Edgar Filing: BARNES GROUP INC

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001

_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-4801

BARNES GROUP INC.
(Exact name of registrant as specified in its charter)

Delaware 06-0247840
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

123 Main Street, Bristol, Connecticut 06011-0489
------------------------------------- ----------
(Address of Principal Executive Office) (Zip Code)

Registrant's telephone number, including area code: (860) 583-7070

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
------------------- -----------------------------------------

Common Stock, $0.01 Par Value New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
---
The aggregate market value of the registrant's voting stock held by
non-affiliates amounted to $333,581,909 as of January 31, 2002. The registrant
had outstanding 18,464,330 shares of common stock as of January 31, 2002.

Documents Incorporated by Reference:

Parts I and II incorporate information by reference from the registrant's 2001
Annual Report to Stockholders. Part III incorporates information by reference
from the registrant's Proxy Statement dated March 13, 2002.

PART I

Item 1. Business.
--------

The Company is a diversified international manufacturer of
precision metal parts and distributor of industrial supplies, serving a wide
range of markets and customers. Founded in 1857 and headquartered in Bristol,
Connecticut, the Company was organized as a Delaware corporation in 1925. The
Company consists of three businesses: Associated Spring, one of the world's
largest manufacturer of precision mechanical and nitrogen gas springs; Barnes
Aerospace, a manufacturer and repairer of highly engineered assemblies and
products for aircraft engines, airframes, and land-based industrial gas
turbines; and Barnes Distribution, an international distributor of maintenance,
repair and operating supplies. The Company has more than 5,100 employees at over
50 locations 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. Associated Spring is equipped to
produce virtually every type of precision spring, from fine hairsprings for
electronics and instruments to large heavy-duty springs for machinery. Nearly
all of Associated Spring's products are highly engineered custom solutions with
order sizes ranging from just a few units to several million. These products are
made of various metals, and are purchased primarily by durable goods
manufacturers in industries such as farm equipment, telecommunications, medical
devices, home appliances, electronics and transportation. Associated Spring also
manufactures nitrogen gas springs and manifold systems used to precisely control
stamping presses utilized in metal forming industries.

Through Associated Spring's ability to conduct product design
and development, physical product and material testing, rapid prototyping and
reduction of manufacturing-cycle times, the Company provides complete
engineering solutions from concept to manufacturing. Associated Spring's
precision mechanical springs are sold in the United States and through the
Company's foreign subsidiaries to manufacturers in many industries, chiefly for
use as components in their own products. Precision springs are sold primarily
through Associated Spring's sales employees.

Associated Spring has a global and diverse customer base,
including manufacturers of industrial and textile machinery, motors, generators,
electronic equipment, aircraft, household appliances and fixtures, hardware,
office equipment, agricultural equipment, railroad equipment, general machinery,
scientific instruments, light vehicles and heavy trucks.

Associated Spring has manufacturing operations in the United
States, Brazil, Canada, China, Mexico, Singapore, and Sweden, and has retained a
minority interest of 15% in its former subsidiary in Argentina.

___________________________
*As used in this annual report, "Company" refers to the registrant and its
consolidated subsidiaries except where the context requires otherwise, and
"Associated Spring," "Barnes Aerospace," and "Barnes Distribution" refer to the
above-defined businesses, but not to separate corporate entities.

Associated Spring owns a 45% interest in a joint venture
corporation in the United States with NHK Spring Co., Ltd. of Japan. The joint
venture corporation, NHK-Associated Spring Suspension Components Inc. ("NASCO"),
manufactures suspension springs at its facility in Bowling Green, Kentucky.

Barnes Aerospace. Barnes Aerospace is a worldwide producer of
----------------
precision machined and fabricated components and assemblies for original
equipment manufacturer (OEM) turbine engine, airframe and industrial gas turbine
builders, and provides jet engine component overhaul and repair services for
many of the world's major commercial airlines. Barnes Aerospace products and
services, which have earned a reputation for excellence throughout the
international aerospace community, are sold primarily through Barnes Aerospace's
sales employees.

