The following discussion of the Company’s financial condition and results of operations should be read together with the other financial information and consolidated financial statements included in this Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. The Company’s actual results could differ materially from the results anticipated in the forward-looking statements as a result of a variety of factors, including those discussed in “Forward Looking Statements” and elsewhere in this Annual Report.  The Company designs, develops, manufactures, markets, sells and distributes products and components, primarily for the medical and health care industry. The Company markets components to other equipment manufacturers for incorporation in their products and sells finished devices to physicians, hospitals, clinics and other treatment centers. The Company’s products and services primarily range from ophthalmology and cardiovascular products to fluid delivery devices, contract manufacturing and kitting services. In 2003 approximately 26 percent of the Company’s sales were outside the U.S. The Company’s products are used in a wide variety of applications by numerous customers, the largest of which accounted for approximately 14 percent of net sales in 2003. The Company encounters competition in all of its markets and competes primarily on the basis of product quality, price, engineering, customer service and delivery time.  The Company’s strategy is to provide a broad selection of products and a high level of service in the areas in which it competes. The Company focuses its research and development efforts to improve current products and develop highly-engineered products that meet customer needs and have the potential for broad market applications and significant sales. Proposed new products may be subject to regulatory clearance or approval prior to commercialization and the time period for introducing a new product to the marketplace can be unpredictable. The Company is also focused on controlling costs.  The Company does this by investing in modern manufacturing technologies and controlling purchasing processes. Over the past three years, the Company has continued to be faced with increasing costs associated with all lines of insurance, including group health benefits. The Company has been successful in consistently generating cash from operations and uses that cash to reduce indebtedness, to fund capital expenditures, to repurchase stock and, starting in 2003, to pay dividends. During 2003, the Company reduced debt by approximately $6.0 million. The Company’s strategic objective is to further enhance its position in its served markets by:  • Focusing on customer needs  • Expanding existing product lines and developing new products • Maintaining a culture of controlling cost  • Preserving and fostering a collaborative, entrepreneurial management structure  For the year ended December 31, 2003, the Company reported revenues of $62.8 million, income from continuing operations of $4.9 million and net income of $5.1 million, up 5 percent, 20 percent and 95 percent, respectively, from 2002. The Company’s income from continuing operations was $4.9 million, or $2.86 per basic and $2.66 per diluted share, in 2003, compared to income from continuing operations of $4.1 million, or $2.37 per basic and $2.18 per diluted share, in 2002 and $4.3 million, or $2.10 per basic and $1.88 per diluted share, in 2001. Net income, including discontinued operations and cumulative effect of accounting change, totaled $5.1 million, or $2.96 per basic and $2.75 per diluted share, in 2003, compared with $2.6 million, or $1.51 per basic and $1.39 per diluted share, in 2002 and $9.8 million, or $4.80 per basic and $4.30 per diluted share, in 2001. The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142 effective January 1, 2002. The required adoption of SFAS No. 142 as discussed in Note 2 to the Company’s Consolidated Financial Statements included herein is considered a change in accounting principle and the cumulative effect of adopting this standard resulted in a $1.6 million, or $ .96 per basic and $ .88 per diluted share, non- cash, after-tax charge in 2002. Operating revenues were $62.8 million in 2003, compared with $59.5 million in 2002 and $57.6 million in 2001. These revenue increases are generally attributable to higher sales volumes. The 5 percent revenue increase in 2003 over the prior year is primarily attributable to an 8 percent increase in the revenues of the Company’s ophthalmic products, an 8 percent increase in the revenues of the Company’s cardiovascular products, a 3 percent increase in the Company’s fluid delivery products and a 2 percent increase in the Company’s other medical and non-medical products and services. The 3 percent revenue increase in 2002 over the prior year is primarily attributable to an 8 percent increase in the revenues of the Company’s cardiovascular products, a 4 percent increase in the Company’s fluid delivery products and a 4 percent increase in the Company’s other medical and non-medical products and services. The Company’s cost of goods sold was $40.6 million in 2003, compared with $39.2 million in 2002 and $35.8 million in 2001. The increase in cost of goods sold for 2003 over 2002 was primarily related to the increase in revenues discussed above and increased insurance costs partially offset by an improvement in manufacturing variances resulting from increased production volumes. The increase in cost of goods sold for 2002 over 2001 was primarily related to a shift in product mix, which resulted in lower gross margins, and the increase in revenues discussed above. Gross profit was $22.2 million in 2003, compared with $20.3 million in 2002 and $21.8 million in 2001. The Company’s gross profit in 2003 was 35 percent of revenues compared with 34 percent of revenues in 2002 and 38 percent of revenues in 2001. The increase in gross profit percentage in 2003 24 OVERVIEW RESULTS OF OPERATIONS MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS