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 Barnes Group Inc. Reports Fourth Quarter and Full Year 2014 Financial Results
   Friday, February 20, 2015 6:30:08 AM ET

--Sales of $310 million, up 7%; Organic Sales up 6%

--Operating Margin of 15.7%; Adjusted Operating Margin of 16.1%, up 190 bps

--Diluted EPS from Continuing Operations of $0.60, up 28%; Up 9% to $0.62 on an Adjusted Basis

--Full Year 2014:

--Sales of $1,262 million, up 16%; Organic Sales up 6%

--Operating Margin of 14.3%; Adjusted Operating Margin of 15.4%, up 250 bps

--Diluted EPS from Continuing Operations of $2.16, up 65%; Up 28% to $2.34 on an Adjusted Basis

--2015 Guidance:

--2015 EPS from Continuing Operations of $2.40 to $2.55 per diluted share; On an Adjusted Basis, $2.42 to $2.57 per diluted share, up 3% to 10%

Barnes Group Inc. (B ), an international industrial and aerospace manufacturer and service provider, today reported financial results for the fourth quarter and full year 2014.



Fourth quarter net sales of $310 million were up 7% from $291 million in the fourth quarter of 2013, driven by organic sales growth of 6% and one additional month of acquisition revenues from the Manner business versus the prior year period. Unfavorable foreign exchange reduced sales by 3%. Income from continuing operations for the fourth quarter was $33.3 million, or $0.60 per diluted share, compared to $26.3 million, or $0.47 per diluted share in the prior year period. On an adjusted basis, income from continuing operations was $0.62 per diluted share, up 9% from $0.57 a year ago. Fourth quarter 2014 adjusted diluted earnings from continuing operations exclude the impact of Manner short-term purchase accounting adjustments of $0.8 million pre-tax and costs related to the closure of production operations at Associated Spring’s Saline, Michigan facility which were $0.5 million pre-tax. Together, these two items contributed $0.02 to adjusted diluted earnings from continuing operations.

For the full year, Barnes Group generated net sales of $1,262 million, up 16% from last year; organic sales growth was 6% while acquisitions contributed 10%. Income from continuing operations was $120.5 million, or $2.16 per diluted share, compared to $72.3 million, or $1.31 per diluted share in 2013. On an adjusted basis, income from continuing operations was $2.34 per diluted share, up 28% from $1.83 a year ago. 2014 adjusted diluted earnings from continuing operations exclude the impact of Manner short-term purchase accounting adjustments of $8.5 million pre-tax, or $0.11 per diluted share, and costs related to the closure of production operations at the Saline, Michigan facility which were $6.0 million pre-tax, or $0.07 per diluted share. 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 Manner, $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.

A table reconciling 2013 and 2014 non-GAAP adjusted results presented in this release to our GAAP results is included at the end of this press release.

"Barnes Group’s continued execution of its profitable growth strategy has delivered another year of excellent financial performance with an impressive 250 basis point gain in adjusted operating margin and a 28% increase in adjusted earnings from continued operations," said Patrick J. Dempsey, President and Chief Executive Officer of Barnes Group Inc. "Our relentless focus on driving differentiated industrial technologies and innovative solutions to the customers and end markets we serve is fueling our growth engine and we look forward to carrying that momentum into 2015," added Dempsey.

Industrial

-- Fourth quarter 2014 sales were $198.2 million, up 8% from $183.7 million in the same period last year. The Manner business, acquired in October 2013, provided $10.4 million of "acquisition" sales while Industrial’s organic sales grew 7% over the prior year period. Unfavorable foreign exchange negatively impacted sales by $9.0 million, or 5%.

-- Operating profit of $27.0 million in the fourth quarter was up 74% from $15.5 million in the prior year period. Operating profit benefited from the contribution of Manner and higher organic sales, and was partially offset by $0.8 million of Manner short-term purchase accounting adjustments and $0.5 million of restructuring charges related to the closure of production operations at the Saline, Michigan facility. Last year’s fourth quarter included $7.3 million of short-term purchase accounting adjustments and transaction costs associated with the Manner acquisition. Excluding the acquisition related expenses and Saline closure costs, adjusted operating profit was $28.3 million, up 24% from a year ago. Adjusted operating margin was 14.3%, up 190 bps from last year’s adjusted operating margin of 12.4%.

-- Full year 2014 sales were $822.1 million, up 20% from $687.6 million last year. The Manner business provided $113.7 million of "acquisition" sales increase while unfavorable foreign exchange negatively impacted sales by $7.3 million, or 1%. Industrial’s organic sales grew 4% over the prior year.

