Edgar Filing: BARNES GROUP INC

FINAL PROSPECTUS SUPPLEMENT

Prospectus Supplement

(To Prospectus dated April 11, 2003)

2,823,506 Shares

Barnes Group Inc.

Common Stock

Barnes Group Inc. is offering 2,000,000 shares of its common stock and the selling stockholder named in this prospectus supplement and the accompanying prospectus is offering 823,506 shares of common stock. Barnes Group Inc. will not receive any proceeds from the sale of shares of common stock by the selling stockholder.

Our common stock is listed on the New York Stock Exchange under the symbol “B.” On May 21, 2003, the closing price of our common stock on the New York Stock Exchange was $20.79 per share.

Investing in our common stock involves risks. See “Risk Factors” beginning on page 7 of the accompanying prospectus and page S-12 of this prospectus supplement.

	Per Share		Total

Offering Price	$	19.000	$	53,646,614

Discounts and Commissions to Underwriters	$	1.045	$	2,950,564

Offering Proceeds to Barnes Group Inc.	$	17.955	$	35,910,000

Offering Proceeds to Selling Stockholder	$	17.955	$	14,786,050

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Barnes Group Inc. has granted the underwriters the right to purchase up to an additional 423,525 shares of common stock to cover any over-allotments. The underwriters can exercise this right at any time within thirty days after the offering.

The underwriters expect to deliver the shares of common stock to investors on or about May 28, 2003.

Banc of America Securities LLC

McDonald Investments Inc.

Robert W. Baird & Co.

BB&T Capital Markets

May 21, 2003

You should rely only on the information contained or incorporated by reference in this prospectus supplement or the accompanying prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We and the selling stockholder are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale of these securities is not permitted. You should assume that the information appearing in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference in this prospectus supplement and the accompanying prospectus is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates.

TABLE OF CONTENTS

Prospectus Supplement

Forward-Looking Statements		S-4
Prospectus Supplement Summary		S-5
Risk Factors		S-12
Use of Proceeds		S-13
Price Range of Common Stock and Dividend Policy		S-13
Capitalization		S-14
Unaudited Pro Forma Financial Information		S-15
Selected Consolidated Financial Data		S-16
Management’s Discussion and Analysis of Financial Condition and Results of Operations		S-17
Business		S-28
Management		S-44
Selling Stockholder		S-48
Underwriting		S-49
Legal Matters		S-51
Experts		S-51
Where You Can Find More Information; Incorporation by Reference		S-51
Index to Consolidated Financial Statements		F-1

Prospectus
About this Prospectus		2
Forward-Looking Statements		3
Where You Can Find More Information; Incorporation by Reference		3
Barnes Group Inc.		5
Risk Factors		7
Use of Proceeds		16
Ratio of Earnings to Fixed Charges		16
Description of Our Capital Stock		17
Description of Debt Securities		21
Description of Warrants		29
Selling Stockholder		32
Plan of Distribution		33
Validity of Securities		33
Experts		34

Unless the context otherwise requires, references in this prospectus to “Barnes Group,” “we,” “us” and “our” and similar references refer to Barnes Group Inc., a Delaware corporation, and its consolidated subsidiaries. We own or have rights to various trademarks and trade names used in our business including the following: Associated Spring^®, Barnes Aerospace^®, Barnes Distribution^®, Bowman^®, Curtis^®, Mechanics Choice^®, Raymond^®, Kar^®, Spectrum^® and Seeger^®. This prospectus supplement, the accompanying prospectus and the documents incorporated by reference contain references to certain of these trademarks and trade names as well as certain trademarks, service marks and trade names of other companies.

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Market and industry data used throughout this prospectus supplement, the accompanying prospectus and the documents incorporated by reference, including information relating to market share and trends, is based on our good faith estimates. These estimates were based on independent industry publications and other publicly available information. Although we believe these sources are reliable, we have not independently verified the information and cannot guarantee its accuracy and completeness.

FORWARD-LOOKING STATEMENTS

Certain information included or incorporated in this prospectus supplement and the accompanying prospectus contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements represent our expectations or beliefs, including, but not limited to, statements concerning industry performance, our operations, performance, financial condition, growth and acquisition objectives, margins and growth in sales of our products and services. For this purpose, any statements contained or incorporated in this prospectus supplement or the accompanying prospectus that are not statements of historical fact may be deemed to be forward-looking statements. Words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate” or “continue” or similar words are intended to identify forward-looking statements, although not all forward-looking statements are identified by those words. Forward-looking statements by their nature involve substantial risks and uncertainties, certain of which are beyond our control. Actual results may differ materially depending on a variety of important factors, including those described in this prospectus supplement or in the accompanying prospectus under the caption “Risk Factors.” All forward-looking statements speak only as of the date of this prospectus supplement or the accompanying prospectus, as applicable. Neither we, nor any of the underwriters, undertake to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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PROSPECTUS SUPPLEMENT SUMMARY

The following summary highlights selected information from this prospectus supplement and the documents incorporated by reference and does not contain all of the information that is important to you. We encourage you to read this prospectus supplement, the accompanying prospectus and the documents incorporated by reference in their entirety. We have granted the underwriters an option to purchase 423,525 shares of our common stock to cover over-allotments. Unless we indicate otherwise, the information contained in this prospectus supplement assumes the underwriters’ option to cover over-allotments is not exercised.

Barnes Group

Barnes Group Inc. is a diversified international manufacturer of precision components and assemblies and distributor of industrial supplies, serving a wide range of markets and customers. We had net sales of $784.0 million for the year ended December 31, 2002 and $218.7 million for the three months ended March 31, 2003. Our operations consist of three businesses:

•

Associated Spring, representing approximately 41% of our net sales for 2002, is one of the world’s largest manufacturers of precision mechanical and nitrogen gas springs and is a global supplier of retaining rings and plastic injection-molded components;

•

Barnes Distribution, representing approximately 36% of our net sales for 2002, is an international distributor of industrial maintenance, repair and operating (MRO) supplies; and

•

Barnes Aerospace, representing approximately 23% of our net sales for 2002, is a manufacturer and provider of repair services for highly-engineered assemblies and components for aircraft engines, airframes and land-based industrial gas turbines.

We conduct our operations in 22 manufacturing facilities, six sales offices (including headquarters locations) and 31 distribution centers. Our manufacturing facilities are located in the United States, Brazil, Canada, China, Germany, Mexico, Singapore and Sweden, and we have sales offices or distribution centers in the United States, Brazil, Canada, France, Ireland, Mexico, Puerto Rico, Singapore, Spain and the United Kingdom. We currently have more than 6,200 employees worldwide.

Associated Spring

Associated Spring is the largest manufacturer of precision springs in North America and one of the largest precision spring manufacturers in the world. We are equipped to produce virtually every type of precision spring, from fine hairsprings for electronics and medical instruments to large, heavy-duty springs for machinery. We are also a leading supplier of nitrogen gas springs and manifold systems used to precisely control stamping presses, as well as a global supplier of retaining rings and injection-molded plastic-on-metal and metal-in-plastic components and assemblies. A majority of Associated Spring’s products are highly-engineered, custom solutions that we design and develop in collaboration with our customers from concept through manufacturing. Our products are purchased primarily by durable goods manufacturers in industries such as transportation, consumer products, farm equipment, telecommunications, medical devices, home appliances and electronics. Associated Spring serves its worldwide customer base through 14 manufacturing facilities strategically located in eight countries including the United States.

Barnes Distribution

Barnes Distribution is an industry leader in the distribution of MRO supplies. We provide a wide variety of high-volume replacement parts and other products, and inventory management services to a well-diversified customer base ranging from small automobile repair shops to the largest railroads in North America. We

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distribute products under seven widely recognized brands: Bowman, Curtis, Mechanics Choice, Kar, Raymond, Autoliaisons and Motalink. Our primary products include fasteners, special purpose hardware, electrical supplies, hydraulics and security products. Through our Raymond division, we also distribute mechanical die and nitrogen gas springs, mechanical struts and standard parts such as coil and flat springs, most of which are manufactured by Associated Spring. Barnes Distribution becomes a critical partner in the operations of its customers and helps them increase their profitability by using innovative methods and new technologies to solve complex supply problems. We distribute our products primarily through our direct sales force of over 1,600 people in eight countries, and we also sell our products through distributors in many other countries.

Barnes Aerospace

Barnes Aerospace produces precision machined and fabricated components and assemblies for original equipment manufacturers (OEMs) of turbine engines and airframes for commercial aircraft, military jets, business jets and land-based industrial gas turbines. For example, we are one of the largest outside suppliers of structural components used in the GE 90-115B turbine engine, which is the exclusive engine for the next-generation Boeing 777 aircraft. Barnes Aerospace’s machining and fabrication operations produce critical engine and airframe components through technically advanced processes such as super-plastic forming, diffusion bonding, laser drilling and large-scale multi-axis milling and turning. We specialize in working with difficult materials such as titanium, cobalt, inconel and other aerospace alloys. Our capabilities have enabled us to build strong and long-standing customer relationships and to participate in the design phase of components and assemblies, where we provide our customers with manufacturing research, testing and evaluation to assess and improve the design and manufacturability of the component or assembly. By doing so, Barnes Aerospace positions itself to be a long-term supplier of components and assemblies to the engine or airframe projects in which it participates.

Barnes Aerospace also provides jet engine component overhaul and repair services for many of the world’s major commercial airlines, the U.S. military and OEMs. We perform overhaul and repair services at three government-certified repair facilities, including two in the United States and one in Singapore. We refurbish jet engine components through a variety of complex processes including electron beam welding, plasma coating, vacuum brazing and water jet cleaning. Our ability to complete large, complicated repairs quickly benefits our customers by allowing them to defer replacement purchases.

Competitive Strengths

Leadership Positions in Each of Our Three Businesses. We enjoy leadership positions within the precision spring, industrial distribution and aerospace industries. Associated Spring is the largest precision spring manufacturer in North America and one of the largest precision spring manufacturers in the world. We believe that Barnes Distribution is one of the 20 largest industrial distributors in North America. Barnes Aerospace has content on virtually all major commercial aircraft engine programs and performs repairs on many engine models currently in service. Furthermore, to develop a leading position in these industries requires engineering expertise, technical capabilities, an extensive sales and marketing infrastructure and/or a high level of capital investment. We believe that the leading positions we enjoy as a result of our engineering and technical expertise and sales and marketing infrastructure, which we gained from a combination of our historical operations, investments and acquisitions, provide us with a significant competitive advantage.

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to customers relating to design of new components and trouble shooting for existing designs. Barnes Aerospace’s research and development team works with customers to improve the design and manufacturability of components and assemblies. We are one of only a few suppliers with an on-site sales office or open access to the facilities of the major aerospace OEMs, positioning us to be a primary resource for new products and technical support. Similarly, Barnes Distribution has developed close ties with its national accounts and other customers through recurring contact in the course of providing inventory management services over extended periods.

A Diverse Business Mix and Customer Base. We provide our products and services to a wide range of industries and customers. The industries we serve include transportation, aerospace and defense, electronics, telecommunications, consumer goods, agriculture, food processing, construction, energy, logistics and general industrial. This diversification reduces our dependence on any given geographic area or industry segment and mitigates the impact of cyclical downturns.

Global Manufacturing, Sales and Distribution Capabilities. We have eight manufacturing facilities located outside the United States supported by a global sales force. In addition, we conduct distribution operations, either directly or through third party relationships, in more than a dozen countries. The international scope of our manufacturing, sales and distribution operations provides us with the ability to efficiently serve our global customer base. Our global scope also positions us to service our customers as they move their operations to lower cost locations outside the United States.

Strong Cash Flow to Support Future Growth. Over the past three years, we have generated more than $170 million in cash flow from operations. We seek to maximize cash flow by aggressively managing working capital and controlling expenses on an ongoing basis throughout the organization. Our strong cash flow from operations allows us to continue to grow our business both organically by investing in capital expenditures and new internal programs and initiatives, as well as through strategic acquisitions.

Experienced and Committed Management Team. Our executive management team averages more than 25 years of operational, sales, finance or marketing experience in manufacturing, distribution or aerospace organizations. Further, our executive management team has extensive experience in identifying acquisition candidates, structuring acquisitions and rapidly integrating acquired businesses. Our executive management and employees are significant holders of our common stock, owning more than 20% of our outstanding shares at December 31, 2002.

Business Strategies

Our goal is to build lasting value for our stockholders by generating sustainable, profitable growth. We seek to achieve this goal by pursuing the following strategic initiatives:

•

Generate Internal Growth and Profitability both Through New Products for Customers and Through New Customer Relationships.

•

Over the past five years, we have invested over $20 million in research and development and engineering capabilities, including Associated Spring’s PDC. Through our focus on engineering expertise, we have broadened our product offerings to reach customers in markets we have not previously served, such as telecommunications and electronics, auto racing, consumer products and land-based industrial turbine engines. We intend to continue to leverage our engineering capability to design and develop new products in response to our customers’ needs.

•

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our national customers and implemented e-commerce initiatives to attract customers interested in maintaining their own inventory. At Associated Spring, we increased our U.S. sales personnel and added a European sales manager. Each of these initiatives, implemented during the last three years, has resulted in new customers and increased sales in the targeted markets.

•

Continue to Acquire Businesses that Profitably Add Customers, Products, Technology or Geographic Presence. Over the past four years, Barnes Group has completed eight acquisitions. We continually seek acquisition opportunities in each of our three businesses that will add customers, product offerings, technology or geographic reach to our existing base of business. Our top 60 operating managers have participated in training focused on issues related to the integration of acquisitions. For every acquisition, we develop an integration plan and assign a dedicated cross-functional integration team. This integration team is responsible for implementing the integration plan in a timely and cost effective manner so that we can realize the synergies identified prior to the acquisition. We believe that the acquisition and integration expertise we have developed enables us to continue to strategically expand our businesses and increase our profitability.

•

Continue to Expand Our Global Capabilities. Our customer base is global in nature, and we are committed to continuing to expand our global presence to meet our customers’ needs. We currently have manufacturing and distribution operations in 13 countries, and in the past four years we have purchased or built manufacturing operations in China, Sweden and Germany. We also recognize, and intend to continue to take advantage of, lower labor and production costs associated with international manufacturing.

•

Leverage Training and Education Throughout the Organization to Strengthen the Focus on Long-term Profitability. We use sophisticated, internally developed measurement tools to gauge the performance of our three operations. In 2002, we began a program to educate approximately 1,400 operational and decision-making employees on the use of these tools in their day-to-day decision making, empowering them to think like owners of the business. These tools encourage employees to focus on operating profitability as well as the various inputs of capital into a business that can affect the long-term success of the organization.

•

Promote Continuous Improvement Initiatives. We undertake initiatives in each of our three businesses to continuously improve our processes, strengthening our competitive advantage. In our Associated Spring and Barnes Aerospace businesses, these initiatives are heavily focused on lean manufacturing strategies and techniques. At Barnes Distribution, these initiatives focus on decreasing order processing time and optimizing inventory levels. We aggressively promote a culture where process improvements are encouraged and often implemented throughout all levels of the organization as part of daily operations. By continuously focusing on process improvements, we seek to increase operating efficiency, reduce waste, ensure high quality and customer satisfaction and improve profitability.

Acquisition Focus

In 1998, our board of directors determined that increasing industry consolidation affecting our three businesses provided us with the opportunity to complement our existing operations with focused acquisitions. To better position Barnes Group to undertake acquisitions, the board assembled a management team with significant operations expertise and experience in identifying, structuring and integrating acquisitions. Our increased focus on acquisitions led to the completion of eight transactions since 1999 with an aggregate purchase price of approximately $314 million. These acquisitions expanded the scope of our operations, added complementary products or product lines, increased our customer base and expanded our geographic scope. The individual purchase prices of the acquired businesses ranged from a high of $92.2 million for the nitrogen gas spring

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business of Teledyne Industries to a low of $709,000 for Euro Stock Springs. Certain information concerning these acquisitions is set forth in the following table:

Business Acquired	Business Conducted	Date of Acquisition	Barnes Business Unit

Nitrogen gas spring business of Teledyne Industries	Design and manufacture of nitrogen gas springs	August 1999	Associated Spring

Curtis Industries	Distribution of MRO supplies and security products	May 2000	Barnes Distribution

Kratz-Wilde/Apex	Fabrication and machining of aerospace components	September 2000	Barnes Aerospace

Euro Stock Springs	Distribution of die and other standard springs	January 2001	Barnes Distribution

Forward Industries	Design and manufacture of nitrogen gas springs	November 2001	Associated Spring

Seeger-Orbis	Manufacture of retaining rings	February 2002	Associated Spring

Spectrum Plastics	Manufacture of plastic injection-molded components and assemblies	April 2002	Associated Spring

Kar Products	Distribution of MRO supplies	February 2003	Barnes Distribution

On February 6, 2003 we completed the acquisition of Kar Products, a leading full service distributor of MRO supplies to industrial, construction, transportation and other markets. For the year ended December 31, 2002, Kar Products had net sales of $122.1 million and an operating income of $6.3 million. With the incremental sales of Kar Products, we believe Barnes Distribution is among the top 20 industrial distributors in North America. The addition of Kar Products’ direct sales force of approximately 600 professionals increased the Barnes Distribution sales and service organization to more than 1,600 professionals, expanding the sales force’s ability to cross-sell new products and immediately increasing Barnes Distribution’s ability to serve national, regional and local customers. Kar Products also added nearly 40,000 customers located in all 50 states, Puerto Rico and Canada. Based on our integration experience and, in particular, our recent experience in consolidating Curtis Industries, a business similar to Kar Products, we expect that the integration of Kar Products will enable us to recognize substantial future cost savings within Barnes Distribution.

We financed the acquisition of Kar Products through a combination of $60.0 million in cash and $18.5 million of our common stock. Of the $60.0 million of cash consideration, $56.0 million was funded with proceeds from borrowings under our revolving credit agreement.

Our Address

Our principal executive offices are located at 123 Main Street, Bristol, Connecticut 06010-0489. Our telephone number is (860) 583-7070. We maintain websites at www.barnesgroupinc.com, www.asbg.com, www.barnesaero.com, www.barnesdistribution.com and other affiliated websites. The information on our websites is not part of this prospectus supplement.

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The Offering

Common stock offered by us

2,000,000 shares

Common stock offered by the selling stockholder

823,506 shares

Common stock outstanding immediately after this offering

21,936,075 shares

Use of proceeds

The proceeds from our sale of common stock will be used to repay a portion of the indebtedness outstanding under our revolving credit agreement incurred in connection with the Kar Products acquisition. We will not receive any proceeds from the sale of common stock by the selling stockholder.

New York Stock Exchange Symbol

The number of shares of our common stock outstanding immediately after this offering is based on the number of shares of our common stock outstanding as of March 31, 2003. Such number of shares excludes 4,237,691 shares of our common stock issuable upon the exercise of outstanding stock options at a weighted-average exercise price of $20.61 per share; 757,199 shares of our common stock issuable under outstanding incentive stock units; and 54,000 shares of our common stock issuable pursuant to rights granted under our Non-Employee Director Stock Plan.

We have granted the underwriters an option to purchase 423,525 shares of our common stock to cover over-allotments. Unless we indicate otherwise, the information contained in this prospectus supplement assumes the underwriters’ option to cover over-allotments is not exercised.

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SUMMARY HISTORICAL CONSOLIDATED AND PRO FORMA FINANCIAL INFORMATION

The summary historical consolidated financial data as of December 31, 2002 and 2001, and for the three years in the period ended December 31, 2002, are derived from our audited consolidated financial statements included elsewhere in this prospectus supplement. The summary historical consolidated financial data as of December 31, 2000 have been derived from our audited consolidated financial statements not included in this prospectus supplement. The unaudited pro forma financial information as of and for the year ended December 31, 2002 set forth below gives effect to the Kar Products acquisition as if it had occurred on January 1, 2002. See “Unaudited Pro Forma Financial Information” for a discussion of the assumptions underlying the summary pro forma financial information below.

You should read the following summary historical consolidated and pro forma financial information in conjunction with (1) our audited consolidated financial statements and related notes, (2) the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (3) the section entitled “Unaudited Pro Forma Financial Information,” each included in this prospectus supplement.

	Pro Forma Year Ended December 31, 2002		Year Ended December 31,
	Pro Forma Year Ended December 31, 2002		2002			2001			2000
	(Dollars in thousands, except per share data)
Statement of Income Data:
Net sales	$	906,132	$	784,036		$	768,821		$	740,032
Operating income		52,199		44,840			40,320			62,949
Net income		30,411		27,151			19,121			35,665
Basic earnings per share		1.55		1.45			1.03			1.92
Diluted earnings per share		1.52		1.42			1.01			1.90
Average shares outstanding:
Basic		19,673,948		18,750,442			18,506,247			18,568,359
Diluted		20,108,838		19,185,332			18,919,968			18,791,227

			December 31,
			2002			2001			2000
			(In thousands)
Balance Sheet Data:
Cash and cash equivalents			$	28,355		$	48,868		$	23,303
Working capital				106,558			72,931			114,502
Total assets				652,530			636,505			636,941
Total long-term debt, including current portion				220,962			225,941			230,000
Total stockholders’ equity				208,220			198,837			201,333

			Year Ended December 31,
			2002			2001			2000
			(In thousands, except per share data)
Other Financial Data:
Associated Spring sales			$	321,699		$	279,156		$	327,280
Barnes Distribution sales				286,696			298,362			291,062
Barnes Aerospace sales				183,022			200,407			135,103
Inter-segment sales				(7,381	)		(9,106	)		(13,413	)
Capital expenditures				19,367			24,857			28,042
Depreciation and amortization				33,626			37,045			35,871
Net cash provided by operating activities				54,411			65,038			51,857
Cash dividends declared per common share				0.80			0.80			0.79
EBITDA(1)				81,560			76,665			99,601

(1)

EBITDA is a measurement not calculated in accordance with U.S. generally accepted accounting principles (GAAP). We define EBITDA as net income plus income taxes, interest expense and depreciation and amortization. We do not intend EBITDA to represent cash flows from operations as defined by GAAP, and you should not consider it as an alternative to net income, net cash provided by operating activities or any other items calculated in accordance with GAAP, or as an indicator of our operating performance. Our definition of EBITDA may not be comparable with EBITDA as defined by other companies. We believe EBITDA is commonly used by financial analysts and others in the industries in which we operate and thus provides useful information to investors. Management uses EBITDA as one measure of our leverage capacity and debt servicing ability. Following is a reconciliation of EBITDA to our net income:

	Year Ended December 31,
	2002		2001		2000
	(In thousands)
Net income	$	27,151	$	19,121	$	35,665
Income taxes		5,960		4,338		12,925
Interest expense		14,823		16,161		15,140
Depreciation and amortization		33,626		37,045		35,871

EBITDA	$	81,560	$	76,665	$	99,601

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RISK FACTORS

You should carefully consider the following risks and uncertainties and all other information contained in this prospectus supplement or the accompanying prospectus, including the documents incorporated by reference, before you decide whether to purchase our common stock. Any of the following risks and the risks set forth in the accompanying prospectus, if they materialize, could adversely affect our business, financial condition and results of operations. As a result, the trading price of our common stock could decline, and you could lose all or part of your investment. The risks and uncertainties described below and in the accompanying prospectus are not the only risks that we face in our business.

Limited trading volume of our common stock may contribute to its price volatility.

Our common stock is traded on the New York Stock Exchange. During 2002, the average consolidated daily trading volume for our common stock as reported by the New York Stock Exchange was 21,460 shares. Even with the additional dissemination of our common stock offered by us and the selling stockholder pursuant to this prospectus supplement, we are uncertain as to whether a more active trading market in our common stock will develop. As a result, relatively small trades may have a significant impact on the trading price of our common stock. Other factors may also affect the volatility of the trading price of our common stock. Because of the volatility of the trading price of our common stock, purchasers of shares in this offering may not be able to resell their shares of common stock at or above the price to the public for this offering.

Certain provisions of our certificate of incorporation, by-laws, shareholder rights plan and the Delaware General Corporation Law may have possible anti-takeover effects.

Some of the provisions of our certificate of incorporation, by-laws and shareholder rights plan could discourage, delay or prevent an acquisition of our business at a premium price. The provisions:

•

permit the board of directors to increase its own size and fill the resulting vacancies;

•

provide for a board comprised of three classes of directors with each class serving a staggered three-year term;

•

authorize the issuance of up to 3,000,000 shares of preferred stock in one or more series without a stockholder vote;

•

entitle certain holders of our common stock to purchase a fraction of a share of our Series A Junior Participating Preferred Stock that may be converted into a right to purchase our or a successor’s common stock at a discount; and

•

under certain circumstances, require a 70% super-majority vote to approve certain mergers and other business combinations between us and any holder of 5% or more of our common stock.

In addition, Section 203 of the Delaware General Corporation Law imposes restrictions on mergers and other business combinations between us and any holder of 15% or more of our common stock.

We may not be able to pay dividends on our common stock.

While we have historically paid dividends on our common stock, we are under no obligation to declare or pay such dividends. The declaration and payment of dividends on our common stock in the future is subject to, and will depend upon, among other things:

•

our future earnings and financial condition, liquidity and capital requirements;

•

our ability to pay dividends under our debt arrangements; and

•

other factors deemed relevant by our board of directors.

If we cease to pay or reduce the amount of dividends on our common stock, the market price of our common stock may decline.

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USE OF PROCEEDS

Our net proceeds from the sale of the 2,000,000 shares of common stock offered by us, after deducting underwriting discounts and commissions and estimated offering expenses of $425,000, will be approximately $35.5 million (approximately $43.1 million if the underwriters’ over-allotment option is exercised in full). We expect to use all of the net proceeds to repay a portion of the indebtedness outstanding under our $150.0 million revolving credit facility incurred in connection with the Kar Products acquisition. This credit facility matures on June 14, 2005, and had an outstanding principal balance of $98.0 million as of March 31, 2003. Loans under the credit facility bear interest at a variable rate (3.3% weighted average at March 31, 2003). Affiliates of certain of the underwriters are lenders under the credit facility. These affiliates will receive some of the net proceeds of this offering. We will not receive any proceeds from the sale of common stock by the selling stockholder. We will, however, receive and hold for the account of the selling stockholder $365,762 of proceeds from the sale of shares by the selling stockholder that will be used to satisfy any amounts the selling stockholder owes us from purchase price adjustments under the agreement pursuant to which we purchased Kar Products.

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

Our common stock is currently quoted on New York Stock Exchange under the symbol “B.” The following table shows, for the periods indicated, the high and low closing prices per share of our common stock as reported on the New York Stock Exchange and the dividends paid per share. The market price for our common stock may continue to be subject to wide fluctuations in response to a variety of factors, some of which are beyond our control. See “Risk Factors” in this prospectus supplement.

Quarter Ended	High		Low		Dividends Paid Per Share
Fiscal year ended December 31, 2001:
First Quarter	$	21.00	$	18.00	$	0.20
Second Quarter	$	24.70	$	18.25	$	0.20
Third Quarter	$	24.80	$	19.48	$	0.20
Fourth Quarter	$	24.94	$	19.20	$	0.20
Fiscal year ended December 31, 2002:
First Quarter	$	26.35	$	21.60	$	0.20
Second Quarter	$	25.80	$	21.00	$	0.20
Third Quarter	$	23.38	$	18.45	$	0.20
Fourth Quarter	$	22.90	$	17.50	$	0.20
Fiscal year ended December 31, 2003:
First Quarter	$	22.07	$	18.55	$	0.20
Second Quarter (through May 21, 2003)	$	21.85	$	19.90	$	0.20	(1)

(1)

Declared April 16, 2003 and payable on June 10, 2003 to stockholders of record on May 30, 2003.

We encourage you to obtain current market quotations for our common stock before deciding whether to purchase our common stock.

We pay quarterly dividends on shares of our common stock. We have paid dividends on shares of our common stock since 1934. We cannot assure you that we will continue to pay dividends with respect to any future quarter or, if we pay dividends, the amount of the dividends. Additionally, our debt agreements contain financial covenants that require the maintenance of interest coverage and leverage ratios and minimum levels of net worth. Such covenants and restrictions may restrict the amount of dividends we may make under such agreements.

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CAPITALIZATION

The following table sets forth, as of March 31, 2003, our capitalization on an actual basis and as adjusted to give effect to the issuance of our common stock in this offering and the application of the proceeds as described under “Use of Proceeds.” You should read the following information in conjunction with our audited consolidated financial statements and related notes, the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this prospectus supplement.

	As of March 31, 2003
	Actual			As Adjusted
	(In thousands, except share amounts)
	(Unaudited)
Debt:
Current portion of long-term debt	$	6,849		$	6,849
Long-term debt (excluding current maturities)		277,187			241,702

Total debt		284,036			248,551

Stockholders’ Equity:
Common Stock, par value $0.01 per share, 60,000,000 shares authorized; 22,037,769 shares issued, actual, and 24,037,769 shares issued, as adjusted; 19,936,075 shares outstanding, actual, and 21,936,075 shares outstanding, as adjusted(1)		220			240
Additional paid-in capital		53,167			88,632
Treasury stock of 2,101,694 shares, at cost(1)		(41,474	)		(41,474	)
Retained earnings		258,349			258,349
Accumulated other non-owner changes to equity		(34,715	)		(34,715	)

Total stockholders’ equity		235,547			271,032

Total capitalization	$	519,583		$	519,583

(1)

The number of shares reported in the accompanying prospectus as outstanding as of March 31, 2003 (20,231,339 shares) is overstated by 295,264 shares and the number of shares reported as being held as treasury shares (1,806,430) is understated by 295,264 shares, in each case because such numbers reflected 295,264 shares of restricted stock as outstanding, although such shares were never actually issued. The restricted stock awards were in the form of restricted stock units granted under our Employee Stock and Ownership Program. If the conditions specified in such restricted stock units are satisfied, unrestricted shares of stock will be issued in the future in accordance with the terms of such restricted stock units.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION

On February 6, 2003, we acquired Kar Products LLC and certain assets and liabilities of its Canadian business, A. & H. Bolt and Nut Company Ltd. (collectively referred to in this section as the acquired operations). The purchase price of $78.5 million was financed through a combination of $4.0 million of cash, $56.0 million of debt and 923,506 shares of our common stock valued at $18.5 million. The following unaudited pro forma consolidated income statement for the year ended December 31, 2002 has been prepared based on our historical income statement and the unaudited historical income statement of the acquired operations as if the acquisition of the acquired operations had occurred on January 1, 2002. The unaudited pro forma consolidated income statement is based on assumptions that we believe are reasonable under the circumstances and is intended for informational purposes only. The following pro forma financial data may not be indicative of the future results of operations and what the actual results of operations would have been. The pro forma data does not include the effect of synergies and cost reduction initiatives related to the acquisition.

Unaudited Pro Forma Consolidated Income Statement

for the Year Ended December 31, 2002

	Barnes Group Inc.		Acquired Operations									Consolidated Pro Forma
	Barnes Group Inc.		Historical			Adjustments			Total			Consolidated Pro Forma
	(Dollars in thousands, except per share data)
	(Unaudited)
Net sales	$	784,036	$	122,096		$	—		$	122,096		$	906,132
Cost of sales		530,004		53,161			135	(1)		53,296			583,300

Gross profit		254,032		68,935			(135	)		68,800			322,832
							274	(1)
							(3,044	)(2)
Selling and administrative expenses		209,192		62,611			1,600	(3)		61,441			270,633

Operating income		44,840		6,324			1,035			7,359			52,199
Other Income		3,651		148			(40	)(4)		108			3,759
							(9,265	)(5)
Interest expense		14,823		9,265			2,194	(6)		2,194			17,017
							(341	)(7)
Other expense		557		322			(275	)(8)		(294	)		263

Income (loss) before income taxes and effect of accounting change		33,111		(3,115	)		8,682			5,567			38,678
Income taxes		5,960		(249	)		2,476	(9)		2,227			8,187

Income (loss) before effect of accounting change		27,151		(2,866	)		6,206			3,340			30,491
Effect of accounting change		—		(6,653	)		6,653	(10)		—			—

Net income (loss)	$	27,151	$	(9,519	)	$	12,859		$	3,340		$	30,491

Basic earnings per share	$	1.45										$	1.55
Diluted earnings per share	$	1.42										$	1.52
Average shares outstanding:
Basic		18,750,442											19,673,948
Diluted		19,185,332											20,108,838

(1)

Reflects incremental rent expense over depreciation expense. Facilities are temporarily leased from A. & H. Bolt and Nut Company Ltd. following the acquisition.

(2)

Reflects exclusion of former holding company activities retained by seller.

(3)

Reflects estimated amortization of intangible assets associated with the acquired operations based on a preliminary assessment of the fair value of the acquired assets of the acquired operations. We are in the process of finalizing the valuation of these assets. Accordingly, the actual amounts may vary from our estimates.

(4)

Reflects reduction of interest income on $4.0 million of cash used to fund a portion of the cash purchase price.

(5)

Reflects exclusion of interest expense on unassumed debt retained by seller.

(6)

Reflects additional interest expense as a result of borrowings under our credit facility in order to fund the remaining portion of the cash purchase price. The interest rate on the borrowings under our credit facility is a variable rate. A one-quarter of one percent change in the interest rate would impact income before income taxes by $143,000.

(7)

Reflects the exclusion of deferred financing costs retained by seller.

(8)

Reflects reduced commitment fee expense on our credit facility as a result of the increased borrowing level.

(9)

Reflects the adjustment to our marginal tax rate on the incremental income derived from the acquired operations.

(10)

Reflects the exclusion of the cumulative impact of adopting SFAS 142 on January 1, 2002.

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SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data as of December 31, 2002 and 2001, and for the three years in the period ended December 31, 2002, are derived from our audited consolidated financial statements included elsewhere in this prospectus supplement. The selected consolidated financial data as of December 31, 2000, 1999 and 1998 and for the two years in the period ended December 31, 1999 have been derived from our audited consolidated financial statements not included in this prospectus supplement. You should read the selected financial data with our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus supplement.

	Year Ended December 31,
	2002			2001			2000			1999			1998
	(Dollars in thousands, except per share data)
Statement of Income Data:
Net sales	$	784,036		$	768,821		$	740,032		$	622,356		$	651,183
Operating income		44,840			40,320			62,949			46,107			55,279
Net income		27,151			19,121			35,665			28,612			34,494
Basic earnings per share		1.45			1.03			1.92			1.47			1.72
Diluted earnings per share		1.42			1.01			1.90			1.46			1.69
Average shares outstanding:
Basic		18,750,442			18,506,247			18,568,359			19,417,856			20,095,710
Diluted		19,185,332			18,919,968			18,791,227			19,642,755			20,426,369
Other Financial Data:
Associated Spring sales	$	321,699		$	279,156		$	327,280		$	282,573		$	262,093
Barnes Distribution sales		286,696			298,362			291,062			230,384			246,877
Barnes Aerospace sales		183,022			200,407			135,103			121,253			154,565
Inter-segment sales		(7,381	)		(9,106	)		(13,413	)		(11,854	)		(12,352	)
Capital expenditures		19,367			24,857			28,042			27,823			34,843
Depreciation and amortization		33,626			37,045			35,871			30,602			28,431
Net cash provided by operating activities		54,411			65,038			51,857			62,797			76,036
Cash dividends declared per common share		0.80			0.80			0.79			0.75			0.69
EBITDA(1)		81,560			76,665			99,601			79,393			87,200

	December 31,
	2002			2001			2000			1999			1998
	(In thousands)
Balance Sheet Data:
Cash and cash equivalents	$	28,355		$	48,868		$	23,303		$	43,632		$	40,206
Working capital		106,558			72,931			114,502			103,165			106,884
Total assets		652,530			636,505			636,941			516,282			418,904
Total long-term debt, including current portion		220,962			225,941			230,000			140,000			51,000
Total stockholders’ equity		208,220			198,837			201,333			180,614			188,674

(1)

EBITDA is a measurement not calculated in accordance with GAAP. We define EBITDA as net income plus income taxes, interest expense and depreciation and amortization. We do not intend EBITDA to represent cash flows from operations as defined by GAAP, and you should not consider it as an alternative to net income, net cash provided by operating activities or any other items calculated in accordance with GAAP, or as an indicator of our operating performance. Our definition of EBITDA may not be comparable with EBITDA as defined by other companies. We believe EBITDA is commonly used by financial analysts and others in the industries in which we operate and thus provides useful information to investors. Management uses EBITDA as one measure of our leverage capacity and debt servicing ability. Following is a reconciliation of EBITDA to our net income:

	Year Ended December 31,
	2002		2001		2000		1999		1998
	(In thousands)
Net income	$	27,151	$	19,121	$	35,665	$	28,612	$	34,494
Income taxes		5,960		4,338		12,925		14,086		20,169
Interest expense		14,823		16,161		15,140		6,093		4,106
Depreciation and amortization		33,626		37,045		35,871		30,602		28,431

EBITDA	$	81,560	$	76,665	$	99,601	$	79,393	$	87,200

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Business

We are a diversified international manufacturer of precision components and assemblies and distributor of industrial supplies. We are comprised of three business segments. The Associated Spring segment is a manufacturer of precision mechanical and nitrogen gas springs, retaining rings and injection-molded plastic components that are used in a variety of industries, including transportation, consumer goods, electronics and telecommunications. The Barnes Distribution segment is an international distributor of MRO supplies and a full-service provider of logistics management services for industrial, heavy equipment and transportation maintenance markets. It also distributes close-tolerance engineered metal components manufactured principally by Associated Spring. The Barnes Aerospace segment supplies precision machined and fabricated components and assemblies for commercial and military aircraft and industrial gas turbines, as well as engine component overhaul and repair services in support of the global airline industry. Through these three businesses, we help our customers enhance their competitiveness and responsiveness by realizing the benefits of our manufacturing and logistics management capabilities.

