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## CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY 

(in thousands) 

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The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. 

## NOTE 1 

## ORGANIZATION AND NATURE OF BUSINESS 

Stoneridge, Inc. (Stoneridge) and its subsidiaries are designers and manufacturers of engineered electrical and electronic components, modules and systems for the automotive, medium and heavy-duty truck, agricultural, and off-road vehicle markets. 

## NOTE 2 

## SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

## Basis of Presentation 

The accompanying consolidated financial statements include the accounts of Stoneridge and its wholly owned and majority-owned subsidiaries (collectively, the Company). All significant intercompany transactions and balances have been eliminated in consolidation. 

## Cash and Cash Equivalents 

The Company considers all short-term investments with original maturities of three months or less to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value. 

## Accounts Receivable Concentrations 

Revenues are principally generated from the automotive, medium and heavy-duty truck, and agricultural vehicle markets. Due to the nature of these industries, a signifi- cant portion of sales and related accounts receivable are concentrated in a relatively small number of customers. In 2001, the top three customers accounted for approxi- mately 18%, 17% and 15% of net sales, while the top five customers accounted for 68% of net sales. The top three customers accounted for approximately 18%, 17% and 17% of the Company’s 2000 net sales, and its top five cus- tomers accounted for approximately 66% of its 2000 net sales. Accounts receivable from the Company’s five largest customers aggregated approximately $48,529 and $47,876 at December 31, 2001 and 2000, respectively. 

## Inventories 

Cost is determined using the last-in, first-out (LIFO) method for approximately 74% and 77% of the Company’s inventories at December 31, 2001 and 2000, respectively, 

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

(in thousands, except share and per share data, unless otherwise indicated) 

and by the first-in, first-out (FIFO) method for all other inventories. Inventory cost includes material, labor and overhead. Inventories consist of the following at December 31: 

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## Property, Plant and Equipment 

Property, plant and equipment are recorded at cost and consist of the following at December 31: 

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Depreciation is provided by both the straight-line and accelerated methods over the estimated useful lives of the assets. Depreciation expense for the years ended December 31, 2001, 2000 and 1999 was $18,664, $18,218 and $17,057, respectively. Depreciable lives within each property classification are as follows: 

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Maintenance and repair expenditures that are not consid- ered betterments and do not extend the useful life of property are charged to expense as incurred. Expenditures for improvements and major renewals are capitalized. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss on the disposition is credited or charged to income. 

