In July 2001, the FASB issued SFAS 142, “Goodwill and Other Intangible Assets.” Under SFAS 142, the amortiza- tion period for certain intangibles will change and good- will will no longer be subject to amortization. Goodwill will be subject to at least an annual assessment for impairment by applying a fair value-based test. This Statement is effective for the Company on January 1, 2002. The Company is currently in the process of evaluat- ing the overall potential impact of this Statement on the Company’s financial statements. Goodwill amortization, which approximates $9.5 million annually, will cease effective January 1, 2002. An impairment analysis will be performed during 2002 as required by the new Statement. On March 6, 1999, the Company purchased certain assets and assumed certain liabilities of Delta Schoeller, Limited (Delta) for approximately $12,200. Delta is a United Kingdom manufacturer of switches for the automotive industry. The transaction was accounted for as a pur- chase. The results of operations of Delta are included in the accompanying financial statements from the date of acquisition. In October 2001, the FASB issued SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS 144, which will be effective for the Company in fiscal year 2002, supersedes SFAS 121 and establishes guide- lines for accounting for the impairment and disposal of long-lived assets. The Company believes that the adop- tion of SFAS 144 will not materially impact the Company’s financial statements upon adoption. The Company has a 50% interest in PST Industria Eletronica da Amazonia Ltda. (PST), a Brazilian electronic components business that specializes in electronic vehi- cle security devices. The investment is accounted for under the equity method of accounting. The Company’s investment in PST was $1,758 and $1,492 at December 31, 2001 and 2000, respectively. The Company has loaned PST $6,498, which includes accrued interest. The initial loan was used for the repayment of existing debt and is secured by certain assets of PST. Certain prior year amounts have been reclassified to con- form to their 2001 presentation in the consolidated finan- cial statements. The Company has also entered into two joint venture agreements with Connecto AB, a Swedish manufacturer of power distribution systems. Pursuant to the terms of the agreements, the Company has a 92% interest in a Brazilian joint venture and a 14% interest in a European joint venture. The Brazilian joint venture is consolidated with the results of the Company and the European joint venture is accounted for under the equity method of accounting, as the Company maintains significant influ- ence over this entity. As of December 31, 2001, the Company incurred costs of approximately $5,187 related to these joint ventures. The joint ventures are establish- ing production facilities in Brazil and Europe for the pur- pose of manufacturing and selling power distribution sys- tems in South America and Europe, respectively.  On August 27, 1999, the Company purchased all the out- standing shares of TVI Europe, Limited (TVI) for approxi- mately $20,700. TVI is a United Kingdom manufacturer of vehicle information and management systems for the European commercial vehicle market. The transaction was accounted for as a purchase. The excess of purchase price over the fair value of assets acquired was approxi- mately $17,400. The results of operations of TVI are included in the accompanying financial statements from the date of acquisition. The Company has a $425.0 million credit agreement with a bank group. The credit agreement, as amended on September 28, 2001, has the following components: a $100.0 million revolving facility including a $5.0 million swing line facility, a $150.0 million term facility, and a $175.0 million term facility. The $100.0 million revolving facility and the $150.0 million term facility expire on December 31, 2003 and require a commitment fee of 0.50% on the unused balance of the revolver. The revolv- ing facility permits the Company to borrow up to half its borrowing in specified foreign currencies. Interest is payable quarterly at either (i) the prime rate plus a mar- gin of 2.50% or (ii) LIBOR plus a margin of 4.00%. These margins increase periodically through September 30, 2002. These facilities require additional interest of 1.00% on the aggregate unpaid principal balance payable on the expiration date. The $5.0 million swing line facility expires on December 31, 2003. Interest is payable monthly at an overnight money market borrowing rate. The $175.0 mil- lion term facility expires on December 31, 2005. Interest is payable quarterly at either (i) the prime rate plus a mar- gin of 3.50% or (ii) LIBOR plus a margin of 5.00%. These margins increase periodically through September 30, 2002. This facility also requires additional interest of 1.00% on the aggregate unpaid principal balance payable on the expiration date. The weighted average interest rate in effect for the years ended December 31, 2001, 2000 and 1999 was approxi- mately 9.39%, 7.75% and 8.40%, respectively, including the effects of the interest rate swap agreements. Long-term debt consists of the following at December 31: The credit agreement contains various covenants that require, among other things, the maintenance of certain minimum amounts of consolidated net worth and consoli- dated EBITDA and certain specified ratios of consolidated total debt to consolidated EBITDA, interest coverage and fixed charge coverage. Restrictions also include limits on capital expenditures and dividends. The Company was in compliance with these covenants at December 31, 2001. Unremitted earnings of foreign subsidiaries are $10,978 as of December 31, 2001. Because these earnings have been indefinitely reinvested in foreign operations, no pro- vision has been made for U.S. income taxes. It is imprac- A reconciliation of the Company’s effective income tax rate to the statutory federal tax rate for 2001, 2000 and 1999 is as follows: The provisions for income taxes included in the accompa- nying financial statements represent federal, state and foreign income taxes. The provision for income taxes con- sists of the following for the years ended December 31: Future maturities of long-term debt as of December 31, 2001 are as follows: 18 NOTE 4 INVESTMENTS NOTE 3 ACQUISITIONS Reclassifications  NOTE 5 LONG-TERM DEBT NOTE 6 INCOME TAXES The credit agreement requires certain debt prepayments based upon the achievement of defined levels of EBITDA. 2002 $ 41,621 2003 88,479 2004 45,237 2005 116,004 2006 — 2001 2000 1999 Current: Federal $ (9,347) $ 3,003 $ 12,281 State and foreign 712 2,763 3,966 (8,635) 5,766 16,247 Deferred: Federal 8,387 7,602 8,618 State and foreign 1,198 717 985 9,585 8,319 9,603 Total $ 950 $ 14,085 $ 25,850 2001 2000 1999 Statutory U.S. federal income tax rate 35.0% 35.0% 35.0% State income taxes,  net of federal tax benefit 14.6 1.5 3.0 Tax credits (23.1) (1.0) — Goodwill amortization 7.6 0.5 0.7 Foreign sales corporation (56.0) (3.8) (1.4) Foreign rate differential 28.6 (2.4) — Other items 17.7 0.3 1.3 Effective income tax rate 24.4% 30.1% 38.6% 2001 2000 Borrowings under credit agreement $286,610 $323,670 Borrowings payable to foreign banks 3,891 4,826 Other 840 2,145 291,341 330,641 Less: Current portion 41,621 34,562 $249,720 $296,079 19 Stoneridge, Inc. and Subsidiaries Stoneridge, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated)