162.8    17.5  %
Operating        $34.1        $34.3        ($0.2)      (0.6)  %        $123.2         $107.1       $16.1       15.0  %
Income
% of Sales       11.7   %     13.3   %                 (1.6)  pts.     11.3     %     11.5   %                 (0.2) pts.
Income from
Continuing       $26.3        $26.7        ($0.4)      (1.5)  %        $72.3          $79.8        ($7.5)      (9.4) %
Operations
Net Income       $26.8        $29.7        ($2.9)      (9.8)  %        $270.5         $95.2        $175.3      NM
                                                                                                                     
Income from
Continuing
Operations       $0.47        $0.49        ($0.02)     (4.1)  %        $1.31          $1.44        ($0.13)     (9.0) %
Per Diluted
Share
                                                                                                                     
Income from
Discontinued
Operations       $0.01        $0.05        ($0.04)     (80.0) %        $3.61          $0.28        $3.33       NM
Per Diluted
Share
                                                                                                                     
Net Income
Per Diluted    $0.48     $0.54     ($0.06)   (11.1) %      $4.92       $1.72     $3.20     NM    
Share
NM = Not
Meaningful
                                                                                                                     

Industrial

  *Fourth quarter 2013 sales were $183.7 million, up 17% from $157.1 million
    in the same period last year. The increase was driven by organic sales
    growth of 4%, Männer’s sales contribution, and favorable foreign exchange
    of $1.4 million.
  *Operating profit of $15.5 million for the fourth quarter of 2013 was down
    4% from $16.2 million from the prior year period. Industrial operating
    profit in this year’s fourth quarter includes the impact of $7.3 million
    of short-term purchase accounting adjustments and transaction costs
    related to the Männer acquisition. Last year’s fourth quarter included
    $0.8 million of costs of a similar nature related to the acquisition of
    Synventive. Excluding these acquisition related expenses, adjusted
    operating profit at Industrial was $22.8M, up 34%, driven by the profit
    contribution of Männer, the profit impact of higher organic sales, and
    productivity improvements. Adjusted operating margin was 12.4%, up 160 bps
    from last year.
  *Full year 2013 sales were $687.6 million, up 28% or $149.2 million over
    2012. Organic sales increased by $22 million, while acquisition related
    sales from Synventive and Männer contributed $127 million.
  *Full year 2013 operating profit was $71.9 million, up 46% from 2012
    primarily benefiting from the profit contribution of the acquired
    Synventive and Männer businesses, the profit impact from increased organic
    sales, favorable pricing and productivity improvements. Operating profit
    in 2013 was negatively impacted by $7.3 million in short-term purchase
    accounting adjustments and transaction costs related to the Männer
    acquisition, and CEO transition costs of $6.6 million allocated to the
    segment during the first quarter of 2013. Last year, operating profit was
    negatively impacted by $5.9 million in short-term purchase accounting
    adjustments and transaction costs related to the Synventive acquisition.
    Excluding these items, adjusted operating margin increased to 12.5%, up
    230 bps.

Aerospace

  *Fourth quarter 2013 sales were $107.4 million, up 6% from $101.1 million
    in the same period last year. Sales growth in original equipment
    manufacturing (“OEM”) was partially offset by a decline in aftermarket
    spare parts sales while aftermarket repair and overhaul sales were
    essentially flat to last year.
  *Operating profit of $18.6 million for the fourth quarter of 2013 was up 3%
    from the prior year period of $18.1 million. Operating profit benefited
    from the impact of higher OEM sales, lower employee related costs,
    primarily reduced incentive compensation, and the absence of an inventory
    valuation adjustment within the aftermarket repair and overhaul business
    taken last year, offset in part by lower aftermarket sales. Operating
    margin for the fourth quarter of 2013 was 17.3%, down 60 bps.
  *Full year 2013 sales were $404.0 million, up 3% from $390.5 million in
    2012. The increase was primarily from sales growth in the OEM, partially
    offset by declines in the aftermarket repair and overhaul and spare parts
    businesses.
  *Full year 2013 operating profit decreased 11% to $51.3 million from $57.9
    million last year. Operating profit benefited from higher sales in the OEM
    manufacturing business and lower employee related costs, primarily reduced
    incentive compensation. Operating profit was negatively impacted by an
    $8.6 million inventory valuation charge taken in the third quarter related
    to exchange engine parts within the aftermarket repair and overhaul
    business, the profit impact of lower sales in the highly profitable
    aftermarket RSP spare parts business, increased costs of new product
    introductions, and CEO transition costs of $3.9 million allocated to the
    segment during the first quarter of 2013. Full year operating margin
    decreased to 12.7%, down 210 bps. Excluding the impact of the allocated
    CEO transition costs, adjusted Aerospace operating margin was 13.7%.
  *Aerospace backlog increased to a record $554 million at the end of 2013,
    up 1% over last year-end and up 9% from the third quarter of 2013.