-- Full year operating profit of $108.4 million was up 51% from $71.9 million in the prior year period. Operating profit benefited from the contribution of Manner and higher organic sales, and was partially offset by $8.5 million of Manner short-term purchase accounting adjustments and $6.0 million of restructuring charges related to the closure of production operations at the Saline, Michigan facility. For 2013, operating profit included $7.3 million of short-term purchase accounting adjustments and transaction costs related to the acquisition of Manner and $6.6 million of non-recurring CEO transition costs. Excluding these items, adjusted operating profit was $122.9 million for 2014 versus $85.8 million a year ago, an increase of 43%. Adjusted operating margin was 14.9%, up 240 bps from last year’s adjusted operating margin of 12.5%.

Aerospace

-- Fourth quarter 2014 sales were $112.0 million, up 4% from $107.4 million in the same period last year. Increased sales from the original equipment manufacturing ("OEM") business and aftermarket maintenance, repair and overhaul ("MRO") businesses were partially offset by lower aerospace spare parts sales.

-- Operating profit was $21.6 million for the fourth quarter of 2014 as compared to $18.6 million for the prior year period. Operating profit in the quarter benefited from the contributions of increased sales in the OEM business, higher sales and profits in the MRO business, and were partially offset by increased employee related costs and the profit impact of lower spare parts sales. Operating margin was 19.3% in the quarter, up 200 basis points from 17.3% a year ago.

-- Full year 2014 sales were $440.0 million, up 9% from $404.0 million in the same period last year. Increased sales from the OEM and MRO businesses were partially offset by lower aerospace spare parts sales.

-- Operating profit was $71.6 million for the full year 2014 as compared to $51.3 million for the prior year. Operating profit benefited from the contributions of increased sales in the OEM business, higher profits in the MRO business, and the absence of an $8.6 million inventory valuation adjustment taken in the third quarter of 2013. These benefits were partially offset by increased employee related costs and the profit impact of lower spare parts sales. For 2013, operating profit included $3.9 million of non-recurring CEO transition costs. Excluding this item, adjusted operating profit for 2013 was $55.2 million. 2014 operating margin increased to 16.3%.

-- Aerospace backlog was $523 million at the end of the fourth quarter, down 6% from last year-end and up 2% from the third quarter of 2014.

Additional Information

-- Interest expense decreased $1.7 million to $11.4 million in 2014 primarily as a result of a lower average interest rate, offset in part by higher average borrowings for the year.

-- The Company’s effective tax rate from continuing operations for 2014 was 27.6% compared with 32.8% in 2013. Included in the full year 2013 income tax is a charge of approximately $16 million associated with the April 2013 U.S. Tax Court’s unfavorable decision. Excluding this charge, the full year 2013 adjusted effective tax rate was 17.5%. The effective tax rate increase in 2014 over the adjusted full year 2013 rate is due to a mix of earnings attributable to higher-taxing jurisdictions, the expiration of certain tax holidays, and the increase in the repatriation of a portion of current foreign earnings to the U.S.

2015 Outlook

Barnes Group expects 2015 organic revenue growth of 6% to 9% with total revenue growth of 3% to 6% after consideration of unfavorable foreign exchange. Operating margins are forecasted to be in the range of 16% to 17%. GAAP earnings from continuing operations are expected to be in the range of $2.40 to $2.55 per diluted share. Excluding an approximate $0.02 of remaining Manner short-term purchase accounting adjustments anticipated to be recorded in 2015, adjusted diluted earnings per share from continuing operations is expected to be in the range of $2.42 to $2.57, up 3% to 10% from 2014’s adjusted diluted earnings per share of $2.34. Further, the Company anticipates capital expenditures of approximately $55 to $60 million and cash conversion to approximate 100% of net income.

"Enhanced investments in our businesses, and the smooth integration of recent acquisitions that brought innovative technologies to Barnes Group, have advanced our ability to deliver differentiated industrial technologies to market," said Christopher J. Stephens, Jr., Senior Vice President, Finance and Chief Financial Officer, Barnes Group Inc. "Our solid balance sheet and the strong cash flow expectation for 2015 position us favorably for further growth investments and acquisition opportunities that support our strategy."

Conference Call

Barnes Group Inc. will conduct a conference call with investors to discuss fourth quarter and full year 2014 results at 8:30 a.m. ET today, February 20, 2015. The public may access the conference through a live audio webcast available on the Investor Relations section of Barnes Group’s website at www.BGInc.com. The conference is also available by direct dial at (877) 201-0168 in the U.S. or (647) 788-4901 outside of the U.S.; Conference ID 49092873. Supplemental materials will be posted to the Investor Relations section of the Company’s website prior to the conference call.

