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Sales at Barnes Distribution were $103.8 million for the quarter, up $31.8 million, or 44 percent, from $72.0 million in the quarter ended Sept. 30, 2002. Kar Products, which Barnes Group purchased in February 2003, contributed $30.8 million of sales in the most recent quarter. Barnes Distribution generated operating profit of $7.4 million in the third quarter of 2003, up sharply from operating profit of $2.4 million in the third quarter of 2002.
The improvement in operating profit was driven primarily by the operating profit contribution from Kar Products and higher gross profit margin. Included in Barnes Distribution's operating profit is an incremental year-over-year gain of $0.9 million from the sale of distribution centers; the gain was essentially offset by approximately $0.8 million of incremental severance expense.
"This was a solid quarter for Barnes Distribution; beyond tripling operating profit, the integration of Kar is running ahead of our original schedule, and our new sales growth initiatives are performing very well," said Edmund M. Carpenter, Barnes Group's president and CEO. "Our national and regional customer development efforts, e-commerce platforms and new Tier 2 relationships together contributed $5.9 million in sales to the most recent quarter, up from $1.8 million last year. We added more than 50 new national and regional customers, bringing to 249 the total new customers gained since January, 2002.
"During the quarter, we continued to integrate Kar Products into Barnes Distribution, achieving a number of milestones. As a result of the progress we have made to date, we believe that Kar will be substantially integrated in the U.S. by the end of the year, and the integration in Canada, which includes the construction of a new distribution center, will be completed in the first half of 2004."
Sales at Associated Spring were $81.1 million for the quarter, up slightly compared with sales of $80.9 million in the quarter ended Sept. 30, 2002. The increase reflected higher sales of nitrogen gas springs and products for industrial markets, combined with the positive impact on sales from foreign currency translation. These were essentially offset by a decline in sales related to the North American light vehicle market.
Associated Spring's operating profit was $4.9 million for the third quarter of 2003, down from $6.5 million in the third quarter of 2002. Operating profit was positively impacted by the benefits from the 2002 closure of Associated Spring's Dallas, TX facility. This was more than offset by certain incrementally higher personnel costs, including pension and severance expenses totaling approximately $1.0 million, and a $0.5 million reduction in the carrying value of the Dallas facility, which is currently held for sale.
"Associated Spring continues to successfully leverage higher-growth segments of its key markets, such as nitrogen gas springs and the non-U.S. automakers, to offset sales declines with some domestic customers," Carpenter said. "Although this business remains quite profitable, during the third quarter we began taking additional actions aimed at improving operating margins to be more in line with historical levels."
Sales at Barnes Aerospace were $39.4 million for the third quarter of 2003, down from $45.8 million in the third quarter of 2002. Operating profit was $2.0 million for the quarter ended September 30, 2003, up from $1.4 million in the comparable year-ago period, reflecting the benefit of cost reduction efforts taken during 2002, productivity and efficiency