Key Business Drivers

There are a number of end-market demand factors that impact sales in each of the three businesses. Key sales drivers for Associated Spring are: light vehicle production in North America and Europe, which correlates well with the sales of automotive springs and with tool and die build, which impacts our nitrogen gas spring sales; sales of cell phone handsets and other electronic products in the telecommunications, computer and optical device markets; and sales of white goods, small engines, compressors, heavy duty trucks and similar products that impact our industrial springs.

General industrial activity in North America and Europe is the key sales driver for Barnes Distribution, as Barnes Distribution’s customer base is well diversified through many different economic sectors.

For original equipment manufacturer (OEM) components produced at Barnes Aerospace, key sales drivers include new commercial and military aircraft production and land-based industrial gas turbine deliveries. The number of commercial aircraft in the active fleet and the number of revenue passenger miles flown by the world’s airlines are key drivers of sales for the Barnes Aerospace overhaul and repair operations.

Critical Accounting Policies

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant accounting policies are disclosed in Note 1 to the Consolidated Financial Statements included in this prospectus supplement. The most significant areas involving management judgments and estimates are described below. Actual results could differ from such estimates.

Inventory Valuation

We value inventories at the lower of cost or market. We use the last-in, first-out (LIFO) method to value the majority of domestic inventories. Provisions are made to reduce excess or obsolete inventories to their estimated net realizable value. Loss provisions, if any, on contracts are established when reasonably expected. Loss provisions are based on the excess inventoriable costs over the net revenues of the products or group of related products under contract. The process for evaluating the value of excess and obsolete inventory often requires us to make subjective judgments and estimates concerning future sales levels, quantities and prices at which such

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inventory will be sold in the normal course of business. Accelerating the disposal process or incorrect estimates of future sales potential may necessitate future adjustments to these provisions.

Business Acquisitions

We record assets and liabilities acquired in a business combination at their estimated fair values at the acquisition date. At December 31, 2002, we had $164.6 million of goodwill, representing the cost of acquisitions in excess of fair values assigned to the underlying net assets of acquired companies. In accordance with Statement of Financial Accounting Standards (SFAS) 142, goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment testing. The assessment of goodwill involves the estimation of the fair value of “reporting units,” as defined by SFAS 142. We completed our annual assessment of goodwill in the second quarter of 2002 and determined that no impairment then existed. We will test for impairment again in the second quarter of 2003. Future cash flows can be affected by changes in the global economy and local economies, industries and markets in which we sell products or services, and the execution of management’s plans, particularly with respect to integrating acquired companies. There can be no assurance that future events will not result in impairment of goodwill or other intangible assets.

Reorganization of Businesses

We record a liability for reorganization initiatives at the time that management approves and commits to a reorganization plan. Such a plan identifies all significant actions to be taken and specifies an expected completion date that is within a reasonable period of time. The liability includes those costs that can be reasonably estimated. Estimates are subject to adjustments based upon actual costs incurred (see—“Recent Accounting Changes”).

Pension and Other Postretirement Benefits

Accounting policies and significant assumptions related to pension and other postretirement benefits are disclosed in Note 10 to the Consolidated Financial Statements included in this prospectus supplement.

In 2002, the portfolio managers authorized to invest pension trust funds were changed and the mix of assets in which managers invest was revised. The following table provides a breakout of the new targeted mix of investments, by asset classification, along with the historical rates of return for each asset class and the long-term projected rates of return.

Asset Class	New Target Percentage	Historical Rate of Return(1)	Projected Long-Term Rate of Return
Large Cap Growth	20%	11.4%	10.4%
Large Cap Value	20%	13.1%	12.1%
Small Cap Growth	9%	8.9%	7.9%
Small Cap Value	9%	14.7%	13.7%
Non-U.S. Equity	9%	10.2%	9.2%
Real Estate-Related	5%	14.9%	12.9%
Fixed Income	27%	9.3%	7.3%
Cash	1%	7.1%	5.1%
Weighted Average	—	11.3%	9.9%

(1)

Historical returns based on the life of the respective index, approximately 20 to 25 years.

The historical rates of return were calculated based upon compounded average rates of return of published indices. The fixed income investments represent approximately 27% of the trust asset mix and are estimated to be

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5% to 10% lower than the fixed income components of typical pension trusts. The fixed income investments include a higher-than-average component of yield-aggressive investments, including high-yield corporate bonds. Based on the overall historical and projected rates of return, management is projecting the long-term rate of return on pension assets to be 9.5%.

A one-quarter percentage point change in the assumed long-term rate of return would impact our pretax income by approximately $0.8 million annually. A one-quarter percentage point change in the discount rate would impact our pretax income by approximately $0.3 million annually. We review these and other assumptions at least annually.

We use a calculated value to determine the market-related value of pension plan assets. This approach results in a market-related value of pension assets that differs from the fair market value of plan assets. This difference results from the deferment in the recognition of asset gains and losses above or below expected returns on assets for a period of approximately five years. At December 31, 2002, the market-related value of pension assets exceeded the fair market value by $70.0 million. This difference under SFAS 87 will increase pension expense by $3.1 million in 2003 and an additional $2.3 million in 2004.

Income Taxes

As of December 31, 2002, we had recognized $38.6 million of deferred tax assets, net of valuation reserves. The realization of these benefits is dependent on future taxable income. For those jurisdictions where the expiration date of tax carry-forwards or the projected operating results indicate that realization is not likely, a valuation allowance is provided. Management believes that sufficient income will be earned in the future to realize deferred income tax assets, net of valuation allowances recorded. The recognized net deferred tax asset is based on our estimates of future taxable income and our tax planning strategies. The realization of these deferred tax assets can be impacted by changes to tax codes, statutory tax rates and future taxable income levels.

Acquisitions

During the past three years, we acquired a number of businesses which were accounted for using the purchase method. Accordingly, the results of operations of the acquired companies have been included in the consolidated results from their respective acquisition dates.

In May 2000, we purchased substantially all of the assets and liabilities of Curtis Industries, Inc. for $63.4 million. Curtis, a distributor of MRO supplies and high-quality security products, was combined with Bowman Distribution to form Barnes Distribution. This business combination created a broader product offering, enhanced service capabilities and opportunities for increased sales penetration. The combination also created significant cost savings opportunities, primarily through headquarters and distribution center consolidations and increased purchasing leverage. The majority of these cost savings were realized in 2002.

In connection with the Curtis acquisition, we incurred certain integration costs. The integration plan included combining the headquarters functions and consolidating warehousing and distribution networks. As a result, we recorded total costs of $6.4 million, relating primarily to lease consolidation costs, facility closure costs and reductions in personnel. Costs of $4.7 million associated with the acquired business were reflected as assumed liabilities in the allocation of the purchase price to net assets acquired. The remaining integration costs of $1.7 million were reflected in expenses in 2000. As of December 31, 2002, $1.5 million remained as liabilities related primarily to future lease payments.

In September 2000, we purchased substantially all of the assets and liabilities of AVS/Kratz-Wilde Machine Company and Apex Manufacturing, Inc. for $40.9 million. Kratz-Wilde/Apex fabricates and machines intricate aerospace components for jet engines and auxiliary power units. These businesses are included in the Barnes

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Aerospace segment. This acquisition augmented Barnes Aerospace by extending product depth and customer penetration, and also provided an additional FAA-licensed aircraft engine repair facility.

In 2001, we completed two bolt-on acquisitions, for a combined purchase price of $3.8 million. In January 2001, we acquired Euro Stock Springs & Components Limited (Euro Stock). Euro Stock distributes standard springs through catalogs to customers located primarily in Europe. This business, which is included in the Barnes Distribution segment, expanded Barnes Distribution’s presence in Europe and added a new sales channel through Euro Stock’s product catalog. In November 2001, we acquired certain assets of Forward Industries, L.L.C., and its subsidiary Forward Industries, Ltd. Forward Industries designs and manufactures nitrogen gas springs that are used in the appliance, automotive, heating and cooling and electrical industries. This acquisition has been integrated with our existing nitrogen gas spring business and is included in the Associated Spring segment. The acquisition broadened the nitrogen gas spring product line offering of Associated Spring.

In 2002, we completed two acquisitions for a total purchase price of $34.0 million. Consideration for the acquisitions included cash of approximately $31.0 million, of which $2.0 million will be paid in two equal installments in April 2003 and April 2004, and issuance of 119,048 shares of our common stock (at a market value at the time of the acquisition of approximately $3.0 million). In February 2002, we acquired substantially all of the manufacturing assets of Seeger-Orbis GmbH & Co. OHG of Germany from TransTechnology Corporation. Seeger- Orbis is a leading manufacturer of retaining rings used in a number of transportation and industrial applications. The Seeger-Orbis acquisition expanded Associated Spring’s product line and geographic reach, particularly into the automotive and industrial manufacturing markets of Western Europe. In April 2002, we acquired Spectrum Plastics Molding Resources, Inc. of Ansonia, Connecticut (Spectrum). Spectrum is a premier manufacturer of plastic injection-molded components and assemblies that are used primarily in the telecommunications, electronics, medical and consumer goods industries. Spectrum, which is included in the Associated Spring segment, provides Associated Spring with the capability of providing more complete product solutions with discrete or continuous metal-in-plastic and plastic-on-metal injection-molded components.

The purchase price of each acquisition has been allocated to tangible and intangible assets and liabilities of the businesses, based upon estimates of their respective fair values. For acquisitions initiated prior to June 30, 2001, the resulting goodwill had been amortized over a 40-year life. Beginning in 2002, goodwill is no longer amortized, as the lives are considered indefinite. See Note 1 to the Consolidated Financial Statements included in this prospectus supplement.

On February 6, 2003, we acquired Kar Products LLC of Des Plaines, Illinois, and certain assets and liabilities of its Canadian business, A.&H. Bolt & Nut Company Ltd. Kar Products adds to the Barnes Distribution segment a diversified customer base that operates in all 50 states, Puerto Rico and Canada, further enhancing Barnes Distribution’s international presence and leadership position within the MRO market. The purchase price of $78.5 million was paid through a combination of $60.0 million cash and $18.5 million (923,506 shares) of our common stock. We expect to achieve a number of post-acquisition cost savings and other synergies through headquarters and infrastructure consolidation. We also anticipate that the acquisition will be accretive in the first year.

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Results of Operations

The following table sets forth our consolidated statement of income data as a percentage of revenue:

	Year Ended December 31,
	2002		2001		2000
Net sales	100.0	%	100.0	%	100.0	%
Cost of sales	67.6	%	67.6	%	66.0	%

Gross profit	32.4	%	32.4	%	34.0	%
Selling and administrative expenses	26.7	%	27.2	%	25.5	%

Operating income	5.7	%	5.2	%	8.5	%
Other income	0.5	%	0.5	%	0.6	%
Interest expense	1.9	%	2.1	%	2.0	%
Other expense	0.1	%	0.6	%	0.5	%
Income taxes	0.7	%	0.5	%	1.8	%

Net income	3.5	%	2.5	%	4.8	%

We reported record net sales of $784 million in 2002, an increase of $15 million, or 2%, over 2001 net sales of $769 million. The sales increase reflected our recent acquisitions, which contributed $40 million, all to Associated Spring’s sales, as well as organic growth in Associated Spring. This growth was partially offset by a 9% decline in sales at Barnes Aerospace, which coincides with a sharp decline in the commercial aerospace markets, and a 4% sales decline at Barnes Distribution. The decline at Barnes Distribution reflects the impact of adverse market conditions in the manufacturing, industrial and transport services sectors. From a geographic perspective, our foreign sales increased 17% year-over-year, while domestic sales decreased 3%.

In 2001, our net sales were up $29 million, or 4%, over 2000, reflecting a sharp rise in sales at Barnes Aerospace and sales from our 2000 and 2001 acquisitions. This growth was partially offset by a decline in transportation- and telecommunications-related sales at Associated Spring and the adverse impact of weak economic conditions on Barnes Distribution’s sales. The businesses acquired in 2000 and 2001 provided incremental sales of $61 million in 2001: $1 million to Associated Spring, $34 million to Barnes Aerospace and $26 million to Barnes Distribution.

Operating income was $44.8 million in 2002, an increase of 11.2% compared with $40.3 million in 2001. These results reflect higher operating profit at Associated Spring and Barnes Distribution. The year-over-year increase in operating profit was impacted positively by a $4.8 million pretax business consolidation charge, relating primarily to the Associated Spring segment, taken in the fourth quarter of 2001. The charge did not recur in 2002. In addition, operating income in 2002 benefited from efficiencies gained from the actions taken in this business consolidation. These improvements were partially offset by lower profits at Barnes Aerospace due to lower sales volume and additional severance expense, higher postretirement benefit expense at Associated Spring and lower pension income companywide. Pension income decreased by $1.2 million due primarily to reduced investment performance of plan assets and a lower discount rate. The cost of postretirement benefits, other than pensions, increased $1.4 million due to increased benefit levels provided to certain U.S. employees.

Overall operating income margin was 5.7% in 2002 compared with 5.2% in 2001. While gross profit margin held steady at 32.4% in 2002, gross profit margins improved at both Associated Spring and Barnes Distribution. The decline in gross profit margin in Barnes Aerospace, due directly to the sales shortfall, offset the improvements in the other two businesses. Total selling and administrative expenses declined to 26.7% as a percentage of sales, from 27.2% in 2001. In total dollars, selling and administrative expenses increased $0.2 million to $209.2 million in 2002, which included $5.8 million in selling and administrative expenses related to the recent acquisitions, offset by the impact of the $4.8 million fourth-quarter 2001 charge. Reductions in selling and administrative expenses resulting from synergies realized from Barnes Distribution’s integration of Curtis

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were partially offset by the higher pension, postretirement and other compensation costs, including the higher severance expense at Barnes Aerospace.

Operating income was $40.3 million in 2001, compared with $62.9 million in 2000. A number of items contributed to the operating income decline. The primary factors were the impact of a weak industrial economy on sales volume and a shift in the overall sales mix to lower-margin businesses. The $29 million net sales increase was comprised of $61 million in incremental sales from the 2001 and 2000 acquisitions and a $31 million increase in the existing aerospace business, which was substantially offset by a $63 million sales decrease in the higher-gross-margin Associated Spring and Barnes Distribution businesses. Also impacting operating income were higher personnel costs, specifically health insurance and pension costs. Selling and administrative expenses increased $20.5 million in 2001 over 2000, reflecting the fourth-quarter charge and the costs attributable to the newly acquired businesses, as well as the continued investment made in the sales, marketing and engineering functions throughout the company.

Segment Review

Associated Spring sales for 2002 were $322 million, up $43 million, or 15%, from sales of $279 million in 2001. Sales were a record $327 million in 2000. Sales in 2002 increased over 2001 due to higher light vehicle production in the domestic transportation markets as well as from incremental sales from the acquisitions of Forward Industries, Seeger-Orbis and Spectrum, which in the aggregate totaled $40 million. Offsetting these increases was a sharp drop in organic sales of telecommunications and electronics products, as sales to those end markets fell by over 40% in 2002. Domestic sales at Associated Spring grew by approximately 5% in 2002, while foreign sales increased by approximately 38% to $120 million. Sales grew sharply in Europe in 2002, reflecting the Seeger-Orbis acquisition and organic growth in nitrogen gas spring sales from Sweden. Sales were lower in Asia, reflecting the weakness in the telecommunications and electronics markets. Associated Spring’s sales fell in 2001 compared with 2000, due to the sharp contraction in domestic light vehicle production, a weak domestic economy and a worldwide decline in telecommunications and electronics sales.

Associated Spring reported operating profit of $28.1 million in 2002, compared with $19.4 million in 2001 and $44.0 million in 2000. The increase in operating profit in 2002 reflects the higher sales volume; higher profits resulting from actions taken since late 2000 to reduce the business’s cost structure; operational improvements, particularly in Mexico; and the absence of a $4.6 million charge taken in 2001 to reduce the business unit’s infrastructure. This increase was partially offset by a decline in sales of more profitable telecommunications and electronics products, and one-time costs related to the purchase accounting step-up of inventory to fair value at Seeger-Orbis. In 2002, we completed the closure of the Texas spring plant, with retained business from the Texas plant being relocated to other Associated Spring facilities, improving their capacity utilization. As of December 31, 2002, the remaining accrual balance of $0.5 million related primarily to facility holding costs for the Texas plant, which is currently held for sale. Management anticipates that the impact of the transfer of business from the Texas plant will continue to be accretive to operating profit in 2003. The decrease in operating profit in 2001 reflects the sales volume decline and, in particular, the significant shortfall in the more profitable electronics business. In addition, operating profit was significantly impacted in the fourth quarter of 2001 from expenses immediately recognized at the time of the announcement of the Texas plant closure.

Sales at Barnes Distribution were $287 million in 2002, down $11 million, or 4%, from $298 million in 2001; sales in 2000 were $291 million. Sales fell in 2002 due to weak economic conditions within the manufacturing and industrial sectors in the United States and many international markets, which have persisted since late 2000. This was partially offset by new sales initiatives, including an increased focus on national and regional account development, which generated more than $3 million in sales during 2002. This initiative, combined with electronic commerce initiatives, will be a growth driver in 2003 and beyond. Sales increased in 2001 versus 2000 as a result of incremental sales from acquisitions of $26 million, which was largely offset by a $19 million decline in organic sales driven by the weak economic conditions noted above.

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Despite the year-over-year decline in sales, operating profit at Barnes Distribution increased to $7.5 million in 2002 from $5.5 million in 2001. The increase largely reflects higher operating efficiency as synergies from the Curtis acquisition were successfully realized. Operating profit also benefited from an improvement in gross profit margin stemming from selective price increases and lower product procurement costs. Operating profit decreased in 2001 from $12.9 million in 2000 as a result of lower organic sales volume, which more than offset the benefits from incremental sales volume and early realization of synergies from the Curtis acquisition.

Barnes Aerospace sales for 2002 were $183 million, down $17 million, or 9%, from a record $200 million in 2001. Sales in 2000 totaled $135 million. The sales decline in 2002 largely reflected the sharp decrease in global new commercial aircraft deliveries and continued aircraft order cancellations or deferrals by the major airlines in the wake of the events of September 11, 2001. The 2002 decline also reflects lower overhaul and repair sales, as a significant number of aircraft were removed from the active fleet in response to continued low passenger traffic. These factors were partially offset by higher direct and indirect military sales. Sales increased in 2001 versus 2000 as Barnes Aerospace benefited from the successful cultivation of new markets and customers and from approximately $34 million in incremental sales related to the acquisition of Kratz-Wilde/Apex. Total orders for 2002 were $178 million, compared with $216 million in 2001. Order backlog declined to $152 million at December 31, 2002, from $159 million at December 31, 2001. Both orders and order backlog were affected by the same factors that negatively impacted sales in 2002.

Barnes Aerospace operating profit was $10.8 million in 2002, compared with $16.4 million in 2001 and $8.0 million in 2000. Operating profit fell in 2002 primarily as a result of the decline in sales volume. In addition, during 2002, management addressed what is likely to be a protracted recovery in the aerospace industry by reducing employment by approximately 20%, resulting in severance expenses of $1.3 million. Management believes that these headcount reductions and other steps to reduce costs, such as work furloughs and reduced overtime, have properly positioned the business for the current economic environment. Operating profit increased in 2001 versus 2000, reflecting the sharply higher sales volume and the benefit of lean manufacturing initiatives completed throughout the year.

