In November 2000, we acquired the stock of Hoeflich Controls, Inc., a manufacturer of ignition systems, and certain related assets, and in June 2001, we acquired certain assets and assumed certain liabilities of the Bryce diesel fuel injection business of Delphi Automotive Systems. These acquisitions, which cost a total of $31,844, were accounted for using the purchase method of accounting. In 2001, acquired goodwill was amortized based on an amortization period of 15 years. Beginning October 1, 2001, goodwill is no longer amortized. Under terms of the Hoeflich purchase agreement, we could be required to make an additional payment of up to $1,200 in fiscal year 2004, contingent upon attaining certain investment and sales volumes, as defined by the agreement. If we had completed the acquisitions on October 1, 1999, net sales and net earnings for 2001 and 2000 would not have been materially different from amounts reported in the statements of consolidated earnings. At the time of our acquisition from Delphi, one of our directors was an executive vice president with Delphi Automotive Systems and served as president in a sector other than the one containing diesel fuel injection businesses. In 2002, we reduced the carrying value of certain Industrial Controls manufacturing equipment to its estimated fair value. This equipment is no longer in service and is to be disposed of. The resulting loss, which totaled $3,000, was recognized as other expense in the statement of consolidated earnings. A present value technique involving multiple cash flow scenarios was used to estimate the fair value of the equipment. Income taxes consisted of the following: Deferred income taxes presented in the consolidated balance sheets are related to the following: We have not provided for taxes on $11,595 of undistributed foreign earnings that we consider permanently reinvested. These earnings could become subject to income taxes if they are remitted as dividends, are loaned to the company, or if we sell our stock in the subsidiaries. However, we believe that foreign tax credits would largely offset any income tax that might otherwise be due. We recorded a valuation allowance to reflect the estimated amount of deferred tax assets that may not be realized primarily due to foreign net operating loss carryforward limitations. Remaining deferred tax assets are expected to be realized through future earnings. The changes in the valuation allowance were as follows: C. Impairment loss on equipment: D. Income taxes: 35 Year ended September 30, 2002 2001 2000 Current: Federal $16,784 $23,884 $17,947 State 2,288 3,064 2,202 Foreign 5,125 6,603 5,456 Deferred 1,313 (664) 1,511 $25,510 $32,887 $27,116 Year ended September 30, 2002 2001 Beginning balance $(10,936) $(11,168) Foreign net operating loss carryforward (2,137) 25 State net operating loss carryforward (10) 177 Capital loss carryback utilization 1,050 30 Ending balance $(12,033) $(10,936) At September 30, 2002 2001 Deferred tax assets: Postretirement and early retirement benefits $17,933 $17,853 Foreign net operating loss and state tax credits 11,943 9,796 Inventory 7,219 6,105 Other 26,899 24,961 Valuation allowance (12,033) (10,936) Total deferred tax assets, net of valuation allowance 51,961 47,779 Deferred tax liabilities: Intangibles—net (11,401) (8,084) Other (7,335) (5,759) Total deferred tax liabilities (18,736) (13,843)  Net deferred tax assets $33,225 $33,936