In addition, the call will be recorded and available for playback from 12:00 p.m. (ET) on Friday, February 20, 2015 until 11:59 p.m. (ET) on Friday, February 27, 2015, by dialing (404) 537-3406; Conference ID 49092873.

About Barnes Group

Founded in 1857, Barnes Group Inc. (B ) is an international industrial and aerospace manufacturer and service provider, serving a wide range of end markets and customers. The highly engineered products, differentiated industrial technologies, and innovative solutions delivered by Barnes Group are used in far-reaching applications that provide transportation, manufacturing, healthcare products, and technology to the world. Barnes Group’s approximately 4,500 skilled and 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, including unionized employees, customers, distributors, suppliers, business partners or governmental entities; failure to successfully negotiate collective bargaining agreements or potential strikes, work stoppages or other similar events; 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, 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; 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 outcome of pending and future legal, governmental, or regulatory proceedings and contingencies and 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,
                                                                                                                                    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                          -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                         2014                                 2013                                                     %                                                   2014                                                     2013                                                %
                                                                                                                                                                                                                                                                                                                Change                                                                                                                                                                                                                                          Change
                                                                                                                                    -------------------- ---------- --------------------                       -------------------- ---------- --------------------                                           --------                                            -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                                           ------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Net sales                                                                                                                                              $    310,173                                                               $    291,136                                                                  6.5                                                                  $  1,262,006                                                                                   $  1,091,566                                                                  15.6
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Cost of sales                                                                                                                                               196,977                                                                    193,555                                                                  1.8                                                                       829,648                                                                                        738,170                                                                  12.4
Selling and administrative expenses                                                                                                       64,613                               63,515                                               1.7                                                    252,384                                                  230,195                                                9.6
                                                                                                                                    -------------------- ---------- --------------------                       -------------------- ---------- --------------------                                                                                               -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                         261,590                              257,070                                               1.8                                                  1,082,032                                                  968,365                                               11.7
                                                                                                                                    -------------------- ---------- --------------------                       -------------------- ---------- --------------------                                                                                               -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Operating income                                                                                                                                             48,583                                                                     34,066                                                                 42.6                                                                       179,974                                                                                        123,201                                                                  46.1
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Operating margin                                                                                                                                               15.7 %                                                                     11.7 %                                                                                                                                             14.3 %                                                                                         11.3 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Interest expense                                                                                                                                              2,834                                                                      3,091                                                                 (8.3 )                                                                      11,392                                                                                         13,090                                                                 (13.0 )
Other expense (income), net                                                                                                                  314                                  835                                             (62.4 )                                                    2,082                                                    2,537                                              (17.9 )
                                                                                                                                    -------------------- ---------- --------------------                       -------------------- ---------- --------------------                                                                                               -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Income from continuing operations before income taxes                                                                                                        45,435                                                                     30,140                                                                 50.7                                                                       166,500                                                                                        107,574                                                                  54.8
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Income taxes                                                                                                                              12,177                                3,827                                                NM                                                     45,959                                                   35,253                                               30.4
                                                                                                                                    -------------------- ---------- --------------------                       -------------------- ---------- --------------------                                                                                               -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Income from continuing operations                                                                                                                            33,258                                                                     26,313                                                                 26.4                                                                       120,541                                                                                         72,321                                                                  66.7
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
(Loss) income from discontinued operations, net of income taxes                                                                                              (1,746 )                                                                      511                                                                   NM                                                                        (2,171 )                                                                                      198,206                                                                    NM
                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                    -----------------------------------------------------                      -----------------------------------------------------                                                                                              -----------------------------------------------------                                          -----------------------------------------------------
Net income                                                                                                                                             $     31,512                                            $     26,824                                              17.5                                                                  $    118,370                                                                $    270,527                                              (56.2 )
                                                                                                                                    ==================== ========== ====================                       ==================== ========== ====================                                                                                               ==================== ========== ====================                                           ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Common dividends                                                                                                                                       $      6,539                                            $      5,927                                              10.3                                                                  $     24,464                                                                $     22,422                                                9.1
                                                                                                                                    ==================== ========== ====================                       ==================== ========== ====================                                                                                               ==================== ========== ====================                                           ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Per common share:
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Basic:
     Income from continuing operations                                                                                                                 $       0.60                                                               $       0.49                                                                 22.4                                                                  $       2.20                                                                                   $       1.34                                                                  64.2
     (Loss) income from discontinued operations, net of income taxes                                                                       (0.03 )                                                  0.01                                                NM                                                      (0.04 )                                                                      3.68                                                 NM
                                                                                                                                    -------------------- ---------- --------------------                       -------------------- ---------- --------------------                                                                                               -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
     Net income                                                                                                                                        $       0.57                                            $       0.50                                              14.0                                                                  $       2.16                                                                $       5.02                                              (57.0 )
                                                                                                                                    ==================== ========== ====================                       ==================== ========== ====================                                                                                               ==================== ========== ====================                                           ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Diluted:
     Income from continuing operations                                                                                                                 $       0.60                                                               $       0.47                                                                 27.7                                                                  $       2.16                                                                                   $       1.31                                                                  64.9
