CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (in thousands) 14 Accumulated Other Number Additional Retained Comprehensive Comprehensive of shares Paid-In Capital Earnings Loss Income/(Loss) Balance, December 31, 1998 22,397 $141,506 $ 49,330 $ (294) Net income  —  —  41,172 —  $ 41,172 Other comprehensive income:  Currency translation adjustments  —  —  —  (86) (86) Comprehensive income  $ 41,086 Balance, December 31, 1999 22,397 141,506 90,502 (380) Net income  —  —  32,709 —  $ 32,709 Other comprehensive income:  Currency translation adjustments  —  —  —  (2,151) (2,151) Comprehensive income  $ 30,558 Balance, December 31, 2000  22,397 141,506 123,211 (2,531) Net income  —  —  2,946 —  $ 2,946 Other comprehensive loss:  Cumulative effect of change in accounting  for derivatives — — — (268) (268) Change in fair value of derivatives  —  —  —  (4,042) (4,042) Currency translation adjustments  —  —  —  (1,215) (1,215) Comprehensive loss  $ (2,579) Balance, December 31, 2001  22,397 $ 141,506 $ 126,157 $ (8,056) The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. NOTE 1 ORGANIZATION AND NATURE OF BUSINESS NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents Accounts Receivable Concentrations Inventories Stoneridge, Inc. (Stoneridge) and its subsidiaries are designers and manufacturers of engineered electrical and electronic components, modules and systems for the automotive, medium and heavy-duty truck, agricultural, and off-road vehicle markets.  The accompanying consolidated financial statements include the accounts of Stoneridge and its wholly owned and majority-owned subsidiaries (collectively, the Company). All significant intercompany transactions and balances have been eliminated in consolidation. Basis of Presentation The Company considers all short-term investments with original maturities of three months or less to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value. Revenues are principally generated from the automotive, medium and heavy-duty truck, and agricultural vehicle markets. Due to the nature of these industries, a signifi- cant portion of sales and related accounts receivable are concentrated in a relatively small number of customers. In 2001, the top three customers accounted for approxi- mately 18%, 17% and 15% of net sales, while the top five customers accounted for 68% of net sales. The top three customers accounted for approximately 18%, 17% and 17% of the Company’s 2000 net sales, and its top five cus- tomers accounted for approximately 66% of its 2000 net sales. Accounts receivable from the Company’s five largest customers aggregated approximately $48,529 and $47,876 at December 31, 2001 and 2000, respectively. Cost is determined using the last-in, first-out (LIFO) method for approximately 74% and 77% of the Company’s inventories at December 31, 2001 and 2000, respectively, and by the first-in, first-out (FIFO) method for all other inventories. Inventory cost includes material, labor and overhead. Inventories consist of the following at December 31: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) Property, plant and equipment are recorded at cost and consist of the following at December 31: Property, Plant and Equipment Depreciation is provided by both the straight-line and accelerated methods over the estimated useful lives of the assets. Depreciation expense for the years ended December 31, 2001, 2000 and 1999 was $18,664, $18,218 and $17,057, respectively. Depreciable lives within each property classification are as follows: Maintenance and repair expenditures that are not consid- ered betterments and do not extend the useful life of property are charged to expense as incurred. Expenditures for improvements and major renewals are capitalized. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss on the disposition is credited or charged to income. 2001 2000 Raw materials $ 35,488 $ 45,552 Work in progress 8,192 9,369 Finished goods 11,142 15,261 Less: LIFO reserve (318) (23) Total $ 54,504 $ 70,159 2001 2000 Land and land improvements $ 5,552 $ 5,560 Buildings and improvements 44,730 43,855 Machinery and equipment 93,041 87,245 Office furniture and fixtures 23,925 22,925 Tooling 48,313 38,350 Vehicles 862 1,115 Leasehold improvements 1,106 1,110 217,529 200,160 Less: Accumulated depreciation and amortization 99,468 86,305 $118,061 $113,855 Buildings and improvements 10-40 years Machinery and equipment 5-10 years Office furniture and fixtures 3-10 years Tooling 2-5 years Vehicles 3-5 years Leasehold improvements 3-8 years 15 Stoneridge, Inc. and Subsidiaries Stoneridge, Inc. and Subsidiaries