10-Q 1 e10q02q1.txt BARNES GROUP INC. 10Q 1ST QTR 3/31/2002 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM l0-Q (Mark One) (X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2002 or ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For transition period from -------------------- to -------------------- Commission File Number 1-4801 BARNES GROUP INC. (a Delaware Corporation) I.R.S. Employer Identification No. 06-0247840 123 Main Street, Bristol, Connecticut 06010 Telephone Number (860) 583-7070 Number of common shares outstanding at May 7, 2002 - 18,785,235 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 --- --- -1- BARNES GROUP INC. FORM 10-Q INDEX For the Quarterly period ended March 31, 2002 DESCRIPTION PAGES ----------- ----- PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Statements of Income for the three months ended March 31, 2002 and 2001 3 Condensed Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001 4-5 Consolidated Statements of Cash Flows for the three months ended March 31, 2002 and 2001 6 Notes to Condensed Consolidated Financial Statements 7-11 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11-16 ITEM 3. Quantitative and Qualitative Disclosure About Market Risk 16 PART II. OTHER INFORMATION ITEM 4. Submission of Matters to Vote of Security Holders 16 ITEM 6. Exhibits and Reports on Form 8-K 16 Signatures 17 Exhibit Index 17 -2- PART I. FINANCIAL INFORMATION Item 1. Financial Statements BARNES GROUP INC. CONSOLIDATED STATEMENTS OF INCOME Three months ended March 31, 2002 and 2001 (Dollars in thousands, except per share data) (Unaudited) 2002 2001 -------- -------- Net sales $194,236 $199,250 Cost of sales 130,298 132,562 Selling and administrative expenses 52,381 52,935 -------- -------- 182,679 185,497 -------- -------- Operating income 11,557 13,753 Other income 427 1,405 Interest expense 3,390 4,233 Other expenses 137 1,173 -------- -------- Income before income taxes 8,457 9,752 Income taxes 1,691 2,438 -------- -------- Net income $ 6,766 $ 7,314 ======== ======== Per common share: Net income: Basic $ .37 $ .39 Diluted .36 .39 Dividend .20 .20 Average common shares outstanding: Basic 18,497,371 18,620,760 Diluted 19,026,049 18,937,924 See accompanying notes. -3- BARNES GROUP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) ASSETS March 31, December 31, 2002 2001 --------- ------------ (Unaudited) Current assets Cash and cash equivalents $ 30,669 $ 48,868 Accounts receivable, less allowances (2002-$3,583; 2001-$3,114) 112,969 94,124 Inventories Finished goods 51,905 51,840 Work-in-process 18,587 15,506 Raw materials and supplies 18,920 18,375 -------- -------- 89,412 85,721 Deferred income taxes and prepaid expenses 28,618 27,822 -------- -------- Total current assets 261,668 256,535 Deferred income taxes 5,290 5,783 Property, plant and equipment 420,510 406,639 Less accumulated depreciation 258,337 253,696 -------- -------- 162,173 152,943 Goodwill 160,162 159,836 Other assets 64,944 61,408 -------- -------- Total assets $654,237 $636,505 ======== ======== See accompanying notes. -4- BARNES GROUP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) LIABILITIES AND STOCKHOLDERS' EQUITY March 31, December 31, 2002 2001 --------- ------------ (Unaudited) Current liabilities Notes payable $ 8,000 $ 5,500 Accounts payable 67,453 71,410 Accrued liabilities 61,279 59,118 Long-term debt - current 57,583 47,576 -------- -------- Total current liabilities 194,315 183,604 Long-term debt 177,890 178,365 Accrued retirement benefits 67,647 63,610 Other liabilities 12,691 12,089 Stockholders' equity Common stock-par value $0.01 per share Authorized: 60,000,000 shares Issued: 22,037,769 shares stated at par value 220 220 Additional paid-in capital 54,979 54,874 Treasury stock at cost, 2002-3,461,939 shares 2001-3,576,322 shares (74,939) (76,903) Retained earnings 246,345 243,369 Accumulated other comprehensive income (24,911) (22,723) -------- -------- Total stockholders' equity 201,694 198,837 -------- -------- Total liabilities and stockholders' equity $654,237 $636,505 ======== ======== See accompanying notes. -5- BARNES GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended March 31, 2002 and 2001 (Dollars in thousands) (Unaudited) 2002 2001 ------- ------- Operating activities: Net income $ 6,766 $ 7,314 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 7,883 9,615 Gain on disposition of property, plant and equipment (61) (82) Changes in assets and liabilities: Accounts receivable (14,742) (12,049) Inventories 4,198 4,957 Accounts payable (6,288) 3,886 Accrued liabilities 1,078 (8,985) Deferred income taxes 1,071 1,757 Other (550) (3,143) ------- ------- Net cash (used) provided by operating activities (645) 3,270 Investing activities: Proceeds from disposition of property, plant and equipment 306 66 Capital expenditures (4,066) (5,832) Business acquisitions, net of cash acquired (23,011) (677) Other (395) (1,069) ------- ------- Net cash used by investing activities (27,166) (7,512) Financing activities: Net increase in notes payable 3,947 1,964 Borrowings under revolving credit agreement 10,000 -- Proceeds from the issuance of common stock 999 606 Common stock repurchases (96) (1,014) Dividends paid (3,703) (3,730) Proceeds from sale of debt swap -- 13,766 ------- ------- Net cash provided by financing activities 11,147 11,592 Effect of exchange rate changes on cash flows (1,535) 527 ------- ------- (Decrease) increase in cash and cash equivalents (18,199) 7,877 Cash and cash equivalents at beginning of period 48,868 23,303 ------- ------- Cash and cash equivalents at end of period $30,669 $31,180 ======= ======= See accompanying notes. -6- Notes to Condensed Consolidated Financial Statements: 1. Summary of Significant Accounting Policies ------------------------------------------ The accompanying unaudited condensed consolidated balance sheet and consolidated statements of income and cash flows have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The December 31, 2001 balance sheet was derived from audited financial statements. The financial statements do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. For additional information, please refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. In the opinion of management, all adjustments, including normal recurring accruals considered necessary for a fair presentation, have been included. Operating results for the three-month period ended March 31, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. 2. Net Income Per Common Share ---------------------------- For the purposes of computing diluted earnings per share, the weighted average number of shares outstanding was increased by 528,678 and 317,164 for the periods ended March 31, 2002 and 2001, respectively, for the potential dilutive effects of stock-based incentive plans. There were no adjustments to net income for the purposes of computing income available to common stockholders for those periods. 3. New Accounting Standards ------------------------ The Company adopted Statement of Financial Accounting Standard (SFAS) No. 141, "Business Combinations," and SFAS No. 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 will no longer be amortized and instead will be evaluated 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 effective for all other acquisitions on January 1, 2002. SFAS 142 states that an entity has six months from the date it initially applies SFAS 142 to complete the first step of the transitional goodwill impairment test. The Company initially applied SFAS 142 as of January 1, 2002. Management is in the process of completing the first step. If -7- Notes to Condensed Consolidated Financial Statements, Continued: management were to determine that impairment exists, a loss would be recognized as the effect of a change in accounting principle. The effect of this accounting change on the Company's consolidated results of operations and financial position would be determined in the second step of the impairment test in the second half of 2002. In accordance with SFAS 142, the Company no longer amortizes goodwill. The following table presents income adjusted to exclude goodwill amortization expense recognized in the prior period: (Dollars in thousands, except for per share data) (Unaudited) Three months ended March 31, ------------------ 2002 2001 ------ ------ Net income, as reported $6,766 $7,314 Add back: goodwill amortization, net of income taxes -- 841 ------ ------ Adjusted net income $6,766 $8,155 ====== ====== Basic earnings per common share, as reported $ .37 $ .39 Add back: goodwill amortization, net of income taxes -- .05 ------ ------ Adjusted basic earnings per share $ .37 $ .44 ====== ====== Diluted earnings per common share, as reported $ .36 $ .39 Add back: goodwill amortization, net of income taxes -- .04 ------ ------ Adjusted diluted earnings per share $ .36 $ .43 ====== ====== 4. Acquisitions ------------ On February 21, 2002, the Company purchased substantially all of the manufacturing assets of Seeger-Orbis GmbH & Co. OHG of Germany (Seeger- Orbis) from TransTechnology Corporation. The results of operations of Seeger-Orbis have been included in the consolidated financial statements since the purchase date. The acquired business will expand both the product offerings and geographic scope of the Associated Spring segment. The purchase price of approximately $21.0 million was financed primarily with cash