(Dollars in thousands, except per share amounts) The differences comprising the net deferred taxes shown on the Consolidated Balance Sheet at June 30 were as follows: At June 30, 2001, the Company has operating loss carryforwards of $39,537 for tax purposes, some of which can be carried forward indefinitely and others which can be carried forward from three to 20 years. A valuation allowance has been established due to the uncertainty of realizing certain foreign operating loss carryforwards. The recognition of any future tax benefit resulting from the reduction of $18,765 of the valuation allowance will reduce any goodwill related to the Commercial Intertech acquisition remaining at the time of the reduction. Provision has not been made for additional U.S. or foreign taxes on undistributed earnings of certain international operations as those earnings will continue to be reinvested. It is not practicable to estimate the additional taxes, including applicable foreign withholding taxes, that might be payable on the eventual remittance of such earnings.  Accumulated undistributed earnings of foreign operations reinvested in their operations amounted to $333,796, $276,481 and $205,756, at June 30, 2001, 2000 and 1999, respectively. Earnings per share have been computed according to SFAS No. 128, “Earnings per Share.” Basic earnings per share is computed using the weighted average number of shares of common stock outstanding during the year.  Diluted earnings per share is computed using the weighted average number of common shares and common share equivalents outstanding during the year. Common share equivalents represent the dilutive effect of outstanding stock options. The computation of net income per share was as follows: The Company is authorized to sell up to $800 million of short-term commercial paper notes, rated A-1 by Standard & Poor's, P-1 by Moody's and F-1 by Fitch, Inc. At June 30, 2001 there were $489,848 of commercial paper notes outstanding which were supported by the available domestic lines of credit.  Commercial paper, along with short-term borrowings from foreign banks, primarily make up the balance of Notes payable. The balance and weighted average interest rate of the Notes payable at June 30, 2001 and 2000 were $526,809 and 5.9% and $314,365 and 5.6%, respectively. During fiscal 2001 the Company did not issue any medium-term notes leaving $530,000 available for issuance at June 30, 2001. The Company has other lines of credit, primarily short-term, aggregating $125,429 from various foreign banks, of which $91,600 was available at June 30, 2001. Most of these agreements are renewed annually. The Company has committed lines of credit totaling $820,765 through several multi-currency unsecured revolving credit agreements with a group of banks, of which $321,293 was available at June 30, 2001. The majority of these agreements expire October 2003. The interest on borrowings is based upon the terms of each specific borrowing and is subject to market conditions. The agreements also require facility fees of up to 8/100ths of one percent of the commitment per annum. Covenants in some of the agreements include a limitation on the Company's ratio of debt to tangible net worth.  Inventories valued on the last-in, first-out cost method are approximately 44% in 2001 and 43% in 2000 of total inventories. The current cost of these inventories exceeds their valuation determined on the LIFO basis by $147,300 in 2001 and $141,187 in 2000. Progress payments of $18,969 in 2001 and $20,279 in 2000 are netted against inventories. Note 6 Inventories Note 7 Financing Arrangements Note 5 Earnings Per Share 29 2001 2000 1999 Numerator: Net income applicable to common shares $ 340,792 $ 368,232 $ 310,501 Denominator: Basic – weighted average common shares 114,304,977 110,330,711 108,799,974 Increase in weighted average from dilutive effect of exercise of stock options 759,470 913,921 878,985 Diluted – weighted average common shares, assuming exercise of stock options 115,064,447 111,244,632 109,678,959 Basic earnings per share $ 2.98 $ 3.34 $ 2.85 Diluted earnings per share $ 2.96 $ 3.31 $ 2.83 2001 2000 Postretirement benefits 11111111111111111111111 $ (10,951) $ 1,710 Other liabilities and reserves  66,281  58,077 Long-term contracts  000 9,046  5,347 Operating loss carryforwards  39,537 45,182 Foreign tax credit carryforwards  8,171  3,356 Valuation allowance  (20,629)  (26,887) Depreciation and amortization 111111111111111111 (135,502)  (95,138) Inventory  12,500  10,532 Net deferred tax (liability) asset 0000000000000000 $ (31,547) $ 2,179 Change in net deferred tax (liability) asset: Provision for deferred tax 111111111111111111111 $ (44,902) $(12,800) Items of other comprehensive (loss) income  (7,528) 320 Acquisitions  18,704 (49,432) Total change in net deferred tax1111111111111111 $ (33,726) $(61,912) 