     (Loss) income from discontinued operations, net of income taxes                                                                       (0.03 )                                                  0.01                                                NM                                                      (0.04 )                                                                      3.61                                                 NM
                                                                                                                                    -------------------- ---------- --------------------                       -------------------- ---------- --------------------                                                                                               -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
     Net income                                                                                                                                        $       0.57                                            $       0.48                                              18.8                                                                  $       2.12                                                                $       4.92                                              (56.9 )
                                                                                                                                    ==================== ========== ====================                       ==================== ========== ====================                                                                                               ==================== ========== ====================                                           ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Dividends                                                                                                                                                      0.12                                                                       0.11                                                                  9.1                                                                          0.45                                                                                           0.42                                                                   7.1
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Weighted average common shares outstanding:
     Basic                                                                                                                                               54,896,444                                                                 53,983,034                                                                  1.7                                                                    54,791,030                                                                                     53,860,308                                                                   1.7
     Diluted                                                                                                                                             55,485,643                                                                 55,332,376                                                                  0.3                                                                    55,723,267                                                                                     54,973,344                                                                   1.4
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
NM - Not Meaningful
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                     BARNES GROUP INC.
                                                                                                                                                                                                                                     OPERATIONS BY REPORTABLE BUSINESS
                                                                                                                                                                                                                                     SEGMENT
                                                                                                                                                                                                                                     (Dollars in thousands)
                                                                                                                                                                                                                                     (Unaudited)
                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                     Three months ended December 31,                                                                                                                                                                                         Twelve months ended December 31,
                                                                                                                                                      ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                          -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                          2014                             2013                                                           %                                           2014                               2013                                                            %
                                                                                                                                                                                                                                                                                                                                   Change                                                                                                                                                                                                                     Change
                                                                                                                                                      -------------------- ------- --------------------                      -------------------- ------- --------------------                                           ------------------------                            -------------------- --------- --------------------                      -------------------- --------- --------------------                                           ------------------------
Net sales
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
     Industrial                                                                                                                                                          $ 198,165                                                              $ 183,739                                                                   7.9                                              $   822,051                                                              $   687,550                                                                  19.6
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
     Aerospace                                                                                                                                                             112,009                                                                107,399                                                                   4.3                                                  439,959                                                                  404,021                                                                   8.9
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
     Intersegment sales                                                                                                                                      (1 )                                                (2 )                                                                50.0                                    (4 )                                                  (5 )                                                                20.0
                                                                                                                                                      -------------------- ------- --------------------                      -------------------- ------- --------------------                                                                                               -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Total net sales                                                                                                                                                          $ 310,173                                           $ 291,136                                                6.5                                              $ 1,262,006                                           $ 1,091,566                                               15.6
                                                                                                                                                      ==================== ======= ====================                      ==================== ======= ====================                                                                                               ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Operating profit
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
     Industrial                                                                                                                                                          $  27,015                                                              $  15,483                                                                  74.5                                              $   108,360                                                              $    71,888                                                                  50.7
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
     Aerospace                                                                                                                                           21,568                           18,583                                               16.1                                71,614                             51,313                                               39.6
                                                                                                                                                      -------------------- ------- --------------------                      -------------------- ------- --------------------                                                                                               -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Total operating profit                                                                                                                                                   $  48,583                                           $  34,066                                               42.6                                              $   179,974                                           $   123,201                                               46.1
                                                                                                                                                      ==================== ======= ====================                      ==================== ======= ====================                                                                                               ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Operating margin                                                                                                                                                                                                                                                                                                                   Change                                                                                                                                                                                                                     Change
                                                                                                                                                                                                                                                                                                                         --------------------------                                                                                                                                                                                                 --------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
     Industrial                                                                                                                                                               13.6 %                                                                  8.4 %                                                                 520 bps.                                                13.2 %                                                                   10.5 %                                                                 270                 bps.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
     Aerospace                                                                                                                                             19.3 %                                              17.3 %                                                                 200 bps.                             16.3 %                                                12.7 %                                                                 360                 bps.
                                                                                                                                                      -------------------- ------- --------------------                      -------------------- ------- --------------------                                                                                               -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Total operating margin                                                                                                                                                        15.7 %                                                                 11.7 %                                                                 400 bps.                                                14.3 %                                                                   11.3 %                                                                 300                 bps.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                             BARNES GROUP INC.
                                                                                                                                                                        CONSOLIDATED BALANCE SHEETS
                                                                                                                                                                                 (Dollars
                                                                                                                                                                               in thousands)
                                                                                                                                                                                (Unaudited)
                                                                                            
