Principles of consolidation: The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation.

Revenue recognition: Sales and related cost of sales are recognized primarily upon shipment of products. Approximately one percent of sales were recognized prior to shipment as a result of customers’ request necessitated by the customers’ changing business conditions. In all such instances the Company has accounted for these transactions in accordance with U.S. generally accepted accounting principles as well as the Securities and Exchange Commission’s Staff Accounting Bulletin No. 101.

Research and development: Research and development expenditures are expensed as incurred.

Earnings per share: Basic earnings per common share are computed by dividing net income by the weighted-average number of common shares outstanding during the year. Diluted earnings per share are computed by dividing net income by the weighted-average number of common shares outstanding during the year including common stock equivalents, if dilutive.

Inventory valuation: Inventories are valued at the lower of cost, determined by the first-in, first-out (FIFO) method, or market.

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Property and equipment: Property and equipment are stated at cost. Plant and equipment are depreciated for financial reporting purposes principally using the straight-line method over the estimated useful lives of assets as follows: land improvements, 15-30 years; buildings, 15-45 years; leasehold and building improvements, 8-20 years; and machinery and equipment, 3-16 years. For tax purposes, the Company generally uses accelerated methods of depreciation. The tax effect of the difference between book and tax depreciation has been provided as deferred income taxes. On sale or retirement, the asset cost and related accumulated depreciation are removed from the accounts and any related gain or loss is reflected in income. Maintenance and repairs that do not improve efficiency or extend economic life are expensed currently. Interest costs are capitalized for major capital expenditures during construction.

Goodwill: Goodwill represents the excess of cost over net assets of businesses acquired. Goodwill acquired prior to 1971 is not amortized against income unless a loss of value becomes evident. Goodwill resulting from investments made subsequent to 1970 is amortized against income using the straight line method over various periods ranging from 20 to 40 years. The Company periodically reviews goodwill for impairment and assesses whether significant events or changes in business circumstances indicate that the carrying value of the assets may not be fully recoverable. Recoverability is assessed by comparing anticipated undiscounted future cash flows from operations to net book value.

In January of 2002, the Company will adopt the reporting requirements of Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets” and, as required for acquisitions after June 30, 2001, has already applied its requirements to the purchase of Duralam, Inc. which was completed on September 7, 2001.

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Intangible assets: Intangible assets are being amortized against income using the straight line method over their estimated useful lives, with periods ranging up to 20 years. The Company periodically reviews intangible assets for impairment and assesses whether significant events or changes in business circumstances indicate that the carrying value of the assets may not be fully recoverable. Recoverability is assessed by comparing anticipated undiscounted future cash flows from operations to net book value.

Taxes on undistributed earnings: No provision is made for U.S. income taxes on earnings of non-U.S. subsidiary companies which the Company controls but does not include in the consolidated federal income tax return since it is management’s practice and intent to permanently reinvest the earnings.

Translation of foreign currencies: Assets and liabilities are translated at the exchange rate as of the balance sheet date. All revenue and expense accounts are translated at average exchange rates in effect during the year. Translation adjustments are recorded as a separate component of equity.

Accumulated other comprehensive income (loss): The components of accumulated other comprehensive income (loss) are as follows as of December 31:

Statement of Cash Flows: For purposes of reporting cash flows, cash includes cash on hand and demand deposit accounts.

Preferred Stock Purchase Rights: On July 29, 1999, the Company’s Board of Directors adopted a Shareholder Rights Plan by declaring a dividend of one preferred share purchase right for each outstanding share of common stock. Under certain circumstances, a right may be exercised to purchase one two-hundredth of a share of Series A Junior Preferred Stock for $120, subject to adjustment. The rights become exercisable if, subject to certain exceptions, a person or group acquires beneficial ownership of 15 percent or more of the Company’s outstanding common stock or announces an offer which would result in such person acquiring beneficial ownership of 15 percent or more of the Company’s outstanding common stock. If a person or group acquires beneficial ownership of 15 percent or more of the Company’s outstanding common stock, subject to certain exceptions, each right will entitle its holder to buy common stock of the Company having a market value of twice the exercise price of the right. The rights expire August 23, 2009, and may be redeemed by the Company for $.001 per right at any time before a person becomes a beneficial owner of 15 percent or more of the Company’s outstanding common stock. The Company’s Board of Directors has designated 600,000 shares of Series A Junior Preferred Stock with a par value of $1 per share that relate to the Shareholder Rights Plan. At December 31, 2001, none of these shares were issued or outstanding.

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Financial Instruments: In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” This statement, as amended, establishes standards for recognition and measurement of derivatives and hedging activities and requires that all derivative instruments be recorded on the balance sheet at fair value. The fair value of all derivative instruments, such as forward foreign currency exchange contracts and interest rate swap arrangements are recorded. Implementation of this standard as required on January 1, 2001, did not have a material effect on the Company’s financial position or results of operation.

Environmental cost: The Company is involved in a number of environmental related disputes and claims. The Company accrues for environmental costs when it is probable that these costs will be incurred and can be reasonably estimated. At December 31, 2001 and 2000, reserves were $778,000 and $401,000, respectively. Adjustments to the reserve accounts and costs which were directly expensed for environmental remediation matters resulted in charges to the income statements for 2001, 2000, and 1999 of $406,000, $183,000, and $2,046,000, net of third party reimbursements totaling $5,000, $150,000, and $442,000, for 2001, 2000, and 1999, respectively.

Estimates and assumptions required: The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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. Actual results could differ from those estimates.

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