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 $3.0 million). 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 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. On February 6, 2003, the Company 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). 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 inter- national 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 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 Company  also anticipates that the acquisition will be accretive in the first year. Barnes Group 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 the Company’s 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, the Company’s foreign sales increased 17% year-over-year, while domestic sales decreased 3%.  PAGE 10 Back to Table of Contents The following table sets forth the Company’s consolidated statement of income data as a percentage of revenue: Results of Operations 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% MANAGEMENT’ S DISCUSSION & ANALYSIS BARNES GROUP INC.