BARNES GROUP INC, 10-Q filed on 10/29/2012
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2012
Oct. 24, 2012
Document and Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Sep. 30, 2012 
 
Document Fiscal Year Focus
2012 
 
Document Fiscal Period Focus
Q3 
 
Entity Registrant Name
BARNES GROUP INC 
 
Entity Central Index Key
0000009984 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
54,113,235 
Consolidated Statements of Income (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Income Statement [Abstract]
 
 
 
 
Net sales
$ 306,059 
$ 298,643 
$ 902,577 
$ 886,069 
Cost of sales
208,571 
198,776 
603,440 
584,251 
Selling and administrative expenses
67,817 
65,679 
202,327 
203,140 
Total operating costs and expenses
276,388 
264,455 
805,767 
787,391 
Operating income
29,671 
34,188 
96,810 
98,678 
Interest expense
3,243 
1,902 
8,046 
7,906 
Other expense (income), net
851 
(501)
1,799 
228 
Income from continuing operations before income taxes
25,577 
32,787 
86,965 
90,544 
Income taxes
4,847 
7,896 
18,463 
22,730 
Income from continuing operations
20,730 
24,891 
68,502 
67,814 
Loss from discontinued operations, net of income taxes
(2,249)
(1,646)
(2,983)
(3,165)
Net income
$ 18,481 
$ 23,245 
$ 65,519 
$ 64,649 
Basic:
 
 
 
 
Income from continuing operations
$ 0.38 
$ 0.45 
$ 1.25 
$ 1.23 
Loss from discontinued operations, net of income taxes
$ (0.04)
$ (0.03)
$ (0.05)
$ (0.06)
Net income
$ 0.34 
$ 0.42 
$ 1.20 
$ 1.17 
Diluted:
 
 
 
 
Income from continuing operations
$ 0.38 
$ 0.44 
$ 1.24 
$ 1.21 
Loss from discontinued operations, net of income taxes
$ (0.04)
$ (0.03)
$ (0.05)
$ (0.06)
Net income
$ 0.34 
$ 0.41 
$ 1.19 
$ 1.15 
Dividends
$ 0.10 
$ 0.08 
$ 0.30 
$ 0.24 
Weighted average common shares outstanding: [Abstract]
 
 
 
 
Basic
54,508,387 
55,834,038 
54,618,636 
55,325,541 
Diluted
55,098,263 
56,380,585 
55,234,478 
56,095,069 
Consolidated Statements of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Consolidated Statements of Comprehensive Income [Abstract]
 
 
 
 
Net income
$ 18,481 
$ 23,245 
$ 65,519 
$ 64,649 
Other comprehensive income (loss), net of tax
 
 
 
 
Unrealized gain (loss) on hedging activities, net of tax (1)
95 1
(19)1
(302)1
31 1
Foreign currency translation adjustments, net of tax (2)
24,567 2
(34,388)2
14,112 2
5,405 2
Defined benefit pension and other postretirement benefits, net of tax (3)
394 3
1,988 3
4,305 3
3,318 3
Total other comprehensive income (loss), net of tax
25,056 
(32,419)
18,115 
8,754 
Total comprehensive income (loss)
$ 43,537 
$ (9,174)
$ 83,634 
$ 73,403 
Consolidated Statements of Comprehensive Income (Parenthetical) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Unrealized gain (loss) on hedging activities, tax
$ (106)
$ (6)
$ (425)
$ 107 
Foreign currency translation adjustment, tax
1,587 
(1,464)
1,095 
(24)
Defined benefit pension and other postretirement benefits, tax
$ 687 
$ 445 
$ 2,848 
$ 1,336 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Assets
 
 
Cash and cash equivalents
$ 87,354 
$ 62,505 
Accounts receivable, less allowances (2012 - $2,846; 2011 - $2,898)
257,091 
200,460 
Inventories
230,197 
216,520 
Deferred income taxes
33,400 
28,829 
Prepaid expenses and other current assets
27,318 
21,680 
Total current assets
635,360 
529,994 
Deferred income taxes
31,544 
47,661 
Property, plant and equipment
633,901 
603,383 
Less accumulated depreciation
(407,262)
(392,599)
Property, plant and equipment, net
226,639 
210,784 
Goodwill
577,503 
366,104 
Other intangible assets, net
389,545 
272,092 
Other assets
18,288 
13,730 
Total assets
1,878,879 
1,440,365 
Liabilities and Stockholders' Equity
 
 
Notes and overdrafts payable
8,085 
12,364 
Accounts payable
107,052 
92,524 
Accrued liabilities
99,159 
92,250 
Long-term debt - current
540 
540 
Total current liabilities
214,836 
197,678 
Long-term debt
678,050 
333,148 
Accrued retirement benefits
129,989 
152,696 
Deferred income taxes
54,107 
20,662 
Other liabilities
19,568 
13,781 
Commitments and contingencies (Note 13)
   
   
Stockholders' Equity
 
 
Common stock - par value $0.01 per share Authorized: 150,000,000 shares Issued: at par value (2012 - 59,096,577 shares; 2011 - 58,593,802 shares)
591 
586 
Additional paid in capital
329,170 
316,251 
Treasury stock, at cost (2012 - 4,998,447 shares; 2011 - 4,254,350 shares)
(99,729)
(79,569)
Retained earnings
609,236 
560,186 
Accumulated other non-owner changes to equity
(56,939)
(75,054)
Total stockholders' equity
782,329 
722,400 
Total liabilities and stockholders' equity
$ 1,878,879 
$ 1,440,365 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Allowance for doubtful accounts
$ 2,846 
$ 2,898 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
150,000,000 
150,000,000 
Common stock, shares issued
59,096,577 
58,593,802 
Treasury stock, at cost
4,998,447 
4,254,350 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Operating Activities:
 
 
Net income
$ 65,519 
$ 64,649 
Adjustments to reconcile net income to net cash from operating activites:
 
 
Depreciation and amortization
40,190 
43,855 
Amortization of convertible debt discount
1,641 
1,633 
Gain on disposition of property, plant and equipment
(214)
(400)
Stock compensation expense
6,564 
5,866 
Withholding taxes paid on stock issuances
(1,123)
(1,089)
Loss on the sale of businesses
749 
Changes in assets and liabilities, net of the effects of acquisitions:
 
 
Accounts receivable
(12,317)
(27,462)
Inventories
981 
(11,385)
Prepaid expenses and other current assets
(5,683)
(1,457)
Accounts payable
2,756 
4,867 
Accrued liabilities
(4,256)
14,119 
Deferred income taxes
1,470 
632 
Long-term retirement benefits
(17,967)
(15,448)
Other
(1,009)
95 
Net cash provided by operating activities
77,301 
78,475 
Investing activities:
 
 
Proceeds from disposition of property, plant and equipment
556 
3,352 
Payments related to the sale of businesses, net
(339)
Change in restricted cash
4,900 
Capital expenditures
(22,923)
(25,169)
Business acquisitions, net of cash acquired
(296,717)
(3,495)
Other
(3,013)
(3,424)
Net cash used by investing activities
(317,536)
(28,736)
Financing activities:
 
 
Net change in other borrowings
(4,558)
3,023 
Payments on long-term debt
(78,065)
(354,167)
Proceeds from the issuance of long-term debt
376,000 
339,290 
Premium paid on convertible debt redemption
(9,803)
Proceeds from the issuance of common stock
5,630 
26,829 
Common stock repurchases
(19,037)
(22,369)
Dividends paid
(16,245)
(13,197)
Excess tax benefit on stock awards
1,659 
8,607 
Other
(1,184)
(2,098)
Net cash provided (used) by financing activities
264,200 
(23,885)
Effect of exchange rate changes on cash flows
884 
(461)
Increase in cash and cash equivalents
24,849 
25,393 
Cash and cash equivalents at beginning of period
62,505 
13,450 
Cash and cash equivalents at end of period
87,354 
38,843 
Debt assumed in connection with acqusition
$ 45,537 
 
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

The accompanying unaudited consolidated balance sheet and the related unaudited consolidated statements of income, comprehensive income and cash flows have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The consolidated financial statements do not include all information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. The balance sheet as of December 31, 2011 has been derived from the 2011 financial statements of Barnes Group Inc. (the “Company”). For additional information, please refer to the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011. In the opinion of management, all adjustments, including normal recurring accruals considered necessary for a fair presentation, have been included. Operating results for the three- and nine-month periods ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

In the first quarter of 2012, the Company changed its organizational structure to align its strategic business units into three reportable business segments: Aerospace, Industrial and Distribution. See Note 12 for a description of the three reportable segments.

Additionally, in the fourth quarter of 2011, the Company completed the sale of its Barnes Distribution Europe businesses (the "BDE business"). The BDE business was comprised of the Company's European KENT, Toolcom and BD France distribution businesses that were reported within the segment formerly referred to as Logistics and Manufacturing Services.

All previously reported financial information has been adjusted on a retrospective basis to reflect the segment realignment and the discontinued operations for all periods.
Discontinued Operations
Discontinued Operations
Discontinued Operations
 
On December 30, 2011, the Company sold substantially all of the assets of its BDE business to Berner SE (the "Purchaser") in a cash transaction pursuant to the terms of a Share and Asset Purchase Agreement ("SPA") among the Company, the Purchaser, and their respective relevant subsidiaries dated November 17, 2011. The Company received gross proceeds of $33,358, which represents the initial stated purchase price, and yielded net cash proceeds of $22,492 after consideration of cash sold, transaction costs paid and closing adjustments. The final amount of proceeds from the sale of the BDE business was subject to post-closing adjustments that were reflected in discontinued operations in periods subsequent to the disposition. The loss on the transaction for the period ended September 30, 2012 includes certain additional transaction costs and post closing adjustments.

