Item 1. Business. --------- The Company is in three businesses: Bowman Distri- bution, a distributor of consumable repair and replacement products for industrial, heavy equipment, and transportation maintenance markets; Associated Spring, a manufacturer and distributor of custom-made springs and other close-tolerance engineered metal components; and Barnes Aerospace, a manufacturer of precision machined and fabricated assemblies for the aircraft and aerospace industries and a refurbisher of jet engine components.*
Bowman Distribution. Bowman Distribution is engaged in ------------------- distributing in the United States, Canada, the United Kingdom and France a variety of replacement parts and other products, including fasteners and special purpose hardware, automotive parts, automotive specialties and accessories, general purpose electric and gas welding supplies, industrial maintenance supplies, and industrial aerosols such as adhesives, lubricants, and sealants.
The products sold by Bowman Distribution are, for the most part, not manufactured by the Company, but are obtained from a number of outside suppliers. The vast majority of the products are repackaged and sold under Bowman's labels.
Sales by Bowman Distribution in the United States and Canada are primarily to industrial plants, chemical and petro- chemical process industries, contractors, new car dealers, garages, service stations, operators of vehicle fleets, and airline ground maintenance facilities.
In 1992, the Company sold substantially all of the assets of the Pioneer division of Bowman.
Associated Spring. Associated Spring manufactures and ----------------- distributes a wide variety of custom metal parts for mechanical purposes. It is equipped to produce practically every type of spring requiring precision engineering, as well as an extensive variety of precision metal components and assemblies. Its
----------------------- *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 "Bowman Distribution" refer to the above-defined businesses, but not to separate corporate entities.
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products range in size from fine hairsprings for instruments to large springs for heavy machinery, and its output of a given metal part may vary in amount from a few units to several million. Associated Spring does not produce leaf springs or bed springs.
Associated Spring's custom metal parts 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. Custom metal parts are sold primarily through Associated Spring's sales employees. In view of the diversity of functions which Associated Spring's custom metal parts perform, Associated Spring's output is characterized by little standardization, with the major portion being manufactured to customer specifications.
The automotive and automotive parts industries constitute Associated Spring's largest single custom metal parts market. Other important outlets include manufacturers of industrial and textile machinery, motors, generators, meters and other electrical and electronic equipment, aircraft, diesel and other internal combustion engines, household appliances and fixtures, hardware, office equipment, agricultural equipment, railroad equipment, general machinery, firearms, and scientific instruments.
The Associated Spring Distribution division is engaged in the distribution of industrial products to the tool and die market, of which die springs manufactured by Associated Spring are the principal item. It also distributes certain standard parts manufactured by Associated Spring consisting primarily of stock wire and flat springs which are sold under the Company's SPEC registered trademark. The Company has an exclusive marketing agreement with Stroemsholmens Mekaniska Verkstad AB to market Kaller nitrogen gas springs and systems in North America and other specified countries.
Associated Spring also has manufacturing operations in Brazil, Canada, Mexico, and Singapore, and distribution operations in the United Kingdom and France. In 1992, the Company closed its spring manufacturing plant in Dayton, Ohio. In 1993, the Company closed its spring manufacturing plant in Memphis, Tennessee and transferred the warehouse operations conducted in Corry, Pennsylvania to a new warehouse facility located in Ypsilanti, Michigan. In 1994, it closed its spring manufacturing plants in Gardena, California, and Monterrey, Mexico. The Company has retained a minority interest of 15% in its former subsidiary in Argentina.
The Company is a partner 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