Additional Information

  *Interest expense increased $0.9 million to $13.1 million in 2013 primarily
    as a result of a higher average interest rate, offset in part by lower
    average borrowings for the year.
  *The Company’s effective tax rate from continuing operations was 32.8% in
    2013 compared with 13.5% in 2012. Included in the 2013 income tax is a
    charge of $16.4 million associated with the April 16, 2013 U.S. Tax
    Court’s unfavorable decision arising out of an IRS audit for the tax years
    2000 through 2002. Excluding this charge, the 2013 adjusted effective tax
    rate is 17.5%. The adjusted effective tax rate increase in 2013 versus
    last year’s rate was mainly due to a change in earnings attributable to
    higher-taxing jurisdictions, an increase in the Company’s effective tax
    rate in Sweden and the absence of several discrete foreign tax related
    items in 2012.

2014 Outlook

Barnes Group expects 2014 total revenue to grow 14% to 17%, 5% to 8% on an
organic basis, and forecasts adjusted operating margins in the range of 14.5%
to 15.5%. GAAP earnings from continuing operations are expected to be in the
range of $2.02 to $2.17 per diluted share. Excluding additional Männer
short-term purchase accounting adjustments in 2014, adjusted diluted earnings
per share from continuing operations are anticipated to be in the range of
$2.15 to $2.30, up 18% to 26% from 2013’s adjusted diluted earnings per share
of $1.83. Further, the Company expects capital expenditures of approximately
$60 million and cash conversion to be approximately 100% of net income.

“Significant portfolio transformation, as well as organic investment within
our existing businesses, is allowing us to deliver continued profitable
growth,” said Christopher J. Stephens, Jr., Senior Vice President, Finance and
Chief Financial Officer, Barnes Group Inc. “In addition, 2013’s financial
performance and solid cash flow have allowed us to position our balance sheet
to support this growth and to be ready for further growth investments and
acquisition opportunities.”

Conference Call

Barnes Group Inc. will conduct a conference call with investors to discuss
fourth quarter and full year 2013 results at 8:30 a.m. EDT today, February 21,
2014. A webcast of the live call and an archived replay will be available on
the Barnes Group investor relations link at www.BGInc.com. The conference is
also available by direct dial at (888) 680-0865 in the U.S. or (617) 213-4853
outside of the U.S. (request the Barnes Group Earnings Call), Participant
Code: 60526351.

In addition, the call will be recorded and available for playback until April
25, 2014 by dialing (617) 801-6888; Passcode: 26722969.

About Barnes Group

Founded in 1857, Barnes Group Inc. (NYSE: B) is an international industrial
and aerospace manufacturer and service provider, serving a wide range of end
markets and customers. The products and services provided by Barnes Group are
used in far-reaching applications that provide transportation, communication,
manufacturing and technology to the world. Barnes Group’s approximately 4,300
dedicated employees, at more than 60 locations worldwide, are committed to
achieving consistent and sustainable profitable growth. For more information,
visit www.BGInc.com.

Forward-Looking Statements

This press release contains forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
often address our expected future operating and financial performance and
financial condition, and often contain words such as "anticipate," "believe,"
"expect," "plan," "strategy," "estimate," "project," and similar terms. These
forward-looking statements do not constitute guarantees of future performance
and are subject to a variety of risks and uncertainties that may cause actual
results to differ materially from those expressed in the forward-looking
statements. These include, among others: difficulty maintaining relationships
with employees, customers, distributors, suppliers, business partners or
governmental entities; difficulties leveraging market opportunities; changes
in market demand for our products and services; rapid technological and market
change; the ability to protect intellectual property rights; introduction or
development of new products or transfer of work; higher risks in international
operations and markets; the impact of intense competition; and other risks and
uncertainties described in documents filed with or furnished to the Securities
and Exchange Commission (SEC) by the Company, including, among others, those
in the Management's Discussion and Analysis of Financial Condition and Results
of Operations and Risk Factors sections of the Company's filings. The risks
and uncertainties described in our periodic filings with the SEC include,
among others, uncertainties relating to conditions in financial markets;
currency fluctuations and foreign currency exposure; future financial
performance of the industries or customers that we serve; our dependence upon
revenues and earnings from a small number of significant customers; a major
loss of customers; inability to realize expected sales or profits from
existing backlog due to a range of factors, including insourcing decisions,
material changes, production schedules and volumes of specific programs; the
impact of government budget and funding decisions; changes in raw material or
product prices and availability; integration of acquired businesses including
the Männer Business; restructuring costs or savings; the continuing impact of
prior acquisitions and divestitures and any other future strategic actions,
including acquisitions, joint ventures, divestitures, restructurings, or
strategic business realignments, and our ability to achieve the financial and
operational targets set in connection with any such actions; the impacts of
the U.S. Tax Court's April 16, 2013 decision and any related appeal; the
outcome of pending and future legal, governmental, or regulatory proceedings
and contingencies; uninsured claims; future repurchases of common stock;
future levels of indebtedness; and numerous other matters of a global,
regional or national scale, including those of a political, economic,
business, competitive, environmental, regulatory and public health nature. The
Company assumes no obligation to update our forward-looking statements.

BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
                                                                                              
                   Three months ended December 31,                   Twelve months ended December 31,
                   2013               2012 ^(1)          %           2013               2012 ^(1)          %
                                                         Change                                            Change
                                                                                                           
Net sales          $ 291,136          $ 258,200          12.8        $ 1,091,566        $ 928,780          17.5
                                                                                                           
Cost of sales        193,555            172,515          12.2          738,170            655,653          12.6
Selling and
administrative      63,515           51,418          23.5         230,195          165,996         38.7
expenses
                                                                                                           
                    257,070          223,933         14.8         968,365          821,649         17.9
                                                                                                           
Operating            34,066             34,267           (0.6  )       123,201            107,131          15.0
income
                                                                                                           
Operating            11.7       %       13.3       %                   11.3       %       11.5       %
margin
                                                                                                           
Interest             3,091              4,192            (26.3 )       13,090             12,238           7.0
expense
Other expense       835              844             (1.1  )      2,537            2,631           (3.6 )
(income), net
                                                                                                           
Income from
continuing
operations           30,140             29,231           3.1           107,574            92,262           16.6
before income
taxes
                                                                                                           
Income taxes        3,827            2,506           52.7         35,253           12,432          NM
                                                                                                           
Income from
continuing           26,313             26,725           (1.5  )       72,321             79,830           (9.4 )
operations
                                                                                                           
Income from
discontinued
operations,          511                3,006            (83.0 )       198,206            15,419           NM
net of income
taxes
                                                                                     
Net income         $ 26,824          $ 29,731          (9.8  )     $ 270,527         $ 95,249          NM
                                                                                                           
Common             $ 5,927           $ 5,417           9.4         $ 22,422          $ 21,662          3.5
dividends
                                                                                                           
Per common
share:
                                                                                                           
Basic:
Income from
continuing         $ 0.49             $ 0.49             -           $ 1.34             $ 1.46             (8.2 )
operations
Income from
discontinued
operations,         0.01             0.05            (80.0 )      3.68             0.28            NM
net of income
taxes
Net income         $ 0.50            $ 0.54            (7.4  )     $ 5.02            $ 1.74            NM
                                                                                                           
Diluted:
Income from
continuing         $ 0.47             $ 0.49             (4.1  )     $ 1.31             $ 1.44             (9.0 )
operations
Income from
discontinued
operations,         0.01             0.05            (80.0 )      3.61             0.28            NM
net of income
taxes
Net income         $ 0.48            $ 0.54            (11.1 )     $ 4.92            $ 1.72            NM
                                                                                                           
Dividends            0.11               0.10             10.0          0.42               0.40             5.0
                                                                                                           
Weighted
average common
shares
outstanding:
Basic                53,983,034         54,649,732       (1.2  )       53,860,308         54,626,453       (1.4 )
Diluted              55,332,376         55,194,226       0.3           54,973,344         55,224,457       (0.5 )
                                                                                                           
NM - Not
Meaningful
                                                                                                           

Notes:
(1) Results for 2012 have been adjusted on a retrospective basis to reflect
the BDNA discontinued operations.