Other Income/Expense

Other income totaled $3.7 million in 2002, compared with $3.9 million in 2001 and $4.8 million in 2000. The decrease in other income in 2002, compared with 2001, was due to foreign exchange transaction gains of $1.2 million in 2002 compared with gains of $1.9 million in 2001, offset by higher equity income from our 45% interest in a joint venture with NHK Spring Co., Ltd. of Japan. The foreign exchange gains related primarily to exposures on U.S. dollar-denominated financial instruments, primarily in our Brazil operation. Our policy is to hedge foreign currency transaction exposure except in locations where the local currency has historically weakened against the U.S. dollar. The decrease in 2001, compared with 2000, was due to lower equity income from the joint venture offset in part by higher net foreign exchange transaction gains.

Lower interest expense in 2002, compared with 2001, was a result of lower market interest rates and a fixed-to-variable interest rate swap agreement that collectively more than offset the impact of an increase in average borrowings. Other expenses declined in 2002 due to an accounting change that eliminated goodwill amortization of $4.2 million in 2001. This change is more fully described in Note 1 to the Consolidated Financial Statements included in this prospectus supplement.

Interest expense and other expenses increased in 2001 as a result of acquisitions. Interest expense increased due to significantly higher borrowings, offset in part by lower average interest rates. Other expenses increased with the additional goodwill amortization associated with the acquisitions.

Income Taxes

Our effective tax rate was 18.0% in 2002, compared with 18.5% in 2001 and 26.6% in 2000. The decline in the tax rate in both 2002 and 2001 is due to a significant shift in the overall mix of income to a higher percentage

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of foreign income, in jurisdictions with tax rates lower than the U.S. statutory tax rate. In addition, the lower tax rate in 2002 reflects the benefit of an Employee Stock Ownership Plan dividend distribution tax deduction. The 2002 tax deduction includes a retroactive election for the 2001 dividend distribution, the result of an amendment to our Retirement Savings Plan (RSP). The effective tax rate is expected to be in the range of 22.0% to 25.0% in 2003, assuming a single-year deduction for the RSP dividends and an anticipated shift in earnings to countries with higher tax rates, primarily the United States.

Net Income and Net Income Per Share

Consolidated net income was $27.2 million in 2002, $19.1 million in 2001 and $35.7 million in 2000. Basic earnings per share was $1.45 for 2002, compared with $1.03 in 2001 and $1.92 in 2000. Diluted earnings per share was $1.42 for 2002, $1.01 for 2001 and $1.90 in 2000.

Liquidity and Capital Resources

Management assesses our liquidity in terms of our overall ability to generate cash to fund our operating and investing activities. Of particular importance in the management of liquidity are cash flows generated from operating activities, capital expenditure levels, dividends, capital stock transactions, effective utilization of surplus cash positions overseas and adequate bank lines of credit.

Our ability to generate cash from operations in excess of our internal operating needs is one of our financial strengths. Management continues to focus on cash flow and working capital and anticipates that operating activities in 2003 will provide sufficient cash to take advantage of opportunities for organic business expansion and to meet our current financial commitments. Future acquisitions are expected to be financed through a mix of internal cash, borrowing and equity.

Operating activities are the principal source of cash flow for us, generating $54.4 million in 2002, $65.0 million in 2001 and $51.9 million in 2000. Operating cash flow in 2002 reflects higher net income when compared with 2001. Depreciation and amortization was reduced due to the absence of $4.2 million of goodwill amortization in 2002, as discussed in Note 1 to the Consolidated Financial Statements included in this prospectus supplement. In addition, depreciation declined $0.7 million due to lower capital spending over the past three years and the retirement of older assets. Management continues to stress the need for effective working capital management, which contributed to positive cash flow in 2002. Significant progress was made in reducing inventory levels, primarily at Barnes Distribution and Barnes Aerospace. Accounts payable decreased in part due to reduced inventory purchases, combined with the impact, in 2002, of aggressive working capital management at the end of 2001. The increase in deferred taxes reflects operating loss carry-forwards generated in 2002 that will be utilized in the future and the impact of a minimum pension liability adjustment. In 2001, the increase in operating cash flow was due primarily to significant improvements in working capital, which more than offset the lower net income in that year.

Investing activities used cash of $48.0 million in 2002, compared with $26.0 million in 2001 and $134.5 million in 2000. Investing activities in 2002 included the acquisitions of Seeger-Orbis and Spectrum. The Seeger-Orbis acquisition was funded from cash held by us outside the United States. In 2001, funds used for two bolt-on acquisitions were offset in part by a favorable purchase price adjustment received in 2001 on the Kratz-Wilde/Apex acquisition. The significant cash use in 2000 is attributable to the purchases of Curtis and Kratz-Wilde/Apex. Our capital spending program focuses on business growth and improvements in productivity and quality. In 2002, we reduced capital spending in response to the economic downturn. We expect to increase capital spending in 2003 to roughly 2001 levels.

Net cash used by financing activities was $24.4 million in 2002 and $13.3 million in 2001, compared with net cash provided by financing activities of $64.8 million in 2000. Cash from financing activities in 2002 included $4.7 million of cash proceeds from the termination of an interest rate swap. This cash, combined with

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cash provided by operating activities, proceeds from additional borrowings and excess cash, was used to fund acquisitions and capital expenditures and to pay dividends. Cash dividends were held at $0.80 per share for 2002. Total cash used to pay 2002 dividends to stockholders was $15.0 million. In 2001, proceeds from the sale of a cross-currency debt swap, combined with strong cash flow from operating activities, were used in part to fund capital expenditures, pay dividends, repurchase our stock and reduce debt. In 2000, the increase in borrowings reflected the issuance of additional long-term debt to fund business acquisitions as well as to supplement cash generated by operating activities.

We maintain bank-borrowing facilities to supplement internal cash generation. At December 31, 2002, we had a $150 million borrowing facility under a three-year revolving credit agreement, of which $32 million was borrowed at an interest rate of 3.05%. Additionally, we had $6.0 million in borrowings under uncommitted short-term bank credit lines, at an interest rate of 2.38%.

Borrowing capacity is limited by various debt covenants. The most restrictive covenant requires us to maintain a ratio of Total Debt to EBITDA, as defined in the revolving credit agreement, of not more than 3.0 times at December 31, 2002. The actual ratio at December 31, 2002, was 2.66 times and would have allowed additional borrowings of $27.6 million. In conjunction with the Kar Products acquisition, we amended the revolving credit agreement, to increase the ratio to 3.25 times for the first three quarters of 2003. The ratio will return to 3.0 times at December 31, 2003, a ratio we expect to meet. In connection with the financing of the acquisition, we borrowed an additional $56 million under the revolving credit facility. At March 31, 2003 we had a principal balance of $98.0 million outstanding under our credit facility. We expect to use all of our net proceeds of this offering to repay a portion of the indebtedness outstanding under our credit facility.

At December 31, 2002, we held $28.4 million in cash and equivalents, predominately in our non-U.S. subsidiaries. Although repatriation of certain non-U.S. cash balances to the United States could have adverse tax consequences, cash held outside the United States is available to fund international cash requirements, including acquisitions.

We believe our credit facilities, coupled with cash generated from operations, are adequate for our anticipated future requirements.

In November 2000, we financed a portion of the Curtis and Kratz-Wilde/Apex business acquisitions by issuing $60 million of privately placed senior notes with three insurance companies. These notes bear an annual fixed rate of 9.34% and are payable in three equal annual installments beginning in 2006. In August 2002, we terminated an interest rate swap agreement that had effectively converted the notes to variable-rate debt. In connection with the swap agreement termination, we received a cash payment of $4.7 million. The corresponding adjustment to the carrying value of the debt is being amortized against interest expense over the remaining life of the notes.

The funded status of our pension plans is dependent upon many factors, including returns on invested assets and the level of market interest rates. Recent declines in the value of securities traded in equity markets and declines in long-term interest rates have had a negative impact on the funded status of the plans. In 2002, no contribution was required and no cash contribution was made to any of the U.S. qualified pension plans. Furthermore, no significant cash contributions to the qualified plans are anticipated in 2003. In accordance with SFAS 87, “Employers’ Accounting for Pensions,” we recorded a minimum pension liability adjustment for underfunded plans as of December 31, 2002, through an after-tax charge of $16.8 million to accumulated other non-owner changes to equity.

Market Risk

Market risk is the potential economic loss that may result from adverse changes in the fair value of financial instruments. Our financial results could be impacted by changes in interest rates, foreign currency exchange rates

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and commodity price changes. We use financial instruments to hedge our exposure to fluctuations in interest rates and foreign currency exchange rates. We do not use derivatives for speculative or trading purposes.

Our long-term debt portfolio consists of fixed-rate and variable-rate instruments and is managed to reduce the overall cost of borrowing while also minimizing the effect of changes in interest rates on near-term earnings. In August 2002, we entered into an interest rate swap agreement that effectively converts $18.8 million of our fixed-rate senior notes to variable-rate debt. This interest swap agreement had a positive impact on 2002 earnings, reducing interest expense by $0.1 million.

Our primary interest rate risk is derived from our outstanding variable-rate debt obligations. At December 31, 2002, the result of a hypothetical 1% increase in the average cost of our variable-rate debt, including the interest rate swap agreement, would have reduced annual pretax profit by $0.6 million.

At December 31, 2002, the fair value of our fixed-rate debt was $153.0 million, compared with our carrying amount of $156.9 million. We estimate that a 1% decrease in market interest rates at December 31, 2002, would have increased the fair value of our fixed-rate debt to $158.5 million.

We have manufacturing, sales and distribution facilities around the world and we make investments and conduct business transactions denominated in various currencies. The currencies of the locations where our business operations are conducted are the U.S. dollar, Canadian dollar, Euro, British pound, Singapore dollar, Swedish krona, Mexican peso, Brazilian real and Chinese renminbi. We are exposed primarily to U.S. dollar-denominated financial instruments at our international locations. A 10% adverse change in all currencies at December 31, 2002, would have resulted in a $1.0 million loss in the fair value of those financial instruments.

Foreign currency commitments and transaction exposures are managed at the operating units as an integral part of their businesses in accordance with a corporate policy that addresses acceptable levels of foreign currency exposures. We do not hedge our foreign currency net investment exposure. To reduce foreign currency exposure in countries where the local currency is strengthening against the U.S. dollar, management has converted U.S dollar-denominated cash and short-term investments to local currency and is using forward currency contracts for other U.S. dollar-denominated assets in an effort to reduce the effect of the volatility of changes in foreign exchange rates on the income statement. In weaker currency countries, such as Brazil and Mexico, management continues to invest excess cash in U.S. dollar-denominated instruments.

Our exposure to commodity price changes relates primarily to certain manufacturing operations that utilize high-grade steel spring wire and titanium. We manage our exposure to changes in those prices through our procurement and sales practices. We are not dependent upon any single source for any of our principal raw materials or products for resale, and all such materials and products are readily available.

Inflation

Management believes that during the 2000–2002 period, inflation did not have a material impact on our financial statements.

Recent Accounting Changes

We adopted SFAS 141, “Business Combinations,” and SFAS 142, “Goodwill and Other Intangible Assets.” SFAS 141 requires companies to account for acquisitions entered into after June 30, 2001, using the purchase method and establishes criteria to be used in determining whether acquired intangible assets are to be recorded separately from goodwill. SFAS 142 sets forth the accounting for goodwill and other intangible assets. Goodwill and other intangible assets with indefinite lives are no longer amortized but instead are evaluated at least annually for impairment by comparing the carrying value to the fair value at the reporting unit level. Intangible assets with finite lives will be amortized over their useful lives. SFAS 142 is effective for acquisitions completed after June 30, 2001, and, as of January 1, 2002, became effective for all other prior acquisitions.

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In August 2001, SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” was issued. This statement was effective on January 1, 2002. Adoption of this standard did not have a material impact on our financial position, results of operations or cash flows.

In April 2002, SFAS 145, “Rescission of FASB Statements No. 4, 44, and 64, amendment of FASB Statement No. 13, and Technical Corrections,” was issued. The standard eliminates an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. The adoption of this statement is not expected to have a material impact on our financial position, results of operations or cash flows.

In June 2002, SFAS 146, “Accounting for Costs Associated with Exit or Disposal Activities,” was issued. This statement provides guidance on the recognition and measurement of liabilities associated with exit or disposal activities and requires that such liabilities be recognized when incurred. This statement is effective for exit or disposal activities that are initiated after December 31, 2002, and does not impact our existing accruals. Adoption of this standard may impact the timing of recognition of costs associated with future exit and disposal activities.

In November 2002, the FASB issued FASB Interpretation 45 (FIN 45), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others.” FIN 45 expands disclosure requirements and requires that a guarantor recognize, at fair value, a liability for its obligation under a guarantee. The recognition and measurement requirements are effective on a prospective basis for guarantees issued or modified after December 31, 2002. Management believes that FIN 45 will not have a material impact on our financial position, results of operations or cash flows. We have complied with the expanded disclosure requirements.

In December 2002, SFAS 148, “Accounting for Stock Compensation—Transition and Disclosure,” was issued. This statement addresses transition provisions and disclosure requirements. We have complied with the amended disclosure requirements.

Recent Developments

For a discussion of our results of operations for the three months ended March 31, 2003 and 2002 and our liquidity and capital resources as of March 31, 2003, see our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003, which is incorporated herein by reference.

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BUSINESS

Overview

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Barnes Distribution, representing approximately 36% of our net sales for 2002, is an international distributor of industrial maintenance, repair and operating (MRO) supplies; and

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Competitive Strengths

Strong Historical Customer Relationships. We have established long-standing relationships with customers in a variety of industries, including automotive, electronics and aerospace. We work collaboratively with our customers from the development stage to manufacture products that meet their individual performance and cost requirements. Associated Spring’s Product Development Center (PDC) provides engineering and other resources to customers relating to design of new components and trouble shooting for existing designs. Barnes Aerospace’s research and development team works with customers to improve the design and manufacturability of components and assemblies. We are one of only a few suppliers with an on-site sales office or open access to the facilities of the major aerospace OEMs, positioning us to be a primary resource for new products and technical support. Similarly, Barnes Distribution has developed close ties with its national accounts and other customers through recurring contact in the course of providing inventory management services over extended periods.

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Business Strategies

Our goal is to build lasting value for our stockholders by generating sustainable, profitable growth. We seek to achieve this goal by pursuing the following strategic initiatives:

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Generate Internal Growth and Profitability both Through New Products for Customers and Through New Customer Relationships.

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Additionally, we continue to invest in our global sales and marketing functions to position us to reach new customers and to increase our sales to existing customers. For example, we opened an aerospace sales office in the United Kingdom and hired sales people dedicated to the military aerospace market. At Barnes Distribution, we expanded our dedicated national accounts sales force to increase sales to our national customers and implemented e-commerce initiatives to attract customers interested in maintaining their own inventory. At Associated Spring, we increased our U.S. sales personnel and added a European sales manager. Each of these initiatives, implemented during the last three years, has resulted in new customers and increased sales in the targeted markets.

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Identifying and supporting change agents in each business unit, including a continuous improvement coordinator and core team;

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Training the workforce in, and empowering them with, various continuous improvement tools, such as Kaizen workshops, Poka-Yoke, 5S and Six Sigma;

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Defining how improvement can be measured, standardizing short-term and long-term performance indicators; and

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Identifying and disseminating lessons learned throughout the organization.

By continuously focusing on process improvements, we seek to increase operating efficiency, reduce waste, ensure high quality and customer satisfaction and improve profitability.

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Acquisition Focus

Business Acquired	Business Conducted	Date of Acquisition	Barnes Business Unit

Nitrogen gas spring business of Teledyne Industries	Design and manufacture of nitrogen gas springs	August 1999	Associated Spring

Curtis Industries	Distribution of MRO supplies and security products	May 2000	Barnes Distribution

Kratz-Wilde/Apex	Fabrication and machining of aerospace components	September 2000	Barnes Aerospace

Euro Stock Springs	Distribution of die and other standard springs	January 2001	Barnes Distribution

Forward Industries	Design and manufacture of nitrogen gas springs	November 2001	Associated Spring

Seeger-Orbis	Manufacture of retaining rings	February 2002	Associated Spring

Spectrum Plastics	Manufacture of plastic injection-molded components and assemblies	April 2002	Associated Spring

Kar Products	Distribution of MRO supplies	February 2003	Barnes Distribution

Associated Spring

Associated Spring is the largest manufacturer of precision springs in North America and one of the largest precision spring manufacturers in the world. Our ability to produce virtually every type of precision spring gives

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us an advantage as we seek to be the preferred supplier to our customers in our targeted markets. Acquisitions since 1999 have added or expanded Associated Spring’s capabilities in the areas of nitrogen gas springs, retaining rings and injection-molded plastic-on-metal and metal-in-plastic components and assemblies. Our ability to support our customers’ needs from design to manufacture and the breadth of our product offerings make Associated Spring an attractive option for customers looking for a single source for their product needs. We also own a 45% interest in NHK-Associated Spring Suspension Components Inc. (NASCO), a joint venture corporation that manufactures suspension springs at its facility in Bowling Green, Kentucky. Our joint venture partner, NHK Spring Co., Ltd. of Japan, is one of the world’s largest spring makers.

Products and Services

Our Associated Spring business designs and manufactures a variety of precision springs, stampings, components and assemblies. A majority of Associated Spring’s products are highly-engineered custom solutions that we design and develop in collaboration with our customers from concept through manufacturing. Through our Product Development Center, which we believe is unique among North American spring manufacturers, we have the ability to execute product design and development, physical product and material testing, rapid prototyping and reduction of manufacturing-cycle times. Our products include:

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Precision mechanical springs of all types, including suspension springs;

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Nitrogen gas springs and manifold systems;

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Retaining rings; and

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Injection-molded plastic-on-metal and metal-in-plastic components and assemblies.

Precision Mechanical Springs. Associated Spring is equipped to produce virtually every type of precision mechanical spring, from fine hairsprings for electronics and medical instruments to large heavy-duty springs for machinery. Our springs are incorporated into many types of products including automobiles, engines, cellular phones, household appliances and electronics, biomedical devices, industrial machinery, heavy trucks and office equipment. NASCO, which is accounted for as an equity investment in our financial statements, manufactures suspension springs.

Nitrogen Gas Springs. Associated Spring also manufactures nitrogen gas springs and manifold systems used to precisely control stamping presses. Associated Spring entered the nitrogen gas spring business in August 1999 with its acquisition of the nitrogen gas spring business of Teledyne Industries, Inc. and further expanded the business in November 2001 with its acquisition of Forward Industries. Nitrogen gas springs and manifold systems manufactured by Associated Spring are used in the appliance, automotive, heating and cooling, can making, sheet metal forming and electrical industries.

