Notes to Consolidated Financial Statements (In thousands of dollars except per share amounts) The reasons for the differences between our effective income tax rate and the United States statutory federal income tax rate were as follows: Consolidated amortization expense associated with assembled workforce totaled $204 in 2001, consisting of $7 for Industrial Controls and $197 for Aircraft Engine Systems. The following stock options were outstanding during 2002, 2001, and 2000 but were not included in the computation of diluted earnings per share because the options’ exercise prices were greater than the average market price of the common shares during the respective periods: Percent of pretax earnings, year ended September 30, 2002 2001 2000 Statutory rate 35.0 35.0 35.0 State income taxes, net of federal tax benefit 2.6 2.2 2.1 Foreign loss effect 2.2 1.5 2.4 Foreign tax rate differences (1.1) 0.1 0.1 Foreign sales benefits (1.6) (1.1) (1.6) Other items, net 0.5 0.6 0.2 Capital loss utilization (1.5) — (1.6) Effective rate 36.1 38.3 36.6 Year ended September 30, 2002 2001 2000 Earnings before cumulative effect of accounting change (A) $45,170 $53,068 $46,976 Determination of shares,  in thousands: Weighted-average shares of common stock outstanding (B) 11,325 11,318 11,263 Assumed exercise of stock options 252 243 55 Weighted-average shares of common stock outstanding assuming dilution, in thousands (C) 11,577 11,561 11,318 Earnings before cumulative effect of accounting change: Basic per share amount (A/B) $  3.99 $ 4.69 $ 4.17 Diluted per share amount (A/C)  3.90  4.59 4.15 At September 30,  2002 2001 Industrial Controls: Beginning balance $ 37,849 $ 31,008 Goodwill acquired 17,784  8,382 Reclassification of assembled workforce 159 — Cumulative effect of accounting change (4,015) — Foreign currency exchange rate changes 1,366  343 Amortization expense —  (1,884) Ending balance $ 53,143 $ 37,849 Aircraft Engine Systems: Beginning balance $ 57,855 $ 60,245 Reclassification of assembled workforce 4,267 — Amortization expense —  (2,390) Ending balance $ 62,122 $ 57,855 Consolidated: Beginning balance $ 95,704 $ 91,253 Goodwill acquired 17,784  8,382 Reclassification of assembled workforce 4,426 — Cumulative effect of accounting change (4,015) — Foreign currency exchange rate changes 1,366  343 Amortization expense —  (4,274) Ending balance $115,265 $ 95,704 At September 30, 2002 2001 Raw materials $ 5,499 $ 4,638 Component parts 77,004 74,595 Work in process 27,095 33,472 Finished goods 17,514 18,455 $127,112 $131,160 F. Inventories: G. Goodwill: E. Earnings per share: Year ended September 30, 2002 2001 2000 Options 12,543 4,884 203,429 Weighted-average exercise price $70.28 $69.73 $32.22 36