Barnes Aerospace's machining and fabrication operations, with
facilities in Connecticut, Arizona, Ohio, Michigan and Utah produce critical
engine and airframe parts through processes such as electrical discharge
machining, laser drilling, and multi-axis milling and turning and specialize in
hot and cold forming of complex parts made from titanium and other aerospace
alloys. Additional capabilities include superplastic forming and diffusion
bonding, and machining of aluminum and other sheet metal products. Customers
include airframe and gas turbine engine manufacturers for commercial and
military jets, business jets, and land-based industrial gas turbines.

Barnes Aerospace's overhaul and repair facilities, located in
Connecticut, Ohio, and Singapore, specialize in the refurbishment of jet engine
components such as cases, rotating air seals, honeycomb air seals and housings.
Processes performed at these facilities include electron beam welding, plasma
coating, vacuum brazing, and water jet cleaning. Customers include worldwide
major airlines and engine overhaul businesses and the United States military.

Barnes Distribution. Barnes Distribution is an industry leader
-------------------
in the distribution of maintenance, repair, and operating (MRO) supplies. Since
1927, it has grown into one of the world's largest value-added MRO distributors
and international logistics management service businesses. Barnes Distribution
distributes under four product lines: Bowman Distribution, Curtis Industries,
Mechanics Choice, and Raymond Distribution.

Bowman, Curtis and Mechanics Choice distribute a wide variety
of replacement parts and other products, and provide related inventory
management and logistics services. These products include fasteners, special
purpose hardware, electrical supplies, hydraulics, chemicals and security
products. Raymond distributes die and nitrogen gas springs and standard parts
such as coil and flat springs, most of which are manufactured by Associated
Spring. With the exception of springs from Associated Spring, the products sold
by Barnes Distribution are obtained from outside suppliers.

Using innovative methods and new technology to solve complex
supply problems, Barnes Distribution becomes a critical partner in the operation
and profitability of its customers. Barnes Distribution's products are sold in
the United States, Canada, Mexico, the United Kingdom, Ireland, France, Asia,
and Brazil through

a sales force of over 1,000 people, and in many other countries through
distributors. Barnes Distribution's customers range from small automobile
dealers and repair shops to the largest railroads, utilities, food processors,
chemical producers and vehicle fleet operators.

Segment Analysis. The analysis of the Company's revenue from
----------------
sales to unaffiliated customers, operating profit and assets by business segment
as well as revenues from sales to unaffiliated customers and long-lived assets
by geographic area appearing on pages 26 through 27 of the Company's 2001 Annual
Report to Stockholders, included as Exhibit 13 to this report, is incorporated
by reference.

Competition. The Company competes with many other companies,
-----------
large and small, engaged in the manufacture and sale of custom metal parts and
assemblies (including aerospace components). The Company believes Associated
Spring is the largest manufacturer of precision springs in North America and one
of the largest in the world. The Company also faces active competition in the
products sold by Barnes Distribution. The principal methods of competition for
the Company's three businesses include service, quality, price, reliability of
supply, technology, innovation, and also, in the case of Associated Spring and
Barnes Aerospace, design.

Backlog. The backlog of the Company's orders believed to be
-------
firm amounted to $198,417,000 at the end of 2001, as compared with $202,667,000
at the end of 2000. Of the 2001 year-end backlog, $158,690,000 is attributable
to Barnes Aerospace and all of the balance is attributable to Associated Spring.
$36,638,000 of Barnes Aerospace's backlog is not expected to be shipped in 2002.
Substantially all of the remainder of the Company's backlog is expected to be
shipped during 2002.

Raw Materials and Customers. None of the Company's divisions
---------------------------
or segments is dependent upon any single source for its principal raw materials
or products for resale, and all such materials and products are readily
available. One customer, General Electric Co., accounted for 12.7% of the
Company's total sales in 2001. Automotive manufacturers and manufacturers of
electronic products are important customers of Associated Spring. Sales by
Barnes Aerospace to four manufacturers in the aerospace industry accounted for
approximately 64% of its business. Barnes Distribution is not dependent on any
one or a few customers for a significant portion of its sales.

Research and Development. Although most of the products
------------------------
manufactured by the Company are custom parts made to customers' specifications,
the Company is engaged in continuing efforts aimed at discovering and
implementing new knowledge that is useful in developing new products or services
or significantly improving existing products or services. The Company spent
approximately $4,478,000 on its research and development activities in 2001, as
compared to expenditures of approximately $4,528,000 in 2000 and $4,272,000 in
1999. There were no significant customer-sponsored research and development
activities.

Patents and Trademarks. Patents, licenses, franchises and
----------------------
concessions are not material to any of the Company's businesses.

Employees. As of December 31, 2001, the Company employed 5,150
---------
people.

Environmental Laws. Compliance with federal, state, and local
------------------
laws which have been enacted or adopted regulating the discharge of materials
into the environment or otherwise relating to the protection of the environment
has not had a material effect and is not expected to have a material effect upon
the capital expenditures, earnings, or competitive position of the Company.

Item 2. Properties.
----------

The Company and its operating subsidiaries conduct business at
22 manufacturing plants, and 31 sales and distribution centers at various
locations throughout the world. All of the plants, except the one in China, one
in Arizona, and one location in Singapore, are owned. In addition, Associated
Spring-Asia has a long-term lease on the land but owns the plant in Singapore.
Of the properties that are owned, none is subject to any encumbrance. A listing
of the principal facility locations of each of the Company's businesses is set
forth below.

Property List
-------------

L = Lease
O = Own

Barnes Group Inc. Barnes Distribution
----------------- -------------------

Headquarters - Bristol, CT (O) . Headquarters - Cleveland, OH (L)
Headquarters, Raymond Distribution -
Maumee, OH (L)

Associated Spring
-----------------

.. Headquarters - Farmington, CT (L) . Distribution Operations
- United States
.. Manufacturing Plants Arlington, TX (L)
- United States Bakersfield, CA (L)
Brecksville, OH (O) Buena Park, CA (2-L)
Bristol, CT (O) Columbus, OH (L)
Corry, PA (O) Edison, NJ (L)
Dallas, TX (O) Elizabethtown, KY (O)
Milwaukee, WI (O) Las Vegas, NV (L)
Saline, MI (O) New Berlin, WI (L)
Syracuse, NY (O) Reno, NV (L)
- International Shelbyville, KY (O)
Burlington, Ontario, Canada (O)* Sparks, NV (O)
Campinas, Brazil (O)* Ypsilanti, MI (L)
Konigstein, Germany (O) - International
Mexico City, Mexico (O) Burlington, Ontario, Canada (O)*
Republic of Singapore (L-Land, Campinas, Brazil (O)*
O-Bldg.)* Concord, Ontario, Canada (O)
Tianjin, China (L) Corsham, United Kingdom (L)
Tranas, Sweden (O) Edmonton, Alberta, Canada (O)
Elancourt Cedex, France (L)
.. Sales & Development Evesham, United Kingdom (L)
Boynton Beach, FL (L) Mexico City, Mexico (L)
Glen Ellyn, IL (L) Mississauga, Ontario, Canada (L)
Plymouth, MI (L) Moncton, New Brunswick, Canada (O)
Mullingar, Ireland (L)
.. Distribution Republic of Singapore (L-Land
Frazer, MI (L) O-Bldg.)*
Trappas Cedex, France (L)
Barnes Aerospace
----------------

.. Headquarters - Windsor, CT (O)

.. Manufacturing Plants
- United States
East Granby, CT (O)
Lansing, MI (O)
Phoenix, AZ (L)
Ogden, UT (O)
West Chester, OH (O)
Windsor, CT (2-O)
- International
Republic of Singapore (L)

.. Sales
Derby, United Kingdom (L) *Shared Facilities

The Company believes that its owned and leased properties have been
adequately maintained, are in satisfactory operating condition, are suitable and
adequate for the business activities conducted therein, and have productive
capacities sufficient to meet current needs.

Item 3. Legal Proceedings.
-----------------

There are no material pending legal proceedings to which the Company
or any of its subsidiaries is a party, or of which any of their property is the
subject.

Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------

No matter was submitted during the fourth quarter of 2001 to a vote of
security holders.

PART II

Item 5. Market for the Registrant's Common Stock and Related Stockholder
----------------------------------------------------------------
Matters.
-------

The information regarding the Company's common stock contained on pages
21 through 23 of the Company's 2001 Annual Report to Stockholders is
incorporated by reference. As of January 31, 2002, the Company's common stock
was held by 18,464,330 stockholders of record. The Company's common stock is
traded on the New York Stock Exchange under the symbol "B".