held by the Company outside the United States. -8- Notes to Condensed Consolidated Financial Statements, Continued: 5. Acquired Intangible Assets -------------------------- Intangible assets consist of registered trademarks purchased in the acquisition of the nitrogen gas spring business in 1999. These trademarks are being amortized over their estimated useful lives of 30 years. At March 31, 2002, the gross carrying amount of trademarks was $4.2 million and accumulated amortization was $0.4 million. Amortization expense for the three-month period was immaterial. The estimated aggregate amortization expense is approximately $0.1 million in each of the years 2002 through 2006. The Company is in the process of obtaining third-party valuations of certain intangible assets for its acquisition of Seeger-Orbis. The purchase price allocation is expected to be finalized in the second quarter of 2002. Any amounts related to the intangible assets that were acquired with the Seeger-Orbis acquisition are not included above. 6. Goodwill -------- The following table sets forth the change in the carrying amount of goodwill for the period ended March 31, 2002: (Dollars in thousands) Associated Barnes Barnes Total Spring Aerospace Distribution BGI ---------- --------- ------------ -------- Balance as of January 1, 2002 $ 68,505 $ 31,415 $ 59,916 $159,836 Goodwill acquired 326 -- -- 326 -------- -------- -------- ------- Balance as of March 31, 2002 $ 68,831 $ 31,415 $ 59,916 $160,162 ======== ======== ======== ======== The adjustment of $0.3 million of acquired goodwill relates to the acquisition of the assets of Forward Industries in November 2001. This was based on the determination of the final purchase price and the purchase price allocation. 7. Comprehensive Income -------------------- Comprehensive income includes all changes in equity during a period except those resulting from the investment by and distributions to, stockholders. For the Company, comprehensive income includes net income, foreign currency translation adjustments and deferred gains and losses related to certain derivative instruments. -9- Notes to Condensed Consolidated Financial Statements, Continued: Statement of Comprehensive Income (Dollars in thousands) (Unaudited) For the three months ended March 31, 2002 2001 -------- -------- Net income $ 6,766 $ 7,314 Unrealized (losses) gains on hedging activities, net of income taxes (618) 176 Foreign currency translation adjustments (1,570) (499) -------- -------- Comprehensive income $ 4,578 $ 6,991 ======== ======== 8. Information on Business Segments -------------------------------- The following tables set forth information about the Company's operations by its three reportable business segments: (Dollars in thousands) For the three months ended March 31, 2002 2001 -------- -------- Revenues Associated Spring $ 75,565 $ 75,993 Barnes Aerospace 47,410 46,890 Barnes Distribution 72,865 79,407 Intersegment sales (1,604) (3,040) -------- -------- Total revenue $194,236 $199,250 ======== ======== Operating profit Associated Spring $ 7,077 $ 7,168 Barnes Aerospace 2,742 3,927 Barnes Distribution 1,996 2,951 -------- -------- Total operating profit 11,815 14,046 Interest income 124 160 Interest expense (3,390) (4,233) Other expense (92) (221) -------- -------- Income before income taxes $ 8,457 $ 9,752 ======== ======== 9. Contingency ----------- The Company continues to guarantee a minimum rate of return on certain pre-April, 2001, assets of its 401(k) Retirement Savings Plan (the Plan). -10- Notes to Condensed Consolidated Financial Statements, Continued: This guarantee will become a liability for the Company only if, and to the extent that, the value of the related Company stock does not cover the guaranteed asset value when an employee withdraws from the Plan. The following table compares the market value of the Company's stock at various balance sheet dates and the related guarantee at those dates: (Dollars in thousands, except for per share data) Balance Stock price Plan Sheet date per share Guarantee ---------- ----------- --------- March 31, 2002 $24.50 $ 43 December 31, 2001 23.99 47 December 31, 2000 19.88 401 December 31, 1999 16.31 2,321 10. Subsequent Event ---------------- On April 29, 2002, the Company acquired Spectrum Plastics Molding Resources, Inc., a fully integrated, precision injection molder of plastic products, which will be included in the Associated Spring segment. The acquisition adds a complementary product line that will expand the current metal product offerings of this segment, enabling it to become a single-source solution for customers needing plastic and metal components and assemblies. The acquisition added plastic molding capabilities that will use metal inserts and continuous stamped lead frame to supply metal-in-plastic and plastic-on-metal assemblies for the electronics, telecommunications, medical, and other rapidly growing, technologically advanced markets. Under prior management, sales for the fiscal year ended September 30, 2001 were $20.3 million. Item 2. Management's Discussion and Analysis of Financial Condition and Results of 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 of the Notes to Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. The most significant areas involving management judgments and estimates are described below. Actual results could differ from those estimates. -11- Management's Discussion and Analysis of Financial, Condition and Results of Operations, Continued: Business Acquisitions: Assets and liabilities acquired in business combinations are recorded at their estimated fair values at the acquisition date. At March 31, 2002, the Company has $160.2 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 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 the standard. Management will complete this assessment by June 30, 2002 based on the best information available as of the date of the assessment, which incorporates management assumptions about expected future cash flows. Future cash flows can be affected by changes in the global economy, industries and markets in which the Company sells products and the execution of management's plans, particularly to integrate acquired companies. There can be no assurance that future events will not result in impairments of goodwill or other assets. Income Taxes: At March 31, 2002, the Company has recognized $21.4 million of deferred tax assets, net of valuation reserves. The realization of a portion of these benefits is dependent on future income. Management believes that sufficient income will be earned in the future to realize deferred income tax assets, net of valuation allowances recorded. 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. The recognized net deferred tax asset is based on the Company's estimates of future taxable income and its 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. Results of Operations --------------------- Net sales for the first quarter 2002 were $194.2 million compared with a record $199.3 million in the first quarter last year. Net sales in the first quarter of 2002 reflected the first signs of economic improvement over the third and fourth quarters of 2001. First quarter 2002 operating income was $11.6 million compared to $13.8 million in the first three months of 2001. These results reflect a significant period-over-period sales decline in the Barnes Distribution segment and lower earnings in the Barnes Aerospace and Barnes Distribution segments. Operating income margin was 5.9% compared with 6.9%, a year ago, driven for the most part by a lower gross margin, which declined to 32.9% from 33.5% a year ago. This decline in gross margin resulted from the overall shift in the sales mix to lower margin business, a direct impact of the decline in sales at Barnes Distribution. Selling and administrative expenses, as a percentage of sales, remained relatively flat compared to last year's first quarter. Impacting operating expenses were higher personnel costs, specifically pension and other -12- Management's Discussion and Analysis of Financial, Condition and Results of Operations, Continued: compensation costs. Efforts were made in all three business segments to cut costs and reduce infrastructure. These cost reductions are expected to have a positive impact on profits as sales volumes increase in future periods. Segment Review - Sales and Operating Profit ------------------------------------------- Associated Spring's sales for first quarter 2002 were $75.6 million, compared to $76.0 million a year ago. Sales during the quarter were impacted by the weakness in the telecommunications and electronics sectors of Associated Spring's business. However, the sales decline in these sectors was partially offset by continued strong growth in the nitrogen gas spring business, $4.4 million of incremental sales from recent acquisitions and improved sales to the light vehicle transportation market. While the positive trend in light vehicle production is forecasted to continue through the second quarter of 2002, the telecommunications and electronics markets are expected to remain weak in the near term. Operating profit for the segment was $7.1 million in the first quarter of 2002 compared with $7.2 million for the same period a year ago, reflecting the lower sales volume. This was offset, in large part, by solid cost controls. Barnes Aerospace's first quarter 2002 sales were $47.4 million, compared with $46.9 million in 2001. Operating profit fell to $2.7 million for the current quarter, from $3.9 million during last year's first quarter. The decline in operating profit reflects severance and other personnel costs as well as additional expenses tied to new product introductions. Orders recorded during the first quarter of 2002 were $45.1 million and order backlog at March 31, 2002 was $155.8 million, essentially unchanged from the December 31, 2001 level. Barnes Distribution's sales in the first three months of 2002 were $72.9 million, down 8.2% from $79.4 million in 2001. The sales decline reflects the continued weak economic conditions in the North American and European industrial markets. Although sales were down year over year, the current quarter's sales trend, when compared to the third and fourth quarters of 2001, is positive. Operating profit for the first quarter 2002 was $2.0 million, down from $3.0 million a year ago. Operating profit was negatively impacted by the sales volume decline offset in part by lower purchased material costs and by the impact of cost reduction efforts initiated in 2001 related to the consolidation of several distribution centers and the reorganization of the sales management function. Other Income/Expense --------------------- Significantly lower other income for the first quarter 2002 compared to 2001 was due to a small foreign exchange transaction loss in the current period, compared to a gain of $0.9 million last year. Lower interest expense in 2002 was a result of lower interest rates. Other expenses declined because of the -13- Management's Discussion and Analysis of Financial, Condition and Results of Operations, Continued: absence of $1.0 million of goodwill amortization, due to an accounting change. Please refer to Note 3, "New Accounting Standards", for further explanation. Income Taxes ------------ The Company's effective tax rate for first quarter 2002 was 20.0%, compared with 25.0% in 2001's first quarter. The lower rate in 2002 is primarily due to a higher percentage of income in foreign jurisdictions with tax rates lower than the U.S. statutory tax rate. Net Income and Net Income Per Share ----------------------------------- Consolidated net income for the first quarter of 2002 and 2001 was $6.8 million and $7.3 million, respectively. Basic and diluted earnings per share for the first quarter of 2002 were $.37 and $.36 compared to 2001's basic and diluted earnings per share of $.39. Financial Condition ------------------- Cash Flows ---------- The Company's ability to generate cash from operations in excess of its internal operating needs is one of its financial strengths. Management continues to focus on cash flow and anticipates operating activities in 2002, combined with aggressive asset management, will provide sufficient cash to take advantage of opportunities for organic business expansion and to meet the Company's current financial commitments. Management assesses the Company's liquidity in terms of its overall ability to generate cash to fund its 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. Net cash used by operating activities in the first three months of 2002 was $0.6 million, compared to net cash provided of $3.3 million in 2001's first quarter. In the first quarter of 2002 operating cash flow was negatively impacted by lower operating results and by a higher use of working capital compared to 2001's first quarter. The reduction in depreciation and amortization was due to the absence of $1.0 million of goodwill amortization in the 2002 period, as previously discussed. In addition, depreciation declined $0.7 million quarter over quarter due to lower capital spending over the past three years and the retirement of older assets. Net cash used by investing activities in the first quarter of 2002 was $27.2 million compared with $7.5 million in 2001. The significant increase in this -14- Management's Discussion and Analysis of Financial, Condition and Results of Operations, Continued: year's investing activities was due, in large part, to the acquisition of Seeger-Orbis in February 2002. The acquisition was funded primarily from cash held by the Company outside the United States. As expected, capital spending is below the 2001 level. Net cash provided by financing activities was $11.1 million in the first three months of 2002 compared to $11.6 million in the comparable period of 2001. In 2002, the proceeds from additional borrowings under the revolving credit agreement and short-term credit lines were used to finance operating activities, primarily working capital requirements, as well as to fund capital expenditures and pay dividends. In 2001, proceeds from the sale of a cross- currency debt swap, combined with cash generated by operating activities, were used in part to fund capital expenditures, pay dividends and repurchase the Company's stock. Liquidity and Capital Resources ------------------------------- The Company maintains substantial bank borrowing facilities to supplement internal cash generation. At March 31, 2002, the Company had $150.0 million of borrowing capacity under its revolving credit agreement of which $50.0 million was borrowed at an interest rate of 3.12%. The Company's revolving credit agreement will expire in December 2002. Accordingly, borrowings under the revolving credit agreement are classified in the current portion of long-term debt. The Company intends to enter into a new three-year revolving credit agreement during the second quarter of 2002. The Company also has available approximately $15.0 million in uncommitted short-term bank credit lines of which $8.0 million was in use at March 31, 2002. The interest rate on this borrowing was 2.74%. The Company believes its credit facilities coupled with cash generated from operations are adequate to finance its anticipated future requirements. Forward-Looking Statements -------------------------- This quarterly report may contain certain forward-looking statements as defined in the Public Securities Litigation and Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements. Investors are encouraged to consider these risks and uncertainties as described within the Company's periodic filings with the Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, the following: the ability of the Company to integrate newly acquired businesses and to realize acquisition synergies on schedule; changes in market demand for the types of products and services produced and sold by the Company; the Company's success in identifying and attracting customers in new markets; the Company's ability to develop new and enhanced products to meet customers' needs on time; changes in economic and political conditions worldwide and in the locations where the Company -15- Management's Discussion and Analysis of Financial, Condition and Results of Operations, Continued: does business; interest and foreign exchange rate fluctuations; and changes in laws and regulations. Item 3. Quantitative and Qualitative Disclosure About Market Risk At March 31, 2002, the result of a hypothetical 1% increase in the average cost of the Company's variable-rate debt would reduce pretax profit of the Company by $1.3 million on an annual basis. For additional information, please refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. PART II. OTHER INFORMATION Item 4. Submission of Matters to Vote of Security Holders ------------------------------------------------- (a) The Annual Meeting of the Company's stockholders was held on April 10, 2002. Proxies for the meeting were solicited pursuant to Regulation 14 A. (c) (1) The following directors were elected: Votes in Vote For Terms Director Favor Withheld Expiring -------- -------- -------- -------- William S. Bristow, Jr. 14,869,154 805,733 2005 Edmund M. Carpenter 14,858,829 816,058 2005 G. Jackson Ratcliffe, Jr. 14,848,398 826,489 2005 Donald W. Griffin 14,860,780 814,107 2003 (2) The stockholders approved the Barnes Group Inc. Employee Stock And Ownership Program, as amended effective February 1, 2002. The proposal was adopted as 9,961,948 shares voted for, 3,831,402 shares voted against, 272,650 shares abstained and 1,608,887 shares were unvoted. Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits Exhibit 10.1 Barnes Group Inc. Employee Stock and Ownership Program (b) Form 8-K No reports on Form 8-K, Item 5, Other Events, were filed during the quarter ended March 31, 2002. -16- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Barnes Group Inc. (Registrant) Date May 14, 2002 By /S/ William C. Denninger ------------ ------------------------------------- William C. Denninger Senior Vice President, Finance and Chief Financial Officer (the principal financial officer) Date May 14, 2002 By /s/ Francis C. Boyle, Jr. ------------ ------------------------------------- Francis C. Boyle, Jr. Vice President, Controller (the principal accounting officer) EXHIBIT INDEX BARNES GROUP INC. Quarterly Report on Form 10-Q For Quarter ended March 31, 2002 -------------------------------- Exhibit No. Description Reference ---------- ----------- --------- 10.1 Barnes Group Inc. Employee Incorporated by reference to Stock And Ownership Program, Annex I to the Registrant's as amended effective Proxy Statement dated March February 1, 2002 13, 2002 for the Annual Meeting of Stockholders held April 10, 2002 that was filed with the Commission on March 12, 2002. -17-