The Company enters into forward foreign currency exchange contracts to manage foreign currency exchange rate exposures associated with certain foreign currency denominated receivables and payables. At December 31, 2001 and 2000, the Company had outstanding forward foreign currency exchange contracts aggregating $3,166,000 and $7,270,000, respectively. Forward foreign currency exchange contracts generally have maturities of less than nine months and relate primarily to major Western European currencies. Counterparties to the forward foreign currency exchange contracts are major financial institutions. Credit loss from counterparty nonperformance is not anticipated. On January 1, 2001, SFAS No. 133, “Accounting for Derivative Instruments,” was adopted by the Company. SFAS No. 133 requires that the fair value of derivative instruments, such as forward foreign currency exchange contracts, be recorded on the balance sheet with subsequent changes reflected in income or deferred as an element of equity. The Company has not designated these derivative instruments as hedging instruments. The $6,600 net settlement expense (fair value) related to active forward foreign currency exchange contracts is recorded on the balance sheet and as an expense element of other costs (income), net.

During the third quarter 2001, to obtain greater exposure to short-term floating interest rates the Company entered into long-term interest rate swap agreements for a total notional amount of $350.0 million with three major U.S. banks. These interest rate swap agreements have been designated as hedges of changes in the fair value of the Company’s existing $350.0 million fixed rate long-term debt obligations ($100.0 million, 6.7 percent note due July 1, 2005, and $250.0 million, 6.5 percent note due August 15, 2008). Counterparties to these agreements are major financial institutions who also participate in the Company’s bank credit facilities. Credit loss from counterparty nonperformance is not anticipated.

Under these interest rate swap agreements the Company will receive a fixed rate of interest and pay a variable rate of interest over the term without the exchange of the underlying notional amounts. The fixed rate of interest, which the Company will receive, is equal to the interest rate of the Company’s long-term debt which is being hedged. The variable rate of interest which the Company will pay is based on the six-months London Interbank Offered Rate (LIBOR), set in arrears, plus a fixed spread which is unique to each agreement. The variable rates are reset semiannually at each net settlement date. At December 31, 2001, the net settlement receivable of $4.0 million was recorded as a reduction in interest expense. This position for the Company would become less favorable as short-term interest rates increase.

The terms of the interest rate swap agreements have been specifically designed to conform with the applicable terms of the hedged items and with the requirements of paragraph 68 of SFAS No. 133 to support the assumption of no ineffectiveness (changes in fair value of the debt and the swaps exactly offset) and to simplify the computations necessary to make the accounting entries. At December 31, 2001, the fair value of these interest rate swaps was $1.3 million in the banks’ favor, as determined by the respective bank using discounted cash flow or other appropriate methodologies, and is included with other liabilities and deferred credits with a corresponding decrease in long-term debt.

At December 31, 2001 and 2000, the carrying value approximates the fair value of financial instruments such as cash, trade receivables and payables, and short-term debt because of the short-term maturities of these instruments. The fair value of the Company’s long-term debt, including current maturities but excluding capitalized leases, is estimated to be $599,097,000 and $665,448,000 at December 31, 2001 and 2000, respectively, using discounted cash flow analyses, based on the incremental borrowing rates currently available to the Company for similar debt with similar terms and maturity.

Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of entities comprising the Company’s customer base and their dispersion across many different industries and countries. As of December 31, 2001 and 2000, the Company had no significant concentrations of credit risk.

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