Retaining Rings. Associated Spring expanded its retaining ring and snap ring business with the Seeger-Orbis acquisition in January 2002. Based in Germany, Seeger-Orbis is the original inventor of the retaining ring, and Seeger is the universally recognized brand name for high-quality retaining rings. In Europe, Seeger-Orbis is the leading manufacturer of retaining rings—often called “Seeger rings”—used in a number of transportation and industrial applications. Consistent with its strategy of cross-selling acquired product lines to its existing customers, Associated Spring has begun selling the Seeger retaining rings to its North American customers.

Injection-Molded Plastic-on-Metal and Metal-in-Plastic Components and Assemblies. The acquisition of Spectrum Plastics in April 2002 provided Associated Spring with the capability to offer more complete product solutions with discrete or continuous metal-in-plastic and plastic-on-metal injection-molded components. Spectrum is a premier manufacturer of plastic injection-molded components and assemblies that are used primarily in the telecommunications, electronics, medical and consumer goods industries. Many of Spectrum’s historical customers are also customers of Associated Spring, giving us the opportunity to incorporate Associated Spring components into products sold to these customers by Spectrum and to incorporate Spectrum components into products sold to these customers by Associated Spring.

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The Precision Spring Industry

Associated Spring manufactures highly-engineered custom components for use in a wide variety of applications. We estimate that the total market for light and heavy duty springs in North America is at least $4.0 billion per year. We estimate that the precision-engineered subset of the overall spring market, which is the core part of the market we serve, is at least $1.9 billion per year in North America. Manufacturers of automotive products, consumer products, farm equipment, telecommunications, medical devices, home appliances and electronics are primary end-users of precision springs. Although it is consolidating, the precision spring market is still fragmented. Similarly, there are multiple producers of nitrogen gas springs globally, although Associated Spring has a significant market share. A precision spring manufacturer’s ability to invest in design and development and to provide product breadth and attractive prices are fundamental advantages in the market today.

The precision spring industry serves a broad range of end-markets in industries, many of which are cyclical in nature. However, the variety of the end-markets tempers the impact from the cyclical nature of the underlying industries. A significant driver of the demand for precision springs in North America is light vehicle production, which includes cars and light-duty trucks such as pickups, minivans and SUVs. Light vehicle production in North America has been at or near record levels in each of the past five years and reached an all-time high of 17.7 million vehicles in 2000. In 2001, production dropped to 15.8 million vehicles as auto manufacturers cut production to address high dealer-level inventories. In 2002, production increased to 16.7 million vehicles, and production was 4.2 million vehicles during the first quarter of 2003, compared with 4.1 million vehicles during the first quarter of 2002. Production for the full year 2003 is expected to be slightly below the production level of 2002.

The overall demand for durable goods also has an impact on both our mechanical springs and our nitrogen gas spring products. Some of our mechanical springs are used to make big-ticket items such as refrigerators, washing machines and generators. Our nitrogen gas spring products are used primarily in tool and die applications for a variety of heavy-duty metal stamping processes. Demand for durable goods that require stamped metal is a key driver of tool and die builds, which in turn affects the demand for our nitrogen gas spring products. During recessionary periods or times of economic uncertainty, demand for big-ticket products is usually weak, as consumers defer purchases until economic conditions improve. Consumer purchases of durable goods have risen in eight of the last 10 years, but fell in 2000 and 2001 due to the recession and the aftermath of the September 11th terrorist attacks. In 2002, consumer purchases of durable goods grew by 5.6% from 2001 levels and have been flat in the first two months of 2003 compared to the same period of 2002.

Our mechanical springs are also used in a variety of products for the telecommunications and electronics market. The market for telecommunications and electronics products has been in a severe downturn since early 2001. In the current economic downturn, we have seen a significant drop in the demand for the springs we manufacture for the telecommunications and electronics end markets. This contraction in the telecommunications and electronics markets may continue, further impacting demand for our products sold to these industries.

Customers

Associated Spring’s customers are primarily durable goods manufacturers in industries such as transportation, consumer products, farm equipment, telecommunications, medical devices, home appliances and electronics. In the transportation industry, our customers include both OEMs and their suppliers. Associated Spring’s reliance on the “big three” automakers has decreased steadily from approximately 38% of sales in 1999 to approximately 30% of sales in 2002.

Competition

Associated Spring competes with many large and small companies engaged in the manufacture and sale of custom metal components and assemblies. Our primary competitors include MW Industries Inc., MUBEA, Inc.,

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Peterson American Corporation, Scherdel GmbH and Chuo Spring Co., Ltd. We compete on the basis of price, quality, service, reliability of supply, technology, innovation and design. Our global scope also positions us to service our customers as they move their operations to lower cost locations outside the United States.

Manufacturing and Distribution

Associated Spring has approximately one million square feet of manufacturing space in 14 facilities in the United States, Brazil, Canada, China, Germany, Mexico, Singapore and Sweden. NASCO manufactures suspension springs at its facility in Bowling Green, Kentucky. Associated Spring’s manufacturing facilities are strategically located to take advantage of proximity to its customers and lower cost labor. We believe that as customers continue to shift production to lower cost markets, the importance of having non-U.S. manufacturing capabilities will continue to grow. Associated Spring’s global manufacturing capabilities give it the ability to effect prompt, efficient delivery of finished parts, components and assemblies when and where they are needed. Associated Spring continually upgrades its manufacturing operations to enhance productivity, quality and response time. Associated Spring also aggressively utilizes lean manufacturing techniques to build competitive advantage and improve profitability. These techniques include, among others, the use of manufacturing cells, visual factory aids, Kaizen events, total productive maintenance programs and Six Sigma quality teams.

Sales and Marketing

Associated Spring’s products are sold primarily through Associated Spring’s direct sales force and through the Raymond division of Barnes Distribution. Associated Spring acts not only as a supplier, but as a resource for specialized engineering and design solutions. Because many of Associated Spring’s products are precision engineered, we collaborate with our customers on a continuous basis to develop new products or designs that meet their needs. Our salespeople work closely with the engineering departments of our customers, while our competitors’ salespeople generally work only with our customers’ purchasing departments. To equip our salespeople to perform in this capacity, new salespeople go through engineering training where they learn the basic science of springs and all salespeople receive in-plant training for two weeks each year that covers how our products are made.

Design and Development / Research and Development

Associated Spring aims to be the most technologically advanced, creative and responsive global supplier of precision metal components. A majority of the products manufactured by Associated Spring are custom components made to customers’ specifications. Our engineers and salespeople continually look for ways to help our customers refine new designs and work collaboratively with our customers to provide new products and services. These activities enable us to develop and maintain solid, long-term customer relationships. In the last five years, Associated Spring has invested more than $100 million in systems and technology, training and human development. We believe Associated Spring’s Product Development Center, located in close proximity to our major customers in Detroit, Michigan, is unique among spring manufacturers in its ability to design, develop, prototype, and extensively test new products and materials. Associated Spring also utilizes advanced computerized dynamic simulation technology which enables its engineers to analyze the performance of component assemblies in a realistic working environment. Associated Spring’s team includes some of the foremost experts in their fields, with numerous Ph.D.s and advanced-degree professionals in a broad range of engineering disciplines.

Barnes Distribution

Barnes Distribution is an industry leader in the distribution of MRO supplies. Barnes Group entered the distribution industry with its acquisition of Bowman Products in 1964. The Bowman operations were combined with the Raymond division of Associated Spring, which had historically distributed certain of Associated Spring’s products, and the operations of Motalink and Autoliasons, both of which were acquired in 1973, to form

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what is now Barnes Distribution. The Curtis Industries acquisition in 2000 and the Kar Products acquisition in 2003 more than doubled the size of Barnes Distribution’s pre-2000 operations. We believe Barnes Distribution is now one of the 20 largest industrial distributors in North America. Barnes Distribution also distributes products in France and the United Kingdom.

Products and Services

Barnes Distribution distributes MRO supplies under seven widely recognized brands: Bowman, Curtis, Mechanics Choice, Kar, Raymond, Autoliaisons and Motalink. In addition to private-label products, some of which are manufactured by third-party OEMs to Barnes Distribution’s specifications, we also sell name-brand products such as 3M, Loctite, Nucor and Stanley. Barnes Distribution distributes a wide variety of replacement parts and other products and provides related inventory management services. The products distributed by Barnes Distribution are generally products ordered on a recurring basis that have a low per-piece cost. Our primary products include fasteners, special purpose hardware, electrical supplies, hydraulics and security products. Through our Raymond division, we also distribute mechanical die and nitrogen gas springs, mechanical struts and standard parts such as coil and flat springs, most of which are manufactured by Associated Spring. Barnes Distribution regularly stocks approximately 50,000 stock keeping units, or SKUs, and can access over a million more.

Barnes Distribution also offers customers an array of service options designed to increase its customers’ productivity, while decreasing or eliminating their transaction costs. Our service options range from basic catalog ordering to a vendor managed inventory model. Barnes Distribution primarily provides services in a vendor managed inventory model where, with limited customer involvement, we monitor inventory levels, track usage, replenish inventory and provide inventory reporting. Barnes Distribution uses innovative methods and new technologies to solve complex supply problems. Additionally, Barnes Distribution offers e-business solutions that provide for seamless integration with customers’ enterprise resource planning, or ERP, systems and e-procurement exchanges and a website that offers technical information, material safety data sheets and an electronic catalog. We also have product specialists that regularly provide on-site training seminars and technical assistance for our customers.

The MRO Distribution Industry

The market for industrial MRO supplies in North America is estimated to be between $300 and $320 billion per year. The industrial distribution industry is extremely fragmented, with an estimated 185,000 industrial distributors operating in North America. The top 50 distributors represent approximately 14% of the overall market, with no single company holding more than a 2% share of the market. Distributors ranking 51-100 represent approximately 1% of the market, and the remaining distributors represent approximately 85% of the market. Our served market, which consists of high-volume, low-cost, consumable MRO supplies, makes up approximately 5-10% of the overall industrial distribution market, with an estimated annual value of between $15 and $32 billion.

Industrial distributors typically sell a broad range of products for diverse industrial, commercial, construction and maintenance applications. Excluding fasteners, the majority of products sold are not components of manufactured products. There are three basic methods used to sell and distribute MRO supplies:

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A catalog order model where customers order from a catalog and products are shipped by the vendor to the customer from one or more centralized locations;

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A branch distribution model, where the inventory of MRO supplies is maintained at the distributor’s branch location and either picked up by the customer at the distributor’s branch or delivered by the distributor from the branch to the customer’s site; and

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A vendor managed inventory model, where inventory is maintained at the customer’s site and is administered by either the distributor or the customer through e-commerce initiatives, which may include the ancillary procurement of products not regularly stocked by the vendor.

Industrial activity in the United States, Canada and Europe is the most significant driver of the MRO market in those geographic areas. In the United States, the MRO market generally moves in the short-term with the growth or decline of the Industrial Production Index, which has declined during both 2001 and 2002 due to recessionary conditions. The MRO market is currently characterized by the following trends:

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MRO users have reduced inventories and increased order frequency, reducing order size and increasing transaction costs to the distributor. This trend favors suppliers who are able, through their scale and efficiency, to reduce their per-order transaction costs.

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MRO users are increasingly looking to consolidate their supplier base to reduce administrative burdens and costs. This trend favors suppliers who carry more products, provided that those suppliers’ prices remain competitive.

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End users are demanding more value-added services from their suppliers, provided that such services also produce documented cost savings. This trend favors suppliers who provide vendor managed inventory services on a cost-effective basis.

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Manufacturers are relocating from Western Europe to Eastern Europe and the Far East, which increases the size and attractiveness of the MRO market in Eastern Europe and the Far East. This trend creates an opportunity for suppliers to expand their global presence by meeting the needs of these new markets.

We believe that we are well positioned to benefit from these trends due to our scale and efficiency, product breadth, value-added services, e-commerce and automated solutions and our global capabilities.

Customers

Barnes Distribution has approximately 130,000 customers around the world. Our primary customers include auto dealerships, car and truck fleets, factories and railroads. We are not dependent on any single customer for a significant portion of our Barnes Distribution sales.

Competition

Barnes Distribution faces active competition. The products sold by Barnes Distribution are not unique, and its competitors carry substantially similar products. We compete based on price, timeliness and reliability of supply, service alternatives and product breadth and quality. Barnes Distribution competes most directly with other companies engaged in the distribution of high-volume, low-cost consumable MRO supplies using either the branch or vendor managed inventory model. Our primary competitors include Fastenal Company, Lawson Products, Inc., and MSC Industrial Supply Co. In the European market, Barnes Distribution’s primary competitors are Wurth Group, RS Components Ltd. and Buck and Hickman Ltd. We believe that our acquisitions of Curtis Industries and Kar Products position Barnes Distribution to take advantage of economies of scale that will drive down its cost of servicing the end-user. We expect these economies of scale will permit Barnes Distribution to reduce its costs without sacrificing the high level of service that it provides to its customers.

Sales, Marketing and Distribution

Barnes Distribution sells its products primarily through its direct sales force of over 1,600 people in eight countries, and it also sells its products through distributors in many other countries. Barnes Distribution primarily sells and markets its products through the vendor managed inventory model, where inventory is maintained at the customers’ locations and replenished as necessary either by Barnes Distribution sales representatives or the customer through e-commerce facilities. In the vendor managed inventory model, we monitor inventory levels,

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track usage, replenish inventory and provide inventory reporting with limited customer involvement. The breadth of our sales force allows us to provide on-site service throughout North America. We are seeking to expand the customer base that we serve by offering e-business solutions that permit customers who desire to manage their own inventory to order products electronically so that they can more efficiently manage their own inventory and still obtain the on-site benefit of the vendor managed inventory model of MRO distribution.

Barnes Distribution has distribution centers strategically located throughout North America that enable us to ship 97% of orders within 24 hours and enable our customers to receive their orders within one to two days. Our U.S. and Canadian operations, including Kar Products, process approximately 5,500 orders per day with an average order value of approximately $250 per order. This excludes transactions for Raymond and for our European operations. To accommodate this transaction volume, Barnes Distribution employees utilize automated solutions to streamline inventory management and order processing.

Barnes Aerospace

Barnes Aerospace produces precision machined and fabricated components and assemblies for OEMs of turbine engines and airframes for commercial aircraft, military and business jets and land-based industrial gas turbines. It also provides jet engine component overhaul and repair services for many of the world’s major commercial airlines, the U.S. military and OEMs. Our Kratz-Wilde/Apex acquisition in 2000 extended our product depth and customer penetration and provided an additional FAA-licensed aircraft engine repair facility.

Products and Services

Barnes Aerospace provides critical manufacturing and repair services for aircraft engine and airframe manufacturers or OEMs, airlines and the U.S. military. We serve our aerospace customers in four primary areas:

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Precision machining;

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Advanced fabrication;

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Overhaul and repair services; and

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Kits and assemblies.

Precision Machining. We have produced engine components for virtually every major commercial engine program and our components can be found in airplanes serving most major airlines throughout the world. Our components are located in the compressor, combustor and turbine sections of the engine and include engine cases, bearing housings, rotating air seals, and complex assemblies. Our precision machining operations specialize in tight tolerance gear machining and complex assemblies, offering customers complete assembly, balancing and test services.

Advanced Fabrication. We are a prime source for fabricated airframe and engine components and assemblies for global aircraft manufacturers. Our advanced fabrications operations specialize in hot and superplastic forming, cold forming, welding and brazing, honeycomb brazing and grinding, large-scale multi-axis milling and turning, laser and water jet cutting technologies and diffusion bonding. Components manufactured by our advanced fabrications operations are found throughout the airframe, nacelle and engine and include liners, shroud segments and retainer rings.

Overhaul and Repair Services. We are a global leader in turbine engine component repair, overhaul and modification services. We have government certified repair stations located in Connecticut, Ohio and Singapore. We serve more than 90% of the world’s major commercial airlines. Our primary overhaul and repair capabilities for turbine engines include:

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Overhaul of engine cases;

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Honeycomb replacement for sealing components;

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Restoration of knife-edge seals; and

•

Complete overhaul of bearing housings, turbine supports and gas generator cases.

We provide repair and overhaul services for the engines manufactured by General Electric, Rolls-Royce and Pratt & Whitney, among others. Our repair and overhaul operations require a high level of expertise, advanced technology and sophisticated equipment. Our ability to complete large complicated repairs quickly benefits our customers by allowing them to defer replacement purchases.

Kits and Assemblies. In order to reduce purchasing costs, streamline purchasing decisions and have greater control over quality, purchasing departments of OEMs and aircraft operators seek suppliers that can provide the scale, expertise and capacity to meet their needs. These customers are increasingly looking to simplify their supply chain by purchasing kits and completed assemblies rather than single parts. Our kitting and assembly services offer customers the opportunity to simplify their supply chain. Our kits permit customers to order finished, tested assemblies from us rather than procuring multiple detail parts and carrying extra inventory. We believe that our ability to provide a broad array of products and services, our reputation for quality and timely delivery and our established market presence position us to take advantage of this trend in the aerospace industry.

The Aerospace Industry

Barnes Aerospace operates in both the OEM and the maintenance, repair and overhaul segments of the aerospace market. We manufacture components for and provide services to a broad spectrum of the aerospace industry that includes commercial, regional, business and military aircraft manufacturers and operators. We also manufacture components for and provide services to the industrial gas turbine industry. The industries in which we compete are comprised of a large number of small, specialized companies and a limited number of large, well-capitalized companies. These industries have been consolidating in recent years and we believe that this consolidation will continue for the foreseeable future.

The events of September 11, 2001 and their aftermath impacted both the OEM and the maintenance, repair and overhaul markets. The most direct impact from these events was an immediate reduction in commercial air travel. Demand for air travel is affected by a number of factors, including the absolute level of general economic activity. Recent events such as the war in Iraq and the outbreak of severe acute respiratory syndrome, or SARS, have had a negative impact on air travel, the long-term effects of which cannot be determined.

The decline in demand for air travel has negatively impacted the operating performance and profitability of the worldwide airline industry. As a result, many airlines have reduced their fleet size by temporarily grounding or permanently retiring older and less cost-efficient aircraft. New aircraft orders have fallen and certain airlines have begun to delay or cancel scheduled deliveries of new aircraft.

In addition to deferring new aircraft purchases, we believe many airlines elected to defer certain optional maintenance and refurbishment activities in order to minimize total cash outlays in response to weaker air travel demand. A significant portion of maintenance, repair and overhaul activity required on commercial aircraft is mandated by government regulation that limits the total time or number of flights that may elapse between scheduled maintenance, repair or overhaul events. As a result, although short-term deferrals are possible, maintenance, repair and overhaul activity is ultimately required to continue to operate the aircraft in revenue-producing service. Therefore, trends in the maintenance, repair and overhaul market are closely related to the size and utilization level of the worldwide aircraft fleet.

The negative effects of the events of September 11, 2001 on the commercial aviation market have been somewhat offset by increased funding of new military aircraft programs such as the F-22 Raptor, the F-18 Super Hornet, the Joint Strike Fighter and the V-22 Osprey. More than 4,300 aircraft are expected to be delivered over the lives of these four programs.