                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                 December 31,                                                                   December 31,
                                                                                                                                                                                                                                                                     2014                                                                           2013
                                                                                                                                                                                                                                                        -----------------------------                                            ----------------------------------------
Assets
Current assets
  Cash and cash equivalents                                                                                                                                                                                                                             $                       46,039                                           $                                  70,856
  Accounts receivable                                                                                                                                                                                                                                                          275,890                                                                             258,664
  Inventories                                                                                                                                                                                                                                                                  212,044                                                                             211,246
  Deferred income taxes                                                                                                                                                                                                                                                         31,849                                                                              18,226
  Prepaid expenses and other current assets                                                                                                                                                                                                                  22,574                                                           18,204
                                                                                                                                                                                                                                                        -------------------- ---------                                           -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                  
     Total current assets                                                                                                                                                                                                                                                      588,396                                                                             577,196
                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                  
Deferred income taxes                                                                                                                                                                                                                                                           10,061                                                                               2,314
Property, plant and equipment, net                                                                                                                                                                                                                                             299,435                                                                             302,558
Goodwill                                                                                                                                                                                                                                                                       594,949                                                                             649,697
Other intangible assets, net                                                                                                                                                                                                                                                   554,694                                                                             534,293
Other assets                                                                                                                                                                                                                                                 26,350                                                           57,615
                                                                                                                                                                                                                                                        -------------------- ---------                                           -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                  
Total assets                                                                                                                                                                                                                                            $                    2,073,885                                           $                               2,123,673
                                                                                                                                                                                                                                                        ==================== =========                                           ==================== ====================
                                                                                                                                                                                                                                                                                                                                  
Liabilities and Stockholders’ Equity
Current liabilities
  Notes and overdrafts payable                                                                                                                                                                                                                          $                        8,028                                           $                                   1,074
  Accounts payable                                                                                                                                                                                                                                                              94,803                                                                              88,721
  Accrued liabilities                                                                                                                                                                                                                                                          161,397                                                                             154,514
  Long-term debt - current                                                                                                                                                                                                                                      862                                                           56,009
                                                                                                                                                                                                                                                        -------------------- ---------                                           -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                  
     Total current liabilities                                                                                                                                                                                                                                                 265,090                                                                             300,318
                                                                                                                                                                                                                                                                                                                                  
Long-term debt                                                                                                                                                                                                                                                                 495,844                                                                             490,341
Accrued retirement benefits                                                                                                                                                                                                                                                    115,057                                                                              80,884
Deferred income taxes                                                                                                                                                                                                                                                           70,147                                                                              94,506
Other liabilities                                                                                                                                                                                                                                                               15,954                                                                              16,210
                                                                                                                                                                                                                                                                                                                                  
Total stockholders’ equity                                                                                                                                                                                                                                1,111,793                                                        1,141,414
                                                                                                                                                                                                                                                        -------------------- ---------                                           -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                  
Total liabilities and stockholders’ equity                                                                                                                                                                                                              $                    2,073,885                                           $                               2,123,673
                                                                                                                                                                                                                                                        ==================== =========                                           ==================== ====================
                                                                                                                                                                                                                                                                                                                                                       
                                                                                                                                             BARNES GROUP INC.
                                                                                                                                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                                                          (Dollars in thousands)
                                                                                                                                                (Unaudited)
                                                                                                                                     