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Inc. ("NASCO"), has a manufacturing facility in Bowling Green, Kentucky. It manufactures and sells hot-wound coil springs for automotive suspension systems and counterbalance torque bars for trunk lids. Barnes Group owns a minority interest of 45% in NASCO.
Barnes Aerospace. Barnes Aerospace is engaged in the ---------------- advanced fabrication and precision machining of components for jet engines and airframes as well as the repair and overhaul of jet engine components. Windsor Manufacturing, Windsor Airmotive, and Advanced Fabrications constitute the Barnes Aerospace Group.
Windsor Manufacturing manufactures machined and fabricated parts as well as assemblies. It specializes in the machining of difficult-to-process aircraft engine superalloys. Manufacturing processes include computer numerically controlled machining, electrical discharge machining, laser drilling, creep-feed grinding, and automated deburring. Customers include gas turbine engine manufacturers for commercial and military jets as well as land-based turbines. In 1993, the operations of the Company's Central Metal Products plant were consolidated with Windsor Manufacturing.
Windsor Airmotive specializes in refurbishing jet engine components. Electron beam welding and plasma spray are two of the major processes used in this division, and customers include approximately 30 airlines world-wide and the military. Windsor Airmotive also has a facility in Singapore.
Advanced Fabrications, through its Jet Die and Flameco plants, specializes in hot forming and fabricating titanium and other high-temperature alloys such as hastelloy and inconel for use in precision details and assemblies for aircraft engine and airframe applications. It utilizes advanced manufacturing processes including superplastic forming and diffusion bonding.
Segment Analysis.The analysis of the Company's revenue ----------------- from sales to unaffiliated customers, operating income, and identifiable assets by industry segments and geographic areas appearing on pages 26 and 27 of the Company's 1994 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 (including aerospace components). The Company believes Associated Spring is the largest domestic manufacturer of precision springs used for mechanical purposes. The Company also faces active competition in the products sold by Bowman
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Distribution. The principal methods of competition for the Company's three businesses include service, quality, price, reliability of supply, and also, in the case of Associated Spring and Barnes Aerospace, technology and design.
Backlog. The backlog of the Company's orders believed to ------- be firm amounted to $108,143,000 at the end of 1994, as compared with $102,596,000 at the end of 1993. Of the 1994 year-end backlog, $53,622,000 is attributable to the Barnes Aerospace Group and all of the balance is attributable to the Associated Spring Group. $16,067,000 of Barnes Aerospace's backlog is not expected to be shipped in 1995. Substantially all of the remainder of the Company's backlog is expected to be shipped during 1995.
Raw Materials and Customers. None of the Company's --------------------------- divisions or groups are dependent upon any single source for any of their principal raw materials or products for resale, and all such materials and products are readily available. No one customer accounted for more than 10% of total sales in 1994. Automotive manufacturers continue to be important customers of Associated Spring. Sales by Barnes Aerospace to two domestic jet engine manufacturers accounted for approximately 50% of its business. Bowman 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 the 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 improving significantly an existing product or service. The Company spent approximately $2,640,000 on its research and development activities in 1994, as compared to expenditures of approximately $1,846,000 in 1993 and $1,145,000 in 1992. There were no significant customer-sponsored research and development activities in 1994. Barnes Aerospace divisions spent approximately $495,000 in 1993 on customer-sponsored research and development activities compared to expenditures of approximately $6,882,000 in 1992.
Patents and Trademarks. Patents, licenses, franchises ---------------------- and concessions are not material to any of the Company's businesses.
Employees. As of the date of this report, the Company --------- employs approximately 4,200 persons.
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.
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Item 2.

Item 2. Properties. ---------- The Company and its Canadian subsidiary operate 12 manufacturing plants and 15 warehouses at various locations throughout the United States and Canada, of which all of the plants and 6 of the warehouses are owned in fee, and the others are leased. Of the properties which are owned, none is subject to any encumbrance. The Company's other foreign subsidiaries own or lease plant or warehouse facilities in the countries where their operations are conducted. The listing of the facility locations of each of the Company's businesses contained in the Directory of Operations on the inside back cover of the 1994 Annual Report to Stockholders, included as Exhibit 13 to this report, is incorporated by reference.
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.

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.

Item 4. Submission of Matters to a Vote of Security Holders. --------------------------------------------------- No matter was submitted during the fourth quarter of 1994 to a vote of security holders.
The following information is included in accordance with the provisions of Item 401(b) of Regulation S-K:
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Except for Messrs. Barnes, Fadel, and Martin, 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. No family relationships exist among the executive officers of the Company.
Mr. Barnes was elected Senior Vice President- Administration effective December 16, 1993. From 1982 to 1993, Mr. Barnes was employed by The Olson Brothers Company as Executive Vice President and President, which position he held since 1983. Prior to joining Olson Brothers, Mr. Barnes held a variety of management positions with The Connecticut Bank and Trust Company, The S. Carpenter Construction Company, and the Company's Bowman Distribution division.
Mr. Fadel was elected Vice President of Barnes Group Inc. and President, Associated Spring effective January 21, 1994. Mr. Fadel joined the Company in 1991 as Group Director of Advanced Engineering and Technology for Associated Spring. In addition, Mr. Fadel served as Division Manager at the Associated Spring plant in Saline, Michigan from 1992 to 1994. From 1989 to to 1991, Mr. Fadel
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was employed by Herman Miller, Inc. as Manager of Chemical Engineering and Senior Project Manager. Prior to joining Herman Miller, he held industrial and manufacturing engineering positions at Chrysler Corp., General Dynamics Corp. and the former Burroughs Corporation.
Mr. Martin was elected Executive Vice President- Operations effective December 16, 1993. He joined the Company on October 1, 1990 as Group Vice President, Associated Spring. In December, 1991, his title was changed to President and Chief Operating Officer of Associated Spring. Mr. Martin was previously Corporate Vice President of Manufacturing for Herman Miller, Inc. Prior to joining Herman Miller, he worked for Bendix Corporation from 1981 to 1988 as Vice President of Planning of its Industrial Group, Vice President and General Manager of the Electronics Division, Vice President and General Manager of the Filtration Systems Group and most recently served as President of Bendix's Fram Canada business. Prior to 1981, Mr. Martin held a variety of management positions with the General Electric Company and was a senior consultant with Arthur D. Little.
PART II
Item 5.

Item 5. Market for the Registrant's Common Stock and Related ---------------------------------------------------- Stockholder Matters. ------------------- The information regarding the Company's common stock contained on pages 23 and 29 of the Company's 1994 Annual Report to Stockholders is incorporated by reference. As of February 7, 1995, the Company's common stock was held by 3,583 stockholders of record. The Company's common stock is traded on the New York Stock Exchange.
Item 6.

Item 6. Selected Financial Data. ----------------------- The selected financial data for the last five years contained on pages 30 and 31 of the Company's 1994 Annual Report to Stockholders is incorporated by reference.
Item 7.

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 11 through 13 of the Company's 1994 Annual Report to Stockholders are incorporated by reference.
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Item 8.

Item 8. Financial Statements and Supplementary Data. ------------------------------------------- The financial statements and report of independent accountants appearing on pages 14 through 28 of the Company's 1994 Annual Report to Stockholders are incorporated by reference. See also the reports of independent accountants included on pages 13 and 14 below pursuant to Item 302(a) of Regulation S-K. The material under "Quarterly Data" on page 29 of the Company's 1994 Annual Report to Stockholders is also incorporated by reference.
Item 9.

Item 9. Changes and Disagreements with Accountants on ------------------------------------------------------- Accounting and Financial Disclosure. ----------------------------------- The material under "Approval of Selection of Independent Accountants" on pages 13 and 14 of the Company's Proxy Statement dated March 3, 1995 is incorporated by reference.
PART III
Item 10.

Item 10. Directors and Executive Officers of the Company. ----------------------------------------------- The material under "Election of Directors" on pages 1 through 5 of the Company's Proxy Statement dated March 3, 1995 is incorporated by reference. See also "Executive Officers of the Company," included above pursuant to Item 401(b) of Regulation S-K.
Item 11.

