model. A recovery in industrial economic activity would hav e the greatest impact on Barnes Distribution’s revenue, but these two growth drivers should clearly augment the operation in 2003 and beyond. As expected in the post-9/11 environment, global aircraft pr oduction and airline passenger traffic was down substantially in 2002, impacting revenue at Barnes Aerospace. Because of this, the management team at Aerospace acted quickly to cur tail costs, cutting employment in the business by nearly 20 percent and reducing operating c osts throughout the organization. Despite the turmoil in the commercial aircraft industry, sales eff orts made by Barnes Aerospace to diversify the customer base paid dividends in 2002, as sales were down only modestly and the business remained profitable. Our customer orders and order backlog also benefited from those efforts; Barnes Aerospace generated $178 million in customer orders, while order backlog remained strong at $152 million at year end. A particular bright spot was new orders for direct and indirect military customers, which w ere roughly one third of the total orders received this year. And, although the environment f or commercial aircraft is likely to remain flat in 2003, we continue to be excited about sever al new commercial engine programs, in which Barnes Aerospace is a major supplier, that will be entering service over  the next several years. We’ve always regarded our disclosures to investors as open and transparent. And, we’re eager to comply with the new enhanced disclosures passed by Congr ess in the Sarbanes-Oxley Act of 2002; you’ll find some of these new disclosures in this annual report, while many more will begin next year. Our current accounting policies, processes and internal controls, combined with a conscientious Board of Directors that includes an activ e and informed Audit Committee, give us confidence in affirming that the information w e present to you in our periodic reports is a fair and accurate representation of the health and performance of your Company.Thus, in the case of Barnes Group, w think that the quantity of disclosure may change, but the high quality will remain the same. Our Board of Directors also reached its full complement of 1 0 business leaders, as Mylle H. Mangum joined the Board in December. Mylle, the CEO of Tr ue Marketing Services, brings strong executive management, marketing and manufacturing experience — gained at companies such as BellSouth Corporation, Holiday Inn W orldwide and General Electric —  that will be highly valued by our Boar and our senior management team. In summary, despite a tough environment in 2002, Barnes Gr oup continued to grow; we rebounded financially from 2001 and generated cash to fur ther invest in the business; we integrated two strategic acquisitions; and we successfully positioned each of our three businesses to remain profitable through, and beyond, this curr ent economic cycle. Looking ahead to the future, we remain confident that your Compan y will continue to generate sustainable, profitable growth and build lasting value for you, our stockholders. Edmund M. Carpenter President and Chief Ex ecutiv e Officer Thomas O. Barnes Chairman of the Board Keeping Our Direction and Focus Corporate Governance Net Sales 1998 1999 2000 2001 2002 $^{$}$800 600 400 200 = - = - 1998 1999 2000 2001 2002 Diluted E.P.S. $^{$}$2.00 1.60 1.20 0.80 0.40 = = Dividends Paid Per Share 1998 1999 2000 2001 2002 $^{$}$0.90 0.60 0.30 = es = es Back to Table of Contents PAGE 5 i i