As required by the terms of the SPA, the Company was required to place €9,000 of the proceeds in escrow to be used for any settlement of general representation and warranty claims. Absent a breach of warranty claim, the funds would be released from escrow on August 31, 2012 unless there were any then pending claims. Cash related to a pending claim would remain in escrow until a final determination of the claim had been made.

On August 17, 2012, the Purchaser provided a notice of breach of various warranties to the Company. The Company rejected the Purchaser's notice and demanded release of the full escrow effective August 31, 2012. The Purchaser refused to release the full escrow, and only €3,900 ($4,900) plus interest was released whereas €5,100 ($6,586 at September 30, 2012) plus interest remains in escrow. The Company objected to the retention of the escrow and expects to prevail in this matter. The Company has recorded the restricted cash in prepaid expenses and other current assets at September 30, 2012 and December 31, 2011.

The following amounts related to the BDE business were derived from historical financial information. The amounts have been segregated from continuing operations and reported as discontinued operations within the consolidated financial statements:

 
Three months ended September 30,
 
Nine months ended September 30,
 
2012
 
2011
 
2012
 
2011
Net sales
$

 
$
26,751

 
$

 
$
86,028

Loss before income taxes
(2,234
)
 
(191
)
 
(2,234
)
 
(742
)
Income tax expense

 
(744
)
 

 
(1,048
)
Loss from operations of discontinued businesses, net of income taxes
(2,234
)
 
(935
)
 
(2,234
)
 
(1,790
)
Loss on transaction
(21
)
 
(1,145
)
 
(788
)
 
(2,215
)
Income tax benefit on loss on sale
6

 
434

 
39

 
840

Loss on the sale of businesses
(15
)
 
(711
)
 
(749
)
 
(1,375
)
Loss from discontinued operations, net of income taxes
$
(2,249
)
 
$
(1,646
)
 
$
(2,983
)
 
$
(3,165
)


The loss from operations of discontinued businesses is primarily due to adjustments to retained liabilities.
Acquisition
Acquisition
Acquisition

On August 27, 2012, the Company completed the acquisition of Synventive Molding Solutions (“Synventive”) by acquiring all of the issued and outstanding shares of capital stock of Synventive Acquisition Inc., a Delaware corporation. Synventive is a leading designer and manufacturer of highly engineered and customized hot runner systems and components which serve as the enabling technology for many complex injection molding applications and are standard in industries that require premium product aesthetics and performance. This business, which is being integrated into our Industrial segment, enhances the Company's core manufacturing capabilities, adds innovative products and services and is expected to expand the Company's global marketplace presence. The Company acquired Synventive for an aggregate purchase price of $351,620, consisting of $306,083 in cash (including cash acquired of $9,366) and the assumption of $45,537 of debt. Immediately following the completion of the acquisition, the Company paid $45,156 of the assumed debt, primarily using cash on hand. The remaining purchase price was financed primarily with borrowings under the Company's revolving credit facility.
During the nine months ended September 30, 2012, the Company incurred $2,409 of acquisition-related costs. These costs include due diligence costs and transaction costs to complete the acquisition. These costs have been recognized in the Company's Consolidated Statement of Income as selling and administrative expenses.
The operating results of Synventive have been included in the Consolidated Statements of Income since the date of acquisition. The Company reported $15,830 in net sales and an operating loss of $2,896 from Synventive, included within the Industrial segment's operating profit, inclusive of $5,117 of short-term purchase accounting adjustments, for the period from the acquisition date through September 30, 2012.













The following table summarizes the fair values of the assets acquired, net of cash acquired, and liabilities assumed at the date of the acquisition:
 
 
Accounts Receivable
$
42,724

Inventory
13,546

Other current assets
3,988

Property, plant and equipment
16,481

Other noncurrent assets
2,841

Intangible assets (Note 6)
126,600

Goodwill (Note 6)
203,988

        Total assets acquired
410,168

 
 
Current liabilities
(22,768
)
Other liabilities
(4,361
)
Deferred taxes
(40,785
)
Debt assumed
(45,537
)
        Total liabilities assumed
(113,451
)
        Net assets acquired
$
296,717

 
 

The final purchase price allocation is subject to post-closing adjustments pursuant to the terms of the Stock Purchase Agreement with Synventive.
The following table reflects the unaudited pro forma operating results of the Company for the three and nine months ended September 30, 2012 and 2011, which give effect to the acquisition of Synventive as if it had occurred on January 1, 2011. The pro forma results are based on assumptions that the Company believes are reasonable under the circumstances. The pro forma results are not necessarily indicative of the operating results that would have occurred had the acquisition been effective January 1, 2011, nor are they intended to be indicative of results that may occur in the future. The underlying pro forma information includes the historical financial results of the Company and Synventive adjusted for certain items including depreciation and amortization expense associated with the assets acquired and the Company’s expense related to financing arrangements, with the related tax effects. The pro forma information does not include the effects of any synergies or cost reduction initiatives related to the acquisition.
 
(Unaudited Pro Forma)
Three months ended September 30,
 
(Unaudited Pro Forma)
Nine months ended September 30,
 
2012
2011
 
2012
2011
Net sales
328,880

337,796

 
1,004,098

994,098

Income from continuing operations
24,164

25,522

 
75,171

55,734

Net income
21,915

23,876

 
72,188

52,569

 
 
 
 
 
 
Per common share:
 
 
 
 
 
Basic:
 
 
 
 
 
     Income from continuing operations
$
0.44

$
0.46

 
$
1.38

$
1.01

     Net income
$
0.40

$
0.43

 
$
1.32

$
0.95

Diluted:
 
 
 
 
 
     Income from continuing operations
$
0.44

$
0.45

 
$
1.36

$
0.99

     Net income
$
0.40

$
0.42

 
$
1.31

$
0.94


Pro forma earnings during the three and nine month periods ended September 30, 2012 were adjusted to exclude non-recurring items including acquisition-related costs and expense related to the fair value adjustment to inventory and acquired backlog. Pro forma earnings in 2011 were adjusted to include acquisition-related costs of $11,808 ($2,409 incurred by the Company and $9,399 incurred by Synventive at closing) and expense of $3,682 and $1,200 related to the fair value adjustments to inventory and acquired backlog, respectively. In addition, 2011 earnings were adjusted to exclude a gain on debt restructuring and a foreign exchange gain related to debt at Synventive.
Net Income Per Common Share
Net Income Per Common Share
Net Income Per Common Share

For the purpose of computing diluted income from continuing operations and net income per common share, the weighted-average number of common shares outstanding is increased for the potential dilutive effects of stock-based incentive plans and convertible senior subordinated notes. For the purpose of computing diluted income from continuing operations and net income per common share, the weighted-average number of common shares was increased by 589,876 and 546,547 for the three-month periods ended September 30, 2012 and 2011, respectively, and 615,842 and 769,528 for the nine month periods ended September 30, 2012 and 2011, respectively, to account for the potential dilutive effect of stock-based incentive plans. There were no adjustments to income from continuing operations or net income for the purposes of computing income available to common stockholders for those periods.

The calculation of weighted-average diluted shares outstanding excludes all shares that would have been anti-dilutive. During the three month periods ended September 30, 2012 and 2011, the Company excluded 367,428 and 686,016 stock options, respectively, from the calculation of weighted average diluted shares outstanding as the stock options would have been anti-dilutive. During the nine month periods ended September 30, 2012 and 2011, the Company excluded 331,618 and 844,552 stock options, respectively, from the calculation of weighted average diluted shares outstanding as the stock options would have been anti-dilutive.

The Company granted 101,000 stock options, 161,204 restricted stock unit awards and 103,160 performance share awards in February 2012 as part of its annual grant award. All of the stock options and the restricted stock unit awards vest upon meeting certain service conditions. The restricted stock unit awards are included in basic average common shares outstanding as they contain nonforfeitable rights to dividend payments. The performance share awards are part of a long-term Relative Measure program, which is designed to assess the Company's performance relative to the performance of companies included in the Russell 2000 Index over the three-year term of the program ending December 31, 2014. The performance goals are independent of each other and based on three metrics: the Company's total shareholder return ("TSR"), basic earnings per share growth and operating income before depreciation and amortization growth (weighted equally). The participants can earn from zero to 250% of the target award and the award includes a forfeitable right to dividend equivalents, which are not included in the aggregate target award numbers. The fair value of the TSR portion of the performance share awards was determined using a Monte Carlo valuation method as the award contains a market condition.

The 3.375% convertible senior subordinated notes due in March 2027 (the “3.375% Convertible Notes”) are convertible, under certain circumstances, into a combination of cash and common stock of the Company. The conversion price as of September 30, 2012 was approximately $28.31 per share of common stock. The dilutive effect of the notes is determined based on the average closing price of the Company's stock for the last 30 trading days of the quarter as compared to the conversion price of the notes. Under the net share settlement method, there were no potential shares issuable under the notes as the notes would have been anti-dilutive for the three and nine month periods ended September 30, 2012 and 2011.