                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                             Twelve months ended December 31,
                                                                                                                                                                                ---------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                    2014                              2013    
                                                                                                                                                                                -------------------- -------- --------------------                      -------------------- -------- --------------------
Operating activities:
Net income                                                                                                                                                                      $                     118,370                                           $                     270,527
Adjustments to reconcile net income to net cash provided by
operating activities:
  Depreciation and amortization                                                                                                                                                                        81,395                                                                  65,052
  Amortization of convertible debt discount                                                                                                                                                               731                                                                   2,391
  Loss (gain) on disposition of property, plant and equipment                                                                                                                                             143                                                                    (887 )
  Stock compensation expense                                                                                                                                                                            7,603                                                                  18,128
  Withholding taxes paid on stock issuances                                                                                                                                                            (4,367 )                                                                (2,090 )
                                                                                                                                                                                                        1,586                                                                (313,708 )
  Loss (gain) on the sale of businesses
  Changes in assets and liabilities, net of the effects of
  acquisitions/divestitures:
    Accounts receivable                                                                                                                                                                               (21,367 )                                                               (23,764 )
    Inventories                                                                                                                                                                                       (10,092 )                                                                 2,079
    Prepaid expenses and other current assets                                                                                                                                                          (7,137 )                                                                (2,172 )
    Accounts payable                                                                                                                                                                                    8,123                                                                   2,384
    Accrued liabilities                                                                                                                                                                                24,402                                                                  (9,891 )
    Deferred income taxes                                                                                                                                                                              (9,841 )                                                                 3,412
    Long-term retirement benefits                                                                                                                                                                      (7,584 )                                                                  (642 )
  Other                                                                                                                                                                              4,933                              (729 )
                                                                                                                                                                                -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                                                                                                                                                                                                         
Net cash provided by operating activities                                                                                                                                                             186,898                                                                  10,090
                                                                                                                                                                                                                                                         
Investing activities:
Proceeds from disposition of property, plant and equipment                                                                                                                                                849                                                                   1,767
(Payments for) proceeds from the sale of businesses                                                                                                                                                    (1,181 )                                                               538,942
Change in restricted cash                                                                                                                                                                               4,886                                                                    -
Capital expenditures                                                                                                                                                                                  (57,365 )                                                               (57,304 )
Business acquisitions, net of cash acquired                                                                                                                                                              -                                                                   (307,264 )
Component Repair Program payments                                                                                                                                                                     (70,100 )                                                               (16,639 )
Other                                                                                                                                                                               (1,338 )                                             (2,058 )
                                                                                                                                                                                -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                                                                                                                                                                                                         
Net cash (used) provided by investing activities                                                                                                                                                     (124,249 )                                                               157,444
                                                                                                                                                                                                                                                         
Financing activities:
Net change in other borrowings                                                                                                                                                                          7,009                                                                  (2,753 )
Payments on long-term debt                                                                                                                                                                           (332,336 )                                                              (555,195 )
Proceeds from the issuance of long-term debt                                                                                                                                                          293,291                                                                 450,253
Payment of assumed liability to Otto Manner Holding AG                                                                                                                                (19,796 )                                                                  -
Premium paid on convertible debt redemption                                                                                                                                                           (14,868 )                                                                  -
Proceeds from the issuance of common stock                                                                                                                                                             11,460                                                                  13,491
Common stock repurchases                                                                                                                                                                               (8,389 )                                                               (68,608 )
Dividends paid                                                                                                                                                                                        (24,464 )                                                               (22,422 )
Excess tax benefit on stock awards                                                                                                                                                                      4,888                                                                   3,899
Other                                                                                                                                                                                 (338 )                                             (1,472 )
                                                                                                                                                                                -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                                                                                                                                                                                                         
Net cash used by financing activities                                                                                                                                                                 (83,543 )                                                              (182,807 )
                                                                                                                                                                                                                                                         
Effect of exchange rate changes on cash flows                                                                                                                                       (3,923 )                                               (227 )
                                                                                                                                                                                -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                                                                                                                                                                                                         
Decrease in cash and cash equivalents                                                                                                                                                                 (24,817 )                                                               (15,500 )
                                                                                                                                                                                                                                                         
Cash and cash equivalents at beginning of year                                                                                                                                      70,856                            86,356  
                                                                                                                                                                                -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                                                                                                                                                                                                         
Cash and cash equivalents at end of year                                                                                                                                        $                      46,039                        $                      70,856  
                                                                                                                                                                                ==================== ======== ====================                      ==================== ======== ====================
                                                                                                                                                                                                                                                                                       
                                                                                                                                                                BARNES GROUP INC.
                                                                                                                                                           RECONCILIATION OF NET CASH
                                                                                                                                                       PROVIDED BY OPERATING ACTIVITIES TO
                                                                                                                                                                 FREE CASH FLOW
                                                                                                                                                                    (Dollars
                                                                                                                                                                  in thousands)
                                                                                                                                                                   (Unaudited)
                                                                                                                                     
                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                    Twelve months ended December 31,
                                                                                                                                                                                                                       --------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                           2014                             2013    
                                                                                                                                                                                                                       -------------------- ------- --------------------                      -------------------- -------- --------------------
Free cash flow:
                                                                                                                                                                                                                                                                                               
