2001 Compared to 2000 Financial Condition Assets Aircraft Engine Systems’ segment assets at September 30, 2001, were 8% lower than a year earlier. This decrease primarily resulted from negotiating accelerated pay agreements with several of our customers and better collection experience generally, reducing accounts receivable. Also affecting receivables, Aircraft Engine Systems’ sales were 3% lower in the fourth quarter 2001 than in the fourth quarter 2000 and we increased our allowance for losses by $1.5 million following the terrorist attacks in September 2001. Other contributing factors to the decrease in segment assets are that goodwill and other intangibles decreased by the amount of amortization for the year and capital expenditures were below depreciation levels. Increases in inventories made in anticipation of first quarter 2002 sales partially offset these decreases. Industrial Controls’ segment assets at September 30, 2002, were near last year’s levels. Increases in goodwill and other intangibles, attributable to business acquisitions, were largely offset by reductions in accounts receivable. The reductions in accounts receivable were primarily related to changes in the level of sales activity immediately prior to the end of the year. Industrial Controls’ sales were 11% lower in the fourth quarter 2002 than in the fourth quarter 2001. Aircraft Engine Systems’ segment assets at September 30, 2002, were 9% lower than a year earlier. Reductions in accounts receivable and inventories, both attributable to changes in the level of business activity, account for most of the decrease. Aircraft Engine Systems’ sales were 16% lower in the fourth quarter 2002 than in the fourth quarter 2001. Nonsegment assets at September 30, 2002, increased over the prior year primarily because of higher cash balances. 2002 Compared to 2001 Industrial Controls’ segment assets at September 30, 2001, were 32% higher than a year earlier. Business acquisitions accounted for about half of the increase. The remaining increase resulted from changes in accounts receivable, inventories, and property, plant, and equipment associated with the level of business activity. Industrial Controls’ sales were 23% higher in the fourth quarter 2001 than in the fourth quarter 2000 and we anticipated higher sales volumes in following quarters. Goodwill and other intangibles decreased by the amount of amortization for the year. Our discussion and analysis of financial condition is presented by segment for assets. We also separately discuss and analyze other balance sheet measures and cash flows. Together, this discussion and analysis will help you assess our liquidity and capital resources, as well as understand changes in our financial condition. In thousands at September 30, 2002 2001 2000 Segment assets: Industrial Controls $286,302 $283,072 $214,935 Aircraft Engine Systems 219,480 241,002 260,712 Nonsegment assets 76,613 60,554 58,076 Total assets $582,395 $584,628 $533,723 23