Effective April 5, 2011, the Company, through the trustee of its 3.75% convertible senior subordinated notes due in August 2025 (the "3.75% Convertible Notes"), exercised its right to redeem the remaining $92,500 principal amount of these notes under their indenture agreement. The Company elected to pay cash to holders of the notes surrendered for conversion, including the value of any residual shares of common stock that were payable to the holders electing to convert their notes into an equivalent share value. Accordingly, the potential shares issuable for the 3.75% Convertible Notes were not included in either basic or diluted weighted average common shares outstanding for the nine month period ended September 30, 2011.
Inventories
Inventories
Inventories

The components of inventories consisted of:
 
September 30, 2012
 
December 31, 2011
Finished goods
$
124,384

 
$
121,984

Work-in-process
60,797

 
60,557

Raw material and supplies
45,016

 
33,979

 
$
230,197

 
$
216,520

Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets

Goodwill:
The following table sets forth the change in the carrying amount of goodwill for each reportable segment and for the Company as of and for the period ended September 30, 2012:
 
Aerospace
 
Industrial
 
Distribution
 
Total Company
January 1, 2012
$
30,786

 
$
192,544

 
$
142,774

 
$
366,104

Goodwill acquired

 
203,988

 

 
203,988

Foreign currency translation

 
7,034

 
377

 
7,411

September 30, 2012
$
30,786

 
$
403,566

 
$
143,151

 
$
577,503



The changes recorded at Industrial include $203,988 of goodwill resulting from the acquisition of Synventive. The amount allocated to Goodwill is reflective of the benefits the Company expects to realize from the entrance into a new business platform, increased global market access and Synventive's assembled workforce. None of the recognized goodwill is expected to be deductible for income tax purposes.
Other Intangible Assets:
Other intangible assets consisted of:
 
 
 
September 30, 2012
 
December 31, 2011
 
Range of
Life -Years
 
Gross Amount
 
Accumulated Amortization
 
Gross Amount
 
Accumulated Amortization
Amortized intangible assets:
 
 
 
 
 
 
 
 
 
Revenue sharing programs (RSPs)
Up to 30
 
$
293,700

 
$
(52,072
)
 
$
293,700

 
$
(46,367
)
Customer lists/relationships
10-15
 
102,806

 
(19,635
)
 
23,506

 
(17,292
)
Patents and technology
7-14
 
41,972

 
(6,283
)
 
6,572

 
(5,211
)
Trademarks/trade names
5-30
 
12,750

 
(7,317
)
 
12,050

 
(6,618
)
Other
Up to 15
 
12,692

 
(5,866
)
 
11,492

 
(4,454
)
 
 
 
463,920

 
(91,173
)
 
347,320

 
(79,942
)
Unamortized intangible asset:
 
 
 
 
 
 
 
 
 
Trade name
 
 
10,000

 

 

 

 
 
 
 
 
 
 
 
 
 
Foreign currency translation
 
 
6,798

 

 
4,714

 

Other intangible assets
 
 
$
480,718

 
$
(91,173
)
 
$
352,034

 
$
(79,942
)


In connection with the acquisition of Synventive in August 2012, the Company recorded intangible assets of $126,600 which includes $79,300 of customer relationships, $35,400 of patents and technology, $10,700 of trade names ($10,000 of which relates to the Synventive trade name and has an indefinite life) and $1,200 of customer backlog. The weighted-average useful lives of the acquired assets were 15 years, 7 years, 10 years and less than one year, respectively.
Estimated amortization of intangible assets for future periods is as follows: 2012 - $20,000 ; 2013 - $27,000; 2014 - $31,000; 2015 - $31,000 and 2016 - $30,000.
Debt
Debt
Debt

The Company's debt agreements contain financial covenants that require the maintenance of interest coverage and leverage ratios. The Company is in compliance with its debt covenants as of September 30, 2012, and closely monitors its future compliance based on current and anticipated future economic conditions.

Long-term debt and notes and overdrafts payable at September 30, 2012 and December 31, 2011 consisted of:
 
 
September 30, 2012
 
December 31, 2011
 
 
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
3.375% Convertible Notes
 
$
55,636

 
$
60,239

 
$
55,636

 
$
59,038

Unamortized debt discount – 3.375% Convertible Notes
 
(3,692
)
 

 
(5,333
)
 

Revolving credit agreement
 
625,400

 
626,534

 
281,900

 
270,288

Borrowings under lines of credit and overdrafts
 
7,675

 
7,675

 
12,364

 
12,364

Foreign bank borrowings
 
1,080

 
1,080

 
1,485

 
1,642

Other
 
576

 
576

 

 

 
 
686,675

 
696,104

 
346,052

 
343,332

Less current maturities
 
(8,625
)
 
 
 
(12,904
)
 
 
Long-term debt
 
$
678,050

 
 
 
$
333,148

 
 


The 3.375% Convertible Notes are subject to redemption at their par value at any time, at the option of the Company, on or after March 20, 2014. The note holders may also require the Company to redeem some or all of the notes at their par value on March 15th of 2014, 2017 and 2022. The 3.375% Convertible Notes are also eligible for conversion upon meeting certain conditions as provided in the indenture agreement. The eligibility for conversion is determined quarterly. During the third quarter of 2012, the 3.375% Convertible Notes were not eligible for conversion. During the fourth quarter of 2012, the 3.375% Convertible Notes will not be eligible for conversion. The notes are valued using quoted market prices that represent Level 2 observable inputs.

The Company maintains an amended and restated revolving credit agreement (the "Credit Agreement") with Bank of America, N.A. as the administrative agent. In July 2012, the Company executed a $250,000 accordion feature that was available under the Company's existing $500,000 Credit Facility, increasing the available amount under the Credit Facility to $750,000. The $750,000 Credit Agreement matures in September 2016. Borrowings under the Credit Agreement bear interest at LIBOR plus a spread ranging from 1.10% to 1.70%. The fair value of the borrowings is based on observable Level 2 inputs. The borrowings are valued using discounted cash flows based upon the Company's estimated interest costs for similar types of borrowings.

In addition, the Company has available approximately $15,000 in uncommitted short-term bank credit lines ("Credit Lines"), of which $7,500 was borrowed at September 30, 2012 at an interest rate of 2.16% and $12,000 was borrowed at December 31, 2011 at an interest rate of 2.17%. The Company had also borrowed $175 and $364 under overdraft facilities at September 30, 2012 and December 31, 2011, respectively. Repayments under the Credit Lines are due within seven days after being borrowed. Repayments of the overdrafts are generally due within two days after being borrowed. The carrying amounts of the Credit Lines and overdrafts approximate fair value due to the short maturities of these financial instruments.

The Company also has foreign bank borrowings. The fair value of the foreign bank borrowings are based on observable Level 2 inputs. These instruments are valued using discounted cash flows based upon the Company's estimated interest costs for similar types of borrowings.

Other debt consists primarily of bank acceptances which are used to pay certain vendors. Bank acceptances represent financial instruments accepted by certain Chinese vendors in lieu of cash paid on receivables, generally range from 3 to 6 months in maturity and are guaranteed by banks. The fair value of the bank acceptances are based on observable Level 2 inputs and their carrying amounts approximate fair value due to their short maturities.
Derivatives
Derivatives
Derivatives

The Company has manufacturing, sales and distribution facilities around the world and thus makes investments and conducts business transactions denominated in various currencies. The Company is also exposed to fluctuations in interest rates and commodity price changes. These financial exposures are monitored and managed by the Company as an integral part of its risk management program.

Financial instruments have been used by the Company to hedge its exposure to fluctuations in interest rates. The Company previously had two, three-year interest rate swap agreements which together converted the interest on the first $100,000 of the Company's one-month LIBOR-based borrowings from a variable rate plus the borrowing spread to a fixed rate of 2.947% plus the borrowing spread. These agreements matured in the first quarter of 2011. In April 2012, the Company entered into five-year interest rate swap agreements transacted with three banks which together convert the interest on the first $100,000 of the Company's one-month LIBOR-based borrowings from a variable rate plus the borrowing spread to a fixed rate of 1.03% plus the borrowing spread. These interest rate swap agreements were accounted for as cash flow hedges.

The Company also uses financial instruments to hedge its exposures to fluctuations in foreign currency exchange rates. The Company has various contracts outstanding which primarily hedge recognized assets or liabilities, and anticipated transactions in various currencies including the British pound sterling, U.S. dollar, Euro, Singapore dollar, Swedish krona and Swiss franc. Certain foreign currency derivative instruments are treated as cash flow hedges of forecasted transactions.  All foreign exchange contracts are due within two years.

The Company does not use derivatives for speculative or trading purposes or to manage commodity exposures.

Changes in the fair market value of derivatives that qualify as fair value hedges or cash flow hedges are recorded directly to earnings or accumulated other non-owner changes to equity, depending on the designation. Amounts recorded to accumulated other non-owner changes to equity are reclassified to earnings in a manner that matches the earnings impact of the hedged transaction. Any ineffective portion, or amounts related to contracts that are not designated as hedges, are recorded directly to earnings.

The following table sets forth the fair value amounts of derivative instruments held by the Company.
 
September 30, 2012
 
December 31, 2011
 
Asset Derivatives
 
Liability Derivatives
 
Asset Derivatives
 
Liability Derivatives
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Interest rate contracts
$

 
$
(2,014
)
 
$

 
$

Foreign exchange contracts
1,563

 

 
276

 

 
 
 
 
 
 
 
 
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Foreign exchange contracts
2,115

 
(53
)
 
28

 
(976
)
Total derivatives
$
3,678

 
$
(2,067
)
 
$
304

 
$
(976
)

Asset derivatives are recorded in prepaid expenses and other current assets in the accompanying consolidated balance sheets. Liability derivatives related to interest rate contracts and foreign exchange contracts are recorded in other liabilities and accrued liabilities, respectively, in the accompanying consolidated balance sheets.

The following table sets forth the gain (loss), net of tax, recorded in accumulated other non-owner changes to equity for the three- and nine-month periods ended September 30, 2012 and 2011 for derivatives held by the Company and designated as hedging instruments.
 
Three months ended September 30,
 
Nine months ended September 30,
 
2012
 
2011
 
2012
 
2011
Cash flow hedges:
 
 
 
 
 
 
 
Interest rate contracts
$
(551
)
 
$

 
$
(1,250
)
 
422

Foreign exchange contracts
646

 
(19
)
 
948

 
(391
)
 
$
95

 
$
(19
)
 
$
(302
)
 
$
31


Amounts included within accumulated other non-owner changes to equity that were reclassified to expense during the first nine months of 2012 related to the interest rate swaps resulted in a fixed rate of interest of 1.03% plus the borrowing spread for the first $100,000 of one-month LIBOR borrowings. Amounts included within accumulated other non-owner changes to equity that were reclassified to income during the first nine months of 2011 related to the interest rate swaps resulted in a fixed rate of interest of 2.947% plus the borrowing spread for the first $100,000 of one-month LIBOR borrowings. The amounts reclassified for the foreign exchange contracts were not material in any period presented. Additionally, there were no amounts recognized in income for hedge ineffectiveness during the three- and nine-month periods ended September 30, 2012 and 2011.

The following table sets forth the gains (losses) recorded in other expense (income), net in the consolidated statements of income for the three- and nine-month periods ended September 30, 2012 and 2011 for non-designated derivatives held by the Company. Such amounts were substantially offset by (losses) gains recorded on the underlying hedged asset or liability.
 
Three months ended September 30,
 
Nine months ended September 30,
 
2012
 
2011
 
2012
 
2011
Foreign exchange contracts
$
2,380

 
$
(3,144
)
 
$
3,305

 
$
(4,055
)
Fair Value Measurements
Fair Value Measurements
Fair Value Measurements

The provisions of the accounting standard for fair value define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard classifies the inputs used to measure fair value into the following hierarchy:

Level 1
Unadjusted quoted prices in active markets for identical assets or liabilities

Level 2
Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability

Level 3
Unobservable inputs for the asset or liability

The following table provides the financial assets and financial liabilities reported at fair value and measured on a recurring basis:
 
 
 
Fair Value Measurements Using
Description
Total
 
Quoted Prices in Active Markets for
Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
September 30, 2012
 
 
 
 
 
 
 
Asset derivatives
$
3,678

 
$

 
$
3,678

 
$

Liability derivatives
(2,067
)
 

 
(2,067
)
 

Bank acceptances
3,343

 

 
3,343

 

Rabbi trust assets
1,816

 
1,816

 

 

 
$
6,770

 
$
1,816

 
$
4,954

 
$

 
 
 
 
 
 
 
 
December 31, 2011
 
 
 
 
 
 
 
Asset derivatives
$
304

 
$

 
$
304

 
$

Liability derivatives
(976
)
 

 
(976
)
 

Rabbi trust assets
1,494

 
1,494

 

 

 
$
822

 
$
1,494

 
$
(672
)
 
$



The derivative contracts are valued using observable current market information as of the reporting date such as the prevailing LIBOR-based and U.S. treasury interest rates and foreign currency spot and forward rates. Bank acceptances represent financial instruments accepted from certain Chinese customers in lieu of cash paid on receivables, generally range from 3 to 6 months in maturity and are guaranteed by banks. The carrying amounts of the bank acceptances, which are included within other current assets, approximate fair value due to their short maturities. The fair values of rabbi trust assets are based on quoted market prices from various financial exchanges.
Pension and Other Postretirement Benefits
Pension and Other Postretirement Benefits
Pension and Other Postretirement Benefits

Pension and other postretirement benefits expenses consisted of the following:
 
Three months ended September 30,
 
Nine months ended September 30,
Pensions
2012
 
2011
 
2012
 
2011
Service cost
$
1,704

 
$
1,477

 
$
4,962

 
$
4,421

Interest cost
5,419

 
5,626

 
16,156

 
16,866

Expected return on plan assets
(8,216
)
 
(8,030
)
 
(24,506
)
 
(24,060
)
Amortization of prior service cost
209

 
280

 
629

 
842

Recognized losses
3,170

 
1,436

 
9,029

 
4,311

Settlement loss
91

 

 
91

 

Net periodic benefit cost
$
2,377

 
$
789

 
$
6,361

 
$
2,380

 
 
 
 
 
 
 
 
 
Three months ended September 30,
 
Nine months ended September 30,
Other Postretirement Benefits
2012
 
2011
 
2012
 
2011
Service cost
$
69

 
$
70

 
$
205

 
$
213

Interest cost
643

 
712

 
1,902

 
2,136

Amortization of prior service credit
(396
)
 
(385
)
 
(1,189
)
 
(1,156
)
Recognized losses
269

 
202

 
811

 
606

Net periodic benefit cost
$
585

 
$
599

 
$
1,729

 
$
1,799

Income Taxes
Income Taxes
Income Taxes

The Company's effective tax rate from continuing operations for the first nine months of 2012 was 21.2%. In 2011, the Company's effective tax rate from continuing operations was 25.1% in the first nine months of the year and 21.7% for the full year. The effective tax rate for the first nine months of 2011 included the recognition of $1,793 of discrete tax expense related to tax adjustments for earlier years. The decrease in the 2012 effective tax rate from continuing operations was driven primarily by the absence of this discrete item and the impact of a decrease in the planned repatriation of a portion of current year foreign earnings to the U.S., partially offset by a projected change in the mix of earnings attributable to higher-taxing jurisdictions or jurisdictions where losses cannot be benefited in 2012.

The Company was awarded a number of multi-year Pioneer tax status certificates (the "certificates") by the Ministry of Trade and Industry in Singapore for the production of certain engine components by the Aerospace aftermarket business, the earliest of which was granted in August 2005 retroactive to October 2003. The certificates are subject to the Company meeting certain capital expenditure and workforce commitments. The first certificate expired in September of 2012, the next certificate is scheduled to expire in the first quarter of 2013 and the remaining certificates are scheduled to expire in the subsequent two years, unless extensions are granted.
Information on Business Segments
Information on Business Segments
Information on Business Segments

In the first quarter of 2012, the Company changed its organizational structure to align its strategic business units into three reportable segments: Aerospace, Industrial and Distribution. The Company is organized based upon the nature of its products and services. Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions and assesses operating performance. The Company has not aggregated operating segments for purposes of identifying reportable segments.

The Aerospace segment produces precision-machined and fabricated components and assemblies for original equipment manufacturer (“OEM”) turbine engine, airframe and industrial gas turbine builders throughout the world, and for the military. Aerospace also provides jet engine component overhaul and repair services for many of the world's major turbine engine manufacturers, commercial airlines and the military. In addition, Aerospace manufactures and provides aerospace aftermarket spare parts and provides repair services for aerospace engine components. The Industrial segment is a global supplier of high quality manufactured precision components for critical applications, and a leading designer and manufacturer of highly engineered and customized hot runner systems and components, serving diverse industrial end markets such as transportation, energy, electronics, medical devices and consumer products. The Distribution segment is an industry leader in logistics support through vendor managed inventory and technical sales for maintenance, repair, operating and production supplies, as well as the design, assembly and distribution of engineered supplies for the global industrial base.

The following tables set forth information about the Company's operations by its three reportable segments:
 
Three months ended September 30,
 
Nine months ended September 30,
 
2012
 
2011
 
2012
 
2011
Net sales
 
 
 
 
 
 
 
   Aerospace
$
98,370

 
$
98,125

 
$
289,391

 
$
283,415

   Industrial
123,812

 
112,476

 
349,404

 
337,910

   Distribution
85,719

 
90,260

 
270,999

 
271,903

   Intersegment sales
(1,842
)
 
(2,218
)
 
(7,217
)
 
(7,159
)
Total net sales
$
306,059

 
$
298,643

 
$
902,577

 
$
886,069

 
 
 
 
 
 
 
 
Operating profit
 
 
 
 
 
 
 
   Aerospace
$
15,345

 
$
16,071

 
$
44,269

 
$
44,548

   Industrial
7,406

 
10,340

 
28,728

 
32,275

   Distribution
6,920

 
7,777

 
23,813

 
21,855

Total operating profit
29,671

 
34,188

 
96,810

 
98,678

   Interest expense
3,243

 
1,902

 
8,046

 
7,906

   Other expense (income), net
851

 
(501
)
 
1,799

 
228

Income from continuing operations before income taxes
$25,577
 
$32,787
 
$86,965
 
$90,544


 
September 30, 2012
 
December 31, 2011
Assets
 
 
 
   Aerospace
$
534,807

 
$
544,943

   Industrial(A)
879,284

 
453,279

   Distribution
284,125

 
278,139

   Other (B)
180,663

 
164,004

Total assets
$
1,878,879

 
$
1,440,365


(A) The increase in assets within the Industrial segment primarily reflects the acquisition of Synventive.
(B) "Other" assets include corporate-controlled assets, the majority of which are cash and deferred tax assets.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies

Product Warranties

The Company provides product warranties in connection with the sale of certain products. From time to time, the Company is subject to customer claims with respect to product warranties. Product warranty liabilities were not material as of September 30, 2012 and December 31, 2011.