Net cash provided by operating activities                                                                                                                                                                              $                    186,898                                           $                      10,090
Capital expenditures                                                                                                                                                                                                     (57,365 )                                            (57,304 )
                                                                                                                                                                                                                       -------------------- ------- --------------------                      -------------------- -------- --------------------
                                                                                                                                                                                                                                                                                               
Free cash flow(1)                                                                                                                                                                                                      $                    129,533                        $                     (47,214 )
                                                                                                                                                                                                                       ==================== ======= ====================                      ==================== ======== ====================
                                                                                                                                                                                                                                                                                               
Free cash flow to net income cash conversion ratio (as adjusted):
                                                                                                                                                                                                                                                                                               
Free cash flow (from above)                                                                                                                                                                                            $                    129,533                                           $                     (47,214 )
Income tax (reduction) payments related to the gain on the sale of                                                                                                                                                       (12,608 )                                            130,004  
BDNA
                                                                                                                                                                                                                       -------------------- ------- --------------------                      -------------------- -------- --------------------
Free cash flow (as adjusted)(2)                                                                                                                                                                                                             116,925                                                                  82,790
                                                                                                                                                                                                                                                                                               
Net income                                                                                                                                                                                                                                  118,370                                                                 270,527
Gain on the sale of BDNA, net of income taxes                                                                                                                                                                                  -                          (195,317 )
                                                                                                                                                                                                                       -------------------- ------- --------------------                      -------------------- -------- --------------------
Net income (as adjusted)(2)                                                                                                                                                                                            $                    118,370                        $                      75,210  
                                                                                                                                                                                                                       ==================== ======= ====================                      ==================== ======== ====================
                                                                                                                                                                                                                                                                                               
Free cash flow to net income cash conversion ratio (as adjusted)(2)                                                                                                                                                                              99 %                                                                   110 %
                                                                                                                                                                                                                                                                                                                             