BARNES GROUP INC.
OPERATIONS BY REPORTABLE BUSINESS SEGMENT
(Dollars in thousands)
(Unaudited)
                                                                                      
                 Three months ended December 31,                 Twelve months ended December 31,
                 2013            2012 ^(1)       %               2013              2012 ^(1)       %
                                                 Change                                            Change
Net sales
                                                                                                           
Industrial       $ 183,739       $ 157,114       16.9            $ 687,550         $ 538,305       27.7
                                                                                                           
Aerospace          107,399         101,092       6.2               404,021           390,483       3.5
                                                                                                           
Intersegment      (2      )      (6      )     66.7             (5        )      (8      )     37.5
sales
                                                                                                           
Total net        $ 291,136      $ 258,200      12.8            $ 1,091,566     $ 928,780      17.5
sales
                                                                                                           
Operating
profit
                                                                                                           
Industrial       $ 15,483        $ 16,187        (4.3 )          $ 71,888          $ 49,253        46.0
                                                                                                           
Aerospace         18,583        18,080       2.8              51,313          57,878       (11.3 )
                                                                                                           
Total
operating        $ 34,066       $ 34,267       (0.6 )          $ 123,201        $ 107,131      15.0
profit
                                                                                                           
Operating                                        Change                                            Change
margin
                                                                                                           
Industrial         8.4     %       10.3    %     (190 ) bps.       10.5      %       9.1     %     140     bps.
                                                                                                           
Aerospace         17.3    %      17.9    %     (60  ) bps.      12.7      %      14.8    %     (210  ) bps.
                                                                                                           
Total
operating          11.7    %       13.3    %     (160 ) bps.       11.3      %       11.5    %     (20   ) bps.
margin
                                                                                                           

Notes:
(1) Results for 2012 have been adjusted on a retrospective basis to reflect
the impact of the BDNA discontinued operations, including a reallocation of
corporate overhead expenses, and the segment realignment.

BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
                                                           
                                                                
                                               December 31,     December 31,
                                               2013             2012
Assets
Current assets
Cash and cash equivalents                      $  70,856        $  86,356
Accounts receivable                               258,664          253,202
Inventories                                       211,246          226,220
Deferred income taxes                             18,226           33,906
Prepaid expenses and other current assets        18,204          18,856
                                                                
Total current assets                              577,196          618,540
                                                                
                                                                
Deferred income taxes                             2,314            29,961
Property, plant and equipment, net                302,558          233,097
Goodwill                                          649,697          579,905
Other intangible assets, net                      534,293          383,972
Other assets                                     57,615          23,121
                                                                
Total assets                                   $  2,123,673     $  1,868,596
                                                                
Liabilities and Stockholders' Equity
Current liabilities
Notes and overdrafts payable                   $  1,074         $  3,795
Accounts payable                                  88,721           99,037
Accrued liabilities                               154,514          96,364
Long-term debt - current                         56,009          699
                                                                
Total current liabilities                         300,318          199,895
                                                                
Long-term debt                                    490,341          642,119
Accrued retirement benefits                       80,884           159,103
Deferred income taxes                             94,506           48,707
Other liabilities                                 16,210           18,654
                                                                
Total stockholders' equity                       1,141,414       800,118
                                                                
Total liabilities and stockholders' equity     $  2,123,673     $  1,868,596
                                                                

BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
                                                             
                                                                  
                                              Twelve months ended December 31,
                                              2013                2012
Operating activities:
Net income                                    $  270,527          $ 95,249
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization                    65,052             57,360
Amortization of convertible debt discount        2,391              2,211
Gain on disposition of property, plant           (887      )        (178     )
and equipment
Stock compensation expense                       18,128             8,819
Withholding taxes paid on stock issuances        (2,090    )        (1,150   )
(Gain) loss on the sale of businesses            (313,708  )        886
Changes in assets and liabilities, net of
the effects of acquisitions/divestitures:
Accounts receivable                              (23,764   )        (4,160   )
Inventories                                      2,079              5,404
Prepaid expenses and other current assets        (2,172    )        (4,341   )
Accounts payable                                 2,384              (5,493   )
Accrued liabilities                              (9,891    )        (9,746   )
Deferred income taxes                            3,412              9,446
Long-term retirement benefits                    (642      )        (16,438  )
Other                                           (729      )       (1,492   )
                                                                  
Net cash provided by operating activities        10,090             136,377
                                                                  
Investing activities:
Proceeds from disposition of property,           1,767              854
plant and equipment
Proceeds from (payments for) the sale of         538,942            (438     )
businesses
Change in restricted cash                        -                  4,900
Capital expenditures                             (57,304   )        (37,787  )
Business acquisitions, net of cash               (307,264  )        (296,560 )
acquired
Component Repair Program payments                (16,639   )        -
Other                                           (2,058    )       (3,776   )
                                                                  