The Company was named in a lawsuit arising out of an alleged breach of contract and implied warranty by a customer of Toolcom Suppliers Limited (“Toolcom”), a business previously included within the former Logistics and Manufacturing Services segment, related to the sale of certain products prior to the Company’s 2005 acquisition of Toolcom. In 2006, the plaintiff filed the lawsuit in civil court in Scotland and asserted that certain products sold were not fit for a particular use and claims approximately 5,500 pounds sterling (approximately $8,900 at September 30, 2012) in damages, plus interest at the statutory rate of 8% per annum and costs. The court found that Toolcom was in breach of contract and implied warranty, and ordered Toolcom to pay a portion of the plaintiff’s attorneys’ fees. The court has not made determinations as to causation and damages. In the third quarter 2012, the customer provided to the Company additional information regarding its claim, increasing the amount of damages, including lost profits, that the customer allegedly suffered as a result of the Company's breach of contract and implied warranty, and the amount of interest due on the claim. Although the Company intends to vigorously defend its position, based on reviews of the currently available information and acknowledging the uncertainties of litigation, management has provided for what it believes to be a reasonable estimate of loss exposure. While it is currently not possible to determine the ultimate outcome of this matter, the Company believes that any ultimate losses would not be expected to have a material adverse effect on the Company’s consolidated financial position or cash flows, but could be material to the consolidated results of operations of any one period.

Income Taxes

In connection with an IRS audit for the tax years 2000 through 2002, the IRS proposed adjustments to these tax years of approximately $16,500, plus a potential penalty of 20% of the tax assessment plus interest. The adjustment relates to the federal taxation of foreign income of certain foreign subsidiaries. The Company filed an administrative protest of these adjustments. In the third quarter of 2009, the Company was informed that its protest was denied and a tax assessment was received from the Appeals Office of the IRS. In November 2009, the Company filed a petition against the IRS in the U.S. Tax Court contesting the tax assessment received. As expected, a trial was held in the first quarter of 2012 and all briefs were filed in the third quarter of 2012. A decision is expected late in the fourth quarter of 2012 or in the first half of 2013. Depending on the outcome, an appeal by either party is possible. The Company continues to believe its tax position on the issues raised by the IRS is correct and the Company plans to continue to take appropriate actions to vigorously defend its position. The Company believes it should prevail on this issue. While any additional impact on the Company's liability for income taxes cannot presently be determined, the Company continues to believe it is adequately provided for and the outcome is not expected to have a material effect on the consolidated financial position or cash flows, but could be material to the consolidated results of operations of any one period.
Discontinued Operations (Tables)
Schedule of Disposal Groups, Including Discontinued Operations
The following amounts related to the BDE business were derived from historical financial information. The amounts have been segregated from continuing operations and reported as discontinued operations within the consolidated financial statements:

 
Three months ended September 30,
 
Nine months ended September 30,
 
2012
 
2011
 
2012
 
2011
Net sales
$

 
$
26,751

 
$

 
$
86,028

Loss before income taxes
(2,234
)
 
(191
)
 
(2,234
)
 
(742
)
Income tax expense

 
(744
)
 

 
(1,048
)
Loss from operations of discontinued businesses, net of income taxes
(2,234
)
 
(935
)
 
(2,234
)
 
(1,790
)
Loss on transaction
(21
)
 
(1,145
)
 
(788
)
 
(2,215
)
Income tax benefit on loss on sale
6

 
434

 
39

 
840

Loss on the sale of businesses
(15
)
 
(711
)
 
(749
)
 
(1,375
)
Loss from discontinued operations, net of income taxes
$
(2,249
)
 
$
(1,646
)
 
$
(2,983
)
 
$
(3,165
)


The loss from operations of discontinued businesses is primarily due to adjustments to retained liabilities.
Acquisition (Tables)
The following table summarizes the fair values of the assets acquired, net of cash acquired, and liabilities assumed at the date of the acquisition:
 
 
Accounts Receivable
$
42,724

Inventory
13,546

Other current assets
3,988

Property, plant and equipment
16,481

Other noncurrent assets
2,841

Intangible assets (Note 6)
126,600

Goodwill (Note 6)
203,988

        Total assets acquired
410,168

 
 
Current liabilities
(22,768
)
Other liabilities
(4,361
)
Deferred taxes
(40,785
)
Debt assumed
(45,537
)
        Total liabilities assumed
(113,451
)
        Net assets acquired
$
296,717

 
 
The following table reflects the unaudited pro forma operating results of the Company for the three and nine months ended September 30, 2012 and 2011, which give effect to the acquisition of Synventive as if it had occurred on January 1, 2011. The pro forma results are based on assumptions that the Company believes are reasonable under the circumstances. The pro forma results are not necessarily indicative of the operating results that would have occurred had the acquisition been effective January 1, 2011, nor are they intended to be indicative of results that may occur in the future. The underlying pro forma information includes the historical financial results of the Company and Synventive adjusted for certain items including depreciation and amortization expense associated with the assets acquired and the Company’s expense related to financing arrangements, with the related tax effects. The pro forma information does not include the effects of any synergies or cost reduction initiatives related to the acquisition.
 
(Unaudited Pro Forma)
Three months ended September 30,
 
(Unaudited Pro Forma)
Nine months ended September 30,
 
2012
2011
 
2012
2011
Net sales
328,880

337,796

 
1,004,098

994,098

Income from continuing operations
24,164

25,522

 
75,171

55,734

Net income
21,915

23,876

 
72,188

52,569

 
 
 
 
 
 
Per common share:
 
 
 
 
 
Basic:
 
 
 
 
 
     Income from continuing operations
$
0.44

$
0.46

 
$
1.38

$
1.01

     Net income
$
0.40

$
0.43

 
$
1.32

$
0.95

Diluted:
 
 
 
 
 
     Income from continuing operations
$
0.44

$
0.45

 
$
1.36

$
0.99

     Net income
$
0.40

$
0.42

 
$
1.31

$
0.94


Pro forma earnings during the three and nine month periods ended September 30, 2012 were adjusted to exclude non-recurring items including acquisition-related costs and expense related to the fair value adjustment to inventory and acquired backlog. Pro forma earnings in 2011 were adjusted to include acquisition-related costs of $11,808 ($2,409 incurred by the Company and $9,399 incurred by Synventive at closing) and expense of $3,682 and $1,200 related to the fair value adjustments to inventory and acquired backlog, respectively. In addition, 2011 earnings were adjusted to exclude a gain on debt restructuring and a foreign exchange gain related to debt at Synventive.
Inventories (Tables)
Schedule of Inventory, Current
The components of inventories consisted of:
 
September 30, 2012
 
December 31, 2011
Finished goods
$
124,384

 
$
121,984

Work-in-process
60,797

 
60,557

Raw material and supplies
45,016

 
33,979

 
$
230,197

 
$
216,520

Goodwill and Other Intangible Assets (Tables)
The following table sets forth the change in the carrying amount of goodwill for each reportable segment and for the Company as of and for the period ended September 30, 2012:
 
Aerospace
 
Industrial
 
Distribution
 
Total Company
January 1, 2012
$
30,786

 
$
192,544

 
$
142,774

 
$
366,104

Goodwill acquired

 
203,988

 

 
203,988

Foreign currency translation

 
7,034

 
377

 
7,411

September 30, 2012
$
30,786

 
$
403,566

 
$
143,151

 
$
577,503

Other intangible assets consisted of:
 
 
 
September 30, 2012
 
December 31, 2011
 
Range of
Life -Years
 
Gross Amount
 
Accumulated Amortization
 
Gross Amount
 
Accumulated Amortization
Amortized intangible assets:
 
 
 
 
 
 
 
 
 
Revenue sharing programs (RSPs)
Up to 30
 
$
293,700

 
$
(52,072
)
 
$
293,700

 
$
(46,367
)
Customer lists/relationships
10-15
 
102,806

 
(19,635
)
 
23,506

 
(17,292
)
Patents and technology
7-14
 
41,972

 
(6,283
)
 
6,572

 
(5,211
)
Trademarks/trade names
5-30
 
12,750

 
(7,317
)
 
12,050

 
(6,618
)
Other
Up to 15
 
12,692

 
(5,866
)
 
11,492

 
(4,454
)
 
 
 
463,920

 
(91,173
)
 
347,320

 
(79,942
)
Unamortized intangible asset:
 
 
 
 
 
 
 
 
 
Trade name
 
 
10,000

 

 

 

 
 
 
 
 
 
 
 
 
 
Foreign currency translation
 
 
6,798

 

 
4,714

 

Other intangible assets
 
 
$
480,718

 
$
(91,173
)
 
$
352,034

 
$
(79,942
)
Debt (Tables)
Schedule of Debt
Long-term debt and notes and overdrafts payable at September 30, 2012 and December 31, 2011 consisted of:
 
 
September 30, 2012
 
December 31, 2011
 
 
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
3.375% Convertible Notes
 
$
55,636

 
$
60,239

 
$
55,636

 
$
59,038

Unamortized debt discount – 3.375% Convertible Notes
 
(3,692
)
 

 
(5,333
)
 

Revolving credit agreement
 
625,400

 
626,534

 
281,900

 
270,288

Borrowings under lines of credit and overdrafts
 
7,675

 
7,675

 
12,364

 
12,364

Foreign bank borrowings
 
1,080

 
1,080

 
1,485

 
1,642

Other
 
576

 
576

 

 

 
 
686,675

 
696,104

 
346,052

 
343,332

Less current maturities
 
(8,625
)
 
 
 
(12,904
)
 
 
Long-term debt
 
$
678,050

 
 
 
$
333,148

 
 
Derivatives (Tables)
The following table sets forth the gains (losses) recorded in other expense (income), net in the consolidated statements of income for the three- and nine-month periods ended September 30, 2012 and 2011 for non-designated derivatives held by the Company. Such amounts were substantially offset by (losses) gains recorded on the underlying hedged asset or liability.
 
Three months ended September 30,
 
Nine months ended September 30,
 
2012
 
2011
 
2012
 
2011
Foreign exchange contracts
$
2,380

 
$
(3,144
)
 
$
3,305

 
$
(4,055
)
The following table sets forth the fair value amounts of derivative instruments held by the Company.
 
