Your Company enjoyed another profitable year in 2002, as we  set a new record for sales and generated significant operating cash flow and a 42 percent incr ease in our net income. We also delivered a total return to our stockholders that again exceeded that of both the Standard and Poor’s SmallCap 600 Index and the Russell 2000 Index, despite  an equity market that declined for a third straight year for the first time since the 1940s. 

It was particularly satisfying that these results occurred in a y ear that saw significant external challenges to our business, the most pervasiv of which was an industrial economy that showed little sign of improvement.While many companies rushed to  adopt a ‘flavor of the month’ approach to their strategic direction in an effort to deal with the sustained economic downturn, we maintained our direction and focus on building lasting va lue for our stockholders by generating sustainable, profitable growth. Our steady co mmitment t o our strategic direction, regardless of temporary external forces, speaks for itself. 

By remaining focused on long-term value generation, each of our three businesses delivered solid results during 2002. At Associated Spring, sales of nitrogen gas springs and products for the transportation sector grew nicely, more than offsetting a dr op in sales of telecommuni- cations and electronics products. Through their investments to  diversify the customer base, Barnes Aerospace was able to hold their backlog essentially st eady year-over-year, despite the disruption in the commercial aerospace market. And Barnes Distribution was able to roll out numerous new customer growth initiatives, while at the same time reducing their overall cost of doing business. 

## The ‘Group’ Becomes Bigger 

## Inside 

6 Five-Year Operating Results 

7 Management’s Discussion & Analysis 

17 Consolidated Financial Statements 

21 Notes to Consolidated Financial Statements 

40 Report of Independent Accountants 

41 Quarterly Data (Unaudited) 

42 Selected Financial Data 

43 About the Company 

As we have mentioned in our past letters to you, there are tw o primary elements in our approach to generating sustainable, profitable growth: creating internal sales growth to new and existing customers and markets, and finding strategic acquisitions for each of our three businesses. In addition to several internal growth initiatives that were under way last year, we also continued down that second path in 2002 by acquiring tw o businesses that fit extremely well with Associated Spring. 

First, in February, we acquired Seeger-Orbis. Seeger-Orbis, which is based in Germany, is a leading manufacturer of retaining rings — often called ‘Seeger rings’ in Europe — used in a number of transportation and industrial applications. S eeger-Orbis ex tends the product line reach of Associated Spring and gives the Compan a critical geographic expansion into the automotive and industrial manufacturing markets of Europe, where previously Associated Spring did not have a large customer presence. A ke business driver of the acquisition was the cross-selling opportunity for Seeger-Orbis into the North American market and from our other Associated Spring operations into Europe; to date, the business development opportunities have been excellent. 

In April, we acquired Spectrum Plastics. Spectrum, which is based in Connecticut, is a premier, fully integrated precision plastic injection-molding company. Spectrum services many of the same customers as Associated Spring, and by adding advanc ed plastic molding capabilities, Associated Spring is able to supply metal-in-plastic and plastic-on-metal assemblies for the 