Net cash provided (used) by investing            157,444            (332,807 )
activities
                                                                  
Financing activities:
Net change in other borrowings                   (2,753    )        (8,852   )
Payments on long-term debt                       (555,195  )        (114,411 )
Proceeds from the issuance of long-term          450,253            376,000
debt
Proceeds from the issuance of common             13,491             7,061
stock
Common stock repurchases                         (68,608   )        (19,037  )
Dividends paid                                   (22,422   )        (21,662  )
Excess tax benefit on stock awards               3,899              1,438
Other                                           (1,472    )       (1,261   )
                                                                  
Net cash (used) provided by financing            (182,807  )        219,276
activities
                                                                  
Effect of exchange rate changes on cash         (227      )       1,005    
flows
                                                                  
(Decrease) increase in cash and cash             (15,500   )        23,851
equivalents
                                                                  
Cash and cash equivalents at beginning of       86,356           62,505   
year
                                                                  
Cash and cash equivalents at end of year      $  70,856          $ 86,356   
                                                                             

BARNES GROUP INC.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(Dollars in thousands)
(Unaudited)
                                                              
                                                                   
                                              Twelve months ended December 31,
                                              2013                 2012
Free cash flow:
                                                                   
Net cash provided by operating activities     $  10,090            $ 136,377
Capital expenditures                            (57,304   )        (37,787 )
                                                                   
Free cash flow^(1)                            $  (47,214   )       $ 98,590  
                                                                   
Free cash flow to net income cash
conversion ratio (as adjusted):
                                                                   
Free cash flow (from above)                   $  (47,214   )       $ 98,590
Income tax payments related to the gain         130,004           -       
on the sale of BDNA
Free cash flow (as adjusted)^(2)                 82,790              98,590
                                                                   
Net income                                       270,527             95,249
Gain on the sale of BDNA, net of income         (195,317  )        -       
taxes
Net income (as adjusted)^(2)                  $  75,210           $ 95,249  
                                                                   
Free cash flow to net income cash                110       %         104     %
conversion ratio (as adjusted)^(2)
                                                                             

Notes:
(1) The Company defines free cash flow as net cash provided by operating
activities less capital expenditures. In 2013, net cash provided by operating
activities is negatively impacted by $130.0 million of estimated income tax
payments related to the gain on the sale of BDNA. The proceeds from the sale
are reflected in investing activities. The Company believes that the free cash
flow metric is useful to investors and management as a measure of cash
generated by business operations that can be used to invest in future growth,
pay dividends, repurchase stock and reduce debt. This metric can also be used
to evaluate the Company's ability to generate cash flow from business
operations and the impact that this cash flow has on the Company's liquidity.

2) For the purpose of calculating the cash conversion ratio, the Company has
excluded the income tax payments related to the gain on the sale of BDNA made
during 2013 from free cash flow and the gain on the sale of BDNA from net
income.

BARNES GROUP INC.
NON-GAAP FINANCIAL MEASURE RECONCILIATION
(Dollars in thousands, except per share data)
(Unaudited)
                                                                                    
                 Three months ended December 31,                 Twelve months ended December 31,
                 2013           2012 ^(1)      % Change          2013            2012 ^(1)       %
                                                                                                 Change
SEGMENT
RESULTS
Operating
Profit -
Industrial       $ 15,483       $ 16,187         (4.3 )          $ 71,888        $ 49,253        46.0
Segment
(GAAP)
                                                                                                         
Synventive
short-term
purchase           -              775                              -               4,987
accounting
adjustments
Synventive
acquisition        -              3                                -               912
transaction
costs
Männer
short-term
purchase           5,456          -                                5,456           -
accounting
adjustments
Männer
acquisition        1,823          -                                1,823           -
transaction
costs
CEO
transition        -            -                              6,589         -       
costs
                                                                                                         
Operating
Profit -
Industrial
Segment as       $ 22,762      $ 16,965        34.2            $ 85,756       $ 55,152       55.5
adjusted
(Non-GAAP)
^(2)
                                                                                                         
Operating
Margin -
Industrial         8.4    %       10.3   %       (190 ) bps.       10.5    %       9.1     %     140     bps.
Segment
(GAAP)
Operating
Margin -
Industrial
Segment as         12.4   %       10.8   %       160    bps.       12.5    %       10.2    %     230     bps.
adjusted
(Non-GAAP)
^(2)
                                                                                                         
