Management’s Discussion and Analysis Other Balance Sheet Measures 2002 Compared to 2001 2001 Compared to 2000 Working capital (current assets less current liabilities) at September 30, 2002, increased over the prior year primarily as a result of financing activities that provided $75 million of new long-term debt in 2002, none of which is current. Principal of this new debt is payable in seven equal annual installments beginning in 2006. As a result, our cash and cash equivalents exceeded our current debt by $11.6 million at September 30, 2002, whereas last year our current debt exceeded our cash and cash equivalents by $17.5 million. At September 30, 2002, required future principal payments of long-term debt and commitments under operating leases were as follows: We currently have a revolving line of credit facility with a syndicate of U.S. banks totaling $150 million that expires on June 15, 2003. In addition, we have other lines of credit facilities, which totaled $56.4 million at September 30, 2002, that are generally reviewed annually for renewal. Increases in working capital were most significantly attributed to increases in Industrial Controls’ inventories in anticipation of higher sales volumes in upcoming quarters and to reductions in short-term borrowings made possible by the excess of operating cash flows over our investing cash flows. Shareholders’ equity increased 16%, resulting primarily from 2001 net earnings in excess of cash dividend payments. Shareholders’ equity increased 11%, resulting primarily from 2002 net earnings in excess of cash dividend payments. We are currently involved in matters of litigation arising from the normal course of business, including certain environmental and product liability matters. Further discussion of these matters is in Note Q in the notes to consolidated financial statements. Provisions of debt agreements include covenants customary to such agreements that require us to maintain specified minimum or maximum financial measures and place limitations on various investing and financing activities. The agreements also permit the lenders to accelerate repayment requirements in the event of a material adverse event. Our most restrictive covenants require us to maintain a minimum consolidated net worth and a maximum consolidated debt to consolidated operating cash flow, as defined in the agreements. At September 30, 2002, we had the ability to pay dividends and purchase the company’s common stock up to $109.2 million. In thousands at September 30, 2002 2001 2000 Working capital $152,312 $123,744 $100,836 Long-term debt, less current portion 78,192 77,000 74,500 Other liabilities 52,928 51,042 50,142 Commitments and contingencies — — — Shareholders’ equity 354,901 318,862 275,624 In thousands for the year(s) 2004/ 2006/ ending September 30, 2003 2005 2007 Thereafter Long-term debt $ 2,000 $ — $21,428 $53,572 Operating leases 3,235 4,037 2,721 2,348 24