Item 6. Selected Financial Data.
-----------------------

The selected financial data for the last five years contained on page
29 of the Company's 2001 Annual Report to Stockholders are incorporated
by reference.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations.
-------------

The financial review and management's analysis thereof appearing on
pages 7 through 11 of the Company's 2001 Annual Report to Stockholders are
incorporated by reference.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
---------------------------------------------------------

The information regarding market risk contained on pages 10 and 11 of
the Company's 2001 Annual Report to Stockholders is incorporated by reference.

Item 8. Financial Statements and Supplementary Data.
-------------------------------------------

The financial statements and report of independent accountants
appearing on pages 12 through 27 of the Company's 2001 Annual Report to
Stockholders are incorporated by reference. See also the report of independent
accountants included on page 15 below pursuant to Item 302(a) of Regulation S-K.
The material under "Quarterly Data" on page 28 of the Company's 2001 Annual
Report to Stockholders is also incorporated by reference.

Item 9. Changes in and Disagreements With Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure.
--------------------

None.

PART III

Item 10. Directors and Executive Officers of the Company.
-----------------------------------------------

The material under "Election of Three Directors For A Three-Year Term
and one Director for a One-Year Term" on pages 1 through 3, of the Company's
Proxy Statement dated March 13, 2002 is incorporated by reference.

The Company's executive officers as of the date of this report are as
follows:

Age as of
Executive Officer Position December 31, 2001
----------------- -------- -----------------

Edmund M. Carpenter President and Chief Executive Officer 60
(since 1998)

John R. Arrington Senior Vice President, Human Resources (since 55
1998)

Francis C. Boyle, Jr. Vice President, Controller (since 1997) 51

Leonard M. Carlucci Vice President, Barnes Group Inc. (since 1994) 55
and President, Associated Spring (since 1999)

Joseph D. DeForte Vice President, Tax (since 1999) 59

William C. Denninger Senior Vice President, Finance and 51
Chief Financial Officer (since 2000)

A. Keith Drewett Vice President, Barnes Group Inc. and 55
President, Barnes Distribution
(since 2000)

Thomas P. Fodell Vice President, Barnes Group Inc. and 51
Vice President, Sales and Marketing, Associated
Spring (since 2000)

Signe S. Gates Senior Vice President, General Counsel and 52
Secretary (since 1999)

Philip A. Goodrich Senior Vice President, Corporate Development 45
(since 2000)

Age as of
Executive Officer Position December 31, 2001
----------------- -------- -----------------

Gregory F. Milzcik Vice President, Barnes Group Inc. and President, 42
Barnes Aerospace (since 1999)

Lawrence W. O'Brien Vice President, Treasurer (since 2001) 52

Idelle K. Wolf Vice President, Barnes Group Inc. and 49
Chief Operating Officer, Barnes Distribution
(since 2000)

Except for Messrs. Carpenter, Arrington, DeForte, Denninger, Drewett,
Goodrich, Milzcik and O'Brien, and Mses. Gates and Wolf, each of the Company's
executive officers has been employed by the Company or its subsidiaries in an
executive or managerial capacity for at least the past five years. Each officer
holds office until his or her successor is chosen and qualified or otherwise as
provided in the By-Laws, except Mr. Carpenter who holds office pursuant to an
employment agreement with the Company, which is incorporated as Exhibit 10.12 to
this report. No family relationships exist among the executive officers of the
Company.

Mr. Carpenter joined the Company as President and Chief Executive
Officer in December 1998. From 1996 to 1998, Mr. Carpenter was a Senior Managing
Director of Clayton, Dubilier & Rice, Inc., a private equity firm.

Mr. Arrington joined the Company 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.

Mr. DeForte joined the Company 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.

Mr. Denninger joined the Company 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. Drewett joined the Company as Vice President, Barnes Group Inc. and
President, Barnes Distribution in May 2000, upon the Company's 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.

Mr. Goodrich joined the Company 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.

Mr. Milzcik joined the Company 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.

Mr. O'Brien joined the Company 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.

Ms. Gates joined the Company 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.

Ms. Wolf joined the Company as Vice President, Barnes Group Inc. and
Chief Operating Officer, Barnes Distribution in May 2000, upon the Company's
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.

Item 11. Executive Compensation.
----------------------

The information under "Compensation of Directors" appearing on page 4,
and the information under "Compensation," "Stock Options," "Pension Plans,"
"Employment Agreement," and "Change-In-Control Agreements" appearing on pages 10
through 15 of the Company's Proxy Statement dated March 13, 2002, are
incorporated by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------

The information concerning this item appearing on pages 4 and 5 of the
Company's Proxy Statement dated March 13, 2002, is incorporated by reference.

Item 13. Certain Relationships and Related Transactions.
----------------------------------------------

None.

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
----------------------------------------------------------------

(a) The report of PricewaterhouseCoopers LLP, independent accountants,
and the following financial statements and financial statement
schedules are filed as part of this report:

Reference
--------------------------------
Annual Report
--------------
Form 10-K to Stockholders
--------- ---------------
(page) (page)
------ ------

Report of independent accountants 15 27

Consolidated balance sheets at December 31, 2001
and 2000 13

Consolidated statements of income for the years
ended December 31, 2001, 2000, and 1999 12

Consolidated statements of changes in stockholders'
equity for the years ended December 31, 2001,
2000, and 1999 15

Consolidated statements of cash flows for the years
ended December 31, 2001, 2000, and 1999 14

Notes to consolidated financial statements 16-27

Supplementary information 28
Quarterly data (unaudited)

Consolidated schedule for the years ended December
31, 2001, 2000, and 1999: 16
Schedule II - Valuation and Qualifying Accounts

All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements or notes thereto.

The consolidated financial statements listed in the above index which are
included in the Annual Report to Stockholders of Barnes Group Inc. for the year
ended December 31, 2001, are incorporated by reference. With the exception of
the pages listed in the above index and in Items 1, 5, 6, 7, 7A, and 8, the 2001
Annual Report to Stockholders is not to be deemed filed as part of this report.

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the last quarter of the period
covered by this report.

(c) The Exhibits required by Item 601 of Regulation S-K are filed as
Exhibits to this Annual Report on Form 10-K and indexed at pages 17
through 21 of this report.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date: March 22, 2002

BARNES GROUP INC.

By /s/ Edmund M. Carpenter
---------------------------------
Edmund M. Carpenter
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below as of the above date by the following persons on
behalf of the Company in the capacities indicated.

/s/ Edmund M. Carpenter
-------------------------------------------------
Edmund M. Carpenter
President and Chief Executive Officer
(principal executive officer) and Director

/s/ William C. Denninger
-------------------------------------------------
William C. Denninger
Senior Vice President, Finance
Chief Financial Officer
(principal financial officer)

/s/ Francis C. Boyle, Jr.
-------------------------------------------------
Francis C. Boyle, Jr.
Vice President, Controller
(principal accounting officer)

/s/ Thomas O. Barnes
-------------------------------------------------
Thomas O. Barnes
Director

/s/ John W. Alden
-----------------------------------------------------
John W. Alden
Director

/s/ Gary G. Benanav
-----------------------------------------------------
Gary G. Benanav
Director

/s/ William S. Bristow, Jr.
-----------------------------------------------------
William S. Bristow, Jr.
Director

/s/ George T. Carpenter
-----------------------------------------------------
George T. Carpenter
Director

/s/ Donald W. Griffin
-----------------------------------------------------
Donald W. Griffin
Director

/s/ Frank E. Grzelecki
-----------------------------------------------------
Frank E. Grzelecki
Director

/s/ G. Jackson Ratcliffe
-----------------------------------------------------
G. Jackson Ratcliffe
Director

REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE

To the Board of Directors
of Barnes Group Inc.