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We believe that a number of significant long-term trends will continue to increase the demand for the design, engineering, manufacture, repair and overhaul of aircraft components. These trends include:

Increased Air Transit and Aircraft Production. Despite recent events, we believe that the longer-term growth drivers for air transit and aircraft production remain intact. The FAA has forecasted that commercial air traffic demand, as measured by revenue passenger miles, will grow at an average rate of approximately 4% per year through 2014. Further, the FAA has forecasted that this increase in demand will lead to growth in the size of the aircraft fleet at an average rate of approximately 2% per year over the same period. We expect that this continued growth in air transit and aircraft production will increase the demand for aircraft component production and repairs.

Growth in the Market for Regional Jet Aircraft. Regional jets are becoming a larger part of aircraft fleets as airlines purchase them to replace older turboprop aircraft, increase the frequency of flights to less densely populated destinations, enhance airline operating and cost efficiency and adjust the size of the aircraft in their fleets to coincide with passenger demand. The FAA projects that the size of the regional jet fleet will grow at an average rate of approximately 9% per year through 2014. As more regional jets enter service, and as these aircraft get older, we believe that product sales to the regional jet market will increase and that demand for aftermarket repair and services in this market will also increase.

Increased Military Spending and Procurement. The Department of Defense budget for procurement of military aircraft in 2003 is $25.5 billion. We believe that the budget for operations and maintenance, commonly referred to as O&M, which funds near-term sustainment and readiness objectives, will grow with the overall level of aircraft procurement spending. Both procurement and O&M funding are important drivers of our military component production and repair business.

Increased Outsourcing by Aircraft Operators and OEMs. Aircraft operators have been under increasing pressure to reduce both operating and capital costs associated with providing aviation services. Overhaul and repair services on many parts require a technical expertise that the aircraft operators do not possess and cannot afford to develop. Additionally, aircraft components manufactured and sold by third party suppliers and components that have been repaired and overhauled are generally less expensive than new aircraft components manufactured by OEMs. As a result, OEMs and aircraft operators have increasingly outsourced aircraft components and repair and overhaul services. We expect this trend to continue as the worldwide airline industry continues to experience economic difficulties.

Reduced Number of Approved Suppliers. In order to reduce purchasing costs, streamline purchasing decisions and have greater control over quality, purchasing departments of OEMs and aircraft operators look for suppliers that can provide the scale, expertise and capacity to meet their needs. These customers require vendors to offer a broader range of services and seek to simplify their supply chain by purchasing kits and completed assemblies rather than single parts. We believe that our broad array of aviation products and services, our reputation for quality and timely delivery and our established market presence, position us to be selected as an approved supplier to these important customers.

Industrial Gas Turbine Market. Our aerospace group also operates in the OEM and maintenance, repair, and overhaul markets for industrial gas turbine components. According to the U.S. Energy Information Administration, consumption of electricity is projected to grow worldwide at a compound annual growth rate of approximately 2% through 2025. We believe that this long-term trend of increased electricity consumption should result in increased demand for the production of new industrial gas turbines and the repair and overhaul of related industrial gas turbine components, although a number of other factors also influence demand for these products and services.

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Customers

Customers of Barnes Aerospace include airframe and gas turbine engine manufacturers for commercial, military and business jets and land-based industrial gas turbines. Barnes Aerospace derived nearly 60% of its 2002 revenue from customers with whom it has maintained a relationship for at least 20 years. Because of our strong customer relationships and product development efforts, we are well-positioned to participate in component and assembly requirements for current and next generation engine and airframe programs. For example, we are one of the largest outside suppliers of structural components used in the GE 90-115B turbine engine, which is the exclusive engine for the next-generation Boeing 777-300ER aircraft. Customers of our overhaul and repair services include major commercial airlines, the U.S. military and engine overhaul businesses including OEMs. Sales by Barnes Aerospace to five OEMs in the aerospace industry accounted for approximately 60% of its sales for the year ended December 31, 2002.

Competition

Barnes Aerospace’s OEM business competes primarily with both the leading jet engine OEMs and a large number of machining, fabrication and repair companies. Competition is based mainly on price, quality, engineering and technical capability, product breadth and service.

Competition for the repair and overhaul of turbine engine components comes from three principal sources: OEMs, major commercial airlines and other independent service companies. Some major commercial airlines own and operate their own service centers and sell repair and overhaul services to other aircraft operators. OEMs also maintain service centers that provide repair and overhaul services for the components that they manufacture. Other independent service organizations also compete for the repair and overhaul business of other users of aircraft components. We believe that the principal competitive factors in the repair and overhaul market are turnaround time, technical capability, price, quality and overall customer service.

Manufacturing

Barnes Aerospace manufactures highly-engineered components and assemblies for aircraft engines and airframe builders at facilities in the United States. Barnes Aerospace’s machining and fabrication operations produce critical engine and airframe parts through technically advanced processes such as laser drilling and large scale multi-axis milling and turning, with a focus on difficult materials such as titanium and other aerospace alloys. Additional capabilities include super-plastic forming and diffusion bonding, and machining of aluminum and other sheet metal products. Barnes Aerospace performs repair, overhaul and modification services at two repair facilities in the United States and at one repair facility in Singapore. Our repair facilities are all government certified. At these facilities we specialize in the refurbishment of jet engine components through processes including electron beam welding, plasma coating, vacuum brazing and water jet cleaning. Our Connecticut facility boasts the largest electron beam welder on the east coast, allowing it to refurbish parts that are too large for most of its competitors. Barnes Aerospace has implemented Kaizen processes, total productive maintenance and cellular manufacturing, all of which foster a culture of continuous improvement. Barnes Aerospace’s manufacturing processes are integrated, allowing it to perform precision machining and fabrication and manufacturing to produce a finished part.

Sales and Marketing

Barnes Aerospace products and services are sold primarily through Barnes Aerospace’s sales employees. Most of the Barnes Aerospace sales employees have technical degrees and industry experience. Barnes Aerospace works in close partnership with its customers. These partnering relationships add value to the process of manufacturing and maintenance and allow us to assess customer needs, share new technologies, anticipate future requirements and work with research and development to meet customers’ needs and requirements. Our sales employees continually seek to expand the products we sell to our customers, such as by seeking to provide

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kits and assemblies rather than just individual components. Barnes Aerospace has on-site customer representatives at General Electric and Rolls-Royce and has sales offices in close proximity to Pratt & Whitney’s and Honeywell’s operations. Barnes Aerospace’s facility in Singapore gives it a significant advantage in servicing the maintenance and repair needs of Asia-based airlines, and its United Kingdom sales office is instrumental in serving its European customer base.

Design and Development / Research and Development

Barnes Aerospace offers a comprehensive range of in-house support and capabilities, including a wide range of engineering expertise. Similar to Associated Spring, many of Barnes Aerospace’s products are custom components made to customers’ specifications. Barnes Aerospace’s customers typically design the component or assembly to be manufactured, and Barnes Aerospace’s state-of-the-art facilities allow it to provide customer engineering services in manufacturing research, testing and evaluation to assess and improve the design and manufacturability of the component or assembly. By participating in the design phase of the process, Barnes Aerospace positions itself to be a long-term supplier of components and assemblies to the engine or airframe projects in which it participates. Barnes Aerospace’s advanced fabrications operations continually update their process capabilities to provide customers with superior solutions to design challenges. In order to respond to the emphasis on cost reduction in the airline industry, Barnes Aerospace’s repair and overhaul operations continually seek to reduce its customers’ costs by implementing unique repair technologies and processes.

Government Regulation

The FAA regulates the manufacture, repair and operation of all aircraft and aircraft parts operated in the United States. Its regulations are designed to ensure that all aircraft are continuously maintained in proper condition to ensure safe operation of the aircraft. Similar rules apply in other countries. All aircraft must be maintained under a continuous condition monitoring program and must periodically undergo thorough inspection and maintenance. The inspection, maintenance and repair procedures for the various types of aircraft and equipment are prescribed by regulatory authorities and can be performed only by certified repair facilities utilizing certified technicians. Certification and conformance is required prior to installation of a part on an aircraft. Certification for the repair of a particular component can be obtained through source approval from the OEM manufacturing the engine in which the component is contained or an approval from a designated engineering representative, or DER, who is an engineer authorized by the FAA to approve repair procedures. Barnes Aerospace has source approvals for most of the repairs it performs on a recurring basis. We also employ a DER who can review and approve particular repairs when appropriate. Aircraft operators must maintain logs concerning the utilization and condition of aircraft engines, life-limited engine parts and airframes. In addition, the FAA requires that various maintenance routines be performed on aircraft engines, some engine parts and airframes at regular intervals based on cycles or flight time. Engine maintenance must also be performed upon the occurrence of certain events, such as foreign object damage in an aircraft engine or the replacement of life-limited engines parts.

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Facilities

We conduct our operations in 22 manufacturing facilities, six sales offices (including headquarters locations) and 31 distribution centers. Our manufacturing facilities are located in the United States, Brazil, Canada, China, Germany, Mexico, Singapore and Sweden, and we have sales offices or distribution centers in the United States, Brazil, Canada, France, Ireland, Mexico, Puerto Rico, Singapore, Spain and the United Kingdom. The following table shows the breakdown of the facilities by operating group:

Type of Facility	U.S. & Canada	Europe	Mexico & South America	Asia Pacific	Total
Associated Spring
Manufacturing	8	2	2	2	14
Sales & Development	2	—	—	—	2
Barnes Aerospace
Manufacturing	7	—	—	1	8
Sales	—	1	—	—	1
Barnes Distribution
Distribution Centers	22	6	2	1	31

Total	39	9	4	4	56

All but three of the manufacturing facilities are owned. The majority of the distribution centers are leased. The above table does not include our corporate office, which is owned, or the headquarters for each of our businesses, one of which is owned and the other two of which are leased.

Raw Materials

None of our business segments or divisions are dependent upon a single source for its principal raw materials, and all such raw materials have, historically, been readily available. A number of raw materials that we use are supplied by as few as two providers; however, we have not had difficulty obtaining these materials as a result. The principal raw materials used by Associated Spring to manufacture its products are high grade spring wire steel and flat rolled steel. The principal raw materials used by Barnes Aerospace to manufacture its products are titanium and inconel; however, Barnes Aerospace also requires special materials such cobalt and other complex aerospace alloys.

Employees

At March 31, 2003, we employed approximately 6,200 people. Approximately 16.6% of our U.S. employees and 20.9% of our non-U.S. employees are covered by collective bargaining agreements which expire between 2003 and 2006. In April 2002, we experienced a work stoppage for one workday at Associated Spring’s Bristol, Connecticut facility in connection with the renewal of a collective bargaining agreement. We consider our relationships with our employees to be good.

Backlog

Our backlog of orders believed to be firm amounted to $207.0 million at March 31, 2003, compared with $205.7 million at the end of 2002. Of the backlog as of March 31, 2003, $148.2 million is attributable to Barnes Aerospace and the balance is attributable to Associated Spring. Approximately 69% of Barnes Aerospace’s backlog is tied to commercial aircraft, while 30% is tied to military, either directly or indirectly.

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Legal Proceedings

We are subject to litigation from time to time in the ordinary course of our business. We do not believe that any pending or threatened litigation or claim will have a material adverse effect on our financial condition, results of operations or cash flows.

Patents and Trademarks

Patents, trademarks, licenses, franchises and concessions are not material to any of our businesses.

Environmental

Our past and present business operations and the past and present ownership and operations of real property by us are subject to extensive domestic and international environmental laws and regulations. We use and generate hazardous substances and wastes in our operations. In addition, many of our current and former properties are or have been used for industrial purposes. Accordingly, we monitor hazardous waste management and applicable environmental permitting and reporting for compliance with applicable laws at our locations in the ordinary course of our business. We may be subject to potential material liabilities relating to any investigation and clean-up of our locations or properties where we delivered hazardous waste for handling or disposal that may be contaminated and to claims alleging personal injury. However, compliance with environmental laws has not had and is not expected to have a material impact on our capital expenditures, earnings or competitive position.

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MANAGEMENT

Our Board of Directors has 10 members and is divided into three classes, with directors in each class serving a three year term. The following table sets forth the names and ages of our executive officers and directors, as well as the positions and offices held by those persons.

Name	Age	Position
Directors

John W. Alden	61	Director

Thomas O. Barnes	54	Chairman of the Board

Gary G. Benanav	57	Director

William S. Bristow, Jr.	49	Director

Edmund M. Carpenter	61	Director, President and Chief Executive Officer

George T. Carpenter	62	Director

Donald W. Griffin	66	Director

Frank E. Grzelecki	65	Director

Mylle H. Mangum	54	Director

G. Jackson Ratcliffe, Jr.	67	Director

Executive Officers

John R. Arrington	56	Senior Vice President, Human Resources

William C. Denninger	52	Senior Vice President, Finance, Chief Financial Officer

Signe S. Gates	53	Senior Vice President, General Counsel and Secretary

Phillip A. Goodrich	46	Senior Vice President, Corporate Development

Francis C. Boyle, Jr.	53	Vice President, Controller

Joseph D. DeForte	60	Vice President, Tax

Lawrence W. O’Brien	53	Vice President, Treasurer

A. Keith Drewett	56	Vice President, Barnes Group Inc., and President, Barnes Distribution

Thomas P. Fodell	52	Vice President, Barnes Group Inc., and Chief Operating Officer, Associated Spring

Richard P. McCorry	41	Vice President, Barnes Group Inc., and President, Associated Spring

Gregory F. Milzcik	43	Vice President, Barnes Group Inc., and President, Barnes Aerospace

Idelle K. Wolf	51	Vice President, Barnes Group Inc., and Chief Operating Officer, Barnes Distribution

John W. Alden. Mr. Alden, 61, retired as Vice Chairman, United Parcel Service of America, Inc. in 2000. He is Chairman of the Corporate Governance Committee, and a member of the Finance Committee and the Compensation and Management Development Committee of our board of directors. From 1988 until his retirement, he served as a director of United Parcel Service. He is a director of Silgan Holdings Inc. and the Dun & Bradstreet Corporation.

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Thomas O. Barnes. Mr. Barnes, 54, is Chairman of the Board of Directors and an employee of Barnes Group. He is an ex officio, non-voting member of the Executive Committee of our board of directors. He is a director of Valley Bank, Inc.

Gary G. Benanav. Mr. Benanav, 57, is Chairman and Chief Executive Officer of New York Life International, LLC since 1997. He is also Vice Chairman and a Director of New York Life Insurance Company. He is Chairman of the Audit Committee, and a member of the Corporate Governance Committee and the Compensation and Management Development Committee of our board of directors. He is a director of Express Scripts, Inc., a full-service pharmacy benefit management company.

William S. Bristow, Jr. Mr. Bristow, 49, is President of W.S. Bristow & Associates, Inc., which is engaged in small business development. He is Chairman of the Executive Committee, and a member of the Corporate Governance Committee, the Finance Committee, and the Audit Committee of our board of directors.

Edmund M. Carpenter. Mr. Carpenter, 61, became President and Chief Executive Officer of Barnes Group in 1998. He is an ex officio, non-voting member of the Executive Committee of our board of directors. From 1996 to 1998, he was a Senior Managing Director of Clayton, Dubilier & Rice, Inc., a private equity firm. From 1988 to 1995, he was Chairman and Chief Executive Officer of General Signal Corporation, a manufacturer of capital equipment and instruments for the process control, electrical, semi-conductor and telecommunications industries. He is a director of Campbell Soup Company and Dana Corporation.

George T. Carpenter. Mr. Carpenter, 62, is President and a director of The S. Carpenter Construction Company, which is involved in general contracting, and The Carpenter Realty Company, which is involved in real estate management. He is Chairman of the Finance Committee, and a member of the Executive Committee and the Corporate Governance Committee of our board of directors. He is a director of Webster Financial Corporation.

Donald W. Griffin. Mr. Griffin, 66, is retired. He is a member of the Audit Committee, the Corporate Governance Committee and the Compensation and Management Development Committee of our board of directors. He was Chairman of the Board of Directors of Olin Corporation from 1996 to April 2003, and President and Chief Executive Officer of Olin from 1996 through 2000. He is a director of Eastman Chemical Company.

Frank E. Grzelecki. Mr. Grzelecki, 65, is retired. He is Chairman of the Compensation and Management Development Committee, and a member of the Executive Committee, the Audit Committee, and the Finance Committee of our board of directors. He was a Managing Director of Saugatuck Associates, Inc., a private investment firm, from 1999 to 2000. He was a director and Vice Chairman of Handy & Harman, a diversified industrial manufacturing company, from 1997 to 1998. From 1992 to 1997, he served as a director and President and Chief Operating Officer of Handy & Harman. Mr. Grzelecki is a trustee of The Phoenix Edge Series Fund.

Mylle H. Mangum. Ms. Mangum, 54, is the Chief Executive Officer of True Marketing Services, a newly formed venture. She is a member of the Corporate Governance Committee, the Finance Committee, and the Compensation and Management Development Committee of our board of directors. From 1999 to 2002, she was the Chief Executive Officer of MMS, a private equity company involved in developing and implementing marketing and loyalty programs in high tech environments. She was President, Global Payment Systems and Senior Vice President, Strategic Planning and Expense Management for Carlson Wagonlit Travel from 1997 to 1999. She is a director of Scientific-Atlanta, Inc., Payless ShoeSource, Inc. and Havertys Furniture Companies, Inc.

G. Jackson Ratcliffe, Jr. Mr. Ratcliffe, 67, is Chairman of the Board of Directors of Hubbell Incorporated, after also serving as President and Chief Executive Officer of Hubbell from 1987 through July 2001. He is a member of the Audit Committee, the Finance Committee, and the Compensation and Management Development Committee of our board of directors. He is a director of Sunoco, Inc., Praxair, Inc. and Olin Corporation.

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John R. Arrington. Mr. Arrington, 56, joined Barnes Group as Senior Vice President, Human Resources in April 1998. From 1995 to 1998, Mr. Arrington was Vice President, Human Resources of U.S. West Communications Group.

William C. Denninger. Mr. Denninger, 52, joined Barnes Group as Senior Vice President, Finance and Chief Financial Officer in March 2000. From 1994 to 2000, Mr. Denninger was Vice President-Finance and Chief Financial Officer of BTR Inc., an industrial products manufacturer. Mr. Denninger is a director of Graham Corporation.

Signe S. Gates. Ms. Gates, 53, joined Barnes Group as Senior Vice President, General Counsel and Secretary in June 1999. From 1996 to 1999, Ms. Gates was Vice President, General Counsel and Corporate Secretary of Axel Johnson Inc., a manufacturing, distribution and service company in the energy, telecommunications and environmental industries.

Phillip A. Goodrich. Mr. Goodrich, 46, joined Barnes Group as Vice President, Business Development in November 1999. He was promoted to Senior Vice President, Corporate Development in December 2000. From 1996 to 1998, Mr. Goodrich was Senior Vice President, Corporate Development of AMETEK, Inc., a manufacturer of electric motors and electronic equipment.

Francis C. Boyle, Jr. Mr. Boyle, 53, joined Barnes Group in April 1978. In his 25-year career with Barnes Group, Mr. Boyle has held a series of increasingly responsible roles in the corporate reporting and accounting functions, and was appointed as our Vice President, Controller in 1997. Prior to joining Barnes Group, Mr. Boyle was employed as an audit manager for Ernst & Young.

