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## Notes to Consolidated Financial Statements 

(In thousands of dollars except per share amounts) 

## M. Stock option plan: 

We have a stock option plan covering key management members and directors of the company. Options granted under the plan generally have a term of 10 years and vest evenly at the end of each year over four years from the date of grant. There were 2,100,000 shares of common stock authorized for issuance under the plan at September 30, 2002. We account for options in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and therefore we do not recognize compensation expense in association with options granted at or above the market price of our common stock at the date of grant. As required by Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation,” the following table presents pro forma net earnings and per share information that has been prepared as if compensation for these options was recognized: 

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The determination of compensation expense for this pro forma information was based upon the estimated fair value of the options granted on the date of their grant. 

The weighted-average estimated fair value of options granted was $16.03 in 2002, $16.05 in 2001, and $6.82 in 2000. These estimates were determined using the Black-Scholes option pricing model and the following weighted-average assumptions by grant year: 

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Changes in outstanding stock options were as follows: 

<img src='content_image/101177.jpg'>

Stock options outstanding at September 30, 2002, consisted of the following: 

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There were 541,043 stock options exercisable at September 30, 2001, and 501,972 at September 30, 2000. 

## N. Shareholder rights plan: 

We have a shareholder rights plan to protect shareholders against unsolicited attempts to acquire control of the company that do not offer what the Board of Directors believes to be an adequate price to all shareholders. In connection with this plan, a dividend of one preferred stock purchase right for each outstanding share of common stock was paid to shareholders in February 1996. Each right entitles its holder to purchase from the company one-four hundredth of a share of Series A Preferred Stock, par value $.003 per share, at a price of $75.00 (subject to 