Our audits of the consolidated financial statements referred to in our report
dated January 30, 2002 appearing in the 2001 Annual Report to Stockholders of
Barnes Group Inc. (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedule listed in Item 14(a)(2) of this Form
10-K. In our opinion, this financial statement schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
Hartford, Connecticut
January 30, 2002

BARNES GROUP INC.
Schedule II - Valuation and Qualifying Accounts
Years Ended December 31, 2001, 2000, and 1999
( In thousands )

Allowances for Doubtful Accounts:

Balance December 31, 1998 $ 2,413
Provision charged to income (1) 1,343
Doubtful accounts written off (net) (427)
Other adjustments --
-----------

Balance December 31, 1999 3,329
Provision charged to income 936
Doubtful accounts written off (net) (2) (1,990)
Other adjustments (3) 445
-----------

Balance December 31, 2000 2,720
Provision charged to income (4) 2,076
Doubtful accounts written off (net) (4) (1,682)
Other adjustments --
-----------

Balance December 31, 2001 $ 3,114
===========

(1) The 1999 provision charged to income reflects complications encountered
during the implementation of a new integrated management system at Barnes
Distribution.

(2) The increase in doubtful accounts written off in 2000 was the result of
Barnes Distribution recognizing the write-off of receivables previously
reserved and expensed.

(3) Opening balances of acquired businesses.

(4) The 2001 increase in the provision charged to income and the level of
write-off of doubtful accounts reflects the impact the weak economic
environment has had on the Company's customers.

EXHIBIT INDEX

Barnes Group Inc.

Annual Report on Form 10-K
for the Year ended December 31, 2001
------------------------------------

Exhibit No. Description Reference
----------- ----------- ---------

3.1 Restated Certificate of Incorporation. Incorporated by reference to Exhibit 3.1 to
the Company's report on Form 10-K for the
year ended December 31, 1997.

3.2 Amended and Restated By-Laws. Incorporated by reference to Exhibit 3.2 to
the Company's report on Form 10-K for the
year ended December 31, 1998.

4.1 Revolving Credit Agreement dated as of Incorporated by reference to Exhibit 4.1 to
December 1, 1991 among the Company and the Company's report on Form 10-K for the
several commercial banks. year ended December 31, 1996.

4.2 (i) Sixth Amendment to Credit Agreement Incorporated by reference to Exhibit 4.2 to
set forth in Exhibit 4.1 dated as of the Company's report on Form 10-K for the
December 1, 1997. year ended December 31, 1997.

(ii) Seventh Amendment to Credit Agreement Filed with this report.
set forth in Exhibit 4.1 dated as of September
29, 1999.

(iii) Eighth Amendment to Credit Agreement Filed with this report.
set forth in Exhibit 4.1 dated as of
October 1, 2001.

4.3 Rights Agreement dated as of December 10, Incorporated by reference to Exhibit 1 to
1996, between the Company and ChaseMellon the Company's report on Form 8-A filed on
Shareholder Services, L.L.C. December 20, 1996.

4.4 Note Agreement dated as of September 16, Incorporated by reference to Exhibit 4.8 to
1991, among the Company and several the Company's report on Form 10-K for the
insurance companies. year ended December 31, 1996.

Exhibit No. Description Reference
----------- ----------- ---------

4.5 Note Purchase Agreement dated as of Incorporated by reference to Exhibit 4.9 to
December 1, 1995, between the Company and the Company's report on Form 10-K for the
several insurance companies. year ended December 31, 1995.

4.6 Note Agreement dated as of November 12, Incorporated by reference to Exhibit 4.6 to
1999, between 3031786 Nova Scotia Company, the Company's report on Form 10-K for the
a wholly owned subsidiary of the Company, year ended December 31, 1999.
and several insurance companies; and
related Guaranty Agreement between the
Company and such insurance companies.

4.7 Note Agreement dated as of November 21, Incorporated by reference to Exhibit 4.7 to
2000, between Barnes Group Inc. and several the Company's report on Form 10-K for the
insurance companies. year ended December 31, 2000.

4.8 Term Loan Facility Agreement between Incorporated by reference to Exhibit 10.1 to
Associated Spring-Asia Pte. Ltd. and The the Company's report on Form 10-Q for the
Development Bank of Singapore Limited, quarter ended June 30, 2001.
dated June 19, 2001.

4.9 Guarantee of Term Loan Facility Agreement, Incorporated by reference to Exhibit 10.2 to
between Barnes Group Inc. and The the Company's report on Form 10-Q for the
Development Bank of Singapore Limited, quarter ended June 30, 2001.
dated June 19, 2001.

4.10 Currency Swap and Interest Rate Hedging Incorporated by reference to Exhibit 10.3 to
Master Agreement, between Associated the Company's report on Form 10-Q for the
Spring-Asia Pte. Ltd. and The Development quarter ended June 30, 2001.
Bank of Singapore Limited, dated June 19,
2001.