Joseph D. DeForte. Mr. DeForte, 60, joined Barnes Group as Vice President, Tax in August 1999. From 1997 to 1999, Mr. DeForte was Vice President and Chief Financial Officer of Loctite Corporation, a manufacturer and distributor of adhesives and sealants. From 1988 to 1997, Mr. DeForte was Vice President, Tax, Loctite Corporation. In 1997, Loctite Corporation became a subsidiary of Henkel KGaA.

Lawrence W. O’Brien. Mr. O’Brien, 53, joined Barnes Group as Vice President and Treasurer in August 2001. From 1997 to 2001, Mr. O’Brien was Vice President and Treasurer of L-3 Communications Corporation. From 1981 to 1996, Mr. O’Brien worked for Pechiney Corporation including serving as Vice President and Treasurer from 1990 to 1996.

A. Keith Drewett. Mr. Drewett, 56, joined Barnes Group as Vice President, Barnes Group Inc. and President, Barnes Distribution in May 2000, upon our acquisition of Curtis Industries. From 1998 to 2000, Mr. Drewett was President and Chief Executive Officer of Curtis Industries, Inc. From 1992 to 1998, he was President of the Automotive and Industrial Division of Curtis Industries. He was also Senior Vice President of Curtis from 1997 to 1998 and Vice President of Curtis from 1992 to 1997.

Thomas P. Fodell. Mr. Fodell, 52, joined Barnes Group in November 1979. Mr. Fodell has held a series of increasingly responsible positions in the sales, marketing and management functions of Associated Spring, and was most recently appointed Chief Operating Officer of Associated Spring in 2002. Prior to that Mr. Fodell was the Vice President, Sales and Marketing from 1999 to 2002, and was the director of worldwide automotive sales from 1997 to 1999.

Richard P. McCorry. Mr. McCorry, 41, joined Barnes Group as President, Associated Spring on May 1, 2003. He was elected as Vice President, Barnes Group Inc. on May 6, 2003. From 2001 to April 2003, Mr. McCorry was President of Textron Power Transmission, a business segment of Textron, Inc. He was Executive Vice President – Global Operations for Textron Industrial Products in 2001, and from 1999 to 2001, he was Managing Director of Textron Automotive Company Italia, S.r.l. From 1995 to 1999, Mr. McCorry held various vice president roles in the operating and engineering functions of Textron and Lear Corporation.

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Gregory F. Milzcik. Mr. Milzcik, 43, joined Barnes Group as Vice President, Barnes Group Inc. and President, Barnes Aerospace in June 1999. From 1997 to 1999, Mr. Milzcik was Vice President and General Manager of International Operations of Lockheed Martin Aircraft and Logistics, an aerospace manufacturing and service company. From 1994 to 1997, Mr. Milzcik was Group Vice President, Manufacturing and Overhaul of Precision Standard, Inc., an aerospace structure manufacturing and engineering services company.

Idelle K. Wolf. Ms. Wolf, 51, joined Barnes Group as Vice President, Barnes Group Inc. and Chief Operating Officer, Barnes Distribution in May 2000, upon our acquisition of Curtis Industries. From 1998 to 2000, Ms. Wolf was Executive Vice President and Chief Operating Officer of Curtis Industries, Inc. She was Senior Vice President and Chief Financial Officer of Curtis from 1997 to 1998, and Vice President of Finance and Chief Financial Officer from 1992 to 1997.

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SELLING STOCKHOLDER

The selling stockholder is offering 823,506 shares of our common stock pursuant to this prospectus supplement and the accompanying prospectus.

The following table sets forth, with respect to the selling stockholder (i) the number of shares of common stock beneficially owned as of March 31, 2003 and prior to the offering contemplated hereby, (ii) the number of shares of common stock to be sold by the selling stockholder under this prospectus supplement, and (iii) the number of shares of common stock which will be owned after the offering by the selling stockholder.

Name	Prior to Offering			Shares Offered	After Offering
	Shares	Percent		Shares Offered	Shares	Percent
GC-Sun Holdings II, L.P.	923,506	4.6	%(1)	823,506	100,000	*

Less than 1% of the outstanding shares of common stock.

(1)

Based on 19,936,075 shares of common stock outstanding as of March 31, 2003. The number of shares reported in the accompanying prospectus as outstanding as of March 31, 2003 (20,231,339 shares), and on which the corresponding percentage included in the accompanying prospectus is based, is overstated by 295,264 shares. See footnote (1) to the table included in the section entitled “Capitalization.”

S-48

UNDERWRITING

We and GC-Sun Holdings II, L.P., as selling stockholder, are offering the shares of common stock described in this prospectus supplement through a number of underwriters. Banc of America Securities LLC, McDonald Investments Inc., Robert W. Baird & Co. Incorporated and BB&T Capital Markets, a division of Scott & Stringfellow, Inc., are the representatives of the underwriters. We and the selling stockholder have entered into an underwriting agreement with the representatives. Subject to the terms and conditions of the underwriting agreement, we and the selling stockholder have severally agreed to sell the underwriters, and each of the underwriters has severally agreed to purchase, the number of shares of common stock listed next to its name below:

Underwriters		Number of Shares
Banc of America Securities LLC		1,694,104
McDonald Investments Inc.		423,526
Robert W. Baird & Co. Incorporated		352,938
BB&T Capital Markets, a division of Scott & Stringfellow, Inc.		352,938

Total		2,823,506

The underwriting agreement is subject to a number of terms and conditions and provides that the underwriters must buy all of the shares if they buy any of them. The underwriters will sell the shares of common stock to the public when and if the underwriters buy the shares from us and the selling stockholder.

The underwriters initially will offer shares to the public at the price specified on the cover page of this prospectus supplement. The underwriters may allow to selected dealers a concession of not more than $0.627 per share. The underwriters may also allow, and any other dealers may reallow, a concession of not more than $0.100 per share to selected other dealers. If all the shares of common stock are not sold at the public offering price, the underwriters may change the public offering price and the other selling terms. The common stock is offered subject to a number of conditions, including:

•

The receipt and acceptance of the common stock by the underwriters; and

•

The underwriters’ right to reject orders in whole or in part.

We have granted the underwriters an option to buy up to 423,525 additional shares of common stock. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with this offering. The underwriters have 30 days from the date of this prospectus supplement to exercise this option. If the underwriters exercise this option, they will each purchase additional shares of common stock approximately in proportion to the amounts specified in the table above.

The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters. These amounts are shown assuming no exercise and full exercise of the underwriters’ option to purchase additional shares of common stock.

	No Exercise		Full Exercise
Per share	$	1.045	$	1.045
Total	$	2,950,564	$	3,393,147

The expenses of the offering, not including underwriting discounts and commissions, are estimated to be approximately $425,000 and will be payable by us. Expenses of this offering, exclusive of the underwriting discounts and commissions, include the SEC filing fee, the New York Stock Exchange filing fee, legal and accounting fees, printing expenses, transfer agent and registrar fees and other miscellaneous fees.

S-49

We, our executive officers and directors and the selling stockholder have entered into lock-up agreements with the underwriters. Under these agreements, subject to exceptions, we, our executive officers and directors and the selling stockholder may not offer, sell, contract to sell or otherwise dispose of or hedge any common stock or securities convertible into or exchangeable for shares of common stock without the prior written consent of Banc of America Securities LLC. These restrictions will be in effect for a period of 90 days after the date of this prospectus supplement.

We and the selling stockholder will indemnify the underwriters against some liabilities, including some liabilities under the Securities Act. If we or the selling stockholder are unable to provide this indemnification, we and the selling stockholder will contribute to the payments the underwriters may be required to make in respect of those liabilities.

Our common stock is quoted on the New York Stock Exchange under the symbol “B.”

In connection with this offering, certain of the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our common stock. Specifically, the underwriters may overallot in connection with this offering, creating a short position. In addition, the underwriters may bid for, and purchase, our common stock in the open market to cover short positions or to stabilize the price of our common stock. Any of these activities may stabilize or maintain the market price of our common stock above independent market levels, but no representation is made hereby of the magnitude of any effect that the transactions described above may have on the market price of our common stock. The underwriters will not be required to engage in these activities, and may engage in these activities, and may end any of these activities at any time without notice.

Several of the underwriters or their affiliates have provided and in the future may continue to provide investment banking and other financial services, including the provision of credit facilities, to us in the ordinary course of business for which they have received and will receive customary compensation. In addition, affiliates of certain underwriters participating in this offering are lenders under our revolving credit facility. Banc of America Securities LLC is the arranger under the selling stockholder’s credit agreement, and the administrative agent and a lender under that credit agreement are affiliates of Banc of America Securities LLC. Because more than 10% of the proceeds of this offering, not including underwriting compensation, may be received by entities who are affiliated with National Association of Securities Dealers, Inc. members who are participating in this offering, this offering is being conducted in compliance with Rule 2710(c)(8) of the Conduct Rules of the National Association of Securities Dealers, Inc. Pursuant to that rule, the appointment of a qualified independent underwriter is not necessary in connection with this offering, as a bona fide independent market (as defined in the Conduct Rules of the National Association of Securities Dealers, Inc.) exists in our common stock.

S-50

LEGAL MATTERS

The validity of the issuance of the shares of our common stock to be sold in this offering and other legal matters related to this offering will be passed upon for us by Nixon Peabody LLP, Rochester, New York. Certain legal matters in connection with the offering will be passed upon for the underwriters by Shearman & Sterling, New York, New York.

EXPERTS

The consolidated financial statements of Barnes Group Inc. as of December 31, 2002 and 2001 and for each of the three years in the period ended December 31, 2002 included and incorporated by reference in this prospectus supplement have been so included and incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE

We are subject to the reporting requirements of the Securities Exchange Act of 1934 and, in accordance with these requirements, we file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission, or the SEC. We have also filed a registration statement on Form S-3, including exhibits, under the Securities Act of 1933 with respect to the common stock offered by this prospectus supplement. This prospectus supplement and the accompanying prospectus, which is part of the registration statement, do not contain all of the information included in the registration statement or the exhibits. The registration statement as well as the reports, proxy statements and other information filed by us can be inspected at the public reference facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Copies of these materials can also be obtained from the Public Reference Section of the SEC at the address mentioned above at prescribed rates.

The SEC also maintains a website that contains registration statements, reports, proxy and information statements and other information regarding companies like us that file electronically with the SEC. The address of the SEC’s website is www.sec.gov. Reports, proxy statements and other information concerning our business may also be inspected at the offices of the New York Stock Exchange, on which our common stock is listed, at 20 Broad Street, New York, New York 10005. This information may also be obtained from us as described below.

The SEC allows us to “incorporate by reference” the information we file with it into this prospectus supplement and the accompanying prospectus, which means that we can disclose important information to you by referring you to those documents, and those documents will be considered part of this prospectus supplement and the accompanying prospectus. Information that we file later with the SEC will automatically update and supercede the previously filed information. We incorporate by reference in this prospectus supplement each of the documents listed below and any future filings that we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus supplement and before the end of the offering of our common stock:

•

Our Annual Report on Form 10-K for the fiscal year ended December 31, 2002;

•

Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003;

•

The portions of our Proxy Statement dated March 17, 2003 that are incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended December 31, 2002;

•

Our Current Reports on Form 8-K filed with the SEC on January 21, 2003 and February 20, 2003 (as amended by Form 8-K/A filed with the SEC on April 14, 2003);

S-51

•

The description of our common stock contained in our Registration Statement on Form 10 filed with the SEC on August 21, 1963; and

•

The description of our preferred stock purchase rights contained in our Registration Statement on Form 8-A filed with the SEC on December 20, 1996, as amended by Form 8-A/A filed with the SEC on March 18, 1999.

You may request a copy of these filings, at no cost, by writing or calling us at the following address or telephone number:

Investor Relations

Barnes Group Inc.

123 Main St.

Bristol, Connecticut 06010-0489

(860) 583-7070

Exhibits to the filings will not be sent, however, unless these exhibits have specifically been incorporated by reference in this document.

S-52

BARNES GROUP INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Financial Statements:

Report of Independent Auditors		F-2

Consolidated Balance Sheets at December 31, 2002 and 2001		F-3

Consolidated Statements of Income for the years ended December 31, 2002, 2001 and 2000		F-4

Consolidated Statements of Changes In Stockholders’ Equity for the years ended December 31, 2002, 2001 and 2000		F-5

Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000		F-6

Notes to Consolidated Financial Statements		F-7

F-1

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and

Stockholders of Barnes Group Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, changes in stockholders’ equity and cash flows present fairly, in all material respects, the financial position of Barnes Group Inc. and its subsidiaries at December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 to the Consolidated Financial Statements, the Company adopted Statement of Financial Accounting Standards, No. 142, “Goodwill and Other Intangible Assets,” effective January 1, 2002.

/s/ PRICEWATERHOUSECOOPERS LLP

Hartford, Connecticut

January 31, 2003,

except for Note 3, which is as of February 6, 2003.

F-2

BARNES GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	December 31,
	2002			2001
ASSETS
Current Assets
Cash and cash equivalents	$	28,355		$	48,868
Accounts receivable, less allowances (2002—$2,891; 2001—$3,114)		97,533			94,124
Inventories		88,809			85,721
Deferred income taxes		16,024			16,702
Prepaid expenses		7,916			11,120

Total current assets		238,637			256,535
Deferred income taxes		22,610			5,783
Property, plant and equipment		159,440			152,943
Goodwill		164,594			159,836
Other assets		67,249			61,408

Total assets	$	652,530		$	636,505

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes payable	$	—		$	5,500
Accounts payable		63,389			71,410
Accrued liabilities		61,853			59,118
Long-term debt—current		6,837			47,576

Total current liabilities		132,079			183,604
Long-term debt		214,125			178,365
Accrued retirement benefits		87,162			63,610
Other liabilities		10,944			12,089

Commitments and contingencies (Notes 9 and 18)

Stockholders’ equity
Common stock—par value $0.01 per share Authorized: 60,000,000 shares Issued: 22,037,769 shares at par value		220			220
Additional paid-in capital		53,511			54,874
Treasury stock at cost (2002—3,081,718 shares; 2001—3,576,322 shares)		(61,847	)		(76,903	)
Retained earnings		255,147			243,369
Accumulated other non-owner changes to equity		(38,811	)		(22,723	)

Total stockholders’ equity		208,220			198,837

Total liabilities and stockholders’ equity	$	652,530		$	636,505

See accompanying notes.

F-3

BARNES GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(Dollars in thousands, except per share data)

	Years Ended December 31,
	2002		2001		2000
Net sales	$	784,036	$	768,821	$	740,032
Cost of sales		530,004		519,536		488,634
Selling and administrative expenses		209,192		208,965		188,449

		739,196		728,501		677,083

Operating income		44,840		40,320		62,949
Other income		3,651		3,890		4,773
Interest expense		14,823		16,161		15,140
Other expenses		557		4,590		3,992

Income before income taxes		33,111		23,459		48,590
Income taxes		5,960		4,338		12,925

Net income	$	27,151	$	19,121	$	35,665

Per common share:
Net income:
Basic	$	1.45	$	1.03	$	1.92
Diluted		1.42		1.01		1.90
Dividends		0.80		0.80		0.79
Average common shares outstanding:
Basic		18,750,442		18,506,247		18,568,359
Diluted		19,185,332		18,919,968		18,791,227

See accompanying notes.

F-4

BARNES GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(Dollars in thousands)

	Common Stock		Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Non-Owner Changes to Equity			Total Stockholders’ Equity
January 1, 2000	$	220	$	49,786		$	(63,893	)	$	218,388		$	(23,887	)	$	180,614
Comprehensive income:
Net income										35,665						35,665
Foreign currency translation adjustments													3,070			3,070

Comprehensive income										35,665			3,070			38,735
Dividends paid										(14,677	)					(14,677	)
Common stock repurchases							(9,197	)								(9,197	)
Employee stock plans				2,059			3,909			(110	)					5,858

December 31, 2000		220		51,845			(69,181	)		239,266			(20,817	)		201,333
Comprehensive income:
Net income										19,121						19,121
Foreign currency translation adjustments													(1,244	)		(1,244	)
Unrealized losses on hedging activities													(662	)		(662	)

Comprehensive income										19,121			(1,906	)		17,215
Dividends paid										(14,806	)					(14,806	)
Common stock repurchases							(8,798	)								(8,798	)
Employee stock plans				3,029			1,076			(212	)					3,893

December 31, 2001		220		54,874			(76,903	)		243,369			(22,723	)		198,837
Comprehensive income:
Net income										27,151						27,151
Foreign currency translation adjustments													1,236			1,236
Unrealized losses on hedging activities													(502	)		(502	)
Minimum pension liability adjustment													(16,822	)		(16,822	)

Comprehensive income										27,151			(16,088	)		11,063
Dividends paid										(15,018	)					(15,018	)
Stock issued for the purchase of Spectrum				(358	)		3,358									3,000
Stock issued for charitable contribution				(90	)		488									398
Common stock repurchases							(1,147	)								(1,147	)
Employee stock plans				(915	)		12,357			(355	)					11,087

December 31, 2002	$	220	$	53,511		$	(61,847	)	$	255,147		$	(38,811	)	$	208,220

See accompanying notes.

F-5

BARNES GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in thousands)

	Years ended December 31,
	2002			2001			2000
Operating activities:
Net income	$	27,151		$	19,121		$	35,665
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		33,626			37,045			35,871
Loss (gain) on disposition of property, plant and equipment		(222	)		2,093			(1,960	)
Changes in assets and liabilities:
Accounts receivable		5,692			11,378			1,087
Inventories		9,843			(3,629	)		(7,631	)
Prepaid expenses		3,095			(1,884	)		(1,425	)
Accounts payable		(12,626	)		13,514			(5,415	)
Accrued liabilities		(87	)		(5,552	)		1,026
Deferred income taxes		(15,941	)		6,510			5,863
Long-term pension asset		(2,070	)		(7,514	)		(8,249	)
Other		5,950			(6,044	)		(2,975	)

Net cash provided by operating activities		54,411			65,038			51,857
Investing activities:
Proceeds from disposition of property, plant and equipment		3,592			1,093			2,744
Capital expenditures		(19,367	)		(24,857	)		(28,042	)
Business acquisitions, net of cash acquired		(31,189	)		(1,036	)		(104,935	)
Other		(1,003	)		(1,209	)		(4,309	)

Net cash used by investing activities		(47,967	)		(26,009	)		(134,542	)
Financing activities:
Net decrease in notes payable		(2,935	)		(1,463	)		(5,201	)
Payments on long-term debt		(61,004	)		(28,000	)		(60,000	)
Proceeds from the issuance of long-term debt		48,000			23,711			150,000
Proceeds from the issuance of common stock		3,792			2,845			3,920
Common stock repurchases		(1,147	)		(8,798	)		(9,197	)
Dividends paid		(15,018	)		(14,806	)		(14,677	)
Proceeds from the sale of swaps		4,702			13,766			—
Other		(752	)		(584	)		—

Net cash (used) provided by financing activities		(24,362	)		(13,329	)		64,845
Effect of exchange rate changes on cash flows		(2,595	)		(135	)		(2,489	)

(Decrease) increase in cash and cash equivalents		(20,513	)		25,565			(20,329	)
Cash and cash equivalents at beginning of year		48,868			23,303			43,632

Cash and cash equivalents at end of year	$	28,355		$	48,868		$	23,303

Supplemental Disclosure of Cash Flow Information:

Non-cash financing and investing activities include the 2002 issuance of $3.0 million of treasury stock and $2.0 million in installment payments in connection with the Spectrum acquisition.