Item 11. Executive Compensation. ---------------------- The material under "Compensation of Directors" appearing on page 6, the material under "Stock Plan for Non- Employee Directors" appearing on page 7, and the information appearing on pages 8 through 12 of the Company's Proxy Statement dated March 3, 1995 is incorporated by reference.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and --------------------------------------------------- Management. ----------
The information concerning this item appearing on pages 6 through 8 of the Company's Proxy Statement dated March 3, 1995 is incorporated by reference.
Item 13.

Item 13. Certain Relationships and Related Transactions. ---------------------------------------------- The information concerning this item appearing on page 6 of the Company's Proxy Statement dated March 3, 1995 is incorporated by reference.
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PART IV
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.
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The consolidated financial statements listed in the above index which are included in the Annual Report to Stock- holders of Barnes Group Inc. for the year ended December 31, 1994 are hereby incorporated by reference. With the exception of the pages listed in the above index and in Items 1, 2, 5, 6, 7, and 8, the 1994 Annual Report to Stockholders is not to be deemed filed as part of this report.
(b) 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 and indexed at pages 16 through 18 of this report.
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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: February 17, 1995
BARNES GROUP INC.
By /s/ A. Stanton Wells ----------------------------- A. Stanton Wells 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/ A. Stanton Wells --------------------------- A. Stanton Wells President and Chief Executive Officer (the principal executive officer) and Director
/s/ John E. Besser --------------------------- John E. Besser Senior Vice President-Finance and Law (the principal financial officer)
/s/ Francis C. Boyle, Jr. --------------------------- Francis C. Boyle, Jr. Assistant Controller (the principal accounting officer)
/s/ Thomas O. Barnes --------------------------- Thomas 0. Barnes Director
/s/ Wallace Barnes -------------------------- Wallace Barnes Director
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/s/ Gary G. Benanav --------------------------- Gary G. Benanav Director
/s/ William S. Bristow, Jr. --------------------------- William S. Bristow, Jr. Director
/s/ Robert J. Callander -------------------------- Robert J. Callander Director
/s/ George T. Carpenter --------------------------- George T. Carpenter Director
/s/ Donna R. Ecton --------------------------- Donna R. Ecton Director
/s/ Marcel P. Joseph --------------------------- Marcel P. Joseph Director
/s/ Theodore E. Martin ---------------------- Theodore E. Martin Director
/s/ Juan M. Steta --------------------------- Juan M. Steta Director
/s/ K. Grahame Walker --------------------------- K. Grahame Walker Director
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REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Barnes Group Inc.
Our audit of the consolidated financial statements referred to in our report dated January 23, 1995 appearing on page 28 of the 1994 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 for the year ended December 31, 1994 listed in Item 14(a) 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/ PRICE WATERHOUSE LLP PRICE WATERHOUSE LLP
Hartford, Connecticut January 23, 1995
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REPORT OF INDEPENDENT AUDITORS
Stockholders and Board of Directors Barnes Group Inc.
We have audited the consolidated balance sheet of Barnes Group Inc. as of December 31, 1993 and the related consolidated statements of income, stockholders' equity and cash flows for each of the two years in the period ended December 31, 1993. Our audits also included the financial statement schedule listed in the Index at Item 14(a) for each of the two years in the period ended December 31, 1993. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Barnes Group Inc. at December 31, 1993 and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
As discussed in Note 1 to the consolidated financial statements, the Company changed its methods of accounting for income taxes and for certain postretirement and postemployment benefits in the year ended December 31, 1992.
/s/ Ernst & Young LLP Ernst & Young LLP
Hartford, Connecticut January 28, 1994
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BARNES GROUP INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 1994, 1993 and 1992 (in thousands)
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EXHIBIT INDEX ------------- Barnes Group Inc.
Annual Report on Form 10-K for year ended December 31, 1994 --------------------------------
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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 Exhibit 13, which will be furnished free of charge, and Exhibits 22, 23.1 and 23.2, which are included herein, copies of exhibits referred to above will be furnished at a cost of twenty cents per page to security holders who make written request therefor to The Secretary, Barnes Group Inc., Executive Office, 123 Main Street, P.O. Box 489, Bristol, Connecticut 06011-0489.
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