4.11 Guarantee of Currency Swap and Interest Incorporated by reference to Exhibit 10.4 to
Rate Hedging Master Agreement, between the Company's report on Form 10-Q for the
Barnes Group Inc. and The Development Bank quarter ended June 30, 2001.
of Singapore Limited, dated June 19, 2001.

Exhibit No. Description Reference
----------- ----------- ---------

10.1* The Company's Management Incentive Incorporated by reference to Exhibit 10.1 to
Compensation Plan, as amended and restated the Company's report on Form 10-K for the
January 1, 2000. year ended December 31, 2000.

10.2* The Company's Long Term Incentive Plan. Incorporated by reference to Exhibit 10.2 to
the Company's report on Form 10-K for the
year ended December 31, 1995.

10.3* The Company's Retirement Benefit Incorporated by reference to Exhibit 10.3 to
Equalization Plan. the Company's report on Form 10-K for the
year ended December 31, 1995.

10.4* The Company's Supplemental Executive Incorporated by reference to Exhibit 10.4 to
Retirement Plan. the Company's report on Form 10-K for the
year ended December 31, 1995.

10.5* The Company's 1991 Stock Incentive Plan, as Incorporated by reference to Exhibit 10.5 to
amended and restated May 15, 1998. the Company's report on Form 10-K for the
year ended December 31, 1998.

10.6* The Company's Non-Employee Director Incorporated by reference to Exhibit 10.7 to
Deferred Stock Plan. the Company's report on Form 10-K for the
year ended December 31, 1994.

10.7* The Company's Amended and Restated Incorporated by reference to Exhibit 10.8 to
Directors' Deferred Compensation Plan. the Company's report on Form 10-K for the
year ended December 31, 1996.

10.8* The Company's Senior Executive Enhanced Incorporated by reference to Exhibit 10.8 to
Life Insurance Program, as amended and the Company's report on Form 10-K for the
restated May 16, 1997. year ended December 31, 1998.

10.9* The Company's Enhanced Life Insurance Incorporated by reference to Exhibit 10.12
Program. to the Company's report on Form 10-K for the
year ended December 31, 1993.

Exhibit No. Description Reference
----------- ----------- ---------

10.10* The Company's Supplemental Senior Officer Incorporated by reference to Exhibit 10.13
Retirement Plan. to the Company's report on Form 10-K for the
year ended December 31, 1996.

10.11* The Company's Executive Officer Incorporated by reference to Exhibit 10.14
Change-In-Control Severance Agreement. to the Company's report on Form 10-K for the
year ended December 31, 1997.

10.12* Employment Agreement dated as of December Incorporated by reference to Exhibit 10.14
8, 1998 between the Company and Edmund M. to the Company's report on Form 10-K for the
Carpenter. year ended December 31, 1998.

10.13* The Company's Employee Stock and Ownership Incorporated by reference to Exhibit 10.13
Program. to the Company's report on Form 10-K for the
year ended December 31, 2000.

10.14* Barnes Group Inc. Executive Deferred Incorporated by reference to Exhibit 10.1 to
Compensation Plan. the Company's report on Form 10-Q for the
quarter ended September 30, 2001.

10.15* Barnes Group Inc. Retirement Savings Plan, Filed with this report.
as amended through January 1, 2002.

13 Portions of the 2001 Annual Report to Filed with this report.
Stockholders.

21 List of Subsidiaries. Filed with this report.

23 Consent of Independent Accountants. Filed with this report.

*Management contract or compensatory plan or arrangement.

The Company agrees to furnish to the Commission, upon request,
a copy of each instrument with respect to which there are outstanding issues of
unregistered long-term debt of the Company and its subsidiaries the authorized
principal amount of which does not exceed 10% of the total assets of the Company
and its subsidiaries on a consolidated basis.

Except for Exhibits 13, 21, and 23, which will be furnished
free of charge, copies of exhibits referred to above will be furnished at a cost
of twenty-five cents per page to security holders who make a written request to
the Secretary, Barnes Group Inc., 123 Main Street, P.O. Box 489, Bristol,
Connecticut 06011-0489.