September 30, 2012
 
December 31, 2011
 
Asset Derivatives
 
Liability Derivatives
 
Asset Derivatives
 
Liability Derivatives
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Interest rate contracts
$

 
$
(2,014
)
 
$

 
$

Foreign exchange contracts
1,563

 

 
276

 

 
 
 
 
 
 
 
 
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Foreign exchange contracts
2,115

 
(53
)
 
28

 
(976
)
Total derivatives
$
3,678

 
$
(2,067
)
 
$
304

 
$
(976
)

Asset derivatives are recorded in prepaid expenses and other current assets in the accompanying consolidated balance sheets. Liability derivatives related to interest rate contracts and foreign exchange contracts are recorded in other liabilities and accrued liabilities, respectively, in the accompanying consolidated balance sheets.

The following table sets forth the gain (loss), net of tax, recorded in accumulated other non-owner changes to equity for the three- and nine-month periods ended September 30, 2012 and 2011 for derivatives held by the Company and designated as hedging instruments.
 
Three months ended September 30,
 
Nine months ended September 30,
 
2012
 
2011
 
2012
 
2011
Cash flow hedges:
 
 
 
 
 
 
 
Interest rate contracts
$
(551
)
 
$

 
$
(1,250
)
 
422

Foreign exchange contracts
646

 
(19
)
 
948

 
(391
)
 
$
95

 
$
(19
)
 
$
(302
)
 
$
31


Amounts included within accumulated other non-owner changes to equity that were reclassified to expense during the first nine months of 2012 related to the interest rate swaps resulted in a fixed rate of interest of 1.03% plus the borrowing spread for the first $100,000 of one-month LIBOR borrowings. Amounts included within accumulated other non-owner changes to equity that were reclassified to income during the first nine months of 2011 related to the interest rate swaps resulted in a fixed rate of interest of 2.947% plus the borrowing spread for the first $100,000 of one-month LIBOR borrowings. The amounts reclassified for the foreign exchange contracts were not material in any period presented. Additionally, there were no amounts recognized in income for hedge ineffectiveness during the three- and nine-month periods ended September 30, 2012 and 2011.
Fair Value Measurements (Tables)
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
The following table provides the financial assets and financial liabilities reported at fair value and measured on a recurring basis:
 
 
 
Fair Value Measurements Using
Description
Total
 
Quoted Prices in Active Markets for
Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
September 30, 2012
 
 
 
 
 
 
 
Asset derivatives
$
3,678

 
$

 
$
3,678

 
$

Liability derivatives
(2,067
)
 

 
(2,067
)
 

Bank acceptances
3,343

 

 
3,343

 

Rabbi trust assets
1,816

 
1,816

 

 

 
$
6,770

 
$
1,816

 
$
4,954

 
$

 
 
 
 
 
 
 
 
December 31, 2011
 
 
 
 
 
 
 
Asset derivatives
$
304

 
$

 
$
304

 
$

Liability derivatives
(976
)
 

 
(976
)
 

Rabbi trust assets
1,494

 
1,494

 

 

 
$
822

 
$
1,494

 
$
(672
)
 
$

Pension and Other Postretirement Benefits (Tables)
Schedule of Net Benefit Costs
Pension and other postretirement benefits expenses consisted of the following:
 
Three months ended September 30,
 
Nine months ended September 30,
Pensions
2012
 
2011
 
2012
 
2011
Service cost
$
1,704

 
$
1,477

 
$
4,962

 
$
4,421

Interest cost
5,419

 
5,626

 
16,156

 
16,866

Expected return on plan assets
(8,216
)
 
(8,030
)
 
(24,506
)
 
(24,060
)
Amortization of prior service cost
209

 
280

 
629

 
842

Recognized losses
3,170

 
1,436

 
9,029

 
4,311

Settlement loss
91

 

 
91

 

Net periodic benefit cost
$
2,377

 
$
789

 
$
6,361

 
$
2,380

 
 
 
 
 
 
 
 
 
Three months ended September 30,
 
Nine months ended September 30,
Other Postretirement Benefits
2012
 
2011
 
2012
 
2011
Service cost
$
69

 
$
70

 
$
205

 
$
213

Interest cost
643

 
712

 
1,902

 
2,136

Amortization of prior service credit
(396
)
 
(385
)
 
(1,189
)
 
(1,156
)
Recognized losses
269

 
202

 
811

 
606

Net periodic benefit cost
$
585

 
$
599

 
$
1,729

 
$
1,799

Information on Business Segments (Tables)
Schedule of Segment Reporting Information, by Segment
The following tables set forth information about the Company's operations by its three reportable segments:
 
Three months ended September 30,
 
Nine months ended September 30,
 
2012
 
2011
 
2012
 
2011
Net sales
 
 
 
 
 
 
 
   Aerospace
$
98,370

 
$
98,125

 
$
289,391

 
$
283,415

   Industrial
123,812

 
112,476

 
349,404

 
337,910

   Distribution
85,719

 
90,260

 
270,999

 
271,903

   Intersegment sales
(1,842
)
 
(2,218
)
 
(7,217
)
 
(7,159
)
Total net sales
$
306,059

 
$
298,643

 
$
902,577

 
$
886,069

 
 
 
 
 
 
 
 
Operating profit
 
 
 
 
 
 
 
   Aerospace
$
15,345

 
$
16,071

 
$
44,269

 
$
44,548

   Industrial
7,406

 
10,340

 
28,728

 
32,275

   Distribution
6,920

 
7,777

 
23,813

 
21,855

Total operating profit
29,671

 
34,188

 
96,810

 
98,678

   Interest expense
3,243

 
1,902

 
8,046

 
7,906

   Other expense (income), net
851

 
(501
)
 
1,799

 
228

Income from continuing operations before income taxes
$25,577
 
$32,787
 
$86,965
 
$90,544


 
September 30, 2012
 
December 31, 2011
Assets
 
 
 
   Aerospace
$
534,807

 
$
544,943

   Industrial(A)
879,284

 
453,279

   Distribution
284,125

 
278,139

   Other (B)
180,663

 
164,004

Total assets
$
1,878,879

 
$
1,440,365


(A) The increase in assets within the Industrial segment primarily reflects the acquisition of Synventive.
(B) "Other" assets include corporate-controlled assets, the majority of which are cash and deferred tax assets.
Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Details)
3 Months Ended
Sep. 30, 2012
Segment
Accounting Policies [Abstract]
 
Number of reportable segments
Discontinued Operations (Details)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended 0 Months Ended 9 Months Ended
Sep. 30, 2012
USD ($)
Sep. 30, 2011
USD ($)
Sep. 30, 2012
USD ($)
Sep. 30, 2011
USD ($)
Dec. 30, 2011
Barnes Distribution Europe [Member]
USD ($)
Sep. 30, 2012
Barnes Distribution Europe [Member]
USD ($)
Sep. 30, 2012
Barnes Distribution Europe [Member]
EUR (€)
Dec. 31, 2011
Barnes Distribution Europe [Member]
EUR (€)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
 
 
 
 
 
 
 
 
Proceeds from divestiture of businesses
 
 
 
 
$ 33,358 
 
 
 
Proceeds from the sale of businesses, net of cash sold
 
 
 
 
22,492 
 
 
 
Proceeds in escrow
 
 
 
 
 
6,586 
5,100 
9,000 
Change in restricted cash
 
 
4,900 
 
4,900 
3,900 
 
Net sales
26,751 
86,028 
 
 
 
 
Loss before income taxes
(2,234)
(191)
(2,234)
(742)
 
 
 
 
Income tax expense
(744)
(1,048)
 
 
 
 
Loss from operations of discontinued businesses, net of income taxes
(2,234)
(935)
(2,234)
(1,790)
 
 
 
 
Loss on transaction
(21)
(1,145)
(788)
(2,215)
 
 
 
 
Income tax benefit on loss on sale
434 
39 
840 
 
 
 
 
Loss on the sale of businesses
(15)
(711)
(749)
(1,375)
 
 
 
 
Loss from discontinued operations, net of income taxes
$ (2,249)
$ (1,646)
$ (2,983)
$ (3,165)
 
 
 
 
Acquisition (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
0 Months Ended 1 Months Ended 3 Months Ended 9 Months Ended
Aug. 27, 2012
Sep. 30, 2012
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Diluted
 
 
 
 
 
 
Pro forma adjustments, acqusition related costs
 
 
 
 
 
$ 11,808 
Synventive [Member]
 
 
 
 
 
 
Business Acquisition [Line Items]
 
 
 
 
 
 
Aggregate purchase price
351,620 
 
 
 
 
 
Cash paid
306,083 
 
 
 
 
 
Cash acquired
9,366 
 
 
 
 
 
Debt assumed
45,537 
 
 
 
 
 
Repayments of debt
45,156 
 
 
 
 
 
Acquisition related costs
 
 
 
 
2,409 
 
Sales since date of acquisition
 
15,830 
 
 
 
 
Operating loss since date of acquisition
 
2,896 
 
 
 
 
Accounts Receivable, net
42,724 
 
 
 
 
 
Inventory, net
13,546 
 
 
 
 
 
Other current assets
3,988 
 
 
 
 
 
Property, plant and equipment
16,481 
 
 
 
 
 
Other noncurrent assets
2,841 
 
 
 
 
 
Intangible assets
126,600 
 
 
 
 
 
Goodwill
203,988 
 
 
 
 
 
Total assets acquired
410,168 
 
 
 
 
 
Current liabilities
(22,768)
 
 
 
 
 