See accompanying notes.

F-6

BARNES GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002

(All dollar amounts included in the notes are stated in thousands except per share data and the tables in Note 17.)

1. Summary of Significant Accounting Policies

General: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

Consolidation: The accompanying consolidated financial statements include the accounts of the Company and all of its subsidiaries. Intercompany transactions and account balances have been eliminated. The Company accounts for its 45% investment in the common stock of NASCO, a suspension spring company jointly owned with NHK Spring Co., Ltd. of Japan, under the equity method. The NASCO investment of $9,908 and $9,431 as of December 31, 2002 and 2001, respectively, is included in other assets. Other income in the accompanying income statements includes income of $1,090, $408 and $1,611 for the years 2002, 2001 and 2000, respectively, from the Company’s investment in NASCO. The Company received dividends from NASCO totaling $44, $464 and $666 in 2002, 2001 and 2000, respectively.

Revenue recognition: Sales and related cost of sales are recognized when products are shipped to customers and title has passed.

Cash and cash equivalents: Cash in excess of operating requirements is invested in short-term, highly liquid, income-producing investments. All highly liquid investments purchased with a maturity of three months or less are cash equivalents. Cash equivalents are carried at fair value.

Inventories: Inventories are valued at the lower of cost or market. The last-in, first-out (LIFO) method was used to accumulate the cost of the majority of U.S. inventories, which represent 66% of total inventories. The cost of all other inventories was determined using the first-in, first-out (FIFO) method. Loss provisions, if any, on contracts are established when reasonably expected. Loss provisions are based on the excess inventoriable costs over the net revenues of the products or group of related products under contract.

Property, plant and equipment: Property, plant and equipment is stated at cost. Depreciation is recorded over estimated useful lives, ranging from 20 to 50 years for buildings and three to 17 years for machinery and equipment. The straight-line method of depreciation was adopted for all property, plant and equipment placed in service after March 31, 1999. For property, plant and equipment placed into service prior to April 1, 1999, depreciation is calculated using accelerated methods.

Goodwill: Goodwill represents the excess purchase price over the net assets of companies acquired in business combinations. In accordance with SFAS 142, “Goodwill and Other Intangible Assets,” effective January 1, 2002, goodwill is not being amortized, as the lives are considered indefinite. For periods prior to January 1, 2002, goodwill acquired since 1970 but prior to July 1, 2001, was being amortized on a straight-line basis over 40 years. Annually, goodwill is subject to impairment testing in accordance with SFAS 142. Based on this assessment, there was no goodwill impairment in 2002.

F-7

BARNES GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents income adjusted to exclude goodwill amortization expense recognized in the prior periods:

	2002		2001		2000
Net income, as reported	$	27,151	$	19,121	$	35,665
Add back: goodwill amortization, net of income taxes		—		3,449		2,899

Adjusted net income	$	27,151	$	22,570	$	38,564

Basic earnings per share, as reported	$	1.45	$	1.03	$	1.92
Add back: goodwill amortization, net of income taxes		—		.19		.16

Adjusted basic earnings per share	$	1.45	$	1.22	$	2.08

Diluted earnings per share, as reported	$	1.42	$	1.01	$	1.90
Add back: goodwill amortization, net of income taxes		—		.18		.15

Adjusted diluted earnings per share	$	1.42	$	1.19	$	2.05

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. The Company uses financial instruments to hedge its exposure to fluctuations in interest rates and foreign currency exchange rates but does not use derivatives for speculative or trading purposes. The Company also does not use derivatives to manage commodity exposures or hedge its foreign currency net investment exposure.

The Company adopted SFAS 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, on January 1, 2001. The standard requires that all derivative instruments be recorded on the balance sheet at fair value. The accounting for changes in the fair value depends on how the derivative is used and designated. In accordance with the transition provisions of SFAS 133, the Company recorded a $400 gain on January 1, 2001, which was entirely offset by a loss recorded on the re-measurement of underlying balance sheet items. There was no transition adjustment to other non-owner changes to equity.

Foreign currency contracts qualify as fair value hedges of unrecognized firm commitments, or cash flow hedges of recognized assets and liabilities or anticipated transactions. Gains and losses on derivatives are recorded directly to earnings or other non-owner changes to equity, depending on the designation. Amounts recorded to 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 is recorded directly to earnings. The Company’s policy for classifying cash flows from derivatives is to report the cash flows consistent with the underlying instrument.

At December 31, 2002, the fair value of derivatives held by the Company was a net liability of $1,833. During 2002, losses of $279 included in other non-owner changes to equity were reclassified to earnings. Amounts in other non-owner changes to equity expected to be reclassified to earnings within the next year are not material. During 2002, gains or losses related to hedge ineffectiveness were immaterial. Foreign currency transaction gains included in income were $1,172, $1,874 and $1,012 in 2002, 2001 and 2000, respectively, inclusive of gains and losses on foreign currency derivatives.

Foreign currency translation: The majority of the Company’s foreign subsidiaries use the local currency as the functional currency. Assets and liabilities of foreign operations are translated at year-end rates of exchange;

F-8

BARNES GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

revenues and expenses are translated at average annual rates of exchange. The resulting translation gains and losses are reflected in accumulated other non-owner changes to equity within stockholders’ equity.

Stock-Based Compensation: The Company has stock-based employee compensation plans, which are described more fully in Note 15. The Company accounts for those plans under the recognition and measurement principles of APB Opinion 25, “Accounting for Stock Issued to Employees,” and related Interpretations. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation.

	2002			2001			2000
Net income, as reported	$	27,151		$	19,121		$	35,665
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects		1,589			1,227			431
Deduct: Stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(5,970	)		(4,962	)		(3,108	)

Pro forma net income	$	22,770		$	15,386		$	32,988

Earnings per share:
Basic—as reported	$	1.45		$	1.03		$	1.92
Basic—pro forma		1.21			.83			1.78
Diluted—as reported		1.42			1.01			1.90
Diluted—pro forma		1.18			.81			1.76

The fair value of each stock option grant on the date of grant has been estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	2002	2001	2000
Risk-free interest rate	3.69%	4.84%	6.65%
Expected life	4.0 years	4.3 years	5.0 years
Expected volatility	35%	35%	30%
Expected dividend yield	3.51%	3.40%	3.57%

The weighted-average grant date fair values of options granted during 2002, 2001 and 2000 were $5.37, $4.77 and $4.44, respectively.

2. Acquisitions

During the past three years, the Company has acquired a number of businesses, all of which were accounted for using the purchase method. Accordingly, the results of operations of the acquired companies have been included in the consolidated results from their respective acquisition dates.

In May 2000, the Company purchased substantially all of the assets and liabilities of Curtis for $63,363. Curtis, a distributor of MRO supplies and high-quality security products, was combined with Bowman Distribution to form Barnes Distribution. This business combination created a broader product offering, enhanced service capabilities and increased sales penetration for the business segment. The combination also created significant cost savings opportunities, primarily through headquarters and distribution center consolidations and increased purchasing leverage. A majority of these cost savings were realized in 2002. In

F-9

BARNES GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

connection with the Curtis acquisition, the Company incurred certain integration costs which are more fully discussed in Note 8.

In September 2000, the Company purchased substantially all of the assets and liabilities of Kratz-Wilde Machine Company and Apex Manufacturing Inc. (Kratz-Wilde/Apex) for $40,938. Kratz-Wilde/Apex fabricates and machines intricate aerospace components for jet engines and auxiliary power units. These businesses are included in the Barnes Aerospace segment. This acquisition augmented Barnes Aerospace by extending product depth and customer penetration, and also provided an additional FAA-licensed aircraft engine repair facility.

In 2001, the Company completed two bolt-on acquisitions for a combined purchase price of $3,830. In January 2001, the Company acquired Euro Stock. Euro Stock distributes standard springs through catalogs to customers located primarily in Europe. This business, which is included in the Barnes Distribution segment, expanded Barnes Distribution’s presence in Europe and added a new sales channel through Euro Stock’s product catalog. In November 2001, the Company acquired certain assets of Forward Industries, L.L.C., and its subsidiary Forward Industries, Ltd. Forward Industries designs and manufactures nitrogen gas springs that are used in the appliance, automotive, heating and cooling and electrical industries. This acquisition has been integrated with the Company’s existing nitrogen gas spring business and is included in the Associated Spring segment. The acquisition broadened the nitrogen gas spring product line offering of Associated Spring.

In 2002, the Company completed two acquisitions for a total purchase price of $34,029. Consideration for the acquisitions included cash of approximately $31,029, of which $2,000 will be paid in two equal installments in April 2003 and April 2004, and issuance of 119,048 shares of Barnes Group common stock (at a market value at the time of the acquisition of approximately $3,000). In February 2002, the Company acquired substantially all of the manufacturing assets of Seeger-Orbis GmbH & Co. OHG of Germany (Seeger-Orbis) from TransTechnology Corporation. Seeger-Orbis is a leading manufacturer of retaining rings used in a number of transportation and industrial applications. The Seeger-Orbis acquisition expanded Associated Spring’s product line and geographic reach, particularly into the automotive and industrial manufacturing markets of Western Europe. In April 2002, the Company acquired Spectrum Plastics Molding Resources, Inc. of Ansonia, Connecticut (Spectrum). Spectrum is a premier manufacturer of plastic injection-molded components and assemblies that are used primarily in the telecommunications, electronics, medical and consumer goods industries. Spectrum, which is included in the Associated Spring segment, provides Associated Spring with the capability of providing more complete product solutions with discrete or continuous metal-in-plastic and plastic-on-metal injection molded components.

The purchase prices for these acquisitions have been allocated to tangible and intangible assets and liabilities of the businesses based upon estimates of their respective fair values.

The 2002 and 2001 acquisitions provided incremental sales of $39,659 in 2002. The 2001 and 2000 acquisitions provided incremental sales of $60,860 in 2001. Pro forma net profit has not been presented for the 2002 and 2001 acquisitions because the results would not be significantly different than historical results.

The following table reflects the operating results of the Company for the year ended December 31, 2000, on a pro forma basis, which gives effect to the acquisitions of the two businesses acquired in 2000 at the beginning of the year. The pro forma results are not necessarily indicative of the operating results that would have occurred had the acquisitions been effective January 1, 2000; nor are they intended to be indicative of results that may occur in the future. The underlying pro forma information includes the amortization expense associated with the assets acquired, the Company’s financing arrangements, certain purchase accounting adjustments and related

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

income tax effects. The pro forma results do not include the effects of synergies and cost reduction initiatives related to the acquisitions.

		2000
		(Unaudited)
Net sales		$798,652
Income before income taxes		48,309
Net income		35,449
Per common share:
Basic		$1.91
Diluted		1.89

3. Subsequent Event

On February 6, 2003, the Company acquired Kar Products, a leading full-service distributor of MRO supplies to industrial, construction, transportation and other markets. The acquisition expands both the geographic scope and product line reach of the Barnes Distribution segment. Kar Products has a diversified customer base that operates in all 50 states, Puerto Rico and Canada, further enhancing Barnes Distribution’s leadership position within the MRO market and its international presence. The purchase price of $78,500 was financed through a combination of $4,000 of cash, $56,000 of debt and $18,500 (923,506 shares) of Barnes Group common stock. The Company expects to achieve a number of post-acquisition cost savings and other synergies through headquarters and infrastructure consolidation. The costs related to the consolidation efforts have not been finalized and therefore are not included in the pro forma data that follows.

The Company is in the process of obtaining third-party valuations of certain assets acquired with Kar Products. Thus, the allocation of the purchase price is subject to refinement. Any amounts attributable to such assets are expected to be finalized during 2003. The following pro forma data summarize the combined balance sheets of the Company and Kar Products as if the acquisition had occurred at December 31, 2002.

	As Reported		Kar (1)		Other (2)			Pro forma
	(Unaudited)
Current assets	$	238,637	$	29,543	$	(4,000	)	$	264,180
Non-current assets		249,299		7,052					256,351
Goodwill		164,594		50,247					214,841

Total assets	$	652,530	$	86,842	$	(4,000	)	$	735,372

Current liabilities	$	132,079	$	8,342		—		$	140,421
Long term debt		214,125				56,000			270,125
Other liabilities		98,106							98,106
Stockholders’ equity/net assets		208,220		78,500		(60,000	)		226,720

Liabilities and stockholders’ equity	$	652,530	$	86,842	$	(4,000	)	$	735,372

(1)

The Kar amounts represent the estimated fair values of the assets acquired and liabilities assumed.

(2)

Other includes the acquisition financing. The net increase in shareholders equity reflects the $18,500 issuance of shares.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

4. Inventories

Inventories at December 31 consisted of:

	2002		2001
Finished goods	$	58,244	$	51,839
Work-in-process		16,993		18,370
Raw materials and supplies		13,572		15,512

	$	88,809	$	85,721

Inventories valued by the LIFO method aggregated $58,506 and $66,092 at December 31, 2002 and 2001, respectively. If LIFO inventories had been valued using the FIFO method, they would have been $12,567 and $13,135 higher at those dates.

5. Property, Plant and Equipment

Property, plant and equipment at December 31 consisted of:

	2002		2001
Land	$	9,087	$	4,046
Buildings		79,578		74,191
Machinery and equipment		340,647		328,402

		429,312		406,639
Less accumulated depreciation		269,872		253,696

	$	159,440	$	152,943

Depreciation expense was $29,304, $30,008 and $30,314 for 2002, 2001 and 2000, respectively.

6. Goodwill and Other Intangible Assets

Goodwill: The following table sets forth the change in the carrying amount of goodwill for each reportable segment:

	Associated Spring			Barnes Aerospace			Barnes Distribution			Total BGI
January 1, 2001	$	71,416		$	26,127		$	58,124		$	155,667
Goodwill acquired		(1,120	)		6,275			3,230			8,385
Goodwill amortization		(1,791	)		(987	)		(1,438	)		(4,216	)

December 31, 2001		68,505			31,415			59,916			159,836
Goodwill acquired		7,872			(515	)		(2,599	)		4,758

December 31, 2002	$	76,377		$	30,900		$	57,317		$	164,594

During 2002, an additional $1,035 of goodwill was recognized related to Associated Spring’s November 2001 acquisition of Forward Industries assets, related primarily to an adjustment to the fair value of the equipment acquired, and $6,837 million for the April 2002 acquisition of Spectrum. No goodwill resulted in connection with the acquisition of Seeger-Orbis. Goodwill related to the Barnes Aerospace 2000 acquisition of

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Kratz-Wilde/Apex decreased $515 in 2002, the result of the reduction of accrued acquisition costs. Also in 2002, goodwill was reduced by $2,599 related to Barnes Distribution’s Curtis acquisition. This reduction relates primarily to an adjustment to the reorganization accrual and inventory valuation.

In 2001, Associated Spring’s goodwill related to the acquisition of the nitrogen gas spring business was reduced by $1,272, reflecting the adjustment to accrued acquisition costs. Initial goodwill of $152 was recorded for the acquisition of certain assets of Forward Industries. The $6,275 increase in goodwill resulted from the completion of the purchase price allocation to the Barnes Aerospace segment valuation of inventories, backlog and fixed assets, offset by a $700 purchase price adjustment. Barnes Distribution’s business reorganization of Curtis, acquired in 2000, and the completion of the purchase price allocation resulted in $2,332 of additional goodwill being recognized. In addition, $898 of goodwill was recorded in Barnes Distribution related to the acquisition of Euro Stock.

At December 31, 2002, $80,524 of goodwill is tax deductible.

Acquired Intangible Assets: Intangible assets, other than goodwill, consist of registered trademarks, purchased in the acquisition of the nitrogen gas spring business in 1999, and registered trademarks and patents purchased in the 2002 acquisitions of Seeger-Orbis and Spectrum. The amounts attributable to these intangible assets are included in the purchase price allocations.

Trademarks acquired with the purchase of the nitrogen gas spring business are being amortized over their estimated useful lives of 30 years. At December 31, 2002, the gross carrying amount of trademarks was $4,395 and accumulated amortization was $488. The aggregate amortization expense is approximately $146 in each of the years 2003 through 2007.

Intangible assets that were acquired with Seeger-Orbis were $3,047 and consist of trademarks and patents with estimated useful lives of 30 and 15 years, respectively. The accumulated amortization at the end of 2002 was $197. The aggregate amortization expense is approximately $236 in each of the years 2003 through 2007. Intangible assets that were acquired with Spectrum were $2,400 and consist primarily of trade-marks with estimated useful lives of 30 years. The accumulated amortization at the end of 2002 was $57. The aggregate amortization expense is $87 in each of the years 2003 through 2007.

7. Accrued Liabilities

Accrued liabilities at December 31 consisted of:

	2002		2001
Payroll and other compensation	$	16,063	$	13,503
Postretirement/postemployment benefits		9,315		9,283
Other		36,475		36,332

	$	61,853	$	59,118

8. Business Reorganization Accruals

Business reorganization accruals are included in accrued liabilities.

In connection with the Curtis acquisition in May 2000, the Company incurred certain integration costs. The Company recorded total costs of $6,405 related primarily to lease consolidation costs, facility closure costs and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

reductions in personnel. At December 31, 2001, $5,537 remained as liabilities related to future lease payments and facility closure costs. During 2002, $2,010 of the accrual was utilized in connection with warehouse closures. In addition, $2,030 of accruals were reduced with a corresponding reduction to goodwill. As of December 31, 2002, an accrual of approximately $1,497 remained which related to future lease payments, which will continue through the remaining lives of the leases.

During the fourth quarter of 2001, the Company recorded pretax charges of $4,842, primarily for Associated Spring, related to actions aimed at reducing the Company’s infrastructure. Such actions included the closure of an Associated Spring plant in Texas. Additional costs to transfer certain retained business to other Associated Spring plants in 2002 were not accruable in 2001 and were recognized as incurred in 2002. The 2001 charges included $179 recorded in cost of sales and $4,663 in selling and administrative expenses, and related to net workforce reductions of approximately 122 salaried and hourly employees, the elimination of approximately 128,500 square feet of facilities and the disposal of assets. At December 31, 2001, the accrual balance of $2,223 related to facility holding costs and severance. During 2002, $1,695 of the accrual was utilized. As of December 31, 2002, the remaining balance of $528 related to post-closure holding costs for the Texas plant, which is currently for sale.

9. Debt and Commitments

Long-term debt at December 31 consisted of:

	2002				2001
	Carrying Amount		Fair Value		Carrying Amount
7.13% Notes, including interest swap	$	19,028	$	18,724