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 and the utilization of the related year-end 2013 income tax receivable to offset 2014 payments 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,
                                                                                       ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                                               -------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          2014                            2013                                                                                              % Change                                                                                               2014                           2013                                          % Change
                                                                                       -------------------- ------ --------------------                      -------------------- ------ --------------------                                                                ---------------------------------------------------------------                                                               -------------------- -------                      -------------------- ------- --------------------                      ------------------------------------------
SEGMENT RESULTS
-----------------------------------------------------------------
Operating Profit - Industrial Segment (GAAP)                                                              $ 27,015                                                              $ 15,483                                                                                                                            74.5                                                                                   $ 108,360                                         $  71,888                                                             50.7
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Manner short-term purchase accounting adjustments                                              792                                                                 5,456                                                                                                                                                                                                                                          8,504                                             5,456
Manner acquisition transaction costs                                                             -                                                                 1,823                                                                                                                                                                                                                                              -                                             1,823
Restructuring charges                                                                                          467                                                                     -                                                                                                                                                                                                                                          6,020                                                 -
CEO transition costs                                                                          -                               -                                                                                                                                                                                                        -                          6,589  
                                                                                       -------------------- ------ --------------------                      -------------------- ------ --------------------                                                                                                                                                                                              -------------------- -------                      -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Operating Profit - Industrial Segment as adjusted (Non-GAAP) (1)                                          $ 28,274                                           $ 22,762                                                                                                         24.2                                                                                   $ 122,884                                         $  85,756                                          43.3
                                                                                       ==================== ====== ====================                      ==================== ====== ====================                                                                                                                                                                                              ==================== =======                      ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Operating Margin - Industrial Segment (GAAP)                                                                  13.6 %                                                                 8.4 %                                                                                                                   520                              bps.                                                              13.2 %                                            10.5 %                                                    270         bps.
Operating Margin - Industrial Segment as adjusted (Non-GAAP) (1)                                              14.3 %                                                                12.4 %                                                                                                                   190                              bps.                                                              14.9 %                                            12.5 %                                                    240         bps.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Operating Profit - Aerospace Segment (GAAP)                                                               $ 21,568                                                              $ 18,583                                                                                                                    16.1                                                                                           $  71,614                                         $  51,313                                                     39.6
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
CEO transition costs                                                                          -                               -                                                                                                                                                                                                        -                          3,903  
                                                                                       -------------------- ------ --------------------                      -------------------- ------ --------------------                                                                                                                                                                                              -------------------- -------                      -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Operating Profit - Aerospace Segment as adjusted (Non-GAAP) (1)                                           $ 21,568                                           $ 18,583                                                                                                 16.1                                                                                           $  71,614                                         $  55,216                                  29.7
                                                                                       ==================== ====== ====================                      ==================== ====== ====================                                                                                                                                                                                              ==================== =======                      ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Operating Margin - Aerospace Segment (GAAP)                                                                   19.3 %                                                                17.3 %                                                                                                                   200                              bps.                                                              16.3 %                                            12.7 %                                                    360         bps.
Operating Margin - Aerospace Segment as adjusted (Non-GAAP) (1)         19.3 %                          17.3 %                                       200           bps.                        16.3 %                         13.7 %                                 260         bps.
----------------------------------------------------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
CONSOLIDATED RESULTS
-----------------------------------------------------------------
Operating Income (GAAP)                                                                                   $ 48,583                                                              $ 34,066                                                                                                                    42.6                                                                                           $ 179,974                                         $ 123,201                                                     46.1
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Manner short-term purchase accounting adjustments                                              792                                                                 5,456                                                                                                                                                                                                                                          8,504                                             5,456
Manner acquisition transaction costs                                                             -                                                                 1,823                                                                                                                                                                                                                                              -                                             1,823
Restructuring charges                                                                                          467                                                                     -                                                                                                                                                                                                                                          6,020                                                 -
CEO transition costs                                                                          -                               -                                                                                                                                                                                                        -                         10,492  
                                                                                       -------------------- ------ --------------------                      -------------------- ------ --------------------                                                                                                                                                                                              -------------------- -------                      -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Operating Income as adjusted (Non-GAAP) (1)                                                               $ 49,842                                           $ 41,345                                                                                                 20.6                                                                                           $ 194,498                                         $ 140,972                                  38.0
                                                                                       ==================== ====== ====================                      ==================== ====== ====================                                                                                                                                                                                              ==================== =======                      ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Operating Margin (GAAP)                                                                                       15.7 %                                                                11.7 %                                                                                                                   400                              bps.                                                              14.3 %                                            11.3 %                                                    300         bps.
Operating Margin as adjusted (Non-GAAP) (1)                             16.1 %                          14.2 %                                       190           bps.                        15.4 %                         12.9 %                                 250         bps.
----------------------------------------------------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Diluted Income from Continuing Operations per Share (GAAP)                                                $   0.60                                                              $   0.47                                                                                                                    27.7                                                                                           $    2.16                                         $    1.31                                                     64.9
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Manner short-term purchase accounting adjustments                                             0.01                                                                  0.07                                                                                                                                                                                                                                           0.11                                              0.07
Manner acquisition transaction costs                                                             -                                                                  0.03                                                                                                                                                                                                                                              -                                              0.03
Restructuring charges                                                                                         0.01                                                                     -                                                                                                                                                                                                                                           0.07                                                 -
CEO transition costs                                                                                             -                                                                     -                                                                                                                                                                                                                                              -                                              0.12
April 2013 tax court decision                                                                 -                               -                                                                                                                                                                                                        -                           0.30  
                                                                                       -------------------- ------ --------------------                      -------------------- ------ --------------------                                                                                                                                                                                              -------------------- -------                      -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Diluted Income from Continuing Operations per Share as adjusted                                           $   0.62                                           $   0.57                                                                                                  8.8                                                                                           $    2.34                                         $    1.83                                  27.9
(Non-GAAP) (1)
                                                                                       -------------------- ------ --------------------                      -------------------- ------ --------------------                                                                                                                                                                                              -------------------- -------                      -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                         
----------------------------------------------------------------- -------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------------------------------------------------- -------------------- -------------------- -------------------- ------------------------------------------------------------------------------------------------------------------------ -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                          Full-Year 2015 Outlook
                                                                                                                                                                                                                                                                             --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Diluted Income from Continuing Operations per Share (GAAP)                                                                                                                                                                                                                   $                              2.40                                       to                               $                       2.55
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Manner short-term purchase accounting adjustments                                                                                                                                                                                                                                               0.02            
                                                                                                                                                                                                                                                                             ----------------------------------------  -------------------- -------------------- -------------------- -------------------- -----------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Diluted Income from Continuing Operations per Share as adjusted                                                                                                                                                                        $                              2.42                    to            $                       2.57                                         
(Non-GAAP) (1)
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------          -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -----------------------------------------------   -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Notes:

(1) The Company has excluded the following from its "as adjusted" financial measurements: 1) short-term purchase accounting adjustments related to its Manner acquisition in 2014, 2) restructuring charges related to the closure of production operations at the Company’s Associated Spring facility located in Saline, Michigan in 2014, 3) short-term purchase accounting adjustments and transaction costs related to its Manner acquisition in 2013, 4) CEO transition costs associated with the modification of outstanding equity awards in 2013 and 5) the tax charge associated with the April 2013 tax court decision 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.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20150220005028r1&sid=cmtx6&distro=nx&lang=en

SOURCE: Barnes Group Inc.

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


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