Other liabilities
(4,361)
 
 
 
 
 
Deferred taxes
(40,785)
 
 
 
 
 
Total liabilities assumed
113,451 
 
 
 
 
 
Net assets acquired
296,717 
 
 
 
 
 
Net sales
 
 
328,880 
337,796 
1,004,098 
994,098 
Income from continuing operations
 
 
24,164 
25,522 
75,171 
55,734 
Net income
 
 
21,915 
23,876 
72,188 
52,569 
Basic:
 
 
 
 
 
 
Income from continuing operations (in dollars per share)
 
 
$ 0.44 
$ 0.46 
$ 1.38 
$ 1.01 
Net income (in dollars per share)
 
 
$ 0.40 
$ 0.43 
$ 1.32 
$ 0.95 
Diluted
 
 
 
 
 
 
Income from continuing operations (in dollars per share)
 
 
$ 0.44 
$ 0.45 
$ 1.36 
$ 0.99 
Net income (in dollars per share)
 
 
$ 0.40 
$ 0.42 
$ 1.31 
$ 0.94 
Pro forma adjustments, acqusition related costs
 
 
 
 
 
9,399 
Pro forma adjustments, inventory
 
 
 
 
 
3,682 
Pro forma adjustments, acquired backlog
 
 
 
 
 
1,200 
Business Acquistion, Purchase Accouting Adjustments
5,117 
 
 
 
 
 
Parent Company [Member]
 
 
 
 
 
 
Diluted
 
 
 
 
 
 
Pro forma adjustments, acqusition related costs
 
 
 
 
 
$ 2,409 
Net Income Per Common Share (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
1 Months Ended 3 Months Ended 9 Months Ended 1 Months Ended 9 Months Ended
Feb. 29, 2012
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Convertible Debt [Member]
3.75% Convertible Notes [Member]
Apr. 5, 2011
Convertible Debt [Member]
3.75% Convertible Notes [Member]
Sep. 30, 2012
Convertible Debt [Member]
3.375% Convertible Notes [Member]
Dec. 31, 2011
Convertible Debt [Member]
3.375% Convertible Notes [Member]
Feb. 29, 2012
Restricted Stock Units (RSUs) [Member]
Feb. 29, 2012
Performance Share Awards [Member]
Sep. 30, 2012
Performance Share Awards [Member]
Net Income Per Common Share
 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Number Diluted Shares Outstanding Adjustment
 
589,876 
546,547 
615,842 
769,528 
 
 
 
 
 
 
 
Adjustments to income from continuing operations and net income for the purposes of computing income available to common stockholders
 
$ 0 
$ 0 
$ 0 
$ 0 
 
 
 
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount
 
367,428 
686,016 
331,618 
844,552 
 
 
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross
101,000 
 
 
 
 
 
 
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period
 
 
 
 
 
 
 
 
 
161,204 
103,160 
 
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period
 
 
 
 
 
 
 
 
 
 
 
3 years 
Minimum Range of Target Award of Stock Plan
 
 
 
 
 
 
 
 
 
 
 
0.00% 
Maximum Range of Target Award of Stock Plan
 
 
 
 
 
 
 
 
 
 
 
250.00% 
Convertible notes stated interest rate
 
 
 
 
 
3.75% 
 
3.375% 
 
 
 
 
Debt Instrument, Convertible, Conversion Price
 
 
 
 
 
 
 
$ 28.31 
 
 
 
 
Trading Days Used To Compute Average Closing Price of Stock for Dilutive Effect Comparison
 
 
 
30 days 
 
 
 
 
 
 
 
 
Debt instrument, carrying amount
 
 
 
 
 
 
$ 92,500 
$ 55,636 
$ 55,636 
 
 
 
Inventories (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Inventory Disclosure [Abstract]
 
 
Finished goods
$ 124,384 
$ 121,984 
Work-in-process
60,797 
60,557 
Raw material and supplies
45,016 
33,979 
Inventories
$ 230,197 
$ 216,520 
Goodwill and Other Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended 9 Months Ended 9 Months Ended 9 Months Ended 9 Months Ended 9 Months Ended 0 Months Ended 0 Months Ended
Sep. 30, 2012
Dec. 31, 2011
Sep. 30, 2012
Aerospace [Member]
Sep. 30, 2012
Industrial [Member]
Sep. 30, 2012
Distribution [Member]
Sep. 30, 2012
Revenue sharing programs (RSPs) [Member]
Y
Dec. 31, 2011
Revenue sharing programs (RSPs) [Member]
Sep. 30, 2012
Customer lists/relationships [Member]
Y
Dec. 31, 2011
Customer lists/relationships [Member]
Sep. 30, 2012
Patents and technology [Member]
Y
Dec. 31, 2011
Patents and technology [Member]
Sep. 30, 2012
Trademarks/trade names [Member]
Y
Dec. 31, 2011
Trademarks/trade names [Member]
Sep. 30, 2012
Other [Member]
Y
Dec. 31, 2011
Other [Member]
Sep. 30, 2012
Unamoritized Trade name [Member]
Aug. 27, 2012
Unamoritized Trade name [Member]
Dec. 31, 2011
Unamoritized Trade name [Member]
Aug. 27, 2012
Synventive [Member]
Aug. 27, 2012
Synventive [Member]
Customer Relationships [Member]
Y
Aug. 27, 2012
Synventive [Member]
Patents and technology [Member]
Y
Aug. 27, 2012
Synventive [Member]
Trade Names [Member]
Y
Sep. 30, 2012
Synventive [Member]
Unamoritized Trade name [Member]
Aug. 27, 2012
Synventive [Member]
Customer Backlog [Member]
Aug. 27, 2012
Maximum [Member]
Synventive [Member]
Customer Backlog [Member]
Y
Goodwill and Intangible Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 79,300 
$ 35,400 
 
 
$ 1,200 
 
Weighted-average useful lives of acquired assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15 
10 
 
 
Intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
126,600 
 
 
10,700 
 
 
 
Goodwill:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill, beginning of period
366,104 
 
30,786 
192,544 
142,774 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill acquired
203,988 
 
203,988 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation
7,411 
 
7,034 
377 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill, end of period
577,503 
 
30,786 
403,566 
143,151 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
203,988 
 
 
 
 
 
 
Other Intangible Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Range of life - minimum (in years)
 
 
 
 
 
 
 
10 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Range of life - maximum (in years)
 
 
 
 
 
30 
 
15 
 
14 
 
30 
 
15 
 
 
 
 
 
 
 
 
 
 
 
Finite Lived Intangible Assets Before Foreign Currency Translation Adjustment
463,920 
347,320 
 
 
 
293,700 
293,700 
102,806 
23,506 
41,972 
6,572 
12,750 
12,050 
12,692 
11,492 
 
10,000 
 
 
 
 
10,000 
 
 
Finite Lived Intangible Assets Foreign Currency Translation Adjustment
6,798 
4,714 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated Amortization
(91,173)
(79,942)
 
 
 
(52,072)
(46,367)
(19,635)
(17,292)
(6,283)
(5,211)
(7,317)
(6,618)
(5,866)
(4,454)
 
 
 
 
 
 
 
 
Gross Amount
480,718 
352,034 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intangible Assets, Future Amortization Expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangible assets expected in 2012
20,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangible assets expected in 2013
27,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangible assets expected in 2014
31,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangible assets expected in 2015
31,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangible assets expected in 2016
$ 30,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended 9 Months Ended 9 Months Ended 9 Months Ended
Sep. 30, 2012
Dec. 31, 2011
Sep. 30, 2012
Convertible Debt [Member]
3.375% Convertible Notes [Member]
Dec. 31, 2011
Convertible Debt [Member]
3.375% Convertible Notes [Member]
Sep. 30, 2012
Revolving Credit Agreement [Member]
Jul. 10, 2012
Revolving Credit Agreement [Member]
Jun. 30, 2012
Revolving Credit Agreement [Member]
Dec. 31, 2011
Revolving Credit Agreement [Member]
Sep. 30, 2012
Lines of Credit and Overdrafts [Member]
Dec. 31, 2011
Lines of Credit and Overdrafts [Member]
Sep. 30, 2012
Foreign Bank Borrowings [Member]
Dec. 31, 2011
Foreign Bank Borrowings [Member]
Sep. 30, 2012
Lines of Credit [Member]
Dec. 31, 2011
Lines of Credit [Member]
Sep. 30, 2012
Bank Overdrafts [Member]
Dec. 31, 2011
Bank Overdrafts [Member]
Sep. 30, 2012
Other Debt Obligations [Member]
Dec. 31, 2011
Other Debt Obligations [Member]
Sep. 30, 2012
Minimum [Member]
Sep. 30, 2012
Minimum [Member]
Revolving Credit Agreement [Member]
Sep. 30, 2012
Maximum [Member]
Sep. 30, 2012
Maximum [Member]
Revolving Credit Agreement [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term Debt, Gross
 
 
$ 55,636 
$ 55,636 
$ 625,400 
 
 
$ 281,900 
 
 
$ 1,080 
$ 1,485 
 
 
 
 
$ 576 
$ 0 
 
 
 
 
Debt Instrument, Fair Value Disclosure
696,104 
343,332 
60,239 
59,038 
626,534 
 
 
270,288 
7,675 
12,364 
1,080 
1,642 
 
 
 
 
576 
 
 
 
 
Debt Instrument, Unamortized Discount
 
 
(3,692)
(5,333)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Borrowings under lines of credit and overdrafts
8,085 
12,364 
 
 
 
 
 
 
7,675 
12,364 
 
 
7,500 
12,000 
175 
364 
 
 
 
 
 
