Management's Discussion and Analysis of Financial Condition and Results of Operations

Inflation
Inflation has not had a significant impact on the Company's United States operations over the past three years, nor is it expected to have a significant impact in the foreseeable future.

During the first quarter of fiscal year 1997, the Company changed its method of reporting foreign currency translation adjustments for its Mexican operations to the method prescribed for highly inflationary economies. Under that method, foreign currency translation adjustments are reflected in results of operations, instead of in shareholders' equity. As of January 1, 1999, the Mexican economy was no longer considered highly inflationary by the SEC staff. Accordingly, subsequent to January 1, 1999, gains and losses resulting from translation of the financial statements of the Company's Mexican operations are reflected in shareholders' equity, and the functional currency used by the Company's Mexican operations is the Mexican peso. These changes did not have a material effect on the Company's results of operations for fiscal year 1998 or 1999. However, no assurance can be given that a material change will not occur in the future due to events within Mexico beyond the Company's control.