Operating
Profit -
Aerospace        $ 18,583       $ 18,080         2.8             $ 51,313        $ 57,878        (11.3 )
Segment
(GAAP)
                                                                                                         
CEO
transition        -            -                              3,903         -       
costs
                                                                                                         
Operating
Profit -
Aerospace
Segment as       $ 18,583      $ 18,080        2.8             $ 55,216       $ 57,878       (4.6  )
adjusted
(Non-GAAP)
^(2)
                                                                                                         
Operating
Margin -
Aerospace          17.3   %       17.9   %       (60  ) bps.       12.7    %       14.8    %     (210  ) bps.
Segment
(GAAP)
Operating
Margin -
Aerospace
Segment as      17.3   %    17.9   %    (60  ) bps.    13.7    %    14.8    %   (110  ) bps.
adjusted
(Non-GAAP)
^(2)
                                                                                                         
CONSOLIDATED
RESULTS
Operating
Income           $ 34,066       $ 34,267         (0.6 )          $ 123,201       $ 107,131       15.0
(GAAP)
                                                                                                         
Synventive
short-term
purchase           -              775                              -               4,987
accounting
adjustments
Synventive
acquisition        -              3                                -               912
transaction
costs
Männer
short-term
purchase           5,456          -                                5,456           -
accounting
adjustments
Männer
acquisition        1,823          -                                1,823           -
transaction
costs
CEO
transition        -            -                              10,492        -       
costs
                                                                                                         
Operating
Income as
adjusted         $ 41,345      $ 35,045        18.0            $ 140,972      $ 113,030      24.7
(Non-GAAP)
^(2)
                                                                                                         
Operating
Margin             11.7   %       13.3   %       (160 ) bps.       11.3    %       11.5    %     (20   ) bps.
(GAAP)
Operating
Margin as
adjusted        14.2   %    13.6   %    60    bps.    12.9    %    12.2    %   70     bps.
(Non-GAAP)
^(2)
                                                                                                         
Diluted
Income from
Continuing       $ 0.47         $ 0.49           (4.1 )          $ 1.31          $ 1.44          (9.0  )
Operations
per Share
(GAAP)
                                                                                                         
Synventive
short-term
purchase           -              0.01                             -               0.07
accounting
adjustments
Synventive
acquisition        -              -                                -               0.01
transaction
costs
Männer
short-term
purchase           0.07           -                                0.07            -
accounting
adjustments
Männer
acquisition        0.03           -                                0.03            -
transaction
costs
CEO
transition         -              -                                0.12            -
costs
April 2013
tax court         -            -                              0.30          -       
decision
                                                                                                         
Diluted
Income from
Continuing
Operations       $ 0.57        $ 0.50          14.0            $ 1.83         $ 1.52         20.4
per Share as
adjusted
(Non-GAAP)
^(2)
                                                                                                         
                                                                                     
                                                                                                         
                                               Full-Year 2014 Outlook
Diluted
Income from
Continuing                                     $ 2.02   to       $ 2.17
Operations
per Share
(GAAP)
                                                                                                         
Männer
short-term
purchase                                               0.13   
accounting
adjustments
                                                                                                         
Diluted
Income from
Continuing
Operations                                     $ 2.15  to       $ 2.30    
per Share as
adjusted
(Non-GAAP)
^(2)
                                                                                     
                                                                                                         

Notes:
(1) Results for 2012 have been adjusted on a retrospective basis to reflect
the impact of the BDNA discontinued operations, including a reallocation of
corporate overhead expenses, and the segment realignment.

(2) The Company has excluded the following from its "as adjusted" financial
measurements: 1) short-term purchase accounting adjustments and transaction
costs related to its Synventive acquisition in 2012, 2) CEO transition costs
associated with the modification of outstanding equity awards in 2013, 3) the
tax charge associated with the April 2013 tax court decision in 2013 and 4)
short-term purchase accounting adjustments and transaction costs related to
its Männer acquisition in 2013. Management believes that these adjustments
provide the Company and its investors with an indication of our baseline
performance excluding items that are not considered to be reflective of our
ongoing results. Management does not intend results excluding the adjustments
to represent results as defined by GAAP, and the reader should not consider it
as an alternative measurement calculated in accordance with GAAP, or as an
indicator of the Company's performance. Accordingly, the measurements have
limitations depending on their use.

Contact:

Barnes Group Inc.
William Pitts
Director, Investor Relations
860-583-7070
 
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