 
Total debt, net of unamortized discounts
686,675 
346,052 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less current maturities
(8,625)
(12,904)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt
678,050 
333,148 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Convertible notes stated interest rate
 
 
3.375% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of credit facility, accordian feature amount
 
 
 
 
 
250,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of credit facility, maximum borrowing capacity
 
 
 
 
$ 750,000 
 
$ 500,000 
 
 
 
 
 
$ 15,000 
 
 
 
 
 
 
 
 
 
Debt instrument basis spread on LIBOR
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.10% 
 
1.70% 
Line of Credit Facility, Interest Rate at Period End
 
 
 
 
 
 
 
 
 
 
 
 
2.16% 
2.17% 
 
 
 
 
 
 
 
 
Repayment period
 
 
 
 
 
 
 
 
 
 
 
 
7 days 
 
2 days 
 
 
 
 
 
 
 
Maturity of bank acceptances
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 months 
 
6 months 
 
Derivatives (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
 
 
Derivative Assets
$ 3,678 
$ 304 
Derivative Liabilities
(2,067)
(976)
Other Liabilities [Member] |
Designated as Hedging Instrument [Member] |
Interest Rate Contracts [Member]
 
 
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
 
 
Derivative Liabilities
(2,014)
Accrued Liabilities [Member] |
Designated as Hedging Instrument [Member] |
Foreign Exchange Contracts [Member]
 
 
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
 
 
Derivative Liabilities
Accrued Liabilities [Member] |
Not Designated as Hedging Instrument [Member] |
Foreign Exchange Contracts [Member]
 
 
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
 
 
Derivative Liabilities
(53)
(976)
Prepaid Expenses and Other Current Assets [Member] |
Designated as Hedging Instrument [Member] |
Interest Rate Contracts [Member]
 
 
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
 
 
Derivative Assets
Prepaid Expenses and Other Current Assets [Member] |
Designated as Hedging Instrument [Member] |
Foreign Exchange Contracts [Member]
 
 
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
 
 
Derivative Assets
1,563 
276 
Prepaid Expenses and Other Current Assets [Member] |
Not Designated as Hedging Instrument [Member] |
Foreign Exchange Contracts [Member]
 
 
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
 
 
Derivative Assets
$ 2,115 
$ 28 
Derivatives (Details 1) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 1 Months Ended 3 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Sep. 30, 2011
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Sep. 30, 2012
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Sep. 30, 2011
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Sep. 30, 2012
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Interest Rate Contracts [Member]
Sep. 30, 2011
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Interest Rate Contracts [Member]
Sep. 30, 2012
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Interest Rate Contracts [Member]
Sep. 30, 2011
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Interest Rate Contracts [Member]
Sep. 30, 2012
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Foreign Exchange Contracts [Member]
Sep. 30, 2011
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Foreign Exchange Contracts [Member]
Sep. 30, 2012
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Foreign Exchange Contracts [Member]
Sep. 30, 2011
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Foreign Exchange Contracts [Member]
Sep. 30, 2012
Not Designated as Hedging Instrument [Member]
Foreign Exchange Contracts [Member]
Sep. 30, 2011
Not Designated as Hedging Instrument [Member]
Foreign Exchange Contracts [Member]
Sep. 30, 2012
Not Designated as Hedging Instrument [Member]
Foreign Exchange Contracts [Member]
Sep. 30, 2011
Not Designated as Hedging Instrument [Member]
Foreign Exchange Contracts [Member]
Apr. 30, 2012
Interest Rate Swap [Member]
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Bank
Mar. 31, 2011
Interest Rate Swap [Member]
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Apr. 30, 2012
Interest Rate Swap [Member]
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Mar. 31, 2011
Interest Rate Swap [Member]
Designated as Hedging Instrument [Member]
Cash Flow Hedging [Member]
Derivatives
Derivative [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of Interest Rate Derivatives Held
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Term of Interest Rate Derivatives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 years 
3 years 
 
 
Number of Banks Transacted With for Interest Rate Swap Agreements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative, Amount of Hedged Item
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 100,000 
$ 100,000 
 
 
Debt Instrument, Description of Variable Rate Basis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
one-month LIBOR 
one-month LIBOR 
 
 
Derivative, Fixed Interest Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.03% 
2.947% 
Maximum Remaining Maturity of Foreign Currency Derivatives
2 years 
 
2 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative, Net Hedge Ineffectiveness Gain (Loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net
 
 
 
 
95 
(19)
(302)
31 
(551)
(1,250)
422 
646 
(19)
948 
(391)
 
 
 
 
 
 
 
 
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 2,380 
$ (3,144)
$ 3,305 
$ (4,055)
 
 
 
 
Fair Value Measurements (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2012
Dec. 31, 2011
Sep. 30, 2012
Quoted Prices in Active Markets for Identical Assets (Level 1)
Dec. 31, 2011
Quoted Prices in Active Markets for Identical Assets (Level 1)
Sep. 30, 2012
Significant Other Observable Inputs (Level 2)
Dec. 31, 2011
Significant Other Observable Inputs (Level 2)
Sep. 30, 2012
Significant Unobservable Inputs (Level 3)
Dec. 31, 2011
Significant Unobservable Inputs (Level 3)
Sep. 30, 2012
Estimate of Fair Value, Fair Value Disclosure [Member]
Dec. 31, 2011
Estimate of Fair Value, Fair Value Disclosure [Member]
Sep. 30, 2012
Minimum [Member]
Sep. 30, 2012
Maximum [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Asset derivatives
$ 3,678 
$ 304 
$ 0 
$ 0 
$ 3,678 
$ 304 
$ 0 
$ 0 
$ 3,678 
$ 304 
 
 
Liability derivatives
(2,067)
(976)
(2,067)
(976)
(2,067)
(976)
 
 
Bank acceptances
 
 
 
3,343 
 
 
3,343 
 
 
 
Rabbi trust assets
 
 
1,816 
1,494 
1,816 
1,494 
 
 
Financial assets and financial liabilities, reported at fair value
 
 
$ 1,816 
$ 1,494 
$ 4,954 
$ (672)
$ 0 
$ 0 
$ 6,770 
$ 822 
 
 
Maturity of bank acceptances
 
 
 
 
 
 
 
 
 
 
3 months 
6 months 
Pension and Other Postretirement Benefits (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Pensions [Member]
 
 
 
 
Pension and other postretirement benefits expenses
 
 
 
 
Service cost
$ 1,704 
$ 1,477 
$ 4,962 
$ 4,421 
Interest cost
5,419 
5,626 
16,156 
16,866 
Expected return on plan assets
(8,216)
(8,030)
(24,506)
(24,060)
Amortization of prior service cost (credit)
209 
280 
629 
842 
Recognized losses
3,170 
1,436 
9,029 
4,311 
Settlement loss
91 
91 
Net periodic benefit cost
2,377 
789 
6,361 
2,380 
Other Postretirement Benefits [Member]
 
 
 
 
Pension and other postretirement benefits expenses
 
 
 
 
Service cost
69 
70 
205 
213 
Interest cost
643 
712 
1,902 
2,136 
Amortization of prior service cost (credit)
(396)
(385)
(1,189)
(1,156)
Recognized losses
269 
202 
811 
606 
Net periodic benefit cost
$ 585 
$ 599 
$ 1,729 
$ 1,799 
Income Taxes (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended 12 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Dec. 31, 2011
Income Tax Disclosure [Abstract]
 
 
 
Effective tax rate
21.20% 
25.10% 
21.70% 
Tax items related to prior year tax adjustments
 
$ 1,793 
 
Term of scheduled expiration of pioneer tax status certificates unless extensions are granted
2 years 
 
 
Information on Business Segments (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Segment
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Segment Reporting Information [Line Items]
 
 
 
 
Number of reportable segments
 
 
 
Net sales
$ 306,059 
$ 298,643 
$ 902,577 
$ 886,069 
Operating profit
29,671 
34,188 
96,810 
98,678 
Interest expense
3,243 
1,902 
8,046 
7,906 
Other expense (income), net
851 
(501)
1,799 
228 
Income from continuing operations before income taxes
25,577 
32,787 
86,965 
90,544 
Aerospace [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net sales
98,370 
98,125 
289,391 
283,415 
Operating profit
15,345 
16,071 
44,269 
44,548 
Industrial [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net sales
123,812 
112,476 
349,404 
337,910 
Operating profit
7,406 
10,340 
28,728 
32,275 
Distribution [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net sales
85,719 
90,260 
270,999 
271,903 
Operating profit
6,920 
7,777 
23,813 
21,855 
Intersegment sales [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net sales
$ (1,842)
$ (2,218)
$ (7,217)
$ (7,159)
Information on Business Segments Details 1 (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Segment Reporting Information [Line Items]
 
 
Assets
$ 1,878,879 
$ 1,440,365 
Aerospace [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Assets
534,807 
544,943 
Industrial [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Assets
879,284 1
453,279 1
Distribution [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Assets
284,125 
278,139 
Other [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Assets
$ 180,663 2
$ 164,004 2
Commitments and Contingencies (Details)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2012
USD ($)
Sep. 30, 2012
Pending or Threatened Litigation [Member]
USD ($)
Sep. 30, 2012
Pending or Threatened Litigation [Member]
GBP (£)
Loss Contingencies [Line Items]
 
 
 
Damages sought, amount
 
$ 8,900 
£ 5,500 
Damages sought, interest at statutory rate (per annum)
 
8.00% 
8.00% 
IRS proposed adjustments to tax years 2000 through 2002, before penalty and interest
$ 16,500 
 
 
Potential penalty, percentage of tax assessment
20.00%