MANAGEMENT’S DISCUSSION & ANALYSIS AND FINANCIAL STATEMENTS Discussion of Cash Flows The Consolidated Statement of Cash Flows reflects cash inflows and outflows from the Company's operating, investing and financing activities. All year references are to fiscal years. Cash and cash equivalents decreased $44.9 million in 2001 after increasing $35.2 million in 2000.  Cash Flows From Operating Activities –  The Company's largest source of cash continues to be net cash provided by operating activities. Net cash provided by operating activities in 2001 was $532.2 million compared to $538.0 million in 2000. This decrease was principally due to Accounts payable using cash of $43.7 million in 2001 compared to providing cash of $21.8 million in 2000. Accrued domestic and foreign taxes used cash of $6.1 million in 2001 after providing cash of $30.1 million in 2000. Net income in 2001 decreased $27.4 million compared to 2000, and accrued payrolls and other compensation used cash of $13.6 million in 2001 compared to providing cash of $8.0 million in 2000. In addition, cash provided by operating activities excluded a (Gain) on sale of plant and equipment of $55.9 million in 2001 compared to $5.3 million in 2000. These uses of cash in 2001 were partially offset by non-cash expenses of Depreciation and Amortization, which increased $58.1 million in 2001 compared to 2000. Deferred income taxes increased $32.5 million in 2001 as opposed to decreasing $11.9 million in 2000. Net assets held for sale provided cash of $43.1 million in 2001 after having no impact in 2000, and Accounts receivable used cash of $6.7 million in 2001 after using cash of $42.4 million in 2000. Net cash provided by operating activities in 2000 was a record $538.0 million compared to $459.1 million in 1999. Net income in 2000 increased $57.7 million over 1999. Accounts payable provided cash of $21.8 million in 2000 compared to using cash of $33.1 million in 1999 and Accrued payrolls and other compensation provided cash of $8.0 million in 2000 after using cash of $21.9 million in 1999. These providers of cash in 2000 were partially offset by Deferred income taxes, which decreased $11.9 million in 2000 as opposed to increasing $5.7 million in 1999. Other liabilities provided cash of $5.6 million in 2000 after providing cash of $20.7 million in 1999. Inventories provided cash of $17.2 million in 2000 compared to providing cash of $30.6 million in 1999 and Accounts receivable used cash of $42.4 million in 2000 after using cash of $31.4 million in 1999. Cash Flows From Investing Activities – Net cash used in investing activities was $240.1 million higher in 2001 than 2000, due to an increase in the amount spent on Acquisitions of $232.2 million and an increase in the amount spent on Capital expenditures of $104.3 million in 2001, partially offset by an increase of $58.0 million in proceeds received from the sale of plant and equipment in 2001. Net cash used in investing activities was $266.7 million higher in 2000 than 1999, primarily due to Acquisitions using $261.1 million more cash in 2000, partially offset by an increase of $25.7 million in proceeds received from the sale of plant and equipment in 2000. Included in Other is an increase in cash used for equity investments in 2000. To complete Acquisitions the Company utilized cash of $583.3 million in 2001; $351.0 million of cash and the issuance of common stock valued at $184.3 million in 2000; and cash of $89.9 million in 1999. The net assets of the acquired companies at their respective acquisition dates consisted of the following: 22 In summary, based upon the Company's past performance and current expectations, management believes the cash flows generated from future operating activities should provide adequate funds to support internal growth and continued improvements in the Company’s manufacturing facilities and equipment. The Company’s worldwide financial capabilities may be used to support planned growth as needed. Dividends have been paid for 204 consecutive quarters, including a yearly increase in dividends for the last 45 fiscal years. The current annual dividend rate is $.72 per share. Common share activity in 2001 primarily includes the exercise of stock options. During 2001 the Company did not purchase any shares of its common stock for treasury. In 2000 the Company increased its outstanding borrowings by a net total of $154.6 million primarily to fund acquisitions. The majority of the funding occurred in the second half of 2000 and was accomplished through the issuance of commercial paper. Cash Flows From Financing Activities – In 2001 the Company increased its outstanding borrowings by a net total of $308.1 million primarily to fund acquisitions. The majority of the funding was through the issuance of EUR 300 million ($257.2 million on the date of issuance) of five- year Euro Notes in the European debt capital market. Additional funds were obtained through the issuance of commercial paper. (in thousands)  2001 2000 1999 Assets acquired: Accounts receivable  $ 87,514 $ 72,651 $ 16,529  Inventories  67,904 90,319 16,173  Prepaid expenses  11,730 2,329 2,509 Assets held for sale 84,640 164,000 Deferred income taxes 10,029 27,814  Plant & equipment  141,411 119,889 17,686  Other assets  12,072 246,915 3,783 Excess cost of investments over net assets acquired 383,878 158,230 84,589 799,178 882,147 141,269  Liabilities and equity assumed: Notes payable  20,926 2,433 10,433  Accounts payable  36,545 41,315 10,105  Accrued payrolls  20,587 18,345 6,828  Accrued taxes (5,463) 102,473 (646)  Other accrued liabilities 72,150  56,432 3,535  Long-term debt  53,823  107,195 20,090  Pensions and other postretirement benefits 2,483 22,964 471 Deferred income taxes 13,027  Other liabilities  1,846  588 Unearned compensation (4,285) 215,924  346,872 51,404  Net assets acquired $ 583,254 $ 535,275 $ 89,865